PRESENTED BY

Dr. Seema Laddha

The
Term
Ethics
derieved from greek
word Ethos which
means Character.
Ethics
is a social
science which deals
with concepts such as
right
and wrong,
moral
and
immoral,good
and
bad etc.
Behavior of Dealing
with one another

MEANINGS
Business Ethics deals with morality in
the business.it is a system of moral principles
and values applied to business activities.this
means the business activities should be
conducted according to ethics or moral
standards.

Defination
According to wheeler,
Business Ethics is an art or science
of maintaining harmonious
relationship with society,its
various groups and institutions
as well as reorganising for right
or wrong of business conduct.

Defination
As per Investopedia
Business ethics are implemented in
order to ensure that a certain required
level of trust exists between
consumers and various forms of
market participants with businesses.
For example, a portfolio manager
must give the same consideration to
the portfolios of family members and
small individual investors. Such
practices ensure that the public is
treated fairly. .

Code of conduct : Business ethics is a code of conduct. It tells what

to do and what not to do for the welfare of the society. All
businessmen must follow this code of conduct.
Based on moral and social values : Business ethics is based on
moral and social values. It contains moral and social principles
(rules) for doing business. This includes self-control, consumer
protection and welfare, service to society, fair treatment to social
groups, not to exploit others, etc.
Gives protection to social groups : Business ethics give protection
to different social groups such as consumers, employees, small
businessmen, government, shareholders, creditors, etc.
Provides basic framework : Business ethics provide a basic
framework for doing business. It gives the social cultural, economic,
legal and other limits of business. Business must be conducted within
these limits.
Voluntary : Business ethics must be voluntary. The businessmen
must accept business ethics on their own. Business ethics must be
like self-discipline. It must not be enforced by law.

Requires education and guidance : Businessmen must be

given proper education and guidance before introducing
business ethics. The businessmen must be motivated to use
business ethics. They must be informed about the advantages of
using business ethics. Trade Associations and Chambers of
Commerce must also play an active role in this matter.
Relative Term : Business ethics is a relative term. That is, it
changes from one business to another. It also changes from one
country to another. What is considered as good in one country
may be taboo in another country.
New concept : Business ethics is a newer concept. It is strictly
followed only in developed countries. It is not followed
properly in poor and developing countries.

There must be a strong corporate governance to control the

unethical issues and activities.
Bribery: Accepting bribe create a conflict of interest between
the person receiving bribe and his organization. And this
conflict would result in unethical practices.
Coercion : It is forcing a person to do things which are against
his personal believes. E.g. blocking a promotion, loss of job or
blackmailing.
Insider Trading : Insider trading is misuse of official position.
Here the employee leaks out certain confidential data to
outsiders or other insiders which effect the reputation and
performance of company.

Conflicts of Interest: Conflict of interest when Private interests are

important for employees which are against the desire of employer
Unfair Discrimination :Unfair treatment or given privileges to persons on
the base of race, age, sex, nationality or religion. It is failures to treat all
persons equally.
Political Donations and Gifts: Gifts, donations or contribution to political
leaders or parties to get any unconditional act done e.g. sanctioning of any
special contract, issue of licenses etc.
Presentation of false returns of income and statements :It is to prepare
false income returns and statements of accounts for evasion of tax and getting
various govt. benefits and incentives.
Accumulation of profits by illegal means: Sometimes business undertakes
various unethical and unconstitutional activities to maximize its profits e.g.
hoarding of goods, black marketing, speculation etc.

CAUSES OF UNETHICAL CONDUCT IN AN

ORGANIZATION
Pressure to meet unrealistic objectives and deadlines:
According to a recent survey, the pressure from management or
from the Board to meet unrealistic
business objectives is
the leading factor that causes unethical behavior.
2. Increase in acute competition:
Competition is increasing at national and international level.
Every business aims to be the highest profit maker. To achieve
this goal, organization/individuals are urged to act dishonestly
and unethically.
3. Economic Greed:
People have a desire to live a life full of comforts and luxuries.
Some people follow unethical means to earn more money.
Personal financial worries become a cause for unethical
practices such as accepting a bribe.
1.

CAUSES OF UNETHICAL CONDUCT IN AN

ORGANIZATION
4. Information of unethical acts through media:
The information given by media provides ideas to inexperienced businessman
for doing unethical activities.
5. Pressure to earn profit:
- Shareholders expect larger returns.
- Employees hope for higher salary and benefits
- Directors expect higher remuneration
- Thus there is an increasing pressure to maximize profit to cope with
enlarged requirements.
6. Lack of Management Support or Poor Leadership:
- Leader is responsible for motivating his staff.
- If the leader does not encourage his subordinates to be ethical then there are
higher chances of unethical conduct
- If the leader himself is involved in unethical activities, his employees may
do the same.

Ethical organizations are based on the principle of fairness.

All stakeholders are treated equally without any discrimination.

Benefit of stakeholders in given precedence over own interest.

There is clear communication in ethical organizations.

What is to be done, how it is to be done is clearly stated.

No bureaucracy/Minimum bureaucracy and high control helps in

implementing business ethics easily.

Avoid Exploitation of Consumers

Unfair Trade Practices

Encourage Healthy Competition

Fair Treatment To Employees

Avoid Payment Of Bribe

Respect Consumer Rights

Accept Social Responsibility

HAVING MORAL
VALUES
FAIR PRICES
FAIR WAGES

NO VALUES NO
ETHICS
SHORT WEIGHTS
AND MEASURES
SUPPY INFERIOR
QUALITY

Efforts at Institutional Level

Efforts at Governmental Level

Efforts ay Social and Religious Level

Ethical code of conduct:

Handbook containing the rules, regulations and procedure to be
followed by the employees of an organization.
Ethics committees:
Ethics committees are formed for influencing the ethical conduct of
business on a permanent basis.
Transparency in working:
The procedure, rules and policies of a business organization should
not be kept so secret.
Penalties:
Criminal and monetary punishments may be given to those who
neglect the ethical code of conduct.

Clear cut policies and working procedures:

Due to unclear policies and procedures of working, certain
business people adopt corrupt practices, for taking advantages of
the situation.
Strict penalty provisions:
Strict penalty provisions especially in the Companies Act, 1956
must be altered so as to give more criminal and monetary
punishments.
Political indiscipline:
Political indiscipline is one of the causes of unethical conduct or
business.
Enactment and enforcement of laws:
the real enforcement of government laws protecting the interests
of consumers, workers, public interest could be made possible.

A businessman who follows the unethical conduct in

business should be socially boycotted by the people.

Social service institutions should take effective steps to bring

in the notice of authorities of such businessmen who act on

unethical grounds.

Good corporate governance should look at all

stakeholders and not just shareholders alone.
Corporate governance is something WHICH COMES
FROM WITHIN!
The provisions of companies act should be followed
both in letter and spirit.

Corporate Governance

Satyam Vada Dharmam Chara

Forever speak the truth and follow the dharma
- Taittariya Upanishad

To

provide

the

maximum

happiness

for

the

maximum number of people for the maximum period,

based on the principles of Dharma righteousness

and moral values.

- Ayodhya Kand

Corporate Governance is the application of best

management practices, Compliance of law in true letter and
spirit and adherence to ethical standards for effective
management and distribution of wealth and discharge of social
responsibility for sustainable development of all stakeholders.

-The Institute of Company Secretaries of India

Corporate governance is "the system by which companies are directed and
controlled
It involves regulatory and market mechanisms, and the roles and relationships
between a companys management, its board, its shareholders and
other stakeholders, and the goals for which the corporation is governed.
An important theme of corporate governance is the nature and extent
of accountability of people in the business.

1)

Unethical Business Practices

Security Scams ---Harshad Mehtha Security Scam
Equity allotments at discount rates to the controlling groups
Disappearance of Companies (1993-94) - around 4,000
companies with 25,000 crores without starting business
Misdeed of Companies
Plantation, Sheep rearing, etc.

2)

Impact of Globalization
Integration with Foreign Market
Foreign Investors expectations
New Business Opportunities --- IT & ITES, BPO etc.,
New Capital formation FII, FDI

3)

Impact of Privatisation
New structure of ownership
Multinational Companies

CONCLUSION
GOOD ETHICS IS
GOOD BUSINESS