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Introduction

In today’s business environment, it is clearly evident that the notion of integrity is closely tied to ethical issues which involve the questions of what is right and wrong. Every business enterprise is created with the desire to succeed; however, there arise instances when the interests of the company supersede those of the outside stakeholders that include shareholders, partners, customers, employees, funders, suppliers and the government. Each of them has different concerns, and if they are not attended to, it results in a conflict. Therefore, there is a necessity for every firm to distinguish the needs of their stakeholders and ensure that none is compromised, and at the same time, the business is able to accomplish its objectives (Vissak & Zhang, 2013). This paper looks into the various ways enterprises are dishonest with regards to different stakeholders and discerns the consequences of such acts.

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Lying to Suppliers and Partners

As companies alter their core competencies and extend their supply networks across the oceans, their inherent risks increase and their suppliers become more important. To reduce the threats, businesses are required to develop sustaining mutual relations with their suppliers so as to have access to quality raw materials that will ensure that quality products get to final consumers. However, there are cases when business venture can deceive their suppliers into delivering materials and fail to pay for them within the established payment terms. Additionally, some companies mislead suppliers through overbuys, a criminal activity aimed at obtaining large amounts of merchandise from them without paying for it. Moreover, there are swindlers who will acquire goods from other small companies and pay for them promptly, but then, use these suppliers as terms of reference. Lastly, some businesses use the hit and run strategy where they move to a new location, acquire merchandise and pay using phony checks, and by the time they have been cashed, they move to a new location (Tournet, 2016). Speaking about partners, in their book Dishonesty in Management, Tiia Visaak and Xiaotian Zhang (2013) give examples of three Chinese companies that deceived their business partners in the US by selling products that they copied from them without informing them. Once discovered, one of the enterprises that was not well established ended up becoming bankrupt and was liquidated while the other two were able to survive (Vissak & Zhang, 2013).

Deceiving business partners and suppliers immensely hurts the business and can result in massive losses in the company. Firstly, firms ruin strong ties formed with their partners, and this can lead to bankruptcy especially if the partners were main investors of the enterprise. Secondly, they also end up losing the pool of knowledge gained from their partners, connections, market access and business reputation. Finally, lying to suppliers will mean that a company cannot obtain merchandise and credit facilities that will strain business operations (Whitford & Elkind, 2013).

Lying to Banks

Almost all business entities need funding from banks at one point of their operations. With the federal government and banks tightening their lending criteria, it becomes tougher for companies to access credit facilities. Furthermore, small business entities and startup companies are faced with the challenge of getting a loan due to their credit worthiness. As a result, a lot of enterprises lie to banks in order to receive the needed money and get low interest rates. To issue credit, banks require substantiating documentation of income and credit history from the internal revenue service database. To do this, firms will lie about their credit history and their current repayment terms. They will also manipulate the financial documents required by the bank for them to be granted a loan. In addition, companies may arrange and lease equipment or fictitious assets which they use as security.

Speaking about the consequences of the discussed act, lying to banks is never a smart move for any business. A critical review of the credit information may reveal that the facts presented are false which can damage firm’s reputation in the eyes of their potential funders. Additionally, enterprises end up losing credits already issued if the falsification of documents is revealed. In addition, those involved in a fraud may end up in prison for giving fake documentation and personifications and are persecuted under Title 18 of the U.S Code, Section 1014 that is applied amidst allegations of fraud, business loans and bogus checks (Whitford & Elkind, 2013). Therefore, to prevent the instances of such illegal behavior, the Credit Act of 2009 requires banks to weigh the credibility of customers more carefully than ever before to reduce cases of fraud (Whitford & Elkind, 2013).

Lying to Customers

The growth and future of any company lies in the ability to offer sustainable and quality services and goods to customers, and their willingness to accept the value placed on them. The increased level of competition has greatly influenced the manner in which business operations are conducted. Every company wants to reach its target market, and this may involve instances of providing the public with misleading information. In general, enterprises will lie to customers so as to reduce the costs involved in reaching the target market, deal with competition and for personal interests of maximizing profits. In 2009, Rice Krispies was busted for lying that their product contained 25% of the daily recommended amount of antioxidants and nutrients which boosted child’s immunity against the H1N1 swine flu virus (Elliot, 2011). This prompted the violent earnings for the corporation although they had made false claims about the health benefits of consuming the products without any scientific evidence (Elliott, 2011). During the economic crisis of 2008, JP Morgan lied to its customers about its stamina in the harsh times by assuring them of the risk management procedures undertaken (Whitford & Elkind, 2013). Later, in 2009, the company encountered an egregious trading loss which was a consequence of a combination of detectable problems of sharing risks and customers losing trust in the bank (Whitford & Elkind, 2013).

Telling a small lie especially to customers can have very huge impact on the company. The initial effect is always beneficial to the business but fails to work in the long run. Misleading claims that are not supported by any substantiated evidence will always get a company in trouble with customer loyalty. The latter are likely to stop buying the products as they feel betrayed and will consequently seek for their substitutes from competitors. Consequently, enterprises are bound to suffer financially from the loss of their market share to rivals.

Lying to Employees

A firm’s level of integrity is expressed through how it values its employees. Any management decisions taken by the owners or by the management team directly and indirectly affect staff’s personal lives. Fairness and interplay are inherent in decisions and practices regarding hiring, promotions, salaries and layoffs. Many entrepreneurs recognize the importance of looking after their employees through creating a conducive working environment and rewarding them for their contributions (Tournet, 2016).

However, despite many companies realizing the value of those working for them, there are many instances when enterprises stray from the mentioned above principles. Employers will often bait a trap and change the policy after recruitment hence making an employee feel deceived. Such instances can arise when workers are promised salary increment after completing a certain assignment, bonus structure aimed at doubling income, a flexible schedule within the stipulated work hours per week, advancement opportunities and extensive training opportunities that will never materialize. In addition, some employers go to the extent of blackmailing their subordinates and forcing them to act unethically in order to keep their jobs. Furthermore, office employees may be forced to destroy certain documents, and a sales employee may be forced to lower ethical standards in order to make a sale (Vissak & Zhang, 2013). Lying to employees creates lapses in integrity which are, in turn, replicated like a virus within an organization that erodes the ethics and culture of a business.

Enron Case Study as an Illustration of Unethical Business Behavior

Enron’s case is a bright example of unethical business conduct and of what happens when companies decide to publish misleading financial information. The company dates back to 1985 when it commenced its operations as an interstate pipeline enterprise following a merger between Houston Natural Gas and Omaha under the leadership of Kenneth Lay as a CEO. It was globally recognized as the sixth largest energy company in the world in 2000 after reporting revenue of $100 billion US and trading its shares for $90 US each. In August 2001, the chairman and CEO of Enron left the corporation, and in October, it reported a loss of $618 million that was the first quarterly loss in four years. An investigation into the case conducted by the US Security and Exchange Commission revealed that there was a complex web of partnerships designed to hide Enron’s debt. By November 2001, the company’s stock had dropped to 60 cents per one share, and investors had lost a great deal of their shareholding. In December, Enron filed for bankruptcy, and it has become the biggest case of that kind with about 5,600 employees losing their jobs (Smoliar, 2012). In this situation, everyone was on the losing end with the shareholders losing $60 billion of their investments in the company in just a couple of days. US citizens lost trust in the American economic system, the company’s banks lost their reputation since they were accused of collusion; Arthur Anderson, a renowned audit firm, lost its credibility as it had audited the company’s financials, and lastly, the US President at the time, George Bush, who had strong ties with Lay, was under sharp criticism (Elliott, 2011).

Conclusion

Telling a lie is a number one reason of why most entrepreneurs fail in business. It happens not because it makes them look bad but the act of telling lies plucks them from the realities of what is happening in the real world. Businesses need to establish solid relationships with their stakeholders for them to remain in market. With increased competition and harsh economies, being honest at all times is not as easy as it sounds, but it can make a difference.

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