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AN INTRODUCTION TO BUSINESS ETHICS

This chapter seeks to


Identify reasons why the study of ethics is important

Explain the nature and meaning of business ethics


Explain the difference between ethical and values Clarify the difference between ethics and the law Introduce the distinction between ethics and morality

Meaning of Ethics

Character of a man

Decided by

Conduct of a person

Leads to

Series of Actions

Good or Bad, Right or Considered As wrong, Moral or Immoral Taken together

By which we can Judge again Moral Standards

Known as Moral Judgement

Requires

Ethics and Ethos


The word ethics is derived from the Greek ethos, meaning customary or conventional or character or manners To be ethical in the sense of ethos is to conform to what is typically done, to obey the conventions and rules of ones society and religion.
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The questions today are less about why or should ethics be a part of business, than about which ethics should guide business decisions and how ethics can be integrated within business.

Business Ethics
A branch of philosophical ethics Reflect: In what ways do the practices and decisions made within business promote or undermine human well-being?

How ought we to live?


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Like never before, corporations are being asked, encouraged to improve their business practices to emphasize legal and ethical behavior. Companies, professional firms and individuals alike are being held increasingly accountable for their actions, as demand grows for higher standards of corporate social responsibility
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Graphic Organizer
Business Ethics
Creating safe products Fair treatment of employees

Creating jobs

Environmental protection

Truthful about financial status

The need to study Business Ethics


If business managers see the need to focus on ethical behavior, so should business students Preparation for career in contemporary business Consumers are affected by decisions made by businesses

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The Goals of Business Ethics


To treat students as active learners To engage students in an active process of thinking and questioning To allow students to think for themselves To deal with the mess of relativistic conclusions
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Importance of Business ethics


1. Personal Gain

2. Individual values Vis organizational goals


3. Managers values and attitudes 4. Competitive pressure 5. Cross cultural contradictions
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Cultural Etiquette

In Thailand, it is customary to exchange gifts during a second business meeting.


In China, gift giving is considered a form of bribery and is illegal.

Application of VALUES & ETHICS in Business

Organization

Individual
A Comprehensive Study

What are values?


They are the ideas and beliefs about life that guide us to do what we do and be what we are They can be about:
Politics Religion Being of service Education Money Career Family Dishonesty Taking Risks Respect Leisure Friends so on

What are values?


Those beliefs or standards that incline us to act or to choose in one way rather than another. It helps us to take decision about right and wrong. A companys core values are those beliefs and principles that provide the ultimate guide in the companys decision-making.

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Values & Ethics

Values( set of preferences) are said to be the cause and Ethics effect.

Johnson & Johnson


High quality and prompt service at reasonable price with a view to making fair profit. To respect individuality of employees keeping in mind their job security and means of fulfilling family responsibility. Informal communication Just and ethical action Encourage community service

Reliance Industries: Reliance believes that any business conduct can be ethical only when it rests on the nine core values of

Honesty, Integrity, Respect, Fairness, Purposefulness, Trust, Responsibility, Citizenship and Caring.

Growth is care for good health Growth is care for safety Growth is care for the environment Growth is conservation Growth is betting on our people Growth is thinking beyond business

Ethics and Morality


Ethos (Greek) and Mores (Latin) are terms having to do with custom, habit, and behavior. Ethics is the study of morality. This definition raises two questions: (a) What is morality? (b) What is the study of morality?

What is Morality?
morality can be defined as: a system of rules for guiding human conduct, and principles for evaluating those rules. Two points are worth noting in this definition: (i) morality is a system; and (ii) it is a system comprised of moral rules and principles. moral rules can be understood as "rules of conduct," which are very similar to "policies."

Ethics and Morality


Ethics is the principle that guides human behavior

Morals are how we judge others. They are related to traditional beliefs, customs that guide human social behavior
Ethics is based on moral standard and code of conduct whereas moral is generally accepted conduct and conventions of the society
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Relationship between Law and Ethics


Ethics is moral principles that governs the conduct of an individual whereas law is concerned with minimum regulation necessary for public order.
Frequent Overlap

Ethics

Law

Ethics is generally unwritten whereas law is written and has to be enforced.

Ethics concentrate on DO s
Law concentrate on DON Ts

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Concept of Rights and Duties


They are two sides of same coin. A proper mixture of them brings success and development. Rights are Power or Authority Duties are Responsibilities or Obligations
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RIGHTS
1. 2. 3. 4. Right to price services Right to raise prices Right to say NO Right to charge clients/customers late fees for not paying on time 5. Right to charge more if need arises 6. Right to learn and do better next time 7. Right to enjoy business
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DUTIES
1. Duties towards Customers

2. Duties towards Suppliers


3. Duties towards Shareholders 4. Duties towards Society 5. Duties towards Government
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BUSINESS WESTERN PERSPECTIVES AND INDIAN (EASTERN) PERSPECTIVES

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EHTICAL ORGANISM
Ethics in organization Organizations are becoming more responsible towards society Organizations are towards betterment of society Eg Facilities such as Educational, Medical, Financial are provided Organizations keep record of different social activities

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1. 2. 3. 4. 5. 6. 7.

Increases goodwill & reputation in society Contributes in productivity Contributes for expansion & diversification Develops customer relationships Reduces employee turnover Develops superior subordinates relationship Helps in economic growth & development

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CORPORATE CODE OF CONDUCT


Code is a set of rules which are accepted set of written rules which states that how people in a particular organization should behave. Code are intended to control, guide or manage the behavior or conduct of individuals working in organizations. Organizations have to operate within the ethics, values and morals principles of the society to which it belongs

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In organizations code of conduct is prepared by the BOD, CEO, Top management, Legal Departments or by the Founder.

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Corporate Code of Conduct


Format of Corporate Code of Conduct 1. Compliance Code Guidance & Prohibition of certain conduct 2. Corporate Norms Companies values to achieve objectives 3. Management Statements Statement by management to do business

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Corporate can be divided into 1. General Rules 2. Organizations Responsibilities 3. Employees Responsibilities

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Business Ethics: What Does It Really Mean?

Business Ethics:Today vs. Earlier Period


Societys Expectations of Business Ethics

Ethical Problem

Actual Business Ethics Ethical Problem

1950s

Time

Early 2000s

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Ethical Judgment vs. Behavior


From the time of Aristotle we have noticed a discontinuity between judging some act as right and behaving rightly. Knowing what is right is different from doing what is right. People vary in strength of character and motivation and fortitude.

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Business Ethics and the Law


Compliance with the law will prove insufficient for ethically responsible businesses. The Law is rife with ambiguity. Many acts are not illegal until a court rules that they are. Court cases demonstrate that you cannot always rely on the law to decide what is right or wrong.

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Whether we examine ethical questions explicitly or not, they are answered by each of us every day in the course of our lives.

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Morality, Virtues and Social Ethics


Morality: How should I live my life? How should I act? What should I do? What kind of person should I become? Virtues: character traits that constitute a life worth living Social Ethics: How ought society be structured? How ought we live together?

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Reflections on the chapter


A wide range of people can be adversely affected by the decision made within contemporary business. There are many roles to play within the economic system to insure integrity of that system and to prevent fraud and abuse. Business operates within a social context and has duties to a wide range of people beyond those people who own a companys stock.

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