Business Ethics

Prepared and presented by:

Sugandha Vidge (80)
Nupur Vashisth (84)
 Ethics is the branch of philosophy that
focuses on morality and the way in which
moral principles are applied to everyday life.
 Ethics involves an active process of applying
values, which may range from religious
principles to customs and traditions.
 Business ethics focuses on what constitutes
right or wrong behavior in the world of
business. Corporate business executives have
a responsibility to their shareholders and
employees to make decisions that will help
their business make a profit. But in doing so,
businesspeople also have a responsibility to
the public and themselves to maintain ethical
principles.
The disastrous revelation
 Ramalinga Raju founded Satyam Computers in 1987
and was its Chairman until January 7, 2009 when he
resigned from the Satyam board after admitting to
cheating six million shareholders.
 After being held in Hyderabad's Chanchalguda jail on
charges including cheating, embezzlement and
insider trading.
 Raju was granted bail on 25.3.2011. Raju was granted
bail on condition that he should report to the local
police station once a day and that he shouldn't
attempt to tamper with the current evidence
 A botched acquisition attempt involving
Maytas in December 2008 led to a plunge in
the share price of Satyam.
 In January 2009, Raju indicated that
Satyam's accounts had been falsified over a
number of years.
 He admitted to an accounting dupery to the
tune of 7000 crore rupees or 1.5 Billion US
Dollars and resigned from the Satyam board
on January 7, 2009.
Companies like Satyam indulge in the following activities that come under the ambit
of unethical practice:
 Resorting to dishonesty, trickery or deception.
 Distortion of facts with a view to misleading or creating confusion.
 Manipulating executives emotionally by exploiting their vulnerabilities.
 Resorting to profiteering due to excessive greed.
 Over invoicing through false documents to show higher profits.
 Using political clout to avoid penalty or compensation for unlawful act.
 Lack of transparency and avoiding investigation.
 Damaging the environment by violating the government prescribed norms for
pollution.
 Resorting to money laundering.
 Diverting through foul means from a public limited company to family-owned
concerns.
 Abusing the legally constituted institutions such as boards of directors, auditors
and independent directors to achieve nefarious ends.
A guide of principles designed to help professionals
conduct business honestly and with integrity.
A code of ethics document may outline
 the mission and values of the business or organization
 how professionals are supposed to approach
problems
 the ethical principles based on the organization's core
values and
 the standards to which the professional will be held.
It focuses upon:
 Stakeholders and employees
 Quality of product and services
 Customer satisfaction
 Community and environment
 Purposes and Values
states what the company is all about, what it does, why
it exists. Ex. financial objectives , pr
ofessional standards , aspirations.
 Rules of Conduct
conduct adopted by the business toward its employees,
customers, shareholders and other funding agents,
suppliers, and then the wider society.
conduct may be spelled out in relation to the physical
environment; ethnic, gender, and race relations; realms
such a law and justice or medical practice.
 the code may specify categories of problems such as
conflicts of interest; taking or offering bribes, gifts,
favors, etc.; rules relating to information such as
disclosures;preferential treatment, discrimination;
interpersonal relations; resolving quality versus cost
conflicts,etc.
 Implementation, Reporting, and Sanctions
administrative implementation of the code and
sanctions against code violations.
 Recognizing company's need to manage
corporate ethics.
 Developing strategies to raise ethical
standards.
 Employees should be educated about the
company's ethics to make it relevant and real.
 Provide in house advisors.
 Incentives and Punishments.
 Whistle blowers to be given protection.