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Business Ethics

Corporate Ethics.
Ethical Extent of Access to Corporate
Corporate Disclosure
Trade Secret & Insider Trading
Computers & Privacy
Concept of Corporate Culture
Concept of Code of Ethics
Factors that lead to uestiona!le "nethical Practices
Concept of Social Audit
The Social Audit Process
Institutionali#ation of Ethical Conduct$
Ethical Extent of Access to Corporate Information.
Corporate Disclosure:
Two substantive moral principles:
%$ Each person has the right to the information he needs to enter into a transaction fairly$
&$ Each person has the right to 'no( those actions of others that (ill seriously and adversely
affect him$
Deal with three questions:
%$ To (hom must disclosure !e made availa!le)
&$ *ho must !e disclosed)
+$ *ho from should disclosure ta'e)
Ethical Extent of Access to Corporate Information.
Corporate Disclosure:
,ased on t(o principles a corporation has the moral o!ligation to disc louse needed information
to those (ith (hom it enters into transaction$
*hat morally must !e disclosed)
a- *hat must !e disclosed to (or'ers) They have right to 'no( the conditions of (or'
including their rights !enefits and o!ligations$
!- .overnment has the right to 'no( that corporations are complying (ith the la($
c- The corporation from a moral point of vie( should disclose to its suppliers (hatever is
necessary to ma'e the contracts !et(een them fair$
d- Disclosure of information to stoc'holders and to potential stoc'holders has caused a great
deal of de!ate$
e- The mem!ers of the !oard of directors are the legal representatives of the shareholders/ so
they o(e the shareholders appropriate information as (ell as honest service in the interests$
f- The consumers should !e informed of any dangers posed !y the use of the product he !uys
(ill !e reasona!ly safe if property used$
*hat form should disclosure ta'e) Shareholders are informed of corporation0s activities through
the annual report and the annual shareholders meeting government is informed of a company0s
activities through legally mandated reports and (here appropriate through on1site investigation
and inspection and (or'ers are informed of the conditions of employment prior to their
Trade secrets refer to all 'no(ledge developed a firm (hich it guards as proprietary$
Trade secrets designate an alternative to patents and copyrights as a means to protecting
inventions formulas and the li'e$
Indicators which mae information secret
The amount of securit!: A company may treat the information techni2ues of inventions/ or consumer
and3or suppliers list as highly confidential that is it ta'es measures to endure that the information is not
availa!le routinely !y restricting access and so on$
The amount of mone!: The amount of money the firm has spent in developing the information$
Information that can !e easily developed does not ma'e any sense$
The value of information to competitors: It is unli'ely that a firm (ill initiate great security to protect
information valua!le only to the firm itself$ If the information is valua!le to the competitors the
company (ill employ enough resources to protect the information$
Insider Tradin": Information that someone (ithin a company has !ut that is not availa!le to those
outside the company$ It includes only trade secrets$
Computers and privac!: The fear of many people concerning computers and privacy can !e descri!ed
as !ig !rothers$ 4ur society recogni#es areas of privacy for the individual into (hich others have no
right to penetrate unless serious harm is threatened to others$ Each person0s thoughts are his o(n as are
his !eliefs$ *hen employee records are 'ept in computer files rather than filing ca!inets/ employers are
!ound to secure that information at least as (ell as they secure filling ca!inets$
#actors that lead to questionable unethical practices.
5any companies place employees in such situations in (hich they are li'ely to perform unethically$
4veremphasis on !oth individual & corporate performance$
5ission statements/ evaluation systems & corporate culture that focus on profit as the company0s sole
Severe competition !et(een companies/ departments or individuals$
5anagement concern for the letter of the la( rather than spirit$
Code of Ethics
A formal (ritten statement specifying the 'inds of things that the !usiness !elieves should !e
done of those things that should !e avoided$
,usiness conduct standards are expressed in meetings/ company maga#ines/ policy manuals &
countless other (ays$
To tell employees ho( to approach & resolve ethical issues$
Deals (ith the most common issues rather complex ethical issues and offer general guidance$
$ocial Audit.
A systematic revie( of an organi#ation0s performance of social responsi!ility activities$ It includes more
than legal re2uirements$
Difference between $ocial % #inancial Audit:
In a financial audit there are standards of the profession and standards of lo( that must !e
adhere to
In a social audit there are no standards of social responsi!ility !ut there are !asic legal
standards responsi!ility pollution safety and employment discrimination and the li'e$
$teps of $ocial Audit &rocess.
Determine social expectations
4utline firm0s position and response
State program o!7ectives and resources committed
Monitor progress and implement corrections
Articulate the firm's values and "oals
The corporation should develop a philosophy of ethical conduct in the !usiness$
The top management of the corporation should set the fools follo(ing moral and ethical norms$
8esponsi!ility should !e not only repaired !ut taught !y example$
Determination should !e made a!out ho( much disclosure is appropriate and to (hom$
Companies should have the information regarding the demands and perception of employees/
consumer9s stoc'holders and pu!lic$
Adopt an Ethical Code
Ac'no(ledge the importance of conducting !usiness morally$
5a'e a real effort to encourage their mem!ers to ta'e moral responsi!ilities seriously$
End their defensiveness in the face of pu!lic discussion and criticism$
8ecogni#e the pluralistic nature of the social of (hich they are a part$
Committees to Institutionali(e Code of Ethics.
Communicate the code and decisions !ased on it$
Provide clear guidelines for ethical !ehavior$
Teach ethical guidelines and their importance$
Clarify and interpret the code (hen need arises$
Facilitate the code9s use$
Conduct fre2uent and unpredicta!le audits$
Investigate grievances and violations of the code$
Discipline violators (ith due punishment and re(ard$
Compliance and ma'e the same pu!lic$
Arran"e Appropriate Ethics Trainin"
A training module is developed$
Trainers should first !e trained !y outside experts in the line$
*or'shops/ seminars conferences are arranged periodically$
Informal social (arming li'e picnics/ sports/ and group travels group prayers etc$ 5ay !e used$
Silent o!servation of the decisions ta'en and treatment done (ith the interest groups$
Superiors at every level should !e encouraged to sho( actions and decisions$
Ethical Issues to Emplo!ees.
Employee 8ights
Factors that demand Ethical Considerations from Employees$
Crime of Employees$
Ethical Issues to Emplo!ees.
:o( employers conduct them selves on the 7o! can enhance or diminish the (or' environment
than any other single facet of employer1employee relations$
Employees ran' honest company communication/ personal recognition/ and respectful treatment
as more important than good pay$
This (or'place reality tons contrary to the teachings of almost all management theories$
In his classical (or' the human side of enterprise$ Douglas 5c.regor formulated theory ;$
Ethical Issues to Emplo!ees.
The management style premised on the !elief that (or'ers essentially disli'e (or' and (ill do
everything they can to avoid it$
5c.regor advocated theory < (hich assumes that employees !asically li'e (or' and vie( it as
something natural and potentially en7oya!le$
Theory =/ (hich touts >apanese1style respect for (or'ers$
#actors that demand Ethical Considerations from Emplo!ers.
)irin" % $election
Intervie(er must exercise care to avoid thoughtless comments that may hurt or insult the person
!eing intervie(ed$
For instance passing remar's a!out a person0s physical disa!ility or personal situation ?a single
A comment that an unthin'ing intervie(er might consider innocent or even friendly could !e
distressing to the persons sitting cross the ta!le$
Panel intervie( (ith uniform list of 2uestions for all applicants can help to increase o!7ectivity$
Screening is to attract only those applicants (ho have a good chance of 2ualifying for the 7o!$
Screening !egins (ith 7o! description ?duties responsi!ilities/ (or'ing conditions and physical
re2uirements- and 7o! specification ?s'ills/ educational experience and physical attri!utes-$
)ealth % safet!
Industrial accidents don0t 7ust happen$
They are caused !y inade2uate (or'er training lac' of understanding of the 7o! improper tools
and e2uipment ha#ardous (or' environments poor e2uipment maintenance and overly tight
5any experts !elieve that (or'place in7uries are related to !ehavior not shortcomings in
4ne as' management consultant says that industrial accident is the cause of hidden culture the
unspo'en rules that are adhered to and that is proactively oriented to(ard safety$
*ew )ealth Challen"es
The redesign of 7o!s/ ad7usta!le chairs/ training in the proper use of diode display terminals and
other preventive measures can often reduce the pro!lem or repetitive strain in7ury$
In case of in7ury/ it is not only the employees (ho are sufferings !ut having a s'illed (or'er go
out on long term disa!ility and vacation reha!ilitation can cast a company a small fortune$
Day care and maternity leave$
4ne often overloo'ed area in discussions of (or'ing conditions is the provision of
maternity3paternity leave and child1care services for (or'ers (ith children$
Employers are in good position to assist in leave and child care services for (or'ers (ith
5oral issue is (omen have a right to compete on an e2ual terrain (ith men$
The moral value here is not to promote any single vision of the good life !ut rather to permit
individuals/ couples and families as much autonomy as possi!le olden other social goals$
#actors that demand Ethical Considerations from Emplo!ers.
*histle ,lo(ing
Executive Privacy
Disclosure of facts
>o! Security
Treatment (ith respect
Freedom of speech and Association
8ight to a fair trial (ith due Process
8ights in Promoting and fining$
Crime of Emplo!ees
Stealing Company Products
em!e##lement of Company Funds
Ta'ing or .iving "nethical .ifts
Insider Trading
Ethical Issues relatin" to Bu!ers
The position of ,uyers compared to the Sellers$
The 5oral 8esponsi!ilities of ,usiness in the Area of Consumer Safety$
Sellers 8ights as a 5ar'et po(er
Concept of Consumerism
5a7or 8ights of ,uyer
5ar'eting Ethics
Ethical Pro!lem Areas in 5ar'eting
*ays of Ethical & Societal 5ar'eting
Guidelines for Proper Advertisements.