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Lesson 1:

NATURE AND SCOPE OF BUSINESS ETHICS

Business ethics is an application of ethical principles in all aspects of business. Ethical problems are universal and throughout all times. Duryodhana said: I know what is right but I am not able to act accordingly, I also know what is wrong but I am not able to restrain myself doing it.

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What we think we become and what we do become our practice. Ethics is philosophy in action Life is a series of actions Both mercy and justice are necessary for the world. Ethics encourages three types of constructive actions a) Obligatory actions expected to be performed by an individual b) Certain actions are prohibited c) Optional actions adding welfare to the customers.

Discussion

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How religion promotes ethics?

Guidelines Human values Positive affirmations Positive actions Holistic approach to life Ignorance is no longer a bliss

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Moral and Ethics

Close relationship Individual and collective moral behaviour Institutional interest above individual interest Elimination of negative qualities Learning organisations

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Type of Ethics
Transactional ethics

Ex: Doctor and patient

Participatory ethics

Ex: Development of a team

Recognitional ethics

Ex: Recoginition and appreciation

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Characters of Business Ethics

1) Individual responsibility 2) Voluntary in nature 3) Differs from person to person, time to time and place to place 4) Ethical decisions affect all the stake holders. 5) Cost benefit analysis cannot be undertaken 6) Effect of ethical decisions cannot be predicted 7) Lower level managers attempt to compromise ethical standards 8) Top management should commit for ethical practice

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9) Ethics has to be offered at corporate doors. Is it right? Is it fair? Who gets the benefit? Who gets hurt? What will you feel about this decision after five years? 10) Can learn from home, school and religious institutions.

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Myths of Business Ethics

1) 2) 3) 4) Ethics is personal and individual affair Business and ethics do not go hand in hand Relative ethics is common practice People learn ethics on their own (Ethics has to be taught) 5) Good business means good ethical practices

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Sources of Business Ethics

1) Religion 2) Culture : Values Norms - Charity 3) Philosophical system: Falsification of statement Overstating of profit Falsified advertisements Exploitation of labour 4) Legal system: Location, business practices, conditions of employment, pricing.

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The Competition Act, 2002

a) b) c) d) e) Size of the market Size of the competitors Monopoly position Barriers to entry Social obligation and costs

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Consumers Rights
1) 2) 3) 4) 5) Right to protection Right to information Right to assurance Right to be heard Right to redressal of grievances

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Factors Influencing Business Ethics i. Leadership : Serving all the stakeholders requires
discipline, vision and committed leadership Johnson and Johnson

ii. Strategy iii. Internal environment

Vision, mission and power structure

iv. External environment

Government policy, general economic conditions and labour standards.

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v. Corporate culture
Fair rules Guidelines known to all Periodic reviews Orientation, training, compensation, promotion and rewards- Ethical training How to act in a situation?

vi. No form of exploitation

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Importance of Business Ethics

1. 2. 3. 4. 5. 6. 7. Transparency Social responsibilities Protection of interest of all the stakeholders Improving the organisational effectiveness Healthy competition Avoidance of whistle blowing Promotion of values in business

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Working Principles of Ethics

1. 2. 3. 4. Standardisation (No fear, No favour) Workable and practical (Tangible benefits) Driven from top management Participation by all