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Ethical Behavior in Management and Business

It’s a question that has been repeatedly asked: why don’t we teach ethical behavior in business? If ethics is the study of moral choices, it is an integral part of teaching every individual within any company or organization. Suppose you will work within, be affected by, or contribute to the success of organizations and businesses.

In that case, you have to have a basic understanding of what behaviors are right and wrong. Ethical behavior in management and business tackles the topic of ethical behavior in management and business as it relates to individuals and organizations. Here are some ethical behavior in management and business.

Ethical Behavior in Management and Business

Ethical Behavior in Management and Business System

1. Obeying the Company’s Rules

Codes of ethics help guide the behavior of individuals in an organization. However, even without codes of ethics, it should be common sense for an individual to obey the rules and regulations a company has instituted. The reason is apparent. Failure to follow the rules leads to poor management, which in turn leads to poor performance and financial losses for the company or organization as a whole. There must be mutual respect and authority to maintain a positive relationship between management and employees.

2. Effective Communication

Effective communication is another topic that can be addressed in ethics education. There are several types of honest communication. The first and probably most apparent type of communication related to ethics, is precisely those situations where people break the rules without stopping to think about what their actions mean. Not every company has a policy on how often employees should communicate via e-mail, but some do. If a person is expected to send an e-mail more than once daily, it is unethical to send more than one. The need for effective communication becomes more critical as the size of the organization increases.

3. Taking Responsibility

Taking responsibility means that when you do something wrong, you take responsibility for it. If a person in an organization never takes responsibility for their actions, they are likely to cause problems and get themselves into trouble. Even if they don’t get into trouble directly, they may be causing other members of the company to lose trust in them. To maintain the integrity and reputation of your company, it is essential to prioritize taking responsibility over just doing another task/job/workload. Many people take responsibility for things that they have no control over. This can lead to an overall decrease in morale within an organization and may even result in a lawsuit against the company.

4. Accountability

Accountability is another aspect of ethical behavior that is often overlooked. Be accountable to your peers, your superiors, and yourself. This means showing up to work on time, paying attention when you are there, and doing your job correctly. You may find that if you prioritize being accountable for your actions daily, you’ll find it easier to be ethical on a larger scale. For example, if someone is told to complete a task by Friday but doesn’t get it done until Monday, they are being unethical.

5. Professionalism

Professionalism is an important yet often overlooked aspect of business and management. To be a professional, you need to do your job right the first time and complete it correctly. If you spend time polishing up your work, you’ll be able to avoid problems further down the line. You may find that increased professionalism comes with increased accountability and responsibility, which are also essential aspects of being a professional in any business or organization. Many top executives have to act professionally to make it to the top, and you’ll likely find that the same is true for other management positions.

6. Mutual Respect for your Colleagues at work

Mutual respect for your colleagues is essential to maintain harmony in your office or business. No one wants to work with someone who cannot get along with others. A negative work environment can quickly become hostile if the person brings their problems from the office to their home. The best way to have good working relationships with other people within your organization is through mutual respect’s abilities, talents, and skills. Respecting someone’s perspective and how they approach a problem will allow them to trust you more.

Ethical Behavior in Management and Business


Ethical behavior in business and management can be approached in various ways. By becoming more ethical within your company, you’ll be able to get more work done faster and will provide a more positive experience for all those involved. By understanding the topics above, you’ll know what is right and wrong within the confines of your organization’s ethics policy. In addition, you’ll probably be able to get more work done and make better decisions within your company as you become more knowledgeable of what is ethical behavior in management and business. And who knows, maybe you’ll even learn something new and exciting.

What Inspires You to Become an Entrepreneur?

If you’ve ever wondered what motivated people to start their own businesses, there are a variety of reasons that may come to your mind. Some people want to be their own boss while others want the opportunity to control their own destiny. Others, of course, just have a product or service that they feel passionately about and want to share it with the world. These are all very valid reasons for becoming an entrepreneur, but inspiration can take many forms and is often hard to quantify.

What Inspires You to Become an Entrepreneur?

What Inspires You to Become an Entrepreneur?

Although this is a difficult question to answer, anyone who has ever dared to venture out on their own can surely relate to the concept of being inspired. There are countless factors that can motivate someone to become an entrepreneur. To get a better idea of what inspires people to start their own business, we asked the following question in our 2012 Global Entrepreneurship Monitor (GEM) Report: “What do you think inspires most people who start new businesses?”

Respondents were presented with a list of 15 options, which included feeling passionate about something you’re doing, wanting control over your life and your future, and needing more freedom.

. . .

However, the GEM Report represents a snapshot of opinions within the entrepreneurship research community. The survey was conducted in July 2012, and respondents represent a cross-section of 6,664 entrepreneurs from across the globe. The findings are based on self-reported responses from 594 respondents who have started a new business or have an existing business with employees in the three years prior to being asked this question (i.e., representing a 0.79% sample). Results are statistically adjusted where appropriate to account for sampling variability. SOURCE: GEM-2012 Survey

The questions asked were both directly related to a product or service, as well as more broad in scope. Whereas questions related to a specific product or service would be more easily quantifiable, however, the broader questions would provide a better overall perspective on entrepreneurship. When comparing both types of questions, it is clear that the majority of respondents say that inspiration comes from a passionate drive to build a company based on an innovative product or service.

As you can see in the table below, 53% of those surveyed said that they felt most inspired when they had a compelling vision for their product or service. Only 27% reported as being most inspired when working with others to create something new. The remaining responses were equally divided between the other 12 options listed.

This is an important finding because it shows that today’s entrepreneurs are driven by passion and innovation more so than they are by necessity and competition. It shows that they start out with a vision and therefore, they are motivated to work hard to achieve it.

This is true across all demographics of entrepreneurs:

It’s true for female entrepreneurs (as illustrated in the following graph), who have been an increasing focus in entrepreneurship research over the past few years.

This is also true of male entrepreneurs, as demonstrated in the following table. In fact, new businesses started by men are nearly three times as likely as those started by women to be based on innovation instead of necessity or competition.

So, who is more likely to start his or her own business? That depends a lot on education. Entrepreneurs with at least a bachelor’s degree are roughly twice as likely to be driven by passion and innovation than those with no more than a high school diploma. But that trend isn’t quite as pronounced outside of higher education.

This image clearly shows the distribution of entrepreneurs by type of business started:

As you can see, entrepreneurship is not just for those with an advanced degree (which is why there are many successful self-employed people with less formal education). The classic image of an entrepreneur who drops out of college to start a business is increasingly less common as the world continues to become more and more connected. However, it does still happen.

This also means that there are very few “accidental entrepreneurs” who stumble into being their own boss after some kind of unfortunate event. Instead, it appears that the most inspired people are those who want to build businesses based on what they’re passionate about.

Interestingly, there is no clear difference between men and women when it comes to the type of business started or the inspiration behind it. After all is said and done, it seems that both genders are driven by the same inspirations and pursue the same types of businesses.

What Inspires You to Become an Entrepreneur?

Final Verdict

After overcoming a few obstacles, most entrepreneurial journeys—irrespective of where you live—start to take shape from there. According to the GEM Report, there are five key steps that entrepreneurs typically go through:

Despite the different stages of growth for entrepreneurs, it’s still important to remember that some early-stage businesses will succeed while others will fail. But these differing rates of success can be attributed to many factors outside of motivation.

Why Free Cash Flow is Negative?

The business cycle is the alternating periods of economic growth, recession, or depression. Various macroeconomic factors dictate the length and severity of each. A recession is when a country’s GDP falls below its potential GDP for an extended period.

Negative cash flow occurs when you collect less money from customers than your costs to serve them as well as holding inventory for them such as raw materials, labor, overhead and interest expenses associated with purchases that are not being used at the time incurred, so they are just sitting on the balance sheet; i.e., idle inventory costs more to hold than it would if sold immediately.

Why Free Cash Flow is Negative?

Why Free Cash Flow is Negative?

1. Business is experiencing a downturn

It is the most common reason why Free Cash Flow is negative.

You are limited to your profits, which are the lesser of your sales revenue or the cost to purchase something from you. Your fees are fixed and not subject to constraints like price increases, technological advances, or changes in the overall business cycle. Your business’s output continues to decline even as it makes a profit.

If your cost of goods sold goes up or customers’ disposable income goes down, then an increase in selling prices requires you to sell fewer units at higher prices, reducing your net income and causing a reduction in sales revenue.

2. Expensive investments

It is a risk that a business becomes exposed to when it has increased in size or has high fixed costs. Most companies know that their money in equipment, buildings, or research and development will eventually be needed to make more money. Still, they don’t make those investments until quarterly earnings reports show that their expenses exceed the sales revenue generated at those prices. 

For example, say Sally’s business incurs an investment to build a new office building with a $1 million price tag. This year’s net income is $100,000 because her net sales were only $7 million.

3. Inaccurate budgeting

Businesses tend to underestimate expenses during bad economic times, which leads to negative Free Cash Flow. It can be good if the industry realizes that it needs to account for those costs to avoid bankruptcy or significant financial losses. The problem comes when companies don’t have money because they believe they have enough cash due to low sales but high profits.

4. Businesses that fail to invest in their long-term survival

Investing in the future is the best way to reduce negative Free Cash Flow. After all, investing today is an expense, but it’s an investment in your quality of life tomorrow and many years later. If you look at big businesses, you will notice that companies that continue to build up cash on hand often go out of business or get bought out by other more successful companies because they are not able to keep up with the advancements in technology or changes in customer demands for their products or services.

5. A high liquidity ratio

It is usually a good thing. It means that the company has a lot of cash sitting around in short-term investments, and not much of it is tied up in its inventory or long-term assets like property, plant, and equipment (PPE) or your goodwill on the balance sheet. Most businesses like to see their current ratio above 1:1, meaning they can turn their inventory into cash within one year if needed.

6. Stock buybacks

The use of stock buybacks to avoid paying a dividend caused businesses to go out of business and make shareholders poorer during the financial crisis of 2008. According to this article from CNN Money, shareholders were unhappy because companies were buying back their stocks at an alarming rate, which reduced the number of shares being sold on the market, lowering their value, and depressing their price as well as raising their cost for investors who want those shares in their portfolio since they are trading at a lower price.

7. Uncompetitive market conditions or products that have no demand

It is a tough one to deal with. There are always changes in the business cycle, changing customer tastes and preferences, new technologies that lower your production costs or increase your productivity, and even changes in your industry that can force you to change how you do business.

It is a case where you need to re-evaluate your business plan and goals for the future. If it’s not working out for you, then perhaps this is not the type of business that best fits your skillset or experiences. 

Why Free Cash Flow is Negative?

Final Verdict

Negative cash flow, either in a given period or for a portfolio, reduces the return rate during that period. It highlights that internally generated funds are insufficient to pay capital expenditures and support cash requirements associated with working capital projects. In all cases, net income must be positive before positive cash flows can be achieved. Net income, marginal profit, and free cash flow are all important metrics within the financial management process. Each measurement tool allows the firm to evaluate various assets in both a qualitative and quantitative manner.

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