Principles of Business

Principles related to forming a business.

A business has ethical obligations and principles that should be adhered to. These are some of
the ethical and legal principles that must be adopted in the establishment and operation of a
business. Any responsible business will want to establish these.

Code of Ethics

The code of ethics highlights the overall principles that guide decisions and actions in relation to
internal and external issues. This document consists of statements that demonstrate how
committed the business is to fulfilling their ethical and moral responsibilities to employees,
customers and other stakeholders.

Example of a code of ethics declaration:

Happy Shoppers Retail Group – Code of Ethics

We the Happy Shoppers Retail Group agree to accept responsibility in making decisions
consistent with the health and safety of the public who visit our stores throughout the country
and to disclose promptly factors that might endanger the public or the environment.

Code of Conduct

The code of conduct is an internal document that is the practical application of the code of
ethics. It is not a single document, but a series of policy documents. It is a set of rules and
guidelines that describe how people within the business are expected to behave. This
document also guides employees and managers on how to respond in certain circumstances
like bullying, personal behaviour, confidentiality and conflicts of interest. All employees are
given a copy of the code of conduct.

Example of an item from a code of conduct document

Page 37 in textbook

Use the link below to read codes of conducts from 18 well known large companies:

https://i-sight.com/resources/18-of-the-best-code-of-conduct-examples/

Code of Practice
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The code of practice is a set of written rules which explain how people working in a particular
profession should behave in their profession; for example, lawyers, accountants, builders,
doctors and nurses. For business persons, this code acts as a guideline for fairly dealing with
customers.

The code of practice can be for one business or for an entire industry. When the entire industry
is represented it is known as a Common Code of Practice.

Examples of code of practice statements:

✔ We are committed to treating you fairly if a problem arises.

✔ We will give you clear information about our goods and services.

Common Codes of Practice

Most industries have a common code of practice for how professionals in those fields are to
conduct themselves. Following these rules help to uphold the reputation of the
industry/profession. If businesses fail to adhere to the common code of practices, they risk
losing their credibility.

Policies for handling personal information

Businesses should have policies on how to store and properly protect the personal data of
employees, suppliers and customers. Failing to properly handle personal data could lead to it
being stolen and misused. Protecting confidential information is also a legal requirement.

Examples of the types of data that need to be protected: names, home/email addresses of
customers/employees, telephone numbers, bank, credit/debit card details and health related
information.