Ethics & It’s Role in Business

Presented By
♦ Mr. Sudhir Salaskar
♦ Mr. Bhavin Vakil
♦ Mr. Ashish Thakkar
♦ Mr. Robin Gupta

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Golden Words by Abraham Lincoln
♦ “Stand with anybody who
stands right. Stand with
him while he is right, and
part with him when he
goes wrong.”
♦ “Character is like a tree
and reputation like its
shadow. The shadow is
what we think of it; the
tree is the real thing.”

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Why Study Ethics?
♦ It lets you to run a business in an ethical
manner.
♦ Ignored when faced with possibility of
earning large sum of money.
♦ Help in trying to do the right thing

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 Ethics
♦ Ethics is a Greek word, it means Character or
manners.
♦ Ethics is subjective while morality is objective.
♦ Ethics is about sense of belongingness to society of
business or organization.
♦ Character is invisible force behind expressions, deed
that has tremendous influence in changing and
transforming the habits pattern

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 Ethics (Contd.)
♦ What is ethics to individual is known as
strategy for organization and therefore no
organizational growth is possible with out
strategy.

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 Ethics (Contd.)
♦ Ethics and Religion
♦ Ethics and Social Responsibility
Ethics - two levels of concern
Individual -- Ethical Tests
Organizational – Corporate Social Responsibility
♦ Soc. Responsibility - Win -Win

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Ethics & Corporate Social
Responsibility

"Corporate Social Responsibility is the

continuing commitment by business to behave
ethically and contribute to economic
development while improving the quality of
life of the workforce and their families as well
as of the local community and society at
large"

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TWO KEY ASPECTS OF
ETHICS
♦ The first involves the ability to discern right
from wrong, good from evil, and propriety
from impropriety.
♦ The second involves the commitment to do
what is right, good and proper. Ethics
entails action; it is not just a topic to mull or
debate.”

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 Moral/Values v/s. Ethics
♦ These terms are not
interchangeable.
♦ Ethics -actual
behaviour.
♦ Morals / Values
-should behave.

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Concepts of Ethics - Origin
♦ Developed by moral philosophers over
generations

♦ Used to distinguish ethical from unethical

behavior

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 Relativism Egoism

The 4
Concepts of
Ethics
Utilitarianism Deontologism

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Relativism
♦ There is no universal standard by which
morality can be judged.

♦ What is correct for one society may be

wrong for another.

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Relativism - Problems
♦ There are no absolutes - murder, slavery,
torture, rape.
♦ What is meant by a society & sub-
societies?
♦ Leads to conclusion - each person’s opinion
is correct.
♦ Nothing that anyone does is morally wrong.

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Egoism
♦ Ethical behavior is that which promotes
one’s own self interest.
♦ Does not mean should not obey laws - only
do so if in self interest.

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Egoism - Problems
♦ An excessive or exaggerated sense of self-
importance.
♦ Externalities associated with private actions
– E.g. to dump toxic wastes as long as don’t
get caught.

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Utilitarianism
♦ Greatest Happiness Principle.
♦ The morality of an action can be determined
by its consequences.
♦ An action is ethical if it promotes the
greatest good for the greatest number.

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Benefits and Costs of an Action
to Whomsoever They Accrue
B1 + B2 + B3 + . .+Bn> C1 + C2 + C3 + . . .+Cn

Then the Action is Ethical

B1 + B2 + B3 + . .+Bn< C1 + C2 + C3 + . . .+Cn

Then the Action is Unethical

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Problems with Utilitarianism
♦ How do you quantify benefits and costs?

♦ How do you value benefits and costs?

♦ Can lead to unjust consequences.

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Deontologism
♦ Derived from the Greek word for Duty
♦ Actions are not justified by their
consequences. Factors other than good
outcomes determine the rightness of actions
♦ E.g.- Starvation.

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Problems with Deontologism

♦ Conflicts between duties E.g. Govt officials

& Builders.
♦ Utilitarians argue that secretly appeal to
consequences to demonstrate the rightness
of actions.

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Utilitarianism Vs. Deontologism
♦ Utilitarianism - The ends justify the means

♦ Deontologism - It is the means which are

important

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 THE CLASSIC TEST FOR
ETHICS
DECISIONS
 Joseph Fletcher, in his book Moral Responsibility,
outlines the classic factors “to be weighed and
ethically evaluated in every moral decision”:
♦ The END sought -- Utilitarianism
♦ The MEANS used -- Deontologism
♦ The MOTIVE involved -- Relativism
♦ The foreseeable CONSEQUENCES.
♦ The SELF INTEREST -- Egoism

 Under this analysis, for the decision to be ethical,

ALL of the factors have to be “right.”
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What is Business Ethics?

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Business Ethics
♦ The application of general ethical concepts
to the unique situations confronted in
business. It asks what is right or wrong
behavior in business and what principles or
rules can be used as guidance in business
situations.

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 10 Myths About Business
Ethics
1. Business ethics is more a matter of
religion than management.
2. Our employees are ethical so we don't
need attention to business ethics.
3. Business ethics is a discipline best led by
philosophers, academics and theologians
4. Business ethics is superfluous -- it only
asserts the obvious: "do good!"
5. Business ethics is a matter of the good
guys preaching to the bad guys.

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 10 Myths About Business
Ethics (Contd.)
6. Business ethics in the new policeperson on the block.
7. Ethics can't be managed.
8. Business ethics and social responsibility are the same
thing.
9. Our organization is not in trouble with the law, so
we're ethical.
10. Managing ethics in the workplace has little practical
relevance.

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 Case Studies
1) Tainted Milk Scandal – China
– Introduction
– The Milk Scandal
– The Govt. Steps in
– The Impact on Chinese Dairy Industry
– The Aftermath

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 Case Studies
2) TATA
1. JRD Tata paid salary by pledging his
personal fortune of Rs. 1 cr.
2. On Business Dealing - JRD Tata had started
the Tata Airlines with an English pilot,
Neville Vincent.

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 6 QUESTIONS TO ASK IN
MAKING ETHICAL DECISIONS

1. Have you defined the problem accurately?

2. How would you define the problem, if you
were on the other side of the fence?
3. Are you confident that your decision will be as
valid long-term as it appears to be short-term?
4. Whom could your decision injure?

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 6 QUESTIONS TO ASK IN
MAKING ETHICAL DECISIONS
5. What is your intention in making this
decision?
6. How does your intention compare with
the likely result?

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Role of Ethics in business
♦ Checking Business Malpractices
♦ Improving customer confidence
♦ Cautious of social responsibility
♦ Safeguarding customers rights
♦ Protecting other social groups
♦ Cordial relationship between business &
society
♦ Good image.

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Whistleblowing
♦ Act of disclosing wrongdoing in an
organization
♦ Like blowing a whistle to call attention to a
wrongdoing.
♦ Types
Internal
External

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Can Cause Bitterness in
Organization
♦ Dissent - Must speak out against others in
organization.
♦ Breach of Loyalty - Perceived as one who
violates confidentiality and loyalty.
♦ Accusation - Singles out specific
individuals as threats to organization or the
public.

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Possible Retaliation
♦ Fired.
♦ Blacklisted.
♦ Transferred to undesirable locations.
♦ Physical abuse.

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Failure to Reveal Wrongdoing
♦ Severe problems for society

♦ Negative image for organization

♦ Encouragement to wrong doers.

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Ethics of Whistleblowing
♦ When is it ethical to reveal wrongdoing ?

♦ When is it ethical to remain silent?

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Example
♦ In charge of Quality Control
♦ Company makes parts for automobile
brakes
♦ Find defect in brake part
♦ Could cause failure in brakes
♦ Failure not certain
♦ May take many years to develop

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Example (cont.)
♦ Go to VP of Production, your boss
♦ He tells you to overlook defect - company
may loose too much money

♦ What would you do?

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“What will it
profit a man
if he gain
the whole
world but
lose his own
soul?”

Jesus Christ

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