GL BAJAJ INSTITUTE OF MANAGEMENT AND RESEARCH

GREATER NOIDA

ASSIGNMENT
PGDM Batch 2018-20
Academic Session 2019-20
Term – VI

Name: SAMEEKSHA
Roll no. GM18196
Subject: Business Ethics & Corporate Governance
Date of Submission: 29 March,2020
Q1(a) Taking a specific industry as the backdrop, discuss why managers should be
guided by ethical reasoning rather than profit objectives when making business
decisions.(5 marks)
Ethical decision-making refers to the process of evaluating and choosing among alternatives
in a manner consistent with ethical principles. In making ethical decisions, it is necessary to
perceive and eliminate unethical options and select the best ethical alternative.

The process of making ethical decisions requires:

Commitment: The desire to do the right thing regardless of the cost

Consciousness: The awareness to act consistently and apply moral convictions to daily
behavior

Competency: The ability to collect and evaluate information, develop alternatives, and
foresee potential consequences and risks

Five Sources of Ethical Standards

The Utilitarian Approach
Some ethicists emphasize that the ethical action is the one that provides the most good or
does the least harm, or, to put it another way, produces the greatest balance of good over
harm. The ethical corporate action, then, is the one that produces the greatest good and does
the least harm for all who are affected -- customers, employees, shareholders, the community,
and the environment. Ethical warfare balances the good achieved in ending terrorism with the
harm done to all parties through death, injuries, and destruction. The utilitarian approach
deals with consequences; it tries both to increase the good done and to reduce the harm done.

The Rights Approach

Other philosophers and ethicists suggest that the ethical action is the one that best protects
and respects the moral rights of those affected. This approach starts from the belief that
humans have a dignity based on their human nature per se or on their ability to choose freely
what they do with their lives. On the basis of such dignity, they have a right to be treated as
ends and not merely as means to other ends. The list of moral rights -- including the rights to
make one's own choices about what kind of life to lead, to be told the truth, not to be injured,
to a degree of privacy, and so on -- is widely debated; some now argue that non-humans have
rights, too. Also, it is often said that rights imply duties -- in particular, the duty to respect
others' rights.

The Fairness or Justice Approach

Aristotle and other Greek philosophers have contributed the idea that all equals should be
treated equally. Today we use this idea to say that ethical actions treat all human beings
equally-or if unequally, then fairly based on some standard that is defensible. We pay people
more based on their harder work or the greater amount that they contribute to an organization,
and say that is fair. But there is a debate over CEO salaries that are hundreds of times larger
than the pay of others; many ask whether the huge disparity is based on a defensible standard
or whether it is the result of an imbalance of power and hence is unfair.
 The Common Good Approach
The Greek philosophers have also contributed the notion that life in community is a good in
itself and our actions should contribute to that life. This approach suggests that the
interlocking relationships of society are the basis of ethical reasoning and that respect and
compassion for all others -- especially the vulnerable -- are requirements of such reasoning.
This approach also calls attention to the common conditions that are important to the welfare
of everyone. This may be a system of laws, effective police and fire departments, health care,
a public educational system, or even public recreational areas.

The Virtue Approach

A very ancient approach to ethics is that ethical actions ought to be consistent with certain
ideal virtues that provide for the full development of our humanity. These virtues are
dispositions and habits that enable us to act according to the highest potential of our character
and on behalf of values like truth and beauty. Honesty, courage, compassion, generosity,
tolerance, love, fidelity, integrity, fairness, self-control, and prudence are all examples of
virtues. Virtue ethics asks of any action, "What kind of person will I become if I do this?" or
"Is this action consistent with my acting at my best?"

Putting the Approaches Together

Each of the approaches helps us determine what standards of behavior can be considered
ethical.

A Framework for Ethical Decision Making

Recognize an Ethical Issue

1. Could this decision or situation be damaging to someone or to some group? Does this
decision involve a choice between a good and bad alternative, or perhaps between two
"goods" or between two "bads"?
2. Is this issue about more than what is legal or what is most efficient? If so, how?

Get the Facts

3. What are the relevant facts of the case? What facts are not known? Can I learn more about the
situation? Do I know enough to make a decision?
4. What individuals and groups have an important stake in the outcome? Are some concerns
more important? Why?
5. What are the options for acting? Have all the relevant persons and groups been consulted?
Have I identified creative options?

Evaluate Alternative Actions

6. Evaluate the options by asking the following questions:

 Which option will produce the most good and do the least harm? (The Utilitarian Approach)
 Which option best respects the rights of all who have a stake? (The Rights Approach)
 Which option treats people equally or proportionately? (The Justice Approach)
 Which option best serves the community as a whole, not just some members? (The Common
Good Approach)
 Which option leads me to act as the sort of person I want to be? (The Virtue Approach)
 Make a Decision and Test It

7. Considering all these approaches, which option best addresses the situation?
8. If I told someone I respect -- or told a television audience -- which option I have chosen, what
would they say?

Act and Reflect on the Outcome

9. How can my decision be implemented with the greatest care and attention to the concerns of
all stakeholders?
10. How did my decision turn out and what have I learned from this specific situation?

Importance of Ethical Decision making

Ethical decisions generate and sustain trust; demonstrate respect, responsibility, fairness and
caring; and are consistent with good citizenship. These behaviors provide a foundation for
making better decisions by setting the ground rules for our behavior.

Effective decisions are effective if they accomplish what we want accomplished and if they
advance our purposes. A choice that produces unintended and undesirable results is
ineffective. The key to making effective decisions is to think about choices in terms of their
ability to accomplish our most important goals. This means we have to understand the
difference between immediate and short-term goals and longer-range goals.

Emphasizes the importance of getting the facts straight

Recognizes that dilemmas can involve right–right as well as right–wrong choices
Encourages the search for creative solutions
Sees ethical decision making as a learning process
Q1(b) According to WHO analysis out of the total world’s population, 80% still relies
on traditional medicine. In developing countries like India, 65% rural communities still
use traditional form of medicine to fullfill their primary health care needs. In India,
there are over 300 major tribal communities. Tribal population in Maharashtra is
about 9 million which is 9% of general population. The concentration of tribal
population occurs in remote areas of hilly regions of Northern, Western and
Northwestern regions of Maharashtra. Bhilla is one of the major tribe and they are
inhabited in Dhule, Jalgaon, Nandurbar districts of Maharashtra. The tribals have long
suffered from a terminal disease caused by bugs.
A company is developing a new drug to cure this. To save time they are doing clinical
trials of new drugs on human patients. However, the law does not allow the same, but it
saves time and lives can be saved by quickly launching the new drug into the market.
Then there is this important aspect that Mr Ram wants to enhance his business motive
and enter the market quickly so as to make profits.
Q 1b. Discuss the moral development stage of Mr Ram (5 marks)
Ans.Lawrence Kohlberg's stages of moral development constitute an adaptation of a
psychological theory originally conceived by the Swiss psychologist Jean Piaget
The theory holds that moral reasoning, the basis for ethical behavior, has six developmental
stages, each more adequate at responding to moral dilemmas than its predecessor. Kohlberg
followed the development of moral judgment far beyond the ages studied earlier by Piaget,
who also claimed that logic and morality develop through constructive stages
Level 1 (Pre-Conventional)
1. Obedience and punishment orientation
(How can I avoid punishment?)

2. Self-interest orientation
(What's in it for me?)
(Paying for a benefit)

Level 2 (Conventional)

3. Interpersonal accord and conformity

(Social norms)
(The good boy/girl attitude)

4. Authority and social-order maintaining orientation

(Law and order morality)

Level 3 (Post-Conventional)

5. Social contract orientation

6. Universal ethical principles
(Principled conscience)

Level 1: Preconventional
Throughout the preconventional level, a child’s sense of morality is externally controlled.
Children accept and believe the rules of authority figures, such as parents and teachers. A
child with pre-conventional morality has not yet adopted or internalized society’s
conventions regarding what is right or wrong, but instead focuses largely on external
consequences that certain actions may bring.

Stage 1: Obedience-and-Punishment Orientation

Stage 1 focuses on the child’s desire to obey rules and avoid being punished. For example, an
action is perceived as morally wrong because the perpetrator is punished; the worse the
punishment for the act is, the more “bad” the act is perceived to be.

Stage 2: Instrumental Orientation

Stage 2 expresses the “what’s in it for me?” position, in which right behavior is defined by
whatever the individual believes to be in their best interest. Stage two reasoning shows a
limited interest in the needs of others, only to the point where it might further the individual’s
own interests. As a result, concern for others is not based on loyalty or intrinsic respect, but
rather a “you scratch my back, and I’ll scratch yours” mentality. An example would be when
a child is asked by his parents to do a chore. The child asks “what’s in it for me?” and the
parents offer the child an incentive by giving him an allowance.
Level 2: Conventional
Throughout the conventional level, a child’s sense of morality is tied to personal and societal
relationships. Children continue to accept the rules of authority figures, but this is now due to
their belief that this is necessary to ensure positive relationships and societal order.
Adherence to rules and conventions is somewhat rigid during these stages, and a rule’s
appropriateness or fairness is seldom questioned.

Stage 3: Good Boy, Nice Girl Orientation

In stage 3, children want the approval of others and act in ways to avoid disapproval.
Emphasis is placed on good behavior and people being “nice” to others.

Stage 4: Law-and-Order Orientation

In stage 4, the child blindly accepts rules and convention because of their importance in
maintaining a functioning society. Rules are seen as being the same for everyone, and
obeying rules by doing what one is “supposed” to do is seen as valuable and important. Moral
reasoning in stage four is beyond the need for individual approval exhibited in stage three. If
one person violates a law, perhaps everyone would—thus there is an obligation and a duty to
uphold laws and rules. Most active members of society remain at stage four, where morality
is still predominantly dictated by an outside force.

Level 3: Postconventional
Throughout the postconventional level, a person’s sense of morality is defined in terms of
more abstract principles and values. People now believe that some laws are unjust and should
be changed or eliminated. This level is marked by a growing realization that individuals are
separate entities from society and that individuals may disobey rules inconsistent with their
own principles. Post-conventional moralists live by their own ethical principles—principles
that typically include such basic human rights as life, liberty, and justice—and view rules as
useful but changeable mechanisms, rather than absolute dictates that must be obeyed without
question. Because post-conventional individuals elevate their own moral evaluation of a
situation over social conventions, their behavior, especially at stage six, can sometimes be
confused with that of those at the pre-conventional level. Some theorists have speculated that
many people may never reach this level of abstract moral reasoning.

Stage 5: Social-Contract Orientation

In stage 5, the world is viewed as holding different opinions, rights, and values. Such
perspectives should be mutually respected as unique to each person or community. Laws are
regarded as social contracts rather than rigid edicts. Those that do not promote the general
welfare should be changed when necessary to meet the greatest good for the greatest number
of people. This is achieved through majority decision and inevitable compromise. Democratic
government is theoretically based on stage five reasoning.

Stage 6: Universal-Ethical-Principal Orientation

In stage 6, moral reasoning is based on abstract reasoning using universal ethical principles.
Generally, the chosen principles are abstract rather than concrete and focus on ideas such as
equality, dignity, or respect. Laws are valid only insofar as they are grounded in justice, and a
commitment to justice carries with it an obligation to disobey unjust laws. People choose the
ethical principles they want to follow, and if they violate those principles, they feel guilty. In
this way, the individual acts because it is morally right to do so (and not because he or she
wants to avoid punishment), it is in their best interest, it is expected, it is legal, or it is
previously agreed upon. Although Kohlberg insisted that stage six exists, he found it difficult
to identify individuals who consistently operated at that level.

Mr Ram is on the Stage2 of moral development (Pre-Conventional) because he is very

oriented towards his interest and profits to launch the new medicine on the market quickly in
order to earn maximum profit.
Q2) A company is diversifying and to avail the tax benefits offered by the government
decides to open the factory in a remote area. However, the new plant may bring chaos
for the inhabitants of the region which is otherwise peaceful. It would attract workers
from nearby areas and disturb the social and economic order and may result in
increased cost of living. The company sensing the possible protest tried to educate the
people of the region and public in general about its Corporate Social Responsibility
(CSR) initiatives it would launch in the region for upliftment of the people. In spite of
this the protests begin and some of the residents decided to approach the judiciary also.

Q2- Identify the CSR initiatives the company can undertake to address the issues
involved in the case. (10 marks)

Ans. The term "Corporate Social Responsibility (CSR)" can be referred as corporate initiative
to assess and take responsibility for the company's effects on the environment and impact on
social welfare. The term generally applies to companies efforts that go beyond what may be
required by regulators or environmental protection groups.
Corporate social responsibility may also be referred to as "corporate citizenship" and can
involve incurring short-term costs that do not provide an immediate financial benefit to the
company, but instead promote positive social and environmental change.
The CSR initiatives the company can undertake to address the issues involved in the case are:
CSR is increasingly becoming integrated into core business operations When properly
designed and implemented to fit the needs of the community and corporation, CSR can
become source of opportunity, innovation, and competitive advantage. The stakeholder
engagement-based CSR approach is particularly suitable and relevant to companies with
plants in rural or peri-urban disadvantaged areas, and willing to analyze and improve
community development around their factories. This “local” approach to CSR is also the one
promoted by the Indian Companies Act, that structures CSR by articulating it around three
main points :

(1) Its target group

(2) Its geographical base

(3) Its sector and issue

Tangible print on the local environment and communities, as extractive or manufacturing

companies’ plants, local community development is an asset to strengthen their reputation
and engagement around their factories.

Four key aspects that a company should keep in mind when launching local CSR programs:

 Sustainability

 Co-creation

 Local team

 Long-term investment
 Sustainability - Ensuring that a CSR initiative is sustainable is primarily achieved by
developing a healthy relationship with local communities and working with them as partners.

Co-creation- As sustainability, co-creation is crucial to ensure that the community has a stake
in the development scheme, and hence fully engages in order to achieve the success of the
CSR initiative.

Local Team- Having a dedicated on-ground implementing team is an essential feature. A

local team, contrary to a corporate one, lies at the interface between the company and the
community.

Long Term Investment- Long-term investment is the condition for success of local CSR
initiatives and of their most valuable outcomes.

Some initiatives that can be taken are:

Environmental Conservation Environmental concerns regularly make the headlines, whether

a long-term problem like global climate change or a more local issue such as a toxic chemical
spill. Companies that align themselves in these efforts help minimize environmental problems
by taking steps such as reducing their overall carbon footprint.

Company Diversity and Labor Practices Business leaders realize that diversity in the
workplace is beneficial when everyone is getting along and working as a team.

However, labor policies must apply to all employees, even those at the highest levels of the
company. Supporting Volunteer Efforts Local communities and charities always need help.
Smart business leaders know that being involved in the community in a productive way is
good for the company too.

1. Give employees the opportunity to help a local school plant trees or work with the city
council on addressing homelessness in the area. Business leaders have the opportunity to
choose where to spend volunteer efforts to best help the local area along with the company.
The important thing for businesses is to choose a cause and contribute time. Ensuring
environmental sustainability to the inhabitants.
2. Ensuring conservation of natural resources and maintaining quality of soil, air and water by
implementing the policies and standard norms regarding the same.
3. Promoting education, including special education and employment enhancing vocation skills
especially among children, women, elderly, and the differently abled and livelihood
enhancement projects;.
4. Finance the project for the development of the area.
5. Promoting the preventive healthcare system by opening the hospital in the area.
6. Providing the proper sanitation system in the village.
7. Promoting the gender empowering women, setting up homes and hostels for women and
orphans; setting up old age homes, day care centres and such other facilities for senior
citizens
8. Training to promote rural sports.
9. Reducing Carbon footprints.