FUNCTIONAL AREAS IN BUSINESS

MANAGEMENT : SOME ETHICAL

ISSUES
ETHICAL ISSUES IN MARKETING AND
ADVERTISEMENT
Over the years, substantial paradigm shifts have taken
place in the area of marketing. There are main three
changes:-
Emphasis has shifted from the philosophy of “let the
buyer beware” to that of “ let the seller beware”.
There is a paradigm shift from products to process.
Focus has been shifted from material or goods to men.
WHAT IS MARKET ETHICS?
Honesty in all marketing transactions.
Responsibility for goods sold.
Openness in all dealing.
Fairness in all deals.
Respect for human dignity.
Disclosure of information regarding the product.
Selling the product that is not harmful.
Absence of unethical means to sell the product.
Charging fair prices.
UNETHICAL PRACTICES IN MARKETING
 PRODUCTS:- these are not always safe and harmless.
They may be adulterated, qualitatively poor.
Buyers may be ignorant about the long term impact of
ingredients.
 PRICING:- Dealers and manufacture often charges too
high pricing.
Predatory prices are charged to eliminate competitions.
 PACKAGING:- manufacture often does not mention the
safety instructions or level and no expiry date.
 PROMOTION:- Very often it makes false claims, implies
cheating.
Products like fairness cream, slimming tea, new hair
growth formula are all hoax.
ETHICS OF CONSUMER ISSUES
 There ate three main theories of consumer ethics:-
 CONTRACTUAL THEORY:- The view that the relationship between a
business firm and its customers is essentially a contractual relationship,
and the firm’s moral duties to the customer are those created by this
contractual relationship. This contract protect the consumer from the
risk of product, if any.
 SOCIAL COST THEORY:- this theory argues that product sold should
not create extra social costs by creating negative utility, sickness,
disease and environmental degradation.
 DUE CARE THEORY:- The view that because manufacturers are in a
more advantaged position and consumers must rely on them, they have
a duty to take special care to ensure that consumers’ interests are not
harmed by the products that they offer them and does not involve any
risk at the time of use.
MAJOR ISSUES RELATED TO CONSUMERS
Consumer protection and safety.
Consumer organizations are looking after the interest and
welfare.
Assurance about product safety, reliability, and
maintenance.
Disclosure of all necessary information.
Proper marketing and advertising.
Proper product labeling with warnings.
Protection against unfair trade practices.
Consumer grievances cells run by the state.
Consumer-seller relation agencies.
ETHICAL ISSUES IN FINANCE AND
ACCOUNTING
 Finance is the lifeblood of business and with the management of
finance, accounting is invariable associated. Ideally financial
sector is motivated by two types of desiderata:
 Operation desiderata :-
 To ensure adequate amount of finance is available when it is
necessary to make an investment.
 To efficiently use the financial resources for benefits of company.
 To make safe and sound investment.
 To ensure investment leads to net benefits over costs.
 Social desiderata:- to make timely payments of wages and
taxes, a reasonable amount of dividend, a payment of social
work to fulfill social responsibilities.
UNETHICAL FINANCIAL PRACTICES
Company took the financial data and manipulate them to suit
requirements.
Share price are raised artificially.
Insider trading.
Merger of company may be financial stunt.
Companies open accounts in different banks to avoid taxes.
Companies may create independent subsidiaries and make
benami property transactions to avoid payments to government.
Companies falsifies bills of purchase.
Loans are taken from those institutions which provide some
favor.
UNETHICAL PRACTICES IN ACCOUNTING
Misappropriation by not recording the cash receipt.
Misappropriation of cash payments.
Misappropriation of goods by wrong recording of sales
and supply or by theft or by showing damages.
Misappropriation of accounts may be done by
showing high values of assets, lower liabilities, higher
sales etc.
ETHICAL ISSUES IN HUMAN RESOURCE
MANAGEMENT
HRM:- Human Resource Management (HRM) is the term
used to describe formal systems devised for the
management of people within an organization. The
responsibilities of a human resource manager fall into three
major areas: staffing, employee compensation and benefits,
and defining/designing work. Essentially, the purpose of
HRM is to maximize the productivity of an organization by
optimizing the effectiveness of its employees.
It includes recruitment, selection, training and
development, performance appraisal, promotion policy,
welfare consideration etc.
PARADIGM SHIFT IN HRM
There is a paradigm shift on the recruitment of people
based on qualification to overall personality
endowment.
Internationally used skill are given more importance
than local skills.
 A shift from recruitment of good people to retention
of these people.
Emphasis has been shifted from creation of physical
productivity to value creation though human values.
CHALLENGES IN HRM
Training of workforce posses a challenge.
Problem of brain drain is a real challenge.
To maintain allocative efficiency where productivity of a factor
is just equal to its remuneration is also a challenge.
Removal of discrimination is a tricky issue.
Pay differences among various ladders of services is a real
challenge.
There may be a problem of alienation among some employees.
To enhance the contestability of employees through capability
expansion is perhaps one of the greatest challenges in HRM.
ETHICAL DILEMMAS IN HRM
 In the matter of promotion, whether one should give special preference to his
relatives or friends, or caste and religion ?
 Policy of divide and rule is not moralistic.
 Many MNCs practice what is called the policy of race to the bottom in which
lower level employees are paid lower wages.
 Use of child labor.
 Payment of a generous bonus at the end of year or a stingy one.
 Exploitation of workers.
 Discrimination.
 Given the resource endowment, a firm can increase the wage level and reduce
the level of employment or wages may be lowered to employ more people.
Which alternative is ethically correct ?
 Firm can practice the policy of hiring and firing without giving any prior notice.
 Choice of technique of production is itself an ethical issue.
UNETHICAL PRATICES IN HRM
 Biased attitude in selection, transfers, promotions, and training and
development activities.
 Not caring for just demands of the Trade Union and not behaving
respectfully with union leaders.
 Trying to create rift between different unions if there are more than one
recognized union.
 Firms do not care for health, safety, job satisfaction and comfortable working
environment.
 HRM policies may be biased.
 Many firm are engaged in exploiting workers.
 Sometimes privacy is not allowed.
 Hiring and firing policy is extended.
 Sexual harassment is prevailing.
 Industrial disputes are solved high-handedly.
QUALITY OF A GOOD EMPLOYER
He follow a principle of natural justice and fairness.
He obey the principle of human rights.
He keeps the working environment comfortable, safe
and healthy.
He resolve all the dispute in amicable way.
He does not exploit workers.
He never resorts to unethical short-cuts to win over
workers.
He is in the favor of capability expansion of workers.
ETHICAL ISSUES IN PRODUCTION AND
OPERATION MANAGEMENT
Production and operation management:- Production
and Operations Management ("POM") is about the
transformation of production and operational inputs into
"outputs" that, when distributed, meet the needs of
customers
Unethical attributes of products:- product may be
unsafe and damaging to health.
Not reliable.
Sub-standard.
Life of product may be shorter than what is claimed.
There may be unwanted side effects.
UNETHICAL WORKING CONDITIONS
Many serious diseases like cancer, asthma, bronchitis
are job-related.
 noise pollution is another concern.
Death due to physical accidents in factories is a
common problem in all countries.
Occupational hazards are prevailing.
 Choice of unhealthy production site.
Working conditions and facilities may be inadequate
like long-working hours.
Inside and outside pollution.
ETHICAL ISSUES IN INFORMATION
TECHNOLOGY (IT) INDUSTRY
Manpower demand for IT software and hardware
sector is constantly growing.
Employment generator, the sector has fuelled the
growth of several ancillary industries and created a
new class of consumers with high disposable incomes.
Multiplier effect on the Indian economy - besides
being the country's biggest growing industry.
IT industry is based on research and knowledge.
Demand for its product is constantly growing.
MAJOR CHALLENGES IN THE IT INDUSTRY
IN INDIA
Contestability in the international market demands
that the industry climbs constantly on the learning
curve and make newer and newer innovations in the
area of product development, look for newer source of
raw materials, find newer markets, newer techniques.
These are major challenges.
 Maintenance of excellent standard is a challenge.
Industry is adversely affected by the problem of brain
drain.
Industry needs more skilled work force.
ETHICAL ISSUES AND DILEMMMAS IN IT
INDUSTRY
Level of information privacy.
 ensuring the accuracy of information.
Informational property rights.
Accessibility of information.
Availability without payment.
Use of information in a modified form.
UNETHICAL PRACTICES IN IT INDUSTRY
 Spreading virus
 Piracy
 Hacking
 Hijacking
 Spoofing
 Infringement of copyright materials
 Credit card fraud
 Account take over
 Phishing
 Cyber extortion and electronic message transfer
 Email threats
 Unauthorized sharing of information.