PGP03112

Section B
Business Ethics Assignment II
Could morality be the essence/source of business? The answer to this question is obvious with its
positive bias. To successfully write this assignment, you need to investigate outlier organizations those
are in the business of selling/assuring morality in the morally deficient world. You need to choose
selectively a few distinctive characteristic these organizations possess that differentiate with nearly
similar organizations. Subsequently, you need to explore the antecedents that potentially generate
opportunity for emergence of such organizations. You need to pay attention to its design and collective
ecology for maintenance of integrity of its design. Finally, you need to examine the factors that may
have significant impact on the success of the organization. Please refrain from using case examples from
part time ethics practitioners (business houses) those who also practice ethics sometime through
corporate social responsibility or other means.





BUSINESS ETHICS ASSIGNMENT II
Submitted
To:
Dr. Malay Biswas





Saurabh Chatterjee
PGP03112
Section B
PGP03112
Section B
Business Ethics Assignment II
Introduction
A designer was asked to design a drumstick layout for a client having a silhouette of a naked woman on
it and he refused to do it. He said that it violated his sense of morality and so he wouldnt do it. Of
course if he had agreed to design the layout he would earn a handsome profit but he had his priorities
straight. As expected, the client approached another manufacturer to make them and the work was
done. Practicing morality can only give an individual a sense of satisfaction and the right to claim that he
or she does not compromise with moral principles even if that entails losses in business. Apart from that
there is hardly any other impact.
The question that arises here is that can morality and ethics be the essence of a business. How can a
business run on the foundations of ethics and morality when there is no collective positioning in the
field of business? All that such a business can achieve through morality is going bust due to losses. We
shall examine in this paper whether this is really the case. Can morality and ethics be adopted by
business if consumers insist on it? Although this may seem far-fetched but there are evidences of such
changes and it will not be too lofty if we expect it to be the reality in the very near future.
The business built on ethics and morality can be defined as one which takes the high road and does not
indulge in either rent seeking or corporate welfare. These terms are explained further in the
subsequent sections. It must be noted that organizations that practice ethics through CSR activities or
other mandated requirements do not come under the purview of this analysis.

Fig 1

PGP03112
Section B
Business Ethics Assignment II
Organizations that are in the business of selling/assuring morality in the morally deficient world.
The Grameen Bank is a Nobel Peace Prize winning microfinance organization and community
development bank started in Bangladesh that makes small loans (known as microcredit or
"grameencredit") to the impoverished without requiring collateral. [Source: Wikipedia]
The Grameen Bank is an epitome of morality and ethics as far the intentions of this organization is
considered. The bank has been making small loans to the impoverished population of Bangladesh in
order to provide them an opportunity to set up their own enterprises. The repayment of loans is
encouraged through peer pressure and there has never been any complaint of forceful recovery of
loans. It is also worth noting that 98% of the borrowers are women. The bank does not rely on
corporate welfare in the sense that it does not expect government subsidies or aid in order to carry on
its operations. There is also no evidence of rent seeking behavior. The bank I solely devoted to the task
of providing credit to small borrowers in rural areas.
The other organization that can be tagged as one based on ethics and morality is Ethical Clothing
Australia. This organization has embraced the concept of ethical consumerism. The phenomenon of
ethical consumerism is akin to positive buying where a consumer buys only those products which are
produced or sourced ethically and boycotting the rest.
Brands often outsource a good deal of their work which is further subcontracted. Gradually the brands
lose track of the various participants in their own supply chain. The result is that the clothes get
manufactured in illegal sweatshops or backyard workshops where workers are paid a paltry sum for
their labor. This is very damaging and can be stopped. Ethical Clothing Australia has taken an important
initiative in the form of accreditation to brands which ensure that their products are made in the most
ethical way without causing any injustice to anyone whatsoever. Consumers can now easily identify
which products are made ethically without exploiting anyone and they can make their decision to
purchase or reject a product.

Characteristics that differentiate these organizations
The organizations that are built on the foundations of ethics and morality have distinctive characteristics
that differentiate them from others in the same business. The business model followed by these
organizations is simple and transparent. This is so because complex business models often carry the
potential to hide wrongdoings by making it difficult for an outsider to discern something unusual from
the regular pattern of business.
According to Richard W. Wilcke, for a corporation or other business entity to commit itself to compete
solely, or primarily, through a free and open market, relying thereby for its success on the voluntary
choices of consumers, is an ethical high road.
Organizations that allow consumers to make their own choice without trying to influence them through
sops or benefits or incomplete information come into this category. Such organizations are expected to
allow the consumer to make a voluntary choice and not push their products. This is a noble posture but
PGP03112
Section B
Business Ethics Assignment II
sadly not accepted by businesses. They believe that in this era of aggressive marketing it is very
important to raise awareness and educate the customers about various products so that they can
make an informed decision. What they are actually doing is pushing their products and providing
incomplete information in most cases to consumers so that they end up buying products that they do
not need.
Salespersons representing business houses are often at the receiving end as far as morality in business is
concerned. This is because a lot of people dislike being sold anything. They feel it is an insult to their
intelligence. A person who wanted to buy a camera performed a thorough research online and in order
to satisfy his last remaining doubts visited a local store where he got enormous help from the salesman
who even attempted to sell additional accessories with the camera. The person did not buy from that
store and instead ordered online receiving a good bargain which saved him $150. While the salesman
was blamed for trying to up-sell, the buyer thought he had a strong moral standing when he decided not
to buy from the store. He overlooked the fact that he was misusing the assistance offered by the
salesman and was taking undue advantage under the garb of professing morality.
Since the ethic is grounded in the right of individuals to seek to satisfy their preferences through
voluntary trade in the marketplace, it does not require the utilitarian ethic of the greater good for the
greater number.[Richard W. Wilcke]
The tendency of a business to take political advantage of its resources is explained by the concepts of
rent seeking and corporate welfare. Rent seeking is a term used by economists to refer to any
expenditure of scarce resources to capture a transfer, i.e., to achieve returns in excess of those a
competitive market would provide. Corporate welfare is a popular term coined originally as a pejorative
by business critics, and refers generally to business subsidies. There are both beneficial and also limiting
aspects to both concepts.
The most positive aspect of rent seeking is that it has helped economists to recognize the scope and
costs of political redistribution by special interests, including business. A limitation is that emphasis is
usually on empirical measurement of waste as a way of identifying socially unproductive behavior. A
second is that the term has come to describe many productive market activities, such as advertising.
The term corporate welfare is at the other end of that spectrum since everyone detests it instinctively,
even those not sure of its meaning. Unfortunately, there are two definitions, each with a different slant
on taxes. Anti-market spokesmen consider so-called tax expenditures credits, deductions, deferrals
and exemptions to be particularly egregious because these funds are allegedly paid by taxpayers and
given to business. The solution to the problem is obvious to them eliminate expenditures and raise
the taxes on business.



PGP03112
Section B
Business Ethics Assignment II
Antecedents that generate opportunity for the emergence of such organizations
The issue of ethics of business executives and corporations became prominent due to many reasons.
The first reason was the growing influence of large corporations which were formidable and very
powerful. These organizations could decide the fate of large number of people, could influence the
decision of lawmakers and were invincible even in a court of law owing to their ability to hire the best
lawyers of the land. There was a growing concern that such huge power in the hands of a few could
create a misbalance and harm the society in general. The society was dependent on the goodwill or
ethics of those in charge of these organizations. There was a call for accountability and transparency
which later translated into expectations of business ethics and good corporate governance in these
businesses.
Another cause was the emergence of the environmental movements which aimed at fixing liability for
the environmental degradation that was taking place due to business and commerce. Many
organizations in their bid to expand to virtually uncharted territories began acquiring land from the
government which did not hesitate to displace the occupants who had been residing there for
generations. These powerful organizations had great sway and used their financial power to bypass
environmental laws to cause irreparable damage to the environment. This was criticized by many
activists as well as lawmakers. Laws that were enacted were not sufficient to deter these organizations
and ethical guidelines were issued to educate executives about the consequences of their actions vis-a-
vis the environment.
The issue of ethics also came to the fore when many scandals rocked nations by their sheer magnitude.
There was large scale collusion between businesses and the lawmakers which resulted in huge scandals
that cost the taxpayers dearly. A hue and cry resulted in calls for ethics in business dealings that involved
the various government bodies. Businessmen and politicians were expected to make voluntary
disclosures about their dealings and were expected to maintain transparency in all their associations.
These disclosures were above and over the ones explicitly prescribed in law.
The reason that organizations treated these ethical guidelines and expectations seriously was that the
market, which was wary of corporate scandals and the resulting losses, reacted very strongly whenever
any ethical violation came to the light. Organizations that followed good and ethical practices found
greater acceptance in the market both in the minds of the consumers and the investors. This was a
great incentive for adopting ethics in business.

Conclusion
Values are core beliefs or desires that guide or motivate our attitude and actions. What one values
drives his or her behavior. Some people value honesty or truthfulness in all situations; others value
loyalty to a higher degree in certain situations. Ethics is the branch of philosophy that theoretically,
logically and rationally determines right from wrong, good from bad, moral from immoral and just from
PGP03112
Section B
Business Ethics Assignment II
unjust actions, conducts and behavior. Some people define ethics simply as doing what you say you will
do or walking the talk.
Overall, ethics establishes the rules and standards that govern the moral behavior of individuals and
groups. It also distinguishes between right and wrong conducts. It involves honest consideration to
underlying motive, to possible potential harm and to congruency with established values and rules.
Business ethics, more specifically, deals with the creation and application of moral standards in the
business environment.
Morals are judgments, standards and rules of good conduct in the society. They guide people toward
permissible behavior with regard to basic values. Overall, values are professed statements of ones
beliefs, ethics is delivering on ones professed values and morals are actions of good conduct as judged
by the society that enhance the welfare of human beings.
With an understanding of values, ethics and morals while using ethical principles, a business owner or
leader can form a framework for effective decision-making with formalized strategies. The willingness to
add ethical principles to the decision-making structure indicates a desire to promote fairness, as well as
prevent potential ethical problems from occurring.
Corporate ethics programs are part of organizational life, and organizations can use such sessions to
further discuss the meaning of values, ethics and morals in the context of their businesses.
Organizational codes of ethics should protect individuals and address the moral values of the firm in the
decision-making processes. Corporate codes of ethics are not merely manuals for how to solve
problems; they are tools that can empower everyone in the organization to say, I am sorry, that is
against our policy or that would violate our companys code of ethics.
Doing so will increase the personal commitment of employees to their companies because people take
pride in the integrity of their corporate culture.









PGP03112
Section B
Business Ethics Assignment II


References
http://greensboring.com/viewtopic.php?f=17&t=7536
http://48days.net/profiles/blogs/selling-morality
http://www.sbnonline.com/2005/04/understanding-ethics-and-morality-in-business-there-are-distinct-
differences-between-ethics-and-morality/
http://en.minghui.org/html/articles/2012/8/18/135001.html
http://en.wikipedia.org/wiki/Ethical_consumerism
http://en.wikipedia.org/wiki/Grameen_Bank
http://www.youtube.com/watch?v=28PrpPVX3Ow
http://www.ethicalclothingaustralia.org.au/home/home
http://www.forbes.com/2011/03/15/most-ethical-companies-leadership-responsibility-ethisphere.html
Richard W. Wilcke, An appropriate ethical model for business, and a critique of Milton Friedman1