INTRODUCTION TO BUSINESS ETHICS

1. INTRODUCTION TO BUSINESS ETHICS

2. CONTENT • Introduction of Business Ethics • Definition • Characteristics • Scope/Area • Objectives • Importance • Sources • Types • Principles • Case Study

3. INTRODUCTION • Business ethics is concerned with the application of ethics to the business activities. • Business ethics are moral values and principles that determine our conduct in the business world. • It is the application of general ethical ideas to business behaviour. • The life and growth of a business depends upon the ethics practiced by a businessman.

4. DEFINITIONS 1) Business ethics is the study of business situations, activities and decisions where issues of right and wrong are addressed. -Andrew Crane 2) The ethics of business is the ethics of responsibility. The businessman must promise that he will not harm knowingly. -Raymond C. Baumhart

6. Requires education and guidance Not against fair profit making Code of conduct Features Based on morale and social value Business social relationship Discipline

7. SCOPE OF BUSINESS ETHICS • Ethics in Compliance: • Compliance means obeying to relevant laws, rules and regulations, authority, policies, standards, procedures or contractual obligations or internal obligations. • Eight pillars of effective compliance are: • High level oversight • Written policies and procedures • Education and training programs • Monitoring and auditing • Investigation and reporting • Response and prevention • Enforcement and discipline • Program effectiveness

8. 2. Ethics in Finance: • Ethics in finance may vary from industry to industry but everyone is liable to do their work at utmost good faith. People who are involved in finance activity have to serve both their company and their customers in utmost good faith. • Code of ethics: • Act with honesty, integrity avoiding conflicts • Provide information which is full, fair, accurate to be submitted to public • Act in good faith and responsibly • Promote ethical behaviour among other associates

9. 3. Ethics in Human Resource: • Human resource professionals have a great deal of morale, ethical and legal responsibilities in recruiting, training, reviewing, terminating and working with employees which can have a huge impact on the business at large. • HR executives should strive to balance organisational and employee needs and interests. • HR executive should support, promote and apply the principle of human rights, equity, dignity in the workplace.

10. 4. Ethics in Marketing: • Ethical marketing refers to the application of marketing ethics into the marketing process. • A shared standard of truth in marketing communications. • Consumers’ privacy should be maintained at all times. • Government standards and regulations must be adhered to and practiced by marketers.

11. 5. Ethics in Production: • Ethics in production is meant to ensure that the production function or activities are not damaging the consumers or the society. • No forced labour should be employed • Manufactures and suppliers should not employ minors i.e. below 14. • Manufactures and suppliers shall treat their employees with dignity and respect. • They should provide safe and healthy workplace.

12. OBJECTIVES BUILDING TRUST QUALITY OF PRODUCT & SERVICES SAFTEY Fig:1 CUSTOMER FOCUS ESTABLISH & MAINTAIN BUSINESS STANDARD FAIR COMPETITION ACCOUNTABILITY SOCIAL & ENVIRONMENTAL COMMITMENT

13. IMPORTANCE REDUCED BUSINESS MALPRACTICES CREATES GOOD IMAGE IMPROVE CUSTOMERS CONFIDENCE BETTER DECISION MAKING PROTECTING EMPLOYEES & SHAREHOLDES CUSTOMERS SATISFACTIONS COST AND RISK REDUCTION LONG TERM GROWTH

15. SOURCES • RELIGION: Religion is the oldest source of ethics. Every religion is the basis of an individual that he follows from his childhood and his deeply rooted in his behaviour. An individual understands about the fair and unfair, badness and goodness of action and the consequences of these actions. 2. CULTURE Culture is the set of important understandings that members of a community shares in common.

16. It consists of a basic set of values, ideas, perception, preferences, concept of morality, code of conduct etc.Culture encourages the members of the organization to give priority to the organizational goal over and above their personal interest. 3. LAW Laws are procedures and code of conduct that are laid down by the legal system of the country. In business, complying with the rule of law is taken as ethical behaviour. The major problem with the law is that all the ethical expectations cannot be covered by the law and especially with the ever-changing outer environment, the law keeps on changing but often fails to keep pace.

17. TYPES OF BUSINESS ETHICS

18. META-ETHICS: • Meta-ethics is the study of the origin and meaning of ethical concepts. • It involves the examination of ethical terms such as justice and morality as broad concepts for a society. • It talks about the nature of ethics and moral reasoning. • It is the least precisely defined area of moral philosophy as compared to normative ethics and applied ethics. • Metaphysical issues- concerning whether morality exists independently of humans or not and, • Psychological issues- concerning the mental basis of our moral judgments and conduct.

19. 2. DESCRIPTIVE ETHICS: • Descriptive ethics describes how people behave and what sorts of moral standards they claim to follow. • People use descriptive ethics as a way to judge particular actions as good or bad based on social contract of a particular society. • Descriptive ethics also change over time. • For ex- the acceptability of racism changed in the United States over the course of generations.

20. 3. NORMATIVE ETHICS: • Normative ethics is the study of principles, rules or theories that guide our actions and judgements to determine what is morally right or wrong. • THE GOLDEN RULE- ‘ we should do to others what we would want others to do to us’. (For ex- we do not want our neighbour to steal our car, then it is wrong for us to steal their car.) • Other normative theories focus on a set of foundational principles or a set of good character traits.

21. 4. APPLIED ETHICS: • Applied ethics is the branch of ethics which consist of the analysis of specific, controversial, moral issues such as abortion, animal rights, etc. • It is subdivided into groups such as • Medical ethics • Sexual ethics • Business ethics • Environmental ethics • The issue needs to be controversial where there significant groups of people both for and against the issue at hand.

22. GENERAL PRINCIPLES

23. CASE STUDY NIKE ‘CONSIDERED’- AN ENVIRONMENTAL SUSTAINABILITY INITIATIVE US based Nike launched an eco-friendly shoes in 2005 under a newly created product line called ‘Considered’. It took several steps like phasing out sulfur hex a fluoride, recycling shoes and manufacturing waste to design sports surfaces and working along with several NGOs to reduce its environmental impact. Nike, ‘Considered’ is an innovative concept where designers were encouraged to design shoes using less amount of harmful adhesive and more of recycled material. Nike had developed an index called ‘Considered Index’ using which Nike’s designers could get a ranking based on the environmental friendliness.

24. Nike aimed at making its own facilities and business travel climate neutral by 2011. • It had set a target of making all its footwear meet the minimum standard of ‘Considered Index’ by 2011, its apparel by 2015 and sports equipment by 2020.

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