BUSINESS ETHICS CONCEPT AND CASES 7THEDITION By: Manuel G.

Valeasquez
Topic Week 1
Wee
Topic Learning Objective
k

PART ONE 1. What situations can prompt unethical Behavior?

Ethics and Business, 2.What is the Nature of Ethics?
Basic Ethical 3.What is meant by Code of Ethics?
1
Principles 4. What is the nature of Business ethics, importance
An overview of types of and objections?
ethics

What situations can prompt unethical Behavior?

Unethical Behavior Among Individuals

1. Lying to your spouse about how much money you spent.

2. Lying to your parents about where you were for the evening.
3. Lying on your resume in order to get a job
4. Talking about a friend behind his back
5. Taking credit for work you did not do
6. Taking money out of your friend's wallet when he is sleeping.
7. Cheating on a school paper by copying it off the Internet.
8. Using your position of power at work to sexually harass someone.
9. Selling a house or Car and not disclosing known defects to the buyers.
10. Stealing money from the petty cash drawer at work.

Unethical Behavior Among Businesses

1. Coercing an injured worker not to report a work injury to workers' compensation

by threatening him with the loss of a job or benefits.
2. Dumping pollutants into the water supply rather than cleaning up the pollution
properly.
3. Engaging in price fixing to force smaller competitors out of business.
4. Not paying an employee for all of the hours worked.
5. Incorrectly classifying an employee as an independent contractor and not as an
employee in order to reduce payroll taxes and avoid purchasing unemployment
and workers' compensation insurance.
6. Using bait and switch or false advertising tactics to lure customers in or convince
them to buy a product.
7. Rolling back the odometer on a vehicle that is for sale.
8. Refusing to honor a warranty claim on a defective product.

1
 9. Refusing to give an employee a final paycheck for hours worked after the
employee leaves the company.
10. Releasing toxins into the air in levels above what is permitted by the
Environmental Protection Agency.

What is the Nature of Ethics?

Ethics is “the study of morality. “The term ethics has several meanings. One of the
meanings given to it is:

“the principles of conduct governing an individual or a group.”

for example, when referring to the rules by which an individual lives his or her personal
life.
Ethics The discipline that examines one’s moral standards or the moral standards of a
society to evaluate their reasonableness and their implications for one’s life.

Morality: are the standards that an individual or a group has about what is right and
wrong, or good and evil.

Moral standards: include the norms we have about the kinds of actions we believe are
morally right and wrong, as well as the values we place on what we believe is morally
good or morally bad. Moral norms can usually be expressed as general rules about our
actions, such as “Always tell the truth,” “It’s wrong to kill innocent people,”
or “Actions are right to the extent that they produce happiness.” Moral values can
usually be expressed with statements about objects or features of objects that have
worth, such as “Honesty is good,” and “Injustice is bad.”

Characteristics of Moral Norms

1. Involved with serious injuries or benefits to human beings.
2. Not established by Law or Legislature.
3. Should be preferred to other values including self-interest.
4. Based on impartial considerations
5. Associated with special emotions and vocabulary
6. Involved with serious injuries or benefits.
7. Not established by Law or Legislature.
8. Should be preferred to other values including self-interest.
9. Based on impartial considerations
10. Associated with special emotions and vocabulary

2
Nonmoral standards: The standards by which we judge what is good or bad and right
or wrong in a nonmoral way.Examples include
1. the standards of etiquette by which we judge people’s manners as good or bad,
2. the rules of behavior set by parents, teachers, or other authorities,
3. the norms we call the law by which we determine what is legally right and wrong,
4. the standards of language by which we judge what is grammatically right and
wrong,
5. the standards of art by which we judge whether a painting or a song is good or
bad,
6. the sports standards by which we judge how well a game of football or basketball
is being played.

Distinguish between Moral Norms and Nonmoral Norms or conventional

standards?
1. From the age of three we can distinguish moral from nonmoral norms.
2. From the age of three we tend to think that moral norms are more serious than
nonmoral norms and apply everywhere independent of what authorities say.The
ability to distinguish moral from nonmoral norms is innate and universal.
3. Conventional norms are less serious and wrong only where authorities set such
norms.

Scope of Ethics:

Ethics is not the only way to study morality. The social sciences—such as anthropology,
sociology, and psychology—also study morality, but do so in a way that is different from
the approach to morality that ethics takes. While ethics is a normative study of morality,
the social sciences engage in a descriptive study of morality.

A normative studyis an investigation that tries to reach normative conclusions—that is,

conclusions about what things are good or bad or about what actions are right or wrong.

A descriptive studyis one that does not try to reach any conclusions about what things
are truly good or bad or right or wrong. Instead, a descriptive study tries to describe or
explain the world without reaching any conclusions about whether the world is as it
ought to be

Kinds of Ethical Issues

Systemic—ethical questions about the social, political, legal, oreconomic systems

withinwhich companies operate
Corporate—ethical questions about a particular corporation and its policies, culture,
climate, impact, or actions
Individual—ethical questions about a particular individual’s decisions, behavior, or
character

3
What is meant by Code of Ethics?

A code of ethics is a guide of principles designed to help professionals conduct

business honestly and with integrity. A code of business ethics behavior is What is to
be done for the welfare of society and what to do. All traders must follow this code of
behavior.A code of ethics also referred to as an "ethical code," generally implies
documents at three levels:

1. codes of business ethics,

2. codes of conduct for employees,
3. codes of professional practice.

For Examples we have all heard of Code of ethics in the form of Hippocratic Oath that
all the Doctors are supposed to take prior to being awarded permission to practice
medicine.

Types of Codes of Ethics:

Principle-Based – Designed to enable the employee to make ethical decisions based

on appropriate values e.g., “treat people fairly” or “don’t be dishonest”.

Policy-Based – Guideline as to how to act in specific ethical dilemma situations

(reducing the need for thinking)
(a) Conflicts of interest
(b) Disseminating proprietary information
(c) Receiving and giving political gifts
(d) Equal opportunities

Generally, the 5 codes of ethics are:

1. Integrity. 4. Confidentiality.
2. Objectivity. 5. Professional behavior
3. Professional competence.

Difference between a Code of Ethics and Code of Conduct?

A code of ethics is broad, giving employees or members a general idea of what types
of behavior and decisions are acceptable and encouraged at a business or
organization.

A code of conduct is more focused. It defines how employees or members should act
in specific situations.

4
What is the nature of Business ethics?

A specialized study of moral right and wrong that concentrates on moral standards as
they apply to business institutions, organizations, and behavior.Business ethics deal
with those activities of business enterprises some of which should be done and some
should not be done for the society.
The nature of business ethics refers to the standard characteristics of human behavior
in its definition as its core concept.It deals with the corporate sector in various points
related to their ethics of business.

A businessman must practice some ethics and here we describe the nature of business
ethics below:

1. Ensure the legality of business activities. Business activities must be legal

and a businessman should not do any kind of illegal activity.
2. Customer orientation: All of his operations must be customer-oriented. He must
bear in his mind that the “customer is the kind” So, he should produce and
distribute those types of goods and services which can satisfy the customers.
3. Supplying good quality product: A businessman must have to ensure the
supply of good quality products and services. He has to maintain the minimum
standard of his product and service.
4. Price: The businessman has to claim a reasonable price for has products or
services that are under the buying capacity of the customers.
5. Following rules and regulations: A businessman must have to follow all
business-related rules and regulations that are formulated by the government.
6. Employer-employee relationship: This is an important issue to build up a
friendly relationship between employers and employees in an organization
because the successes of the organization largely depend on it.
7. Avoiding fraud and cheating: A businessman has to avoid unfair means. He
should not try to cheat or fraud the customers or the general public. He should
always practice honesty and sincerity in his activities.
8. Environmental issues: In the present world, environmental issues are
considered a vital matter. A businessman ensures a healthy environment for the
insiders as well as the outsiders for running the organization smoothly.
9. Avoiding artificial shortage: Some dishonest businessmen create an artificial
shortage of products and thereby they want to gain more profit. This is not
acceptable.
10. Meeting the claims: Claims of different categories of people like workers,
executives, suppliers, etc. are not the same but businessmen have to satisfy
them as per their requirements.
11. Avoiding harmful competition: In order to survive in the market successfully,
each and every business organization should co-operate with each other. They
should avoid harmful competition.
12. Social welfare: Profit earning cannot be the sole motive of business activity.
Businessmen have a social responsibility that must be met. Moreover, the

5
 business organization produces goods and services to generate profit. At the
same time, it must have some impact on society as well as the whole community.

Importance of business ethics

The most systematic method of encouraging ethical behavior is to create moral values
and corporate cultures that link business practices.More and more companies recognize
links between business ethics and financial performance. Companies expressing a
“clear commitment to ethical behavior” continue to exceed organizations that do not
consistently display ethical behavior.

1. Maintain talent. People are willing to join organizations that have high ethical
standards.

2. Investor loyalty. Permanent relation of repeat order / mutual respect for the
company’s success is essential. A company name should be raised in trust and
respect among customers for permanent success.

3. Customer satisfaction. Customer satisfaction is an important component of

successful business strategies. Permanent relation of repeat order / mutual
respect for the company’s success is essential.

4. Regulators. Regulatory eye companies are working ethically as responsible

citizens. The regulator is not always required to monitor the effectiveness of the
company firmly ethically.

Objections to business Ethics:

Arguments Against Ethicsin Business
1. In a free market economy, the pursuit of profit will ensure maximum social benefit
so business ethics is not needed.
2. A manager’s most important obligation is loyalty to the company regardless of
ethics.
3. So long as companies obey the law, they will do all that ethics requires.

Arguments SupportingEthics in Business

1. Ethics applies to all human activities.
2. Business cannot survive without ethics.
3. Ethics is consistent with profit seeking.
4. Customers, employees, and people in general care about ethics.
5. Studies suggest ethics does not detract from profits and seems to contribute to
profits.
Law of agency A law that specifies the duties of persons who agree to act on behalf of
another party and who are authorized by an agreement so to act.