The Impact Of Business Ethics On The Profitability Of An Organization

Project and Seminar Material for Business Administration and Management BAM

The Impact Of Business Ethics On The Profitability Of An Organization


Abstract


This study was carried out to examine the impact of business ethics on the profitability of an organization using Nigerian Bottling Company, Osogbo, Osun State as a case study. Specifically, the study was aimed at studying the concept, practice and general principles of ethics in business and how the concept has been effectively integrated into their practices with respect to the organization profitability; to find out the extent to which the business ethics affect organizational profitability; to find out the different ways by which the ethical standard differ in various societies; and to recommend ways by which the business organization can successfully control their business ethics. The study employed the survey descriptive research design. A total of 40 responses were validated from the survey.

From the responses obtained and analysed, the findings revealed that there is significant relationship between business ethics and level of profitability in an organization; there is significant relationship between business organization and ethics; there is significant relationship between business ethics and sales volume of a business organization; there is a significant correlation between business ethics and the level of social responsibility of a business organization.

The study recommend Organisations to on a frequent basis identify the ethical issues they have and relate with to societal needs by helping to solve the problems as much as possible with utmost sincerity.


Chapter One


Introduction

1.1 Background of the Study

Ethics has become a major ingredient that makes any professional group credible and infact, it enablers any citizen or group conforms to the societal standard of exception. All person whether in business, government or any other enterprise are concerned with ethics. Webster Dictionary defines ethics as ‘the discipline dealing with what is good and bad and with moral duty and obligation”.

Often ethical standards are created into laws but business ethics is just and fair conduct, which goes beyond observing law and government regulations. It means adhering to moral principles being guided by particularly values and to ensure that business is successful and fulfilling.

Adesola (2011) defined ethics as ‘a segment of philosophy concerned with values of human conduct. The term ethics refers to a code of conduct that guides a person in dealing with others. Ethics relates to the social rules that influence people to be honest in their dealing’.

Shower et al (1995) define ethics as “the study of people, right and duties of moral values that people apply in making decision and relationship among people”. The key terms of ethical language are; values, rights, moral values and human relationship.

According to Elegich (1996), “the focus of ethics is to determine how to behave in order to ensure that life is flourishing and worth living”. More so, ethics are concerned with what is deemed acceptable for, good or bad, fair or unfair, just or unjust, right or wrong, action by whom in a field or human activity in the realm of business action and decision making. (Omokutu, 1998).

Most definitions of business ethics relate to rules, standard and moral principles as to what are right or wrong in specific situations. For our purposes and in simple terms, business ethics comprises the standards that guide behaviour in the world of business. Whether the required behaviour is right or wrong, ethical or unethical is often determine by stakeholders, such as investors, customers, interest groups, employees, the legal system and the community. Although, these group are not necessarily “right”, their judgments influence society’s acceptance or rejection of a business and its activities. (Oni & Lawal 2006).

Today, experience has shown that business is inevitable to greatness; consideration has to be given to the ethics so that they will not hinder the growth of the organization profitability.


1.2 Statement of the Problem

There are wide range of problems, however, usually begins with five main concerns. Such ethical dilemmas create the tension in the application of business ethics, due to inherent contradictions. Various types of problems arise from these contradictions stemming from the core corporate responsibility to include problems with stakeholders, profit focus, quantitative emphasis and accounting for externalities as well as very interpretation of corporate responsibility.

Stakeholders’ equity is a problem in business and executives are often under pressure to place the majority of that equity with shareholders in the organization. Profit focus, therefore often becomes the mandate among many business executives and managers.

Quantitative emphasis also tend to create many types of problems in business ethics while many types of decision can be quantified, many can not. Externalities also present problems in business ethics simply became problem figures on balance sheet although do not tell the full story about a company. Cooperate responsibility often entails actions and decisions that are in best interest of the business.


1.3 Objectives of the Study

The main objectives of choosing this research topic are:

  1. To study the concept, practice and general principles of ethics in business and how the concept has been effectively integrated into their practices with respect to the organization profitability.
  2. To find out the extent to which the business ethics affect organizational profitability.
  3. To find out the different ways by which the ethical standard differ in various societies.
  4. To recommend ways by which the business organization can successfully control their business ethics.

In other words, the study chosen is to throw more light on the activities of a business organization to provide the strategies and benefits of ethical codes and guides for manager to pursue.


1.4 Research Questions

The research questions drawn for the purpose of this works are as follows:-

  1. Is the organization able to identify the ethical issues and recognize the approaches available to resolve them?
  2. Has the business firm and interested parties been able to define what constitutes an ethical issues?
  3. Is the organization able to tackle ethical issues that may arise in the organization?

1.5 Statement of Hypothesis

The research hypotheses under this study are as stated below:-

Hypothesis 1
  • Ho: There is no significant relationship between business ethics and level of profitability in the organization.
  • Hi: There is significant relationship between business ethics and level of profitability in an organization.
Hypothesis 2
  • Ho: There is no significant relationship between business organization and ethics.
  • Hi: There is significant relationship between business organization and ethics.
Hypothesis 3
  • Ho: There is no significant relationship between business ethics and sales volume of a business organization.
  • Hi: There is significant relationship between business ethics and sales volume of a business organization.
Hypothesis 4
  • Ho: There is no significant correlation between business ethics and the level of social responsibility of a business organization.
  • Hi: There is significant relationship between business ethics and sales volume of a business organization.

1.6 Significance of the Study

  1. To know how business ethics has contributed to organizational profitability
  2. To find out ways by which an organization can make proper advantages of its ethics
  3. To find the way of increasing profitability in an organization through proper study of those business ethics.
  4. To identify some of the business ethics and those those affects profitability and provide a lasting solution.

The findings of the researcher and ultimately recommendations will help to actualize the above objectives.


1.7 Scope of the Study

The research work would be ideally programmed to examine the impact of business ethics on corporate profitability as it affects Nigerian Bottling Company, Osogbo.

The study covers both theoretical and physical scope. The theoretical scope deals among other with several related literature on business ethics as effects organizational profitability.

The physical scope covers to study of Nigeria Bottling Company plc Osogbo in particular and questionnaire will be administered among the management and staff of the company.


1.8 Limitations of the Study

In any research work, a few problem is usually encountered. First and foremost, the constraints are bound to hinder a research work and this study inclusive. It was not possible to carryout the study extensively as it was originally anticipated.

There is also the problem arising from collection of the questionnaire distributed due to non-chalant attitudes of some respondents.

Library facility is another limiting factor, there is inadequate equipment in libraries to consult for the purpose of collecting secondary data.


1.9 Historical Background of Nigeria Bottling Company Plc

The Nigerian Bottling Company plc (NBC) was established in Atlanta Geogia on May 8th 1886 by Dr. Jhnyth Reinbition a local pharmacist before his death. Ten years after he sold the copy right to group of companies in which Mr. Frank M. Robinson suggested the name “coca-cola”

Coca-cola company is the franchise owners of business i.e copy right issue authority product under supervisor. The franchise owner royalty at the end of every financial period from those countries that bottle coca-cola. The president of coca-cola is Mr. Dough Irester, he oversee all the activities of coca-cola branches all over the world.
In 1922, a young man came to Nigeria through Abeokuta, he worked with A.G Leventies to Bottle coca-cola product authority the A.G leventies. In 1951, coca-cola company authorized the A.G leventies to bottle coca-cola product in Nigeria. Coca-cola first can to Nigeria in 1953 when the Nigerian Bottling set up its first plant in Lagos. It was to be beginning of an existing storing growth and development particularly, during past sixteen years.

Coca-cola is the new worlds leading soft drink sold in more than one hundred and forty-five countries. A total of 250 million servings are consumed everyday is all parts of the globe from Canada in North to Argentian and New Zealand in the South from Alaska to China and from Mexico to Nigeria. Greece was formerly in charge of coca-cola almost everything used in the production of the drink was imported from Greece into the country. Nigerian Bottling Company is today Nigeria number one bottler of soft drinks, selling more than six million bottles per day a figure which is still growing with continuing expansion of brand new plants in various parts of the federation. Fanta is by far the number one best seller in the orange segment and sprite the most widely sold lemon drink in Nigeria, other products bottled by NBC include Ginger Ale, Fanta tonic, Fanta Lemon, Black Corant Fanta and Krest bitter lemon.
The success of coca-cola has brought with it the development of a number of sister industries all contributing to the growth of the Nigeria economy. The NBC glass house in Benin supplies the millions of bottles required to keep a larger Bottling Company in Operation, the crowns to the bottles the plastic company makes plastic-crates for carrying the bottles.

In addition, the triunes, which we are familiar with in many parts of the country, deliver soft drinks to more than fifty thousand dealers.

NBC also is the largest manufacturer of carbonated water in the country used to carbonate your favourite soft drinks. Quality is the key word which determines the success of the whole operation. Only the very best ingredients are used for making soft drink and sophisticated washing and filling equipments installed at all parts.

Conclusively, Nigeria Bottling Company Plc are situated in different part of the country e.g Lagos state, Kano state, Port-Harcourt, Osun state, and Oyo state. The company has two plants in Lagos state one of the plants is located at Apapa while the other one is located at Ikeja. The Ikeja plant has the longest canning and bottling facilities in Nigeria and it is also the main office of the company in Nigeria.


1.10 Definition of Terms

The following terms are explained below:

Business Organization:

A business organization is a group or a unit of people working together with a common objective of profit maximization. Profit maximization is not the only objective, they also satisfy human needs and wants by producing goods and services.

Profitability:

Profitability is the primary goal of all business ventures. Without profitability the business will not survive in the long run. So measuring current and past profitability and projecting future profitability is very important.

Ethics:

Ethics is defined as the study of people, right and duties of moral values that people apply in making decision and relationship among people.


Chapter Five


Conclusion and Recommendation

5.1 Conclusion

In this study, our focus was to examine the impact of business ethics on the profitability of an organization using Nigerian Bottling Company, Osogbo, Osun Stateas a case study. The study specifically was aimed at studying the concept, practice and general principles of ethics in business and how the concept has been effectively integrated into their practices with respect to the organization profitability; to find out the extent to which the business ethics affect organizational profitability; to find out the different ways by which the ethical standard differ in various societies; and to recommend ways by which the business organization can successfully control their business ethics.
The study adopted the survey research design and randomly enrolled participants in the study. A total of 40 responses were validated from the enrolled participants where all respondent are active workers in Nigerian Bottling Company, Osogbo, Osun State.

The findings revealed that:

  1. There is significant relationship between business ethics and level of profitability in an organization.
  2. There is significant relationship between business organization and ethics.
  3. There is significant relationship between business ethics and sales volume of a business organization.
  4. There is a significant correlation between business ethics and the level of social responsibility of a business organization.

5.2 Recommendation

Based on the responses obtained, the researcher proffers the following recommendations:

  1. Business ethics and CSR deserve greater attention and more commitment from corporate organisations, they should formulate policies on ethics and CSR so as to provide a guide and channel efforts towards the use of business ethics and CSR in achieving organisational success.
  2. Organisations should on a frequent basis identify with societal needs by helping to solve these problems as much as possible with utmost sincerity.
  3. Corporate organisations should also intensify efforts to educate the public on their responsibilities, various commitment to other stakeholders and operational limitations.
  4. Government should provide enlightenment for business organisations on the need and importance of effective business ethics and CSR as well as areas in which they could be socially responsible.
  5. Finally, organisations should see business ethics and CSR as a business opportunity that is profitable in the long run. This will give them a clear view of ultimate goal of organisational success.

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