All about Business Ethics

2. Ethics
 Ethics is a subject that deals with human being.
Human by their nature are capable of judging
between right and wrong, good and bad behavior.
Thus, the question of ethics arises, as the human
beings are associated with values and morals.

3. Nature of Ethics
 It is associated with values and morals.
 Ethics deals with human conduct i.e. voluntary,
force by any persons or circumstances.
 Ethics is both Science & Art, but it is more a science,
because it provides systematic knowledge about
moral behaviour and conduct of human beings.

4. Objectives of Ethics
 Ethics deals with human behavior. It assesses
whether a particular act or decision taken by an
individual is moral or not.
 To establish moral standards and norms of the
behavior
 To judge human behavior based on these standards
and norms.
 To assess human behavior and express an opinion
or attitude about the behavior.
 To set a standard or code for the moral behavior and
make recommendations about the desired behavior.

5. Business Ethics
 It refers to the application of ethical judgements to
business activities.

6. Need for Business Ethics
 All businesses exist and operate within society and
therefore they should contribute to welfare of
society.
 To survive in the market, businesses should gain
loyal customers and perform social responsibility.

7. Nature of business ethics
 Most businesses encounter two types of ethical
problems known as overt and covert ethical
problems.
 Overt ethical problems deal with bribery, theft,
collusion, etc. They are clear.
 Where as covert ethical situations occur in corporate
acquisitions, marketing and personnel policies, capital
investment etc. They are complex, clear and have
skillful ethical solutions.

8. Business Ethics and
Profits
 Survival is the name of any business game. If a company
wants to survive it has to think about its profits. Most
businesses operate on the principle that profit is not
linked to ethical consideration.

9. Eg: Johnson & Johnson
 Johnson & Johnson is often recognized as a company
whose ethical behavior is exemplary.
 The company clearly prioritizes its responsibilities in its
corporate credo:
 first to its customer,
 second to its employees,
 third to its management
 fourth to the communities in which it operates,
 fifth to its stockholders, “Business must make a sound
profit,” states the credo in describing fifth responsibility,
but at Johnson & Johnson that concern comes after the rest.

10.  A firm that is not performing well is considered as
liability and burden to the society as it cannot discharge
its responsibility to the community welfare of its
employees, revenue to shareholders, and meet customer
demands.
 Thus profit today is recognized as a characteristic of the
success of a business and justification for its existence.

11. Stages of Ethical Consciousness in
Business
Stage 1
Law of Jungle
Stage 2
Anything for
profit
Stage 5
Stakeholder
concept
Stage 6
Corporate
Citizenship
Stage 3
Profit
maximization in
the short-term
Stage 4
Profit
maximization in
the long-term

15. GENERAL BUSINESS
ETHICS
 This part of business ethics overlaps with the
Philosophy of business, one of the aims of
which is to determine the fundamental purposes
of a company.
 If a company's main purpose is to maximize the
returns to its shareholders, then it should be
seen as unethical for a company to consider the
interests and rights of anyone else.
 Corporate Social Responsibility

16.  Issues regarding the moral rights and duties
between a company and its shareholders:
 Fiduciary responsibility, Stakeholder concept Vs.
Shareholder concept.
 Ethical issues concerning relations between different
companies:
 Hostile takeovers
 Political contributions made by corporations.
 The misuse of corporate ethics policies as marketing
instruments.

17. Ethics of Accounting
Information
Management of
Earnings
Misleading
financial
analysis
Insider trading
Securities fraud Forex Scams
Excessive
payments made
to corporate
CEOs
Bribery

18. Ethics of Human Resource
Management
The ethics of Human
Resource
Management (HRM)
covers those ethical
issues arising
around the
employer-employee
relationship, such as
the rights and duties
owed between
employer and
employee.
Discrimination
•Ageism
•Race
•Religion
•Sex
Union
Busting
Strike
Breaking

19. Issues affecting
the privacy of
the employee:
•Workplace
surveillance
Issues affecting
the privacy of
the employer
Issues relating to
the fairness of the
employment
contract and the
balance of power
between employer
and employee:
• Slavery System
• Occupational
Safety and health

20. Ethics of sales and
marketing
 Marketing, which goes beyond the mere
provision of information about a product,
may seek to manipulate our values and
behaviour. To some extent society regards
this as acceptable, but where is the ethical
line to be drawn?
 Marketing ethics overlaps strongly with
media ethics, because marketing makes
heavy use of media.
 Pricing:
 Price Fixation, Price Discrimination, Price
Skimming

21.  Anti-competitive practices.
 Specific marketing strategies:
 Green wash, Spams (electronic), Planned
obsolescence.
 Content of advertisements:
 Attack ads, concealed messages, products
regarded as immoral or harmful
 Children and marketing:
 Marketing in schools.
 Black markets, Grey Markets

22.  Healthy Competition

23. Ethics of
Production
 This area of business ethics usually deals with the
duties of a company to ensure that products and
production processes do not cause harm.
 Some of the more acute dilemmas in this area arise
out of the fact that there is usually a degree of
danger in any product or production process and it
is difficult to define a degree of permissibility.
 Defective, addictive and inherently dangerous
products and services (e.g. tobacco, alcohol,
weapons, motor vehicles)

24.  Ethical relations between the company and the
environment:
 (Pollution, Carbon emissions trading, Environmental
ethics).
 Ethical problems arising out of new technologies:
 Genetically modified food, Mobile phone radiation
and its effects on health.
 Product testing ethics:
 Animal testing, use of economically disadvantaged
groups (such as students) as test objects.

25. The Bhopal Disaster

26. Green initiatives
Environment friendly bike
Green initiatives in business range from
environmentally friendly technological
innovation, green tourism, green community,
environmental campaigning and environmental
counseling

27. Ethics of intellectual property,
knowledge and skills
 Knowledge and skills are valuable but not easily
"ownable" as objects. Nor is it obvious who has the
greater rights to an idea: the company who trained
the employee, or the employee themselves?
 The country in which the plant grew, or the
company which discovered and developed the
plant's medicinal potential?
 As a result, attempts to assert ownership and
ethical disputes over ownership arise.

28. Patent Infringement,
Copyright
Infringement,
Trademark
Infringement.
Misuse of the
intellectual property
systems to stifle
competition: Patent
Misuse, Copyright
misuse.
Employee Raiding: The
practice of attracting
key employees away
from a competitor to
take unfair advantage
of the knowledge or
skills they may
possess.
The practice of
employing all the most
talented people in a
specific field,
regardless of need, in
order to prevent any
competitors employing
them.

29. Infringement

30. Ethics and
Technology
 The computer and the WWW are two of the most
significant inventions of the twentieth century. There are
many ethical issues that arise from this technology.
 It is easy to gain access to information. This leads to data
mining, workplace monitoring, and privacy invasion.
 Medical technology has improved as well.
Pharmaceutical companies have the technology to
produce life saving drugs.
 These drugs are protected by patents and there are no
generic drugs available. This raises many ethical questions.

31. International business
ethics
 Comparison of business ethical traditions in different
countries. They may be on the basis of their respective
GDP and [Corruption rankings].
 Ethical issues arising out of international business
transactions
 Biopiracy in the pharmaceutical industry.
 Issues such as Globalization and Cultural Imperialism.
 Varying global standards
 The use of Child Labour.
 The way in which multinationals take advantage of
international differences, such as outsourcing production
(e.g. clothes) and services (e.g. call centers) to low-wage
countries.

32.  Foreign countries often use dumping as a
competitive threat, selling products at prices lower
than their normal value. This can lead to problems in
domestic markets. It becomes difficult for these
markets to compete with the pricing set by foreign
markets.
 In 2009, the International Trade Commission has been
researching anti-dumping laws. Dumping is often
seen as an ethical issue, as larger companies are taking
advantage of other less economically advanced
companies.

33. Religious Views on Business
Ethics
 The historical and global importance of religious views
on business ethics is sometimes underestimated in
standard introductions to business ethics.
 In Asia and the Middle East, religious and cultural
perspectives have a strong influence on the conduct of
business and the creation of business values.
 Examples
 Islamic banking, associated with the avoidance of
charging interest on loans.
 Traditional Confucian disapproval of the profit-seeking
motive.

34. Benefits of Managing
Ethics
Attention to
business ethics
has
substantially
improved
society.
Helps maintain
a moral course
in turbulent
times.
Ethics programs
cultivate strong
teamwork and
productivity.
Supports
employee
growth and
meaning.

35. Is an insurance
policy -- they help
ensure that
policies are legal.
Helps avoid
criminal acts
“of omission”
and can lower
fines.
Promotes a strong
public image.
Last and most
formal
attention to
ethics in the
workplace is
the right
thing to do.