ETHICAL ISSUES IN FUNCTIONAL AREAS

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.
• Open criticism of competitors.
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
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