Ethics can best be defined as standards of moral behaviour that are accepted by society as right versus wrong (Nickels et al, 2005). Businesses, as much as an individual, are held accountable for their actions in relationship to societys ethical expectations. Most modern companies are struggling to emerge profitable and reputable in a market that is saturated with competition. One of the tactics used to increase positive visibility in the business world is in establishing a distinctive ethical position. As much important as a companys mission or vision statement is the establishment of a Code of Business Conduct and Ethics annual report. The purpose of this statement is to apply ethical standards to all employees, directors, officers, and possibly subsidiary groups that define disciplinary actions for those who breach the code of conduct. What this serves is to separate the company from any possible negative assessments of its policies on behalf of consumers and to send the message that any deviation from ethical code will be immediately corrected through new initiatives or employee accountability for the act.
In establishing a distinctive ethical position, most companies tend to address issues such as conflicts of interest, confidentiality, fair dealings with other entities, compliance standards, and sometimes cultural ethical standards when dealing with international organisations. The publicity gained from such an ethics code aids not only the business by securing its ethical actions, but also serve the communities, shareholders, and can prevent costly legalities brought on by unfair business practices. These types of lawsuits can be as minor as a breach in employment policy to as extensive as misrepresenting company earnings to inflate company stock.