1] Explain the different functional aspects of Business Ethics?

Ans: INTRODUCTION:

Ethical knowledge is not precise knowledge like mathematics or logic, but general knowledge
like knowledge of nutrition. Also it is practical discipline, rather than theoretical i.e. in order to
be good, one should not just study, what is good, but also practice it. In simple words, any ethical
conduct brings peace and harmony to the person and to the community and unethical conduct
brings pain and misery. Ethics is also a normative science it means it lays down the norms or
rules of what is good or what is bad so it specifies what we “ought” to do and what we “not to
do”. Business ethics is a branch of ethics which prescribe standards of how the business is to be
carried out. It gives guidelines for the companies’ response and accountability to its various
stakeholders like shareholders, customers, employees, directors and management, suppliers,
regulatory bodies, government etc. Business ethics also deals with the responsibility of the
mangers and employees in a competitive business environment. A manager has to resolve the
conflicts of both the economic performance of the organization measured by the total revenue
and profit after tax and the social obligation of the business providing goods and services at a fair
price maintaining its quality. Business Ethics is a form of applied ethics that examines ethical
principals and moral or ethical problems that arise in a business environment.

DEFINITON:

According to Thomas Donaldson, “There is a growing realization all over the world that business
ethics is important for any business and the progress of any society. Ethics alone, not
government nor laws can protect the society. An ethically responsible company is one which has
developed the culture of caring for people and the environment, a culture which flows
throughout the organization from the top managers and leaders”
MEANING:

Business ethics is a branch of ethics which prescribe standards of how the business is to be
carried out. Business Ethics is a form of applied ethics that examines ethical principals and moral
or ethical problems that arise in a business environment. It lays down guidelines for the
company’s response and accountability to its various stakeholders. It has to maintain a fine
balance and take care of the interest of the shareholders on one hand and other like the
employees, suppliers, customers and the community at large on the other hand. Business ethics
would tell us what “RIGHT” is and what is “JUST” in a globalised world where the survival of
the corporation is decided by the market place. Business ethics also deals with the behaviours
and response of a manager in a given situation. A manager in his professional life at times faces
dilemmas – as there is a conflict between organizations economic performance and its social
performance stated in terms of obligation to all stakeholders.

DIFFERENT FUNCTIONAL ASPECTS OF BUSINESS ETHICS ARE AS FOLLOWS:

1] Ethics of Accounting Information:

 Creative accounting, earnings management, misleading financial analysis.

 Insider trading, securities fraud, bucket shops, forex scams: concerns (criminal)
manipulation of the financial markets.
 Executives compensation : concerns excessive payments made to corporate CEO’s and
top management
 Bribery, kickbacks, and facilitation payments: while these may be in the interest of the
company and its shareholders, these practices may be anti-competitive or offend against
the values of society.
 Example: Enron, world com, Arthur Anderson etc.
2] Ethics of Human Resource Management:

The ethics of human resource management covers those ethical issues arising around
the employer- employee relationship, such as the rights and duties owed between
employer and employee

 Discrimination issues including discrimination on the bases of age, gender, race,

religion, disabilities, weight and attractiveness.
 Issues surrounding the representation of employees and the democratization of the
workplace: union busting, strike breaking.
 Issues affecting the privacy of the employees: workplace surveillance, drug
testing. See also: privacy.
 Issues affecting the privacy of the employer: whistle-blowing
 Issues relating to the fairness of the employment contract and the balance of
power between employer and employee: slavery, indentured servitude,
employment law.
 Occupation safety and health.

3] Ethics of Sales and Marketing:

 Pricing: Price fixing, price discrimination, price skimming.

 Anti-competitive practices: these include but go beyond pricing tactics to cover issues
such as manipulation of loyalty and supply chains.
 Specific marketing strategies: Greenwash, bait and switch, shill, viral marketing,
spam, pyramid scheme, planned obsolescence.
 Content of Advertisements: Attack ads, subliminal messages, sex in advertising,
products regarded as immoral or harmful.
 Children and marketing: Marketing in schools.
 Black markets, grey markets.
4] 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.

 Defective, addictive and inherently dangerous products and services (e.g. tobacco,
alcohol. Weapons, motor vehicles, chemical manufacturing, bungee jumping).
 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.
 Example: Bhopal gas tragedy, ford punto scandal etc.

5] Ethics of Intellectual Property, Knowledge and Skills:

Knowledge and skills are valuable but not easily “ownable” as objects. Nor is it obvious that has
the greater rights to an idea: the company who trained the employee or the employee
themselves? As a result, attempts to assert ownership and ethical disputes over ownership arise.

 Patent infringement, copyright infringement, trademark infringement.

 Misuse of the intellectual property system to stifle competition: patent misuse.
 Bioprospecting (ethical) and biopiracy (unethical).
 Business intelligence and industrial espionage.
 Example: Human Genome Project.

Conclusion:

Business ethics is a practice and the managers has to study the theory of business ethics and
practice it in there professional life as they understand the nature of ethical dilemma and
analyzing it they are better equipped to practice business ethics.