SUMMARY

The ability to anticipate and deal with business ethics issues and dilemmas has become a
significant priority in the tewnty-first century. In recent years, a number of well publicized scandals
resulted in public outrage about deception, fraud, and distrust in business and a subsequent demand
for improved business ethics, greater corporate respon sibility, and laws to protect the financially
innocent. Highly visible business ethics issues influence the public’s attitudes toward business and
destroy trust. Ethically charged decisions are a part of everyday life for those who work in
organizational at all levels.

Making good ethical decisions are just as important to business success as mastering
management, marketing, finance, and accounting. While education and training emphasize functional
areas of business, bussiness ethics is often viewed as easy to master, something that happens with
little effort.

It is important to learn how to make decisions in the internal environment of an organization

to achieve personal and organizational goal.

All organizations have to deal with misconduct. Even prestigious colleges such as Harvard and
Darthmouth are not exempt. Students at Dartmouth were disciplined for cheating on their attendance
and participation in an undergraduate ethics course.

It is important to state our approach to business ethics. First we do not moralize by stating
what is right or wrong in a specific sitaution, although we offer background on normative guidelines
for appropriate conduct. Second, although we provide an overview of group and individual decision
making processes, we do not prescribe one approach or process as the best or more ethical. However,
we provide many examples of successful ethical decision making. Third, by itself, think book will not
make you more ethical, not will it give you equations on how to judge the ethical behavior of other.

BUSINESS ETHICS DEFINED

For our purposes, moral refer to a person’s personal philosophies about what is right or wrong. The
important point is that when one speaks of morals, it is personal or singular. Morals, your philosophies
or sets of values of right and wrong, relate to you and you alone.

Business ethics comprises organizational principles, value, and norms that my originate from
individuals, organizational statements, or from the legal system that primarily guide individual and
group behavior in business. Principles are specific and pervasive boundaries for behavior that should
not be violated. Principles often become the basis for rules. Some examples of principles could include
human rights, freedom of speech, and the fundamental justice. Values are enduring beliefs and ideals
that are socially enforced. Several desirable or ethical values for business today are teamwork, trust,
and integrity. Ethics is defined as behavior or decisions made within group values. Building on these
definitions, we begin to develop a concept of business etics. First, to survive and contribute to society,
businesses must earn a profit.second, to be a successfull businesses must address the needs and
desires of stakeholders.

WHY STUDY BUSINESS ETHICS?

A Crisis In Business Ethics

Business ethics has become a major concern in business today. The ethics resource center conduct
the national business ethics survey ( NBES) of more than 6,000 U.S, employess to gateher reliable data
on key ethics and compliance outcomes and to help identify and better understand the ethics issues
that are iportant to employees. Financial institutions and banks have some of the lowest ratings,
indicating that the financial sector has not been able restore its reputation since the most recent
recessions. There is no doubt negative publicity associated with major misconduct lowered the
public’s trust in certain business sectors. Decreased trust leads to a reduction in customer satisfaction
and customer loyalty, which in turn can negatively impact the firm or industry.

SPECIFIC ISSUES

There are a number of ethical issues that must be addressed to prevent misconduct. Mis use of
company resources, abusive behavior, harrassment, accounting fraud, conflicts of interest, defective
products, bribery product knockoffs, and employee theft are all problems cited as potential risk areas.

General ethics plays an important role in the public sector as well. Every organization has the potential
for unethical behavior. The more successful a company, the more the public is critical when
misconduct accurs. For this reason alone, it is important to understand business ethics and recognize
athical issues.

THE REASON FOR STUDYING BUSINESS ETHICS

Studying business ethics is valuable for several reasons. Business ethics is more than an extension of
an individual’s ethics. True moral values can be applied to a variety of situations in life, and some
people do not distinguish everyday ethical issues from business ones.our concern, however, is with
the application of principles, values, and standars in the business context. Professionals in any field,
including business, must deal with individuals personal moral dilemmas because such dilemmas affect
everyone’s ability to function on the job. Just being a good person and having sound personal values
may not be sufficient to handle the ethical issues that arise in a business organization.

Some approaches to business ethics assume ethics training is for people whose personal moral
development is unacceptable, but that is not the case.

Many people with limited business experience suddenly find themselves making decisions about
product quality, advertising, pricing, sales techniques, hiring practices, and pollution control. The
morals they learned from family, religion, and school may not provide specific guidelines for these
complex business decisons.

Studying business ethics will help you begin to identify ethical issues when they arise and recognize
the approaches available for resolving them, the ethical decision making process and about ways to
promote athical behavior within your organization. You may also begin to understand how to cope
with conflicts between your own personal values and those of the organization in which you work.

THE DEVELOPMENT OF BUSINESS ETHICS

The study of business ethics in north america has envolved through five distinct stage, before 1960
and continues to envolve in twenty-firt century.

BEFORE 1960: Ethics In Business

Prior to 1960, the united states endured seceral agonizing phases of questioning the concept of
capitalism. Until 1960, ethical issues related to business were often discussed within the domain of
theology or philosophy or in the realm of legal and competitive relationships. The protestant work
ethic encouraged individuals to be frugal, work hard, and attain success in the capitalistic system.

THE 1960s: The rise of social issues in business

During the 1960s American society witnessed the development of an anti-business trend because
many critics attacked the vested interests that controlled the economic and political apects of society
the so called military insdutrial complex. In 1962 president John F. Kennedy deliverd a “special
message on protecting the consumers interest” that outlined four basic consumer rights: the right to
safety, the right to be informed, the right to choose, and the right to be heard. These came to be
known as the consumers’ Bill of Rights.

The modern consumer movement is generally considered to have begun in 1965 with the publication
of Ralph Nader’s Unsafe at Any Speed that critized the auto industry as a whole, and General Motors
Corporation (GM) in particular, for putting profit and style ahead of lives and safety.

After Kennedy came president Lyndon B. Johnson and the “Great Society” a series of programs that
extended national capitalism and told the business community the U.S. goverment’s responsibilty was
to provide all citizens with some degree of economics stability, equality, and social justice.

THE 1970s: BUSINESS Ethics AS AN EMERGING FIELD

Business ethics began to develop as a field of study in 1970s. Theologians and philosophers laid the
groundwork by suggesting certain moral principles could be applied to business activities. Using this
foundation, business professors began to teach and write about corporate social responsibility, an
organizatio’s obligation to maximize its positive impact on stakeholders and minimize its negative
impact.

By the end of the 1970s, a number of major ethical issues had emerged,including bribery, deceptive
advertising, price collusion, product safety, and ecology. Business ethics became a common
expression.

THE 1980s: Consolidation

In the 1980s, the Defense Industry Initiative on Business Ethics and Conduct (DII) was developed to
guide corporate support for ethical conduct. The effort estabilished a method for discussing best
practices and woking tactics to link organizational practice and policy to successfull ethical compliance.
The DII includes six priciple. First , the DII supports codes of conduct and their widespread distribution.
Second, member companies are expected to provide ethics training for their employees as well as
continuous support between training periods. Third, defense contractors must create an open
atmosphere in which employees feel comfortable reporting violations without fear of retribution.
Fourth, companies need to perform extensive internal audits and develop effective internal reporting
voluntary disclosure plans. Fifth, DII insists that member companies preserve the integrity of the
defense industry.

THE 1990s: Institutionalization Of Business Ethics

The administration of President BillClinton continued to support self regulation and free trade.
Howover, it also took unprecedented government action to deal with health related social issues such
as teenage smoking.

Federal Sentencing Guidelines for Organization (FSGO), approved by congress in November 1991, set
the tone for organizational ethical compliance program in the 1990s. The guidelines, which were based
on the six principles of the DII, broke new ground by codifying into law incentives to reward
organization for taking action to prevent misconduct, such as developing effective internal legal and
ethical compliance programs.

The Twenty-First Century Of Business Ethics

Although business ethics appeared to become more institutionalized in the 1990s, new evidence
emerged in the early 2000s that not all business executives and managers had fully embraced the
public’s desire for high ethical standars.

Such abuses increased public and political demands to improve ethical standars in business. To
address the loss of confidence in financial reporting and corporate ethics, in 2002 congress passed the
Sarbanes-Oxley Act, the most far-reaching change in organizational control and accounting regulations
since the securities and exchange Act of 1934. The sarbanes- Oxley Act and the FSGO institutionalized
the need to discover and address ethical and legal risk. Top management and the board of directors
of a corporation are accountable for dircovering risk asociated with ethical conduct.in 2009 Barack
Obama became President in the middle of a great recession caused by a meltdown in the global
financial industry. His legislation to improve helath care and provide more protection for consumers
focused on social concerns. The Dodd-Frank Wall Street Reform and Consumer Protection Act
addressed some of the issues related to the financial crisis and recession. The Dodd- Frank Act was
the most sweeping financial legislation since teh Sarbanes-Oxley Act and possibly since laws put into
effect during the Great Depression. It was designed to make the financial services industry more
ethical and responsible.

DEVELOPING AN ORGANIZATIONAL AND GLOBAL ETICAL CULTURE

Compliance and ethics initiatives in organizations are designed to establish appropriate conduct and
core values. Ethical culture is acceptable behavior as defined by the company and industry, and
component of corporate culture that captures the value and norms an organization defines and is
compared to by its industry as approriate conduct, positively related to workplace con frontation over
ethics issues, reports to management of observed misconduct, and the presence of ethics hotlines.

Ethical culture creates shared values and support for ethical decisions and is driven by the ethical
leaderhip of top management.

THE BENEFITS OF BUSINESS ETHICS

The field of business ethics continues to change rapidly as more firms recognize the benefits of
improving ethical conduct and the link between business ethics and financial performance. Among
the rewards for being more ethicals and socially responsible in business are increadsed efficiency in
daily operations, greater employee commitment, increased investor willingness to entrust funds,
improved customer trust and satisfaction and better financial performance.

ETHIC CONTRIBUTES TO EMPLOYESS COMMITMENT

The ethical culture of a company matters to employee.according to a report on employee loyalty and
work practices, companies viewed as highly ethical by their employees were six times more likely to
keep their workers. Also, employees who view their company as having a strong community
involvement feel more loyal to their employers and positive abaout themselves.

ETHICS CONTRIBUTES TO INVESTOR LOYALTY

Ethical conduct results in shareholders loyalty and contributes to success that supports even broader
social causes and concerns. Therefore, gaining investors trust and confidence is vital to sustaining the
financial stability of the firm.

ETHICS CONTRIBUTES TO CUSTOMER SATISFACTION

It is generally accepted that customer satisfaction is one of the most important factors in a successful
business strategy. Successful businesses provide an opportunity for customer feedback that engages
the customer in cooperative problem solving.

ETHICS CONTRIBUTES TO PROFITS

A company cannot nurture and develop an ethical culture unless it has achieved adequate financial
performance in terms of profits. Ethical conduct toward customers builds a strong competitive
position shown to positively affect business performance and product innovation.