Corporate Governance

and Ethics
Lecture 1
Ethics and Business Ethics
Session Objectives

▪ The meaning of ethics

▪ Some significant principles in Business Ethics

▪ Concept of business

▪ Nature of business

▪ Characteristics of business
 Introduction

We all know that stealing is bad. But Tantiya Bhil, was a great freedom fighter, who used to steal from the
Britishers and distribute it among the needy. He stole to help the needy. So in
this case was stealing bad? This is where Ethics come in.
 Meaning of Ethics

Ethics refers to the standards that determine what is right and wrong in society.
 Meaning of Ethics

Thus, business ethics are a set of professional standards that emphasize honesty

and duty to the organization and society

Some significant principles in Business Ethics

▪ Fairness
▪ Integrity
▪ Commitment to agreements
▪ Broad-mindedness
▪ Considerateness
▪ Importance given to human esteem and self-
respect
▪ Responsible citizenship
▪ Attempt to excel
▪ Accountability
Some significant principles in Business Ethics

▪ In an organization, following these principles

leads to a decent business environment and
healthy relationships.
Factors that can cause a deviation

1 3

Ignorance and Imperfect reasoning

indifference to issues

Selfishness
Can you think of any other factor that could potentially disrupt business ethics?
concept of business
concept of business
Concept of Business

‘busy-ness’
 Concept of Business

In economics, business is the process of creating utility, while in commerce, business is the process of
buying and selling goods and services. Business includes that part of production that is equally exchanged
and results in mutual benefits for the parties involved.
 Business Definitions

According to Section 2(13) of the Indian Income Tax Act, 1961, business means,
‘any trade, commerce or manufacture or any adventure in the nature of trade,
commerce or manufacture’.
 Nature of Business

The term "business" has a wide range of meanings.

Can you explain what business is in your own words?
Economic activity Social process

01 02 03 04

Human activity System

Types of Business Activities
Characteristics of Business

Exchange or sale Social institution Risk and uncertainty

01 02 03 04 05 06

Creation of utilities Profit motive Customer satisfaction

Can you think of any other characteristics?
Responsibilities of a Business towards
Various Interest Groups
Responsibilities towards consumers

▪ Production of goods that meet the needs of

consumers with different tastes, classes, and
purchasing power

▪ Establishing the lowest possible price while

maintaining efficiency and reasonable profit

▪ Distribute products fairly among all consumer

segments
Responsibilities towards Shareholders

▪ Providing shareholders with maximum information

through newsletters, annual reports, or by holding
the annual general meeting in a convenient location
such that the maximum number of members are
able to participate.
Responsibilities towards community

▪ Improvement of housing conditions through

financial assistance to municipal and district
boards

▪ Supporting hospitals, schools, colleges,

religious institutions, etc., in the community

▪ Promoting better understanding of local and

national affairs through community forums
and group discussions

▪ Providing recreational facilities and

encouraging sports
 Business Ethics

Business + Ethics = Business Ethics

Let’s Recall