Need and Importance of Business Ethics:

The following points explain the need for and importance of

business ethics:
I. Protection of Consumer rights:
Consumer is the centre of all business activities. In fact, business
is essentially meant for satisfaction of consumer wants.
Unfortunately, consumers are the most neglected and exploited
group. The application of business ethics will help to confer
and implement consumer rights. Business ethics can be used to
check malpractices like adulteration, unfair trade practices and to
make the working of business consumer oriented.
II. Social Responsibility:
Business ethics is a means of making business socially
responsible for its actions. Exploitation of consumers, employees,
discriminate use of natural resources, etc; is quite common in all
types of business. Compliance to ethical standards will ensure (a)
protection of consumer rights, (b) public accountability, (c)
protection of workers interests, and (d) proper utilization of
natural resources.
III. Concept of Socialism:
The concept of socialism in business states that gains of a
business must be shared by all and just by the owner of business.
Profit is a sing of business skill and talent. Profit is also a result of
group efforts. Employees, shareholders, consumers, Suppliers
and others contribute to the success of the business.
Therefore, success should be shared by all concerned.
IV. Interest of Industry:
Business ethics are necessary to safeguard the interests of small
scale business firms. The tendency of big business firms is always

to dominate the market and drive away the small scale industries
out of the market. Small scale units can establish their position
and fight for their rights if the industry follows a code of ethics.
V. Consumer Movement:
The growth in consumer movement is also another important
factor that has necessitated the need for business ethics. The
spread of education and awareness among consumers about their
rights has made the business community to conduct business on
ethical principles.
VI. Better Relations with the Society:
Business ethics is needed to develop good relations between
business and society. The relationship of business with society
has various dimensions such as its relations with shareholder,
employees,
consumers,
distributors,
competitors
and
government. Business ethics will help to promote and protect the
interest to various groups.
VII. Buyers Market:
There has been a structural change in the concept of business.
The concept of profit has been gradually taken over by consumer
satisfaction. The large scale production and increased competition
in the market has changed the business scene from a sellers
market to a buyers market. In a changed situation, business
ethics is needed to redefine the traditional concept of profit and
replace it by a balance between profit and consumer satisfaction.
VIII. Beneficial to Business and Society:
Ethics suggests what is good and bad, right and wrong, ethical
and unethical, etc; to businessmen. It also brings an element of
honesty, sincerity, fairness, and human touch to business
activities. Society is also benefited by the introduction of business
ethics. It ensures healthy and competitive business atmosphere,

consumer and labor welfare, and improvement in social, economic

and cultural values of the society. They have either direct or
indirect effect on the society.