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Business Ethics

Business ethics can be defined as written and unwritten codes of principles and values that govern decisions and actions within a company. In the business world, the organization's culture sets standards for determining the difference between good and bad decision making and behaviour. Business ethics= moral rules, principles of behaviour applied in business In the most basic terms, a definition for business ethics boils down to knowing the difference between right and wrong and choosing to do what is right. shareholder perspective and the stakeholder perspective. Shareholder Perspective Those who approach ethical decision making from a shareholder perspective focus on making decisions that are in the owners' best interest. Decisions are guided by a need to maximize return on investment for the organization's shareholders. Individuals who approach ethics from this perspective feel that ethical business practices are ones that make the most money.

Stakeholder Perspective Corporate social responsibility : the belief that companies should consider the needs and interests of multiple stakeholder groups, not just those with a direct financial stake in the organization's profits and losses. Organizations that approach business ethics from a stakeholder perspective consider how decisions impact those inside and outside the organization. Stakeholders are individuals and groups who affect or who are affected by a company's actions and decisions. Shareholders are definitely stakeholders, but they are not the only ones who fall under the definition of stakeholder. Stakeholders may include: employees, suppliers, customers, competitors, government agencies, the news media, community residents and others. The idea behind stakeholder based ethical decision making is to make sound business decisions that work for the good of all affected parties. What is Ethical Behavior? ethical dilemmas one way of dealing with ethical dilemmas is by using the four way test to evaluate decisions. This test involves asking four questions: 1. 2. 3. 4. Is my decision a truthful one? Is my decision fair to everyone affected? Will it build goodwill for the organization? Is the decision beneficial to all parties who have a vested interest in the outcome?

word-of-mouth publicity/ advertising 2. Mission statement Written declaration of a firm's core purpose and focus which normally remain unchanged, whereas business strategies and practices may frequently be altered to adapt to the changing circumstances. Also called company mission, corporate mission, or corporate purpose.

E.g.

Ben & Jerrys Ice Cream A product mission stated as: "To make, distribute & sell the finest quality all natural ice cream & euphoric concoctions with a continued commitment to incorporating wholesome, natural ingredients and promoting business practices that respect the Earth and the Environment."

3. Code of ethics Written guidelines issued by an organization to its workers and management, to help them conduct their actions in accordance with its primary values and ethical standards. A guide of principles designed to help professionals conduct business honestly and with integrity. A code of ethics document may outline the mission and values of the business or organization, how professionals are

supposed to approach problems, the ethical principles based on the organization's core values and the standards to which the professional will be held. 4. Corporate social responsibility (CSR) Companies have a lot of power in the community and in the national economy. They control a lot of assets, and may have billions in cash at their disposal for socially conscious investments and programs. Some companies may engage in "green washing", or paying lip service to corporate responsibility programs, but many large corporations are devoting real time and money to environmental sustainability programs, alternative energy/cleantech, and various social welfare initiatives to benefit employees, customers, and the community at large. Corporate social citizenship

6. Ethical/ Unethical Business Practices

Ethical business practices are actions and attitudes held by a business and its employees that are considered professionally and morally responsible. These types of practices typically seek to promote the goals of the company without sacrificing the common good of its employees, customers, and even competitors.

This often includes programs to ensure fair hiring and promotion within a company, treating customers fairly, and being honest in regard to programs to increase sales. Ethical business practices are often initiated as a top down program, with corporate officers and the heads of the company acting as role models of behavior for other employees.

Ethical issues and society - examples

Honesty, truthfulness and fairness in marketing Use of animals in product testing Agricultural practices e.g. intensive faming The degree of safety built into product design The extent to which a business accepts its alleged responsibilities for mishaps, spillages and leaks The selling of addictive products e.g. tobacco, alcohol Involvement in the arms trade Trading with repressive regimes

Ethical issues arising from internal and industry practices - examples


Treatment of customers - e.g. honouring the spirit as well as the letter of the law in respect to warranties and after sales service The number and proportion of women and ethnic minority people in senior positions The organisations loyalty to employees when it is in difficult economic conditions Employment of disabled people Working conditions and treatment of workers Bribes to secure contracts Child labour in the developing world Business practices of supply firms

Unethical practices in marketing - examples


Pricing lack of clarity in pricing Dumping selling at a loss to increase market share and destroy competition in order to subsequently raise prices Encouraging people to claim prizes while phoning premium rate numbers High pressure selling - especially in relation to groups such as the elderly Counterfeit goods and brand piracy Copyright infringement Copying the style of packaging in an attempt to mislead consumers Deceptive advertising Irresponsible issue of credit cards and the irresponsible raising of credit limits

Unethical practices intelligence

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Unethical practices relating to products - examples Selling goods abroad which are banned at home Omitting to provide information on side effects Unsafe products Built in obsolescence Wasteful and unnecessary packaging Deception on size and content Inaccurate and incomplete testing of products Treatment of animals in product testing 5. Ethical consumerism/ ethical purchasing

Ethical consumerism is the intentional purchase of products and services that the customer considers to be made ethically. This may mean with minimal harm to or exploitation of humans, animals and/or the natural environment.

6. Sustainable development

Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. FOOD FOR THOUGHT?

The Social Responsibility of Business is to Increase its Profits Milton Friedmann, 1970 A business that makes nothing but money is a poor business. Henry Ford Being good in business is doing good business. Anita Roddick, British founder of The Body Shop