Chapter 6: Review Questions

1. What does business ethics mean?

Business ethics refers to the set of principles and rules which provide standard to the
behaviour of individuals directly related to business affairs such as selling of products,
manufacturing and providing services to customer. It is an area of corporate responsibility
where businesses are bound legally and socially by the standard to operate in an ethical
manner. It enhances the law by outlining acceptable behaviours beyond government control.
Corporations establish business ethics to promote integrity among their employees and gain
trust from key stakeholders, such as investors and consumers.

2. What is the main objective of observing ethical behaviour in business?

Code of ethics for a profession is ideally to secure that the behaviour of the employees
are directed in a manner that is socially acceptable and respectful of one another. It
establishes a rule that provides standard for discipline and guide one’s actions in dealing
with different circumstances and act in accordance with the ethical rules by which
everyone is required to comply with.

3. Name the other purpose of business ethics.

Aside from the main purpose of business ethics, other purposes of it includes the
following:
a. To make business realize that they cannot employ double standards to the actions
of other people and to their own actions.
b. To show businessmen that common practices which they have thought to be right
because they see other businessmen doing it, are really wrong.
c. To serve as a standard or ideal upon which business conduct should be based.

4. What is the scope of business ethics?

Ethical behaviour is a very important element in holding the society together. It
maintains the proper order among the people and guides them towards attaining peace
and unity. Without ethical behaviour, people might exercise stealing, cheating, lying and
other actions that could lead into a chaos that may danger the people and the bond of the
society as a whole. Generally business ethics cover the following areas.
 Ethics in Compliance
Compliance is about obeying and adhering to rules and authority. The motivation
for being compliant could be to do the right thing out of the fear of being caught
rather than a desire to be abiding by the law. An ethical climate in an organization
ensures that compliance with law is fuelled by a desire to abide by the laws.
Organizations that value high ethics comply with the laws not only in letter but go
beyond what is stipulated or expected of them.

 Ethics in Finance
The potential for financial managers to line their own pockets or ruin a client or
company through bad judgment is immense. The role of ethics in financial
management is to balance, protect and preserve stakeholders' interests. Financial
managers must have the skills to handle large sums of other peoples' money, but
skill alone isn't enough. It's essential to have a code of ethics in finance and to live
up to those principles every day.
  Ethics in Human Resources
Human resource management (HRM) plays a decisive role in introducing and
implementing ethics. Ethics should be a pivotal issue for HR specialists. 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.

 Ethics in Marketing
Marketing ethics is the area of applied ethics which deals with the moral
principles behind the operation and regulation of marketing. The ethical issues
confronted in this area include:

 Ethics of Production
This area of business ethics deals with the duties of a company to ensure that
products and production processes do not cause harm. Some of the more acute
dilemmas in this area arise out of the fact that there is usually a degree of danger
in any product or production process and it is difficult to define a degree of
permissibility, or the degree of permissibility may depend on the changing state
of preventative technologies or changing social perceptions of acceptable risk.

5. Explain the economic impact of observing business ethics.

A business has an economic impact on society through the wages it pays to its
employees, the materials that it buys from their suppliers and the prices it charges its
customers. It would have a positive social impact on its employees if they are paid fair
living wages and benefits. It will have a positive effect on its suppliers that they paid fairly
and on time for their suppliers. The effect on its customers is positive if the business gives
them good value for the price they pay for the products and services.

6. What is the impact of business ethics to society in general?

Business ethics maintains to keep the business under the expectations and welfare of
society because society provides the place for business so business should be made bound
not to violate the basic of society. The purpose of a business should be contribution in
bringing prosperity and harmony in society. Business ethics take into consideration
responsibilities not just inside the workplace, but also within the environmental, cultural,
and social structures of communities. The social impact of corporate governance
contributes to the ethical climate of society. If business offers bribes to secure work or
other benefits, engage in accounting fraud or breach regulatory and legal limitations on
their operations, the ethics of society suffer. In addition to a deteriorating ethical
environment, such as corruption may unfairly raise the price of goods for consumers or
the quality of the product or service compromised.

7. Explain how business managers could act ethically.

A business manager acts ethically if he follows the following actions:
 acknowledge that his role is to serve the business enterprise and the
community;
 Avoid all abuse of executive power for personal gain, advantage or prestige;
  reveal the fact to his superior whenever his personal business of financial
interests conflict with those of the company;
 be actively concerned with the difficulties and problems of subordinates,
treat them fairly and by example, lead them effectively , assuring o all the
right of reasonable access and appeal to superiors,;
 recognize that his subordinates have a right to information on matter
affecting them, and make provision for its prompt communication unless
such communication is likely to undermine the security and efficiency of the
business;
 fully evaluate the likely effects on employees and the community of the
business plans for the future before taking a final decisions; and
 cooperate with his colleagues and not attempt to secure personal advantages
at their expenses,

8. Describe the inherent conflict between ethics and pursuit of profit

The pursuit of profit must not conflict with the concept of what is right or ethical in the
conduct of business. One of the most salient considerations for pursuing business is
profit. But that doesn’t mean that anyone who is into business has the right to employ
whatever means they want to obtain profits. There is no absolute freedom for anyone to
implement whatever means to gain profits, mostly if those means are unethical, abusive,
or harmful to the society or environment. In addition, people often joke that “business
ethics” is a contradiction in terms. What they are referring to is the apparently inherent
between ethics and pursuit of profit. The implication is that if a company has to choose
between profits and doing the right thing, profits will always win.