BUSINESS ETHICS

By
Prof.Premanand Shetty
Nature of Business Ethics
1. Ethics is as old as mankind.

2. Any decision, may be at individual, group,

organization, government levels have ethical
issues.

3. The decision affects individuals and society

4. Government and business operates in different

social, technological, economic and political
environment.
5. These change from time to time

6. The industry should serve the changing

environments and meet competition in the
market place

7. Business ethics deals in what is ‘right’ , ‘just’

and ‘proper’ in its organization and
stakeholder context.
8. Ethics comes as backbone in giving right inputs for
industry to make informed choices
9. The Industry and commerce has to balance
economic interest of organization and its social
responsibilities.
10. The complex business decisions need ethical
reasoning, in-depth understanding of issues
involved, concern for fairness, and justice due
process for all people.
11. Decision making in business involve sorting
correct and true data, remove conflicting
views to solve moral dilemmas
Ethics in Management and
Managing Business Ethics
1. Indian business and commercial organizations
in the 21st Century have entered a growth
phase and have increased complexities
2. 2.Globalisation is bringing different working
conditions and working environments.
3. The organisations have to be clear about its
vision, mission, strategies moral obligations.
4. All the constituents of the organisation have to
learn and understand them for proper
implementation
5. In the scenario Indian business
organizations are building up their own
ethos.

6. The important factors that influence any

business organization are leadership,
vision, strategies and performance, industry
environment, corporate culture and
individual characteristics of its leaders.
Ethical Issues in Business
1. In recent years the stakeholders of the
companies are keeping an eye on the running
of the companies where they have stakes

2. The use of electronic media, explosion of

business magazines and financial newspapers
throw all up to data data to the stake holders

3. Stakeholders also compare between different

companies in the industry
4. The comparisons will bring out the financial
and physical achievements, legal
compliances, problem areas and notably
ethical conduct of the companies

5. The open atmosphere adds to the

pressures of decision makers to make
ethical choices.

6. The companies should follow moral

management practice.
7. The owners top level executives and
managers to adhere to equitable fair and
just concerns and treatment of all
stakeholders on the opposite side, immoral
treatment in one which has minimum ethical
approach in dealing with stakeholders

Contd….
such as unfair practices, laying of
employees, giving top level managers very
high undeserving salaries and perks and
giving ‘golden parachutes’, attractive
payments, perks and tours to senior
executives.
8. Amoral management is one where top
management and managers of company treat
stakeholders without any concern care.

9. The decisions are made with negligence or

unintentional

10. In amoral type of organization harm is done

through not planned or intended
11. The chapter deals in important issues in
ethical dilema.

12. The issues discussed are

 What I right in theory is it ok in business ?
 is bluffing ethical in business ?
 what is legal is ethical ?
 environment and ethics
 is maximizing profit is ethics
 How degrees and question papers are sold in
unethical manner
13. The examples show the fundamental
relationship between business and society
at large

14. Business ethics engages in essential

questions about transactions, purpose and
values
Social responsibilities and ethical
Values
1. Companies are started basically for profits.
2. However it is essential that profits are earned by
fair means.
3. Every organisation must follow the minimum
expectations of environmental care and employee
welfare
4. There are compulsory as per the Factories Act
1948 and its subsequent amendments
5. These companies who are making more profits
can afford to take up social causes voluntarily
6. This has to be done by realization that they
have earned so much from the society and
hence.
7. Some portion of profits must be utilized to
develop the very society
6. By adopting CSR companies improve their
public image and sales turnover

7. The employee morale will be high and the

owners earn goodwill and respect from one
and all

8. This culture of CSR will help the youngsters

to follow good examples to improve the living
conditions of the public
Ethics in Global Business
1. Business activities in various fields are on the
rise since last two decades due to the impact
of liberalization, privatization and globalization

2. Along with this there there is a need to help

develop ethical values in business

3. In order to improve the business relations it is

essential that executives and other employees
adjust to other country cultures also to make it
easier to deal with different countries.
4. Global business dealings call for protracted
and prolonged negotiations on various
matters

5. High level of negotiation skills are essential

with all the employees dealing in global
business.

6. Gifts, give and take is common in business

practices
7. Low value gift is treated as natural and ethical

8. High value gifts are treated as bribes.

9. Entrepreneurs try to keep track of new

contracts, new projects coming up in various
countries.

10. For this they try to utilize services of

consultants and politicians
11. This method is considered normal and
essential in business community
12. Whenever a country is facing sanctions its
international trade and business gets
adversely affected
13. Hence political leaders should try and avoid
such situations.
14. Further a country should develop favorable
conditions like infrastructure, foreign policy,
technology and political stability is essential

15. This is a collective responsibility of

politicians, technocrats, bureaucrats and
the public.
Ethics in Marketing
1. Marketing is one of the most important functions of
any organisation or institute
2. The outside world makes up its opinion on the
products as well as company based on the
marketing efforts and how marketing executives
conduct and prevent their case
3. Company’s good, average or bad reputation
affects all stake holders like employees,
customers, dealers, traders, suppliers and the
government
4. Hence marketing has a great role to play in
taking best care of all the stakeholders
5. Marketing is easy if the product and brand
image has high popularity for quality, reliability,
fair price and is of contemporary technology
6. The problem arises only if it lacks some of
there attributes and unfair or unethical
practices are adopted to boost sales
7. Consumers have rights to reject a product
they don’t like and also take legal action
against harms or un-usability of a product.

8. Hiding information, wrong labels, copying

competitors packing and printing style,
naming of the product similar to that of
competitor,

Contd….
 use of harmful additives in pharma and food
products, exploitation of women in
advertisements are some of the unethical
practices commonly found in marketing.
9. The advertisements, hoarding should
highlight the product, quality, usage, value
specialty and other good attributes
10. They must avoid criticising competitors,
display of seminude girls and highlighting
too on brand ambassadors
Ethics in Finance
1. SCM covers whole gambit of an organisational
work and hence there are various monetary
transactions.

2. More the number of transactions more the

case towards ethical values is needed

3. Purchase department of a firm takes care of

financial outflow
4. The price comparison, negotiations,
knowledge about taxes, transport, quality and
reliability of various vendor sources is very
essential
5. Purchase department is under focus of the top
management due to the stress on funds
position
6. Even if 1 to 2% is saved in high value and high
consumption value items it will add to profits.
7. Civil contracts, government orders form a
major position of projects being executed
8. There is scope for contractors to indulge in
unfair practices to make more profits
9. Vigilance on public related activities, auditing
and quality check are very essential to ensure
ethical practices
10. Black marketing, hoarding, bribery and corrupt
practices have become a big problem and
constraints in progress of India in all the
spheres of socio-economic activities
11. It is very essential that our elected
representatives, bureaucrats and corporate
executives develop extra concern for ethical
values quality in works and contracts
Ethics in Finance
1. POM is a major activity in any organisation.
2. It takes care of functions of materials,
processing and making the finished product.
3. It takes care of functions of materials (supply
chain management), maintenance, production,
trial testing or products, sub-contracting and
storage etc.
4. It involves various ordering contracts work and
hence faces lots of ethical issues.
5. Quality is always in focus due to customer
need

6. Any negligence on quality due to poor work

or deliberate negligence may lead to losses.

7. Workers play a vital role in quality and

quantity of products.
8. Workers positive attitude is essential to
make the work environment easy and
enjoyable

9. Workers need to be treated well as per their

experience, talent and age factors

10. Irritations in human relation are to be

avoided
11. Fast change of technology is helping to
catch unethical practices.

12. At the same time people are finding it easy

to indulge in unfair practices by using the
advanced technology
Ethics in Finance
1. Financial function is always under focus of top
management and the investing public

2. The companies which have collected public

money by shares issues have bigger social
responsibility than others

3. The financial investment decision is based on

short term, medium term and long term
requirements
4. Since last two decats the subject of public issues
is getting more importance due to huge collections
possible by this method.
5. Public issues have both advantages and
disadvantages
6. Many a times public get cheated by small
companies, who collect money and do not function
as per their prospectus.
7. The price and premium charged are unrealistic

8. Very few reputed companies indulge in insider

trading to benefit few individuals

9. This also can be used for artificial rise of

market price before next public issue.
10 It is observed that in Indian Films industry,
Sports and Politics, the management and
investment is having unethical practices
11. There is exploitation of women and the
money if under world gang is circulated in
their activities.
12. This has gone even to the stage of extortions,
murders, threats and disturbances

13. The law is not able to take quick action nor is it

easy to get proof and witnesses to eradicate
such unlawful practices.
Ethics in HRM
1. HRM is an essential function in every office,
organisation, workshop in private or
government management

2. Whatever the department one works, human

aspects are acting forces.

3. Hence most of the ethical issues are human

related
4. There is possibility of unfair and unethical
practices in many of the HRM functions.
5. The wrong practices can take place in solution,
compensation, perks and facilities, promotions,
transfers, training and development and
deputations to overseas training.

6. Sexual harassment to women employees is

one of the much talked subjects
7. This happens everywhere in the world and
more so in poor and developing countries
8. Many such cases go unreported due to fear of
social stigma
9. Management faces a challenge to keep
balanced views of various issues, fair and
unfair
10. Some times it is difficult to demarcate ethical
and unethical issues.
Ethics in HRM
1. Companies are started basically for profits.

2. However it is essential that profits are earned

by fair means

3. Every organisation must follow the minimum

expectations of environmental care and
employee welfare.

4. There are compulsory as per the Factories Act

1948 and it is subsequent amendments.
5. These companies who are making more profits
can afford to take up social causes voluntarily
6. This has to be done by realization that they
have earned so much from the society and
hence.
7. Some portion of profits must be utilised to
develop the very society
8. By adopting CSR companies improve their
public image and sales turnover.
9. The employee morale will be high and the
owners earn goodwill and respect from one and
all
10. This culture of CSR will help the youngsters to
follow good examples to improve the living
conditions of the people
.
Ethics in IT
1. Usage of computers and internet is increasing
everywhere in the world including the
developing nations

2. Along with this the crimes of different nature

and gravity are also increasing

3. With this situation it has become necessary to

understand various types of frauds and
precautionary measures.
4. Virus attacks, video piray, hicking, e-mail
intrusions have become common
5. Some do it for fun; thrills and other do it for
profits and to have competitive advantage in
business
6. Many credit card companies, original CD’s
manufacturers have suffered losses.
7. Even ISP agents can be hand in glove with
internet pirates
8. The existing laws are not adequate to catch
criminals
9. Some countries don’t even have laws to take care
of this fast changing technology
11. Internet area needs better security arrangements
Role of law and Enforcement
1. The growth of business and industry is making it
important in all human activities
2. Society now expects lot of things from business
3. The stakeholders are active and demand for good
governance
4. The consumer looks to good products of quality at
affordable prices and value for his money
5. The general public and local governments expect
philanthropy for the society n which the business
or industry is located
6. It is considered a ‘giveback’ from industry for use
of society resources.
7. The investors and government expect business to
be futuristic for its survival and growth
8. In all business or industry dealings, society also
expects fairness and ethic-morals
9. Organisation vision and practices should match
these goals
10. Business magazines are generally filled with
stories of companies in trouble due to bribery,
corruption, tax evasion or court cases of some bad
activities
11. These examples act as deterrents of business
ethics
12. Society expectations are very high from business
and industry
13. The society wants industry and business to be a
stakeholder, a philanthropist, and progressive and
improve value to be customers.
14. The professional bodies and statutory
authorities are developing ethical codes to
managers to guide managers on ethical
ways in doing business

15. The darker side of globalisation is terrorism

16. Terrorism has negative effect on business

17. It is like an undeclared war

18. To prevent and meet terrorism global efforts

are required at business and political levels
and to checkmate the so called ‘just wars’.
Business Ethics and Society