2.2 The importance of ethics for customers, stakeholders

Stakeholder is a person, group, organization, or system who affects or can be affected by an organization's actions. If the organization as whole engages in unethical behaviour this is affect each and every person related to that organization. If a word goes out in the market that the particular firm is behaving unethically then it will definitely lose the trust of its workers and also its customers. If you customer does not trust the firm then they will not buy from it and this is will generate loses for the firm in long run.

Building relationships with customers is critical because trust is a huge part of complex or huge purchases. Customers need to find business credible and have benevolence when deciding to spend millions on a contract with it. The factors that influence a successful relationship are customers trust; with customer trust, they are more likely to buy from you than from someone else that they know nothing of. When they see firsthand how company operates and what types of people run the company, they will have a better understanding of company to make an informed decision. Firms should not always give what the customers want. It depends on the situation and the scenario. The CEO sets the standards of the company and needs to enforce it so that the whole of a company is unified. Also, even if it is within the realms of the company's culture, spending ridiculous amounts of money such as taking them on a cruise for a small contract cut too much into their profits than a simple drink at a bar. The head of a company would need to set standards and boundaries for its employees.

There are many ways where management can take to reduce unethical practices. One way would be to set boundaries on what can and can't be done. Non adult entertainment related events or nights out on company terms. These events could offend female clients or even their own salespeople; and not only that, the females will be at a huge disadvantage if the male salespeople went without them which will only force them to go to make the commission.

Another way management can reduce unethical practices is to train their employees. For new or old employees they should have an ethics training class that teaches them about ethical business behaviors for the company. Just because something is not illegal does not mean it's ethical, employees should consider that and think outside the box.

Business stakeholders have higher expectations of how an organization undertakes its activities. Failing to live up to these expectations can impact upon a company’s reputation, which can take a long time to develop or rebuild but can be damaged in a short space of time. It can influence current and prospective customers and the companies’ business prospects; employee morale; recruitment, particularly senior positions; and in comment in the media relating to companies, the analyst community and in capital markets. Even where a company has done nothing to justify an attack on its reputation, a negative perception will itself be seriously damaging over time.

Failure to be seen to implement acceptable ethical standards of conduct can also impact upon the degree of regulation or legislation that might otherwise be introduced to constrain behavior.

Companies are increasingly attempting to maintain or improve their reputations by ‘getting their houses in order’, designing new initiatives such as Codes of Ethics. Many have a long way to go if they are to implement and be seen to implement these successfully and embed a culture of ethical business conduct within the day to day running of their businesses.

What constitutes acceptable ethical business conduct changes over time and conduct that at one time may not have damaged the company’s reputation could subsequently cause considerable damage. Companies need to regularly monitor the overall implementation of their ethical policies and procedures to ensure they match the acceptable standards of the time.

Chapter 3. Corporate ethics in Russia