ETHICAL ISSUES IN FUNCTIONAL

AREAS

Module 4
WHAT IS ORG. FUNCTIONAL
AREA

FUNCTIO
NS

Marketin Productio IT/Syste

HR Finance
g n ms
Ethics in

MARKETING
 MARKETING
Marketing is the process of communicating
the value of a product to customers, for the
purpose of selling that product (goods or
services)
ETHICS IN MARKETING
Marketing ethics addresses principles and standards
that define acceptable conduct in the market place.
Unethical activities usually develop from the
pressure to meet performance objectives.
Marketing which goes beyond the mere provision of
information about (and access to) a product may
seek to manipulate our values and behavior.
Some obvious ethical issues in marketing involves
clear cut attempts to deceive or take advantage of a
situation
 SOME UNFAIR MARKETING
PRACTICES
• False and misleading presentation of
facts.
• Deliberate omitting of required
information.
• Implying a benefit that hardly exists.
• Trade puffing and exaggerations
Opinions rather than facts -
Statements such as "this car is in good
shape" and "your wife will love this
watch" constitute puffing.
 ETHICAL ISSUES IN MARKETING
FUNCTION
1. ETHICS IN MARKETING RESEARCH
• Consumers are concerned about privacy, and Internet
has increased privacy concerns.
• government also maintains a Do Not Call Registry to
prevent unwanted telemarketing.
2. ETHICS IN PRODUCT STRATEGY
• Example: Package strategy.
• Larger packages are more noticeable on the shelf.
• Oddly sized packages make price comparison difficult.
3.ETHICS IN DISTRIBUTION
• Manufacturer’s offers not getting passed on
• Should a company distribute its products in marginally
profitable outlets that have no alternative source of supply?
4.ETHICS IN PROMOTION
• Truth in advertising is the bedrock of ethics in promotion.
• Marketing to children has come under increased scrutiny.
• Marketing beer to college students, including through
providing promotional items such as shirts and hats, raises
ethical questions.
5.ETHICS IN PRICING
• Artificial scarcity & Black marketing
• Fixing a high price and charging less – false impression
 Ethical Issues & the
Marketing Mix

Product Pricing
Issues Issues

Customers

Promotion Distribution
Issues Issues
Ethics in

HUMAN RESOURCE
 ETHICS IN HRM
• The ethics of human resource
management (HRM) covers those
ethical issues arising around the
employer-employee relationship,
such as the rights and duties owed
between employer and employee
 HR Activities
• HR Planning and Analysis
• Equal Employment Opportunity
• Staffing
• HR Development
• Compensation and Benefits
• Health, Safety, and Security
• Employee and Labor/Management
Relations
How HR Spends Its Time
 What Organizations expect from
Employees
 Commitment
 Intelligent & hard work
 Discipline
 Loyalty
 Maintaining confidentiality
 Value addition
 What Employees expect from
organizations
Non statutory benefits
Compensation
Collective bargaining
Whistle blowing
Privacy
Data Security
Psychological contract
Outplacement
  Recruitment 
• Recruitment of kith and kin without assessing
abilities
• Recruitment based on financial favours
• Recruitment of relatives of other employees
• Recruitment of under-qualified persons
• Recruitment of over-qualified persons
• Gender based recruitments
• Employing child behavior
• Giving less than minimum wages as fixed by
government.
 Training 
• Arranging training for only pet employees
• Getting outsiders to train at high costs when insiders
are available
• Planning training programmes without assessing their
real need
• Organizing training programmes during peak seasons,
upsetting the business rhythm.
• Getting high profile trainers with expectations of a
reciprocal favour.
• Training programmes without proper preparation just
to show achievements in the annual report.
• Extending the duration of training programmes
• Supplying outmoded training materials
• Getting useless trainers as an obligation
 Administration 
• Tampering with leave records of employees
• Playing with employee records – adverse
remarks in a few cases
• Allow selective absenteeism on personal
considerations
• Giving promotion letters to favourites earlier
than others (making him more senior)
• Favourite supplier for office purchases
• Favourite security agency
• Favourite uniform suppliers
• Unclean premises. 
 IR 
• IR Managers not averse to siding wherever there were
monetary benefits
• Bargaining with the management till they want to be
seen as true in the eyes of workers
• IR Managers felt they were a superior lot with great
powers and used this to recruit their known ones
• Try to delay the solution as far as possible as their work
depended on IR disputes
• Incite (Provoke) workers to go on strike.
• Inducing Management/Workers to indulge in unhealthy
practices.
• Pressurize workers and state their genuine demands as
not genuine
• Divide and Rule
• Frame stringent and complicated rules to keep the
conflicts going.
Ethics in

PRODUCTION
• This area of business ethics deals
with the duties of a company to
ensure that products and production
processes do not cause harm.
 ETHICAL ISSUES IN
PRODUCTION
• Defective, addictive and inherently dangerous products
and services (e.g. tobacco, alcohol, weapons, motor
vehicles, chemical manufacturing)
• Ethical relations between the company and the
environment: pollution, environmental ethics, carbon
emissions trading
• Ethical problems arising out of new technologies:
genetically modified food, mobile phone radiation and
health.
• Product testing ethics: animal rights and animal testing,
use of economically disadvantaged groups (such as
students) as test objects.
• Medical products – duty to test adequately, side effects,
safety instructions, risk factors in financial products.
• Substitutes for published ingredients
Ethics in

IT/SYSTEMS
 Ethics and IT
• Developments that took place in the last 50
years in the field of science is more than the
entire period before.
• Transition from man – tool – machine –
automation – chip – a progression that has
made the human race less and less human.
• As a result of technological growth,
materialism took precedence over ethical
considerations and meeting the end through
any means became standards of society.
 IT & SOCIETY
• The use of information technology in
business has major impact on society, thus
raises serious ethical considerations in the
areas such as privacy,crime,health,working-
condition, inividuality,employment.
 UNETHICAL PRACTISES
• CRIME IN THE COMPUTER
• MONEY THEFT
• SERVICE THEFT -  (bypassing) a utility meter so
that the true level of consumption is understated
• DATA THEFT
• MALICIOUS ACCESS
• COMPUTER VIRUS
• HEALTH ISSUES
• CYBER ETHICS.
• SOFTWARE OWNERSHIP.
• CENSORSHIP.
Ethics in

FINANCE
ETHICS IN ACCOUNTANCY
Accounting is -
The process by which any business
keeps track of its Financial activities by
recordings its Debits and Credits and
balancing its accounts….
Accounting by its nature, is a system of
Principles applied to present the
Financial position of a business and the
results of its operations and cash flows..
 ETHICAL ISSUES SURROUNDING
ACCOUNTING PRACTICES:
o Underreporting income
o Falsifying Documents
o Illegally evading income taxes
o Or otherwise engaging in Frauds
o Creative Accounting

Example- The accounting Fraud case of

Mr. Ramalinga Raju in Satyam
Computers
 IN ORDER TO PREVENT SUCH ACCOUNTING
FRAUDULENT--

• GAAP(Generally Accepted
Accounting Principles)

• AICPA Code of Professional Conduct

(American Institute of CPAs)

• Indian Accounting Standard

 ETHICAL ISSUES IN FINANCIAL
MARKETS:
Ethical issues are related to-
 savings and credit banks,
 investment banks
 finance companies and fund managers,
 intermediaries and advisers,
 insurance companies and
 financial managers of large industrial
organizations.
 STOCK MARKET FRAUD
The country has witnessed various stock market frauds by
brokers in collusion with corporate to cheat investors and fool
regulator SEBI. There were two major securities scam in the
recent past – Harshad Mehta securities fraud and Ketan Parekh
scam.

 Brokers pushed the prices of selected shares through artificial

trade to attract retail investors and than suddenly withdraw
from the trade. In several cases the shares of bogus and paper
companies were raised to unreasonable levels. Once the scandal
was exposed, the share prices collapsed resulting in huge loss to
investors, especially those who invested their money on rumour
without ascertaining the credentials of the company. Heard
mentality proved expensive for many. Having suffered huge
losses, few investors even committed suicide
 ETHICAL ISSUES IN Merger &
Acquisition

o Adverse Effect on Competition in the

Market

o Anti competitive Business Practices

o Monopoly Business activities

o Forced M&A