Business ethics are important in conducting business transactions. There are several reasons for this. First, a firm that behaves ethically in conducting its business transactions reduces the cost of business transactions. For example, in conducting a business transaction, there is always a gap between order entry by the customers and shipping of the products by the company and payment made by the customers. The gaps between these different stages of business transactions are likely to create an unethical situation for the completion of the sale, because either customers can hold the company hostage by not making timely payment or the company can make the customer hostage by not delivering the products. If this situation becomes prevalent, the convenience for the customers and the firms who behave ethically will be still reduced in monitoring each of transaction step. Or let us take another example, where small mom-and-pop's stores do not accept checks from their customers because of the anticipation of the insufficient funds in their accounts. This example shows...

This, in turn, increases the cost for the store for confirming that customers have sufficient funds and it may also increase the inconvenience for customers as the store might refuse to accept the checks. Similarly, customer theft is a major problem that a business encounters in keeping the costs of its products down for all the customers. Unethical behavior of some of the customers increases the cost of doing business because the store requires elaborate security systems to monitor the workplace.
The other advantage of an ethical behavior is that it increases the likelihood of profit, as customers, employees, and suppliers are less likely to behave opportunistically. This also occurs because trust between customers, employees, and suppliers are unlikely to take the advantages of each other (Kotler and Armstrong, 703).

A company that puts ethics as…