ETHICS IN BUSINESS CONTEXT

Moral principles or beliefs about what is right or wrong/ set of moral values held by an
individual. Science of morals in human conduct - i.e. determining what is the right or wrong
course of action. About being Right, Proper, Just, Fair , Clean & Beneficial to the society
“The values an individual uses to interpret whether any particular action or behavior is
considered right or wrong.”
What Is Business Ethics?
“The principles and standards that define acceptable conduct in business.”
Written and unwritten codes of principles and values that govern decisions and actions within
a company. The application of business values to business behavior. Moral principles that
guide the way a business behaves. The same principles that determine an individual’s actions.
A set of moral principles for arriving at a decision within the values of the organization or
institutions. "Business ethics is the study of business situations, activities, and decisions
where issues of right and wrong are addressed. “In the business world, the organization’s
culture sets standards for determining the difference between good and bad decision making
and behavior.
Morals
Values & Norms placed on what is morally good and bad Norm : We are always under the
obligation to fulfill our promises”
Values are the rules by which we make decisions about right and wrong, should and
shouldn't, good and bad. They also tell us which are more or less important, which is useful
when we have to trade off meeting one value over another.”
Moral Standard = Norms + Values
More and More businesses are expected to have Moral standards and Moral responsibilities.
Moral Responsibility – Accountable for doing what is right
• Causality (Involvement) – Person caused or helped caused the injury or failed to prevent it
when he or she could have.
• Knowledge – Knowingly doing what you are doing
• Freedom – Doing same with your own free desire and will

We need to study business ethics to make better decisions for ourselves, the businesses we
work for and the society we live in. Acting in an ethical way involves distinguishing between
“right” and “wrong” and then making the right” choice.
Importance Of Business Ethics
Ethics influence and contribute to Employee Commitment, Investor and customer loyalty,
Customer satisfaction, Ability to build relationship with stakeholders, Greater earnings
 Public expects business to exhibit high levels of ethical performance and social
responsibility.
Encouraging business firms and their employees to behave ethically is to prevent harm to
society.
Promoting ethical behavior is to protect business from abuse by unethical employees or
unethical competitors.
High ethical performance also protects the individuals who work in business

Ethics Of Governance - Ethical Values

1. Responsibility - Board responsibility for company’s assets
2. Accountability -Board able to justify its decisions
3. Fairness -Board considers interests of all stakeholders fairly
4. Transparency - Board discloses information in manner that allows for meaningful analysis
of the company’s actions
Society wants businesses to be economically profitable and ethical at the same time. What is
right and wrong is always subjective

From where society derive sense of what is right and wrong?

laws /legal system,
From where lawmakers derive what is good or bad?
Tradition/Cultural Experience, Religion, Education, Common Sense
Being ethical would simply mean that you are concerned not only about your own overall
well being but also the well-being of others.

General Business Ethics

Ethics of human resource management
Ethics of sales and marketing
Ethics of production/Product Development
Ethics of intellectual property, knowledge and skills
Accounting Practices
ETHICAL ISSUES & CATEGORIES
 Fairness and Honesty - The heart of business ethics General values of decision makers
 Conflict of interest - Occurs when a person must choose whether to advance their own
personal interest or those of others
 Communication - False and misleading advertising and deceptive personal-selling tactics
anger customers and may cause a business to fail
 Business Relationships - Business people must be ethical toward their customers,
suppliers, and others in their workplace

Business Ethics And Ethical Issues

Accounting Fraud, Insider trading of stocks and bonds, Falsifying documents, Shareholder’s
greed, Deceptive/Treacherous advertising, Defective products ( Safety & Stds),
bribery/Unfair competition, Employee theft, Personal use of Co. Property, Discrimination,
Finished accountability after selling a product, Coercive acts, Profit over social, Dishonesty –
promises & Commitment, Unequal opportunities and rules, Lack of transparency and equity
in decision making and treatment of people, conflict of interest, Lack of mutual respect and
consideration, Artificial High Pricing, Selling of duplicate and harmful products, Integrity
and Trust, Diversity Issues, Compliance issues, termination without fair notice or cause,
harassment in the workplace
Ethical Challenges – Cultural differences, Political unrest, Trade sanctions, IP Protection,
Sustainability, Corruption/Conflict of interest, Human Rights, Child Labor/Mis-treatment of
labor, Varying morality from one culture to another, failing to carry an appropriate share of
the cost of social development, insufficient emphasis on reasonableness, Greed &
unreasonable amount of leverage, Financial instruments complexity, Failure of understanding
risk, Sexual and racial discrimination, harmful products, Telecommunications issues,
(Security & data protection)
ETHICAL DILEMMAS & ETHICAL ISSUES
 Involves a situation where a decision-maker has to decide what is the 'right' or 'wrong'
thing to do. In many situations lines between right and wrong are blurred. Such situations
can lead to ethical dilemmas.
 Ethical dilemmas are situations in which the decision maker faces difficult choice with no
clear cut right answer.
 When faced with ethical dilemmas, it’s important to consider outcomes of the decision-
making process. One way of dealing with ethical dilemmas is by using the four way test to
evaluate decisions. This test involves asking four questions:
 Is my decision a truthful one?
 Is my decision fair to everyone affected?
 Will it build goodwill for the organization?
 Is the decision beneficial to all parties who have a vested interest in the outcome?

Some Principles Of Business Ethics

• Take care of stakeholders, owners, employees, customers, suppliers, community and env
• Fair dealings and fair practices in business, void exploitation of consumers
• Avoid profiteering, Encourage healthy competition, Accept social responsibility
• Have a clear document, Maintain accounting control, Be Trustful and Respectful
Ethics & Profit
Business Ethics is not against Profit, as profit is...
 Return on capital, Reward for risk, Plough-back for growth
 It is a driving force in business, but without exploiting market, consumers, stakeholders
Factors affecting BE

Leadership – Establishes the Ethical tone & Standards of what is and what is not acceptable.
• Environment – Where ethical behaviors are encouraged and rewarded
• Corporate Culture - If the organization behave as if the only thing that matters is profit,
everyone is likely to act in a like manner
• Strategy and performance, Individual Characteristics
• Existence and application of a written code of ethics
• Formal and informal policies and rules
• Financial reward system/ System for reward and recognition
• Hiring Practices /Promotion of employees procedures
• Norms for acceptable behavior - Eg. “speak up” culture
• Degree to which professionalism is emphasized
• The Company’s decision making process,
• Behaviour's and attitude of the company’s leaders