Ethics is a set of rules that define

right and wrong conduct.

Business ethics can be defined as written and
unwritten codes of principles and values that
govern decisions and actions within a company.
In the business world, the organization’s culture
sets standards for determining the difference
between good and bad decision making and
behavior.
 Concept of Ethics
• Ethics is the conception of right and wrong conduct
that tells us whether our behavior is moral or
immoral, good or bad
• Ethics deals with fundamental human
relationships—how we think and behave toward
others and how we want them to think and behave
toward us
• Ethical principles are guides to moral behavior
• For example, in most societies lying to, stealing
from, deceiving, and harming others are
considered unethical and immoral
 Concept of Ethics
• Honesty, keeping promises, helping others, and
respecting the rights of others are considered
ethically and morally desirable behavior
• Notions of right and wrong come from many
sources
• Religious beliefs are a major source of ethical
guidance for many
•The family institution—whether two parents, a
single parent, or a large family with brothers and
sisters, grandparents, aunts, cousins, and other kin—
imparts a sense of right and wrong to children as
they grow up
 Concept of Ethics
• Schools and schoolteachers, neighbors and
neighborhoods, friends, admired role models, ethnic
groups, and the ever-present electronic media and
the Internet influence what we believe to be right
and wrong in life
•The totality of these learning experiences creates in
each person a concept of ethics, morality, and
socially acceptable behavior
• Ethical ideas are present in all societies,
organizations, and individual persons, although they
may vary greatly from one to another
 Concept of Ethics
•Your ethics may not be the same as your neighbours;
one particular religion’s notion of morality may not
be identical to another’s; and what is considered
ethical in one society may be forbidden in another
society
• Differences that exists in societies, orgnisations,
individual persons vary greatly.
• Ethical Relativism- Ethical principals should be
defined in the context of various periods in history, a
society's conditions, a society`s traditions, the
special circumstances of the moment or personal
opinion
• Meaning given to ethics would be relative to the
time
Long termism in business
 Issues of corporate ethics have taken the form of short-termism vs.
long-termism
 If businesses are focused on long term stability and growth, they are
ethical:
 Short term strategies, aimed at earning per share for the year in
question, compromise on longer interests
 Warren Buffet has often stressed on long term strategies
 Investigations into Fannie Mae suggested that the entire senior
management was intensively focused on earnings guidance
 Capital market orientation of companies force them to be tempted
by short term targets:
 Increasingly, the entire system of how companies are evaluated by
analysts, investors and stock markets leads to a short term approach
 McKinsey survey [March 2006] shows that companies are focused on
short term strategies due to market pressures
3 Models of Management Ethics

Three Types Of Management Ethics

8
3 Models of Management Ethics

1. Moral Management—Conforms to high standards

of ethical behavior.

2. Immoral Management—A style devoid of ethical

principles and active opposition to what is ethical.

3. Amoral Management—
 Intentional - does not consider ethical factors
 Unintentional - casual or careless about ethical
considerations in business
9
Developing Moral Judgment

6-23
Making Ethical Judgments

Behavior or act compared with

Prevailing norms
that has been
of acceptability
committed

Value judgments
and perceptions of
the observer

11
Warren Buffet’s rule of thumb for
ethical conduct
 “…I want employees to ask themselves (when
they are in doubt about whether a particular
conduct is ethical or not) whether they are
willing to have any contemplated act appear the
next day on the front page of their local paper –
to be read by their spouses, children and friends
– with the reporting done by an informed and
critical reporter.” [Berkshire Hathaway’s code of
ethics]
 What is Business Ethics ?
• Business ethics is the application of general ethical
ideas to business behaviour & business ethics is not
a special set of ethical ideas different from ethics
from general
• If dishonesty is considered to be unethical and
immoral, then anyone in business who is dishonest
with stakeholders is acting unethically and
immorally
• If protecting others from harm is considered to be
ethical, then company that recalls a dangerously
defective products is acting in ethical way
 What is Business Ethics ?
•To be considered ethical, business must draw its
ideas about what is proper behaviour from the same
sources as everyone. Business should not try to
make up its own definitions of what is right and
wrong
 What is Business Ethics ?
Observations of Unethical Behavior at Work
Fifty-two percent of employees observed at least one type of misconduct
in the workplace in the past year Types of misconduct include (in order
of frequency observed):
• Abusive or intimidating behavior toward employees
•Lying to employees, customers, vendors, or the public
•A situation that places employee interests over organizational interests
•Violations of safety regulations
•Misreporting of actual time worked
•Discrimination on the basis of race, color, gender, age or similar
categories
•Stealing or theft
•Sexual harassment
Source: 2005 National Business Ethics Survey, Ethics Resource Center,
Washington, D.C
 Some Examples
• Toyota Motor Company has announced a recall
campaign for the RAV4 model in the United States,
soon extending it globally- The 1,124,000 vehicles
that will be called back in the U.S. are RAV4 units of the
2006-2012 model years and MY 2012-2014 RAV4 EV
models.
•Toyota is making this precautionary recall action to
improve the safety
of the second-row outboard seats on both sides of the
vehicle
http://www.autoevolution.com/news/toyota-will-recall-11-million-rav4-models-in-the-usa-
104778.html#; 18 February 2016
 Some Examples
• Mitsubishi Motors admitted that it had used
improper methods to test the fuel economy of cars
sold in Japan for 25 years, drastically widening the
scope of a mileage-doctoring scandal gripping the
company.
•The automaker said it still did not know exactly how
many models had been given exaggerated fuel
ratings. But it said it now believed it had been using
unapproved methods since 1991 — a period that
covers dozens of vehicle introductions and millions
of cars and trucks.
http://www.nytimes.com/2016/04/27/business/interna
Some Examples
In September 2015 
the Environmental Protection Agency (EPA) found
 that many Volkswagen cars being sold in America
had a "defeat device" - or software - in diesel
engines that could detect when they were being
tested, changing the performance accordingly to
improve results. The German car giant has since
admitted cheating emissions tests in the USA. With
VW recalling millions of cars worldwide from early
next year, it has set aside €6.7bn (£4.8bn) to cover
costs. That resulted in the company posting its
 first quarterly loss for 15 years of €2.5bn in late
October.
Red Bull said it could "give you wings”
Energy drinks company Red Bull was 
sued in 2014 for its slogan "Red Bull gives you wings." The company
settled the class action case by agreeing to pay out a maximum of $13
million — including $10 to every US consumer who had bough the
drink since 2002.
The tagline, which the company has used for nearly two decades, went
alongside marketing claims that that the caffeinated drink could
improve a consumer's concentration and reaction speed.
Beganin Caraethers was one of several consumers who brought the
case against the Austrian drinks company. He said he was a regular
consumer of Red Bull for 10 years, but that he had not developed
"wings," or shown any signs of improved intellectual or physical
abilities.
Red Bull released this statement following the settlement:
Red Bull settled the lawsuit to avoid the cost and distraction of
litigation. However, Red Bull maintains that its marketing and
labeling have always been truthful and accurate, and denies any and
New Balance said its shoe could help wearers burn
calories
New Balance was accused of false advertising in
2011 over a sneaker range that it claimed could help
wearers burn calories, according to Reuters. Studies
found that there were no health benefits from wearing
the shoe.
The toning sneaker claimed to use hidden board
technology and was advertised as calorie burners that
activated the quads, hamstrings and calves. Plaintiffs
in the lawsuit claimed to have been harmed and
misled by the sneaker company.
On August 20, 2012, New Balance agreed to pay a
settlement of $2.3 million, 
according to The Huffington Post
 Why Business should be ethical?
A. Meet Demands of Business Stakeholders
• Organizational stakeholders demand business to
exhibit high levels of ethical performance and social
responsibility
• In a 10-country poll of public opinion, people in 9 of
the 10 countries (Australia, Canada, Great Britain,
Mexico, Japan, Germany, South Africa, Russia, and
the United States, with only the Chinese people
disagreeing) preferred setting higher ethical standards
and improving society over the more traditional
corporate goals of making a profit, paying taxes,
creating jobs, and obeying the law
 Why Business should be ethical?
A. Meet Demands of Business Stakeholders
• Some businesses know that meeting stakeholders’
expectations is good business
• When a company upholds ethical standards,
consumers may conduct more business with the firm
and the stockholders may benefit as well
B. Enhance Business Standards
• Being ethical imparts a sense of trust, which promotes
positive alliances among business partners
• If this trust is broken, the unethical party may be
shunned and ignored
 Why Business should be ethical?
B. Enhance Business Standards
• The nurturing of an ethical environment and the
development of ethical safeguards can be critical,
influences in positively affecting a firm’s financial
performance

C. Comply with Legal Requirements

• Doing business ethically is also often a legal
requirement
• Two recent laws of USA in particular, provide
direction for companies interested in being more
ethical in their business operations
 Why Business should be ethical?
C. Comply with Legal Requirements
• Although they apply only to U.S.-based firms, these legal
requirements also provide a model for firms that operate outside
the United States
• U.S. Corporate Sentencing Guidelines provides a strong incentive
for businesses to promote ethics at work & this guidelines come
into play when an employee of a firm has been found guilty of
criminal wrongdoing and the firm is facing sentencing for the
criminal act, since the firm is responsible for actions taken by its
employees
• Another legal requirement imposed upon U.S. businesses is the
Sarbanes Oxley Act of 2002.Born from the ethics scandals at
Enron, WorldCom, Tyco, and others, this law sought to ensure that
firms maintained high ethical standards in how they conducted and
monitored business operations
 Why Business should be ethical?
D. Prevent or Minimize Harm
• Another reason businesses and their employees
should act ethically is to prevent harm to the general
public and the corporation’s many stakeholders
• One of the strongest ethical principles is stated very
simply: Do no harm
• A company that is careless in disposing of toxic
chemical wastes that cause disease and death is
breaking this ethical injunction
• Preventing harm also relates to protecting business
firms from abuse by unethical employees and
unethical competitors
 Why Business should be ethical?
E. Promote Personal Morality
• Most people want to act in ways that are consistent
with their own sense of right and wrong
• One works in a supportive ethical climate contributes
to one’s sense of psychological security
• According to a LRN study, a California-based legal
and ethics training company, 94 percent of employees
said it was critical or important that the company they
work for is ethical
Some other general causes or reasons for business to be
ethical are:
1. To improve brand image: Ethical company enjoys
good reputation in the market and enhance brand
image
 ethical?
Some other general causes or reasons for business to be
ethical are:
2. To win customer loyalty : In order to win the trust of
the buyers and make them regular customer, a
company should run ethically
3. To attract investors: Ethical company will have good
name and no one in the market can deny the fact that
everyone wants to be part of it
4. To attract best employees: Best employees seek for
the best place to work and best place is will not be
unethical one
5. To attract vendors / suppliers: A company with good
great ethical values tends to maintain a good
relationship with the suppliers
Ethics
McDonald's
•Bad business ethics example by McDonald's is what
is known as the "McDonald's Legislation“ . In 1972,
Ray Kroc, the company’s founder made a rare
donation of $250,000 to Nixon's (US President)
reelection campaign and in return got a favorable
legislation that allowed companies such as
McDonald's to pay teenage employees 20 percent less
than federal minimum wages. Most observers
consider this a typical case of corporate influence on
lawmakers to enact legislation that serve their selfish
ends and harm society
Ethics
McDonald's
• McDonald’s also doesn't allow employees to
unionize, and in one instance where workers at St.
Hubert Quebec did form a union, the company
closed down the unit promptly
• Between 1986 and 1990, activists of London
Greenpeace distributed pamphlets with the title
“What's Wrong with McDonald's? Everything They
Don't Want You to Know" and the wordings
“McDollars, McGreedy, McCancer, McMurder,
McProfits, McGarbage," alleging that McDonald's
promoted Third World poverty, sold unhealthy food,
exploited workers and children, tortured animals,
Ethics
Nestle
• WHO found children in developing countries who fed
on Nestle’s infant-formula had mortality rates five to ten
times greater than that of breast-fed children. The
problem was Nestle’s sinister campaign of appointing
uniformed nurses to distribute the baby formula to poor
mothers for free, long enough for lactating mother’s milk
to dry up
 Wal-Mart
• Wal-Mart very often finds itself slapped with lawsuits
that accuse it of predatory pricing, or pricing products too
low to drive competition out of business and gain a
monopoly in local markets
Ethics
 Wal-Mart
• Wal-Mart also faced charges of monopoly, by
making suppliers dependent on them and forcing
them to indulge in self-defeating practices, such as
pressuring them to sell goods below cost or at prices
lower than they would get elsewhere
• Wal-Mart regularly faces lawsuits from employees
accusing the company of forcing them to work
overtime without pay and denying them health
insurance
Ethics
CitiBank
• Deciding to spend $50 million on a new private
jet after taking $45 billion in taxpayer funds to
stay afloat, as Citibank did is a textbook example
of bad business ethics. To make matters worse
for CitiBank, CEO Vikram Pandit lied to
Congress that he received a compensation of
one million a year when the actual figure was
$11
Source:million
http://www.brighthub.com/office/entrepreneurs/articles/115557.aspx
 Why Ethical problems occur?
Gain and Selfish Interest
•Desire for personal gain, or even greed, causes some
ethics problems
•People employed sometimes have personal values that
are less than desirable & they will put their own welfare
ahead of all others, regardless of the harm done to other
employees, the company, or society
•A manager or employee who puts his or her own self-
interest above all other considerations is called an ethical
egoist
•Self-promotion, a focus on self-interest to the point of
selfishness, and greed are traits commonly observed in an
ethical egoist
 Why Ethical problems occur?
• It may be simply a single-minded drive for profits,
regardless of the company or individual’s financial
condition, that creates a climate for unethical activity

. Conflicts of Interest
• A conflict of interest occurs when an individual’s self-
interest conflicts with acting in the best interest of
another, when the individual has an obligation to do so
• For example, if a purchasing agent directed her
company’s orders to a firm from which she had received a
valuable gift, even if this firm did not offer the best
quality or value, she would be guilty of a conflict of
interest
 Why Ethical problems occur?
Conflicts of Interest
• Conflicts of interest are normally considered unethical,
because a failure to disclose a conflict of interest
represents deception and may hurt the person or
organization
• In recent years, much attention has been focused on
organizational conflicts of interest in the accounting
profession
• When an accounting firm audits the books of a public
company, it has an obligation to shareholders to
provide an honest account of the company’s financial
health, but sometimes, though, accounting firms may
be tempted to overlook irregularities to increase their
chances of attracting lucrative consulting work from the
 Why Ethical problems occur?
D. Cross-Cultural Contradictions
• Some of the knottiest ethical problems occur as corporations
do business in other societies where ethical standards differ
from those at home
• Today, the policy makers and strategic planners in all
multinational corporations, regardless of the nation where
they are headquartered, face this kind of ethical dilemma
• Are multinational companies ethically responsible for what
happens to their products, even though they are being sold
legally? What or whose ethical standards should be the guide?
• As business becomes increasingly global, with more and more
corporations penetrating overseas markets where cultures and
ethical traditions vary, these questions will occur more
frequently
 Why Ethical problems occur?
D. Cross-Cultural Contradictions - Example
Consider the following situation: The pesticide methyl parathion is
officially banned or restricted in many countries including the United
States, China, Malaysia, Indonesia, and Cambodia. The World Health
Organization classified methyl parathion as “extremely hazardous.”
The
chemical can be fatal for humans if swallowed, inhaled, or absorbed
through the skin. Yet, methyl parathion and nearly 50 other dangerous
pesticides are being sold in Thailand and Vietnam and, from there,
being illegally exported to Cambodia. Cambodian farmers argue that
they need the pesticides to increase agricultural production, despite the
lack of protective safety equipment or procedures for properly
disposing of used containers. Multinational companies that manufacture
the chemicals say that they are not responsible because they do not
directly market to Cambodia. This episode raises the issue of ethical
relativism, alluded to earlier in this chapter. Although the foreign sales
of methyl parathion to Thailand and Vietnam were legal, were they
 Consequences of ethical problems
• Reduced sales of goods - Customers may boycott
goods produced by company for unethical behaviours

• Drop in stock price- Investors will be unwilling to

buy share from companies known to transact business
dishonestly. Investing in dishonest firms will result in
poor returns

• Negative effect of employee performance-

Employees are not motivated to work for an unethical
company and others
( Also please do write points of Why Business Should
be Ethical but in negative connotation)
 Core elements of ethical character
A. Managers’ Values
• Managers are one of the keys to whether a company
and its employees will act ethically or unethically
• Managers being major decision makers, have more
opportunities than others to create an ethical tone for
their company
• Values held by managers, especially top-level
managers, serve as models for others who work in any
organization
• In a survey of 22,000 people in 21 countries, only
politicians ranked as less trustworthy than managers
of large companies, who finished behind lawyers and
journalists
 Core elements of ethical character
A. Managers’ Values
• The public reportedly had more confidence in
churches, the Supreme Court, television news and
newspapers, Congress, and organized labor than in
business
• In a Gallup poll conducted every 10 years, perception
of business executives’ ethics has steadily fallen
• Differences in ethical values were found among
European employees. Researchers found that workers
in the U.K. are among the most honest in Europe,
avoiding ethical breaches that are more common in
France, Germany, and Spain
 Core elements of ethical character
A. Managers’ Values
• Researchers also found that new CEOs tend to be
more self-interested and short-term focused, possibly
in an effort to immediately drive up company profits,
rather than valuing long-term investments in research
and development or capital expenditures
• However, some managers show a strong concern for
values that include others, living in a world at peace,
or seeking equality among people
B. Virtue Ethics
• Philosophy dates back to Aristotle, based on values
and personal character
 Core elements of ethical character
B. Virtue Ethics
• It focuses on character traits that a good person
should possess and that these values will direct the
person toward good behavior
• Virtue ethics is based on a way of being and on
valuable characteristics rather than on rules for
correct behavior
• Aristotle argued, “Moral virtue is a mean between
two vices, one of excess and the other of deficiency,
and it aims at hitting the mean in feelings, desires, and
action.”
• Moral values acknowledged by Aristotle include
courage, temperance, justice, and prudence
 Core elements of ethical character
C. Personal Character, Spirituality, and Moral
Development
• Personal character is one of the keys to higher ethical
standards in business
• People of integrity produce organizations with integrity
better; when they do, they become moral managers
• There is a close connection between ethical leadership
and a person’s belief system or values
Personal Spirituality
• Personal spirituality, that is, a personal belief in a
supreme being, religious organization, or the power of
nature or some other external, life-guiding force, has
always been a part of the human makeup
 Core elements of ethical character
Personal Spirituality
• Recently, efforts appear to be on the rise to integrate
people’s work with their spirituality
• Most companies use chaplains on an outsourced basis
from secular employee-assistance programs or from
chaplaincy providers such as Marketplace Ministries
(a nonprofit concern that provides about 1,000
Protestant chaplains to more than 240 companies
nationwide)
• Research conducted by the McKinsey&Company’s
Australia office reported that when companies
engaged in spiritual techniques for their employees,
productivity improved and turnover was reduced
 Core elements of ethical character
Personal Spirituality
• Employees who worked for organizations they
considered to be spiritual were less fearful on the
job, less likely to compromise their values and act
unethically, and more able to become committed
to their work
• There is also another school of thought that
believe that business is business, and spirituality is
best left to churches, synagogues, mosques, and
meditation rooms, not corporate boardrooms or
shop floors
 character
Managers’ Moral Development
• Taken together, personal values, character, and
spirituality exert a powerful influence on the way
ethical work issues are treated
• People have different personal histories and have
developed their values, character, and spirituality in
different ways, they are going to think differently
about ethical problems. This is as true of corporate
managers as it is of other people
• In other words, the managers in a company are likely
to be at various stages of moral development. Some
will reason at a high level, others at a lower level
 character
Stages of Moral Development and Ethical Reasoning

Age Group Development Stage and Major Ethics Referent Basics of Ethics
Reasoning

Mature Stage 6 Universal principles: justice, fairness, Principle-centered

adulthood universal human rights reasoning

Mature Stage 5 Moral beliefs above and beyond Principle-centered

adulthood specific social custom: human rights, social reasoning
contract, broad constitutional principle
Adulthood Stage 4- Society at large: customs, traditions, Society-and law-
laws centered reasoning

Early Stage 3-Social groups: friends, school, co- Group-centered

adulthood, workers, family reasoning
adolescence
Adolescence, Stage 2- Reward seeking: self-interest, own Ego-centered reasoning
youth needs, reciprocity (Ego means “self”)
 Corporate Culture and Ethical Climate
• Corporate culture is a blend of ideas, customs,
traditional practices, company values, and shared
meanings that help define normal behavior for
everyone who works in a company
• Culture is “the way we do things around here.”
• Every business has its own culture and it is so
powerful that throughout an organization; it affects
practically everything—from who gets promoted and
what decisions are made , to how employees dress
and what sports they play and when (new employees)
choose a company , they often choose a way of life
 Corporate Culture and Ethical Climate
Ethical Climate
• In most companies, a moral atmosphere can be
detected. People can feel the way the ethical winds
are blowing
• They pick up subtle hints and clues that tell them
what behavior is approved and what is forbidden
• The unspoken understanding among employees of
what is and is not acceptable behavior is called an
ethical climate. It is the part of corporate culture that
sets the ethical tone in a company
• Researchers have found that multiple climates, or
subclimates, may exist within one organization
 Corporate Culture and Ethical Climate

Components of Ethical Climate

Ethical Criteria Focus on Organization Society

Individual Person
Egoism (Self- Self- interest Company interest Economic
centered approach) efficiency

Benevolence Friendship Team interest Social

(Concern-for- responsibility
others approach)

Principle (Integrity Personal morality Company rules Laws and

approach) and procedures professional
codes
 Making Ethics Work in Corporation
• Any business firms that wishes to do so can improve
the quality of its ethical performance
• Doing so requires a company o build ethical
safeguards into everyday routines
Building ethical safeguards into the company
• Managers and employees need guidance on how to
handle day-to-day ethical situations; their own
personal ethical compass may be working well, but
they need to receive directional signals from the
company
• Several organizational steps can be taken to proceed
this kind of ethical awareness and direction
 Making Ethics Work in Corporation
Building ethical safeguards into the company
• As per professor at Harvard Business School - two
distinct approaches to ethics programs
• A compliance-based approach- seeks to avoid legal
sanctions
• Emphasizes the threat of detection and punishment in
order to channel employee behaviour in a lawful
direction
• An integrity-based approach- combine a concern
for the law with an emphasis on employee
responsibility for ethical conduct
• Employees are told to act with integrity and conduct
their business dealings in an environment of honesty
and fairness
 Making Ethics Work in Corporation
Building ethical safeguards into the company
• Researchers found that both approaches lowered
unethical conduct, although in somewhat different
ways
• Compliance-based ethics programs increased
employees’ willingness to seek ethical advice and
their awareness of ethical issues at work
• Integrity-based programs, for their part, also increased
employees’ sense of integrity, commitment to the
organization, willingness to deliver bad news to
supervisors, and their perception that better decisions
were made
 Making Ethics Work in Corporation
Top Management Commitment and Involvement
• When senior level managers signal employees the
they believe ethics should receive high priority in
all business decisions, a giant step taken toward
improving ethical performance throughout the
company
• By personal example, through policy statements,
and by willingness to back up words with actions,
top management can get its message across
• Research has consistently shown that the “tone at
the top”- the example set by top executives- is
critical in fostering ethical behaviour
 Making Ethics Work in Corporation
Top Management Commitment and Involvement
• Whether the issue is sexual harassment, honest
dealing with suppliers, or the reporting of expenses,
the commitments (or lack thereof) by senior
management and the employees’ immediate
supervisor and their involvement in ethics as a daily
influence on employee behavior are the most essential
safeguards for creating an ethical workplace
 Making Ethics Work in Corporation
Codes of Ethics
• Nearly all large U.S. corporations and most
businesses of any size have ethics policies or codes.
• Their purpose is to provide guidance to managers and
employees when they encounter an ethical dilemma
• The rationales underlying the ethics policies differ
from country to country
• A typical code discusses conflicts of interests that can
harm the company for example, it might include
guidelines for accepting or refusing gifts from
suppliers, hiring relatives, having interest in
competitor`s , maintaining security of proprietary
information
 Making Ethics Work in Corporation
Codes of Ethics
• An internal enforcement mechanism, including penalties
for violations, puts teeth into a code
• A shortcoming of many codes is that they tend to provide
more protection for the company than for employees and
the general public
• In the United States and Latin America, it was found that
policies were primarily instrumental, that is, provided
rules and procedures for employees to follow in order to
adhere to company policies or societal laws. In Japan,
most policies were found to be a mixture of legal
compliance and statements of the company’s values and
mission. The values and mission policies also were
popular with European and Canadian
 Making Ethics Work in Corporation
Business Code of Conduct of FNCCI, 2061
1.   Members of all associations and organizations affiliated
to the FNCCI shall make special efforts in abiding by
the terms enunciated in the Business Code of
Conduct as follows
2.All members shall hereby undertake to:
3.Refrain from engaging in business activities that goes
against the interest of the State
4. Pay special attention to the protection and promotion of
public welfare in the conduct of their business. Desist from
activities that jeopardize fair conduct and public norms and
values.  
• Abstain from activities considered detrimental to the
general health of the people
• Maintain smooth supply of quality goods and
services in the market at fair prices. The
Making Ethics Work in Corporation
Business Code of Conduct of FNCCI, 2061
• Refrain from activities likely to cause artificial shortages
of
goods in the market. In the event of any shortages,
shall not
conduct business at unfair prices
• Abstain from the usage of merchandise or standards
prohibited by law
• Maintaining faith in fair business competition, provide
maximum benefit to the consumers
• Oppose monopolistic business practices and controlled
supply systems (e.g. syndicates and cartels) and not be
involved in any such groups or systems
• Settle business disputes through mutual consultations in
an
 Making Ethics Work in Corporation
Business Code of Conduct of FNCCI, 2061
• Show special sensitivity towards environmental protection
• Abide by prevalent statutes, laws and process
• Submit documents, papers, statements of accounts as well
as pay taxes, tariffs and levies as required by law in time
• Abstain from dealing in any goods categorized as forbidden
or banned by law
• Refrain from providing donations or financial assistance to
political parties or their leaders with considerations of
bearing in business deals or for personal benefits
• Fix a ceiling of the value of any gift or present to anyone as not
to exceed Rs.5,000
• Observe the Business Code of Conduct endorsed by the FNCCI
by self as well as encourage others also to do likewise
 Making Ethics Work in Corporation
Ethics Officers, Compliance Officers, and
Ombudspersons
• Ethical lapses in large corporations throughout the
1980s prompted many firms to create a new position:
the ethics officer, compliance officer, or
ombudsperson
• A second surge of attention to ethics and the creation
of ethics offices came in response to the 1991 U.S.
Corporate Sentencing Guidelines & finally, the recent
wave of corporate ethics scandals and the passage of
the Sarbanes-Oxley Act have again turned businesses’
attention toward entrusting ethical compliance and the
development and implementation of ethics programs
 Making Ethics Work in Corporation
Ethics Officers, Compliance Officers, and
Ombudspersons
• Similar to an ethics or compliance officer, an
ombudsperson is an impartial, confidential, and informal
resource for resolving conflicts within an organization
• These conflicts range from compensation and
performance appraisal issues to discrimination,
harassment and safety matters
• Example- Coca-Cola Enterprises, the largest producer,
marketer and distributor of Coca-Cola products, created
an ombuds office in 2001. Thomas Zgambo, Coca-Cola
Enterprises’ ombudsperson, reported that the company
averaged 2,500 contacts annually.
 Making Ethics Work in Corporation
Ethics Assist Lines or Helplines
• In some companies, when employees are troubled about
some ethical issue but may be reluctant to raise it with their
immediate supervisor, they can place a call on the
company’s ethics assist line or helpline (the new preferred
term to hotline or crisis line)
• Assist lines typically have three uses:
• to provide interpretations of proper ethical behavior
involving conflicts of interest and the appropriateness of
gift giving
• to create an avenue to make known to the proper
authorities allegations of unethical conduct
• to give employees and other corporate stakeholders a
way to discover general information about a wide range
of work-related
 Ethics Training Programme
Encouraging Ethical Behaviour
• Business can encourage ethical behaviour by
employees limiting their opportunity to engage in
misconduct
• Formal code of ethics, ethical policies, and ethics
training programme can reduce the incidence of
unethical behaviour
Ethics training programmes
• Another step companies can take to build in
ethical safeguards is to offer employee training
• Training generally is offered annually and held for
less than two hours on average
 Ethics Training Programme
Ethics training programmes
• Ethics training is offered to managers, rather than the rank
and file, and usually involves lectures offered by a
company trainer or general group discussions
• Topics covered in ethics training range from compliance
with governmental regulations to adherence to the
company’s sexual harassment or conflicts of interest
policies
• Ethics training has been found t o be an effective method
f or promoting ethical behavior in the workplace
• The employees wanted and needed to experience the
ethics training program first, and then would agree to the
company’s request for the sign-off to the ethics policy
 Ethics Training Programme
Ethics Audits
• Ethics Audit one of technique that some firms have
attempted to assess the effectiveness of their ethical
safeguards by documenting evidence
• Typically, the auditor was required to note any deviations
from the company’s ethics standards and bring them to the
attention of the audit supervisor
• Often the managers of each operating entity were required
to file a report with the auditor on the corrective action they
took to deal with any deviations from the standards that
emerged in the prior year’s audit
• Audit is a management tool t hat profiles t he policies ,
programs , and practices behind information and knowledge
processing in a firm
 Ethics Training Programme
Comprehensive Ethics Programs
• The critical component in creating an effective ethics
design is the integration of various appropriate ethics
safeguards into a comprehensive program
• A comprehensive, six-element ethics program, that is, a
program integrating written standards, training, advice
resources, hotline for anonymous reporting, ethics
discipline and evaluation systems
• People working at a firm with a comprehensive ethics
program
• More likely to report ethical misconduct in the
workplace to the appropriate company authority
• Be satisfied with the company’s investigation of and
response to charges of ethical misconduct
 Ethics Training Programme
Comprehensive Ethics Programs
• In contrast, firms with only an ethics policy or code were
often perceived as less ethically responsible and less able to
address ethical misconduct in the workplace than firms
without any ethical safeguards
Corporate Ethics Awards
• Firms have been honored for their efforts to create an
ethical climate and improve ethical performance
• Business Ethics Awards, sponsored by Business Ethics
magazine, have been awarded since 1989
• In 2002 Business Ethics magazine created a new Living
Economy Award, based on the work of theorist David
Korten, author of The Post-Corporate World
 Ethics Training Programme
Corporate Ethics Awards
• He emphasized the need to build a living economy based on
firms that focused on fair profits rather than maximum profits
and were locally based, stakeholder-owned, democratically
accountable, life-serving, and operated on a human scale.
• The first Living Economy Award went to the White Dog
Café, a $5 million café in Philadelphia that paid living wages
to all employees, including dishwashers, and purchased
humanely raised meat from local family farmers
• Chroma Technology Corporation, a global high-technology
manufacturer of optic filters, received the Living Economy
Award in 2004. No employee at Chroma is paid more than
$75,000 or less than $37,500, there are no designated
managers, and employees hold seats on the board of directors
standards
• Principle-based standards do not certify or accredit but are
designed to offer corporations guidance on acceptable and
unacceptable
UN Global Compact
• UN Global Compact is a call to companies to voluntarily align
their operations with ten universal principles in the areas of
human rights, labor standards, the environment, and anti-
corruption
• By participating in the Global Compact businesses are
expected to contribute to the fulfillments of the initiative’s
two major objectives
• to mainstream the ten principles in business activities
around the world
• to catalyze actions in support of broader UN goals
(including the Millennium Development Goals)
standards
Ten Principles of UN Global Compact
Human Rights:
• Principle 1: Businesses should support and respect the
protection of internationally proclaimed human rights; and
Principle 2: make sure that they are not complicit in human
rights abuses.
Labour Standards:
• Principle 3: Businesses should uphold the freedom of
association and the effective recognition of the right to
collective bargaining
• Principle 4: the elimination of all forms of forced and
compulsory labour
• Principle 5: the effective abolition of child labour; and
Principle 6: the elimination of discrimination in respect of
employment and occupation.
standards
Ten Principles of UN Global Compact
Environment
• Principle 7: Businesses should support a precautionary
approach to environmental challenges
• Principle 8: undertake initiatives to promote greater
environmental responsibility
• Principle 9: encourage the development and diffusion of
environmentally friendly technologies
Anti-Corruption:
• Principle 10: Businesses should work against corruption in all
its forms, including extortion and bribery.
Principle based international
standards
Principles for Responsible Investment (PRI)
• It is an investor initiative in partnership with United Nations
Environment Progamme (UNEP) Finance Initiative and the
UN Global Compact
• PRI works with its international network of signatories to put
the six Principles for Responsible Investment into practice
• Goals are:
• To understand the investment implications of
environmental, social and governance issues
• To support signatories in integrating these issues into
investment and ownership decisions
Six Principles
• We will incorporate Environmental , Social and Corporate
Governance (ESG) issues into investment analysis and
decision-making processes
standards
Principles for Responsible Investment (PRI)
Six Principles
• We will be active owners and incorporate ESG issues into our
ownership policies and practices
• We will seek appropriate disclosure on ESG issues by the
entities in which we invest
• We will promote acceptance and implementation of the
Principles within the investment industry
• We will work together to enhance our effectiveness in
implementing the Principles
• We will each report on our activities and progress towards
implementing the Principles
standards
Caux Round Table
• Through an extensive and collaborative process in 1994,
business leaders developed the Caux Round Table (CRT)
Principles for Business to embody the aspiration of
principled business leadership
• The Caux Round Table (CRT) Principles for Responsible
Business set forth ethical norms for acceptable businesses
behaviour
• Events like the 2009 global financial crisis have
highlighted the necessity of sound ethical practices across
the business world
standards
Caux Round Table
Principle 1: Respect stakeholders beyond shareholders
• A responsible business acknowledges its duty to
contribute value to society ; maintains its economic
health and viability not just for shareholders, but also for
other stakeholders; respects the interests of, and acts
with honesty and fairness
Principle 2 – Contribute to economic, social and
environmental development
• A responsible business recognizes that business
cannot sustainably prosper in societies that are failing or
lacking in economic development; contributes to the
economic, social and environmental development of the
communities
Principle 3- Build trust by going beyond the letter of
standards
Caux Round Table
conduct that goes beyond minimum legal obligations &
always operates with candor, truthfulness, and
transparency, and keeps its promises
Principle 4- Respect rules and conventions
• A responsible business respects the local cultures
and
traditions in the communities in which it operates
and  respects all applicable national and international
laws, regulations and conventions, where ever it
operates
Principle 5 – Support responsible globalization
• A responsible business, as a participant in the
global
standards
Caux Round Table
Principle 6- Respect the environment
• A responsible business protects and, where possible,
improves
the environment, and avoids wasteful use of resources
and it
ensures that its operations comply with best environmental
management practices
Principle 7– Avoid illicit activities
• A responsible business does not participate in, or
condone,
corrupt practices, bribery, money laundering, or other illicit
activities; does not participate in or facilitate transactions
linked
standards
Organization for Economic Cooperation and
Development (OECD) Guidelines for
Multinational Enterprises (MNEs)
• They are recommendations providing principles and
standards for responsible business conduct for MNEs
 operating in or from countries adhered to the
Declaration
• The Guidelines are legally nonbinding. Originally, the
Declaration and the Guidelines were adopted by the
OECD in 1976
• The Guidelines cover business ethics on: employment,
human rights, environment, information disclosure,
combating bribery, consumer interests, science and
technology, competition, taxation
Whistle Blowing
• Employee disclosure of illegal, immoral, or illegitimate
practices on the employer`s part is called Whistle-
Blowing
• Many organizations developed mechanisms for
employees to use to “blow the whistle” internally and
enable the organization or industry group to investigate
and possibly address the unethical situation
• When these opportunities are not available or fail to
respond to the issue, an employee may decide to become
an external whistle-blower, that is, speak with the media
or appropriate government agency
• Whistle-blowing can be quite challenging and potentially
hazardous to one’s career
 Whistle Blowing
The Consequences of Whistle-Blowing
• Media attention to the recent business ethical scandals brought
the role of the whistle-blower t o the attention of the public
• Times honored as its “2002 Person of t he Year” three whistle-
blowers: Enron’s Sherron Watkins, WorldCom’s Cynthia
Cooper and t he FBI’s Coleen Rowley
• Each employee tried to work within the organization to expose
wrongdoing—financial mismanagement at Enron and
WorldCom and a culture of no response at FBI
• Each employee acted out of a commitment t o t he organization ,
not setting out to destroy t he company or to cause negative
consequences
• Following the 2003 Columbia space shuttle disaster, NASA
commissioned a study to investigate the whistle-blowing and
found that found a “high level of fear” regarding whistle-blowing
activity
 Whistle Blowing
Government Action and the Whistle-Blower
• Governmental efforts recently have focused on the role of
the whistle-blower
• Securities Exchange Commission (SEC) requires lawyers to
blow the whistle on their clients if they suspect ethical
misbehavior, or at least requires them to make a noisy
withdrawal
• When a lawyer sees evidence of a client company’s
committing a material securities law violation and is unable
to get the company’s board to stop it, the lawyer must quit
and inform the SEC that the resignation is for professional
considerations
• Employee whistle-blowing has gained the attention of
government bodies around the world
 Whistle Blowing
Government Action and the Whistle-Blower
• The effectiveness of these legal protection regulations varies
greatly from country to country
• There are many stigmas or reasons employees may choose not to
become whistle-blowers.
• Divided loyalties—For example, in some Asian countries,
members of the company are treated as family members and it
is considered wrong to report on family members.
• History—The country may have a tragic history of reporting on
others and whistle-blowing may not be considered as a realistic
option.
• Logistics—Employees of global companies may be faced with
numerous time zones and language differences that could
prevent whistle-blowing
 Whistle Blowing
Government Action and the Whistle-Blower
• Fear of retribution—Despite government laws to protect
whistle-blowers, many employees of global businesses
fear retaliation and their fears may be warranted
• Businesses are making significant efforts to improve the
ethical work climates in their organizations and providing
safeguards to encourage ethical behavior by their
employees
 Impact of Ethics on Business and Society
• It is challenging to determine how to conduct business
appropriately
• Businesses wrongdoing can draw attention of public and
government and any business decision might be judged
as right or wrong ; ethical or unethical; legal or illegal
• Consumers and other stakeholders (especially social
advocates) do believe and expect that business not only
make profits but also consider social implications
• Ethics not only affect decision making but also, and
ultimately, institutional culture. By creating value based
culture within the organization, society can be improved
by positive influence that perpetuate outside the
organizations
 Impact of Ethics on Business and Society
• Many people use the terms social responsibility and ethics
interchangeably, they do not mean the same thing. (Business
ethics relates to an individual’s or a work group’s decisions that society
evaluates as right or wrong, whereas social responsibility is a broader concept
that concerns the impact of the entire business’s activities on society)
• The most basic ethical and social responsibility concerns
have been codified as laws and regulations that encourage
businesses to conform to society’s standards, values, and
attitudes
• There are good business reasons for a strong commitment
to ethical values:
1. Ethical companies have been shown to be more
profitable.
2. Making ethical choices results in lower stress for
corporate managers and other employees.
 Impact of Ethics on Business and Society
3. Our reputation, good or bad, endures.
4. Ethical behaviour enhances leadership
5. The alternative to voluntary ethical behaviour is
demanding and costly regulation
• It is important to understand that business ethics goes
beyond legal issues
• Ethical conduct builds trust among individuals and in
business relationships, which validates and promotes
confidence in business relationships
• Establishing trust and confidence is much more difficult
in organizations that have established reputations for
acting unethically
IMPORTANCE OF ETHICS
World Forum for Ethics in
Business
 “Life needs to be honored. Ethics is simply
honoring that period between birth and death.
This is the basic rule of ethics – What we don’t
want others to do to us; we don’t do that to
others. Ethics needs to be inculcated,
cultivated and nurtured. The seed is already
present in every human being, it is already
there, it just needs a little more nurturing - in
politics, business, faith-based organizations,
and also in civic society. If all these four
institutions work together, we can definitely
make a difference in this coming century
 Coke & Pepsi in India
Today, more from the world of
product safety. This time the story
is about Coke and Pepsi, and
allegations that the versions of
their products manufactured in
India contain unacceptably high
levels of pesticides.
world’s biggest brand names,
known for wooing customers
around the world, are facing a
credibility crisis in one of their
crucial emerging markets.
RELIGIOUS VIEWS
ON BUSINESS
ETHICS
 SWAMI VIVEKANAND VIEWS ON
ETHICS
 THE BASIS OF INDIAN
SUBJECTIVITY LIES IN
THE BELIEF OF GOD.
 HE SUGGESTED THE
FUNDAMENTAL LAW
OF ETHICS
 “DON’T INJURE
OTHERS, LOVE
EVERYONE AS YOUR
OWNSELF UNIVERSE
IS ONE”
In order to win the game, you
need to plan. To plan
information is imperative. Get
it through legal & ethical
means. In life and business,
ethical standard must be set,
ETHICAL STANDARD MUST BE SET,
ETHICAL STANDARD MUST BE MET.
CONCLUSION

Ethics are important not

only in business but in all
aspects of life because it is
an essential part of the
foundation on which of a
civilized society is build. A
business or society that
lacks ethical principles is
bound to fail sooner or
later.