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BUSINESS ETHICS

ETHICS
An attempt to find out the nature of morality,

and to define and distinguish what is right from what is wrong. Also called moral philosophy Definition
Acc to G.Velasquez is a study of moral

standards whose explicit purpose is to determine as far as possible whether a given moral standard is more or less correct

Concepts

Ethics Business Ethics Code of Conduct

Definitions

Ethics

Code of behaviour considered correct by society A normative study A science of morals describing a set of rules of behaviour

Personal Ethics
Concern & respect for the autonomy of others Honesty &willingness to comply with the law Fairness &ability not to take undue advantage

of others benevolence preventing harm to any creature

contd.
rofessional ethics Profession a vocation or calling, involving a specific branch of advanced study rinciples
impartiality Openness Confidentiality Due diligence Fidelity to professional responsibilities Avoiding potential conflict of interest

Business Ethics
he art & discipline of applying ethical principles to examine &solve complex moral Dilemmas .E is a specialised study of moral right & wrong .E apply to business institutions ,organisations and behaviour study of how moral stds apply to social

What is not B.E


ifferent from religion

ot synonymous with LAW

thical stds differ from cultural traits

ifferent from feelings

Scope of Business Ethics:


A.Stake Holders Level B.Personal Policy Level C.Internal Policy Level D.Societal Level

1.Employees o Security of Job o Better Working Environment o Welfare Facilities 2. Customers

o Better Quality of Goods o Goods and Services at reasonable price o Not to practice discriminatory pricing. o Not to make false claims about products in advertisement. o Not to dump the goods

3. Shareholders oEnsure Capital appreciation oEnsure Steady and regular dividends oDisclose all relevant information oProtect minority shareholders interests

4. Banks and other lending institutions o Guarantee safety of borrowed funds o Prompt repayment of loads 5. Government o Complying with rules and regulations o Honesty in paying taxes and other dues

B. Personal Policy Level oNot to use office car, stationery and other facilities for personal use oNot to misuse others for personal oNot to indulge in politics to gain power oNot to spoil promotional chances to others oPromise Keeping oMutual Help

C. Internal Policy Level oFair Practices relating to Recruitment, Compensation, Layoffs, Perks, Promotion etc. oTransformational leadership to motivate employees to aim at better and higher things in life oBetter Communication at levels

D. Societal Level
oConcern for Poor and Downtrodden oNo Discrimination against any particular section or group oConcern for Clean Environment oPreservation of scarce Resources for Future oContribution to better quality of life.

ETHICAL ISSUES & SOCIETY

ETHICAL ISSUES & SOCIETY


Involvement in the community Honesty, truthfulness and fairness in

marketing Use of animals in product testing Agricultural practices e.g. intensive farming The degree of safety built into product design Donation to good causes The selling of addictive products e.g. tobacco

UNETHICAL PRACTICES IN MARKETING

UNETHICAL PRACTICES IN MARKETING


Lack of clarity in pricing Dumping selling at a loss to increase

market share and destroy competition in order to subsequently raise prices Copying the style of packaging in an attempt to mislead consumers Deceptive advertising Irresponsible issue of credit cards and the irresponsible raising of credit limits Unethical practices in market research and competitor intelligence

UNETHICAL PRACTICES RELATING TO PRODUCTS

UNETHICAL PRACTICES RELATING TO PRODUCTS


Selling goods abroad which are banned at

home Omitting to provide information on side effects Unsafe products Built in obsolescence Wasteful and unnecessary packaging Deception on size and content Inaccurate and incomplete testing of products Treatment of animals in product testing

Value, law, moral ,virtue

Value
ersonal in nature, simplified, cannot be applicable universally xample: Employees loyalty to organisation(is it coworker/supervisor/custome r/investor-difficult to define)

Law
aries from society to society et of rules framed by political system ome Laws may be unethical also example : Nazi law in Jews segregation

M oral
Stds by which we judge

actions to be right or wrong or the values placed on kind of objects


Example : harassing women is morally wrong

Virtue
Character of a morally

good person executed in habitual behaviour


example: speaking the truth always by Gandhiji

Code of conduct & ethics for managers


ntegrity mpartiality esponsiveness to the public interest ccountability onesty ransparency

Ethical Issues in Today's context

Why Fostering Good Business Ethics Is Important


Note: Slide on each item follows To gain the goodwill of the community To create an organization that operates consistently To produce good business To protect the organization and its employees from legal action To avoid unfavorable publicity

Book Page 8

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Gaining the Goodwill of the Community


Basic responsibilities to society
Declared in formal statement of companys

principles or beliefs Include:

Making contributions to charitable organizations and non-profit institutions Providing benefits for employees in excess of legal requirements Choosing economic opportunities that might be more socially desirable than profitable

Goodwill that socially responsible activities

create can make it easier for corporations to conduct business


Ethics in Information Technology, Second Edition

Creating an Organization That Operates Consistently


Many business values include:
Operating with honesty and integrity, staying true to

corporate principles Operating according to standards of ethical conduct, in words and action Treating colleagues, customers, and consumers with respect Striving to be the best at what matters most to the company Accepting personal responsibility for actions Valuing diversity Making decisions based on facts and principles

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Good Ethics Can Mean Good Business


Produce safe and effective products
Avoid costly recalls and lawsuits

Provide excellent service


Maintain customers

Develop and maintain strong employee

relations
Suffer less turnover Enjoy better employee morale

Suppliers and other business partners prefer

companies that operate in a fair and ethical manner Book Page 9 Bad ethics can lead to bad business results

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Corporation and Its Employees from Legal Actions


U.S. Justice Department sentencing

guidelines suggest more lenient treatment for convicted executives if their companies had ethics programs Fines for criminal violations can be lowered by up to 80 percent if the organization has implemented an ethics management program and cooperates with authorities

Book Page 9-10

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Avoiding Unfavourable Publicity


Public reputation of company strongly

influences
Value of its stock How consumers regard products and services Degree of oversight received from government

agencies Amount of support and cooperation received from business partners

Book Page 10

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Technology Developments

IT Agriculture Bio-Tech Genetic Engineering Infrastructural developments Nano Tech Nuclear Tech

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Ethics in Information Technology


Public concern about the ethical use of

information technology includes:


E-mail and Internet access monitoring Peer-to-peer networks violation of copyright
Music,

Video, Software, Books etc.

Unsolicited e-mail Hackers and identify theft Cookies and spyware

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IT Ethics(contd.)
Hacking Theft of financial info and assets Stealing application info from applications Phishing Mails (Nigerian Scam etc.) Employee Monitoring Abuse of social networking tools

Chat rooms. Sharing Photos etc.

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Ethics in Information Technology (continued)


The general public has not realized the critical

importance of ethics as applied to IT Important technical decisions are often left to technical experts General business managers must assume greater responsibility for these decisions They must be able to make broad-minded, objective, ethical decisions based on technical savvy, business know-how, and a sense of ethics They must also try to create a working environment in which ethical dilemmas can be discussed openly, objectively, and constructively
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Book Page 20

In Marketing

Planned Obsolecence

Obsolescence of function: This refers to when an item is produced to break down or otherwise become nonfunctional in an abnormally short period of time. e.g. the creation of a new cell phone network that is incompatible with earlier cell phones.

In Mktg (cntd.)

Obsolescence of style: This refers to the the obsolescence of items such as clothing, fashion accessories, and home decorating products due to changes in style. e.g. if the fashion trend is for high skirts, low skirts will be rendered stylistically obsolete. Technical obsolescence: This refers to the obsolescence of an older item caused by the creation of a newer item performing the same function, e.g. a digital camera that takes higher

In Agri
hickens - growth so fast that leg bones break because they cant support the weight of muscle put on ow unable to give birth to calf that is too big so kill the cow (and sell carcass) save the calf worth some money nclosed animals disease spreads quickly se lots of antibiotics dont tell consumer

In Genetic Engineering

Eg. BT Brinjal/Tomato etc. (Jurassic Park?) Are they tested enough for real environment? Good insects/pets/farm animals eating the crop and getting affected is it fully tested? Patented seeds if farmers produce own seed will they get prosecuted? New varities will drive away natural species and reduce ecological diversity

eg. No insects No sparrows/Crows -> Silent Mornings?

An education leader promotes the success of every student by acting with integrity, fairness, and in an ethical manner. 5 core moral values

Honesty Respect Responsibility Fairness Compassion

Nano Tech

Release of synthetic Nano particles in to environment Toxic aspects to envirnment, humans Use of nano tech for surveillance and privacy issues

Nuclear Tech

Disposal of Nuclear Waste Are the reactors fool proof for ANY type of natural disastors?

e.g. Japan's nuclear reactor problem

Do we have enough safeguards for human errors and budget cuts forever in to future?

Factors influencing ethics moral development

Moral development
Kohlberg grouped stages into three levels

Level one: preconventional stages


Stage one: punishment and obedience oriented Stage two: instrumental and relative orientation

Level two: conventional stages


Stage three: interpersonal concordance

orientation Stage four: law and order orientation

Level three: postconventional,

autonomous or principled stages


stage five: social contract orientation

LAWRENCE KOHLBERGS THEORY


Male Oriented 20 years of research Grouped stages of

moral development into 3 levels, each containing 2 stages Moral development & Moral reasoning
Changes with increase in

age Mental maturity increases over age

LEVEL 1 PRECONVENTIONAL STAGES


1. Stage 1

Punishment & Obedience Orientation (Child orientation) 2. Stage 2 Instrumental & Relative Orientation

LEVEL 2 CONVENTIONAL STAGES


1. Stage 3

Interpersonal Concordance Orientation 2. Stage 4 Law & Order Orientation

postconventional, autonomous or principled stages


stage five:
social

contract orientation

Stage six:
universal

ethical principles orientation