Ethics for Business Decisions

Business Ethics an overview-

Module 1
 Cases Discussed.
• Lalith Modi-Swaraj Visa Issues(14062015)
• Reliance Petroluem Leaks Papers(Feb 26,2015)

• Questions Asked?
• ethics goes beyond the immediate facts that
pertain to a moral question- what the
situation is, it addresses the question of what
ought to be?
• The word “Ethics” which is coined from the
Latin word ‘Ethics’ and
Greek word ‘ethikos’ pertains to character.
• Ethics is thus said to be the science of
conduct.
• As a matter of fact it deals with certain
standard of human conduct and morals
• Ethics is a mass of moral principles or set of
values about
– what is right or wrong,
– true or false,
– fair or unfair,
– proper or improper,
– what is right is ethical
– and what is wrong is unethical
 Definition.
• Philip Wheel Wright says- “Ethics is the branch
of philosophy
– which is the systematic study of selective choice,
of the
– standards of right and wrong
– and by which it may ultimately be directed.”
NATURE AND OBJECTIVE OF ETHICS
• liberalization and At one side business
globalization enterprise are coping
• major by-product? up with intense
• loss of faith in emerged competition
instruments of
society and on the other side
• Business houses they are violating the
• faith in laws, courts principles of proper
and government public conduct.
NATURE AND OBJECTIVE OF ETHICS
• adopting ethical conduct, code of ethics.
• They are excellent organizations, which have shown a
spurt of activity towards evaluation of goals, concepts,
values related to management and conduct
• nexus between business, crime, politics, a series of
scams, sordid events of the past few years in the public
affairs of the country
• All India Council For Technical Education which
regulates the management education in India has in
December 1995, recommended the inclusion of
business ethics as a course in management studies
curriculum
 Nature of Ethics
• Human Beings-Free Will, Freedom of choice-
means to achieve ends. How far? How much is
too much?
• Voluntary actions-human conduct, moral
behavour.
• Normative in nature-search for ideal standards
that regulate right and wrong conduct.
 Ethics and Related Terms
• Morals- a persons personal philosophies
about that is right and wrong. RELATE TO YOU
AND YOU ALONE.
• Principles- specific and pervasive boundaries
for behaviour that should not be violated. IT
BECOMES THE BASES OF RULES.-human
rights,freedom of speech, fundamental
justice.
• Values- enduring beliefs and ideals that are
socially enforced. Eg. Teamwork,trust and
integrity.Depends on orgn to orgn-Best
practices
• Business Ethics- organisational principles,
values and norms that originate from
individuals,orgn statements, from legal system
that guide individual and group behaviour in
business.
• All stakeholders often determine whether
specific action or standard is ethical or
unethical
• case scenarios discussion:
Ethics –Today Vs Earlier.
 Business Ethics
Concerned with morality and fairness in behavior,
actions, policies and practices that take place within a
business context.

It is the study of practices in organizations and a quest

to determined whether these practices are
acceptable or not.

A field of study that is of interest to the public,

academics , students and ,managers
Descriptive ethics::”What is”
Describing, charactering and studying the morality of people, organization, culture
or society. It compares and contrasts different moral codes, systems, practices,
beliefs and values.
Descriptive Business Ethics- Focus is on learning what is occurring in the realm of
behavior, actions, decisions, policies and practices of business firms, manager or
specific industries.

Descriptive ethics focus on “WHAT IS “-What people believe is going on as the

basis of their perceptions and understandings..THE PREVAILING SET OF ETHICAL
ETHICS STANDARDS AND
PRACTICES IN THE BUSINESS COMMUNITY, IN SPECIFIC ORGANISATION OR ON THE
PART OF
SPECIFIC MANAGERS.

IT CANNOT BE LIMITED TO ONLY “WHAT IS”-----why?-Fudging expenses!

THAT IS WHY NORMATIVE ETHICS IS IMPORTANT.
 NORMATIVE ETHICS-
IS-OUGHT TO BE!!the norms!!
• CONCERNED with supplying and justifying a coherent moral
system of thinking and judging.
• Seeks to uncover, develop and justify basic moral principles
that are intended to guide behavior, actions and decisions.
• Also seeks to propose some principle or principles for
distinguishing what is ethical from what is unethical in the
business context.
• Deals more with WHAT OUGHT TO BE OR WHAT SHOULD BE
in terms of business practices.
• Concerned with establishing norms or standards by which
business practices might be guided or judged.
Major Approaches to Business Ethics
Conventional approach- HOW COMMON,
EVERYDAY SOCIETY(THE AVERAGE) VIEWS business
ethics today. This is based on ordinary Common sense
and prevailing practice

Principles approach- use of ETHICS PRINCIPLES

OR GUIDELINES TO Justify and direct behavior,
actions, policies and practices

Ethical tests approach- based on SHORT,

PRACTICAL QUESTIONS OR TEST to guide ethical
decision making, behavior, and practices
 Sources of Ethics

• Genetic Inheritance- comes in genes –

naturally, biological in nature.—goodness
strengthens
 ii.Religion.
• It is one of the oldest foundations of ethical
standards. Religion wields varying influences
across various sects of people
• Religion- Christianity, Islam,Judaism- people
believe that their religion provides them with
ethical principles/standard….which can be
applied in business. MORALITY IN RELIGIONS-
PRIMARY FOCUS IN SHAPING SOCIETEL ETHICS
 iii. Philosophical systems

• The quality of pleasure- essential measure of

goodness- of an act.EPICURIST
• On the otherhand- STOICS(PURITANS) –
hardworking, thrifty, life styles
 iv-law(legal systems)
• Law is a set of rules that are enforced by a
government authority.
• Blaw and Bethics overlap.
• What is illegal is also unethical. But
otherwise?
• Rule of law is important so that individuals
and entitities can govern themselves
legally….but whether their conduct is ethical
or not is the QUESTION.
• some believe that law is simply power. That is,
the law is followed because the sovereign
issues orders that are backed by threats
• The laws are written, human-made rules.

Coca Cola's unethical practices in India - HRM project.mp4

• Managers play a vital role in a company's legal
and ethical performance.
• It is in part their responsibility to ensure that
their employees are abiding by Central, State,
and Local laws, as well as any ethical codes
established at the company.
• But the managers must provide a positive
example to their employees of proper
behavior in light of laws and ethical codes.
• This relationship is important in management.
Managers must evaluate not only what is legal,
but what they, their employees, and society
consider ethical as well.
• Important here is that companies must also
consider what behaviors their customers will and
will not accept.
• NO COMPANY WANTS TO BE FORCED TO DEFEND
ITSELF OVER ETHICAL ISSUES INVOLVING WAGES,
THE ENVIRONMENT, WORKING ISSUES, OR
HUMAN RELATIONS.
 v. Codes of Conduct.
3 primary codes-
• company codes,
• operating policies and
• code of ethics
 vi. Cultural experiences
• Rules, customs, and standards –comes from
generations handed down to us.
• Society shapes its morals based on this.
Business Ethics Through Film Monsters
Inc..mp4
• What would you do?
 Manufacturing practices of Nike,
• one of the largest manufacturers of athletics sportswear in the world. Nike
produces the majority of its goods in South East Asia.
• Despite the profits of the Nike organization, its foreign workers are paid
substandard wages and work long hours in appalling conditions.
• In 1996, the entry-level wage at one of these factories was $2.20 a day. Labor
groups estimate that a livable wage in Indonesia is about $4.25 a day.
• Compare this with the pay of one of Nike's celebrity promoters, Michael Jordan,
who gets $20 million a year to promote Nike sneakers.
• Jordan's compensation alone is more than the annual income of 20,000 workers
who make Nike shoes. Nike’s manufacturing practices are not illegal.
• There is nothing that says a company cannot take its manufacturing operations
outside the United States.
• And as long as the company is meeting the minimum wage standards of the host
country, there is nothing illegal about paying low wages.
• However, most Americans would look at these practices as unethical, especially
considering the profits of Nike and their spending on celebrity promoters.
 Ethical Concepts – Values and
attitudes, types and codes of ethics.
• Personal values-what an individual regards as desirable.
• Value- is a view of life and judgment of what is desirable that is very
much
• Part of a persons personality and groups moral.
• Imbibed from parents, teachers, and elders
• As one grows, value are adapted and refined as his experiences,
exposure happens
• EG: BEING A GOOD PAYMASTER- PERSONAL VALUE
• BEING FAIR IN RECUITMENT- ETHICS

• Within an organization- values are imparted by the owner or leader

 CODE OF BUSINESS ETHICS
• Nearly 95% of Fortune 500 companies have codes of
conduct.
• The Federation of Indian Chambers of Commerce &
Industry has recently issued a declaration on ‘Norms of
business ethics
• The industry body Confederation of India Industry (CII) had
come out with a Code of Business Ethics for its members.
• According to CII, which has around 8,000 members
including top corporate houses and small medium
enterprises, the new code is designed to increase
transparency and strengthen ethical practices among its
member companies, which is expected to help reduce
corruption in the country.