Unit 3

By Dr. Nandita Sharma

 Topics to be covered
• Corporate mission statement
• Code of ethics
• Need for code of ethics
• Types of code of ethics
• Organizational culture
• Characteristics of organizational culture
• Total Quality Management
• Benefits and principles
Business Ethics
Unit 3
By Dr. Nandita Sharma
 VISION
• The manager’s employees and other stakeholders of an
organization might be interested to understand where the
organization is going and what it aspires to be.
• In order to express an organization’s aspirations for the
future, organizations usually use the term vision.
• Organizations to use vision as a kind of statement
direction, which is needed to motivate and guide the
efforts of employees in the organization.
• A vision is a mental image of a possible and desirable
future state of the organization.
• An organization’s vision statement clarifies the
significant primary goals to be achieved, but does not
highlights the plan to accomplish these goals.
• Vision statement is common, mutual and for every
employee in the organization.
• A good vision statement encourages the organization to
take risks and to pursue innovative ideas to stay
competitive in market.
• The vision statement of an organization allows the
managers to practically monitor the organization’s
progress by comparing the stated objectives and
operational plans for achieving those objectives.
 Definition of Vision
According to Oren Harari
“Vision should describe a set of ideals and priorities, a
picture of the future, a sense of what make the company
special and unique, a core set of principles that the
company stands for, and a broad set of compelling
criteria that will help to define organizational success.”
According to Kotler
“Vision is a description of something (an organization,
corporate culture, a business, corporate culture, a
business, a technology, an activity) in the future.”
 Features of Vision
1. Require careful thinking
2. Helps in selecting target market
3. Decides the long term objectives and focus
4. Future oriented
 VISION statement
of McDonald’s
“to move with velocity to drive profitable growth
and become an even better McDonald’s serving
more customers delicious food each day around
the world.”

The first and third components of McDonald’s vision statement show that the business aims
to grow and expand its operations. This strategic aim entails opening more restaurant
locations and improving operational efficiency to optimize profit margins and profitability.
With the phrase, “around the world,” the corporate vision indicates that the fast-food
business targets the global market, similar to the global market reach emphasized in the
corporate mission statement.
 VISION statement
of Google

“to provide access to the world’s information in

one click.”

Google’s most popular product is its

search engine service. This product enables people to easily access information
from around the world.
 VISION statement
of Amazon

“to be Earth’s most customer-centric company,

where customers can find and discover anything
they might want to buy online, and endeavors to
offer its customers the lowest possible prices.”
 Process of Envisioning

•Understanding the Organization

•Conduct an Audit and Narrow Down the Vision
•Set – up the context for Vision statement
•Formulate alternative Vision statements
•
Select the final Vision statement
Understanding the Organization:
To understand an organization in a better way the
management must identify following details:
✔ Nature of the industry
✔ Mission and purpose of the organization
✔ Kind of value it is providing to the society
✔ Structure of the organization
✔ Critical success factors of the organization
✔ Nature and type of stakeholders
✔ Interest of stakeholders
Conduct an Audit:
Following aspects are to be analyzed at this
stage:
✔ Current direction of the organization
✔ Organizational structure
✔ Organizational activities
✔ Employees of the organization at various levels
✔ Compensation and remuneration plans
✔ Information system and communication flow
within the organization
Narrow down the vision:
Some of the important questions to be answered
here are as follows:
✔ What are the limitations of the vision
statement?
✔ What would be achieved by the vision
statement?
✔ What issues are to be considered by the vision
statement?
Set up the context for vision statement:
Some of the aspects to be considered are:
✔ Anticipation and categorization of future
development which may affect the vision.
✔ Enlist the expectations with each category.
✔ Anticipate the probability of fulfilling the
expectations.
 Formulate alternative vision statements:
The possible future alternatives are discovered and
decided, on the basis of which the strategic leaders
determine the directions that lead to those
alternative future courses.

Select the final vision statement:

✔ Selection of best among the alterative vision
statements.
✔ Final vision statement should qualify in the
criteria for good vision statement.
•Significance of Vision
•Acts as a measure of Excellence
•Overcome the gap
•Help in solving internal and external issues
•Helps in setting goals for future
•Create a sense of responsibility
•Provides a reason for existence
 Corporate Mission Statement
• A mission statement is a concise explanation of
the organization’s reason for existence.
• It describes the organization’s purpose and its
overall intention.
• The mission statement supports the vision and
serves to communicate purpose and direction to
employees, customers, vendors and other
stakeholders.
• Questions to consider when drafting mission
statements could include:
❑ What is our organization’s purpose?
❑ Why does our organization exist?
 Definition of Mission
According to Hunger and Wheelen
“ Mission is the purpose or reason for the
organization’s existence”.

According to Thompson
“Mission is the essential purpose of the
organization, concerning particularly why it is in
existence, the nature of the business it is in, and
the customers it seeks to serve and satisfy.”
The mission statement outlines the activities
conducted by the organization and communicates
them to the society.

The mission statements provide an internal

direction to the organization for its future. It is
necessary for the employees to have motivation
and enthusiasm to achieve the goals of the
organization.
•Characteristics of Good Mission Statement
•Should specify the ways to achieve objectives
•Feasibility
•Precise
•Clarity
•Encouraging
•Indication of Strategy
Components of Mission Statement
• Product or services
• Target Market
• Technology
• Philosophy
• Policy for employees
• Concern for survival, growth and profitability
• Public Image
Mission Statements of companies
Linkedin Mission Statement:
“To connect the world’s professionals to make
them more productive and successful.”

Their mission statement stands out as one of the best

because it quickly and effectively captures the
fundamental function of LinkedIn while placing an
important emphasis on the users of the platform, who
are always the focus of LinkedIn’s design strategies.
 Mission statement of Eureka Forbes
“Encourages its employees to provide superior
customer service to the customers at their
home as per their convenience.”
 Code of Ethics
• A code of ethics, can be described as a set of values that
guides the behaviour and decision-making process of an
organisation and its people.
• Companies may create a code of ethics in the form of a
document that outlines their core values.
• The ethical code document usually sets out the broad
standards to follow while conducting business or
interacting with customers in a business environment.
• A code of ethics document may outline the mission and
values of the business or organization, how professionals
are supposed to approach problems, the ethical principles
based on the organization's core values, and the
standards to which the professional is held.
 Key Points regarding Code of Ethics
• Code of Ethics is “a guide of principles designed to help
professionals conduct business honestly and with
integrity.”.
• For members of an organization, violating the code of
ethics can result in sanctions including termination.
• In some industries, including banking and finance,
specific laws govern business conduct. In others, a code
of ethics may be voluntarily adopted.
• The main types of codes of ethics include a
compliance-based code of ethics, a value-based code of
ethics, and a code of ethics among professionals.
•Benefits of Code of Ethics
•Sets the Right Culture
•Build the good reputation
•Helps remain in compliance with rules and regulations

•Attract Outstanding employees

•Promote Social Change
 1). Sets the right culture:
• It can foster an environment of trust, ethical
behavior, integrity, and excellence.
• Productivity tends to grow as conflicts and
confusions disappear from the workplace.
• Companies that foster an environment of
trust, ethical behavior, integrity, and
excellence are also better prepared to deal
with unforeseen challenges because they have
a very strong foundation to stand on.
 2). Builds a good reputation:
• With so many choices, customers gravitate
toward companies they feel they can trust,
and they stay far away from those companies
that don’t promote ethical behavior.
 3). Helps remain in compliance with
rules and regulations
• Any promises a company makes and fails to
comply with can make it amenable to sue for
breach of contract, so companies that
implement a code of conduct have a strong
incentive to ensure ethical treatment of its
employees, clients, partners, as well as the
public.
 4). Attracts outstanding employees
• Outstanding employees come from all walks
of life, and they all expect to be treated justly
and ethically. Companies with a code of ethics
reassure potential employees that they won’t
be discriminated against, sexually harassed,
intimidated, bullied, or subjected to any other
type of workplace harassment.
 5). Promote Social Change
• One less talked-about benefit of adopting a
code of ethics is that it promotes social
change. We all live on the same planet and
share the same finite amount of natural
resources, so we’re all responsible for the
happiness or misery of one another. By
promoting positive social change, companies
can contribute to making the world a better
place for everyone, not just a select few.
 Steps for Effective Code of Ethics
Step 1
Create a list of all the standards by which you
believe your company should take. Write them
down on the piece of paper.
This should include:
• The general values of the company, managers
and workers.
• The ways in which the company helps with
employees’ continued education, and how the
business complies with all laws and reports all
legal issues.
Step 2:

Customized your code of ethics to your

business. Include examples from your firm
into the code.

If, for example, you use a code of ethics from

another business in your industry, rewrite the
code so it has meaning and therefore, benefits
to your goals.
Step 3:

Involve employees in the creation of a business

code of ethics. Every employee has insight
into the day-to-day operations and challenges.

If, for example, a department experience low

confidence because of office gossip, help
employees find productive ways to build a
culture of trust and respect.
Step 4:

Write down “Code of Ethics”.

A code of ethics should be to the point, and
simple to read. It should have a positive tone
and focus on improving the lives of the
business’ directors, employees and customers.
 Types of Code of Ethics
1). Compliance Based Code of Ethics:
• For all businesses, laws regulate issues such as
hiring and safety standards. Compliance based
codes of ethics not only set guidelines for conduct
but also determine penalties for violations.
• In some industries, including banking, specific
laws govern business conduct. These industries
formulate compliance based codes of ethics to
enforce laws and regulations.
• To ensure that the aims and principles of the
code of ethics are followed, some companies
appoint a compliance officer.
• This type of code of ethics is based on
clear-cut rules and well defined consequences
rather than individual monitoring of personal
behaviour.
2). Value Based Code of Ethics:
• A value based code of ethics addresses a
company’s core value system. It may outline
standards of responsible conduct as they
relate to the larger public good and the
environment.
• Value based ethical codes may require a
greater degree of self regulation than
compliance based codes.
• Some codes of conduct contain language that
addresses both compliance and values.
• For example, a grocery store chain might
create a code of conduct that espouses the
company’s commitment to health and safety
regulations above financial gain.
Code of ethics of different professions
The Legal Profession
• Confidentiality - Lawyers must maintain their
clients' confidence at all times.
• Competence - Legal professionals must
represent their clients with a high level of
competence.
• Professional Courtesy - Lawyers must treat
their colleagues with fairness and courtesy.
The Medical Profession
The American Medical Association imposes a code of
ethics on physicians. It addresses everything from
interpersonal relationships with other staff members
to information on patient care. For instance:
• Trust - Doctors must instill a sense of trust between
themselves and their patients.
• Do No Harm - Doctors cannot engage in any activity
that would cause harm to their patients.
• Privacy - Doctors cannot share the details of their
patients' medical treatments or histories without
permission.
 Content of Code of Ethics
1). Core Value and principles: It must contain in
every code of ethics as it include honesty, respect,
innovation, team work, leadership etc.
2). Financing: Code of ethics tells from where the
company raise finance and how various sources of
finance will explore by company.
3). Customer: code of ethics also done for the
customers to confirm minimum standards that
can be expected from product and services being
offered.
4). Supplier: Code of ethics also support to be
the suppliers. It may refer how suppliers will
be chosen and also set the terms to chosen
suppliers by company.

5). Employees: Code of ethics must confirm the

employment practices i.e. opportunities and
working conditions for the favorable
employees.
McDonald’s Code of Ethics for
Employees

• Worldwide, McDonald’s employees follow a

standard ethical code.
• With franchises all over the world, McDonald’s
has developed a uniform standard of conduct that
applies to all employees.
• It requires the employee, upon being hired, to
sign a copy of these expectations of ethical
conduct, confirming that the employee
understands them and agrees to implement them.
 McDonald’s Expectations
• McDonald’s believes that “the customer is
important.”
• They expect employees to be committed to
their jobs and to their customers.
Employee Responsibilities:
❑ To perform to the highest standards set by the
company, employees must treat fellow workers,
supervisors and customers with respect.
❑ An employee cannot bother anyone or threaten
them. Offensive behaviour is not allowed.
❑ Employees can not insult other with words or
actions.
❑ Employees must practice safety at all times to
ensure not only his well-being but that of others.
❑ Alcohol or illegal drugs are forbidden.
 Google Code of Ethics
Google’s Code of Ethics prohibits discrimination
based on race, color, religion, gender, age,
marital status, disability, etc.
Walmart Code of Ethics Statement
“The trust of our customers, communities,
associates and business partners is our
competitive advantage. It is important to think
about our behaviour and make sure that we are
creating a culture that inspires trust.”
Walmart uses images to highlight its 4 key values:
1. Respect the individual
2. Service to the customers
3. Strive for excellence
4. Act with integrity
Organizational Culture
Meaning of Organizational Culture
• Organizational culture is a system of shared
assumptions, values and beliefs which govern how
people behave in organizations.
• Organizational culture includes an organization’s
expectations, experiences, philosophy and values
that hold it together and is expressed in its
self-image, inner workings and interactions with the
outside world, and future expectations.
• Every organization develops and maintains a unique
culture, which provides guidelines and boundaries
for the behavior of the members of the
organization.
 Organizational culture/corporate
culture includes:-
• The ways the organization conducts its business,
treats its employees, customers and the wider
community.
• The extent to which freedom is allowed in
decision making, developing new ideas, and
personal expression.
• How power and information flow through its
hierarchy
• How committed employees are towards collective
objectives.
 Characteristics of organizational
culture
1). Innovation (Risk Orientation)
Companies with cultures that place a high value
on innovation encourages their employees to
take risks and innovate in the performance of
their jobs.
2). Precision orientation:
A culture that places a high value on attention
to detail expects its employees to perform
their work with precision, and a culture that
places a low value on this characteristics does
not.
3). Emphasis on Outcome (Achievement
Orientation)
Companies that focus on results but not on how
the results are achieved emphasize this value
of organizational culture.
4). Emphasis on People (Fairness Orientation)
Companies that place a high value on this
characteristics of organizational culture place
great importance on how their decisions will
affect the people in their organization.
5). Teamwork (Collaboration Orientation)
Companies that organize work activities around
teams instead of individuals place a high value
on this characteristics of the organizational
culture.
6). Aggressiveness ( Competitive Orientation)
This characteristics of organizational culture
dictates whether group members are
expected to be assertive or easygoing when
dealing with companies they compete with
within the marketplace.
7). Stability (Rule Orientation)
This type of company typically provide
consistent and predictable levels of output
and operate best in non-changing market
conditions.
 Google’s Culture
• Expectations

• Empowerment

• Innovation

• Employee centered
 Expectations
• Free work schedule

• Relaxed, team-based
atmosphere

• High expectations
 Empowerment

• Flat Structure

• Collaborative culture

• High Tech environment

 Innovation
• Focus on flexibility and creativity
• Vibrant workplace, but high risk taking
 Employee Centered
• Facilities
•
Total Quality Management
 Total Quality Management Meaning
❑ Total Quality Management is a management
framework based on the belief that an
organization can build long-term success by
having all its members, from low-level workers to
its highest ranking executives, focus on quality
improvement and thus delivering customer
satisfaction.
❑ Total Quality Management has been defined as an
integrated organizational efforts designed to
improve quality at every level.
 According to International
Organization for Standard
TQM is a management approach for an
organization, centered on quality, based on
the participation of all its members and aiming
at long-term success through customer
satisfaction and benefits to all members of the
organization and to the society.
 Key Elements of TQM
• Focus on the customer

• Employee Involvement

• Continuous improvement
 Principles of Total Quality
Management
1). Customer-focused
2). Total employee involvement
3). Process-centered
4). Integrated system
5). Strategic and systematic approach
6). Continual Improvement
7). Fact based decision making
8). Communication
 Benefits of TQM
• Improved quality
• Employee participation
• Team work
• Working relationship
• Customer satisfaction
• Employee satisfaction
• Productivity
• Communication
• Profitability
• Reduce product defects
Some examples of TQM
• Automobile manufacturer Toyota is one
example of TQM. The adoption of TQM and
kaizen at Toyota led to higher product and
work quality at all levels of the organization.
• Toyota adopted a related practice called
Statistical Quality Control in 1949.
• In 1965, Toyota was awarded the Deming
Application Prize for major advances in quality
improvement.
• In 1994, the Toyota Group Executive Training
Course was established, providing TQM
training for new executives.
 TQM Practices adopted by
TOYOTA
TQM is based on the concept of:
1). Customer First

2). Kaizen

3). Total Participation

 Customer First
• Over its 75 year history, Toyota has strived to
listen to the voice of the customers.
• In 2005, Toyota established Customer Quality
Engineering Division.
• Established the Customer First committee.
• Voice of Customer enhances customer
satisfaction and the quality.
• They have “Customer Month” in which the
company holds even more customer
satisfaction events, seminars and reviews.
 Kaizen
• Kaizen means continuous improvement
• Eliminating waste of time.
• Eliminating fear of workers to report problems
to their supervisors.
• Aim to improve and obtain zero defects
techniques for continuous improvement.
 Total Participation
• Toyota launched the Creative Idea Suggestion
System in 1951 to support and encourage
employees in making effective contributions
to the company’s development.
• Toyota has continued to make advancements
in TQM through employee training in Quality
Control, target-setting and even TQM
employee networks.
 Implementation of TQM
• Toyota motors has a world-wide reputation for
efficient and lean manufacturing, called TPS
(Toyota Production System).
• TPS is based on five principles:
1). Always be faithful to your duties
2). Always be studious and creative
3). Always strives to build a homelike atmosphere.
4). Always be practical
5).Always have respect for spiritual matters, and
remember to be grateful at all times.
 TQM in Tata Steel
• Another example of TQM is Tata Steel, a steel
making company based in India and a
subsidiary of Tata Group.
• Tata Steel adopted TQM in 1980s.
• The company was awarded the Deming
Application Prize in 2008.
• In 2008, Tata Steel created the Performance
Improvement Committee to drive continuous
performance improvement.