BUSINESS ETHICS

Meaning of Business Ethics

Ethics means the set of rules or principles that the organization should follow.
While in business ethics refers to a code of conduct that businesses are expected
to follow while doing business. Through ethics, a standard is set for the
organization to regulate their behavior.
Nature of Business Ethics
The characteristics or features of business ethics are:-
• Code of conduct : Business ethics is a code of conduct. It tells what to do and what not
to do for the welfare of the society. All businessmen must follow this code of conduct.
• Based on moral and social values : Business ethics is based on moral and social values. It
contains moral and social principles (rules) for doing business. This includes self-control,
consumer protection and welfare etc.
• Provides basic framework : Business ethics provide a basic framework for doing business.
It gives the social cultural, economic, legal and other limits of business. Business must be
conducted within these limits.
• Voluntary : Business ethics must be voluntary. The businessmen must accept business
ethics on their own. Business ethics must be like self-discipline.
• Requires education and guidance : Businessmen must be given proper education and
guidance before introducing business ethics. The businessmen must be motivated to use
business ethics. They must be informed about the advantages of using business ethics.
• New concept : Business ethics is a newer concept. It is strictly followed only in developed
countries. It is not followed properly in poor and developing countries.
 ETHOES
“Ethos are the moral ideas and attitudes that belong to a particular group or society”.
Indian ethos refers to the principles of self-management and governance of society, entity or a
system by wisdom as revealed and brought-forth by great scriptures like Veda, Upanishads, Gita,
Mahabharata, Bible and Quran.

APPROACHES OF INDIAN ETHOS

Consequentialist Approach
Consequentialism says that right or wrong depend on the consequences of
an act, and that the more good consequences are produced, the better the
act.
Example: most people would agree that lying is wrong. But if telling a lie would help save
a person's life, consequentialism says it's the right thing to do.

Deontological Approach
is the normative ethical theory that the morality of an action should be based on whether that
action itself is right or wrong under a series of rules, rather than based on the consequences of
the action. It is sometimes describes as duty-, obligation- or rule-based ethics.
Example: an act that is not good morally can lead to something good, such as shooting the intruder
(killing is wrong) to protect your family (protecting them is right

Justice approach
States that an ethical decision is a decision that distributes benefits and harms (costs) among
stakeholders in a fair, equitable, or impartial way.

Emotive approach
He suggests that morals and ethics are just the personal viewpoints and “moral judgements are
meaningless expressions of emotions.” ... This means that if a person feels good about an act, then in
his view, it is a moral act.
Example: Not joining the army at the time of war maybe unethical and unpatriotic from the point of
view of society and the country but the person concerned may consider war as immoral in itself.
TWO THEORIES OF ETHICS
Deontology
The deontological class of ethical theories states that people should adhere to their obligations and
duties when engaged in decision making when ethics are in play. This means that a person will follow
his or her obligations to another individual or society because upholding one’s duty is what is
considered ethically correct. For instance, a deontologist will always keep his promises to a friend and
will follow the law. A person who adheres to deontological theory will produce very consistent
decisions since they will be based on the individual’s set duties.
Virtue
The virtue ethical theory judges a person by his/her character rather than by an action that may
deviate from his/her normal behavior. It takes the person’s morals, reputation, and motivation into
account when rating an unusual and irregular behavior that is considered unethical. For instance, if a
person plagiarized a passage that was later detected by a peer, the peer who knows the person well
will understand the person’s character and will judge the friend accordingly.

ETHICS A MANAGER SHOULD FOLLOW

As a manager, it is considered one of your primary responsibilities to both understand and practice ethical
behavior in order to: meet the company's expectations for conduct, set an example of appropriate
behavior for subordinates, and to minimize the ambiguity that often comes along with the practice of
ethics.
Therefore, it is essential for managers to understand Codes of Conduct, Codes of Ethics, or any other
official set of rules and to attain and keep records of related documentation laying out the expectations
and guidelines for ethical behavior. Managers also have a responsibility to ensure that those who report
to them understand these rules.
An ethical manager is also obligated to set the expectation that any and all ethically unsound practices are
not acceptable. As such, anyone that either conducts or witnesses such an act has a responsibility to
report it through the appropriate channels.
Leaders that consistently apply a company's 'Code of Conduct' or a similar program, along with other
known and documented expectations of behavior, provide a foundation of moral conduct and trust in
their relationships with stakeholders.
As managers, you must also ensure full understanding of your company's expectations for managers in
general, specifically those placed within your assigned role. Ethical ambiguity is not something that a
manager at any level should consider acceptable. If uncertain about a specific policy, procedure, or other
matter, the manager should ask for clarification and attain the appropriate documentation as needed.
12 Ethical Principles for Business Executives
Ethical values, translated into active language establishing standards or rules describing the kind
of behavior an ethical person should and should not engage in, are ethical principles. The
following list
of principles incorporate the characteristics and values that most people associate with ethical
behavior.
1. HONESTY. Ethical executives are honest and truthful in all their dealings and they do not
deliberately mislead or deceive others by misrepresentations, overstatements, partial truths,
selective omissions, or any other means.
2. INTEGRITY. Ethical executives demonstrate personal integrity and the courage of their
convictions by doing what they think is right even when there is great pressure to do otherwise;
they are principled, honorable and upright; they will fight for their beliefs. They will not sacrifice
principle for expediency, be hypocritical, or unscrupulous.
3. PROMISE-KEEPING & TRUSTWORTHINESS. Ethical executives are worthy of trust. They
are candid and forthcoming in supplying relevant information and correcting misapprehensions of
fact, and they make every reasonable effort to fulfill the letter and spirit of their promises and
commitments. They do not interpret agreements in an unreasonably technical or legalistic manner
in order to rationalize non-compliance or create justifications for escaping their commitments.
4. LOYALTY. Ethical executives are worthy of trust, demonstrate fidelity and loyalty to persons
and institutions by friendship in adversity, support and devotion to duty; they do not use or
disclose information learned in confidence for personal advantage. They safeguard the ability to
make independent professional judgments by scrupulously avoiding undue influences and
conflicts of interest.
5. FAIRNESS. Ethical executives and fair and just in all dealings; they do not exercise power
arbitrarily, and do not use overreaching nor indecent means to gain or maintain any advantage
nor take undue advantage of another’s mistakes or difficulties. Fair persons manifest a
commitment to justice, the equal treatment of individuals, tolerance for and acceptance of
diversity, the they are open-minded; they are willing to admit they are wrong and, where
appropriate, change their positions and beliefs.
6. CONCERN FOR OTHERS. Ethical executives are caring, compassionate, benevolent and
kind; they like the Golden Rule, help those in need, and seek to accomplish their business
objectives in a manner that causes the least harm and the greatest positive good.
7. RESPECT FOR OTHERS. Ethical executives demonstrate respect for the human dignity,
autonomy, privacy, rights, and interests of all those who have a stake in their decisions; they are
courteous and treat all people with equal respect and dignity regardless of sex, race or national
origin.
8. LAW ABIDING. Ethical executives abide by laws, rules and regulations relating to their
business activities.
9. COMMITMENT TO EXCELLENCE. Ethical executives pursue excellence in performing their
duties, are well informed and prepared, and constantly endeavor to increase their proficiency in
all areas of responsibility.
10. LEADERSHIP. Ethical executives are conscious of the responsibilities and opportunities of
their position of leadership and seek to be positive ethical role models by their own conduct and
by helping to create an environment in which principled reasoning and ethical decision making
are highly prized.
11. REPUTATION AND MORALE. Ethical executives seek to protect and build the company’s
good reputation and the morale of its employees by engaging in no conduct that might undermine
respect and by taking whatever actions are necessary to correct or prevent inappropriate conduct
of others.
12. ACCOUNTABILITY. Ethical executives acknowledge and accept personal accountability for
the ethical quality of their decisions and omissions to themselves, their colleagues, their
companies, and their communities.

What Is A Whistleblower?
A whistleblower is someone that blows the whistle! No, not the tiny flute instrument. We're
talking about someone that calls out, or reports, someone else's wrongdoing. A whistleblower is a
person working within an organization who reports that organization's misconduct. The person
can be a current or past employee. Also, note that the misconduct can be a past act, can be
ongoing, or can be in the planning stages.
There are two types of whistleblowing. The first is internal whistleblowing. This means that the
whistleblower reports misconduct to another person within the organization. The second type is
external whistleblowing. This means that the whistleblower reports misconduct to a person
outside the organization, such as law enforcement or the media .

INTERNAL AND EXTRENAL WHISTLE BLOWERS

An internal whistleblower is someone who discovers some type of illegal misconduct in a
workplace and decides to communicate their discovery to a supervisor. That supervisor would
then follow protocol in addressing the alleged misconduct within the company.
Alternatively, a whistleblower may choose to alert the authorities or the media of the misconduct.
This would be considered external whistleblowing. There is no law that dictates how a person
who believes there to be misconduct reports that illegal activity.
Any person who chooses to bring suspected misconduct to light is protected by whistleblower
laws. This means that a person may not be retaliated against within the workplace for alerting
anyone to illegal activities within an organization.
For example, Paul has evidence that his co-worker is committing fraud. Paul alerts his direct
supervisor who then follows policies regarding alleged misconduct. Paul would be considered an
internal whistleblower. If, on the other hand, Paul filed a police report, he would be considered
an external whistleblower.
Any person who suspects that a person is conducting illegal activity within an organization has
rights. If you believe that there is illegal activity taking place in your Atlanta company, an attorney
may be able to assist you.

The Three Pillars of Corporate Governance

The three pillars of corporate governance are: transparency, accountability, and security.

Transparency
In simplest terms, transparency means having nothing to hide. For a company, this means it
allows its processes and transactions observable to outsiders. It also makes necessary disclosures,
informs everyone affected about its decisions, and complies with legal requirements.
Transparency is a critical component of corporate governance because it ensures that all of a
company’s actions can be checked at any given time by an outside observer. This makes its
processes and transactions verifiable, so if a question does come up about a step, the company
can provide a clear answer. And after the Enron scandal in 2001, transparency is no longer just an
option, but a legal requirement that a company has to comply with.

Accountability
Accountability, which means answerability or liability. Shareholders are deeply interested in who
will take the blame when something goes wrong in one of a company’s many processes. And even
when everything goes smoothly as expected, knowing that someone will be held accountable for
future mishaps increases shareholders’ confidence, which in turn increases their desire to invest
more. Again, this concern over accountability goes back to the financial scandals in the early
2000s, in which there had been a lot of money stolen, but not enough people to answer for the
crime.When the idea of accountability is approached with this positive outlook, people will be
more open to it as a means to improve their performance. This applies from the staff all the way
up to the corporate board.
Security
A company is expected to make their processes transparent and their people accountable while
keeping their enterprise data secure from unauthorized access. There is simply no compromise for
this. Companies that experience security breaches involving the exposure of their clients’ personal
information quickly lose their credibility. To get back the public’s trust, extensive damage control
is called for — just look at what had to be done after Neiman Marcus and Target suffered from
data leakage Thus, even with accountability and transparency, a company without inadequate
security measures will have a hard time attracting shareholders. After all, any scandal — even a
breach caused by third-party hackers — can have a negative effect on a company’s stock market
performance.

CORPORATE CRIMES
Corporate crime has been considered the time and again to be the greater version to white collar
jobs as it involves crimes performed by the higher class of our society. The concept of corporate
crimes and white collar crimes overlap with each other. One of it is crimes committed by
individuals who are in the decision making the level of corporate sectors against their workers,
society or the environment and the other is crimes done for their own benefit.
TYPES OF WHITE COLLAR CRIME
1. Bank Fraud:
To engage in an act or pattern of activity where the purpose is to defraud a bank of funds.
2. Blackmail:
A demand for money or other consideration under threat to do bodily harm, to injure property, to accuse of a
crime, or to expose secrets.

3. Bribery:
When money, goods, services, information or anything else of value is offered with intent to influence the
actions, opinions, or decisions of the taker. You may be charged with bribery whether you offer the bribe or
accept it.
4. Computer fraud:
Where computer hackers steal information sources contained on computers such as: bank information, credit
cards, and proprietary information.

5. Counterfeiting:
Occurs when someone copies or imitates an item without having been authorized to do so and passes the copy
off for the genuine or original item. Counterfeiting is most often associated with money however can also be
associated with designer clothing, handbags and watches.

6. Credit Card Fraud:

The unauthorized use of a credit card to obtain goods of value.

7. Currency Schemes:
The practice of speculating on the future value of currencies.
 8. Embezz1ement
When a person who has been entrusted with money or property appropriates it for his or her own use and
benefit.

ETHICS IN MARKETING MIX

PRODUCT

Marketing executives face with a lot of ethical problems related to planning and application of product
strategies. For example,
• in new product development process, since ethics and legal subjects are discussed less than it is needed, faulty
products are put on the market and so these products damage consumers. This grows out of seeing product
security as engineering problem in most. Similarly, some product areas such as especially toys for children are
sensitive to the ethical problems . For this reason, ethical way of thinking should come into all levels of
marketing from engineering to customer support
• Other ethical issues related to product decisions, information on labels can sometimes be used as deceptive
although it is technically true, rubbish problem which packing cause after its usage, failing in terms of guarantee
related to product and performing planned product obselence to shorten product life cycle. .

PRICE

Pricing is probably one of the most difficult areas of marketing when it is

analyzed from the ethical point of view. Ethically, price should be equal or
proportional to benefit which is taken by the consumers.

• However, when monopolistic power is had, it is seen that unreasonable price increase is set.
• Other ethical issues related to pricing include non-price price increases, misleading price reduction, price
advertisements which can be misleading or considered as deceitful and their limits are not explained well,

PLACE

Ethical issues related to place grow out of enterprises, which form channel of distribution, have different needs
and goals. At power relationship in the channel, if channel members to put their power which they have into bad
use, this may cause an ethical problem. For example, a powerful manufacturer may force retailer to conduct in
different ways in subjects such as choice of retailer locations, minimum order size, product mix selection,
restriction on alternative supply resources and arrangement of physical condition in retailer’s location.

Other ethical issues result in subjects as retailing decisions, direct marketing, supply and channel management.
• Ethical issues related to retailing decisions eventuate in areas such as buying, product assortment, pricing,
selling, forward buying and slotting allowances.
• Ethical issues in direct marketing are the subjects which are privacy, confidentiality and intrusion
• Ethical problems which are faced while using of internet for marketing are reliability of operations, illegal
activities, privacy, accuracy, pornographic, product guarantees, burglary, aiming at children, spams, deceptive
advertisements.

PROMOTION

Ethical issues related to promotion can be analysed under two headings as

• advertising and
• personal selling.
Advertisements are one of the ways of marketing which is criticised most from an ethical point of view.
Unilateral advertising message, preconceived advertising messages, advertisements breaking programmes are
criticized.

Whether advertisements are ethics or not is determined according to the extent of loss of advertisements to
consumers. Loss can be defined in three ways:
• breach of the autonomy with control or manipulation,
• aggression to privacy, and
• breach of right to know .
Ethical problems in advertising can be analysed under two main headings:
• the content of advertising message and
• agent/customer relationships.

5 LESSONS FROM KAUTALYA ARTHSHASTRA

1. Energetic and Hardworking
You will find most of the leaders do possess qualities like energetic and hardworking. I
believe there is no shortcut to success, so hard work is the only key to growth and
success. Your work and working style will motivate many people working with you. To
become a good leader you need to love the work you do. Because then only you could put
all your efforts developing it, which will give you the result. You must be sincere in all
the efforts you do.
According to Chanakya, “People who work sincerely are the happiest”.
2. Effective Communication
Leaders to communicate properly on all the occasions. If you want to be a great leader,
you need to focus on your communication skills. It becomes essential when you are
managing an organization. An organization should have various communication vehicles
and mediums to reach to their customers. All the management, including the top
authorities, should available for in the communication medium.
Regarding communication, Chanakya in his book, wrote:
“When in the court, he shall never cause his petitioners to wait at the door, for when a
king makes himself inaccessible to his people and entrusts his work to his immediate
officers, he may be sure to engender confusion in business, and to cause thereby public
disaffection, and himself a prey to his enemies.”
3. Fear of Failure & Stress Management
He says, “Once you start a working on something, don’t be afraid of failure and don’t
abandon it.”
A leader possesses the quality of stress management and fair of failure. He or she must be good at
managing the stress in order lead the team. A leader should not have the fear of failure. They keep
them engaged in the work without worrying about the result of their work.
Regarding fear, Chanakya writes “As soon as the fear approaches near, attack and destroy
it”.
Most of the people fail in their venture due to the fear of failure rather than the actual failure. There
are many examples and inspiring stories are there around us, and all those are successful because
they overcame the fear of failure and good at managing stress.
In order to be a successful leader, you need to follow the quality of stress management from the
great leaders.
4. Decision Making
Leaders do possess great qualities, including decision making. It is an important aspect
of business management and the art of the great leaders. They take the decision in favor
of their business and work.
Regarding the decision making, Chanakya writes “All urgent calls he shall hear at once, but
never put off; for when postponed, they will prove too hard or impossible to accomplish”.
You need to take quick decisions related to your business and for this, you need to take the help of
the experts in the field and those are working with you. Any delay in the decision taking could cost
you more and you may not able to accomplish those on time. Good leaders always consider all the
aspects before taking any decision on their strategies and deals. They consult with their experts in
order for decision making.
5. Keeping employees Happy
Chanakya writes “In the happiness of his subjects lies his happiness; in their welfare, his
welfare; whatever pleases himself, he shall not consider as good, but whatever pleases
his subjects he shall consider as good.”
Being a leader you need to think of the people around you, that is your first priority. You need to
work for their happiness. This is an essential quality of successful leaders, those always work for the
welfare of others.