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usiness should behave, and this goes a long way in creating an organizational culture which will see the business increase its efficiency (Mallor, Barnes, Bowers & Langvardt, 2010).
Business ethics will stipulate how the business relates to its stakeholders to ensure that there is a good relationship hence reduces cases of lawsuits, make high profits and ensure business continuity. In the past, unethical business practices have resulted to various scandals, which have resulted to serious economic disasters. Since firms have the need to increase their profits they will engage in lucrative practices, which will make them earn unfair profits and benefit from unethical practices. For any company to be successful, it has to protect all their shareholders since everyone will feel comfortable in an environment where they see their needs are being considered. Trust created by the business to all its stakeholders goes a long way in increasing the businesses’ success and profitability. This paper will look at the financial events surrounding Bernie Madoff, and ENRON and elaborate on the consequences and implications related to a lack of code of ethics.
Enron Corporation was a company in the energy sector located in Texas and had an employee base of 21000 workers in 2001 before it went out of business. The company fell due to false accounting techniques, which made it to be listed as one of the largest companies in the United States with a rating of seventh overall (Lashinsky, 2001). The company was expected to control the market since it had securities in communications, energy and weather portfolios. The company had a well set out fraud plan by using support from political powers to get favors and get an unfair advantage. The company could shut down power plants so that they could get extra money by charging high rates for energy due to the shortages they created.