BECG (CA)

L-3: Introduction to Business Ethics

Ethics:
Ethics deals with what is right or wrong. It is the science of moral principles and recognized rules of conduct. Moral judgments require moral standards by which one judges human conduct. Ethics can also be defined as the science of character of a person expressed as right or wrong conduct of action. Philosophers view ethics as a system of moral principles and the methods for applying the same. According to them, Ethics deals with values relating to human conduct with respect to the right or wrong of certain actions and to the goodness and badness of the motives and ends of such actions. Others consider what is an ethical guideline to-day is often translated to a law or regulation on a later day.

Nature of Ethics:
Ethics deals with human beings, who can judge which is right or wrong or good or bad. - Ethics is more a science than an art, because it is a systematic knowledge about moral behavior and conduct of human beings. - Ethics is a normative (a guide or control of action) science, which tells us what we ought to do. - Ethics deals with human conduct that is voluntary and not forced by any person or circumstance. - The concept of ethics is very vague, abstract and unstructured. There is no universally accepted definition of ethics because ethics is dependent on moral standards, which in turn depend on a value system, which again depend on individuals background, which further depend on his or her experience. Hence the ethical practices are different.
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Need for Business Ethics:

In order to survive in the long run, business should concentrate on the welfare of employees.

Objectives of Ethics:
To assess whether a particular act/decision is moral or not. To establish moral standards and norms of behavior. - To judge human behavior based on these standards or norms. - To assess human behavior and express an opinion or attitude on it. - To set standards or codes for moral behavior and make recommendations about the desired behavior.
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Business:
Business is a primary economic institution through which people in modern societies carry on the task of producing and distributing goods and services.

Business Ethics:
Business Ethics refers to application of ethical judgments to business activities. It concerns itself with what is right or wrong in the work place. It is the normative study of moral standards as they apply to business policies, institutions and human behavior. It is also considered as the ethical analysis of business practices.

Conflicts in Decision making from Business, Legal and Moral Points of View:
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Businesses have choices or alternatives, such as maximization of profits and sales volumes; and providing employment or benefits to employees. However, at times, profits and social responsibility can not co-exist, because, while earning profits, entrepreneurs may neglect social
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responsibility (e.g. postponement of Effluent Treatment Plant, which is required as social consideration towards community, to maximize profits).
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Sometimes, business finds it difficult to explain its action on ethical grounds as in the case of computerization of banks operations which leads to redundancy of clerical jobs.

- Avoidance of tax is an illegal activity and also unethical from social responsibility point of view. - Sometimes social obligations are complex and costly to discharge. But if an organization wants to survive and grow in the long run, it must strike a balance between its social obligations and economic objectives. But if the organization wants to be ethical, it has to discharge its social obligations towards the society.

Nature of Business Ethics:

Most businesses encounter two types of ethical problems, Overt and Covert ethical problems. - Overt ethical problems deal with bribery, theft, collusion, etc., which are clear/transparent and reprehensible. - Covert ethical situations occur in corporate acquisitions, marketing, personnel policies, capital investments, etc. which are complex, clear and have deft ethical solutions.

Ideal Ethical Decision:

It comprises of the following moral virtues: - Right (Morally correct) - Equitable (Just and equal) - Good (Highest good for all concerned) - Proper (Appropriate and acceptable) - Fair (Honesty) - Just (Action) **********