Unit 2 Ethical Issues and Dilemmas

 The problem of just wage

 Sexual harassment
 Gift-giving
 Bribery
 The morality of advertising
 Office romance
 The problem of fair pricing
 Trade secrets and corporate disclosure
 Product misinterpretation
 Caveat Emptor
 The morality of labor strikes
 Whistle-blowing
 Unfair competition
 Money laundering
 Conflict of interest
 Insider trading
 Privacy issues
 Discrimination
 Corporate intelligence.
G.K. Sah, Business Ethics
 Unit 2 Ethical Issues and Dilemmas
 The ethical issue is simply a situation, a problem, or
even an opportunity that requires thought,
discussion, or investigation before a decision can be
made.
 In philosophy, ethical dilemmas, also called ethical
paradoxes or moral dilemmas, are situations in which
an agent stands under two (or more) conflicting moral
requirements, none of which overrides the other.
 The Oxford dictionary defines an ethical dilemma as, “a
situation in which a difficult choice has to be made
between two courses of action, either of which entails
transgressing a moral principle.”
 A dilemma is a problem offering two possibilities, neither
of which is unambiguously acceptable or preferable.
G.K. Sah, Business Ethics
 The problem of just wage
 A just wages is a level of income that allows employees to
sustain themselves and their families in a way that is
consistent with human dignity, without having to work a
second job or rely on government subsidies.
 It covers the necessities for a worker and his or her
household to live a minimally decent existence, such as
hours of labor that are predictable, not excessive, and
provide frequent rest to allow for a good life away from
work.

G.K. Sah, Business Ethics

 Wages Types
 Real wage measured in actual purchasing
power(inflation)
 Nominal wage-measured in money paid not in purchasing
power
 Family wage- money that a worker needs to provide the
needs of the family
 Living wage- minimum hourly wage necessary for a person to
achieve some standard of living
 Minimum wage- the rate determined by the
government
The Government of Nepal has set the minimum monthly
wage for a worker at Rs. 15000. On behalf of the Nepal
Government, the Ministry of Labour, Employment and
Social Security has announced the minimum salary
of Rs 15,000 includes Rs 9,385 in basic salary and Rs
5,615 inflation allowance.

G.K. Sah, Business Ethics

 Arguments in Favour of Increasing the Minimum Wage

 The fundamental argument in support of raising the minimum wage is that

higher wages would improve the general standard of living for minimum
wage workers by providing them with a more adequate income level to deal
with rising costs of living.
 According to a 2019 Congressional Budget Office (CBO) assessment, a
minimum hourly wage of $15 by 2025 would result in a considerable
improvement in the standard of living for at least 17 million individuals, with
an estimated 1.3 million people rising over the poverty line.
 Some supporters of raising the minimum wage believe that a much larger
number of people and families would be lifted out of poverty if they earned
more money, a related potential benefit is a projected reduction in the need
for federal and state government expenditures on financial aid for the poor
and low-income.
 Meanwhile, greater employee morale as a result of higher compensation is an
intangible benefit that could transfer into practical benefits for both employers
and employees. Business owners frequently mention the difficulty of providing
enough encouragement to motivate employees to give their all in their jobs,
which is especially difficult for low-wage workers who believe their efforts
aren't keeping them out of poverty.
G.K. Sah, Business Ethics
 Arguments in against of Increasing the Minimum Wage

 Opponents argue that raising the minimum wage would likely

result in wages and salaries increasing across the board, thereby
substantially increasing operating expenses for companies that
would then increase the prices of products and services to
cover their increased labor costs.
 Increased prices imply an increase in the overall cost of living,
which might effectively nullify any benefit obtained by workers
having more money in their pockets.
 The 2019 CBO report estimates that raising the minimum wage to
$15 an hour by 2025 would result in the loss of approximately 1.3
million jobs. The numbers could be substantially higher if
companies made a major move toward outsourcing more jobs
to less expensive labor markets outside the country.
 One possible negative effect that is less obvious is the risk that
raising the minimum wage could boost labor market
competitiveness for low wage employment.

G.K. Sah, Business Ethics

 Sexual Harassment
 Sexual harassment is a type of harassment involving the use of
explicit or implicit sexual overtones, including the unwelcome and
inappropriate promises of rewards in exchange for sexual favors.
Sexual harassment includes a range of actions from verbal
transgressions to sexual abuse or assault. Harassment can occur
in many different social settings such as the workplace, the home,
school, churches, etc. Harassers or victims may be of any sex or
gender.
 The Government of Nepal has enacted a specific legislation
addressing sexual harassment at workplace with the objective to
protect the right of every individual to work in a safe environment.
 The Sexual Harassment at Workplace Prevention Act, 2015
(2071) (“Sexual Harassment Prevention Act” or “Act”) came
into effect on February 20, 2015 (Falgun 08, 2071).

G.K. Sah, Business Ethics

 Types of Sexual Issues of Sexual
Harassment Harassment

 Sexual harassment victims may

 Physical Harassment experience substantial
 Psychological/Emotional psychological impacts such as
Harassment anxiety, sadness, headaches,
 Written/Graphic Harassment sleep difficulties, weight loss or
gain, nausea
 Gestural Harassment (sickness/vomiting), low self-
 Verbal Harassment esteem, and sexual dysfunction.

G.K. Sah, Business Ethics

 According to The Sexual Harassment
at Workplace Prevention Act, 2015
(2071) these activities would
constitute sexual harassment:
 Physical contact and advances;
 Showing or displaying of pornographic
material,
 Expressing sexual motives by way of
written, verbal, or non-verbal means,
 Demand or proposal for sexual
favours;
 Flirting or harassing with sexual
motive
(The victim as well as the harasser
may be a woman or a man. The victim
does not have to be of the opposite
sex.)

G.K. Sah, Business Ethics

G.K. Sah, Business Ethics
 Gift-giving
 Gift is associated with kindness and selflessness which is
legal.
 Giving gifts is something which usually makes us feels
good
 It brings joy or pleasure to the receiver.
 The purpose of gift giving is to show appreciation and
expressing gratitude to those who support.
 In Japan, people doing business together often exchange
gifts—sometimes expensive ones—in keeping with long-
standing Japanese tradition. When U.S. and European
companies started doing a lot of business in Japan, many
Western business-people thought that the practice of gift
giving might be wrong rather than simply different.

G.K. Sah, Business Ethics

 Bribery
 Bribery is defined as giving money,
presents, in cash or kind, to someone
in order to encourage them to make
favorable and biased business
judgments.
 It is considered an unfair commercial
activity in the United States and is
thus unlawful.
 It is the practice of offering something
(typically money) in exchange for an
unfair advantage.
 It is thus described as an illegal
conduct, but it may also be a
corporate ethical issue due to the fact
that it can be understood differently in
different contexts and cultural
cultures.
G.K. Sah, Business Ethics
It is an unethical behavior since it contributes to
wealth inequality and helps corrupt regimes.
It should be prosecuted as an immoral act, even in
countries where it is legal.
Businesses and governments are moral entities that
join into a social compact.
Managers in Hong Kong, for example, are more
tolerant of various forms of bribery than their
Western counterparts, but they are considerably
less tolerant of failing to recognize a subordinate's
work.
Bribery is the practice of providing, giving,
receiving, or soliciting something of value in order
to influence an official's action in the fulfillment of
his or her public or legal duties.
G.K. Sah, Business Ethics
 Facts about Nepal

 A bribe is involved in more than 1 out of every 10

transactions.
 Corruption is cited as a major limitation by nearly half
of enterprises.
 3 out of every 5 businesses are expected to give
"gifts" in order to gain government contracts.
 Almost 2 out of 5 of businesses are expected to give
"gifts" in order to obtain an import license.
 Almost 1 in every 5 businesses is expected to give
"gifts" in order to obtain an operating license.
 Almost 1 in every 5 businesses is expected to give
"gifts" in order to obtain a building permit.
 More than 1 out of 5 of businesses are required to
make "gifts" in order to obtain an electricity
connection. G.K. Sah, Business Ethics
 Gift-giving and Bribery
 A gift is something valuable given without expecting
anything in return; a bribe is the same thing provided with
the goal of gaining influence or benefit. Bribes and gifts can
be monetary or physical objects, such as tickets to a
sporting event, entertainment, travel, rounds of golf, or
restaurant meals.
 Gift is associated with kindness and selflessness which is
legal. Bribery, on the other hand, is almost universally
condemned, and its practice is considered undesirable,
harmful and destructive. A bribe is associated with
immorality and is considered illegal

G.K. Sah, Business Ethics

 Gift-giving and Bribery
 A gift is something valuable given without expecting
anything in return; a bribe is the same thing provided with
the goal of gaining influence or benefit. Bribes and gifts can
be monetary or physical objects, such as tickets to a
sporting event, entertainment, travel, rounds of golf, or
restaurant meals.
 Gift is associated with kindness and selflessness which is
legal. Bribery, on the other hand, is almost universally
condemned, and its practice is considered undesirable,
harmful and destructive. A bribe is associated with
immorality and is considered illegal

G.K. Sah, Business Ethics

 Issues in Gift-giving and Bribery
 Giving gifts create conflicts of interest because it, either
explicitly or implicitly, encourages the recipient of the gift to
return the favor.
 Bribery is an unethical practice, as it increases wealth inequality
and supports corrupt regimes. As an immoral act, bribery should
be prosecuted even in countries in which it is an acceptable
practice. Businesses and governments should be considered
moral entities that enter into a social contract.

G.K. Sah, Business Ethics

 The morality of advertising
 Advertising ethics are the moral standards that govern
how a company communicates with its target market.
 Companies must demonstrate values when promoting to
consumers because this makes consumers believe the
company cares about what they require. This shows that
the customer is protected by a company that is behaving
in a way that makes a difference to the community they
work in.

G.K. Sah, Business Ethics

 The morality of advertising
The most common false and misleading advertisements can
be classified into three categories:-
 Puffery
 Implied falsity
 Literal falsity
 Surrogate advertisement
 Exaggeration(over statement)
 Unverified claims
 Women used as sex symbols for promoting products
 Comparative advertisements
 Use of children in advertising

G.K. Sah, Business Ethics

 The morality of advertising
 Puffery:- It is a statement that uses exaggeration and/or
hyperbole to promote a product or service.
 For example:-World's best product
 Pizza Hut said its claims that it had "better ingredients" and
"better pizza“
 The Federal Trade Commission defines puffery as
exaggerations about a product or service, “made for the
purpose of attracting buyers, so it is legal.
 Implied falsity:- Implied false advertising claims are ones
that are literally true, but imply another message that is false.
For example:- ABC Mouthwash kills the germs that cause colds
 Literal falsity:- Literal false advertising primarily refers to
promotional materials involving statistical and testing proof of
claims. Literal false advertising is when advertising depends on
a study or test to establish the stated reality of the claim.
G.K. Sah, Business Ethics
G.K. Sah, Business Ethics
 Office romance
 An office romance is a connection between two people
who work for the same firm that goes beyond the socially
acceptable employer-employee relationship and the work-
related tasks that necessitate their interaction.
• Romantic relationships between two people employed by
the same employer. Workplace romance exists when two
members of the same organization develop a relationship
with mutual attraction.

G.K. Sah, Business Ethics

 Why Do People Have Workplace Romances?
 People work long hours at their
jobs.
 Work is a safe atmosphere
where people can meet and
learn more about potential
dating partners.
 Those in the relationship are
"happy" when the romance
blossoms.
 When partners work for the
same company, they have
someone to talk to about
challenges at work because the
other understands and can
assist in resolving concerns.

G.K. Sah, Business Ethics

 Issues in Workplace Romances
 Other employees perceived
nepotism and favoritism.
 Reduced supervisor credibility in
the opinion of his or her team
decreased staff morale
 Conflicts of interest that could
arise
 Company policy violations
 Difficulties in enforcing business
rules consistently
 Other employees' charges of
sexual harassment or
discrimination If the relationship
fails
 Internal gossip and rumors that
can have an impact on the entire
work environment

G.K. Sah, Business Ethics

 The problem of fair pricing

 Pricing is the process by which a company determines the

price at which it will offer its products and services.
 It is the process of calculating how much money a
manufacturer will receive in return for goods and services.
 Pricing method is used to determine the price of a producer's
offerings that are important to both the producer and the client.
 The sum of the values that customers exchange for the
benefits of owning or using a product or service.
 A fair and reasonable price is the price point for a good or
service that is fair to both parties involved in the
transaction. This amount is based upon the agreed-upon
conditions, promised quality and timeliness of contract
performance.

G.K. Sah, Business Ethics

 The Issues of fair pricing
 Price fixing is the worst kind of collusion.
 Favoritism in bidding
 Price discrimination is anti-favoritism
 Price skimming: Discriminating over time
 Pricing that is more than competitive
 Monopoly wresting

G.K. Sah, Business Ethics

 Trade secrets
 Trade secrets consists of
knowledge that is kept
secret.
 These are confidential
information which use to
gain competitive
advantages.
 A trade secret is a type
of intellectual property in
the form of a formula,
practice, process, design,
instrument, pattern,
commercial method, or
compilation of information
G.K. Sah, Business Ethics
Trade secrets

G.K. Sah, Business Ethics

 Corporate disclosure
 Corporate disclosure refers to the information that public
corporations, mutual funds, and corporate executives
must provide to the investing public.
 It is the sharing of information by employees within public
companies to people outside the company.
 The act of disclosing all relevant information about a firm
that may impact an investment decision is known as
corporate disclosure.
 The primary goal of corporate disclosure is "to
communicate firm performance and governance to
outside investors."

G.K. Sah, Business Ethics

 Product misinterpretation
 Misrepresentations are deceptive declarations of truth that
influence another party's contract decision.
 False statements can nullify a contract and, in some
situations, allow the opposite party to claim damages.
 Misrepresentation is a ground of contract breach in all
transactions, regardless of size, but it only applies to
declarations of truth, not opinions or projections.
 There are three forms of misrepresentations:
 Innocent misrepresentation
 Negligent misrepresentation,
 Fraudulent misrepresentation

G.K. Sah, Business Ethics

 Caveat Emptor
 Caveat emptor is a Latin phrase that can be roughly translated in
English to "let the buyer beware."
 A caveat emptor disclaimer is intended to resolve disputes that
arise from information asymmetry, a situation in which the seller
has more information than the buyer about the quality of a good
or service.
 Caveat emptor is the general rule when it comes to a product's
nature or quality, which means that absent fraud, a buyer has no
recourse against a seller for any defect in the product that isn't
covered by an express or implicit condition or warranty.
 For example, under the caveat emptor principle, a buyer who
buys a coffee mug and then discovers that it leaks is stuck with
the defective product. They could have altered their minds if they
had examined the mug before purchasing it.

G.K. Sah, Business Ethics

Caveat Emptor

G.K. Sah, Business Ethics

Caveat Emptor

G.K. Sah, Business Ethics

 The morality of labor strikes
 A labor strike is when workers collectively decide to stop
working in order to demand a concession from an employer.
This usually happens after failed contract negotiations and the
majority of the workers in the bargaining unit have opted to
strike.
 Strikes are sometimes used to pressure governments to
change policies. Occasionally, strikes destabilize the rule of a
particular political party or ruler; in such cases, strikes are often
part of a broader social movement taking the form of a
campaign of civil resistance.

G.K. Sah, Business Ethics

 The morality of labor strikes
 A labor strike is when workers collectively decide to stop
working in order to demand a concession from an
employer. This usually happens after failed contract
negotiations and the majority of the workers in the
bargaining unit have opted to strike.
 Strikes are sometimes used to pressure governments to
change policies. Occasionally, strikes destabilize the rule
of a particular political party or ruler; in such cases, strikes
are often part of a broader social movement taking the
form of a campaign of civil resistance.

G.K. Sah, Business Ethics

 Whistle-blowing
 A whistleblower is someone who disclose information or
action that is considered to be unlawful, unethical, or
incorrect within a private or public institution. The term
whistleblower can also be spelled as whistle-blower or
whistle blower.
 Whistleblowing is the act of an employee reporting
misconduct that they feel is in the public interest. Criminal
action, such as stealing, or unethical or unjust behavior in
the workplace, such as racism, sexism, or homophobia,
are only a few examples of whistleblowing.
 Whistle-blowing is the act of informing the authorities or the
general public that the company you work for is engaging
in unethical or unlawful behavior.

G.K. Sah, Business Ethics

 Whistle-blowing
 A whistleblower is someone who disclose information or
action that is considered to be unlawful, unethical, or
incorrect within a private or public institution. The term
whistleblower can also be spelled as whistle-blower or
whistle blower.
 Whistleblowing is the act of an employee reporting
misconduct that they feel is in the public interest. Criminal
action, such as stealing, or unethical or unjust behavior in
the workplace, such as racism, sexism, or homophobia,
are only a few examples of whistleblowing.

G.K. Sah, Business Ethics

Whistle-blowing

G.K. Sah, Business Ethics

 Unfair competition
 A market participant who engages in misleading,
deceptive, dishonest, fraudulent, coercive, or
unconscionable conduct in trade or commerce is said to
be engaging in unfair competition.

G.K. Sah, Business Ethics

 Money laundering
 Money laundering is the illicit practice of disguising huge
sums of cash obtained through criminal activity, such as
the financing of terrorism or drug trafficking, as coming
from a legitimate source.
 The structuring of large amounts of money into multiple
small transactions at banks
 The use of foreign exchanges.
 Cash smugglers and wire transfers to move money
across borders.
 Investing in high-value and movable commodities such as
diamonds and gold.

G.K. Sah, Business Ethics

 Conflict of interest
 A conflict between the personal interests and the
official responsibilities of a person in a position of trust.
 Interests can be grouped broadly into two categories:
 Direct Interests – An individual's own personal self-
interest, family-interest and personal business
interests.
 Indirect Interests – Personal, family, and business
interests of people or groups with whom the
individual associates.

G.K. Sah, Business Ethics

 Insider trading
 Insider trading refers to the practice of individuals with access
to sensitive or important non-public information about a firm
trading its securities. Utilizing this exclusive access is regarded
as a breach of the person's fiduciary duty.
 However, there are two types of insider trading. One is legal,
and the other is illegal.
 Legal insider trading is when insiders trade the company's
securities (stock, bonds, etc.) and report the trades to the
authorities such as Securities Exchange Commission (SEC).
 Illegal insider trading happens when an insider trades based
on non-public material information about a company to
gain an unfair advantage over the public. It is the illegal use
of non-public material information for personal benefit, which
can be in the form of making profits or avoiding losses.

G.K. Sah, Business Ethics

 Privacy issues
 The capacity to keep information about oneself or oneself
private allows a person or group to express themselves in a
selected manner. When someone says something is private to
them, it typically refers to something particular or sensitive to
them.
 Privacy issues focus on a personal or organizational
information being disclosed to employers and other competitive
companies.
 The revealing of organizational or personal data to prospective
employers or competitors is a privacy concern.

G.K. Sah, Business Ethics

 Discrimination
 Making unwarranted disparities between individuals
based on the groups, classes, or other categories to
which they formally or implicitly belong is known as
discrimination. People may be treated unfairly on account
of their color, gender, age, religion, sexual orientation, or
any other category.

G.K. Sah, Business Ethics

 Corporate intelligence.
 The method and forward-thinking techniques used to generate
information about the competitive environment in order to enhance
organizational performance are known as competitive intelligence.
It entails a coordinated CI program, systematic information
gathering, and analysis from various sources.
 Developing a business plan involves gathering and analyzing
useful information about customers, suppliers, and competitors.

G.K. Sah, Business Ethics

G.K. Sah, Business Ethics