ETHICAL VALUE SYSTEM

MODULE II
TOPICS TO BE COVERED
 The Ethical Value System – Universalism, Utilitarianism, Distributive Justice,
Social Contracts, Individual Freedom of Choice, Professional Codes;
 Culture and Ethics – Ethical Values in different Cultures, Culture and
Individual Ethics. discrimination at work place, The limits of Doctrine of
Caveat Emptor, Ethical Issues in marketing, Advertising
 Guiding businesses with ethical values is becoming increasingly important to those

within the workforce. A recent survey from Global Tolerance showed that 42 percent of
employees would rather work for companies that have a positive impact on their
communities and strong ethical values. In fact, ethics matter more to them than even
earning a high salary. The difference is even more pronounced among millennials, with
64 percent saying they won’t work for a company that doesn’t show strong social
responsibility practices.

 Businesses that don’t lead with ethical practices and a code of ethics risk the inability

to recruit talented team members, experience poor employee performance, struggle

with employee retention, and are subject to increased public scrutiny (especially in
the age of social media). Additionally, organizations need to foster moral values not
just to help their companies but simply because it’s the right thing to do.
What Are Ethical Values?
Ethical values are a set of moral guiding principles that determine how
a company conducts business. These principles seek to serve and
protect others above the organization’s self-interest. Beyond fulfilling
legal obligations, ethical values in business show strong moral
character from leaders and employees.
While there are many out there, the following represent some of the
core values and ethics those in the business world should adopt:
•Integrity
•Fairness
•Leadership
•Honesty
•Accountability
•Teamwork
•Charity/Kindness
 ETHICS Values
Ethics refers to a system of moral principles. Values are associated with the thought process, a
person’s sense of what is wrong and what is right.

Ethics aligns with a professional setup. Values are associated with personal aspects of a person.

Ethics has three major areas of study – Meta-Ethics, Different types of values are moral values, social values,
Normative Ethics, Applied Ethics. aesthetic values, religious values, political values.

Ethics will be consistent within a professional setup but Values vary from person to person, it need not be
would vary between three different organisations or consistent.
institutions.

Ethics are determined by an institution, organisation and Values formed in a person are determined by family
varied professions. Ethics that are followed by medical values, religion, culture, community etc.
professionals will be different from ethics followed in the
public administration domain.

Ethics could act as a constraint. The action that needs to Values could act as a catalyst for the necessary
be taken in an organisation could be consistent with the motivation in a person.
values of a person. However, there could be chances that
it cannot be executed as it may not align with the ethical
standards of the profession, organisation or institution.
UNIVERSAL APPROACH TO ETHICAL DECISION

 Determining the most ethical choices can be extremely difficult. Numerous

formally identified approaches to decision-making are available. A universal

approach to ethics is based on the concept of moral absolutism: the idea
that if something isn't right in one place or for one person, it is not right for
anyone, anywhere. The universal approach is typically used in cross-
cultural situations, but it may also be used in any situation where one party
operates outside of culturally accepted norms.
Moral Universalism is the meta-ethical position that there is a universal ethic which
applies to all people, regardless of culture, race, sex, religion, nationality, sexuality or
other distinguishing feature, and all the time. A universal ethic is a moral system that
applies universally to all of humanity, and thus transcends culture and personal whim.
The source or justification of this system is variously claimed to be human nature,
a shared vulnerability to suffering, the demands of universal reason, common themes
among existing moral codes, or the mandates of religion.
Support
1.The universal approach simplifies the decision-making process. The ethical choice has essentially been
predetermined, so lengthy reflection and debate may not be necessary. Moreover, national laws and global
regulations may make certain choices compulsory, or at least highly preferred. Oversight becomes far easier
when the "right" and "wrong" choices are clearly denoted. Thus, the universal approach can help to ensure
equal standards for all employees, business associates and others affected by a business's activities.

Criticism
Critics have called the universal approach "ethical imperialism," as John Schermerhorn discusses in
"Exploring Management." This particularly poses a problem in cross-cultural business interactions. A
business person may not wish to be perceived in the international community — or at home — as having a
rigid ethical stance. Such an approach could make her seem discriminatory toward those with other beliefs.
 EXAMPLES

 A CEO deciding whether to partner with an overseas firm that refrains from promoting women to higher positions

must decide whether the partnership would be an ethical choice for him.

 A company operating in a country with lax pollution standards must decide what precautions to take in order to

avoid harm to local communities and ecosystems.

 A manager might consider whether an employee with an introverted personality — when compared with people of

his own culture or another — is being uncooperative or simply doesn't prefer to engage in lengthy debate.

 Alternatives

 The cultural relativism approach provides an alternative to the universal approach. Cultural relativism holds that

what is ethical varies depending on local norms and values. It has great respect for the validity of different cultures
and viewpoints. However, business people who subscribe to cultural relativism may still identify broad ethical
standards that tend to apply across boundaries, such as workers' rights regarding safety and fair pay. In other words,
cultural relativism need not be used as an excuse to accept cultural norms of poor working conditions, lack of
educational opportunities or lax environmental regulations. The Integrated Social Contracts Theory follows this logic,
offering a creative approach based on shared ethics and respect for local norms.
WHAT IS
UTILITARIANISM?
 Utilitarianism is a theory of morality that advocates actions
that foster happiness or pleasure and oppose actions that
cause unhappiness or harm. When directed toward making
social, economic, or political decisions, a utilitarian philosophy
would aim for the betterment of society as a whole.
 Utilitarianism would say that an action is right if it results in
the happiness of the greatest number of people in a society or
a group.
 "THE GREATEST GOOD FOR THE GREATEST NUMBER" IS A MAXIM OF UTILITARIANISM.

 Utilitarianism is a tradition of ethical philosophy that is associated with Jeremy

Bentham (1747-1832) and John Stuart Mill (1806-1873), two late 18th- and 19th-
century British philosophers, economists, and political thinkers. Utilitarianism holds
that an action is right if it tends to promote happiness and wrong if it tends to
produce sadness, or the reverse of happiness—not just the happiness of the actor
but that of everyone affected by it.
 At work, you display utilitarianism when you take actions to ensure that the office
is a positive environment for your co-workers to be in, and then make it so for
yourself.
Utilitarian Ethics
"Rule" Utilitarian Ethics
An example of rule utilitarianism in business is tiered pricing for a product or service for different types of
customers. In the airline industry, for example, many planes offer first-, business-, and economy-class seats.
Customers who fly in first or business class pay a much higher rate than those in economy seats, but they also
get more amenities—simultaneously, people who cannot afford upper-class seats benefit from the economy
rates. This practice produces the highest good for the greatest number of people.
And the airline benefits, too. The more expensive upper-class seats help to ease the financial burden that the
airline created by making room for economy-class seats.
"Act" Utilitarian Ethics
An example of act utilitarianism could be when pharmaceutical companies release drugs that have been
governmentally approved, but with known minor side effects because the drug is able to help more people
than are bothered by the side effects. Act utilitarianism often demonstrates the concept that “the end justifies
the means”—or it's worth it.
THE 3 GENERALLY ACCEPTED PRINCIPLES
OF UTILITARIANISM STATE THAT

 Pleasure, or happiness, is the only thing that has intrinsic value.

 Actions are right if they promote happiness, and wrong if they promote

unhappiness.

 Everyone's happiness counts equally.

DISTRIBUTIVE JUSTICE
A fair and just society fulfils the need of
equality, fairness and proper distribution of
goods, wealth and services for everyone so
that the society runs smoothly. The area of
moral philosophy that considers the proper
distribution is known as distributive justice.
It is also a type of social justice since it
concerns equal access to resources and
equal rights and opportunities.
 In other words, distributive justice is a kind of social justice which seeks to

ensure just and proper distribution of not only goods, wealth and services but
also of rights and opportunities.

 In a society with limited resources, the issue of fair allocation is challenging

as well as an issue of multiple debates and contentions.

 Distributive justice acts as a key ethical principle which applies to the

provision of social goods. It also involves the evaluations of the fairness of

the allocation of resources and the desirable outcomes across people.
Distributive justice is concerned with the measurements that should be used to allocate the resources of the society.
It also decides fair distribution of the burdens and benefits of social cooperation among persons with various needs
and claims.
According to Aristotle, distributive justice implies that the state should divide or distribute goods and wealth
among citizens according to merit.

Distributive justice includes issues such as affirmative actions such as recruitments and promotion in government
actions, admission to public educational institutions, seats in legislature, welfare, free education and other goods and
opportunities and they are distributed amongst the members of the society.

The goods that one might possess include the following:

•Economic goods such as incomes and property.

•Opportunities for development such as healthcare, sanitation, education, clean water for drinking.
•Recognitions in the society such as honour, job promotions and social status.
The state should distribute goods, resources and wealth to the people depending on various aspects and distributive
norms.
 SOCIAL CONTRACT THEORY
 Social contract theory says that people live together in society in accordance with an agreement that

establishes moral and political rules of behavior. Some people believe that if we live according to a social
contract, we can live morally by our own choice and not because a divine being requires it.

 A social contract is an unofficial agreement shared by everyone in a society in which they give up some

freedom for security.

Key Elements of Social Contract Theory

 State of Nature: The hypothetical condition of human beings before the establishment of society or

government. Philosophers describe it differently, but it generally represents a time of freedom and equality
where no laws or authority exist.

 Agreement: Individuals collectively agree to form a society and establish a government to escape the state

of nature. This agreement is the "social contract."

 Mutual Obligations: Both the government and the governed have responsibilities. Citizens agree to follow

laws and norms, while the government provides protection and enforces justice.
MAJOR PHILOSOPHERS AND THEIR
VIEWS
1.Thomas Hobbes:
1. State of Nature: Hobbes described it as a "war of all against all," where life was
"solitary, poor, nasty, brutish, and short."
2. Social Contract: Individuals consent to an absolute sovereign (Leviathan) to
ensure peace and security, giving up all their rights except the right to self-
defense.
2.John Locke:
1. State of Nature: Locke viewed it more positively, as a state of equality and
freedom where natural rights (life, liberty, and property) existed.
2. Social Contract: Individuals consent to form a government that protects these
natural rights. If the government fails, citizens have the right to overthrow it.
3.Jean-Jacques Rousseau:
1. State of Nature: Rousseau believed it was a peaceful and uncorrupted time where
humans were free and equal.
2. Social Contract: The agreement forms a collective "general will," and the
government must reflect the common good. Individuals must conform to this
general will to achieve true freedom.
 CODE OF PROFESSIONAL ETHICS
 A professional code of ethics provides individuals with a set of guidelines to
make good decisions in the workplace. Taking the effort to develop moral
standards can foster harmony within an organisation and elevate your
reputation among clients and customers.
 A code of professional ethics is a set of customs that outline an organisation's
mission and values. A page on an employee handbook would often list rules for
behaviour to help employees conduct their business with honesty and integrity.
A code of ethics acts as a model of moral standards that employees are required
to comply with. It ensures that every individual is personally accountable for
their actions and their treatment of others.
 Employers expect professionals to act in line with these principles, especially
when approaching problems or making decisions that have a wider impact on
society. People who violate the code of ethics compromise their trustworthiness
and an organisation's reputation. It may lead to serious consequences, such as
the termination of your contract.
 COMPONENTS OF A PROFESSIONAL
CODE OF ETHICS
1. Work environment
 A code of professional ethics are required to establish the acceptable norms and
practices within your organisation's work environment. It helps determine your
corporate culture and encourages people to model similar values among their
colleagues. By implementing explicit rules and policies, your work environment can be a
place of sound moral judgement.
 Here are some examples of professional ethics for the work environment:

 Equal opportunity

 Professional dress code

 Policy against discrimination and harassment

 Privacy policy

 Safety policy

 Non-violence policy

 Policy against destructive behaviour, including substance abuse and gambling

 2. Conflicts of interest
 A conflict of interest occurs when there is a clash between an individual's
competing interests or loyalty and the organisation. A code of professional
ethics is essential to define the relationships and activities you are required
to avoid that could be deemed unfair or damaging to an organisation's
reputation.
 Examples of conflicts of interest to avoid include:
 Significant financial interests in other companies
 Running for public office
 Insider trading or similar unfair financial practices
 Investing in competing organisations
3. Protecting company assets
Whether you are taking care of office equipment or handling sensitive information and
customer data, a code of professional ethics compels you to prioritise the organisation's
safety and its customers.
Examples of policies to protect company assets include:

•Information security
•Protecting intellectual property
•Use of company property
•Use of property owned by others
•Right to privacy
4. Anti-bribery and corruption
Trust is key to business operations. That is why a code of professional ethics is an effective tool
to set clear boundaries on lawful and unlawful behaviour for employees. It ensures you
uphold an attitude of honesty and fairness in your day-to-day operations.
Here are some examples of policies against bribery and corruption:
•Receiving gifts of significant monetary value
•Accepting loans or bribes
•Relationships with government entities, competitors, customers or former employers
 PROFESSIONAL CODES OF ETHICS IN
DIFFERENT SETTINGS

Lawyers
Lawyers are bound to a professional code of ethics, regardless of their place of
employment, because as guardians of the court of law, it is their professional
responsibility to uphold the virtues of fairness and righteousness.
In 1961, India introduced the Advocate Act to institute a regulatory body that would

oversee the ethical conduct of those in the law profession. The Bar Council of India framed
39 rules under this law to guide moral practices in the court of law. These 39 rules cover
four major areas, a lawyer's duty towards their client, opponent and colleagues and
punishment for professional misconduct.
Clear ethical guidelines for lawyers ensure that our judicial system remains reliable and
Doctors
Like lawyers, doctors are also held to a universal code of ethics based on their chosen
profession.
The Medical Council of India addresses medical ethics in patient care, consent, a physician's
duties, the maintenance of medical records and more. Here is a brief description from the
Journal of Pharmacy & Bioallied Sciences on a few unethical actions that practicing physicians
in India are required to avoid:
•Physicians cannot advertise their practice, nor can they make formal announcements about
their services in the press.
•Physicians cannot use a self-photograph for advertising themselves on a public signboard.
•Physicians cannot run an open medical shop.
•Physicians cannot take rebates or charge commissions to medical suppliers.
•Physicians cannot practice euthanasia.
CULTURE AND ETHICS
WHAT IS CULTURE?
 A group's culture is its unwritten shared ideals, standards, beliefs, and

practices. Because cultural artifacts are produced by people who live in the
same social milieu, culture is frequently a social phenomenon. A group of
people who live in a specific location shares a culture, collective
programming of the society's thought system that separates humans from
other populations in more general terms throughout the same period and is
a reasonably permanent system of meanings. These programs change
depending on the type of social groups that emerge.
 Ethics and culture are closely related. Culture determines how we perceive
and understand moral concerns, shaping our sense of morality and ethical
action. What is deemed cultural norms and values frequently determine
acceptable or inappropriate behavior and these norms and values can
differ greatly from one society to another.
 Ethical behavior is affected by the demographic and cultural composition of
the workforce.
 Studies indicate that men and women, as well as younger and older
employees, differ in the types of behaviors they view as ethical.
 Different cultures also hold different ethical standards, which become
important when managing a diverse workforce or doing business within
different cultures.
 Around the globe, diversity has a different meaning and different overtones.
 In addition to different legal frameworks protecting employee classes, the
types of stereotypes that exist in different cultures and whether and how
the society tackles prejudice against different demographic categories vary
from region to region.
DOCTRINE OF CAVEAT EMPTOR
 “Caveat Emptor” is a Latin phrase that translates to “let the buyer

beware”.

 The doctrine of Caveat Emptor is an integral part of the Sale of Goods Act.

It translates to “let the buyer beware”. This means it lays the responsibility
of their choice on the buyer themselves.

 It is specifically defined in Section 16 of the act “there is no implied

warranty or condition as to the quality or the fitness for any particular

purpose of goods supplied under such a contract of sale“
The Doctrine of Caveat Emptor Meaning

The Doctrine of Caveat Emptor means that the responsibility lies on the buyer of goods

and he must perform due diligence before the purchase of the goods. It is expected from

the buyer to be alert in a contract of sale. He cannot hold the seller responsible for inferior

goods unless the contact is based on fraud. The Doctrine of Caveat Emptor is generally

applicable in the case of property transactions but it can also be applied in the sale of

goods and other services.

Section 16 of the Sale of Goods Act, defines it as ‘“there is no implied warranty or

condition as to the quality or the fitness for any particular purpose of goods supplied

under such a contract of sale“

 Let’s explain the Doctrine of Caveat Emptor with an example. The seller makes the

goods available in the market and it is the responsibility of the buyer to inspect them
well before buying. If the buyer later discovers a defect in the goods that could have
been detected earlier by him, he cannot sue the seller for inferior quality.

 Though the responsibility lies with the buyer, he can shift it to the seller under the

given conditions:

 If the buyer has informed the seller about the purpose of the purchase, before

making the purchase.

 If the buyer relies on the technical expertise and experience of the seller.

 If the goods are of a description that the seller supplies in his normal course of

business.
Exceptions to the Doctrine of Caveat Emptor
The Doctrine of Caveat Emptor and its exceptions will help us understand the situations in which the
responsibility is not put only on the buyer.
•Fitness of the Product for the Buyer’s Purpose of Purchase- Section 16 (1)
If the buyer informs the seller about his purpose behind purchasing the goods and the seller does not sell
the goods according to that knowingly, it relieves the buyer from the responsibility. In this case, it
becomes the duty of the seller to supply the right goods to the buyer. For example, A informs B, who is a
shoe seller, that he wishes to purchase shoes for running. If B still sells him shoes that are not for
running, then B can be held responsible.
Sale of Goods Under the Trade Name
If the buyer purchases a branded product or a product sold under a trading name, then he is assured of the
quality that is associated with that brand name. The seller in this case cannot be held responsible. In this
case, the buyer is not relying on the skill or judgment of the seller but on the implied quality standard that the
brand offers.

Goods Sold by Description

If the buyer purchases the goods based on their description which matches the product, then the seller cannot
be held liable. The seller will be held liable only if he provides an incorrect description of the goods.
•Merchantable Quality of Goods- Section 16(2)
The seller must provide goods of merchantable quality to the buyer.
This means that the goods must be fit for resale in the market and
must pass the market standards. When the buyer purchases the goods
from a seller based on a description and the seller deals in the goods of
that description, then the goods must be of merchantable quality. If the
goods are not of merchantable quality, then the seller can be held
liable for the same.
•Sale by Sample Inspection
The Doctrine of Caveat Emptor does not apply if the buyer purchases
the goods after careful inspection of a sample of the goods that he
intends to buy and the seller supplies goods different from that sample.
For example, A inspects a sample carpet manufactured by B. He gives
an order of 100 carpets of the same quality as that of the sample. If B
supplies carpets that do not match the sample carpet in quality, then
he will be held liable. If the sale is made based on a description as well
as a sample and the goods do not match both, then the buyer is not
held responsible.
Fraudulent Representation by the Seller
If the seller provides fraudulent information about the goods or conceals
some important information about them, the buyer is not responsible.
1. False Advertising
You should be careful to avoid overstating the benefits that a product or service offers in
your marketing and advertising communications, so as to steer clear of accusations of false
advertising. Advertising is considered to be misleading if it misrepresents the value, uses, or
outcomes of a product, utilising inaccurate information in its content to gain buyers' interest.
Although false advertising may be successful in drawing customers into the early stages of
a sales funnel, it ultimately proves extremely harmful to consumer trust and influences long-
term negative brand perception when shoppers inevitably feel disappointed and deceived.
In addition, false advertising can also prove extremely costly for companies should they be
held legally accountable for this unethical practice.; energy drink giant Red Bull provides a
teachable example of this. In 2014, the brand was sued for some $13m for purporting that
its canned drink gave consumers better concentration and reaction speeds, in addition to
more energy – claims that were not adequately supported by compelling research and
evidence.
2. Selective Marketing
The practice of customer segmentation can become immoral if it results in selective
marketing, a term that describes the exclusion of particular types of consumers, most
commonly determined by their sexual orientation, ethnicity, weight, or physical mobility.

This selective marketing discourages demand among so-called 'undesirable' consumers

who are considered to be unprofitable or damaging to the brand's image, by making them
feel unwanted and unwelcome, whether through lack of inclusion in marketing campaign
representation, restricted customer targeting, or deliberate limitations of product ranges.

Rather than being unprofitable, increasing accessibility and inclusivity – such as adding
plus size clothing to your product lines, or developing product variations for disabled
consumers – can significantly boost your sales and ensure continued market relevance in
the future
3. Unethical Data Collection

Market research is incredibly valuable for businesses throughout all stages of their

operations; utilising accurate consumer data in the composition and execution of market

strategies can greatly boost the effectiveness and ROI of promotional activities. Data

collection must be conducted ethically, however.

You should carefully consider governmental data and privacy protection policies before

embarking on market research activities, and ensure full compliance with these regulations.

In Europe, businesses must refer to General Data Protection Regulation (GDPR), while

companies registered in the US can utilise the nation's own privacy protection laws.

The 2018 Cambridge Analytica scandal is a perfect example of the devastating effects of

breaching a consumer's right to personal data privacy, through collecting information

without their consent. Due to its unethical collection processes, the company experienced a
4. Stereotyping
Business owners should be aware that adopting stereotypes in marketing and advertising
campaigns is not only controversial, but also borders on unethical in many instances.

This stereotyping often targets extremely broad consumer groups based on their gender,
age, or ethnicity, assuming that their behaviour, preferences, means, and needs are alike
due to singular common characteristics.
For example, brands may portray traditional gender roles in promotional campaign materials,
heavily featuring women in ads for cleaning products and household goods, while
representing men in ad scenarios relating to business or DIY.

As buyers increasingly respond to tailored communications, appreciating inclusive

representations in your marketing will indicate your brand's acceptance of their unique
differences. Conversely, stereotypes in ad campaigns can offend, alienate or enrage
potential consumers.
5. Negative Advertising

• Although every business is vying for consumer preference and loyalty over competitor

brands, conducting advertising in such a way as to highlight the negative aspects of a

contender's offering is unethical.

• This negative advertising, often described as 'smear tactics', seeks to discredit a

competitor's image in order to elevate your own reputation among consumers.

• You can avoid this practice by setting clear standards for all promotional activities and

messaging, and effectively communicating these to company marketers.

6. Pricing Strategies
There are many unethical policies that may influence your company's pricing strategies, too,
each of which leave the consumer disadvantaged in some way in exchange for greater brand
profits.
Price Gouging
Among these is price gouging. This defines the business practice of unreasonably inflating
your prices during a period of particularly high demand, knowing that many buyers will have
no choice but to make purchases at a premium. Increased demand may be driven by national
emergencies – such as the panic buying of household goods noted during the first stages of
2020's COVID-19 pandemic – or natural disasters, such as elevated sales of building and
repair services following floods, earthquakes, or hurricanes.
Instead of greedily profiting from consumers' disadvantaged, often temporary,
circumstances, you can instead pledge to support charities that aim to do good in the
affected communities with a portion of the revenue gained. Such actions in a time of need
will ensure positive brand perception and consumer appreciation that will endure for many
years to come.
 Predatory Pricing
 Predatory pricing is another unethical policy that sees businesses promote
products at extremely low prices in order to unfairly beat out the
competition. These unusually rock-bottom prices encourage consumers to
select a particular brand's offering, leading to temporary increased sales
for the business, though this may not always translate to heightened
revenues.
 This practice can also have a significant impact on medium-term demand
for the promoted products due to the price fluctuation, and can also block
new competitors from entering the market.
Bait and Switch
Finally, bait and switch is a questionable pricing strategy that involves misleading consumers
by initially advertising low prices to gain their consideration, then revealing that the
promoted products are not available so as to push more expensive items to fulfil their needs
instead.
Rather than falsely attracting buyers' interest in this way, you can instead transparently
share your fixed prices and focus on offering a clear value proposition to justify these costs
honestly.

---
Employing a standard of ethics in marketing can only ever benefit the brand, both in the
short and long-term. Indeed, today's buyers prefer to transact with companies that proudly
demonstrate morality and transparency in all areas of their business, from the management
of buyer data to pricing strategies, campaign messaging and more.
With consumers gaining increasing access to the innermost details of businesses' operational
policies and philosophies, any questionable marketing approaches are sure to come to light
 https://in.indeed.com/career-advice/career-development/professional-ethics