GL BAJAJ INSTITUTE OF MANAGEMENT AND RESEARCH

GREATER NOIDA
ASSIGNMENT
PGDM Batch 2018-20

Name : parnika pranjali

Roll no. GM18146
Subject: Business Ethics & Corporate Governance
Date of Submission: 30 March,2020
Q1(a) Taking a specific industry as the backdrop, discuss why managers should
be guided by ethical reasoning rather than profit objectives when making
business decisions.(5 marks)
Ethical reasoning pertains to the rights and wrongs of human conduct. Each
person has standards that are defined by their personal values which come into
play when the person faces certain dilemmas or decisions.
Profit is the lifeblood of business, without which no business can survive in a
competitive market. In fact profit making is the primary objective for which
a business unit is brought into existence. Profit must be earned to ensure the
survival of business, its growth and expansion over time. ~Managers should be
guided by ethical profitability because Ethical decisions generate and sustain
trust; demonstrate respect, responsibility, fairness and caring; and are consistent
with good citizenship. These behaviors provide a foundation
for making better decisions by setting the ground rules for our behavior. Taking
automobile industry as a backdrop ,which is a good example of ethical decision
making rather than profit objective. ~Reasons -
*If motor vehicles are to be truly autonomous and able to operate responsibly
on our roads, they will need to replicate or do better than the human decision-
making process. But some decisions are more than just a mechanical application
of traffic laws and plotting a safe path. They seem to require a sense of ethics,
and this is a notoriously difficult capability to reduce into algorithms for a
computer to follow.
*Creates goodwill of the company,as automobile industry works on the trust
and experience of the customer.
*Ethical reasoning creates sense of responsibility and helps in sustaining
customers as it focuses on loyality,trust and experience of customer as the
ethical reasoning meets the level of standard in terms of quality.
* Profitability objective can lead to low quality sometimes as it focuses on
earning profits compared to quality.
Q1(b) According to WHO analysis out of the total world’s population, 80% still
relies on traditional medicine. In developing countries like India, 65% rural
communities still use traditional form of medicine to fullfill their primary health
care needs. In India, there are over 300 major tribal communities. Tribal
population in Maharashtra is about 9 million which is 9% of general population.
The concentration of tribal population occurs in remote areas of hilly regions of
Northern, Western and Northwestern regions of Maharashtra. Bhilla is one of
the major tribe and they are inhabited in Dhule, Jalgaon, Nandurbar districts of
Maharashtra. The tribals have long suffered from a terminal disease caused by
bugs. A company is developing a new drug to cure this. To save time they are
doing clinical trials of new drugs on human patients. However, the law does not
allow the same, but it saves time and lives can be saved by quickly launching
the new drug into the market. Then there is this important aspect that Mr Ram
wants to enhance his business motive and enter the market quickly so as to
make profits.
Q 1b. Discuss the moral development stage of Mr Ram (5 marks)
Ans.Lawrence Kohlberg's stages of moral development constitute an adaptation
of a psychological theory originally conceived by the Swiss psychologist Jean
Piaget The theory holds that moral reasoning, the basis for ethical behavior, has
six developmental stages, each more adequate at responding to moral dilemmas
than its predecessor. Kohlberg followed the development of moral judgment far
beyond the ages studied earlier by Piaget, who also claimed that logic and
morality develop through constructive stages
Level 1 (Pre-Conventional) 1. Obedience and punishment orientation
(How can I avoid punishment?)
2. Self-interest orientation
(What's in it for me?)
(Paying for a benefit)
Level 2 (Conventional)
3. Interpersonal accord and conformity
(Social norms)
(The good boy/girl attitude)
4. Authority and social-order maintaining orientation
(Law and order morality)
Level 3 (Post-Conventional)
5. Social contract orientation
6. Universal ethical principles (Principled conscience)
Level 1: Preconventional
Throughout the preconventional level, a child’s sense of morality is externally
controlled. Children accept and believe the rules of authority figures, such as
parents and teachers. A child with pre-conventional morality has not yet
adopted or internalized society’s conventions regarding what is right or wrong,
but instead focuses largely on external consequences that certain actions may
bring. Stage 1: Obedience-and-Punishment Orientation
Stage 1 focuses on the child’s desire to obey rules and avoid being punished.
For example, an action is perceived as morally wrong because the perpetrator is
punished; the worse the punishment for the act is, the more “bad” the act is
perceived to be.
Stage 2: Instrumental Orientation
Stage 2 expresses the “what’s in it for me?” position, in which right behavior is
defined by whatever the individual believes to be in their best interest. Stage
two reasoning shows a limited interest in the needs of others, only to the point
where it might further the individual’s own interests. As a result, concern for
others is not based on loyalty or intrinsic respect, but rather a “you scratch my
back, and I’ll scratch yours” mentality. An example would be when a child is
asked by his parents to do a chore. The child asks “what’s in it for me?” and the
parents offer the child an incentive by giving him an allowance.
Level 2: Conventional Throughout the conventional level, a child’s sense of
morality is tied to personal and societal relationships. Children continue to
accept the rules of authority figures, but this is now due to their belief that this
is necessary to ensure positive relationships and societal order. Adherence to
rules and conventions is somewhat rigid during these stages, and a rule’s
appropriateness or fairness is seldom questioned.
Stage 3: Good Boy, Nice Girl Orientation In stage 3, children want the
approval of others and act in ways to avoid disapproval. Emphasis is placed on
good behavior and people being “nice” to others.
Stage 4: Law-and-Order Orientation
In stage 4, the child blindly accepts rules and convention because of their
importance in maintaining a functioning society. Rules are seen as being the
same for everyone, and obeying rules by doing what one is “supposed” to do is
seen as valuable and important. Moral reasoning in stage four is beyond the
need for individual approval exhibited in stage three. If one person violates a
law, perhaps everyone would—thus there is an obligation and a duty to uphold
laws and rules. Most active members of society remain at stage four, where
morality is still predominantly dictated by an outside force.
Level 3: Postconventional Throughout the postconventional level, a person’s
sense of morality is defined in terms of more abstract principles and values.
People now believe that some laws are unjust and should be changed or
eliminated. This level is marked by a growing realization that individuals are
separate entities from society and that individuals may disobey rules
inconsistent with their own principles. Post-conventional moralists live by their
own ethical principles—principles that typically include such basic human
rights as life, liberty, and justice—and view rules as useful but changeable
mechanisms, rather than absolute dictates that must be obeyed without question.
Because post-conventional individuals elevate their own moral evaluation of a
situation over social conventions, their behavior, especially at stage six, can
sometimes be confused with that of those at the pre-conventional level. Some
theorists have speculated that many people may never reach this level of
abstract moral reasoning.
Stage 5: Social-Contract Orientation
In stage 5, the world is viewed as holding different opinions, rights, and values.
Such perspectives should be mutually respected as unique to each person or
community. Laws are regarded as social contracts rather than rigid edicts. Those
that do not promote the general welfare should be changed when necessary to
meet the greatest good for the greatest number of people. This is achieved
through majority decision and inevitable compromise. Democratic government
is theoretically based on stage five reasoning.
Stage 6: Universal-Ethical-Principal Orientation
In stage 6, moral reasoning is based on abstract reasoning using universal
ethical principles. Generally, the chosen principles are abstract rather than
concrete and focus on ideas such as equality, dignity, or respect. Laws are valid
only insofar as they are grounded in justice, and a commitment to justice carries
with it an obligation to disobey unjust laws. People choose the ethical principles
they want to follow, and if they violate those principles, they feel guilty. In this
way, the individual acts because it is morally right to do so (and not because he
or she wants to avoid punishment), it is in their best interest, it is expected, it is
legal, or it is previously agreed upon. Although Kohlberg insisted that stage six
exists, he found it difficult to identify individuals who consistently operated at
that level.
Mr Ram is on the Stage2 of moral development (Pre-Conventional) because he
is very oriented towards his interest and profits to launch the new medicine on
the market quickly in order to earn maximum profit.
Q2) A company is diversifying and to avail the tax benefits offered by the
government decides to open the factory in a remote area. However, the new
plant may bring chaos for the inhabitants of the region which is otherwise
peaceful. It would attract workers from nearby areas and disturb the social
and economic order and may result in increased cost of living. The
company sensing the possible protest tried to educate the people of the
region and public in general about its Corporate Social Responsibility
(CSR) initiatives it would launch in the region for upliftment of the people.
In spite of this the protests begin and some of the residents decided to
approach the judiciary also.
Q2- Identify the CSR initiatives the company can undertake to address the
issues involved in the case. (10 marks)
Ans. The term "Corporate Social Responsibility (CSR)" can be referred as
corporate initiative to assess and take responsibility for the company's effects on
the environment and impact on social welfare. The term generally applies to
companies efforts that go beyond what may be required by regulators or
environmental protection groups.
Corporate social responsibility may also be referred to as "corporate
citizenship" and can involve incurring short-term costs that do not provide an
immediate financial benefit to the company, but instead promote positive social
and environmental change.
The CSR initiatives the company can undertake to address the issues involved
in the case are: CSR is increasingly becoming integrated into core business
operations When properly designed and implemented to fit the needs of the
community and corporation, CSR can become source of opportunity,
innovation, and competitive advantage. The stakeholder engagement-based
CSR approach is particularly suitable and relevant to companies with plants in
rural or peri-urban disadvantaged areas, and willing to analyze and improve
community development around their factories. This “local” approach to CSR is
also the one promoted by the Indian Companies Act, that structures CSR by
articulating it around three main points :
(1) Its target group
(2) Its geographical base
(3) Its sector and issue
Tangible print on the local environment and communities, as extractive or
manufacturing companies’ plants, local community development is an asset to
strengthen their reputation and engagement around their factories.
Four key aspects that a company should keep in mind when launching local
CSR programs:
• Sustainability
• Co-creation
• Local team
• Long-term investment
Sustainability - Ensuring that a CSR initiative is sustainable is primarily
achieved by developing a healthy relationship with local communities and
working with them as partners.
Co-creation- As sustainability, co-creation is crucial to ensure that the
community has a stake in the development scheme, and hence fully engages in
order to achieve the success of the CSR initiative.
Local Team- Having a dedicated on-ground implementing team is an essential
feature. A local team, contrary to a corporate one, lies at the interface between
the company and the community.
Long Term Investment- Long-term investment is the condition for success of
local CSR initiatives and of their most valuable outcomes.
Some initiatives that can be taken are:
Environmental Conservation Environmental concerns regularly make the
headlines, whether a long-term problem like global climate change or a more
local issue such as a toxic chemical spill. Companies that align themselves in
these efforts help minimize environmental problems by taking steps such as
reducing their overall carbon footprint.
Company Diversity and Labor Practices Business leaders realize that diversity
in the workplace is beneficial when everyone is getting along and working as a
team.
However, labor policies must apply to all employees, even those at the highest
levels of the company. Supporting Volunteer Efforts Local communities and
charities always need help. Smart business leaders know that being involved in
the community in a productive way is good for the company too.
1. Give employees the opportunity to help a local school plant trees or work
with the city council on addressing homelessness in the area. Business leaders
have the opportunity to choose where to spend volunteer efforts to best help the
local area along with the company. The important thing for businesses is to
choose a cause and contribute time. Ensuring environmental sustainability to the
inhabitants.
2. Ensuring conservation of natural resources and maintaining quality of soil, air
and water by implementing the policies and standard norms regarding the same.
3. Promoting education, including special education and employment enhancing
vocation skills especially among children, women, elderly, and the differently
abled and livelihood enhancement projects;.
4. Finance the project for the development of the area.
5. Promoting the preventive healthcare system by opening the hospital in the
area.
6. Providing the proper sanitation system in the village.
7. Promoting the gender empowering women, setting up homes and hostels for
women and orphans; setting up old age homes, day care centres and such other
facilities for senior citizens
8. Training to promote rural sports.
9. Reducing Carbon footprints.