Business ethics (also corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations
• Relationship between business and ethics
• Need for business ethics
• Importance of ethics in business
• 3 Models of Management Ethics
• Developing Moral Judgment
• Ethical behavior
• Factors impacting organizational ethics
• 7 Principles of Admirable Business Ethics
First of all we need to know what is actually ethics
Ethics (also moral philosophy) is the branch of philosophy that
involves systematizing(to plan a system for something), defending, and
recommending concepts of right and wrong conduct.
Business ethics can be defined as written and unwritten
codes of principles and values that govern decisions and
actions within a company. In the business world, the
organization’s culture sets standards for determining the
difference between good and bad decision making and
• Business ethics (also corporate ethics) is a form of applied
ethics or professional ethics that examines ethical principles and ethical
problems that arise in a business environment.
• Business ethics are implemented in order to ensure that a certain required
level of trust exists between consumers and various forms of market
participants with businesses
• Decisions taken within an organization may be made by individuals or
groups, but whoever makes them will be influenced by the culture of the
• A business is considered to be ethical only if it tries to reach a tradeoff
between pursuing economic objective and its social obligations.
Relationship between business and ethics
Ethical relationships concerning your company's interaction with
customers can have a direct impact on the success of your company.
Ethical customer relationships should include honesty with customers,
delivering a good product or service and backing the product or
A company policy that encourages positive relationships with
customers can help position your company as a trusted one.
While unethical behavior, such as making false claims, may gain you
immediate customers, this same behavior will lose those customers for
you in the long run.
Need for business ethics
•Every responsible business understands the need of business ethics.
Company is a legal person; therefore it needs to work in a socially responsible
•It should be implemented and observed by the management, followed by the
employees, and with proper consideration of the customers.
• A business can achieve long term success with business ethics. The more
inclined a business is towards ethics, the more trust of the customer, and
more durability of the business.
Importance of ethics in business
• Attract customers to the firms products, thereby boosting sales and
profits make employees want to stay with the business, reduce labor
turnover and therefore increase productivity(zahiri bat hai jitney zayada
customers hongay utni productivity increase hogi …)
• Attract more employees wanting to work for the business, reduce
recruitment costs and enable the company to get the most talented
employees(employee rate zayada ho jaye ga )
• Attract investors and keep the company’s share price high, thereby
protecting the business from takeover.(jitney zayada investors hongay
business take over se bach jaye gi)
Unethical behavior or a lack of corporate social responsibility, by
comparison, may damage a firm’s reputation and make it less
appealing to stakeholders. Profits could fall as a result.
3 Models of Management Ethics
• Three Types Of Management Ethics
3 Models of Management Ethics
Conforms to high standards of ethical behavior.
A style devoid of ethical principles and active opposition to
what is ethical.
Intentional - does not consider ethical factors
Unintentional - casual or careless about ethical
considerations in business
• WHAT IS ETHICAL BEHAVIOUR?
Ethical behavior is that which is morally accepted as
"good" and "right" as opposed to "bad" or "wrong“
Higher revenues – demand from positive consumer support
Improved brand and business awareness and recognition
Better employee motivation and recruitment
New sources of finance – e.g. from ethical investors
One way of dealing with ethical dilemmas is by using the
four way test to evaluate decisions. This test involves
asking four questions:
•Is my decision a truthful one?
•Is my decision fair to everyone affected?
•Will it build goodwill for the organization?
•Is the decision beneficial to all parties who have avested
interest in the outcome?
WHO IS RESPONSIBLE FOR CREATING ETHICS IN AN
A company’s managers play an important role in
establishing its ethical tone. If managers behave as if the
only thing that matters is profit, employees are likely to act
in a like manner. A company’s leaders are responsible for
setting standards for what is and is not acceptable
employee behavior. It’s vital for managers to play an active
role in creating a working environment where employees
are encouraged and rewarded for acting in an ethical
OTHER FACTORS IMPACTING ORGANIZATIONAL ETHICS
• Corporate culture
• Existence and application of a written code of ethics
• Formal and informal policies and rules
• Norms for acceptable behavior
• Financial reward system
• System for recognizing accomplishment
• Company attitude toward employees
• How employees are selected for promotions
• Hiring practices
• Applications of legal behavior
• Degree to which professionalism is emphasized
• The company’s decision making processes
• Behaviors and attitudes of the organization’s leaders
7 Principles of Admirable Business Ethics
1. Be Trustful
2. Keep An Open Mind
3. Meet Obligations
4. Have Clear Documents
5. Become Community Involved
6. Maintain Accounting Control
7. Be Respectful
Coke & Pepsi in Pakistan
Today, more from the world of product safety. This time the story is
about Coke and Pepsi, and allegations that the versions of their
products manufactured in Pakistan contain unacceptably high levels of
world’s biggest brand names, known for wooing customers around the
world, are facing a credibility crisis in one of their crucial emerging
Ethics are important not only in business but in all
aspects of life because it is an essential part of the
foundation on which of a civilized society is build.
A business or society that lacks ethical principles
is bound to fail sooner or later.