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Ethics

Journal

The document contains my


learning through my journey of the
course on Ethics in Business,
through case studies and ideas
taught in class in the various
spheres in business.

Debarshi Bagchi
PGP-15-182
Division- C

Ethics in Business
Business Ethics form an unwritten, notional and moral code that not only
determines how we are perceived by others but also affects our decision making
processes and directs the path in our present life as well as in the future.
Honesty and ethics are considered the building blocks of our society and it is not
something that we can choose to look away from. Ethics in business defines the
fine line between what is right and wrong for us to do. There are a number of
ethical dilemmas that an individual or business faces in everyday operations.
There is no hard and fast rule about what is right and wrong, but when taking a
decision, one has to consider the degree of acceptability in the eyes of the
public. Everyone has to accept responsibilities beyond their defined boundaries,
concerning the environment and social services.

The Four Spheres Framework


Jospeh L. Badaracco published an article on Business Ethics: Four Spheres of
Executive Responsibility, which describes four different aspects of morality a
corporate professional is expected to display. It helps us to understand ethics
through a formal structure.

The
The
The
The

Commitments
Commitments
Commitments
Commitments

of Private Life
as Economic Agents
as Company Leaders
beyond a Firms Boundaries

The Commitments of Private Life


This explains the generic duties and obligations of our lives, or we can say
behaviours that are accepted socially and expected of everyone. It consists of
telling the truth, not being harmful to others, keeping promises or maybe not to
cheat anyone. These are kind of subjective as opinions may vary from person to
person or from culture to culture. What we are thinking today about these topics
might be completely different from what the future managers will think at that
point of time.

The Commitments as Economic Agents


As future managers, one of the biggest responsibilities that we will be having will
be to serve the interests of stakeholders, or more specifically maximizing
shareholders wealth. It is not just a legal and practical obligation but also the
most visible sphere in the framework we are talking about. Given the pressures
faced by managers in serving the interests of others, there may be situations

where they dace an ethical dilemma while taking a decision, but pressure to
perform must not lead them to making unethical decisions.

The Commitments as Company Leaders


We, as future managers will be part of different companies with many
responsibilities. People working under us will be looking forward to us regarding
many aspects. So it is expected of us to take ethics and morality into
consideration while taking decisions or doing other stuff, because that is what
the followers will learn and in the long run, this will shape the practices that will
be prevalent in the society.

The Commitments Beyond a Firms Boundaries


The responsibilities of a manager dont always stop within the firm. There are
decisions that affect people outside the companys purview as well. Many
companies have complex relations with agents outside the company, and this
creates a complex sphere of external responsibilities for the managers.
Companies need to form strategic alliances that benefit both the shareholders
and the society.

Learnings from Various Topics and Cases


ADMAP- The Insider Movie
This case shows us the story of an employee who considered social well-being
above corporate well-being and revealed the wrongdoings of the tobacco
company and made them public. A company trying to increase its profits by
hurting the society is a purely unethical thing to do, which is not in line with
responsibilities of a manager beyond a firms boundaries, which we talked about
above. The case also teaches us that although it is easy to say, there are
situations where making the ethical decision might have a lot of consequences
and may not be easy, as we got to see what happened to the life of the whistleblower in the movie. There might be obstruction from multiple parties when
making a decision.

BP&S- Bausch & Lomb Case


This case talks about the problems faced by a company when its managers had
resorted to unethical practices to meet their stiff targets given by their bosses.
The managers, under increasing pressure to achieve their numbers, resorted to
unethical practices by forcing distributors to keep excess inventories so that they
met their monthly numbers. Other practices also involved rerouting inventories
to a separate warehouse o keep the stocks and in turn generating fake invoices

and customer orders to make up for the wrongdoings as a proof. This proved
successful only for some time until the distributors started giving back
inventories and some employees of the company revealing it to the higher
management about the unethical practices that had been going on in the
company. This shows that it is not possible to succeed using unethical practices,
rather it tarnishes a persons or companys image forever.
Trust

takes years to build, seconds to break, forever to

repair.

Management Accounting
The topic discussed in class was about the president of a company asking his
accountant to recognize revenues of the next fiscal year in the current year so
that the profits could be shown to around the figure that they had targeted and
it would have resulted in more incentives for both of them as well as making the
shareholders happy with their return on investments. This represents an ideal
ethical dilemma where the manager is torn between being ethical as a person
and abiding by rules of accounting and on other side meeting his targets and
maximizing shareholders wealth. These kinds of situations are pretty common
in a firm where the stakes are very high on either side.

Operations Management
In operations also, there are a lot of ethical issues that managers face which
mainly deals with quality standards and environmental regulations. Quality is the
most important thing for a manufacturing firm as using below par items may
cause disaster as we have seen in the past with a plane crashing due to use of a
previously rejected nut and bolt. Similarly, adhering to environmental regulations
is a very critical thing because too much pollution affects the society as a whole
and also the people who live in areas surrounding a plant or manufacturing
facility. We saw the disaster that Maggi had to face when some laboratories
found out that it contains ingredients like Lead beyond the allowed limit.
Sometimes managers might be tempted to play with the quality standards to
reduce costs or similarly fudging numbers, but it is very important that they
adhere to ethics and morality because their decisions impact the society as a
whole.

Information Management
As we all know, today BigData is the biggest buzzword in the Information
Management industry and it is showing path-breaking techniques and making
data handling very easy. But this situation also poses serious questions like
whether the companies dealing with data will adhere to the privacy rights of the
public and stand out ethically clean when they are forced to take decisions that

have a lot at stake. There are also a lot of concerns regarding the cyber laws like
hacking, spamming, cybersquatting and cyber bullying in this industry.

Marketing- Snow Brands Milk Products Case


In this case we saw what can happen when a company does not publicise its
products as it should be doing by not giving any false information and also not
hiding any information that the consumers should be knowing. Hiding an
ingredient or falsely claiming that it contains other ingredients which will add to
the customer perception can lead to disastrous results. One of the biggest
problems that the company faced was a case of contamination of its milk
products. The company was also accused of tampering with evidence and trying
to cover up in order to save itself from the laws in Japan. Closer home, we also
saw only recently that Snapdeal had to sell an i-Phone for just Rs.68 to a
customer because it had unethically set the price as Rs.68 on its website and
was taken to consumer court where it also had to pay a hefty fine.

Conclusion
The course on Ethics in Business has taught me the importance of moral values
in business, which is kind of an underrated thing in business. It teaches us the
importance of such situations in our life that we will face as a business manager,
where there might be big trade-offs related to a decision where we might be
inclined to take unethical decisions given the pressure on us to make the
numbers, but its important to hold onto business ethics and morality.