Business Ethics & CSR

Business Ethics and Corporate Code of Conduct Definition Business Ethics are those principles, policies or philosophies that are concerned with moral judgment and good conduct as they are applicable to a business situation. Business ethics refers to right or wrong behavior in business decisions. Business ethics involves morally accepted behavior in business practices. It deals with norms relating to customers, shareholders, employees, dealers, govt. and competitors. Characteristics/Features of Business Ethics Business ethics is the code of conduct which businessmen should follow while conducting their normal business activities. Business ethics has universal application. It is a relative term. It changes from one business to another. It differs from country to country. It is strictly followed in western countries and is not followed properly in the poor and developing countries. It has universal application- Large or small. It is more about earning long-lasting relationships in business. It includes self control, service to society, fair treatment to social groups and not to harm others. It gives protection to customers and other social groups such as shareholders, employees and the society at large. It suggests legal, social, moral, economic and cultural limits within which business has to be operated. It must be accepted as self-discipline by businessmen. Businessmen should be given proper education, guidance and training in order to motivate them to follow ethical business practices. It is not against profit-making. It is against profiteering by cheating and exploiting consumers, employees or investors. It supports expansion of business activities but by fair means and not through illegal activities or corrupt practices. Approaches to Business Ethics Empirical, Intuitive, Rational and Revelation Empirical: It states that ethics is derived through experiences of businessmen who determine what is right and what is wrong. Intuitive: It states that business is not necessarily derived from experience of businessmen or logic but businessmen automatically process an understanding of what is good and what is bad. Rational: It states that businessmen need not require any past experience for determination of ethics. Revelation: It states that religious moral principles help life to rise to its greatest potential. Scope for Business Ethics Criminal behavior and legal framework. Human values and personal behavior. Corporate and business ethics. Importance of Business Ethics Customers will be satisfied only if the business follows all the business ethics. Business ethics is needed in order to make businessmen conscious as regards their duties and responsibilities towards consumer and other social groups.

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Business ethics is needed to make business activities fair to consumers. It checks business malpractices and offers protection to consumers. It is needed in order to improve the confidence of consumers as regards quality, price, reliability etc. of goods and services supplied. It is needed for the protection of rights of consumers at the business level such as right to health and safety, right to be informed, right to choose, right to be heard etc. It is needed in order to protect the interest of all those concerned with business- the employees, shareholders, dealers and suppliers. It avoids their exploitation through unfair trade practices. To create good image of businessmen in the society and also to avoid public criticism. Business Ethics and Profits Profit and Only Profit concept. Firms-Non performance means huge liabilities. Promotes inefficiency and cannot discharge social responsibility. Corporate Code of Conduct Values and principles that determine the purpose of the company. Define responsibilities to different groups of the stakeholders. This is how we except you to behave Must and Must not. Prohibitions-Penalties for violating the rules can be identified. Realistic and focus on the potential ethical dilemmas faced by employees, it must be communicated to all employees and enforced. Managers must attend not only to the content of the code but also to the process of determining that content. Code should be developed and disseminated in an open, participate environment involving as many employees as possible. Beliefs and norms of an org. can be turned into an ethical code. It is generally proposed, discussed and defined by the senior executive in the firm and then published and distributed to the employees and shareholders. Codes of standards of behaviour, the way the managers want the other people in the organisation to act when confronted with a given situaton. The norms are usually stated as a series of negative statements, what the employees should not do. The beliefs in the code are standards of thought, the ways that the managers in the org. want the others to think. The beliefs are stated in a positive way. Reasons-Code of Ethics Manage or respond to internal organisational activity. Means for making roles and expectations within the organisation clear. To define the framework of the acceptable behaviour. To follow high standards of practice. To create benchmarks for self-evaluation. To enhance sense of community. Codes of ethics can be a dishonest way of gaining legitimacy in the eyes of shareholders. The goal of the code can also be to control or regulate the behaviour of employees in order to follow legal requirements as it is To create transparency in business activities. To foster higher standards of business ethics. To comply with government laws and norms. Highlights of Code of Ethics Do not cheat/exploit consumers through business malpractices such as artificial products and adulteration.

Business Ethics & CSR

Do not resort to hoarding, black marketing, profiteering and sale of harmful goods. Do not destroy healthy competition, which offers certain benefits to consumers. Do not tarnish the image of competitors by unethical means. Ensure accuracy in weighing, packing and quality while supplying goods to consumers. Pay taxes and other charges to the concerned authorities honestly and regularly. Avoid bribing officials and lobbying for favours. Maintain accurate accounts and make them available to all authorized persons and authorities. Pay fair wages, provide facilities and incentives and also give human treatment to employees. Supply reliable information to shareholders regarding financial position and other policy decisions of the company. Avoid injustice and partiality to employees in transfers and promotions. Avoid discrimination among them on the basis of gender, religion and language. Do not make secret agreement with fellow businessmen for controlling production, pricing or for any other activity harmful to consumers. Accept the principles of service first and profit next Make your business efficient and dynamic. Give the benefits of these features to consumers. Avoid formation of private monopolies and concentration of economic power. Adjust your business activities as per the needs and expectations of consumers. Give due respect and honour to the basic rights of consumers. Honour responsibilities towards different social groups on voluntary basis and not by force. Charge fair and reasonable price. Ensure that intermediaries do not manipulate the prices. Provide product warranty in clear terms. Not to trade in smuggled products. No public misleading and deceptive advertisements. Corporate Codes Corporate Ethics Corporate Practices Code of conduct or behavior Steps involved in implementation of code of ethics: Drafting and preparation Communication Enforcement/Disciplinary action Periodic review Measures to improve ethical conduct of business At Institutional level At Government level At Society level At Institutional level: Code of ethics, Increase in transparency, Rewards, Punishment, Continuous appraisal, Lectures/Seminars At Government Level: Enactment of laws, Institution of awards, Awareness through mass media, Taking quick action At Society level: Consumer awareness programmes, Public interest litigation, Consumers association, Publishing journals, Liaison with government agencies, Boycotting products,

Business Ethics & CSR

Measures for effective implementation of ethical standards and morals, Ethical audit, Ethical training, Business ethics consultants, Ethical code of conduct, Ethics committee, Ethics hotlines, Rewarding exemplary conduct, Disciplinary action, Efficient systems, Government Laws

Egoism and Altruism & Entrepreneur and Manager-Roles and Responsibilities Introduction Human values decide the standard of behaviour. Altruism is an aspect of moral philosophy in which it is argued that moral decisions should be based upon the interests or well-being of others rather than on self-interest. Ethical egoism is belief that one ought to do what is in ones own selfinterest. What is in ones self-interest may incidentally be detrimental to others, beneficial to others, or neutral in its effect. What is Altruism? Altruism revolves around the question of morality I ought to act in the interest of others. In ethical altruism the issue of morality revolves around the idea that in order to live a morally correct life one must act in the interest of others. But acting in the interest of others does not imply a reward E.g. A politician donates money to a charity because it is the right thing to do, is honest act of altruism. But, the politician who donates money to a charity in order to gain favourable public opinion is not act of altruism. What is Egoism? Egoism revolves around the question: I ought to act in the interest of myself.

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In ethical egoism the issue of morality revolves around the idea that people must do what is best for themselves in order to live a morally correct life. When someone strives to reach a goal and sees others as an obstacle to their success, they could be viewed as egoists. In some cases of egoism, the idea of acting out of ones self interest sometimes even extends to overlooking others interests in order to satisfy your own. Is Altruism Really Egoism? One should not get fooled by the egoism. For e.g. Doctors, social workers, engineers and humanitarians alike give up their time and expertise to improve the life of those living in impoverished countries. These humanitarians must have had some self- interest in order to build on the foundation of knowledge they have acquired. It took some actions on their own self-interest to get where they are now. Whether it was motivation driven by the interest to attain more knowledge or the lure of future financial success, is irrelevant. Either way these people were clearly acting according to the foundation of egoism, by acting out of ones self interest. When someone helps a fellow human being because they enjoy the feeling it gives them, is in fact a quality of egoism. Altruism rather than egoism, has a better outline for how one should live life. Combination of the two is probably more realistic. Altruism rather than egoism has a better outline for how one should live life, combination of the two is probably more realistic. Definition: Entrepreneur and Manager An entrepreneur is a person who initiates of a new enterprise, venture or idea and assumes significant accountability for the inherent risks and the outcome. An entrepreneur is one who undertakes an enterprise. Entrepreneur is a person who sets up a business or businesses, taking on greater than normal financial risks, in order to do so. Ideology-Milton Friedman The Social Responsibility of Business is to Maximise its profits. Profit maximization is the exclusive goal of business management. The expectations of others (as reflected in law, ethical custom, and potentially hostile reactions) serve as constraints on a managers ability to achieve the exclusive goal or profit. Personal Ethics V/s Professional Ethics There are two kinds of ethical obligation in business: There are obligations that business people have simply as human being. There are further obligations they have as members of a profession. Personal ethics question-

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What should I do as a human being? What should I do as a professional? If there is a conflict, how should I resolve it? Professional ethics? Expertise is a particular area, The disposition to apply it responsibly. The members of a profession profess. Special obligation of Managers To generate wealth, To provide meaningful and gainful employment. To contribute to social order and stability. Manager-Who is he/she? One who identifies and achieves organizational objectives through the deployment of appropriate resources. Responsibilities- Managing activities, managing resources, managing information, managing people and managing him or herself. Planning and directing the work of a group of individuals, monitoring their work and taking corrective action when necessary. Difference between Entrepreneur and Manager The main reason for an entrepreneur Comprehends the venture for his individual satisfaction and has personal stake in it. A manager provides his services in an enterprise established by someone. An entrepreneur-Bears all risk and uncertainties where as a manager doesnt own it. Entrepreneur- Innovative. Managers-Supervise and create routines. Entrepreneur- Faced with more income uncertainties as his income is contingent on the performance of the org. Managers compensation is less dependent on the performance of the organization. Entrepreneur- Not induced to involve in fraudulent behavior. ManagerMay cheat. Entrepreneur- Qualities like high accomplishment motive, innovative thinking, fore thought, risk bearing ability but not qualified to be a good entrepreneur. Manager- To be educated in the fields of management theories and practices. Entrepreneur- Faults and Failures as a learning exp. Managers- Makes every effort to avoid mistakes and he postpones failure. Ethics and Morality Ethics It is about choosing actions Choose actions that are inherently good rather than ones that are inherently bad. How do people actually decide what is ethically right or wrong? It feels right- E.g. Loophole in security of internet. Listen to your conscience. Avoid making a mistake by doing nothing. Be sure you are right, then go ahead Why

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-Davy Crockett (1786-1836). We will not lie, steal or cheat nor tolerate among us anyone who does -Which do you think is the harder part? Perception of countries as least/ most corrupt Least Corrupt Countries: Finland, Denmark, New Zealand, Iceland, Singapore, Canada, UK Most Corrupt Countries: Pakistan, Bangladesh, India, Nigeria, Kenya, Indonesia Swami Vivekanands Views on Ethics The basis of Indian subjectivity lies in the belief of GOD. Supreme Oneness is the rationale of All Ethics and Morality. He suggested fundamental law of ethics. Do not injure others, love everyone as your own self because the whole universe is one. Ethical Learning from Srimad Bhagavad-Gita Fight of evil and unethical between Kauravs and Pandavas. The work or karmas is driving force of the life and this work has to be ethical. Managers who resort to unethical means to grab the immediate results are successful only for short time like Dhuryodhan. Perform prescribed duties with the utmost devotion, sincerity and humility. The distinction is to be made between ethical work which is useless and work which is downright immoral. Ethical decisions are: Equitable (Justice for all) Morally correct Good and Fair Appropriate to situation British Airways Vs Virgin Airlines BAs framed a baseless story that in Night Club of Richard Branson there were HIV infected needles that were found. They also hacked the Virgin Reservation Software, called the customers and told them that flights had been cancelled and switched them to British Airways. Other examples Mumbai based TATA VSNL employee was caught while leaking information to competitor. Gillette Engineer who led the Razor blade was also supplying the important details to its competitors. Satyam Case.

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Coca Cola and Pepsi. Expert Opinion-Prof Arya In India, you cannot just grow unless you compromise. There is rampant corruption here and all the shortcuts and unfair means are correct. Most of the Top Corporates have set of designed values but hardly any of them walk their talk. It is not only in India but world too. Moral-Normative Ethics Examines standards for the rightness and wrongness of actions. Divided into the sub-disciplines of moral theory and applied ethics. Highest values by which moral judgments are made are often referred to as norms, principles, ideals or standards. Absolutism, Authority, Relativism, Subjectivism. Perspective ethics and Applied Ethics Social evils: Abortion Euthanasia Allocation of scarce health resources Human embryos for research. Morality Latin term Moralis (custom). Actions are good if they are good or worthy of praise. Code of conduct. Human behavior. Principles. To educate a person in mind and not in morals is to educate menace to society - Teddy Roosevelt . Its a fact of life, to win consistently, you need to play by rules. In life, play hard and play fair. In life and business-Ethical standards must be set and Ethical standards must be met.

Business Ethics & CSR

Ethics in Global Marketing What is Marketing? Process of bringing together businesses with customers and involves numerous components e.g. product development, PR, Advertising. What is Global Marketing and Ethics? Depends on culture to culture and place to place. Globalization and International Marketing Ethics problems are closely related to each other. Ethical Problems in Global Marketing Country to country differs. E.g. In USA-Giving business gifts of high value, is generally condemned, but in many countries world gifts are not only accepted but are also expected. Major Ethical Problems Traditional small scale bribery Large scale bribery Gifts/Favors/Entertainment Pricing Products/Technology Tax Evasion Practices Illegal/Immoral Activities in the host or domestic countries Questionable commissions to channel members Cultural differences Involvement in political affairs. Guidelines to solve global business ethics problems Do not direct intentional harm. Produce more good than harm for the host country. Respect the rights of employees and of all others affected by ones actions or policies. To the extent consistent with ethical norms, respect the local culture and work with and not against it. Multinationals should pay their fair share of taxes and cooperate with the local govts. in developing equitable laws and other background insts. International institutions should manage, regulate the global market place and promote the establishment of multinational treaties to govern the global business system. What is Advertisement? Paid for communication to public or section of it. Purpose-Influence opinion or behavior of those to whom it is addressed. ASCI-(Advertising Standard Council of India) - 1985 Self-Regulation in Advertising, ensuring the protection of the interests of consumers.

Business Ethics & CSR

Support from 4sectors-Advertisers, Ad Agencies, Media (Broadcasters and Press) and PR Agencies, Market Research cos. Advertising reminds the target market about the companys offerings. At home-TV, shopping malls, street and subways. Social effects, its creation of consumer desires and its effects on consumer beliefs. It shifts consumption away from one product to another. Privacy enables certain professional relationships to exist. Information and one who gives information. Competition in Advertising- Aspirations, comfort, convenience, economy, efficiency, fear, love, nostalgia, pride, health, luxury, patriotism, safety-Ideas that touch the hearts of target audience and ultimately motivate them to respond. Ethical issues: Truth, Use of children in ad., False claims, Comparative Ad., Use of nudity in ad. Code of Conduct: ASCI To ensure the truthfulness and Honesty of Representations and Claims made by Advertisements and to Safeguard against misleading Advertisements. To ensure that Advertisement are not offensive to generally accepted standards of Public Decency. To safeguard against the indiscriminate use of Advertising in situations or of the Promotion of Products which are regarded as Hazardous or Harmful to society or to individuals, particularly to minors. To ensure the Ad. observe fairness in competition such that the consumers need to be informed on choice in the market place and the generally accepted competitive behaviour in business are both served.

Business Ethics & CSR

Indian Perspective of Ethics - Purusharthas What is Ethics? Ethics - Code of conduct for personal behavior. Ethics in Business: Applying personal ethics into business. Business Ethics: Ethics of business, what is good & bad, right or wrong for business. Governance: Methods and practices of doing business in any organization. Corporate Governance: Set of practices business is carried on in corporate business organization. Good: A code of best management Corporate practice which leads to Governance achievement of corporate mission. Ethics-Definition Greek word Ethos- refers to character. A code of conduct for personal behavior. Driving force- guide- value content. A moral code based on generally accepted standards. Personal Ethics Vs. Ethics in Society. Role of Ethics to discipline thoughts based on God and religion. Role of law to regulate external behavior. Developing personal code of conduct For developing self-confidence/ personality/ courage- Need to know what is Good & Bad for you. For avoiding conflicts/trauma and for achieving success. Code should be built around your personal goals. Purusharthas Purusha- means person or self. Artha- means aim or goal of human life or end. What is sought by men. Purusharthas-Four forms Dharma : Righteousness, Duty Artha : Wealth Kama : Desire, pleasure Moksha : Liberation One of the tenets of Hinduism is: ekam sat viptra bahuda vedanti which means the truth is one but perceived and spoken in different

Business Ethics & CSR

forms. If GOD has many forms and they are all same in the final essence, it logically follows that He can be worshipped in many ways and that we can reach Him through any of his forms and manifestation. Akasat patitam toyam yatha gacchati saagaram, Sarva deva namaskara kesavam pratigacchati which means.. Just as the rain water wherever it falls finally flows down into the ocean, so also worship offered to any GOD will ultimately reach the Supreme GOD. Dharma (Duty) Rightful duty of a person. Examples of a person's dharma are to be a doctor, teacher, writer, warrior, priest, parent etc. Sometimes a person's dharma is decided by their birth, but it need not necessarily so. As a person progresses through life, different stages of life may call for different dharmas and purposes. Tuning into the inner guide of the heart allows a person to identify their dharma, their true calling. Means to the attainment of certain ends. Ends like artha and kama should be acquired through righteousness, honesty and straightforwardness. Stealing for luxurious life is no Dharma. Dharma is duty. It is the higher good to achieve the highest i.e.,moksa. Eg. An IAS officer has to execute his task with utmost sincerity and honesty and not by bribing or other mal-practices. Artha (Wealth) Artha is the pursuit of material wealth, which brings material comforts to a person. The important thing to remember is not to be attached to the possession or attainment of wealth. It can be sought with detachment, and with awareness, and when done in this state of mind, the pursuit of wealth is not different from the pursuit of the Divine, because one sees abundance, or wealth as a form of the Divine. And in this state of detachment, one recognizes when one has attained their financial objectives, and hence the desire to pursue more automatically dies away, paving the way for Moksha. Artha is said to mean-meaning, money, a thing, and possessions. Artha also means the attainment of riches and worldly prosperity, advantage, profit and wealth. It is a powerful urge in human nature. Acquisition of means for the material well-being, therefore, is a legitimate social and moral purpose.

Business Ethics & CSR

Kama (Pleasure) Kama is fulfilling one's desires. Desires are in various forms -to be wealthy, powerful, recognition, service, etc. The Kama purushartha advocates that one's desires in this lifetime need to be fulfilled, albeit in a state of awareness and without harming anyone in the process. For a person to evolve spiritually and to reach the ultimate destination, the barrier of desires needs to be crossed. This can be done either by fulfilling the desires, or by sublimating them. Suppressing of desires is certainly not recommended. Moksha (Liberation) Moksha means liberation, realizing of the Self, and is the ultimate destination for this human birth. It is the stage of inner realization that the individual self is the same as the Supreme Self. It is the experience of union, oneness, with the Universe. It also means release. In Bhagavad-Gita, moksa is mentioned as the supreme tranquility and the highest bliss. It is delight in the self, contentment with the self, selfsatisfaction and self-fulfillment. It is not that on death moksa is ttained. Being the ultimate value of mans social existence, the purushartha of moksa is an end in itself. Beyond that, man has nothing to attain. It is the stage where mans cravings cease and along with that ceases the need for attainment and fulfillment. It is total destruction of egoism. We can call moksa as a sublime goal. It can be known through mystical experience. Concept of Dharma Means to nourish, to uphold and signifies whatever supports the universal order and also the individual life in society. An individual undertakes in harmony with divine injunctions and his own sense of morality and justice. Dharma is characterised by certain common human values like truth, generosity, compassion, sympathy, self-restraint, forgiveness, nonenmity, friendliness, absence of envy etc. Dharma is closely linked with the idea of original human indebtedness or inescapable obligation. Every human being is born with three debts. The first is towards his ancestors, the second is towards the sages and the third is what he owes to the Gods.

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The two great epics of India, the Ramayana and the Mahabharata both emphasise the role of Dharma in individual life as well as in collective existence. If the Ramayana illustrates the need to subordinate wealth and enjoyment to dharma, thus making it the mirror of Indian culture, the Mahabharata expounds on the challenges that dharma faces from greed and wealth in personal and public life Good Dharma = Good Karma. Hinduism accepts the concept of reincarnation, and what determines the state of an individual in the next existence is karma which refers to the actions undertaken by the body and the mind. . In order to achieve good karma it is important to live life according to dharma, what is right. This involves doing what is right for the individual, the family, the class or caste and also for the universe itself. Anything that helps human being to reach god is dharma and anything that hinders human being from reaching god is adharma. According to the Bhagavat Purana, righteous living or life on a dharmic path has four aspects: austerity (tap), purity (shauch), compassion (daya) and truthfulness (satya); and adharmic or unrighteous life has three vices: pride (ahankar), contact (sangh), and intoxication (madya). The essence of dharma lies in possessing a certain ability, power and spiritual strength. The strength of being dharmic also lies in the unique combination of spiritual brilliance and physical prowess. Profit Making and Responsibilities towards Stakeholders What is profit? Business Ethics is not against Profit Profit is Return on capital Reward for risk Plough-back for growth It is a driving force in business, but without exploiting market, consumers and other stakeholders. In the Indian concept- Kama and Artha are considered to be valid human pursuits. But Lobha (greed) and Moha (delusion) being excessive are deemed bad. Making profit would seem to be permissible while profiteering would not be. Profit Maximisation and ethical approach can be explained as under: Maximise the business long-run profits within the limits of the law. Based on the Laisse Fair Theory of Capitalism first expressed by Adam Smith in the 18th Century.

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Argues total social welfare is optimised if humans are permitted to work toward their own selfish goals. The role of govts. and the law is limited solely to ensuring the workings of a free market (by NOT interfering with economic liberty, eliminating collusion among competitors, & promoting accurate information in the marketplace. Strengths and Weakness (Criticism) Strengths- Allocation of societys resources to those units that are most efficient increases overall productivity and maximizes total social utility. Criticism Doesnt concern itself with HOW wealth is allocated in society. The ability of laws and market forces to control corporate behavior is limited. TBL (Tripal Bottom Line) As per TBL, Profit is the economic value created by the org. after deducting the cost of all inputs, including the cost of the capital tied up. It is the real economic impact the org. has on its economic environment. Boardrooms address ethical behaviour based on the concept of Triple Bottom Line. It refers to Triad of profit, social responsibility and stewardship of the environment. Sustainability is the core philosophy from which the TBL is derived. Managers put the ethics of TBL in practice Greater client satisfaction resulting from mutual trust. A more positive public image for the org. Savings from less waste and more effective mgt.of resources developing sustainable practices combined with the active engagement of clients, community etc. Work Culture and Ethics Ethics in the workplace requires abolition of all kinds of discrimination and exploitation. Public concerns about the ethical practices in business usually relate to issues such as: Fraud and embezzlement Accepting bribes or lying Financial scams Deceptive advertising of food and beverages. Unfair Competitive practices Factors influencing workplace ethics The individual moral standards Influence of managers and co-workers Opportunity to engage in misconduct Ethical issues faced by individual at workplace

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Relationships with suppliers and business partnersBribery and immoral entertainment Discrimination between suppliers Dishonesty in making and keeping contracts. Relationship with customersUnfair pricing Cheating customers Dishonest advertising. Relationship with employees Discrimination in hiring, promoting etc Unequal treatment. Management of resources Misuse of official funds Tax evasion. Measures to ensure ethics in the workplace Have a code of conduct and ethics Establish open communication Make ethics decisions in group and make decision public wherever appropriate Integrate ethics mgt. with other mgt. practices Use of cross-functional teams when developing and implementing the ethics mgt prog. Appointing an ombudsman Creating an atmosphere of trust Regularly updating of policies and procedures Include a grievance policy for employees Ethical issues faced by individuals can be classified as Business relationship, Conflicts of interest, Fairness and Honesty and Communication. Responsibilities Towards Stakeholders Business Ethics comprises Ethics of Mgt. Corporate Ethics Industry Ethics Corporate Ethics Corporations develop their own of ethics based on their mission and prevalent industry specific ethics. Such ethical framework provides strategic advantage over competitors, helps them achieve long terms business results in all the markets they operate. What is CREDO? Codified ethical principles for carrying on business. Dictionary Meaning: Oxford A statement of belief; a creed. Relevance of CREDO

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Credo will help corporations to face challenges of today and tomorrow and help them to stay on course and achieve their mission. Credo of Johnson and Johnson helped them to achieve their mission. Corporation mission of J&J: To be the best and the most competitive and comprehensive health care company in the world. Johnson and Johnson It has embodied its ethical principles in their well known document called Our Credo CREDO We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality. We must constantly strive to reduce our costs in order to maintain reasonable prices. Customers orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit. We are responsible to our employees, the men and women who work with us throughout the world. Everyone must be considered as an individual. We must respect their dignity and recognize their merit. They must have a sense of security in their jobs. Compensation must be fair and adequate, and working conditions clean, orderly and safe. We must be mindful of ways to help our employees fulfill their family responsibilities. Employee must feel free to make suggestions and complaints. There must be equal opportunity for employment, development and advancement for those qualified. We must provide competent management, and their actions must be just and ethical. We are responsible to the communities in which we live and work and to the world community as well. We must be good citizens- support good works and charities and bear our fair share of taxes. We must encourage civic improvements and better health and education. We must maintain in good order. The property we are privileged to use protecting the environment and natural resources. Our final responsibility is to out stakeholders. Business must make a sound profit. We must experiment with new ideas. Research must be carried on, innovative programs developed and mistakes paid for. New equipment must be purchased, new facilities provided and new products launched. Reserves must be created to provide for adverse times. When we operate according to these principles, the stockholders should realize a fair return. Four Responsibilities Responsibility to Customers Responsibility to Employees Responsibility to Community Responsibility to Stockholders (Shareholders)

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Responsibility to Customers Produce high quality products and services. In order to maintain reasonable prices, be cost conscious in everything we do to reduce the prices. Constantly strive to provide value for money in our products and services. Give an opportunity to our suppliers and distributors to make a fair profit. Servicing our customers orders promptly and accurately. Responsibility to Employees Each one to be considered as individual by respecting his/her dignity. Recognize the merit of the individual and provide opportunity for promotion/ advancement. Provide clean and safe working conditions. Provide fair and adequate compensation. Help create a sense of security and provide an environment to make suggestions and also complaints. Encourage ways to help employees fulfill their family responsibilities. Provide equal opportunity for employment, development and advancement for those qualified. Encourage open communication in the org. Provide competent, just and ethical management. Responsibility to Community Be a good corporate citizen by following the laws of the land. Support good works and charities. Encourage civic improvements and better health and education. Take care of the property we are using. Take steps to protect the environment and natural resources. Responsibility to Stockholders The business must make a sound profit. Experiment with new ideas and develop innovative systems and practices. Activities related to research and development. Investment in new equipment and facilities. Launch new products. Reserves must be created for adverse times. Stockholders should realize a fair return.

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Corporate Governance Meaning It promotes corporate fairness, transparency and accountability. It is concerned with structures and processes for decision making, accountability, control and behavior at the top level of the org. Transparency in decision-making. Accountability which follows from transparency because responsibilities could be fixed easily for actions taken or not taken and The accountability is for the safeguarding the interests of the stakeholders and the investors in the organization. Definition According to Sir Adrian Cadbury, World Bank Publication, Corporate Governance is holding the balance between economic and social goals and between individual and community goals. According to SEBI Committee, Corporate Governance is the system by which the companies are directed and controlled by the management in the best interest of the stakeholders and others, ensuring greater transparency and better and timely financial reporting. Scope Shareholders rights; Enhancing the shareholders value; Issues concerning the composition and role of the Board of Directors; Deciding the disclosure requirements; Prescribing the accounting systems; Putting in place effective monitoring mechanism etc. Objectives of CG A properly structured board capable of taking independent and objective decisions is in place at the helm of affairs. The board is balanced with representation of adequate no. of nonexecutive and independent directors who will take care of their interests and well-being of all the stakeholders. The board adopts transparent procedures and practices. The board keeps the shareholders informed of relevant developments impacting the company. The board effectively and regularly monitors the functioning of the mgt. team. The board remains in effective control of the affairs of the co. at all times. To confirm that rules are followed. To confirm that proper accounting is done. To confirm that responsibilities are followed.

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To confirm that proper control is created in simple words- Team of Mgt (Control & Mgt.) Prerequisites Political Responsibility-Legitimate law, respect for rights and principles of constitutional state. Social Responsibility- Shared values. Economic Responsibility- Managements obligation of maximising shareholders value. BOD- Adequate internal controls and reports to the co. in a tranparent manner. Shareholders- Appoint Directors and the auditors to hold the board accountable Mgt.- Adequate control systems and to ensure their operation and to provide information to the board on a timely basis. Principles of CG Integrity and Fairness Transparency and Disclosures Accountability and Responsibility Honesty Trust and Integrity Openness Performance orientation Mutual respect and commitment to the org. Basic essentials of CG Role and power of Board Legislation Board Independence Board Skills Management Environment Board Appointment Board Meetings Strategy Setting Business and Community Obligations Financial and Operational Reporting Monitoring the Board Performance Audit Committee Risk Management Issues of CG Internal controls and internal auditors. The independence of the entitys external auditors and the quality of their audits. Oversight and mgt. risk. Oversight of the preparation of the entitys financial statements. Review of the compensation arrangements for the chief executive officer and other senior executives. The resources made available to directors in carrying out their duties.

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The way in which individuals are nominated for positions on the board. Dividend policy. Advantages of Corporate Governance It takes care of all stake holders i.e. share holders, creditors, debtors, workers, customers etc. It avoids to disturb the ethics. It creates transparency in all activities. It creates good image of organization. Mechanism of CG The Companies Act. Securities Law. Discipline of the Capital Market. Nominees on company boards. Statutory audit. Code of conduct. Roles of SEBI Issue of guidelines. Public interest ads. Dealing with complaints of investors. Investor education. Investor surveys. Disclosures by companies. Code regarding takeovers. Concepts in CG Insider Trading Whistle Blowing CG represents the value framework, the ethical framework and the moral framework under which business decisions are taken. CG principles of transparency and accountability are crucial to the integrity and legal credibility of our market system. One of the major problems of CG in India (be it the public sector, the multinationals or the Indian pvt. Sector) is that of disciplining the dominant shareholder and protecting the minority shareholders. The Corporate Governance codes are only a guideline. Effective CG depends upon the commitment of the people in the organization. The key to good CG is a well functioning board of directors. The board should have a core group of excellent, professionally acclaimed nonexecutive directors who understand their dual responsibility role-of appreciating the issues put forward by the management, and of honestly discharging their fiduciary responsibilities towards the companys shareholders as well as creditors.

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Cross Cultural Ethics - Global Dimension Western and Indian Cultures Western Culture is based upon industrialisation and large-scale production. Self-centred-Motivated by principle of personal benefit. Exploitation of nature- Exploit natural resources to satisfy desires. Capital intensive- Industrialisation and large scale production. Market oriented- Creating fresh needs to develop and expand the market. Indian Culture 2400 BC-Indus Valley civilisation. Vedic Religion-Seeking truth and harmless life. Vedas and Upanishads. Hindu Teachings-Oneself, Others and Society. Development of self- Spiritual pre-eminence. Harmony with nature- Living with nature. Labour intensive- Importance to individual skills of production. Society oriented- Importance to family and community as a unit. A Comparison Factors Western Culture Indian Culture Thinking Compartmentalized Integrated Man Material being Spiritual being Happiness For oneself For All Possessions Acquisitiveness Aparigraha (Nonpossession) Motive Profit Service Consumption Consumerism Restrain consumption Natural Resources Relationship Economy For Exploitation Rights-oriented, consciousness of others duties Rising cost of production due Living with Nature Duty-oriented, consciousness of others rights Declining prices and

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to scarcity of resources.

Market

abundance of production due to sustainable use of natural resources Institutionalized capitalism Individualized free (patens, brands, copyrights, competition without cartels, etc.) manipulated markets.

Ethical Values and Culture Cultural Relativism: Right or Wrong- On culture Norman E Bowie (1990): Analysis of Cultural relativism and its relationship to ethical decision-making in MNC. There are Universal moral principles which apply to all cultures. Once these moral principles are identified, cultural relativism does not hold at all. A whole range of behaviour, e.g. torture, murder of the innocent, racism, and casteism, would be accepted as wrong by everyone. Individual Relativism-Right or Wrong on Feelings or Attitudes of Individual If individual relativism were the prevailing view, a stable society would be impossible, life would be difficult and brutish. To rest on ones conduct on the ethics of mere relativity is sure to cause moral drifting and create an unstable and unsafe world. Moral Absolutism and Relativism Morality that is absolute which is not dependent on society or situation. Actions as inherently good or bad. For. Eg. Lying for instance would always be a bad action, even if it is done to promote some other good (like say saving a life). But morality of an action is dependent on the context or consequence of that action. A person would be obligated to tell a lie to save a life so as to minimize the harm done. Moral relativism believes that moral standards are not absolute, but instead emerge from social customs and other sources.

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Environmental Ethics Introduction Air, water, land pollution. Bhopal Gas Factory-3000 lives lost in 1984. Global Warming- Heavy flood from South Pole. Ozone depletion- Heavy consumption distraction of ozone which has generated global warming. Acid Rain- Rain with acidic factor-TAJ MAHAL. Water Pollution- River affecting life. Land Pollution- Artificial fertilizers mixes in soil effects the quality of soil. Contents 1. Rules against any pollution. 2. Proper wastage clearing system. 3. System for reducing the wastage. 4. Increasing the eco-friendly product. 5. Resource of wastage. 6. Creating awareness amongst workers. 7. Minimizing uses of natural resources. 8. Green Accounting System-Environmental factors and accounting of environmental ethics. Steps taken in India Indian Govt. passed AIR control and prevention of Pollution Act 1981. Water Pollution Act was passed. Factories Act was amended. Industries (Development and Regulation) Act passed in 1951. Mines and Minerals (Regulation and Development) Act passed in 1957.

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Environment Limitations Pollution Consumption of non renewable resources like oil. Use of renewable resources such as water above the rate of natural replenishment. Change in the universal balance in the rapid feeling of trees and fast removal of forests. The outlook of winning a war against the nature through the scientific activities. Inviting climatic change through the rapid feeling of trees and fast removal of forests. Toxic waste. Contamination of ground water. Oil spills destroying the seashores. Fossil fuels producing carbon dioxide resulting in green house effect. Usage of fluro carbons that deplete the ozone layer. Support Environment Responsibility Anthropocentrism approach Anxiological approach Eco-centric approach West-Impact Netherlands had to face industrial pollution due to the dumping of industrial wastes and the release of hazardous chemicals into the rivers. Air pollution an soil erosion have been quite severe in Spain. NRA (National Rivers Authority)-1991 According to NRA, investigation on Air, Water and Soil pollution-Farm, Industrial, Oil and sewage and water industry. Reports revealed-Chemical industry recorded highest percentage of environmental pollution. Most industrial polluter- Mineral Industry followed by Chemical industry. Court Action: NRA imposed fines against offenders and issued a formal caution notice for any irresponsibility. European Legislature: Framed 120 different acts. Promoting the benefits of pollution prevention. Customizing legislation to meet the requirements of European member states. Developing and enforcing a polluters pay policy with an aim to impose fines for the defaulters. Initiative by Several Govt.: Green agenda- Encourage org to participate in conservation programmes.

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Some orgs. Initiated environment protection measures such as installation of desulphurization plants and introduced energy saving measures. Environmental Issues in India Rapid industrialisation and urbanisation has caused more harm than good. Eg. Deforestation, Soil erosion, water pollution etc. The Govt. of India (GOI) has adopted a comprehensive policy to protect public health, forest and wildlife. But the policy has an important limitation that no court can enforce it. The Environment Protection Act (1986) focused on reducing industrial pollution. The report stated that the estimated annual cost of environmental,degradation is 4.5% of GDP (average). Environmental Issues: Air Pollution, Energy Consumption, Carbon Emissions, Energy and Carbon intensity. Green Initiatives Green initiatives in business range from environmentally friendly technological innovation, green tourism, green community, environmental campaigning and environmental counselling, e.g.: An environment friendly technology innovation such as recyclable toner cartridges in laser printers reduces wastage. Hero Honda introduced an environmental friendly bike. Reasons for adopting green initiatives Economic benefits from increased efficiency1. Firms by reducing the wastage can decrease handling expenses, fines and costly inputs. Competitive advantage through innovation1. Efficient product ensures the usage of cleaner technologies, process, innovation and waste reduction. Public image1. Consumers, investors and employees respond positively to companies with a reputation for good environmental performance. 2. For future generations. Environmental Social Audit The Confederation of British Industry has defined environmental auditing as the systematic examination of the interactions between any business operation and its surroundings. Industry and Environment Relationship Article 2(f) of the European Union Eco Management And Audit Scheme defines EA as A management tool comprising a systematic, documented, periodic and objective evaluation of how well environmental org., mgt. and equipment are performing in the aim of helping to safeguard the environment by: Facilitating mgt. and control of environmental practices,

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Assessing compliance with company policies, which would include meeting regulatory requirements. Reasons for EA EA can highlight areas of inefficiencies in process e.g. where the amount of resources used are out of proportion to the amount of saleable items/services produced. It can highlight excessive wastes. Can provide opportunity for business to decrease its wastes output and reduce the cost of waste treatment or waste disposal. Seeking answer to questions Goals- What are we doing? In particular, are we in compliance with government regulations, guidelines, codes of practice, permits conditions? Can we do it better? In particular, are there non regulated areas where operations can be improved to minimize the impact on the environment? Can we do it more cheaply? What more should we do? Steps for EA Pre-audit activities which include: Selection and scheduling of facility to audit. Selection of audit team. Contact with facility and planning of the audit. Site activities: which are divided into 5 steps First understanding of internal controls. Gathering of audit evidence. Evaluation of audit findings. Report of findings to facility. Scope of EA Material Audit Energy Audit Water Audit Health and Safety Audit Environmental Quality Audit Water Disposal Audit Engineering Audit Merits Facilitating comparison and interchange of information between operation or plants, Increasing employee awareness of environmental policies and responsibilities, Identifying cost-savings including those resulting from waste minimisation, Evaluating training programmes and providing data to assist in training personnel,

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Providing an information base for use in emergency response arrangements, Assuring an adequate, up-to-date environmental database for internal management awareness and decision making in relation to plant modifications, new plans etc., Helping to assist relations with authorities by convincing them that complete and effective audits are being undertaken, by informing them of the type of procedure adopted. Indian Perspective-EA There is no Statutory requirement for EA in Corporate sector or in the Govt. sector. Few pvt. Sector companies like TISCO, ITC are periodically conducting EA. It was first notified under the EPA of 1986 by the Ministry of Environment of Forests. It requires submission of an Environmental Audit Report or statement to the concerned state Pollution Board. As per the Indian Companies Act, 1956, details relating to energy consumption/energy conservation are presented in the Directors Report as annexure and it highlights the environmental related policies and problems. The concept of environmental auditing in industrial units in India was formally introduced in March 1992 with the overall objective minimizing consumption of resources and promoting use of clean technologies in industrial production to minimize generation of wastes. A gazette notification on environmental audit has been issued by the Ministry of Environment and Forests on March 13, 1992 (amended vide notification GSR (E) dated April 22, 1993). This notification applies to every person carrying on an industry, operation or process requiring consent to operate under Section 25 of the Water (Prevention and Control of Pollution) Act, 1974 (6 of 1974) or under section 21 of the Air (Prevention and Control of Pollution) Act, 1981 (14 of 1981), or both, or authorisation under the Hazardous Waste (Management and Handling) Rules, 1989, issued under the Environment (Protection) Act, 1986 (29 of 1986). The notification requires that an Environmental Statement for the financial year ending the 31st March be submitted to the concerned State pollution Control Board, on or before the 30th September of the same year. Green Marketing Are less toxic Are more durable Contain reusable materials Are made of recyclable material.

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Ethics and IT, E-Commerce and Internet Privacy Highlight Data Mining: Post 9/11 world as part of a widespread pattern of invasions of privacy carried out by American intelligence experts. The practices of the Total Information Awareness Progress in particular were thought to pry into the day-to-day lives of innocent people by IT ethics experts and civil liberations. Social Networking- Beacon 2007 pulled personal info. as ad.Facebook. Cases of abduction on Orkut and MySpace. E-Mail Spam- Spam mails (AOL and Yahoo). Intellectual Property and IT- Since 1990s. Napster, Livewire and other peer-to-peer downloading networks brought the issue of infringing on artistic property to the fore. There are questions from ethicists about the practicality of seeking out unknown artists and writers for something as minor as a blog. Filtering Online Content- Comcast blocked downloads from Bit Torrent. The major ethical debate raged between ISP, the Federal Communications Commission (FCC) and end users is whether Internet service should be content-neutral. E-Commerce Buying and selling of products and services over electronic systems. Electronic transactions- Questions on recognition, authenticity and enforceability of electronic documents and signatures. Marketing-Personal information easily available. Internet Privacy Peoplesearch.com allows anyone to do background searches, asset verification checks and criminal background checks-Fee. Likewise Whowhere.com too. The IT Act, 2000 passed the first Cyber Law. It provided the legal infrastructure for electronic commerce in India. To provide legal framework so that legal sanctity is accorded to all electronic records and other activities carried out by electronic means. This helps in reducing the unethical activities online. IT Act Acceptance in an electronic form of any offer, culminating in an electronic contract, has also been declared legal and enforceable. It has recognised digital signature for the first time in Indian LawFinancial transaction. It has also set up a controller for certifying authorities, adjudicating officers and cyber appellate tribunal. Hacking has been defined for the first time. Punishable upto 3 yrs. Imprisonment and a fine which may exceed to Rs.200000 or with both. The Act has also proposed a legal framework for the authentication of electronic records/communications through digital signature.

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Certain Legal framework for the Authentication and Origin of Electronic Records or Communication E-mail would be valid and legal form of communication-Duly produced and approved in a court of law. Companies shall now be able to carry out electronic commerce using the legal infrastructure provided by the Act. Digital signature have been given legal validity and sanction in the Act. It opens doors for the entry of corporate companies in the business of being Certifying Authorities for issuing Digital Signature Certificates. It now allows the Govt. to issue notification on the web thus heralding e-governance. It enables the cos. To file any form,application or any other document with any office, authority, body or agency owned or controlled by the appropriate govt. in electronic form by means of such electronic form as may be prescribed by the appropriate govt. Important issue of security-Secure digital signatures to pass through a system of security procedures. It would be possible for corporates to have a statutory remedy in case anyone breaks into their computer systems or network and causes damages or copies data. The remedy provided by the Act is in the form of monetary damages, not exceeding Rs. 1 crore.

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Responsibilities and Rights of Investors and Shareholders Who is a Shareholder? Shareholder is an individual, group or org. that holds one or more shares in a firm and in whose name the share certificate is issued. Shareholder is the one who owns shares of stock in a corporation or mutual fund. Along with the ownership comes a right to declared dividends and the right to vote on certain company matters. Either Shareowner, stockholder or Investor Companys Responsibilities Managing the company efficiently in order to secure a fair and competitive return on the owners investment. Disclosing relevant information to shareholders, subject only to legal requirements and competitive constraints. Conserving, protecting and increasing the shareholders assets. Respecting the shareholders requests, suggestions, complaints and formal resolutions. Responsibility of Shareholders Demand an explanation on the annual report or on the overall functioning of the company. Shareholders should use the forum of general body meetings for ensuring that the company is being properly stewarded for maximising the interest of the shareholders. For effective participation, shareholders must maintain decorum during the General Body Meetings. Great degree of interest and involvement in the appointment of the directors and the auditors. Rights of Shareholders To receive the share certificates on allotment or transfer as the case may be, in due time. To receive copies of the abridged Annual Report, the Banlance Sheet and the P&L account. To participate and vote at the General Meetings either personally or through proxies. To receive dividends in due time once approved in the General Meetings. To receive corporate benefits like rights, bonus, etc. once approved. To apply to Company Law Board (CLB) to call or direct holding of the Annual General Meeting. To inspect the minutes book of the GMs and to receive copies thereof. To proceed against the Co. by way of civil or criminal proceedings. To apply for the winding-up of the Co. To receive the residual proceeds.

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Role

To receive offer to subscribe to right shares in case of further issue of shares. To receive offer under takeover or buyback offer under SEBI regulations. To receive all benefits/material information declared for the investors by the Company. Prompt services from the Co. such as transfers, sub-divisions and consolidation of holdings in the Co. As an equity holder they have a right to subscribe to further issue of capital by the co. Investors can expect delivery of shares purchased/ value of shares sold within 15 days from the end of settlement period. Access to the Exchange arbitration facilities in case of dispute with broker. Receipt of the contract note from the broker in the specified format showing transaction price and brokerage separately. Approach concerned regional Arbitration Centres of the Stock Exchange, by confirming geographical jurisdiction. Right to transfer ownership means, shareholders are allowed to trade their stock on an exchange. To sue for Wrongful Acts- In the form of Shareholder class-action lawsuit. Shareholder as a group has following rights: To put requisition for an Extraordinary General Meeting. To demand a poll on any resolution. To apply to CLB to investigate the affairs of the Company. To apply to CLB for relief in cases of oppression and or mismanagement. of Director in CG Power exclusive to BODs (Sec 292)To issue debentures. To borrow money otherwise than through debentures. To invest the funds of the company. To make loans.

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Role

Role of CEO, Chairman and Board of Directors of CEO Equitable treatment of shareholders. Interests of other stakeholders. Role and responsibilities of the board. Integrity and ethical behaviour. Disclosure and Transparency. Foster corporate culture. Maintain positibe and ethical work climate. Develop and recommend to the Board a long-term strategy and vision for the group. Ensure that the day-to-day business affairs are appropriately managed by the MDs and that proper systems and controls are in place for effective risk mgt. of the group. Ensure co-operation with the Board. Recommend to the board the appointment of MDs and ensure succession plans are in place for those MDs. Consistently strive to achieve the companys financial and operating goals and objectives. Ensure continuous improvement in the quality and value of the cos. products and service provided. Ensure that the co. achieves and maintains a satisfactory competitive position within the industry. Formulate and oversee the implementation of major corporate policies. To assist the executive directors in formulating strategic proposals that have to be endorsed by the board. To provide leadership and direction to all his executive directors. To develop a plan for implementing the strategy formulated by the board and/or mgt. and to convince the non-executive directors that the strategy can work. To act as representative of the executive directors when interacting with the non-executive directors. To present the company to major investors, the media and govt. To be a source of inspiration, leadership and direction to the employees, customers and suppliers.

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To be able to identify the situation that requires intervention. To run the org. in an efficient manner. The CEO shall certify or report to the board that no transactions entered into by the co. during the year were fradulent, illegal or violate companys code of conduct. Role of Chairman The Directorate, Chairman of the Board is an active representative of the investors. To set standards and ensure that policies and practices are in place. To ensure that the directors make good decisions. To make sure that directors are continuously upgraded to the levels required by investors to meet the current and future needs of the company. To act decisively in times of a crisis. To act as representative of the co. To manage the board and ensure that its policies are put into practice by the mgt. To work closely with the co. secretary to address legal issues. The chairman must have a good understanding of the financial standing of the co. He must keep a strict watch on the companys actual performance. Proactive and identify problems before CEO does corrective actions. Role of the Board The board are directly accountable to the shareholders. At AGM-The directors must provide a report to shareholders on the performance of the company, what its future plans and strategies are and also submit themselves for re-election to the board. Purpose-Ensure the company's prosperity by collectively directing the company's affairs, whilst meeting the appropriate interests of its shareholders and stakeholders. Establish vision, mission and values Set strategy and structure Delegate to management Exercise accountability to shareholders and be responsible to relevant stakeholders Responsibilities of Directors Directors look after the affairs of the company, and are in a position of trust. They might abuse their position in order to profit at the expense of their company, and, therefore, at the expense of the shareholders of the company. Consequently, the law imposes a number of duties, burdens and responsibilities upon directors, to prevent abuse.

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Directors are responsible for ensuring that proper books of account are kept. The directors must always exercise their powers for a 'proper purpose' that is, in furtherance of the reason for which they were given those powers by the shareholders. Directors must act in good faith in what they honestly believe to be the best interests of the company, and not for any collateral purpose. This means that, particularly in the event of a conflict of interest between the company's interests and their own, the directors must always favour the company. Directors must act with due skill and care. Directors must consider the interests of employees of the company. Role of Directors Disclosure of interest. Divulging information jeopardising interest of the co. Abiding by all laws. Protection of companys assets. Discharging duties to the best judgment. Maintaining confidentiality. Exercising powers within ambits. Reporting to Chairman for illegal/unethical conduct of any employee. Public Disclosure.

Why

ETHICS - An Introduction Ethics is not definable, is not implementable, because it is not conscious, it involves not only our thinking but also our feeling. Integrity is telling myself the truth where as honesty is telling the truth to other people. Live so that when your children think of fairness and integrity, they think of you. Ethics, also known as moral philosophy, is a branch of philosophy that addresses questions about moralitythat is, concepts such as good and evil, right and wrong, virtue and vice, justice, etc. Integrity without knowledge is weak and useless, and knowledge without integrity is dangerous and dreadful. should one learn ethics? A set of right conduct and a theory or a system of moral values. A moral code, morals, morality, values, rights and wrongs, principles, ideals, standards (of behaviour), value system, virtues, dictates of conscience.

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Ethical dilemmas occur whenever two or more values conflict with one another. When people are faced with decisions that require one value to win at the expense of another (for example, profit winning out over employees keeping their jobs). Businesspeople- it provides another perspective and the more information a person has, the better decisions he can make. Stakeholders: To identify the various stakeholders in every decision. Corporate Leadership: If a leader appears to be unconcerned about breaking rules, then those below him will likely do the same. This can often end in legal trouble for the company. Social Responsibility: To balance serving their bottom line, their shareholders and their community Advantages of Ethics Creates high degree of trust and integrate and motivate and empower stakeholders. Eg. TATA group of cos. Creates awareness of CSR of business. The power to co-exist. Helps in professional life- Harmony and at peace. Business Ethics It is Ethics of Business, study of what is good or bad, right and wrong, just and unjust, fair and unfair in the business as against in personal life. Code of conduct for businessman for carrying on business consistent with what others follows. Different from Personal Ethics. Buddha on Business Ethics Trader is like honey bee, who sucks honey out of flower, without harm to flower. Also helps flower pollinating- process of fertilisation- when taking profit, no harm to be done in quest of personal gain. Business Ethics is inseperable part of modern business. It is vital for long term growth of business. Managers Ethics and Corporate Ethics are parts of Business Ethics. Professional Manager-Ethical Manager Ethics in Bhagwat Geeta: Lord Krishna said Manager should look at the task set for him more for its satisfaction, the fulfillment that gives, rather than for personal gain or profit.

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Elliot Jacques, American Scholar called Professional Manager as Propertyless Manager, who manages the company successfully, but does not own any part of it as personal property. He does job not for personal gain, but for satisfaction he drives. Objectives of Business Ethics Check malpractices- rapid business growth threw up many unethical practices- desire for money and economic power breeded many evils, which harmed society. Prevent exploitation of market, society and consumers. Drive home social responsibility to gain confidence of consumer- the king in competition. Forge cordial relation with the society. Some Principles of Business Ethics Take care of stakeholders, owners, employers, customers, suppliers, community and environment. Fair dealings and fair practices in business. Avoid exploitation of consumers. Avoid profiteering. Encourage healthy competition. Accept social responsibility. Importance of Business Ethics The business is not only for growth of businessman, also for long term growth of business itself. Long term creation of wealth. Creation of better social image, and Build investor confidence. Important issues in Business Ethics What is the role of profit and charity in Business Ethics? Is honesty the best policy and good in the long run? Is there a difference between ethical/ unethical/ unethical practices in business and in personal life? Do you agree that the business practice which is legally sound should be treated as ethically sound and some may not be morally sound? Why is Ethics Important? Ethics corresponds to basic human needs: The first obvious reason for being ethical is of course that the top bosses might otherwise land in jail and the company be hit with a heavy fine. However, this is not really an ethical consideration. It is rather a matter of expediency. We believe that most people want, even need, to be ethical not only in their private lives, but also in their business affairs where a manager knows his decisions may effect lives of thousands of people.

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Most people want to be part of an organisation which they can respect and be publicly proud of because they perceive the purpose and activity to be beneficial to society. Values create credibility with the public: A company perceived by the public to be ethically and socially concerned will be honoured and respected even by those who have no intimate knowledge of its actual working. Its public issues, whether in the form of equity, convertible bonds or fixed deposits will attract an immediate response. Values give management credibility with employees: Values provide a common language for aligning a companys leadership and its people Robert Haas of Levi Strauss. TISCO- Hamari company. Association is strong, value as a family, employees are convinced of firms honesty and decency to ease the transition of workers from the firm either to retirement or to some other job. No strike, no unrest unlike the industry. Values help better decision making: Helps management make better decisions. Interest of the public- Economic, social and ethical aspects. Eg. Layoff of workers, closing of plants toxic waste management safety in production processes and in the final product as certain examples to name a few. o Business Ethics in Management streams Finance/Accounting Field HRM Marketing Operations/Production etc.

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Business Ethics Revision Business and Society Business unit to be specific, it should control economic growth of the nation. Helps in the Regional development. Contributes to Social welfare of the country. Creates and develops employment opportunities. It generates income to government. Nation depends on them for Capital formation. Advantages of Business Ethics Enhancement of society. Maintaining moral course in turbulent period. Strong teamwork and productivity. Employee development. Guarantee that policies are legal. Compliance with law. Total quality mgt. Diversity Mgt. Strengthen the business. Ethics and Legality Ethics and Law are both variants of social rules which ensure predictability in society. Predictability is essential for security, survival, continuity and growth. It represents a system of internal controls whereas Law represents a mechanism for external controls. Ethics is generally unwritten and vocabulary whereas Law is purposefully written and enforced by the state. Ethics is guided by moral principles whereas Law is guided by reality principles. Ethics fills in the gaps in Law. They supplement and complement each other. Ethics is always current and operative, Law has to be invoked to be active and needs to be updated periodically to keep it relevant. Ethics and Law Ethics Ethics examines both the individual and social goodwill in all directions. Ethics contains all the social obligations, customs and traditions which are essentially implemented in the society. Law Law is concerned with the minimum regulation necessary for public order. The social customs and traditional beliefs cannot get a place in law.

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The people who reject the ethical principles have to face social boycott and be subjected to societys accusation. The scope of ethics is broad. Ethics means the rules or principles that define right or wrong conduct. People have to obey provisions of law, otherwise they will be subjected to punishment. The scope of law is narrow. Laws are written rules about what is right and what is wrong in various walks of life. It does not use force. Ethical behaviour will always be covered under ethics. It is not backed by power. Ethics concentrates on Dos. It uses force when necessary. Ethical behaviour may or may not be covered by law. It is backed by power. Law concentrates on the Donts. Ethics and Morality Meaning: Ethics- Relates to what is good or bad, moral duties and obligations. Morals- Relates to principles of right and wrong. Analysis: Ethics- It is a greek word from ethos which means character i.e. personal attitude. Morals- Latin word mos or moralis meaning customs i.e. attribute of group of society. Nature: Ethics- It arises from personally accepted principles. Morals- It is accepted due to an authority which may be religious or cultural. Scope: Ethics-Wider and examines whether moral stds are reasonable or unreasonable. Morals- Smaller and addresses human need for belonging and emulation. Expression: Ethics- Abstract and cannot be described in general rules and statements. Morals- Expressed as general rules and statements E.g. Always to tell the truth. Absorption: Ethics- Adopted or absorbed by an individual gradually by taking reasonable decisions in appropriate decisions. Morals- It is typically adopted or absorbed since childhood from family, friends, school, religion and so on. Ethical Influence on Business Plant Location- No adverse impact on local community. Production- Control on pollution.

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Marketing- Fair treatment to customers. Advertising- Truthful and realistic claims. Administration- Concern for social values. Finance- Protection and appreciation of capital. HRM- Just and equitable treatment to employees. and Unfair Business Practices A sound ethical environment may be created and corporate scandals may be avoided by adopting following methods Making employees aware of their legal and ethical responsibilities. Creating policies to motivate and promote employee ethical attitude. Creating a proper communication channel free from fear and insecurity feeling. Ensuring fair treatment to whistle blowers. Western and Indian Ethical Approach/ Perspective Principle 1: Productivity before Profitability. Principle 2: Customer is not sheep that can be sheered. Principle 3: Buyers Domain is more. Principle 4: Be Diplomatic with your Competitors. Basically all the value systems throughout the world teach similar things. They are Humanity- Helping others of our kind, harmony, cooperation and fairness. Humility- Be humble and kind, adjustment and assimilation. Self-development- Through social betterment, gratitude. Respect- Respect for elder, parent and others etc. Eastern Culture Gives more importance to personal relations and contacts. A very conservative society. Demand high respect for elders, parents teacher, etc. Western Culture More importance is given to material concepts. A very open society. Not much concern for respect of elders, parents, teachers, etc. Importance is given to ethics and business. No concern for time, things are taken for granted and things are done at ones own convenience. More concern to profit only. Time is valued, timeliness and punctuality is expected as well as appreciated. Fair