Importance of Business Ethics in
Strategic Management
Ethics are a set of moral standards that are relied upon to reach conclusions and
make decisions. In a business environment, ethics are a key factor in responsible
decision making. Maintaining a high ethical standpoint when operating your
business can provide benefits to both the internal and external stakeholders of
your business. Strategic management refers to the managerial process of
forming a strategic vision, setting objectives, crafting a strategy and then over
time initiating whatever corrective adjustments required for achieving the long-
term objectives and goals of an organization.
The business case for ethics is based on the positive benefits that it can provide
to your business. The reasons behind maintaining high ethical standards include:
1. Long-term growth: Sustainability comes from an ethical long-term vision
which takes into account all stakeholders. Smaller but sustainable profits
long-term must be better than higher but riskier short-lived profits.
2. Cost and risk reduction: companies which recognize the importance of
business ethics will need to spend less protecting themselves from internal
and external behavioral risks, especially when supported by sound
governance -systems and independent.
3. Anti-capitalist sentiment: the financial crisis marked another blow for the
credibility of capitalism, with resentment towards bank bailouts at the cost
of fundamental rights such as education and healthcare.
4. Limited resources: the planet has finite resources but a growing
population; without ethics, those resources are depleted for purely
individual gain at a huge cost both to current and future generations.
5. Creating Credibility: An organization that is believed to be driven by
moral values is respected in the society even by those who may have no
information about the working and the businesses or an organization.
Infosys, for example, is perceived as an organization for good corporate
governance and social responsibility initiatives. This perception is held far
and wide even by those who do not even know what business the
organization is into.
6. Improving Decision Making: A man’s destiny is the sum totals of all the
decisions that he/she takes in course of his life. The same holds true for
organizations. Decisions are driven by values. For example, an
organization that does not value competition will be fierce in its operations
aiming to wipe out its competitors and establish a monopoly in the market.
Business ethics are important for managing a sustainable business mainly
because of the serious consequences that can result from decisions made, with
a lack of regard to ethics. Even if you believe that good business ethics don’t
contribute to profit levels, you should be able to recognize that poor ethics can
have ‘a detrimental effect on your bottom in the long term.
What is Strategic Management?
Strategic management is defined as the analysis, assessment, and ongoing planning and
monitoring of all the necessities a business needs in order to meet its goals and objectives.
To put it bluntly, Strategic Management is about describing and identifying the areas in which a
business may be falling behind competitors, and then improving those areas in order to achieve
better performance and reclaim a competitive advantage.
The twenty-first century society we are living in is a fast paced one, and this extends out to
business environments and competitive landscapes too. Changes can happen within an instant,
and businesses which fail to pivot can fall far behind competitors, damaging their revenue and
halting their growth.
This is where the strategic management process can provide great assistance. The strategic
management process helps businesses assess their present situation, aids them in the
development of strategies, and then helps businesses to both deploy and evaluate the
effectiveness and success of the implemented strategies.
Business Ethics and Management Ethics
Ethics in business relate to how an organization or corporation handles situations that
require moral decisions. Doing business requires making countless decisions on a daily
basis — decisions about which vendor to use for various services, which customers to
contact, where to target advertising or how to focus on long-term goals. Many of those
decisions do not require "right" or "wrong" considerations; they are morally neutral and
require strategic thinking, not ethical deliberation.
Some decisions, however, involve choices that could impact people inside or outside
the organization in potentially negative ways. In those instances, businesses must have
leaders who can make ethical choices that put people ahead of the bottom line.
Management ethics involves leaders protecting their employees, customers and society
as a whole from any negative consequences that could arise from the actions of their
businesses. Management ethics can factor into issues including coworker interactions,
conflicts of interest, customer safety, honest advertising, customer information security
and the responsible use of corporate resources.
