ETHICAL ISSUES IN BUSINESS

Modern Business Ethics and Dilemmas Modern entities are acquiring large significance due to their size and the influence exerted by them. These business corporations have become a method of property tenure and means of organizing societys economic life. The growth of business houses has evolved a corporate system. These corporate systems have gained prominence and have with it the attributes of power and can deal with itself as a major social institution. While ma ing a decision! a manager has many questions which need to be answered" What is right, for whom the decision will help, for whom it will harm, what will be the gains and losses and what would be the optimal decision which would make everybody happy. The most important people that are connected with the company are the sta eholders. These sta eholders include all individuals or groups who can effect or is affected by the actions! decisions! policies! practices or goals of the organization. These sta eholders are divided into # categories$ %. Focal Stakeholders &usiness house or the top management '. !rimary Stakeholders (wners! customers! suppliers and employees. #. Secondary Stakeholders )ll sets of people other than those in % * '. +ncludes consumers! government! general public! society! media etc. )ctions, -emands of the entire all the above sta eholders exerts certain ethical dilemmas on the company which could be divided into two types$ (pen$ Where the problem is open to the public and could be seen. .or eg$ theft! bribery! sabotage! espionage etc /oncealed$ 0idden. /omplex and covered by rules and laws. -ifficult to locate and becomes a potential danger to the corporate. .or eg$ +nside trading! bad 01M policies! corporate acquisitions and mergers.

"ight in #heory, do ethics work in business$ 2uestions that are generally as ed is whether all the theories really wor in real life3 /an these theories guide ethical decision ma ing, -o they wor where the mar et is a battle field and where every product is fighting for a place in the mar et3 The surprising thing is that every manager thin s that the competition is brea ing the rules of ethics except him and he has to ta e protective measures. The question generally as ed is that when the mar et is full of unethical companies following unethical routes how could a competing company remain ethical3 The managers feel that the company would be put to disadvantage! if they follow ethical means. The stoc mar ets and even the local auto repair shop is full of examples of the unethical practices followed by them. 0owever it has been proven time and again that if every organization commits itself to the path of honesty and culture! it can certainly overcome all the difficulties of enforcing ethical values and principles. %s Business Bluffing Ethical$ Without truth as a guiding principle! any discussions become valueless. More often than not we lie! tell half truths or eep quite to some questions. We regularly distort! alter! and manipulate the true information in order to tailor it to the discussions. What words we say and how we say conveys a lot of meaning to the listeners. Truth is not always a wise policy. We need to eep certain things away from public eyes to avert greater disaster. What is &egal is Ethical$ ) decision that a manager ma es has broadly three components$ #he company re'uirements li e physical targets! financial requirements! profits etc. #he moral standards of the company based on the social structure of the society! corporate social responsibilities and ethos of the company. &egal re'uirements of the company and particular situation.

(f these the most important is the 4egal route. The legal route is essentially a compliance based approach where the decisions follow existing laws. Moreover the legal compliance route goes against the philosophy of empowerment. 5mpowerment gives the managers resources! discretion and the authority and then a trust to ma e good and ethical decisions in the interest of the company. (ompliance to legal re'uirements simply kills the initiative and to follow on the dotted line of the law. &aw should be taken only as a guideline so that the decision maker is well within the laid down laws) The law gives only a level of acceptable behavior whereas it does not inspire human excellence that is required in business. ) manager should be aware of the rights as well as the power he has in his hands for ma ing ethical choices in decision ma ing. There are four types of justice based on larger principles of justice$ (ompensatory *ustice$ /ompensating someone for past losses or harm or injustice. "etributive +ustice, 6erving punishment to a guilty who has done harm to a person. The criterion is that the punishment should be in accordance to the crime. Distributive *ustice$ .air is equitable distribution of benefits and burden. 6ome should not get undue gain. !rocedural *ustice$ 7ood rules! fair decisions ma ing processes! procedures and agreements among the parties. This is applicable in all cases especially in contracts. (orporate Social "esponsibility and Ethics 6ocial responsibility is defined as the intelligent objective concern for the welfare of the society. 6ocial responsibility should lead to position contribution towards human betterment. The social responsibility restrains individual or corporate behavior from destructive activities even if it means losing immediate profits. There are ' important elements of /orporate 6ocial 1esponsibility 8/619 &usiness should ta e account of its responsibilities.

 6ociety to accept responsibility of setting ethical standards in the society )dam 6mith considered that ma ing pure profit is a social responsibility of any business as long as some part of the profits is ploughed bac to the benefit of the society. &y ding this! the company earns a good 12! which gives the company a better and lasting brand image and helps in its financial performances. %s Ma-imi.ing !rofits unethical$ +n the high level of competitive mar ets and free economy it is seen that the function of business is economic and not social. The policies of the business should be guided by economic criteria and actions be dictated by the profit maximization within the social and legal framewor . /onsidering any other factor other than profit maximization will be deliberately sacrificing profits. .rom the point of view of society the profit maximization may not be the best outcome from the business entity. :rofit is necessary for the survival of the business. The growth of the business is dependent on the level of the profit earnings of the organizations. The company has to survive by ma ing adequate profits for itself and for growth. 5qually important is the fact the pricing policies of the firm have to be in line with the competitive advantage of the business entity. The next principle is the business has to ta e into account! is the fairness that is combining social activities with the established economic activities of the business. The final argument is the legitimacy that is the social issues are the concern of the government.