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INTRODUCTION TO ETHICS

WHAT IS ETHICS?
‡ Ethics originated from the word ´ethosµ ² character or manners ‡ Ethics can be defined as ´the rules or standards governing the conduct of a person or the members of a professionµ ‡ Ethics is concerned with distinguishing between
² good and evil in the world, ² right and wrong human actions, and ² virtuous and non virtuous characteristics of people.

‡ When more than 100 business people were asked by a sociologist ´what does ehtical mean to youµ
² More than 50percent defined it as ´what my feelings tell me is rightµ ² 25 percent defined it in religious terms as what is ´in accord with my religious beliefsµ ² 18 percent ² ´conforms to the golden ruleµ

‡ As per dictionary several definitions are available
² Principles of conduct governing an individual or a group ² A set of principles of right conduct ² theory or a system of moral values

‡ Personal ethics ²
² referring to the rules by which an individual lives his or her personal life

‡ Professional ethics ²
² the code that guides the professional conduct of people

e.‡ Ethics is the discipline that examines one·s moral standards or the moral standards of the society ‡ It questions the applicability of these standards to our lives and whether these standards are reasonable or unreasonable ‡ i. whether they are supported by good reasons or poor ones .

‡ Ethical conduct is grounded in principles embracing ² ² ² ² ² ² ² ² ² Honesty Fairness Respect for others Honouring commitments and obligations Compassion Integrity Taking responsibilities for our actions Striving excellence in performance Complying with laws and regulations .

makes recommendations about how to or how not to behave ‡ Expresses an opinion or attitude about human conduct in general .OBJECTIVES OF ETHICS ‡ The primary objective is to define the highest good of man and set a standard for the same ‡ Diagnostic goal ± ± Makes evaluative assessment about human behaviour as moral or immoral ‡ Establishes moral standards/norms of behaviour ‡ Makes judgment upon human behaviour based on these standards and norms ‡ Therapeutic goal ± ± Prescribes moral behaviour.

NATURE OF ETHICS ‡ Deals with human behaviour only ‡ The science of ethics is normative science ‡ Ethics deals with human conduct which is voluntary and not forced or coerced ‡ Ethics is basically an area of dealing with moral judgement regarding voluntary human conduct .

SOURCE OF ETHICS ‡ ‡ ‡ ‡ ‡ ‡ Genetic inheritance Religion Philosophical systems Cultural experience The legal system Codes of conduct .

BUSINESS ETHICS .

WHAT IS BUSINESS ETHICS ? ‡ Business ethics are moral principles that define right and wrong behaviour of the business world ‡ The right or wrong is decided by the ² Public interest groups ² Business organisations ² Individual·s personal morals and values .

theft and collusions ‡ The three terms used to define ethics are ² Right ² Proper ² Just .‡ Ethical business performance ² adhering to society·s basic rules that define right and wrong behaviour ‡ Major challenges in business ² balance ethics and economics ‡ Should be ethical and economically profitable ‡ The ethics of management goes beyond simple acts like bribery.

Ethics and profits go together Ethics is the conscious appeal to norms and values. we hold ourselves obliged ‡ People in business often face ethical questions where balance has to be found between the different and often conflicting rights and interests at stake .‡ ‡ ‡ ‡ Ethical adherence gives rise to efficient economy Government and law can protect to an extent In the long run.

‡ Ethics conflicts with profits ‡ Business always chooses profits over ethics ‡ Ethical behaviour creates the kind of goodwill and reputation that will expand opportunities for profit ‡ The first and foremost ethical obligation is to make profits for the shareholders and stakeholders ‡ Also to discharge social responsibilities and welfare commitments .

develop and excel must earn social sanctions ² Without social sanctions.NEED FOR BUSINESS ETHICS ‡ Business operates within the society ² Must contribute to the welfare of the society ² To survive. businesses cannot get loyal customers ² It will collapse and die away in the long run ² Maintenance of proper image ² Assumption of greater responsibilities .

‡ Every business exists more on ethical means or in total regard to its social concern to survive long ‡ Business needs to function as responsible corporate citizen in the country ² The organ of the society that creates wealth .

IMPORTANCE OF BUSINESS ETHICS ‡ Positive benefits of good ethical practices ² High morale ² Improved productivity ‡ Ethical problems occur for the following reasons ² ² ² ² ² Personal gain/dubious character Individual values widely differ with organisational goals Managers values and attitudes Competitive pressures Cross-cultural contradictions .

MANAGERS VALUES AND ATTITUDES ‡ Ethical guidance will be usually provided by the top level to the employees down below ‡ The value held by top managers are important in promoting ethical activities ‡ Three questions that every manager should ask before making a decision ² Will it work? ² Is it right? ² Is it pleasant? .

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‡ Factors which might cause the managers to make unethical decisions ² ² ² ² ² ² Behaviour of the supervisors Peers Industry·s ethical climate Society·s moral climate Formal company policy Personal financial need ‡ Values and attitudes of managers are a critical element in a company·s ethical performance .

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NATURE OF BUSINESS ETHICS ‡ Most ethical questions could be of two types ² Overt ² covert ‡ Ethical issues commonly occur in management ² Areas of corporate acquisitions & Merger of firms ² Marketing policies ² Capital investments ‡ Ethics expects a manager to be honest within himself and also in the society .

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‡ The characteristics of an ethical decision ² Morally correct and due (Right) ² Justice is not only done. but also seen to have been done (just) ² Appropriate and acceptable (Proper) ² Just and equal (just) ² Honest and due (Right) ² Highest good for all concerned .

‡ Ethics is unstructured ² Does not have a standard format or framework ² Is abstract in concept ‡ Does not have universal concept ‡ If a decision helps in benefiting only to oneself. then it is not an ethical decision .

FACTORS INFLUENCING BUSINESS ETHICS ‡ Leadership ‡ Strategy and Performance ‡ Environment ‡ Corporate Culture ‡ Individual Characteristics .

wield power ² hence we should be careful whom we choose as leaders ‡ Leaders should serve as models and mentors ‡ Teaching is one of the primary jobs of leadership .LEADERSHIP ‡ Character is the most crucial and elusive element of leadership ‡ Leaders rule us.

CEO need to be openly and strongly committed to ethical conduct ‡ Executives play a crucial role in creating.EXECUTIVE & SUPERVISORY LEADERSHIP ‡ To achieve results. maintaining and changing ethical culture ‡ Supervisors are responsible for rewards and punishments ‡ Ethical climate or culture in an organisation is more important than specific ethics .

The elements of ethical culture that guide employee thought and action covers: Leadership Fairness Employee authority structure Reward systems Ethics as a topic of conversation in the organisation Organisational focus that communicates care for the employees and the community .

when facing difficult dilemmas .STRATEGY AND PERFORMANCE ‡ In order to act with integrity. a firm must articulate its values and priorities ‡ The most widely used form of values articulated are: ² Corporate mission ² Code of conduct ² Code of ethics ‡ Defining its value structure provides guidance to individual decision makers with the firm.

‡ Three types of strategies formed in firms: ² Corporate strategy ‡ The patterns of entrepreneurial actions and intents underlying the organisations strategic interests in different business. customer groups and customer needs ² Business strategy ‡ The managerial plan for directing and running a particular business unit ² Functional strategy ‡ Plan to manage a principal subordinate activity within a business . divisions. products lines. technologies.

ETHICAL BUSINESS PERFORMANCE ‡ Adhering to society·s basic rules that define right and wrong behaviour ‡ Law and ethics are not identical ² ethical rules are broader and more basic than laws ‡ Business is ethical when it meets ² Public expectations ² Prevents social harm ² Protects itself from abuses by employees and other firms ² Preserves the dignity and integrity of individuals who work in business .

IMPROVEMENT OF ETHICAL PERFORMANCE IN BUSINESS ‡ Requires ² Top management attitudes ² Opening up corporate culture to broad ethical standards ² Organisational changes that help employees at all levels ² Building ethical safeguards into the company ‡ Codes of ethics ‡ Ethics committees ‡ Ethics training programmes ‡ Ethics audits .

² implementing ethics programs or ² instituting code of conduct .CORPORATE CULTURE ‡ Appearance of propriety ‡ An ethical decision does not always lead to the highest profits possible ‡ It engages in ethical decision making because ´it is the right thing to doµ ‡ What contributes to the internal culture of the firm as well as to the external stakeholders perception of the firm? ² Engaging in ethical behaviour.

ENVIRONMENT ‡ Warnings of eco-catastrophe ² Burning rivers ² Dying lakes ² Oil fouled oceans ² Air is highly contaminated ‡ We need to find limits to our growth and changes in our life style .

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OBJECTIVES OF BUSINESS ETHICS ‡ Analysis and Evaluation (Normative) ² ² ² ² prescribing a norm or standard Clarifying standards and lines of arguments It is useful to make one aware of moral values Develops rational methods for answering the present and future issues ² Balanced judgements are based after careful assessment of the relevant information ‡ Therapeutic (curative) Advice ² Suggests solutions and policies when facing ‡ The present dilemmas ‡ Future dangers ² Requires an identification of relevant stakeholder and a clear understanding of the vital issues at stake .

OBJECTIVES OF BUSINESS ETHICS ‡ Evaluates human practices by calling upon moral standards ² Analysis and evaluation ‡ Clarifying standards and lines of argument ‡ Balanced judgements based on careful assessment of relevant information ‡ Gives prescriptive advice on how to act morally in a specific kind of situation .