BUSINESS ETHICS

Module III
Prof.S.B.Mishra
What do you mean by Ethics?
• The English word "ethics" is derived from the Ancient
Greek word ēthikós (ἠθικός), meaning "relating to
one's character",

• Prof. S.K Sarangi “Ethics are basically codes

governing “Do” and “Don’t”, Ethics involves the study
of moral issues and choices. It is concerned with right
Vs. Wrong , Good or bad.
Continues
• Dictionary meaning: Ethics are moral principles that govern
a person's behavior or the conducting of an activity.
• What is right is ethical and what is wrong is unethical. The
overall meaning is that if it is Ethical it is right, proper ,fair
and just.
• Issues of right or wrong are related to one’s values.
• Ethics or moral philosophy is a branch of philosophy that
involves systematizing, defending, and
recommending concepts of right and wrong conduct.
What do you mean by Business Ethics?

• According to Mannuel G Velasquez “Business Ethics is

a specialized study of moral right and wrong. It
concentrates on moral standards as they apply to
business policies, institutions and behavior.”
Continues
• Business ethics goes beyond just a moral code of
right and wrong; it attempts to reconcile what
companies must do legally versus maintaining a
competitive advantage over other businesses. Firms
display business ethics in several ways.
• In other words and in short, business ethics means to
conduct business with a human touch in order to
give welfare to the society.
Hypothetical Examples
• 1. XYZ Co sells cereals with all-natural ingredients….
Should marketing people advertise these facts.

• 2. One low quality part was found in a batch of

10000 electronics machine parts ready for
dispatch…… should you export or not
So, the businessmen must…
 Give a regular supply of good quality goods and services at
reasonable prices to their consumers.
 They must avoid indulging in unfair trade practices like
adulteration, promoting misleading advertisements, cheating in
weights and measures, black marketing, etc.
 They must give fair wages and provide good working conditions to
their workers. They must not exploit the workers.
 They must encourage competition in the market.
 They must protect the interest of small businessmen.
 They must avoid unfair competition.
 They must avoid monopolies. They must pay all their taxes
regularly to the government
Real life Examples…..
• Johnson & Johnson recalls baby powder over
asbestos concerns 24 October 2019
• The US Food and Drug Administration (FDA)
discovered "sub-trace levels” of chrysotile fibres – a
type of asbestos which has been linked to cancer – in
a single bottle of baby powder purchased from an
online retailer.
Facebook and Google :
• Speculation that fake news spread on social media may have
influenced the 2016 US President Elections.
• In 2017 ,Facebook and Google — which derive a major chunk of
their revenue from ad placements — both saying that they had
found accounts tied to the Russian government. Facebook
reported some 3,000 Kremlin-linked ads aimed at dividing the
country that had been bought on its platform. Google,
meanwhile, found tens of thousands of ads bought by Russia-
linked entities on YouTube and Gmail. Twitter also revealed that
a news outlet paid for by the Russian government, Russia Today,
had spent $274,000 in ads on the platform in 2016.
The #MeToo movement
• The #MeToo movement continued to make waves,
and names like Weinstein and Spacey and CK
continued to make headlines. Attention was focused
on Hollywood, but went far beyond into the
corporate world as well — Google employees walked
out over the company’s handling of sexual
harassment claims. Those who teach courses on
ethics and social responsibility are now faced with
how to include #MeToo in the Classroom
Describe the nature (characteristics) of Business Ethics.

1) Code of conduct: Business ethics is a code of conduct. It

tells what to do and what not to do for the welfare of the
society. All businessmen must follow this code of conduct.
2) Based on moral and social values: Business ethics is
based on moral and social values.
3) Gives protection to social groups: Business ethics give
protection to different social groups such as consumers,
employees, small businessmen, government, shareholders
and creditors, etc.
Continues
4) Provides basic framework: Business ethics provide
a basic framework for doing business.
5) Voluntary: Business ethics must be voluntary. The
businessmen must accept business ethics on their
own. Business ethics must be like self-discipline. It
must not be enforced by law.
6) Requires education and guidance:
Continues…
7) Relative Term: Business ethics is a relative term.
That is, it changes from one business to another. It
also changes from one country to another. What is
considered as good in one country may be taboo in
another country.
8) New concept: Business ethics is a newer concept. It
is strictly followed only in developed countries. It is
not followed properly in poor and developing
countries.
Importance (need for) of Business Ethics
I. Long-term growth: sustainability comes from an ethical
long-term vision which takes into account all
stakeholders. Smaller but sustainable profits long-term
must be better than higher but riskier short-lived
profits.
II. Cost and risk reduction: companies which recognize the
importance of business ethics will need to spend less
protecting themselves from internal and external
behavioral risks, especially when supported by sound
governance systems and independent research
Continues…
III. Anti-capitalist sentiment: the financial crisis
marked another blow for the credibility of
capitalism, with resentment towards bank bailouts
at the cost of fundamental rights such as education
and healthcare.
IV. Limited resources: the planet has finite resources
but a growing population; without ethics, those
resources are repleted for purely individual gain at
huge cost both to current and future generations.
The scope of business ethics

• Ethical problems and phenomena arise across all the

functional areas of business organizations and at all
levels within the organisation. So the scope of
business ethics is very wide and covers all aspects of
business and other activities of business firms.
Continues…
• Ethics in Compliance: 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 ethical issues in finance that
companies and employees are confronted with include:
– In accounting – window dressing, misleading financial
analysis.
– Related party transactions not at arm’s length
– Insider trading, securities fraud leading to manipulation of
the financial markets
Continues…
• Ethics in Human Resources :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.
– Discrimination issues i.e. discrimination on the
bases of age, gender, race, religion, disabilities,
weight etc.
– Sexual harassment
Continues…
• 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:
– Pricing: price fixing, price discrimination, price skimming.
– Anti-competitive practices like manipulation of supply,
exclusive dealing arrangements, tying arrangements etc.
– Misleading advertisements
– Content of advertisements.
– Children and marketing.
– Black markets, grey markets.
Continues…
• 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.
– Ethical problems arising out of new technologies
for eg. Genetically modified food
– Product testing ethics.
– Defective, addictive and inherently dangerous
products .
Is Business Ethics important to adhere to?
OR Advantages of business ethics.
• “Success without integrity is failure.” A successful company
is not just about impressive financial statements; success
also has a lot to do with an ethics based in management
philosophy, organisation culture and business practices.
• More and more companies recognize the link between
business ethics and financial performance. Companies
displaying a “clear commitment to ethical conduct”
consistently outperform companies that do not display
ethical conduct
A. Attracting and retaining talent: People aspire to join
organizations that have high ethical values
B. Investor Loyalty : Investors are concerned about ethics,
social responsibility and reputation of the company in
which they invest.
C. Customer satisfaction :The name of a company should
evoke trust and respect among customers for enduring
success. This is achieved by a company that adopts ethical
practices.
D. Regulators :Regulators eye companies functioning ethically
as responsible citizens.
What are the factors influencing business
ethics?

• 1. Personal Code of Ethics: A man’s personal code of

ethics that is what one considers moral is the
foremost responsible factor influencing his behavior.
•  
• 2. Legislation: It is already stated that the
Government will intervene and enact laws only when
the businessmen become too unethical and selfish
and totally ignore their responsibility to the society.
• Ethical Climate of the Industry: . If the company’s
performance is below than other companies, in the
same industry, it cannot survive in the field in the
long run.

• Government Rules and Regulations: Laws support

Government regulations regarding the working
conditions, product safety, statutory warning etc.
• Ethical Code of the Company : When a company
grows larger, its standard of ethical conduct tends to
rise. Any unethical behavior or conduct on the part of
the company shall endanger its established
reputation, public image and goodwill.

• Social Pressures: Social forces and pressures have

considerable influence on ethics in business.
Thank You.
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