Ethical Issues In Business

Ethical issues in business is a common problems in today’s business world. This could happen in corporates under high pressure to hit profit forecasts or business people who looks for lucrative earnings neglecting their social responsibilities.

What are the ethical issues that comes into picture when dealing with investment (scams)? How could the public be aware or educated so that they don’t fall prey into such scams?

Ethical Issues In Business - Why People Fall Prey

This is a complement article for current ethical issues in business.

As we had seen in previous article, the 3 common causes for ethical issues from a business point of view are profitability, greed and loopholes.

We shall be looking at victims point of view, via investment scams in this section.

First of all, if you could notice around, there are many “opportunities” out there for the public, for both the financially educated and financially uneducated group of people.

There a quite a number of reasons why most people fall prey into investment scams:

1. Greed
Greed is the main reasons why people fall prey. People always look for the highest return for their “investment”, and as long as it is “logically” true and sounds “real” to them, through deceptive advertising or mis-leading of scheme details, unethical business practices happen.

2. No Time
Most people are tied up with their day-to-day job in the office / factories. They may be making a lot of money but their time is so tied up to the company they work in. They don’t have the time freedom to scout around for the best offer or enough time to do the due diligence because of high pressure selling. What they have is the money, which is what the cheaters want.

3. No Experience
As mentioned in point no.2, when people have no time for enough exposure on the market movement or activities, they will not have enough experience to differentiate a true investment opportunities from a scam. In fact, the number of failed businesses far out paced the number of successful businesses for sure. And non sincere business persons may use this as good excuses to get away.

4. Not properly educated
Many people could not separate their money into different groups. Most often, they put their hard earned money into investment scams, hoping for an almost unrealistic return (from a financially educated person’s point of view). Some of the victims even borrow money for the investments. It should be noted that only spare money or surplus income that should be used for investment (even when it’s a scam) so that if things go wrong, you won’t be burnt out.

5. Circle of Influence
Herd mentality describes how people are influenced by their peers to adopt certain behaviors, follow trends, and/or purchase items. If you can’t stay cool when making any investment decisions, high chances you may fall prey to scams. Again, high selling pressure is one of the unethical business practices used to lure a group of innocent/ignorance customers.

6. Gamble
A little few of the players or “investors” may already know and aware about the game they are playing. They are taking chances and parking in higher positions before the whole ploy collapse. When they rake in their initial investment, the rest of the money are considered profits, and this could be used to lure new “investors” to pump in money into the system.

As you could see the weakness of the market and a “ready pool” of greedy, ignorance and highly uneducated “prospects” in the market, which seems like little sheeps screaming “come eat me!” to big bad wolf, ethical issues in business is a sure thing to happen as there are people out there who would take any opportunity to grab whatever they could be making without a mercy concern or care about their social responsibilities as a human being.

Ethical Issues In Business - The Investment Scams

So, how would you know if an “investment opportunities of a life time” is too good to be true?

Say for example, you are being offered an “investment” opportunity where you’d be paid 2.5% per month as return, every month for whatever investment amount you put in. Sounds great?

As yourself, “Why would the business not go for a bank loan where the cost is only 8% per annum (business loan interest rate)?”. If the business were to pay you such returns, it means the financial or borrowing cost is a 30% per annum in interest!

The following checklist may help you clear up your mind:

- If I can borrow at 8% per annum, why should I borrow at 30% per annum?

- If I were to borrow 100,000 from you, and be paying you back 2,500 every month, how would I sustain my cash flow for the coming 1-2 years?

Further more, IF the business could not get a normal business loan from any banks with it’s business plan and cash flow projections, there is a very high chance for the business to fail. Banks are one of the most clever party when it comes to business.

- Am I going to invest into a business that couldn’t even get a normal business loan from any bank?

If you want to know more about the Ponzi Scheme, you could check out the business ethic cases, or business ethics cases and the moral behind.

If the ethical issues in business is too much for you, you should be aware that there are still benefits of capitalism to business. The world is ever evolving and there are sure good things to come in the future.

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