LESSON 1: ETHICS AND BUSINESS
Objectives
At the end of this chapter, the students are expected to;
1. Define Business Ethics
2. Identify the features of business ethics
3. Describe the principles of business ethics
4. Understand the nature of business from the moral perspective
5. Rationalize the importance of ethics in business
6. Apply the objective of moral reasoning as a framework for making ethical decisions in
business
7. Examine the morality of profit-motive in business
8. Justify the need for ethical propriety in business and the corporate world
Introduction
Ethics is a topic of social science that is connected with moral values and social values.
'Business Ethics' can be
called as a study of proper business policies and performs regarding possibly controversial
issues, such as
corporate governance, insider trading, bribery, discrimination, corporate social responsibility,
and fiduciary
responsibilities.
Businesses must stand by some simple principles. It should offer quality goods and services at
sensible prices to
consumers. It must also evade adulteration, misleading advertisements, and other unfair
malpractices.
A business must also implement other duties such as allocating fair wages, providing good
working situations, not
abusing the workers, encouraging competition, etc.
Business Ethics – Definition
There are numerous meanings of business ethics, but the ones given by Andrew Crane and
Raymond C.
Baumhart are considered the most appropriate ones.
❖ According to Crane, "Business ethics is the study of business situations, activities,
and decisions where
issues of right and wrong are addressed."
❖ Baumhart defines, "The ethics of business is the ethics of responsibility. The
business man must promise
that he will not harm knowingly."
Features of Business Ethics
There are eight major types of business ethics
Code of Conduct − Business ethics is really a form of codes of conduct. It lets us know what
to do and what not
to do. Businesses must follow this code of conduct.
Based on Moral and Social Values − Business ethics is a topic that is based on moral and
social values. It
proposals some moral and social principles (rules) for conducting a business.
Protection to Social Groups − Business ethics defend numerous social groups counting
consumers, employees,
small businesspersons, government, shareholders, creditors, etc.
Offers a Basic Framework − Business ethics is the basic framework for doing business
correctly. It constructs the
social, cultural, legal, economic, and other limits in which a business must operate.
Voluntary − Business ethics is intended to be voluntary. It should be self-practiced and must
not be enforced by
law.
Requires Education & Guidance − Businessmen should get good education and leadership
about business ethics.
Trade Relations and Chambers of Commerce should be active enough in this matter.
Relative Term − Business ethics is a qualified term. It alters from one business to another and
from one country
to another.
New Concept − Business ethics is a comparatively newer concept. Established countries have
more experience to
business ethics, while poor and developing countries are moderately backward in applying the
principles of
business ethics.
Principles of Business Ethics
The principles of business ethics are connected to social groups that include of consumers,
employees, investors,
and the local community. The important rules or principles of business ethics are as follows −
Avoid Exploitation of Consumers − Do not fraud and abuse consumer with measures such as
artificial price rise
and adulteration.
Avoid Profiteering − Dishonest business actions such as hoarding, black-marketing, selling
banned or harmful
goods to earn exorbitant profits must be avoided.
Encourage Healthy Competition − A well reasonable atmosphere that offers certain profits to
the consumers must
be encouraged.
Accuracy − Correctness in weighing, packaging and quality of providing goods to the
consumers has to be
followed.
Pay Taxes Regularly − Taxes and other duties to the government must be fairly and
frequently paid. Get the
Accounts Audited − Good business records, accounts must be achieved. All official persons
and authorities
should have admission to these details.
Fair Treatment to Employees − Fair wages or salaries, facilities and incentives must be
delivered to the
employees.
Keep the Investors Informed − The shareholders and investors must know about the financial
and other
important choices of the company.
Avoid Injustice and Discrimination − Evade all types of unfairness and prejudice to
employees. Judgment based
on gender, race, religion, language, nationality, etc. should be avoided.
No Bribe and Corruption − Do not give expensive gifts, commissions and payoffs to people
having influence.
Discourage Secret Agreement − Making secret agreements with other business people to
influence production,
distribution, pricing etc. are unethical.
Service before Profit − Accept the principle of "service first and profit next."
