Acknowledgement

I would like to express my sincere gratitude to Ms. Shanu Khattri for

providing this opportunity to work on this topic. She has always been
supportive and encouraging.
I have really enjoyed working on this project.

CONTENTS
Index
Introduction
Characteristics
Why we need to study business ethics
Objectives
Case study
- Case study 1
- Case study 2
Sources
Theories
Modern decision making and ethics
Law and ethics
Social responsibility
Corporate social responsibility
Relation between CSR and business ethics
Critics and arguments against business ethics
Conclusion
Bibliography

Page No.

INTRODUCTION
Ethics in philosophy is the study and evaluation of human conduct in the light of moral
principles or it is the inner-guiding moral principles, values, and beliefs that people use
to analyze or interpret a situation and then decide what is the right or appropriate way
to behave.
Business Ethics can be defined as the critical, structured examination of how people
& institutions should behave in the world of commerce. In particular, it involves
examining appropriate constraints on the pursuit of self-interest, or (for firms) profits,
when the actions of individuals or firms affects others or it is a specialized study of
moral right and wrong. It concentrates on moral standards as they apply particularly to
business policies, institutions, and behavior.
"Business Ethics is the moral standards which guide the running and transactions of
businesses".

- Malcolm Evans

Characteristics of Business Ethics

Some business ethics are imposed by law. Business ethics is the behavior that a
business adheres to in its daily dealings with the world. The ethics of a particular
business can be diverse. They apply not only to how the business interacts with the
world at large, but also to their one-on-one dealings with a single customer. Good
business ethics should be a part of every business. The important characteristics of
business ethics are:

As a guide: - Business ethics constitutes the guiding principles of business

functions with the help of this, businessmen can lean about the progress, situation,
environment and conditions of the business.

Goals and means: - Business ethics is that branch of the business environment in
which can study about the goals and means for the rational selection of sacred
objects and their fulfillment.

Art and Science: - Business ethics is concerned with the principles of business
behaviour, standards, moral values etc. With the study of business ethics, we can
show the difference between good and evil, proper and improve actions of business.
For these activities in business, business ethics is known as an ideal science. It is an
art because it emphasizes practical use of behavioural standards, techniques and
principles.

Study Human Aspects: -Business ethics all those which are concerned with human
aspect. It provides information to customers, government, society etc, on good or
bad, right or wrong conducts of business.

Difference from Social Responsibility: -Social responsibility is concerned with

functions, programmes and policies of an enterprise, whereas business ethics is
related with the conduct and behaviour of businessmen. But social responsibility of
business and its policies are influenced by ethics.

Technology based: - The development of business ethics is possible on the basis

of theological principles, such as service, human welfare, sincerity, good behaviour
etc.

Development Personal Dignity: -Personal dignity can develop with the principles
of ethics.

Unrelated to Emotions: -Business ethics is not concerned with emotions but is

based on reality and social customs. As a matter of fact, business ethics is
developed after testing the requirements of business environment, social customs
and traditions.

Universal Philosophy: - Business ethics is a universal philosophy. Ethical

principles have relevance in every business.

Importance of Business Ethics

Importance of Business Ethics is now recognized that it is good business to be
ethical. An ethical image for a company can build goodwill and loyalty among customers
and clients.

Have honest and fair business practices

Protect the invests of the customers or investor

Good ethics also means good business

Retention of customers and generate loyalty

Transparency in operations and to ensure that both potential and existing customers
are treated as per

Balance the needs and wishes of stakeholders

Creating a positive public image comes from demonstrating appropriate values.
It helps company to maintain his market leadership.
It protects or improves reputation of the organization by creating an efficient and
productive work environment.

It protects the organization from significant risks, and to some degree help grow the
business. Risks such as breaches of law, regulations or company standards, and
damage to reputation were perceived to be significantly reduced.

 Prevention and Reduction of Criminal Penalties: a company must have "an effective
program to detect and prevent violations of the law".

Global challenges: Business must become aware of the ethical diversity of this world
because of increasing globalization of the economy.

Objectives of Business Ethics

Honest and transparent dealing with customers

Protect client and customers from being exploited or cheated

Level playing field among all participants.

Healthy compition for the benefit of all customers

Case Study On Business Ethics & Social

Responsibility
Case Study 1
Organization

KFC

Industry

Fast Foods

Period

1995 2004

Country

India

Abstract

The case highlights the ethical issues involved in Kentucky Fried Chicken's (KFC)
business operations in India. KFC entered India in 1995 and has been in midst of
controversies since then. The regulatory authorities found that KFC's chickens did not
adhere to the Prevention of Food Adulteration Act, 1954. Chickens contained nearly
three times more monosodium glutamate (popularly known as MSG, a flavor enhancing
ingredient) as allowed by the Act. Since the late 1990s, KFC faced severe protests by
People for Ethical Treatment of Animals (PETA), an animal rights protection
organization. PETA accused KFC of cruelty towards chickens and released a video tape
showing the ill-treatment of birds in KFC's poultry farms.
However, undeterred by the protests by PETA and other animal rights organizations,
KFC planned a massive expansion program in India.

BACKGROUND OF KENTUCKY FRIED CHICKEN

KFC is based in Louisville, Kentucky, and is the worlds most popular chicken
restaurant chain.

Founded by Colonel Harland Sanders in in the early 1930s by cooking & serving
food for hungry travellers.In 1952 Sanders started franchising his chicken
business & named it as Kentucky Fried Chicken.

KFC is part of Yum! Brands, Inc., the world's largest restaurant company in terms
of system restaurants, with more than 36,000 locations around the world.

Yum! Brands is run by David Novak, Chairman & CEO .

KFC operates more than 5,200 restaurants in the United States and more than
15,000 units around the world.

109 countries and territories around the world.

Every day, more than 12 million customers are served at KFC restaurants.

KFC Division is run by Cheryl Bachelder, President and Chief Concept Officer

KFCs Entry in INDIA

KFC was the first fast food multinational to enter INDIA , after the economic
liberalization policy of the Indian Govt. in early 1990s.

KFC received permission to open 30 new outlets across the country & Opened
first fast food outlet in Bangalore in June 1995 by targeting upper middle class
population.

PepsiCo planned to open 60 KFC and Pizza Hut outlets in next 7 yrs in the
country.

Issues:

Understand the significance of cultural, economic, regulatory and

ecological

issues while establishing business in a foreign country.

Appreciate the need for protecting animal rights in developed and developing
countries like India.

Understand the importance of ethics in doing business

Examine the reasons for protests of PETA(People for Ethical Treatment of

Animals )

Identify solutions for KFC's problems in India

Problems for KFC

Protests by farmers led by the Karnataka Rajya Ryote Sangha(KRRS) & the
farmers leader was Nanjundaswamy who used the term junk food against KFC.

Protests by cultural & Economic activists.

Protests by PETA in the late 1990s.

Support of celebrities in against of KFC

SWOT ANALYSIS

Strengths

Understand the Culture, Regulatory & Ecological issues.

Understand the importance of Ethics in doing business

Examine the reason for protests of PETA

Identify Solutions for KFCS Problems in India.

Weaknesses

Non Ethical business practice.

PETA Protest.

KRRS Protest.

MSG flavour in chicken.

Opportunity

Retail boom in India.

Indians youth are adopting western culture.

Indian Economy.

Cosmopolitan Rapid Development.

Threats

MSG chicken flavour.

PETA like organizations.

Political parties Protesting for junk foods.

Protest support from famous Personalities like Anil Kumble,Aditi Govithrikar,John

Abraham etc.

There are some Questions for discussion in this case which are as follows :Question 1 Since its entry in India in 1995,KFC has been facing protests by cultural & Economic
activists and farmers. What are the reasons for these protests?
Answer 1

Need for protecting animal rights.

Chicken they serve is full of chemicals (mono-sodium glutamate)

It encourage farmers to shift production of crops to animal feeding

Leaves poorer section of society with no affordable food.

Question 2 Do you think in the light of fierce competition, it is justified for business organizations not
to give importance to ethical values at the cost of making profits? Why or Why not?
Answer 2
No, in the light of cut throat competition, the co. should give importance to the ethics
rather than the making profit.

Profit comes from customers.

Customers have ethics.

Customer is always right.

As someone very rightly said, customers are always right and if at any point of time u
feel that customer is wrong, and then you are wrong.

Present condition of KFC in India

There's more to KFC than great food. Now KFC promote education, diversity and
animal welfare in a number of positive ways. YUM! Brands, Inc. ("Yum") is committed to
conducting its business in an ethical, legal and socially responsible manner. KFC is as
committed to the environment as we are to our food and customers and committed to
the humane treatment of animals.
Yum! Brands, parent company of KFC, formed the KFC Animal Welfare Advisory
Council, which consists of highly regarded experts in the field. The Council provides
with information and advice based on relevant data and scientific research. The Animal
Welfare Advisory Council has been a key factor in formulating our animal welfare
program.
CONCLUSION
Finally, we can understand from the case that every business organization should
understand the importance of ethics by understanding the culture, regulatory &
ecological issues in different countries.
KFC should implement a farm level guideline & audit program - a program which is
industry-leading in the areas of poultry care and handling, mainly for their suppliers in
the broiler industry.

Case Study 2
Organization

ITC Ltd.

Industry

Diversified

Period

2000 2011

Head Quarter

Kolkata, West bangal,India

Revenue

US$ 7 billion

Employees

24, 027

Website

www.itcportal.com

Abstract
ITC is a major India-based conglomerate, with presence in Hotels, Specialty Papers,
Apparel, Foods, Tobacco Products, etc. The case discusses the sustainability initiatives
of the company. The company believed in the Triple Bottom Line philosophy, according
to which the performance of a corporate entity should be judged not just on the basis of
its financials; its environmental and social performance should be taken into account as
well. The case details some of the environmental and community initiatives undertaken
by ITC. The case also mentions some of the criticisms against the company's
sustainability initiatives.

BACKGROUND OF ITC LIMITED

ITC is one of India's foremost private sector companies with a market

capitalisation of over US $ 33 billion and a turnover of US $ 7 billion.

ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and the
World's Most Reputable Companies by Forbes magazine, among India's Most
Respected Companies by Business World and among India's Most Valuable

Companies by Business Today.

Its diversified business includes four segments: Fast Moving Consumer Goods

(FMCG), Hotels, Paperboards, Paper & Packaging and Agri Business

ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty
Papers,

Packaging,

Agri-Business,

Packaged

Foods

&

Confectionery,

Information Technology, Branded Apparel, Personal Care, Stationery, Safety

Matches and other FMCG products.

ITC was incorporated on August 24, 1910 under the name Imperial Tobacco

Company of India Limited.

As the Company's ownership progressively Indianised, the name of the
Company was changed from Imperial Tobacco Company of India Limited to

India Tobacco Company Limited in 1970 and then toI.T.C. Limited in 1974.
In recognition of the Company's multi-business portfolio encompassing a wide
range of businesses - Cigarettes & Tobacco, Hotels, Information Technology,
Packaging, Paperboards & Specialty Papers, Agri-business, Foods, Lifestyle

Retailing, Education & Stationery and Personal Care.

The full stops in the Company's name were removed effective September 18,
2001. The Company now stands rechristened 'ITC Limited'.

Issues

To understand the triple bottom line philosophy.

To learn about the environmental and community initiatives undertaken by ITC.

To know about some of the criticisms against ITC and the company's responses
to these criticisms.

Ethics and CSR philosophy of ITC

ITCs Chairman Y.C.Deveshwar calls this source of inspiration "a commitment

beyond the market". In his own words: "ITC believes that its aspiration to create
enduring value for the nation provides the motive force to sustain growing
shareholder value. ITC practices this philosophy by not only driving each of its
businesses towards international competitiveness but by also consciously
contributing to enhancing the competitiveness of the larger value chain of which it
is a part."

As a corporate citizen with enduring relationships in rural India, ITC has a history
of collaboration with communities and government institutions to enhance farm
productivity and the rural resource base. ITC's commitments in agricultural R&D
and knowledge sharing have spanned vital aspects of competitiveness - efficient
farm practices, soil and water management.

ITC is committed to a national agenda of raising agricultural productivity and

making the rural economy more socially inclusive. ITC believes that the urgency
and scale of these tasks make market linked solutions and innovations more
effective and sustainable than capital intensive approaches.

Initiatives taken by ITC for Ethics and CSR

Contribution to theTriple Bottom Line Philosophy

Ecomomic

A growing portfolio of business encompassing FMCG (Fast Moving Consumer

Goods), paperboards & packaging, Agri & foods business, hotels & information
technology.

A turnover of over US$ 5 billion and a market capitalization of over US$ 18 billion

Total shareholder returns, measured in terms of increase in market capitalization

and dividends, grew at a compound rate of over 24% per annum over the last 5
years.

The FMCG business support the competitiveness, technology, up gradation and

market reach of over 170 small and medium enterprises.

ITC group provides direct employment to more than 26,000 people.

Environmental

ITC has been Carbon Positive four years in a row (sequestering / storing twice

the amount of Co2 that the company emits.

Water Positive seven years in a row ( creating two times more rainwater

harvesting potential than ITCs net consumption.

Solid waste recycling positive (reusing/ recycling more solid waste than

generated).
All environment, health and safety management systems in ITC conform to
international standards.

Social

ITCs businesses generates livelihood for over 5 million people.

ITCs globally recognized E-choupal initiatives the worlds largest rural digital

infrastructure benefiting over 4 million farmers.

ITCs social and farm forest initiative has greened nearly 96,000 hectares,
creating an estimated 43 million person-days of employment among the

disadvantaged.
ITCs watershed development initiative brings precious water to over 46,000

hectares of drylands and moisture-stressed areas.

ITCs sustainable community development initiatives

include

womens

empowerment, supplementary education and integrated animal husbandry

programmes.

E-choupal :

Choupal is a hindi word which means a village meeting place, and E here

stands for electronic so it is a village meeting place on a electronic platform.

It is a virtual market place where vendors and customers come together to
do transactions.

The E-choupal services

Relevant & Real-time Information

Commodity prices, Local Weather, News

Customized Knowledge

Farm Management, Risk Management

Supply Chain for Farm Inputs

Screened for Quality, Demand Aggregation for Competitive Prices &

Efficient Logistics

Direct Marketing Channel

Lower Transaction Costs, Better Value through Traceability

Products access @ door step @ reasonable prices

Future Plans

E-choupal

Now

Next 5 years

10

15

Villagers covered

40,000

1,00,000

No. of E-choupals

6,500

20,000

States covered

Farmers e-empowered

4 million

10 million

E- waste :There is therefore a need to handle such disposals referred to as E-Waste in a

responsible manner in line with emerging global best practices and standards

IT E-Waste is a subset of E-Waste and covers the following IT equipments:

Sl.

Category

Items

1.

Computers

Server / Desktop computer (CPU, Monitor, Keyboard and

Mouse), Laptop, Notebook, Dumb terminal, etc or similar
items

2.

Printer &
Accessories

Printer, Scanner, Printer Cartridge, Toner, etc or similar

items

3.

Network
equipments

Routers, Switches, Patch panel, Modem, Converter, VSAT

equipments, etc or similar items

4.

IT Accessories

TV Tuner box, Floppy, CD and DVD, Pen Drive, External

Hard disk, External CD / DVD writer, DAT Drive, Speaker,
Laptop Battery, Hand Held device, VC equipments, Data
Cartridge, etc or similar items

5.

Associated
Power cable, Data cable, UPS, etc or similar items
Electrical items

No.

ITC E-waste policy

The lifecycle of all IT assets spanning from acquisition to disposal shall be managed in
a manner which conforms to sound environmental norms as detailed in the IT E-Waste
guidelines. This includes :

Preferential dealing with IT vendors having sound E-Waste management processes

Extending the useful life of IT assets to postpone / minimize generation of E-Waste

Responsible disposal processes conforming to regulatory requirements and best

practices

ITCs EHS policy -

To contribute to sustainable development through the establishment and

implementation of environment standards that are scientifically tested and meet the
requirement of relevant laws, regulations and codes of practice.

To take account of environment, occupational health and safety in planning and

decision-making.

To provide appropriate training and disseminate information to enable all employees

to accept individual responsibility for Environment, Health and Safety, implement
best practices, and work in partnership to create a culture of continuous
improvement.

To instil a sense of duty in every employee towards personal safety, as well as that
of others who may be affected by the employees actions.

To provide and maintain facilities, equipment, operations and working conditions

which are safe for employees, visitors and contractors at the Companys premises.

To ensure safe handling, storage, use and disposal of all substances and materials
that are classified as hazardous to health and environment.

To reduce waste, conserve energy, and promote recycling of materials wherever

possible.

To institute and implement a system of regular EHS audit in order to assure

compliance with laid down policy, benchmarked standards, and requirements of
laws, regulations and applicable codes of practice.

To proactively share information with business partners towards inculcating worldclass EHS standards across the value chain of which ITC is a part.

All employees of ITC are expected to adhere to and comply with the EHS Policy and
Corporate Standards on EHS.

Decade of CSR and Business Ethics at ITC Ltd.

2000 - ITCs path breaking E-choupal initiative started in MP
2000 - ITCs social development initiative launched with watershed and agricultural
development, live-stock, productivity and women economic empowerment, primary
education, health and sanitation
2002 - Sourcing products from small enterprises. ITC started marketing of safety
matches branded as Mangaldeep
2002 - Achieves another environmental milestone with
the Elemental Chlorine Free Pulp Mill at Bhadrachalam

the

commissioning of

2003 - ITC turns water positive a global environmental distinction.

2004 - Ushering in Integrating Rural Services the companys first Choupal Saagar
inaugurated in Sehore, MP.

2004 - UNDP World Business Award for E-choupal initiative

2004 - ITCs Green Centre Gurgaon becomes worlds first largest green building to
receive LEED Platinum Rating
2004 - Releases first Sustainability Report as per GRI Guidelines
2004 - e-choupal becomes a case study at Harvard Business School
2005 - Plantation of trees involving 15000 farmers and 300 members of local community
in the Khammam district of AP
2006 - CII ITC Centre of Excellence for Sustainable Development inaugurated in
New Delhi
2006 - ITC turns Carbon Positive another positive environmental distinction
2007 - ITC amongst the top 10 and the first company from India to publish
Sustainability Report in compliance with G3 Guidelines
2008 - ITC ranked 2nd in Indias first Environment, Social and Governance (ESG)
Index launched by Standards and Poor
2008 - ITC forays into wind energy in Packaging and Printing Business

2008 - Wealth out of waste Unique initiative for waste paper recycling
2009 - ITC becomes Waste- Recycling positive
2009- ITC becomes the first Indian company to gain WWF GFTN membership an
important milestone in sustainability journey

The way of ITC

ITC is a board-managed professional company, committed to creating enduring value
for the shareholder and for the nation. It has a rich organisational culture rooted in its
core values of respect for people and belief in empowerment. Its philosophy of all-round
value creation is backed by strong corporate governance policies and systems.
ITCs corporate strategies are :

Create multiple drivers of growth by developing a portfolio of world class businesses

that best matches organisational capability with opportunities in domestic and export
markets.

Continue to focus on the chosen portfolio of FMCG, Hotels, Paper, Paperboards &
Packaging, Agri Business and Information Technology.

Benchmark the health of each business comprehensively across the criteria of

Market Standing, Profitability and Internal Vitality.

Ensure that each of its businesses is world class and internationally competitive.

Enhance the competitive power of the portfolio through synergies derived by

blending the diverse skills and capabilities residing in ITCs various businesses.

Create distributed leadership within the organisation by nurturing talented and

focused top management teams for each of the businesses.

Continuously strengthen and refine Corporate Governance processes and systems

to catalyse the entrepreneurial energies of management by striking the golden

balance between executive freedom and the need for effective control and
accountability.

The ITCs Vision and Mission

Vision :- Sustain ITC's position as one of India's most valuable corporations through
world class performance, creating growing value for the Indian economy and the
Companys stakeholders.
Mission :- To enhance the wealth generating capability of the enterprise in a globalising
environment, delivering superior and sustainable stakeholder value.
Core values :- ITC's Core Values are aimed at developing a customer-focused, highperformance organisation which creates value for all its stakeholders: Trusteeship,
customer focus, respect for people, excellence, innovation, national orientation.

Global Honors and Awards of ITC Ltd. for Business Ethics and CSR :
ITC constantly endeavours to benchmark its products, services and processes to global
standards. The Company's pursuit of excellence has earned it national and international
honours.
ITC Chairman Y C Deveshwar has received several honours over the years. Notable
among them are:

Year

Award

2011

The Padma Bhushan, one of the highest civilian awards in the country by
the Government of India in recognition of his distinguished service of a high
order to the Nation.

2010

The U.S.-India Business Council (USIBC) Award for Global Leadership.

2007

SAM/SPG Sustainability Leadership Award conferred at the International

Sustainability Leadership Symposium, Zurich.

2006

Business Person of the Year from UK Trade & Investment, the UK

Government organisation that supports overseas businesses in that
country.

2006

Inducted into the `Hall of Pride' by the 93rd Indian Science Congress.

2005

Honoured with the Teacher's Lifetime Achievement Award.

2001

Manager Entrepreneur of the Year from Ernst & Young.

Retail Visionary of the Year from Images, India's only fashion and retail
trade magazine.

1998

Honorary Fellowship from the All India Management Association

1996

Distinguished Alumni Award from IIT, Delhi.

1994

Marketing Man of the Year from A&M, the leading marketing magazine.

1986

Meridien Hotelier of the Year.

Criticism
ITC was also criticized regarding some of its sustainability initiatives. According to some
critics, since ITC's main business was the Cigarettes and Leaf Tobacco business which
was detrimental to human health, the company's sustainability initiatives were merely a
part of its strategy to downplay the reality that it was a company that harmed the health
of people..

Conclusion

In the above company has been undertaking several CSR initiatives over the years and
been appreciated for them globally. The case discusses ITC's CSR initiatives and
focuses on its approach. The company's innovative ways and heavy investments to
achieve the 'triple bottom line',many different policies, E-choupal are discussed.

Sources of ethics
Ethics is based on many different factors. Sources of ethics are as follows:1. Genetic Inheritance :- There are persuasive evidence and arguments
suggesting that the evolutionary forces of natural selection influence the
developments of traits such as cooperation and altruism, which lie at the core of
ethical system. The home is the first school of ethics, and he foremost. The more
ethical the parents, the higher the chances that their children will follow those ethics.
Ethics are passed from one generation to another, and the process goes on.
2. Religion :- Religion plays a critical role in deciding ethics. A common man tries to
abide by the ethics prescribed by his or her religion. All religion preach humanity,
peace, development of whole society. Ethics has its roots in religion. The sacred
Geeta preaches about Niskam Karma i.e. work without worrying about the end
result.
3. Culture :- Culture also begets ethical standards. Culture genders to rules, customs
and standards transmitted from generation to generation. Though cultures differ from
religion to religion, its ethical standards remain the same. Different places may have
different culture but no culture believes in dishonesty, in deceiving or harming others.
4. The Legal System :- Laws represent a rough approximation of a societys ethical
standards. Thus, society regards activities such as hoarding, black marketing,
cheating, giving wrong information, etc., as unethical and there exist laws to curtail
such activities. There are also laws against exploitation of labour, sexual
harasshment, etc., and all these activities are considered unethical.

5. Codes of Conduct :- The Council for Fair Business Practices ( CFBP)

established in 1966 adopted the following code of fair business practices :
To charge only fair and reasonable prices and take every possible step to ensure
that the prices to be charged to the consumer are bought to his notice.
To take every possible step to ensure that the agents or dealers do not charge prices
higher than fixed.
In times of scarcity, not to withhold or suppress stocks of goods with a view to

hoarding or profiteering.
Not to produce or trade in spurious goods of standards lower than specified.
Not to publish misleading advertisements
To invoice goods exported or imported at their correct prices.
To maintain accuracy in weights and measures of goods offered for sale.
Not to deal knowingly in smuggled goods.
Providing after sales services where necessary or possible.
Honouring the fundamental rights of the consumer. There are the right to safety,

right to choose, right to information and right to heard.

Discharging social responsibilities and the responsibilities to protect the environment
and natures infrastructure.
Ensuring that the product warranty is offered in simple, unambiguous and concise
language, highlighting the rights of the consumer under it.

Theories of Business Ethics

According to Lovell and Fisher (2003 p69), a range of ethical issues can affect
business, management and organizations. They suggest that tools for ethical thinking
referred to as ethical theories can help in the analysis of such issues.
Ethical theories have their roots in philosophical thinking. It is generally agreed that
there are two main theories: consequential ethics sometimes referred to as (ethics as a
means to an ends) or teleological theory, non consequential ethics sometimes referred
to as (ethics as ends to a means) or deontological theory.
1. Teleological (Utilitarianism) Ethical System :- The teleological morality of
a decision is determined by measuring the probable outcome. The theory most
representative of this approach is utilitarianism, which seeks the greatest good (or

utility) of the greatest number. The most basic form of utilitarian analysis is cost
benefit analysis, where one tallies the cost and benefits of a given decision and
follows the decision that provides for the greatest overall gain. Utilitarianism holds
that actions are right in proportion as they tend to promote happiness, wrong as they
tend to produce the reverse of happiness.
2. Deontological Ethical System :- A deontological system is based on rules or
principals that govern decisions. In this system ethics are measured by the rightness
of an act and depend little on the results of the act. According to this, a moral person
is one of goodwill, and that person makes ethical decisions based on what is right,
regardless of the consequences of his decision.
Normative theories :- That which guides and controls human conduct. Sets out
certain standards that determine what is right and what is wrong.
Golden principle behind this
We should treat others the same way that we want others to treat us
There are Three leading theories of Normative ethics1. Stock holders theory
2. Stake holders theory
3. Social contract theory

Modern Decision - making and Ethics

Economic activity and competition are no longer considered to be incompatible with

ethics and morals. Business decisions based on moral reasoning can be too absolute,
while decisions based only on realities and logic can be too harsh and inhuman. To
avoid this two extremes we can apply ethical decision- making Dilemma.

Ethical Decision making Dilemma

Philosopher Laura Nash give this theory in an ethical dilemma ( Laura nash, Ethics
without the Sermon, Harvard Business Review 56, No. 6 (1981) page no. 80-81)
The American Accounting Association (AAA) published a report on Ethics in the
Accounting Curriculum in 1988, which include a decision model for analysing ethical
dilemmas. Its steps are:

Make your Decision

Assess the consequences

Compare values and alternatives

for a clear decision

Specify the alternatives

Identify major principals,

rules and values

Define the ethical issues

Determine the facts

Modern theories of ethics may prove useful in understanding and encouraging ethical
behavior in business. Imagine a lawless system where every human action is influenced
by market forces. Can an organization remain ethical in this situation? Can business
exist if every firm made decisions on the basis of self interest at any cost? Do lawless
market forces ensure justice and fair business? Of course not.
Economist Dwight Lee and Richard Mckenzie support this contention. They explain that
a business person may act honesty because the high cost of dishonesty.
An economy in which people deal with each other honestly produces more wealth than
one is which people are chronically dishonest, because more changes occur directing
resources into there most productive employees.

Ethics and Law

A relationship exists between law and ethics. In some instances, law and ethics overlap
and what is perceived as unethical is also illegal. In other situations, they do not
overlap.
Law can be defined as a consistent set of universal rules that are widely published,
generally accepted, and usually enforced. These rules describe the ways in which
people are required to act in their relationships with others in a society. They are
requirements to act in a given way, not just expectations or suggestions to act in that
way. Since the government establishes law, the government can use police powers to
enforce laws. The following chart defines the terms in the definition of law above.

Consistent If two requirements contradict each other, both cannot be termed a

law, because people cannot obey both.

Universal The requirements must be applicable to every one with similar

characteristics facing the same set of circumstances.

Published The requirements have to be published, in written form, so that they

are accessible to everyone within the society.

Accepted The requirements have to be generally obeyed.

Enforced Members of society must be compelled to obey the law if they do not
choose to do so voluntarily.

The Relation Between Law and Ethics

Ethical values and legal principles are usually closely related, but ethical obligations
typically exceed legal duties. In some cases, the law mandates ethical conduct.
Examples of the application of law or policy to ethics include employment law, federal
regulations, and codes of ethics.
Though law often embodies ethical principles, law and ethics are far from co-extensive.
The law does not prohibit many acts that would be widely condemned as unethical. And
the contrary is true as well. The law also prohibits acts that some groups would perceive
as ethical. For example lying or betraying the confidence of a friend is not illegal, but
most people would consider it unethical. Yet, speeding is illegal, but many people do not
have an ethical conflict with exceeding the speed limit. Law is more than simply
codifying ethical norms.
The following diagram shows the relationship between law and ethics.

Establishing a set of ethical guidelines for detecting, resolving, and forestalling ethical
breaches often prevents a company from getting into subsequent legal conflicts. Having
demonstrated a more positive approach to the problem may also ensure that
punishment for legal violations will be less severe. Federal sentencing guidelines
passed in 1991 permit judges to reduce fines and jail time for executives proportionate
to the ethical measures a company has taken.

Social responsibility
Being Socially Responsible means that people must behave ethically and with
sensitivity toward social, cultural, economic and environmental issues. Striving for social
responsibility helps individuals, organisations and governments have a positive impact
on development, business and society with a positive contribution to bottom-line results.
We make a living by what we get, but we make a life by what we give.

Winston Churchill.

Corporate Social Responsibility

An obligation, beyond that required by the law and economics, for a firm to pursue
long term goals that are good for society

The continuing commitment by business to behave ethically and contribute to

economic development while improving the quality of life of the workforce and their

families as well as that of the local community and society at large

About how a company manages its business process to produce an overall positive
impact on society

Corporate social responsibility means:

Conducting business in an ethical way and in the interests of the wider community
Responding positively to emerging societal priorities and expectations
A willingness to act ahead of regulatory confrontation
Balancing shareholder interests against the interests of the wider community
Being a good citizen in the community

The World Business Council for Sustainable Development in its publication Making
Good Business Sense by Lord Holme and Richard Watts, used the following definition:Corporate Social Responsibility is the continuing commitment by business to behave
ethically and contribute to economic development while improving the quality of life of
the workforce and their families as well as of the local community and society at large.

What is the relation between CSR and business

ethics?
Business ethics and social responsibility are two concepts many individuals believe go
hand in hand for companies in the business environment. Business ethics represents
the moral principles a company uses to ensure all employees act in an acceptable
manner when completing business functions. Social responsibility is typically an
ideological theory governments and the general public hold, believing that businesses
should not conduct themselves in a manner counter to cultural or societal norms. The
marriage of business ethics and social responsibility occurs when companies institute a
written code of ethics to prove that the company only acts in its best interest so long as
it does not damage the companys social responsibility.

We will probably note the link between business ethics and corporate social
responsibility (CSR). The concepts are closely linked:

A socially responsible firm should be an ethical firm

An ethical firm should be socially responsible
There is clearly an overlap between CSR and business ethics
Both concepts concern values, objectives and decision based on something than the
pursuit of profit

However there is also a distinction between the two:

CSR is about responsibility to all stakeholders and not just shareholders

Ethics is about morally correct behaviour

Critics and Arguments against implementations of

business ethics
Argument 1: In perfectly competitive markets, the pursuit of profit will by itself ensure
that the members of society are served in the most socially beneficial ways.
Counter points to this argument:
1. Most industrial markets are not perfectly competitive as the argument assumes,
and to the extent firms do not have to compete they can maximize profits in spite of
inefficient production.
2. The argument also assumes that any steps taken to increase profits will necessarily
be socially beneficial - then what about bribery, hiding product hazards, surrogate
advertising, harmful pollution etc.
Argument 2: Business managers should do what is in the best interest of the firm. This
is known as loyal agents argument.

Counter points to this argument:

1. The argument shows that the manager should serve the employer in whatever way
the employer wants to be served and this means that ethics does not matter
because we are assuming an unproven moral standard.
2. No limits to managers duties which is morally not correct.
Argument 3: To be ethical it is enough for business people merely to obey the law.
Business ethics is essentially obeying the law.
Counter points to this argument:
It is wrong to see law and ethics as identical. It is true that some laws require

behavior

that is the same as the behavior required by our moral standards. Laws that prohibit
murder, rape, theft, fraud and so on. In such cases, laws and morality coincide, and the
obligation to obey such laws is the same as the obligation to be moral.

CONCLUSION
Business ethics is the value of what should be done and what should not be done from
the business point of view. Organizations are coming to realize the bottom-line benefits
of incorporating sustainability into their DNA. Its beneficial for attraction and retention
and its the right thing to do. HR is a key organizational leader and can take the lead or
partner with other executives to work cross-functionally to integrate CSR objectives into
how business gets conducted. HR practitioners can act as translators of the
organizations CSR commitment vertically and horizontally across departments. Most
will find upon reading this report that they have many good practices underway. Many
will find they have a new structure for their thinking they can apply practically in the
workplace. Some will believe the current economic downturn will put these ideas on the
backburner until the economy rebounds, while others think that organizations which
abandon their CSR integration in the downturn will lose ground and breed cynicism in
brighter times. Regardless of the point of view, all agree that effective HR leadership
on CSR integration requires Board,CEO and executive commitment to be successful.
Indeed, the roadmap is predicated on the assumption of this top level commitment.
However, more and more organizations are committing to sustainability and to
embedding CSR into all that we do, so it is hoped the 11 steps provide some guidance
as to how to go about doing this.
The firm of the future is expected to have undergone significant transformation such that
CSR no longer becomes managed as a separate deliverable, but is part of the
experience of being an employee in an organization that lives its values. For human
resource professionals embarking on CSR or deepening their CSR experience, this
roadmap can help them understand their role in sustainability and CSR and how they
can foster an environment that embeds a CSR ethic in the way we do business around
here.

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