MAT. K. M. PATEL SR. COLLEGE OF COMM.

& SCI

TYBBI

CHAPTER NO. 2

INTRODUCTION TO BUSINESS ETHICS

Prof. Kalpana M. Jadhav

 INTRODUCTION TO BUSINESS ETHICS

Contents covered :
 Meaning of Business Ethics
 Definition of Business Ethics
 Characteristics / features of Business Ethics
 Importance / purpose of Business Ethics
 Principles of Business Ethics
 Scope of Business Ethics
 Conclusion
 INTRODUCTION TO BUSINESS ETHICS

Meaning of Business Ethics :

Business Ethics is the systematic study of ethical matters

pertaining to business industry or related activities, institutions and
beliefs.

Business Ethics are rules of business by which business activity

may be judged.

Business Ethics or ethical standards are the principles, practices

and philosophies that guide the business people in the today’s
business decisions.
 INTRODUCTION TO BUSINESS ETHICS

Definition of Business Ethics :

According to William shaw, “Business ethics is the study

of what constitutes right and wrong or good and bad human
conduct in business context”
Characteristics / features of Business Ethics :

1] Code of conduct

2] Based on moral and social values

3] Gives protection to social groups

4] Provides basic framework

5] Voluntary

6] Requires education and guidance

7] Relative Term
Characteristics / features of Business Ethics :

8] New concept

9] Guide business people

10] It is considered both as a science and an art

11] Dynamic in nature

12] Based on principles of sincerity, good behavior etc.

13] Maintain harmony

14] Concentrate on moral standards

Importance / Purpose of Business Ethics :

1] Self Satisfaction

2] Goodwill of the Business and Businessmen

3] Protection to both sides

4] Positive consequences

5] Encourage others

6] Success and development

7] New Management

8] Good business ethics promote good business

Importance / Purpose of Business Ethics :

9] Stop business malpractices

10] improve customers’ confidence

11] Survival of business

12] Safeguarding customers’ rights

13] Protecting employees and shareholders

14] Develops good relations

15] Creates good image

16] Customers’ satisfaction

17] Healthy competition

 Sacredness
of means
Non and ends Not to do
violence any evil

Principle
of
proportio
Human -nality
dignity

Principles of
Business Ethics
Non
cooperati
Universal on in
value evils

Cooperat
Equivalent ion with
price Publicity others
Scope of Business Ethics :

Ethical problems arise across all the functioning areas of

companies and at all levels within the company.

Ethics in
Finance

Ethics in Ethics in HR
compliance
Scope of
Business
Ethics

Ethics in Ethics in
Production marketing
 Scope of Business Ethics

1. Ethics in Finance :

The Ethical issues in finance that companies and employees are

confronted with includes :

• In Accounting – window dressing, misleading financial analysis.

• Related party transactions not at arm’s length.
• Insider trading.
• Securities fraud leading to manipulation of the financial markets.
• Executive compensation.
• Kickbacks
• Bribery
• Over billing of expenses,
• Facilitation payments.
• Fake reimbursements.
 Scope of Business Ethics

2. Ethics in Human Resources :

The ethics of Human Resource Management covers those ethical issues arising
around the employer-employee relationship, such as rights and duties determined
between employer and employee. The issues of ethics faced by HRM include:

 Discrimination issues – Discrimination on the basis of age, gender, race, religion,

disabilities, weight etc.
 Sexual harassment.
 Affirmative Action.
 Issues surrounding the representation of employees and the democratization of
the workplace.
 Issues affecting privacy of employee : workplace surveillance, drug testing.
 Issues affecting privacy of the employer : Whistle blowing.
 Occupational safety and health.
 Scope of Business Ethics

3. Ethics in Marketing :

Marketing Ethics is the area of applied ethics which deals with the moral
principles behind the operation and regulation of marketing. The ethical issues
confronted in this area include :

 Pricing – Price fixing, price discrimination, price skimming.

 Anti-competitive practices like manipulation of supply.
 Misleading advertisements.
 Content of advertisements.
 Children and marketing.
 Black markets, grey markets.
 Scope of Business Ethics

4. Ethics in Production :

This area of business ethics deals with the duties of a company to ensure that
products and production processes do not cause harm. The ethical issues in this area are :

 Defective, addictive and inherently dangerous products.

 Ethical relations between the company and the environment include pollution,
environmental ethics.
 Ethical problems arising out of new technologies - e.g. Genetically modified food.
 Product testing ethics.
 Scope of Business Ethics

5. Ethics in Compliance :

 Compliance is about obeying and adhering to rules and authority.

 The motivation for being compliant could be to do the right things out of the fear of being
caught rather than a desire to be abiding by the law.

 An ethical climate in an organization ensures that compliance with law is fueled by a

desire to abide by the laws.

 Organizations that value high ethics comply with the laws not only in letter but to beyond
what is stipulated or expected of them.