BBA-106: BUSINESS ORGANIZATION AND ETHICS

Ms. Akansha Tyagi | Asst. Professor | 06.09.2023 | BBA –Ist Sem

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BBA-106: BUSINESS ORGANIZATION AND ETHICS

Unit –I : Meaning and definition of business essentials & scope of business Classification of Business
Activities, Meaning, Definition, Characteristics and objectives of Business Organization, Evolution of
Business Organization . Modern Business, Business & Profession.

Unit – II: Business Unit, Establishing a new business unit. Meaning of Promotion. Features for business, Plant
location, Plant Layout & size of business unit.

Unit – III: Forms of Business Organization. Sole Proprietorship, Partnership, Joint Stock Companies & Co-
operatives.

Unit – IV: Business Ethics- An overview-Concept, nature, evolving ethical values, Arguments against business
Ethics. Relationship between Ethics & Corporate excellence – Corporate mission and statement, Code of
Ethics and culture

Unit – V: Business and Society Changing Concepts and Objectives of Business, Professionalization, Business
ethics, Gandhian Philosophy, Organizational Culture, Technological Development and Social Change, Social
Responsibility of Business, Social Audit

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 Business ethics
Arguments against business Ethics
The more entrenched (rooted) the discipline becomes in business schools, the more
bewildering (baffling or confusing) it appears to managers (Source- https://
hbr.org/1993/05/whats-the-matter-with-business-ethics).

• Approximately over 500 courses of Business ethics are taught at American campuses.
• 90% of the nation’s business schools now provide some kind of training in the area.

………….But it sounds irrelevant for managers

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Arguments against business Ethics
Recent surveys suggest that over 3/4 of America’s major corporations are actively trying to
build ethics into their organizations.
Managers are facing two kinds of ethical challenges: first, identifying ethical courses of
action in difficult grey-area situations ( “not issues of right versus wrong,” but “conflicts of
right versus right”); and, second, navigating those situations where the right course is
clear, but real-world competitive and institutional pressures lead even well-intentioned
managers astray.

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Arguments against business Ethics
1. Milton Friedman argument also known as Friedman Doctrine: The Social Responsibility
of Business is to increase its Profits". In it, he argued that a company has no social
responsibility to the public or society; its only responsible to its shareholders.
2. The argument from incentives : Install financial and legal incentives. Business people
respond to these, not ethics lectures.

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Arguments against business Ethics

3. The gut feeling argument. One cannot study ethics in any meaningful sense anyway, since

it is something you feel, not something you think about.

4. The moral development argument : Moral character is formed in early childhood, not

while sitting in ethics class. By the time students enter business school, it is too late to

change. 5.Business students see no motivation to study ethics and will not take it seriously.

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Arguments against business Ethics

5. The motivational argument :Even if there is reason to study ethics, business students see

no motivation to study it and do not take the subject seriously.

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Gandhian Philosophy

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The Gandhian philosophy

 Gandhism is a body of ideas that describes the inspiration, vision, and the life
work of Mahatma Gandhi.
 It is particularly associated with his contributions to the idea of violent
resistance, sometimes also called civil resistance.

 The two pillars of Gandhism are truth and non-violence.

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What were Gandhi’s economic ideas and how did they aim to protect
human dignity?

 Gandhi’s economic ideas were focused on protecting human dignity, fighting

poverty, exploitation, socio-economic injustice, and deteriorating moral
standards.
• “Spiritualize economics” by freeing it from materialism and bringing it to a
higher spiritual plane.

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Three Cardinals/Pillars/ Elements:
The three cardinals of Gardhian philosophy are:

Truth,
Love,
Nonviolence
https://www.youtube.com/watch?v=9nAUxQ8X3GQ

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Gandhiji’s views on labour management relations:
• Capital and labour should supplement and help each other.
• Gandhiji assigned a paternalist role to management in their dealings with
labour and principle of Trusteeship .

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Principles of Trusteeship
Gandhi’s concept of trusteeship was central to his economic ideas, based on the idea
that everything belongs to God and is for his people as a whole.
He believed that when an individual had more than their fair share, they became a
trustee of that portion for God’s people.
Gandhi suggested trusteeship as a way to address economic inequalities of ownership
and income.
Nonviolent is a way of resolving social and economic conflicts that arose from
inequalities and privileges of the present social order.
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Principles of Trusteeship
 The trusteeship formula he proposed aimed at transforming the present capitalist
order of society into an egalitarian one.

 The theory of trusteeship applied equally to both tangible and intangible property,
and under the Gandhian economic order, the character of production would be
determined by social necessity, not personal greed.

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Seven deadly sins proposed by Gandhiji:
Mahatma Gandhi said that seven things will destroy us,
which are enlisted below:
•Wealth without work.
•Pleasure without conscience.
•Knowledge without character.
•Commerce (business) without morality (ethics).
•Science without humanity.
•Religion without sacrifice.
•Politics without principle

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 Business ethics (UNIT-v)
What is the relationship between Business and Society ?
 Objective business is to develop, produce and supply goods and services to
customers.
 In doing so they have to be profitable.
https://www.youtube.com/watch?v=zeNOpb05Ne4

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 Business ethics (UNIT-v)
Companies benefit society by:
Supplying goods and services .
Creating jobs for customers, suppliers, distributors and coworkers.
Continually developing new goods, services and processes.
Investing in new technologies and in the skills of employees.
Building up and spreading international standards, e.g. for environmental practices
Spreading “good practice” in different areas, such as the environment and
workplace safety .

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 Business ethics (UNIT-v)
Key Business Skills
 Strategic Management.
 Basic Accounting.
 Financial Management.
 People Management.
 Marketing.
 Sales.

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 Business ethics (UNIT-v)
Understanding Society

 A society is a group of people involved in persistent social interaction, or a

large social grouping sharing the same geographical or social territory.
 Political authority and dominant cultural expectations.

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Business and the Changing Society

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Ethical Theories in Business

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Ethical Normative theories include in business include:

• Consequentialist normative theory: Normative themes—egoism,

utilitarianism, Kantian ethics.
• Non-consequentialist normative theory: Non-consequentialist normative
themes—duties, moral rights, and prima facie principle.

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Consequentialist

According to consequentialist theories, the moral rightness of an action is

determined solely by its results.

If its consequences are good, then the act is right; if they are bad, the act is wrong.
Consequentialists (moral theorists who adopt this approach) determine what is
right by weighing the ratio of good to bad that an action will produce.

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Non-Consequentialist
To a first approximation, non-consequentialist theories claim that whether an act is
right or wrong depends on factors other than or in addition to the non-moral value
of relevant consequences.
Non-consequentialist theories accept constraints, options, or both.
Non-consequentialist theories that accept constraints are often referred to as
deontological theories.
https://www.youtube.com/watch?v=wWZi-8Wji7M

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Strategic management

Strategic management can be defined as the formulation,

implementation, and evaluation of actions that will enable a firm to
achieve its objectives.
In a recent review of strategic management models, the mission
statement was noted as being an essential first step in the strategic
management process (David, 1984; Staples & Black, 1984)

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A mission statement can be defined as an enduring document of
purpose that distinguishes one business from other firms of its type
(Pearce, 1982).

Why a mission statement is needed ?

A clear statement of a company's mission is essential to effectively

establishing objectives, formulating strategies, setting goals, devising
policies, allocating resources, and motivating employees.

https://bstrategyhub.com/linkedin-mission-statement-vision-core-values-analysis/#:~:text=What
%20is%20this%3F-,LinkedIn%20Vision%20Statement,providing%20financial%20stability%20to
%20people.
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A good mission statement makes strategy formulation, strategy implementation,

and strategy evaluation much easier.

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Steps in developing Mission Statement

1.Orientation.
2. Component Analysis.
3. Communication Analysis.
4. Connotative Analysis.
5. Applicability Analysis.

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1.Customers - Who are the enterprise's present and future customers?
2. Products or services - What are the firm's major products or services?
3. Markets - Where does the firm compete?
4. Technology - What is the firm's basic technology?
5. Concern for survival, growth, and profitability - What is the firm's attitude towards
economic goals?
6. Philosophy - What are the basic beliefs, values, aspirations, and philosophical
priorities of the firm?
7. Self-concepts - What are the firms' major strengths and competitive advantages?
8. Concern for public image - What is the firm's public image?
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Corporate social responsibility (CSR) is the notion that businesses should focus on
improving the wellbeing of their employees while having a positive impact on the
planet.

72% of US consumers alone believe it’s either 'somewhat' or 'very important' for
businesses to make the world a better place.

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In India, the term CSR is widely being used even though related concepts and terms,
such as business responsibility, sustainable development, philanthropy,
sustainability, corporate citizenship, responsible business, triple bottom line,
shared value, value creation, business ethics, socio-economic responsibility,
bottom of pyramid, stakeholder management, corporate responsibility, and
corporate social performance, are in vogue (Kumar, 2021).

https://www.youtube.com/watch?v=KfKF44ZGPuQ

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• First Industrial Revolution.
• Second Industrial Revolution.
• The Gilded Age in the United State from 1870 to 1900. ( Rise in
Capitalism).
• The Pullman Company – A Chicago- based railcar producer.
• Post War Period
• In 1953 Howard Bowen often known as the Father of
Corporate Social Responsibility coined the term CSR.

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Corporate Social Responsibility- Mandatory Provisions in the Companies’ Act
In 2009, the National Voluntary Guidelines on Social, Environmental, and Economic
Responsibilities of Business were introduced by the Ministry of Corporate Affairs (MCA),
Government of India, “in order to boost CSR activities in India” (Mitra & Schmidpeter, 2017).
The voluntary guidelines evolved into an amendment to the Companies Bill, 2011,
approved by the Lok Sabha in December 2012.
This amendment was later approved by the Indian Parliament as Section 135, CSR Rules,
and Schedule VII of the Companies Act, 2013, and it was published in the Gazette on August
30, 2013, in India.
In the process, India became the first ever country in the world to introduce mandatory CSR
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Section 135 of the Companies Act, 2013 makes it a legal obligation for certain
companies to have a CSR Board which would look over the companies CSR efforts.
Every Company having net worth of Rs. 500 crore or more, or turnover of Rs. 100 crore
or more, or net profit of Rs. 5 crore or more during the immediately preceding financial
year shall constitute CSR committee., under Schedule VII they must specify the reasons
in their annual report

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Some of the mandatory provisions in the Act1 are mentioned below:
• Eligible companies to have a board (CSR Committee) to approve CSR
policy for the company.
• Rules are spelt out for transfer and use of the unspent amount.
• Annual reports of such companies to add a comprehensive CSR report.
• An elaborate CSR policy to be published on the company website.
• Fine and punishment for noncompliance.

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Social Audit

Assessment of how well company discharges its social obligations.

According to the experts it is systematic and comprehensive evaluation of

companies social performance.

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Why it is needed ?
To tell the stakeholders what company is doing for the society.
 Each business unit is not just connected with the internal stakeholders but is
also primarily connected to the external public too.
 The result of these activities can create a significant impact on the local
community or society and environment at large.
 To monitor and regulate the activities of the companies from time to time.
 Motivate the company to act in the best interest of society and the
environment.

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Objectives of Social Audit

1. Primary Objectives- Payment of fair and timely dividends to the

stockholders fair salaries and wages to the employers and laborers.
Also, fair, reasonable, and best possible prices offered to clients and
customers.

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2. Social Objectives- Incentives and bonuses for the employees.
Promoting and encouraging the amenities of the local community.
Promoting research and development framework.

3. General Objectives- . Also, to evaluate conditions in which the employees work,

to evaluate the impact of a company’s business operation on the environment and
the local community.

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