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Presented by Robin Shah BE Biotechnology
I. What is business? II. Defining Ethics III. Models of management ethics IV. Ethical Behavior V. Business Ethics VI. Stages of consciousness of Business Ethics VII.Ethics in business VIII.Need of Business Ethiccs IX. Conclusion
.What is Business? It can be defined as a primary economic institution through which people in modern societies carry on the task of producing and distributing goods and services.
Defining Ethics • The word “ ethics” is derived from the Latin word ‘ ethicus’ and the Greek word ‘ ethikos’. . meaning characters and manners. • Ethics can be interpreted as the method of systemizing. defending & recommending concepts of right & wrong behavior.
3 Models of Management Ethics Moral Immoral Amoral .
Immoral Management—A style devoid of ethical principles and active opposition to what is ethical. Amoral Management— – Intentional . 2.does not consider ethical factors – Unintentional . Moral Management—Conforms to high standards of ethical behavior.casual or careless about ethical considerations in business .1. 3.
Moral. then his act is said to be immoral. Choice between “right” and “wrong” is termed as Moral Judgment. Immoral and Amoral A petrol bunk owner engaged in selling both petrol and diesel to the customers for a profit is an example of amoral conduct. if the owner indulges in mixing petrol with kerosene and sells it to the customer. . But.
• In many situations lines between right and wrong are blurred. Such situations can lead to ethical dilemmas. This test involves asking four questions: Is my decision a truthful one? Is my decision fair to everyone affected? Will it build goodwill for the organization? Is the decision beneficial to all parties who have a vested interest in the outcome? What is Ethical Behavior? . • One way of dealing with ethical dilemmas is by using the four way test to evaluate decisions. • When faced with ethical dilemmas. it’s important to consider outcomes of the decision-making process.
Should I tell him about the competitor or let him go without getting what he needs? What is the guideline for us? The societal interest or the personal interest? 2.What will you do? 1. Meanwhile. I know he could get it cheaper from a competitor. After telling him our price. What should I do? . My boss told me that one of my employees is among several others to be laid off soon. he said he could not afford it. A customer asked for a product from us today. and that I'm not to tell my employee yet or he might tell the whole organization which would soon be in an uproar. I heard from my employee that he plans to join his daughter in an engineering college.
Sources of Ethical Norms Neighbors Fellow Workers Regions of Country Family The Individual Conscience Friends Profession Employer The Law Religious Beliefs Society at Large .
when he thinks that no one is looking .” [Berkshire Hathaway’s code of ethics] Character of a man is what he does.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.Anonymous .
the organization’s culture sets standards for determining the difference between good and bad decision making and behavior. • For example Azim Premji tells all his employees whatever that is.Business Ethics • Business ethics can be defined as written and unwritten codes of principles and values that govern decisions and actions within a company. That means even if there is some kind of doubt about a transaction. . • In the business world. “Grey is Black”. do not go for it.
. • It’s vital for managers to play an active role in creating a working environment where employees are encouraged and rewarded for acting in an ethical manner. • A company’s leaders are responsible for setting standards for what is and is not acceptable employee behavior.WHO IS RESPONSIBLE FOR CREATING ETHICS IN AN ORGANIZATION ? • A company’s managers play an important role in establishing its ethical tone. • If managers behave as if the only thing that matters is profit. employees are likely to act in a like manner.
Other Factors Impacting Organizational Ethics Corporate culture Existence and application of a written code of ethics Formal and informal policies and rules Norms for acceptable behavior Financial reward system System for recognizing accomplishment Company attitude toward employees How employees are selected for promotions Hiring practices Applications of legal behavior Degree to which professionalism is emphasized The company’s decision making processes Behaviors and attitudes of the organization’s leaders .
Stages of Ethical Consciousness in Business Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Law of the Jungle Anything for profit Profit maximization in the short-term Profit maximization in the long-term Stakeholder concept Corporate Citizenship Source: ICMR Centre of Management Research .
Profit maximization is the main objective of the organization and the objective has to be achieved at any cost. .Stages of Ethical Consciousness in Business • The first three stages are coming under Aggressive Capitalism. They believe on the value premise that ethics can not be diluted if they have to survive in the long run. • The last three stages are coming under conscious capitalism. Here organizations are aiming for long term profit .
.Stages of Ethical Consciousness in Business • Law of jungle : This implies corporate are ready to earn the profit by applying money. muscle. media as well as political power. mafia. • For example: Removal of tribal people in the name of industrialization without offering any kind of compensation or rehabilitation package.
• The possibility can not be ignored that companies might bribe the Telecom Minister to get the license at very cheap rate. . It has created a confusion about the mind of all rational individuals how the rate of Rs 1600 crore determined as far back as in 2001 has been applied for a license given in 2007 without any indexation. window dressing etc.Stages of Ethical Consciousness in Business • Anything for profit : According to this. • For example.Telecom Companies like Unitech & Swan purchased Unified Access Service (UAS)licenses from Telecom Ministry of Government of India after paying Rs 1658 crore. misrepresentation of statement. Organization can do anything such as bribing the Government. Earning profit is only ethics for business.
• For example. Often black marketers do hoarding of essential commodities to create an artificial demand for the product so that they will be able to offload their stock at a higher price.After the general election of 1998. when Government raided different go downs. • Just couple of months before election. it was found that huge amount of onion was hoarded by blackmarketers. onion price went up like anything. Madhya Pradesh and Rajasthan . As a consequence incumbent BJP lost the assembly poll to each state as they were unable to control the price hike of necessity commodity like onion. Mr. the assembly elections were going to happen in Delhi. • After the assembly election. .Stages of Ethical Consciousness in Business • Short Term Profit Maximization : The focus is on short term gain rather than long term viability of business. Atal Behari Bajpayee led National Democratic Alliance came into power. • In the same year.
demonstration of farming technique on different seeds. • For example: Mahindra & Mahindra. • When farmer walks into Samriddhi center. The new move is known as Samriddhi. utilization of fertilizer. The nature of assistance is lab tests on farmers’ land . expert asks about their problem and farming practices. . they can come their to solve their agricultural problems. advice on the crops’ nature. Therefore in the short run they are ready to incur some cost. Independent of the fact that whether the farmer has the tractor of M& M or not. is also selling tractor side by side. schedule. Advises are available at free of cost. • The auto major is transferring these tractor selling outlets by adding a repertory of agricultural operation & advice. a major player in Indian Auto Ancillary market. Each Samriddhi center has an agricultural expert and a lab technician.Stages of Ethical Consciousness in Business • Long Term Profit Maximization : Here goal of the company is achieving long term sustainability and creating a sound brand equity.
For example – Marico is in business of cooking oil but Marico spends time and money telling people how to go easy on it. physiotherapist etc. customer & society as a whole. with every pack of saffola. company gave away two coupon of free lipid profile test.Stages of Ethical Consciousness in Business • Stakeholder Concept : Here the objective of the organization is not limited to the maximization of wealth of the shareholders but the emphasis is given to maximize the satisfaction of all the stakeholders such as creditors. employee. For heart patient. suppliers. Marico launched the Saffola Healthy oil. The expert does not promote saffola. It facilitates the common people to know their state of health. Company has 9 to 6 phone line where anyone can talk with nutrition expert for diet related queries. it involved cardiac rehabilitation workshop which included session by cardiologist. • • • . Saffola is made in such a way that consumer will be able to use less of it than other oils. In the year 2009-10. The Saffola health Heart foundation set up in 1991 holds free heart and cholesterol check up .
employees. . Tata Steel had done this just to ensure that their employees could reside nearby the factory . Apart from earning profit. • All civic amenities in 103 year old city Jamshedpur is managed by the subsidiary of Tata Steel by Jusco. As a result productivity of the workers would not be reduced due to wastage of time . • For Example : Tata Steel . they always prefer to maintain a human face . mentioned in one of its Article of Association (AOA) that company shall be mindful of social and moral responsibility to consumers.Stages of Ethical Consciousness in Business • Corporate Citizenship: The company’s focus is on societal marketing concept. labor and energy for reaching to their workplace. shareholders as well as local community.
Ethics in Business Business Ethics towards Employees: • Payment of right wages and salaries. performance appraisal. etc. • Restraining from maligning competitors names. Business Ethics Towards Customers: • Right pricing. . • Restraining from instigating employees. • Ethical promotion including advertising. • Proper personnel policies relating to promotion. • Provision of proper facilities. transfers. Business Ethics Towards Competitors: • Fair competitive practices. suppliers or dealers or competitors etc. • Provision of proper information about products etc.
etc. • Timely payment of dues. • Restraining from pressure tactics on the dealers. . • Payment of proper dues including taxes. Business Ethics Towards Suppliers: • Proper supply contact. • Proper dealer’ contact.Ethics in Business Business Ethics Towards Government: • Timely filing returns and other records. • Supporting Government in social development activities. etc. etc. Business Ethics Towards Dealers: • Timely delivery of products. • Restraining from pressure tactics on the dealers.
• Timely repayment of advances and interest .Ethics in Business Business Ethics Towards Shareholders/Stakeholders: • Provision of proper information. • Timely payment of dividend. • Restraining form insider trading on the stock markets. Business Ethics Towards Financial Institutions: • Proper information about firm’s financial position. etc.
High ethical performance also protects the individuals who work in business. Promoting ethical behavior is to protect business from abuse by unethical employees or unethical competitors. . Encouraging business firms and their employees to behave ethically is to prevent harm to society.Need of Business Ethics • • Protection of Consumer rights Social Responsibility • • • Concept of Socialism Interest of Industry (Small and Large) Consumer Movement • • • • • Better Relations between Business & Society Public expects business to exhibit high levels of ethical performance and social responsibility.
• In the globalized era.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. . we find that “Ethics will be one of the enablers of competitiveness”. • A business or society that lacks ethical principles is bound to fail sooner or later.
Thank You “If business is ethical. then making loss is unethical” .
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