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Lecture 1 Ethics Presentation

The document discusses the nature and scope of business ethics. It defines ethics as the moral principles that guide behavior and decision making. It emphasizes the importance of ethical business practices, such as treating employees and customers fairly. However, it also explains why unethical problems can still occur due to factors like personal gain, differing individual/organizational values, competitive pressures, and cross-cultural issues. Finally, it outlines the scope of business ethics at the stakeholder, personal, societal, and internal policy levels of a company.

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vinit_shah90
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Download as PPT, PDF, TXT or read online on Scribd
53 views

Lecture 1 Ethics Presentation

The document discusses the nature and scope of business ethics. It defines ethics as the moral principles that guide behavior and decision making. It emphasizes the importance of ethical business practices, such as treating employees and customers fairly. However, it also explains why unethical problems can still occur due to factors like personal gain, differing individual/organizational values, competitive pressures, and cross-cultural issues. Finally, it outlines the scope of business ethics at the stakeholder, personal, societal, and internal policy levels of a company.

Uploaded by

vinit_shah90
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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The Nature of Ethics

• Ethics:- The inner guiding moral principle ,


values and beliefs that people use to analyze
or interpret a situation and then decide what
is the right or appropriate way to behave
Ethical Performance
• Ethical business performance means adhering
to society's basic rules that define right and
wrong behavior. Eg.
1) J&J protected the customers by recalling stocks of Tylenol
capsules twice within 5 years when poison was found in some
bottles
2)Parker brothers withdrew its all time best selling toys when 2
kids swallowed the parts and died .
3) HMT Ltd withdrew all its milk separators supplied through its
dairy machinery unit at Aurangabad when at the customers
place the lid flew & hit the roof
6 Primary sources of Ethics
• 1) Religion
• 2) Philosophical systems—Contemporary Americans
advocated a disciplined , hardworking, thrifty life style which
has been instrumental in our society’s moral development
• 3)The Legal Systems --- represents a rough approximation of
society’s ethical standards
• 4) Codes Of Conduct---
• A) Company Codes ---express broad expectations about its
conduct
• B)Company operating policies—express policies as to gifts,
customer complaints, hiring & other decisions
• 5) Genetic Inheritance-qualities of goodness as a genetic trait
• 6) Cultural experience –Customs & Standards transmitted
from generation to generation
Importance of Business Ethics
• Businesses that treat their employees with dignity & integrity
reap many awards in the form of high morale and improved
productivity . People feel good about working in an ethical
company since they are protected along with the general
public.
• In spite of the positive benefits of good ethical practices ,
ethical problems occur for the following reasons:
• Failure of Ethics---WHY ?
1)Personal gain/ dubious character
2)Individual values widely differ with organizational
goals
3)Managers values & attitudes
4)Competitive pressures
5)Cross-cultural contradictions
Importance of Business Ethics (cont)

• 1) Personal gains :
• Greedy people put their own welfare ahead of others . Since
ethical qualities are difficult to anticipate & measure at the
time of recruitment many people creep in like the embezzler,
the expense account paddler, the chronic sick leaver and
bribe taker .
• Personal gains is not the most important reason why
unethical practices occur
• Eg The marketing officer of a big company who makes a lot of
money apart from his high salary .The owner of the company
is aware of the same but ignores it because the officer is good
in his work and supports the owner on various critical issues .
Importance of Business Ethics (cont)
• 2)Individual values vis a vis organizational goals :
• If a company pursues goals or uses methods not acceptable to
some of its employees it will create ethical conflicts in the
business
• “Whistle Blowing” will be the outcome where the employee
who does not like the company’s practices reveals the
situation to the general public
• Eg In one of the machine tool manufacturing firm one of the
officers who was posted abroad was called back by the
director who was not as qualified as him . The methods
followed by the director was not accepted by the officer and
there used to be heated arguments between both .This
officer was not a trouble maker but genuinely interested in
the welfare of the company & employees .This was a ethical
dilemma
Importance of Business Ethics (cont)
• 3)Managers values & attitudes
As decision makers ,managers have more opportunities than
others to set an ethical tone for the company.
Factors which cause managers to make unethical decisions are
a) Behavior of the supervisor
b) Behavior of ones equals in company
c) Society’s moral climate
d) Formal company policy
e) Personal financial need
Values & attitudes of managers are a critical element in a
company’s ethical performance
Importance of Business Ethics (cont)
• 4)Competitive pressures:
• When companies compete for a similar product, they
sometimes engage in unethical activities in order to wipe out
competitor .
Rivalry between employees for advancement can motivate
some kind of unethical behavior.
Importance of Business Ethics (cont)

• 5) Cross-cultural contradictions
• Ethical problem occurs when certain corporates cannot do
business at home , would try to enter other societies where
ethical standards differ .
• There are some companies who have built factories in nations
whose pollution control laws are less stringent than a
particular country regulations. They are charged with
“Exporting Pollution”
• What is thought to be ethically acceptable by one nation is
considered unethical by another .
Factors Influencing Business Ethics

Corporate Individual
Leadership
Culture Characteristics

Nature of
Ethics

Strategy &
Environment
Performance
Factors Influencing Business Ethics
• 1) Leadership : Executives play a crucial role in creating ,
maintaining and changing Ethical culture
When

Employees
Perceived

Supervisors and Executives


pay attention to ethics
regularly

Then

Outcomes
are more
+ve
Factors Influencing Business Ethics
2) Strategy & Performance :
In order to act with integrity , a firm must articulate its values , its
priorities . The most prevalent form of values articulates and
communication that would occur is:
• Corporate mission
• Code of Conduct
• Code of Ethics
3) Corporate Culture :
Engaging in ethical behavior , implementing ethics programme or
instituting codes of conduct all contribute both to the internal culture of
the firm as well as to the external stakeholders perception of the firm.
4) Environment : Every human being is concerned about the
environment . As early as 1960’s , warnings came in the form of burning
rivers, dying lakes & oil fouled oceans .Our food is contaminated with
radioactivity, water we drink contains lead & mercury etc.
Scope of Business Ethics

• At 4 levels

• 1)Stakeholders level
• 2) Personal policy level
• 3) Societal level
• 4) Internal Policy level
Scope of Business Ethics

1) Stake holders level


• Employees
• Security of Jobs
• Better working conditions
• Better recommendation
• Participative management
• Welfare facilities
• Customers
• Better quality of goods
• Goods & services at reasonable prices
• Not to corner stocks & create securities
• Not to practice discriminatory pricing
• Not to make false claims about products in advertisements
• Shareholders
• Ensure capital appreciation
• Ensure steady & regular dividends
• Disclose all relevant information
• Protect minority shareholder’s interests
• Not to window dress balance sheets
• Protect interests in times of mergers , amalgations and takeovers.
• Banks & other lending Institutions
• Guarantee safety of borrowed funds
• Prompt repayment of loans
• Government
• Complying with rules & regulations
• Honesty in paying taxes & other dues
• Acting as partner in progress of the country
• 2)Personal Policy level
• Not to use office car, stationery & other facilities for personal use
• Not to fall prey to short ends
• Not to indulge in politics to gain power
• Not to spoil promotional chances to others
• Promise keeping
• Mutual level

• 3)Societal Level
• Concern for poor & downtrodden
• No discrimination against any particular section or group
• Concern for clean environment
• Contributing to better quality of life
• 4) Internal policy level
• Fair practices relating to requirement , compensation, lay- offs, perks,
promotions etc.
• Transformational leadership to motivate employees to aim at better &
higher things in life
• Better communication at levels.

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