Introduction of Business Ethics

1. Dr. Manjit Kour

2. CONTENTS
 What is Ethics?
Meaning of business ethics.
Ethics explained
Sources of Business ethics.
 Characteristics of Business ethics.
Importance of Business ethics.
Principles of Business ethics.
Types of ethical actions.
Characteristics of ethical actions

3. What is Ethics?
Ethics may be defined as the set of moral principles
that distinguish what is right from what is wrong.
Ethics has a twofold objective: it evaluates human
practices by calling upon moral standards.
 It may give prescriptive advice on how to act morally
in a given situation.

4. GOLDEN RULE OF ETHICS
Ethics of Reciprocity- “ Do unto
others as you would have them
to unto you”

5. Ethics explained
 Ethics are broadly described in the literature as moral principles
about right and wrong, honorable behavior reflecting values, or
standards of conduct.
 Honesty, openness, responsiveness, accountability, due diligence,
and fairness are core ethical principles.
 Ethics are a branch of philosophy with no clear-cut definition of
what behaviors are ethical and which are unethical when judging
one’s behavior.
 There is no general or global consensus for defining ethical
behavior for individuals, as it may change from time to time and
from one place to another place.
 There is no universal measure or standard as to what constitutes
ethical behavior.

6.  Morals refer to a person’s personal philosophies about
what is right or wrong.
 Business ethics comprises organizational principles,
values, and norms that may originate from individuals,
organizational statements, or from the legal system that
primarily guide individual and group behavior in the world
of business.
 Principles are specific and pervasive boundaries for
behavior that should not be violated.
 Values are enduring beliefs and ideals that are socially
enforced.

7. Business Ethics definition
 “Business Ethics is generally coming to know what is
right or wrong in the work place and doing what is
right. This is in regard to effects of products/services
and in relationship with the stake holders.” —Cater
McNamara
 “Business ethics in short can be defined as the
systematic study of ethical matters pertaining to the
business, industry or related activities, institutions and
beliefs. Business ethics is the systematic handling of
values in business and industry.” —John Donaldson

8. “Business Ethics examines three particular subjects: the
systemic issues that are considered as the ethical
concerns focusing on the economic, legal, politic and
social structures in which companies perform, the
corporate issues which are particular to a specific
company and the individual issues which refer to the
concerns of an individual working in a specific
company”
-Velasquez

9. Sources of Business Ethics
Sources of
Business
Ethics
Religion
Culture
Law

10. Characteristics of Business Ethics
Code of conduct
Based on moral and social values
Gives protection to social groups
Provides basic framework
Voluntary
Requires education and guidance
Relative Term
Both science and art
Related to Human Aspect
Greater than Law
Dynamic in nature
Universal application

11. Types of Ethics
Individual Ethics
• Not to tell lies
• To keep one’s
word
• Try not to hurt
others
Institutional
Ethics
• Democratic
management
• Economic and
social
development
• Equal
treatment
• Justice and
peace
Social Ethics
• Environmental
pollution
• Unsafe product
• Unjust
competition
Global Ethics
• Universal
ethical
standards
• Global ethical
issues

12. Importance of Business Ethics
Credibility in the Public
Credibility with the Employees
Corresponds to Basic Human Needs:
Better Decision Making
Profitability
Protection of Society
Protecting employees and shareholders
Healthy competition
Survival of business

13. PRINCIPLES OF BUSINESS ETHICS
Compliance Principle
Responsibility Principle
Fairness Principle
Loyalty Principle
Consideration Principle
Caring Principle
Integrity Principle
Honesty Principle
Integration Principle
Trustworthiness Principle
Compliance Principle
Compliance Principle
Responsibility Principle
Awareness Principle
Implementation Principle

14. Factors Highlighting the
Importance of Business Ethics
 Long term growth
 Cost and risk reduction
 Core values
 Leadership
 Vigilance
 Culture in the Company
 Influence of Co-workers and managers
 Culture in the country

15. Factors Highlighting the
Importance of Business Ethics
 Moral values of a person
 Environment in the country
 Formal Ethics program
 Tolerance level
 Lapse on the part of professionals
 Limited Resources

16. Types of ethical actions
Destructive
actions
Constructive
actions

17. Characteristics of Ethical Actions
 Ethical actions are not only activities to serve others
but also the inner temperament of the mind.
 Ethical actions give importance to helping others.
 Ethical actions are not the instrumental value but the
intrinsic value.
 Ethical actions are performed for prosperity, success
and sound decisions.
 Ethical actions are used to avoid prohibited
constructive actions and to promote obligatory and
optional actions.
 Ethical actions are performed as duties or
responsibilities of individuals.

18. Examples of Ethical Issues
Ethical issues may vary from one organization to another
according to the factors influencing the Ethical Behavior:
conflicts of interest,
quality control issues,
discrimination in hiring and promotion,
misuse of proprietary information,
abuse of company expense accounts,
misuse of company assets,
drug and alcohol abuse,
environmental pollution, environmental destruction,

19. Ethics at Workplace
Business Ethics
 There is increased interaction between the board of
directors, audit committees, internal auditors, external
auditors, executives, and employees in general regarding
ethical conduct in the workplace.
 Business ethics are most simply described as: a process
of promoting moral principles and standards that guide
business behavior.

20. Case Study-Purchasing Ethics
J.R. accepted a position at Cripple Creek Vocational University and
he and his family made a permanent move. Soon, J.R. was
promoted to Administrative Vice President, overseeing the
purchasing department of the University. His oldest son, Jim, got a
good job in educational equipment sales at Tiddley Computer
Corporation in Fort Worth.
As Vice President, J.R. quickly saw the need for 4 to 5 computers in
his office. Although CCVU had a bidding policy, J.R. purchased
Tiddley Corporation's computers direct from Tiddley for about
$3500 each, when IBM clones were selling for around $2000 and
the clone had more promising features than the Tiddley. Jim
handled the sale and received a healthy commission on the sale. If
the purchase had gone through the normal bidding process, the TC
model would not have been selected. Tiddley's local Cripple Creek
franchise dealer objected to Tiddley Corporation that his protected
franchise had been bypassed in the deal.

21. Questions
• Since J.R. was over the purchasing department and had final
decision authority, should purchasing have gone through the
normal bidding routine?
• Is it acceptable for a V.P. to bypass the normal routine to do
business with a family member?
• Was J.R.'s decision not to request bids an ethical choice?
• What should the college purchasing agent do?
• Should anyone else at CCVU have any interest in this activity?
• Has Tiddley's Cripple Creek franchise owner been wronged?
• Should Jim have made the sale? Received a commission?

22. Thank You