Ethics and business

“There are two educations. One should teach us how to make a

loving and the other how to live” – John T. Adams
1. Nature of business
• Business is as old as civilisation
• Beginning of human existence of their own needs
and wants
• Hunting animals
• Cultivated lands for food and clothing
• People sought their products and services so that
they not spend more time, money and effort.
Manufacturer – Continue supplying the products or services
to people if he had enough funds or goods to barter with.
• As long as people have needs and wants there will always
be business, Capital will continue to produce and sell
goods and services will satisfy the needs and wants of
costumers

Society will not exist without business

• Society examines politics, economics, government,
culture and religion. It’s reason is for the promotion of
common goods and protection of individuals interest.
Business is also a complex enterprise involves
-Purchasing -Manufacturing
-Marketing -Advertising
-Selling -Accounting

Businessmen deals with following:

-Suppliers -Costumers
-Employees -Competitors
2. Importance of ethics in business
• Fundamental idea of what is good and what is bad in our human
conduct
• Without ethics, businessmen will set their own moral standards,
moral rules, and moral principles
• Business people consider their actions good but unacceptable
Example:
- Cheating the customers to gain profit, maybe acceptable t
business men but bad for others.
• Because of trends business corporation evaluate measure and
predict outcomes of business plans and decision in terms of
profitability and quantity of goods sold.

• Business ethics opens a novel way of resolving moral problems and

ethical dilemmas affecting business transaction and interaction in
corporate world
3. The businessman’s myths about
business ethics

According to (De George, 1982) businessmen are not

immoral it would be disastrous to judge and conclude that
business people commit an ethical acts in doing business
MYTH #1 Ethics is a personal affair and not a public
debatable matter.
-Ethics is a private issue and not public matter, it is result of
environmental factors like religion, culture and family values
that have great impact on the development of ethical person.

MYTH #2 Ethics and Business do not meet.

-Business is an autonomous human activity for ethical
standards do not exist and that business men ae free to do
what they want.
MYTH #3 Ethics in Business id Relatives
-Morality depends on the person himself and his
environment. This implies what maybe considered a right
action in one country maybe unacceptable in another
country.

MYTH #4 Good Business means Good Ethics

-A business maybe profitable but the means of acquiring
profits maybe questionable.
Example:
• Drug-trafficking and human smuggling are profitable
business but violate rules and values of people.
MYTH #5 Business s a war
-Market is an arena of gladiators trying to fight for survivable
for the number 1 position.
4. The relationship between ethics
and business
Without morality business will be chaotic human activity.
The concerns of ethics as a philosophical science that there
are unwritten loss. Here are some following arguments.

4.1 Business is an integral part of human society

4.2 What is legal may not be necessarily be moral
4.3 Loss are insufficient, sometimes absent or unclear in
some areas of human conduct
4.4 Technocrat-oriented business education, trend is to train
managers to maximize profits by quantifying business
operations
4.5 Peter Drucker argues that “ The business enterprise is an
organ of society and it’s action have a decisive inpact on the
social sin.
 5. Moral Reasoning in Business
Moral Norms
Ethical
REALITY Moral Standard Moral
Issues/
CHECK Complain Policy Judgement
Problems
Ethical Principle

SITUATION PROBLEM DECISION

RESOLUTION
ANALYSIS ANALYSIS ANALYSIS

Examples: -gravity offense -company rules/policies

Graft -frequency of offense -ethical principles -Moral or Immoral
Sexual Harrasment -harm done -codes of conduct -Legal or Illegal
Theft -number of people -moral norms
Bribery affected
-cost

Figure 1. Framework for Moral Reasoning

Characteristics of a Good moral
Standard (Shaw, 1999)
1. Very Serious
2. Grounded on good moral argument
3. Objective and not subjective
4. When violated, brings about feelings of guilt, shame, and
remorse of conscience
Requirements for a good moral
judgment
1. Must be logical
2. Must be based on facts and solid evidence
3. Must be based on sound and defensible moral principles
6. Morality profit motive
Business Reasons:
1. For personal satisfaction
2. To earn a livelihood
3. Want to serve the society
4. To make a profit

Businessmen consider profit as:

1. Form of anticipated reward
2. Compensation for efforts
3. Skills they apply
4. Returns for the capital they invested
Milton Friedman, a noted economist says
“only responsibility of business is to make profit as so long
one stays with the rules of the game and engage in open and
free competition without deception or fraud”

Peter Drucker, disagree with Friedman

He says that “the primary responsibility of business is to look
for customers and satisfy their needs and wants.”
6.1 The assumption of Profit-Motive:
1. Business is an ethical issue
2. As an ethical issue that operates within the two important aspects,
freedom and structure.
6.2 The good and bad sides of profit-motive:
A. The good side of profit-motive
1. Motivates people to do something meaningful
2. Promotes ingenuity and cleverness
3. Makes people productive
4. Generates potential capital
PROFIT- potential capital that can be invested to established a new
business
B. The bad side of profit-motive
1. Promotes rivalry among competitors
2. People focus only on making money
3. Turns business man from being reflective and questioning person
4. Promotes self-interest rather than the common good

6.3 Ethical considerations of profit-motive in business

1. Earning profit is a good and valid activity in business
2. Making excessive profits is totally wrong
3. Profit is not “be-all and the end-all” of doing business
4. Teaching of catholic church do not totally condemn profit as part of
business activity
7. The concept of moral
responsibility
Reason for this is twofold:
1. Man is a rational being, capable of moral judgement
2. Man is a free being, capacity to exercise his choices
Three meanings of moral responsibility ( William H. Shaw )
1. Refers to holding people morally accountable for some
past action/s
2. Also means care, welfare, or treatment of others as
derived from the social role that one plays in the society
3. Refers to one’s capacity for making moral/rational
decisions on his own
8.Business ethics defined:
8.1 Study of what is right or wrong
8.2 study of perceptions of peoples about morality, moral
norms, moral rules, and ethical principles
8.3 study of evaluation, analysis and questioning of ethical
standards, policies, moral norms, and ethical theories.