BMU 08104: Business Ethics: For BMU 08104-III Semester I

BMU 08104:
BUSINESS ETHICS
For BMU 08104-III

Semester I
1.1 Meaning and Origin
 The word ethic is derived from a Greek word-“ethikos” i.e
custom/routine/acceptable mode of conduct/behaviour.
Basically ethics provide parameter and guidance for
conducting any business activities in acceptable manner.
 Specifically ethics has been termed as the study and
philosophy/way of life of human behaviour/conduct, with an
emphasis on the determination of right and wrong ( Ferrell,
O.C).
 It present a set of principles recommending the behaviour
code that explains what is good and right and probably what
is bad or wrong.
 Relating to what is good or bad, having to do with moral duty
and obligation. (Webster’s New World Dictionary ) (Moral is
defined as relating to principles of right and wrong.)
 After defining ethics, let us now define what is business
ethics.
 Business ethics involve companies/organizations (for profit
ones) acting with an awareness of the need for complying
with rules, such as the laws of the land, the customs and
expectations of the community, the principles of morality, the
policies of the organization, and such general concerns as
the needs of others and fairness.
 It also viewed as methods and policies
regarding servicing customers and clients.
 Business ethics has only existed as an
academic field since the 1970s. During the
1960s, corporations found themselves
increasingly under attack over unethical
conduct. As a response to this, corporations -
most notably in the US - developed social
responsibility programmes which usually
involved charitable donations and funding local
community projects.
 This practice was mostly ad hoc and unorganised varying
from industry to industry and company to company. Business
schools in large universities began to incorporate ‘social
responsibility’ courses into their syllabi around this time but it
was mostly focused on the law and management strategy.
 When philosophers became involved they brought ethical
theory to bear on the relevant ethical issues and business
ethics became a more institutionalised, organised and
integral part of education in business. Thereafter annual
conferences, case books, journals and text books were more
regular and established.
1.2 Theories of Ethics
i. Consequentialism theory -from the word consequences i.e
outcome, effect, results or impacts. This maintains that the
majority of an action depends on the non-moral consequences
that the action brings about. Morality of an action consists of
the ratio of good to evil that the action produces (which one
outperform another?)good must outperform evils. If a
particular action have big/many immoral consequences should
not be performed. We should perform right and only right
action in terms of good and evil, as each individual defines
good and evil, and right and wrong.
ii. Values Clarification (Philosophical Relativism)
Teaches that the most important aspect is not what you
believes, but being aware of one’s own feelings, beliefs, and
values systems.
This theory emphasize that value is a relative term and not a
absolute (universally uniform) term.
What is moral to you may not be moral to another person.
Example of these are transcultural and intracultural relativism-
marry my nephew? Abort?
iii. Utilitarianism (from the word utility, i.e satisfaction) states
that the moral standard should be promotion of the best
longterm interests of everyone concerned. Act Utilitarianism
states that the right utilitarian act is the one that produces the
greatest ratio of good to evil for all concerned. Rule
utilitarianism teaches us that certain actions almost always
have a great utilitarian value and thus general rules are
formulated to help us see that we follow these rules of action.
A few doctors decide that a number of experiments on a few
people, even if most of them died, would be worth it if they
could find a cure for a disease that would relieve the suffering
of millions of people.
• iv. Legalistic Moralism (Moral Absolutism) states that there
are pluralities of absolutes (or norms) with each one covering
an area of human experience. These absolutes never conflict
with each other.
• An action that is evil under one absolute is evil under every
other absolute and could never be seen as good under any
absolute.
• This theory emphasize that most morals are absolute and are
not relative throughout the world.
Think of corruption? are some societies accepting it?
 Why should a person be held responsible for committing a
crime if the crime was a lesser norm? Is it wrong for a man to
steal money to purchase a life-saving machine for his child
who is dying? Perhaps the system is at fault and not the
person.
 Moral absolutism is the ethical view that certain actions are
absolutely right or wrong regardless of other contexts such
as their consequences or the intentions behind them. Graded
absolutism is moral absolutism but clarifies that a moral
absolute, like "Do not kill," can be greater or lesser than
another moral absolute, like "Do not lie"
v. Ethical Realism (as espoused by Reinhold Neibuhr) (the
lesser of two evils) states that when absolute norms come into
conflict (as they will eventually do) one must decide which to
follow. Each solution offers limited alternatives, so the solution
which produces the less of two evils is the one to be chosen.
 Thus there is an excusable and pardonable sin because
people did not cause that dilemma by their own acts. Every
decision will have some sinful consequence of which God will
forgive. Thus people must make the choice that is the lesser
sin and then ask God’s forgiveness.
vi. Cognitive Moral Development (as espoused by Lawrence
Kohlberg) states that ethics education is possible. Just as
people develop mentally, physically, and emotionally, they
develop a moral cognizance.
vii. Ethical Hierarcicalism (Graded Absolutism) is the view
that there are many universal norms, but they are not all
intrinsically equal. Thus when a conflict takes place, we must
obey the “higher” norm…we choose the greater of the two
goods. For example:-
 Persons are more valuable than things
 God is more valuable than an incomplete person
 A complete person is more valuable than an incomplete
person
 An actual person is more valuable than a potential person
 Potential persons are more valuable than actual things (fetus
vs appendage)
 Many persons are more valuable than a few persons
 Personal acts which promote personhood are better than
those which don’t
1.3 Why Business Ethics
 There are at least eight practical reasons why owners and
managers should embrace a business ethics program as part
of its management practice; Enhanced reputation and
goodwill; Reduced risks; Reduced costs; Protection from
unethical employees and agents; Enhanced performance,
productivity, and competitive position; Expanded access to
capital, credit, and foreign investment; Increased profits and
sustained long-term growth; Increased international respect.
Some of these issues are discussed in the preceding
sections
i.Enhanced reputation and goodwill
 A business ethics program contributes to the enterprise’s
reputation for integrity. By giving adequate guidance to
employees and agents, it ensures that they know what is
responsible business conduct. By helping form reasonable
expectations among its stakeholders, it minimizes disputes
with customers and other stakeholders and increases
stakeholder satisfaction.
ii. Reduced risks
 Business ethics program helps organizations develops
processes with which it identifies, assesses, and manages
the full range of factors that might pose a risk to social and
financial performance.
 The processes include assessing risks, establishing
adequate standards and procedures, training, and monitoring
and auditing systems. These processes help owners and
managers plan, organize, and control the day-today
operations of an enterprise to minimize risks to its capital,
earnings, and reputation. They include management of risks
associated with accidental losses, as well as operational
risks such as those arising from financial mismanagement,
fraud and embezzlement, corruption, and loss of reputation.
iii. Reduced costs
 These includes cost of bribery, kickback, and other forms of
illegal or corrupt conduct, full cost including management
effort to allocate time to work with officials, to maintain a
second set of books, and to deal with the threat of extortion
and blackmail. The real cost is the risk to reputation and
pride in the enterprise and the reduced prospects for
participating in a market economy. Business Ethics program
can help today’s organizations avoid such kind of hurting
costs.
iv. Protection from unethical employees and agents
v. Enhanced performance, productivity, and competitive position;
vi.Expanded access to capital, credit, and foreign investment;
vii.Increased profits and sustained long-term growth;
viii.Increased international respect.
1.3 Code of Ethics/conduct
 A code of ethics is a reference tool that provides guidance to
both employees and managers on how to implement and
practice business ethics in the workplace. A code should
embody both business standards (such as customer
satisfaction, a high quality of products, safety, and employee
rights) and values (such as mutual trust, respect, and
honesty). Code of conduct gives guidance on the ethical
standards that are required by different groups in the world
system.
 Code of ethics would cover a multitude of subjects which are
unacceptable such as:
 Conflict of Interest- A conflict arises when an employee,
officer, or director of an enterprise performs an action that will
interfere with that individual’s ability to perform his or her
official duties eg personal gain or gain for friend/relative,
accepting gifts from vendors, Hiring friend/relative as an
employee or contractor.
 Personal Use of Goods, Services and Staff Resources-
Office supplies, cabinets, University equipment/vehicles,
computing resources, using clerks for private businesses.
 Hiring/Staffing Practices- Falsifying hours worked,
timekeeping, misrepresenting work performance on
performance evaluation, not communicating work
performance issues to employee, use of child labour, hiring
relatives.
 Business standards (such as customer satisfaction, a high
quality of products, safety, and employee rights) and values
(such as mutual trust, respect, and honesty).
 Travel- falsifying fares and tickets.
 Tanzania procurement need to follow code of conduct like
those issued by National Board of Auditors and Accountants
(NBAA) and other like by International Financial Reporting
Standards/International Accounting Standards (IFRS/IAS)
and International Standards on Auditing (ISA),NBMM.
1.4 Institutionalizing Ethics
 Managers, especially top managers do have a responsibility
to create an organizational environment that fosters ethical
decision making by institutionalizing ethics. This means
applying and integrating ethical concepts with daily actions in
several ways like:
i. By establishing an appropriate company policy or a code of
ethics,
ii.By using a formally appointed ethics committee, and
iii.By teaching ethics in management development programs.
1.4 Institutionalizing Ethics
 The three ways are suggested to be used altogether because
critics point out that ethics codes alone do little to reduce
unethical conduct.
1.5 Governance
 At the organizational level, governance refers to the
establishment of policies, and continuous monitoring of their
proper implementation, by the members of the governing
body of an organization.
 It includes the mechanisms required to balance the powers of
the members (with the associated accountability), and their
primary duty of enhancing the prosperity and viability of the
organization.
 At the national level governance refers to the exercise of
economic, political and administrative authority to manage a
country’s affairs at all levels.
1.5 Governance
 “It comprises the mechanisms, processes and institutions
through which citizens and groups articulate their interests,
exercise their legal rights, meet their obligations and mediate
their differences”.
2.1 Meaning of CSR
 The entirety/whole meaning of CSR can be recognized from

the three words contained within its title phrase: ‘corporate”,
'social,’ and ‘responsibility.’ Therefore, in broad terms, CSR
covers the responsibilities corporations (or other for-profit
organizations) have to the societies within which they are
based and operate.
 CSR=Corporate/company/business+social/community/public/
+responsibility/duty/task/accountability.
2.1 Meaning of CSR
2.1 Meaning of CSR
 The entirety/whole meaning of CSR can be recognized from

the three words contained within its title phrase: ‘corporate”,
'social,’ and ‘responsibility.’ Therefore, in broad terms, CSR
covers the responsibilities corporations (or other for-profit
organizations) have to the societies within which they are
based and operate.
 CSR=Corporate/company/business+social/community/public/
+responsibility/duty/task/accountability.
2.1 Meaning of CSR
 Corporate and social responsibility is sometimes described
as being a tacit/unstated contract between business and a
community, whereby the community permits the business to
operate within its jurisdiction to obtain jobs for and from the
residents and revenue through taxation. Additionally, the
community expects the business to preserve the environment
and to make the community a better place to live and to work
through charitable activities.
2.1 Meaning of CSR
 More specifically, CSR involves a business identifying its

stakeholder groups and incorporating their needs and values
within the strategic and day-to-day decision-making process.
Stakeholders are the shareholders (owners), customers,
employees, suppliers, governments, community in which the
company does business, banking community and other
lenders, society at large and any other with interest in the
organization.
2.2 Arguments behind CSR
 Arguments offered in favor of CSR can be broadly split into
two camps, moral and economic.
a. Moral Argument
 While recognizing that profits are necessary for any business
entity to exist, all groups in society should strive to add value
and make life better. Businesses rely on the society within
which they operate and could not exist or prosper in isolation.
They need the infrastructure that society is provided and live
with, its source of employees, not to mention its consumer
base.
 CSR it is a recognition on the part of the business that ‘for

profit’ entities do not exist in a vacuum, and that a large part
of any success they enjoy is as much due to the context in
which they operate. It is due to the atmosphere of tranquility
offered by the society, in the absence of which everything
that a company want to do is disrupted.
b. An economic argument for CSR-It is an

argument of economic self interest that there are
very real economic benefits to businesses pursuing
a CSR strategy and is designed to persuade those
business managers who are not persuaded by the
moral case. They believe the actions corporations
take today to incorporate CSR throughout the
organization represent a real point of differentiation
and competitive market advantage on which future
success can hinge.
 In today’s brand-driven markets, CSR is a means of matching

corporate operations with stakeholder values and demands,
at a time when these parameters can change rapidly.
2.3 Origin of CSR
 The derivation of the word company? Two Latin words, cum
and panis, which mean breaking bread together. CSR
emphasize the need for companies to share their profit to a
wide array of stakeholders as mentioned above.
 For the healthy growth of the organization, all stakeholders
groups must be served adequately. Of all the stakeholders, in
the past corporations paid little attention to the communities
in which they operated; today, however, the importance of
service to community, employees, suppliers and to society is
widely acknowledged.
2.3 Origin of CSR
 The community can for example may force a company to
refrain from activities that are detrimental to the environment.
Employees will not care for their customers if they do not
believe their company cares about them. Rising supply costs
may force price increases that will reduce the company
forecasted sales volume and profit at large. As part of
corporate social responsibility, many companies have
adopted the triple bottom line philosophy. This means that
they try to support or “earn positive returns” in the economic,
social, and environmental spheres of sustainability.
2.4 Examples of CSR Issues
 Environmental protection-proper waste

disposal, planting tree.
 Offering employees opportunities for
advancement and self-improvement-
sponsoring different training opportunities,
better salaries etc.
 Provision of employment opportunities to the
communities.
 Solving social problems such as poor health facilities and
education services
 Timely payments of suppliers
 Production of quality goods and services
 Patriotism-this include issues such as voluntary payments of
various taxes to the respective authorities.
 Fair trade-paying fair prices for goods bought by companies
from farmers. For example having a “farm direct” program
that cuts out middlemen to deliver higher prices to farmers.
 Diversity-one sub-area of the issue of ‘diversity’ involves the
equal treatment of men and women. Provision of equal
employment opportunities, leave and rewards. Today some
laws have incorporated paternity leave for men, or in their
jobs ads some companies state that XXX is equal opportunity
employer and women are highly encouraged to apply. This is
CSR.
 Corporate governance-Transparency is the
key to encouraging trust in the managers
selected to run a company on behalf of the
shareholders. It is also vital to maintaining
confidence within other stakeholder groups
and the general public. The issues of
accurate financial statements, executive
compensation, and independent oversight,
have become particularly sensitive and
important for companies to get right.
2.5 Why is CSR Important?
 CSR is an important business strategy

because, wherever possible, consumers
want to buy products from companies they
trust; suppliers want to form business
partnerships with companies they can rely
on; employees want to work for companies
they respect; and NGOs, increasingly, want
to work together with companies seeking
feasible solutions and innovations in areas of
common concern.
 Satisfying each of these stakeholder groups allows
companies to maximize their commitment to another
important stakeholder group-their investors, who benefit most
when the needs of these other stakeholder groups are being
met.
 Three trends make CSR unavoidable practice.
Changing social expectations
 Consumers and society in general expect more from the
companies whose products they buy. This sense has
increased in the light of recent corporate scandals,
 which reduced public trust of corporations, and reduced
public confidence in the ability of regulatory bodies and
organizations to control corporate excess. A society in need
of work and inward investment is likely to enforce strict
regulations and penalize organizations that might take their
business and money elsewhere.
Increasing affluence
 Affluent consumers can afford to pick and choose the
products they want. Companies have nothing to do than
producing right products for these customers.
 Globalization
 The growing influence of the media, to sees any ‘mistakes’ by
companies and brought immediately to the attention of the
public. In addition, the Internet fuels communication among
like-minded groups and consumers-empowering them to
spread their message (twitter, facebook-while giving them the
means to co-ordinate collective action (i.e. a product
boycott). In such an environment, a company behaving
morally is not a choice but a must do action.
2.6 Integrating CSR
 Key steps on the road to integrating CSR within all aspects of
operations include:
1.Ensure the commitment of top management, and particularly
the CEO, is communicated throughout the organization
2.Appoint a CSR position at the strategic decision-making level
to manage the development of policy and its implementation
3.Develop relationships with all stakeholder groups and
interests (particular relevant NGOs)-stakeholders meetings,
seasonal/greetings cards.
2.6 Integrating CSR
4. Incorporate a Social or CSR Audit within the company’s
annual report.
5. Ensure the compensation system within the organization
support the CSR policies that have been created.
6. Any anonymous feedback/whistle-blower process, ideally
overseen by an external ombudsperson, will allow the CSR
Officer to operate more effectively.
3.1 Introduction
3.1 Introduction
 There are various definitions on what
constitute a moral character. Moral character
has been defined as (1) a sense of
obligation/duty toward standard /acceptable
of a social collective/community; (2) a sense
of responsibility for acting out of concern for
others; (3) a concern for the rights of others;
(4) a commitment to honesty in interpersonal
relationships; and (5) a state of mind that
causes negative emotional reactions to
immoral acts.
3.2 Components of Moral Character
There are varying views on these
components. Common are:-
i. Ethical Sensitivity/awareness-individual’s
ability to recognize that a situation contains
a moral issue. Recognizing a moral issue
requires the individual’s awareness that
his/her actions have the potential to harm
and/or benefit other people. Later research
broadens this definition, suggesting that
moral sensitivity is the decision maker’s
recognition that a situation has moral
content and, as a result, a moral
E.g knowing that selling or leasing goods or
services to the organization or institution in
which you are employed or agent is
prohibited while you are in a procurement
office, this is moral awareness.
Knowing that 1,2,3 and 4 are things which are
not acceptable at my office or community.
ii. Ethical Judgment
• The consideration of possible alternative
actions and the rationale for selecting one or
more as best; formulating and evaluating
which possible solutions to the moral issue
have moral justification.
• This step in the process requires reasoning
through the possible choices and potential
consequences to determine which are
ethically sound.
 For example weighing these alternatives
when the company is in need of computer.
a.Supply computer to the company via my own
unknown company.
b.Supply computer to the company via my
friend’s company.
c.Supplying computer via open tendering
procedure.
iii. Ethical Motivation/intention-the selection
of moral values most relevant in the situation
and the commitment to act on that selection;
also refers to the intention to choose the
moral decision over another solution
representing a different value. This
component of the ethical decision- making
process involves committing to choose the
moral value. For example, an individual may
recognize two solutions to a dilemma, one
that results in an increase of personal
power/prosperity and one that is morally right.
 In this instance, moral motivation is the
individual’s intention to choose the value of
morality over the value of power.
 For example deciding not to sell or lease
goods or services to the organization or
institution in which you are employed or
agent because you aware that it is not
allowed indicates moral motivation.
iv. Ethical Action-or moral courage refers to
an individual’s behavior. This component is
the individual’s action in the situation. This
step involves courage, determination, and the
ability to follow through with the moral
decision.
 These are also termed as the elements of
ethical decision making process which will be

discussed in the detail later.
3.2 Honesty and Integrity as elements
of Moral Character
i. Honesty refers to a aspect of moral character
and connotes positive and honorable attributes
such as integrity, truthfulness, and
straightforwardness, including
straightforwardness of conduct, along with the
absence of lying, cheating, theft, etc.
Furthermore, honesty means being
dependable, fair, and sincere. Honesty is
valued in many ethnic and religious cultures.
"Honesty is the best policy" is a proverb of
Benjamin Franklin; "Honesty is the first chapter
in the book of wisdom" .
of Moral Character
How to be honesty
i. Figure out why you lie and who you lie to. We've all
lied at one time or another, to different people, to
ourselves, and for different reasons. But coming up with a
systematic plan for becoming more honest will be difficult
unless you try to define those reasons and those people
for yourself.
ii. Anticipate behaviors that will make you feel guilty. To
break the chain of embarrassment and lying, it's
important to learn to anticipate things that you'll likely feel
guilty about in the future, and avoid those behaviors.
When you lie, you're covering up some uncomfortable
truth that's more easily couched in a lie.
of Moral Character
 You can either get comfortable with the truth, or
abandon the behavior that makes you
embarrassed.
iii. Stop comparing yourself to others.
Sometimes we lie to make ourselves seem
bigger and better than we really are. Because
we're constantly competing and comparing
ourselves to others, any inadequacies can be
most-easily overcome with a quick and creative
lie. If you stop feeling competitive with others and
give yourself the value you deserve, you won't
feel the need to lie to bring yourself up, because
you're already up!
of Moral Character
iv. Accept the consequence and decide to face
them. Be ready for anything bad which may
happen because you did not lie. These may
just be temporary consequences but in the
long run you will prosper. Even if there will be
some consequences at the end of the
admission, it'll be the honest consequences
that you deserve.
v. Do things that make you feel pride. You don't
have to lie if you feel good about yourself! Do
things that give you pleasure and that make
of Moral Character
 Getting super-drunk every night might make
you feel good for a couple hours, giving you
pleasure, but the ice-pick in your brain the next
morning at work will have you feeling
embarrassed and guilty when you can't make it
into work. Take care of yourself, mentally and
physically. Don't do things you're embarrassed
to do.
of Moral Character
v. Avoid situations in which you'll have to lie
for others. Be wary when someone tells you
something in confidence that you know that you
should share with someone else (e.g.,
knowledge of a crime, a lie, or a harmful act
against another). Hearing such information puts
you in a difficult position, especially when the
truth eventually emerges and reveals to the
affected person that you knew all along.
of Moral Character
 If someone begins a sentence with "Don't tell
so-and-so about this, okay?" be prepared to
offer your own disclaimer: "If it's something that
I'd want to know about were I them, then please
don't tell me. I don't want to be responsible for
anyone's secrets but my own."
of Moral Character
ii. Integrity- Integrity refers to the quality of having
or observing strong moral principles.
 It involves putting your values/ethics into
action; doing the right thing when no one else
is looking without personal gain or benefit; and
accepting a potential personal cost.
 Integrity stretches to all aspects of an
employee's job. An employee with integrity
fosters trusting relationships with clients,
coworkers and supervisors.
of Moral Character
• Coworkers value the employee's ability to give
honest feedback.
• Clients trust the employee's advice.
• Supervisors rely on the employee's high moral
standards, trusting him not to steal from the
company or create problems.
of Moral Character
of Moral Character
 Integrity Pacts- One means of ensuring more transparency
in government procurement and contracting is called an
integrity pact, a concept developed by the NGO
Transparency International in the mid-1990s. In the context of
government procurement, an integrity pact is a formal pact or
agreement between a government office inviting tenders and
the enterprises intending to participate.
 By signing such an agreement, an enterprise commits itself
to participate in the tendering process in a legal and
transparent way.
of Moral Character
 In particular, it pledges not to offer, pay, accept, or seek
bribes of any kind during the tender. The government office,
in turn, commits that its officials will not demand or accept
any bribes. The key component of an integrity pact is
transparency. All offers and payments made by an enterprise
should be reported to members of the pact. The pact has
preapproved sanctions for violations. Sanctions include
denial or loss of the contract, forfeiture of bid security, liability
for damages, or blacklisting by the government office.
of Moral Character
 Use of the integrity pact is slowly developing on a global
basis, hindered by the expertise and funds needed to
encourage governments and enterprises to enter into the
agreement. Transparency International has facilitated
integrity pacts in Argentina, Benin, Colombia, and Panama.
3.3 Moral Character Dev. Process
 Moral development is the process through
which children/individuals develop proper
attitudes and behaviors toward other people
in society, based on social and cultural
norms, rules, and laws.
Factors in the moral development and behavior
Heredity/inheritance
Early childhood experience
Modeling by important adults and older youth
Peer influence-how are they behaving?
The general physical and social environment-
what is the culture of people around you?
The communications media-what are they
saying? Is there any laws to control the
contents?
What is taught in the schools and other
institutions
Specific situations and roles that elicit
corresponding behavior
Approaches in Moral Development Process
 First, we can ignore it completely which
assumes the issue is outside the bounds of
proper curriculum. The interest by
professional organizations and the public
suggests that this view is inappropriate.
 Second, we can take a "values neutral"
stance and provide opportunities for students
to clarify and defend their own values without
making recommendations or advocating a
particular viewpoint.
 This is the position taken by the advocates of
the values clarification movement and
assumes that in important ways no values or
character traits are more valid than others.
 A third approach is to teach students a
specific process to follow when making
decisions and putting these into action.
This is the approach of the analysis view
used in values education and assumes
moral and character decisions are made
rationally.
 Another (fourth) cognitively-oriented
approach is to engage students in
discussions of relevant moral issues with the
expectation that students who hear their
peers discuss the issue from a higher level
will gravitate to that position.
 A fifth approach is to teach students a given
set of values and accompanying appropriate
actions. This is the position taken by the
inculcation approach to values clarification.
 This approach assumes a set of absolute
values agreed upon by society that are
unchanging and that be applied equally
appropriately in all situations.
 A final approach is to use the inculcation, values
education, analysis, and moral development
approaches described above.
 This combination of approaches is much more
likely to impact the two important aspects of
character not included in values education-
volition/desire and action.
 There are various views on moral
development process. Among the famous
view is that given by Kohlberg's stages of
moral development. The theory which
holds that moral reasoning, the basis for
ethical behavior, has six identifiable
developmental stages, each more adequate
at responding to moral dilemmas than its
predecessor. The six stages of moral
development are grouped into three levels:
pre-conventional morality, conventional
morality, and post-conventional morality,
Level I: Pre-conventional Morality
 Orientation: Behavior is motivated by anticipation of pleasure
or pain.
Stage 1: Punishment and Obedience Orientation
 What could be called a "pre moral" stage, what an agent will
do is determined by calculating the immediate physical
consequences that might result not the moral value of an
action. By deferring to power, the agent's overarching goal is
to avoid physical punishment. Thus, at stage one, obedience
not moral sentiments/opinions or hesitation characterizes
decision making.
Stage 2: Instrumental Exchange (Personal
Reward/Punishment) Orientation
 An individual does what is necessary and makes
concessions to superiors but only as required to satisfy one’s
self-interest. Thus, right conduct consists of that which
instrumentally satisfies one’s self-interest which, in turn,
equate moral decision making to a marketplace where a
moral agent seeks to maximize personal rewards and
minimize punishments. At this stage, an agent is not worried
so much about obedience to one's superiors but more so
how to accrue rewards from one's superiors.
 Perhaps the rationale, once again a pre-moral rationale, is
best stated by the saying “If you scratch my back, I’ll scratch
yours" and justice is “Do unto others as they do unto you”. At
stage two, a moral agent values people solely in terms of
their utility and revenge is viewed as a moral duty.
Level ii: Conventional Morality
Orientation: Behavior motivated by the acceptance of the rules
and standards of one’s group.
Stage 3: Interpersonal Conformity Orientation
 A moral agent acts not from any personal moral sensibility
but in order to gain approval from what is valued by others
because what is “good” and “right” is defined as conformity
with the behavioral expectations of one’s society or peer
group. The moral worth of conduct is irrelevant. What
counts, morally speaking, is that one's conduct gratify or help
others or simply that “Everybody is doing it because the
moral agent's goal is to earn approval from these others. A
“sin” or "bad" conduct is a breach of the conventional
expectations of the social order.
 Retribution at this stage is collective for example, the group
will avoid an individual and punishment is intended to deter
other members of the group from engaging in similar
conduct.
Stage 4: Law and Order Orientation
 Morality involves respecting rules, laws, and duly-constituted
authority as well as defending the given social and
institutional order for its own sake. A moral agent's
responsibility is directed toward the welfare of others by
upholding the status quo.
 At stage four, justice normally refers to criminal or forensic
justice, with the demand that wrongdoers be punished by
paying a debt to society, what is called "retributive
justice." Furthermore, law abiders must be rewarded
because of the strict requirements of justice. Injustice, then,
is the failure for one’s merits to be rewarded or for others
demerits to be punished
Level iii: Post-conventional or Principled Morality
Orientation: Universal moral principles
Stage 5: Prior Rights and Social Contract Orientation
 Moral agents act out of a sense of mutual obligation and the
public good and right conduct tends to be defined in terms of
general individual rights and in terms of standards critically
examined and agreed upon by the whole society. Moral
conduct in a specific situation is not defined by referencing a
checklist of rules, policies, or contractual obligations but is
dependent upon logical application of universal/common,
abstract, moral principles to the concrete
exigencies/demands of the situation at hand.
 I can not steal because the law prohibit this but because I
feel bad for the person am stealing from.
 I can not sleep with my sister because my society say it is
immoral.
 I can not employ a 12 years girl because it is contrary to the
law but because it contrary to the rights of this child.
Stage 6: Universal Moral Principles Orientation
An individual who reaches this stage acts out of
universal principles based upon the equality and intrinsic
worth of all human beings. This is the “Golden Rule”
model of moral decision making. A list of rules inscribed
in stone is no longer necessary because the individual is
motivated by universal moral principles.
I can not steal because the law prohibit this but
because no culture in the world encourage stealing.
I can not sleep with my sister because my society say it
is immoral, because most parts of the world discourage
it.
I can not employ a 12 years girl because it is contrary to
the law but because it contrary to universal rights of
3.3 Moral Character Dev.
Process
4.1 Meaning of Corporate
Governance
Governance
 Corporate governance refers to the system/framework
that a corporation establishes to structure relations
among managers, directors, and shareholders and
between the enterprise and civil society.
 The term “corporate governance” has been also used
broadly to refer to the direction and control of
companies from the viewpoint of the responsibilities of
the board of directors (World Bank, 1999).
 Such governance measures are necessary when
government charters provide limited liability to
shareholders, which separates ownership of the
enterprise from responsibility for day-to-day operations.
Where there is such separation of ownership and
management without accountability, there is little
incentive for managers to make decisions to the benefit
of shareholders who have no voice.
Governance
 Managers are, in such cases, able to use the assets of the
enterprise to their own purposes. Corporate governance
practices are built on the ethical premise that the leaders of
an enterprise have an obligation to be fair, transparent,
accountable, and responsible in their conduct toward
shareholders and civil society.
 Corporate governance can also be described as the way a
company manages itself in order to ensure fair and equitable
returns to all shareholders and other financial stakeholders. It
may also refer to the rules and incentives by which
shareholders control and influence a company’s
management so as to maximize profits and the value of the
corporation.
Governance
CG strive to answer the following questions
i.Who can rightfully claim the power to govern an enterprise?
ii. How can the board of directors and management best protect
the rights of shareholders, especially minority shareholders?
iii.How can the board of directors best guide management to
meet the reasonable expectations of shareholders?
iv.What code of ethics must be followed by the management?
4.2 Principles of Corporate
Governance
1. Fairness, referring to the equitable treatment of all
shareholders;
2. Transparency, i.e., the process of disclosing information on a
company’s performance and important information to
shareholders, the board of directors, workers, government,
suppliers, consumers, and the general public.
3. Accountability based on a system of checks and
balances(condemn bad acts and poor performance
internally) and sound auditing practices;
4. Responsibility for decisions and actions through clearly
defined roles and duties for owners, shareholders, directors
and managers
5. Respect for the rights of minority shareholders;
4.3 Preconditions for effective CG
i. The corporate values, codes of conduct and other standards
of appropriate behaviour and the system used to ensure
compliance with them;
ii. A well-articulated corporate strategy against which the
success of the overall enterprise and the contribution of
individuals can be measured;
iii. The clear assignment of responsibilities and decision-
making authorities, incorporating a hierarchy of required
approvals from individuals to the board of directors;
iv. Strong internal control systems, including internal and
external audit functions, risk management functions
independent of business lines, and other checks and
balances;
v. Special monitoring of risk exposures where conflicts of interest
are likely to be particularly great, including business
relationships with borrowers affiliated with the bank, large
shareholders, senior management, or key decision-makers
within the firm (e.g. traders);
vi. The financial and managerial incentives, to act in an
appropriate manner offered to senior management, business
line management and employees in the form of compensation,
promotion and other recognition;
vii. Appropriate information (about compliance and standards)
flows internally and to the public, and
viii. A well-functioning board of directors who have the skills, the
time, and the access to information needed to discharge its
responsibilities effectively.
ix. Establishment of a mechanism for the interaction and
cooperation among the board of directors, senior management
and the auditors;
4.4 Principles of CG-Disclosure
Though there are many principles of CG, let us talk about one
principle of Information Disclosure. Where is the information to
be disclosed ?
i.The Stockholders
ii.The board of directors
iii.The Government
iv.The Workers
v.Suppliers
vi.Consumer
vii.The General Public
As said earlier a company has moral obligation of disclosing
various information to different stakeholders including:-
The Stockholders-information on the management of the
corporation, its financial position (net sales of the company, net
earnings, return on shareholder’s equity, earnings per share,
dividends, working capital, and the assets and liabilities of the
corporation), and its general plans in the future. Such information
can be offered through annual reports in corporation’s meeting.
The board of directors-these are the legal representatives of
the shareholders, so they owe the
Shareholders appropriate information, as well as honest service
in their interests. Yet board members need not make public
everything they learn. Board of directors they have right to
independent access to the information they desire.
Government-to know that the corporations are complying with
the law.
Workers-conditions of workers, their rights, benefits and
obligations, policy of the corporation in areas in which they have
moral concerns. If they do not wish to work for a company that
practice discrimination, they should be able to find out whether
their company engage in such practices.
 Suppliers-the corporation from moral point of view, should
disclose to its suppliers whatever is necessary to make the
contracts between them fair. This is also emphasized in the
Public Procurement Regulation, section 10 which emphasize
Transparency and Fairness to tenderers.
 Consumers-consumers should be informed of any danger
posed by the use of the product they purchase. If a product is
caustic, they should be so informed. If it is poisonous, they
should be warned. If it is defective, they should be notified in
some ways before it is purchased. They should know the
contents of foods or drugs, and what kind of material a product
is made of.
 General Public-the term general public includes more than
simply a corporation’s customers or potential customers. A
public is any group that has an actual or potential interest in
or impact on a company’s ability to achieve its objectives.
Public outside the organization need to be informed on
issues concerning environment impact, pollution, and the
possible dangers of the operation to the surrounding
population. Whether it is a new factory, a nuclear-powered
plants, farming activities, the public must be informed on any
immediate and remote dangers.
 Disclosure should include, but not be limited to, material
information on:
The financial and operating results of the company.
 Audited financial statements showing the financial
performance and the financial situation of the company (most
typically including the balance sheet, the profit and loss
statement, the cash flow statement and notes to the financial
statements) are the most widely used source of information
on companies.
 Company objectives.
 In addition to their commercial objectives, companies are
encouraged to disclose policies relating to business ethics,
the environment and other public policy commitments. Such
information may be important for investors and other users of
information to better evaluate the relationship between
companies and the communities in which they operate and
the steps that companies have taken to implement their
objectives.
 Major share ownership and voting rights.
 One of the basic rights of investors is to be informed about
the ownership structure of the enterprise and their rights vis-
à-vis the rights of other owners. Countries often require
disclosure of ownership data once certain thresholds of
ownership are passed. Such disclosure might include data on
major shareholders and others that control or may control the
company, including information on special voting rights,
shareholder agreements, the ownership of controlling or
large blocks of shares, significant cross shareholding
relationships and cross guarantees.
 Companies are also expected to provide information on
related party transactions.
 Members of the board and key executives, and their
remuneration.
 Investors require information on individual board members
and key executives in order to evaluate their experience and
qualifications and assess any potential conflicts of interest
that might affect their judgement.
 Board and executive remuneration are also of concern to
shareholders. Companies are generally expected to disclose
sufficient information on the remuneration of board members
and key executives (either individually or in the aggregate)
for investors to properly assess the costs and benefits of
remuneration plans and the contribution of incentive
schemes, such as stock option schemes, to performance.
 Material foreseeable risk factors.
 Users of financial information and market participants need
information on reasonably foreseeable material risks that
may include: risks that are specific to the industry or
geographical areas; dependence on commodities; financial
market risk including interest rate or currency risk; risk
related to derivatives and off-balance sheet transactions; and
risks related to environmental liabilities.
 Material issues regarding employees and other
stakeholders.
 Companies are encouraged to provide information on key
issues relevant to employees and other stakeholders that
may materially affect the performance of the company.
Disclosure may include management/employee relations,
and relations with other stakeholders such as creditors,
suppliers, and local communities.
 Some countries require extensive disclosure of information
on human resources. Human resource policies, such as
programmes for human resource development or employee
share ownership plans, can communicate important
information on the competitive strengths of companies to
market participants.
 Governance Structures and Policies
 Companies are encouraged to report on how they apply
relevant corporate governance principles in practice.
Disclosure of the governance structures and policies of the
company, in particular the division of authority between
shareholders, management and board members is important
for the assessment of a company’s governance.
5.2 Introduction to HRM
5.2 Introduction to HR
 Human Resource Management is a business function that is
concerned with managing relations between groups of
people in their capacity as employees, employers and
managers. ‘Human resource management' occupies the
sphere of activity of recruitment selection, orientation,
performance appraisal, training and development, industrial
relations and health and safety issues where ethics really
matters.
5.2 Types of Moral Theories in
HR
 Three basic types of moral theories/principles in the
field of normative ethics have been developed.
 Firstly, the Utilitarian theory which suggests that plans
and actions should be evaluated by their consequences.
The underlying idea is that plans or actions should
produce the greatest good for the greatest number of
people.
 Secondly, Individual Rights theory, the theory based on
rights which holds that all people have basic rights.
Examples are rights to freedom of conscience (sense of
rights or wrong), and due process -fair trial, (fair
treatment before the law), freedom of movement,
physical security, freedom of speech/expressions, and
freedom from torture.
HR
 The individual rights principle includes more than legal rights;
it also includes human rights that everyone is granted as a
moral norm of society. For example, access to education and
knowledge isn’t a legal requirement everywhere, but most of
us believe that it is a human right. One problem with
individual rights is that certain individual rights may conflict
with others. The shareholders’ right to be informed about
corporate activities may ultimately conflict with an executive’s
right to privacy, for example.
HR
 Thirdly the theory of justice which demand that decision
makers be guided by fairness and equity, as well as
impartiality., known as “Distributive justice” . This
principle suggests that people who are similar in
relevant ways should receive similar benefits and
burdens; those who are dissimilar should receive
different benefits and burdens in proportion to their
dissimilarity. For example, we expect that two
employees who contribute equally in their work should
receive similar rewards, whereas those who make a
lesser contribution should receive less. A variation of the
distributive justice principle says that inequalities are
acceptable where they benefit the least well off in
society.
HR
 Thus employees in risky jobs should be paid more if this
benefits others who are less well off. One problem with the
distributive justice principle is that it is difficult to agree on
who is “similar” and what factors are “relevant.” Most of us
agree that race and gender should not be relevant when
paychecks are distributed. But should rewards be determined
purely by an employee’s performance? Or should effort,
seniority, and other factors also be taken into account?
5.3 Responding To Ethical
Situations
 To respond to situations with ethical elements, the
following guides are suggested for thought:
i. Does the behavior or result achieved comply with all
applicable laws, regulations, and government codes?
ii.Does the behavior or result achieved comply with all
organizational standards of ethical behavior?
iii.Does the behavior or result achieved comply with professional
standards of ethical behavior?
5.3 Responding To Ethical
Situations
 What the preceding three points make clear is that just
complying with the laws does not guarantee ethical behavior.
Laws and regulations cannot cover every situation that HR
professionals and employees will face. Instead, people must
be guided by values and personal behavior “codes,” but
employers have a role to play through HR management.
5.3 Unethical Practices in HRM
 Unethical issues that may arise in the employment
relationship, includes:-
 Issues affecting the privacy of the employee: workplace
surveillance through the use of psychometric tests to
electronic surveillance of work patterns through the
application of ICT, drug testing;
 Issues relating to the fairness of the employment contract
and the balance of power between employer and employee:
slavery, indentured servitude, employment law;
 Lack of occupational safety and health;
 All issues related to the hiring and firing of employees. An
employee or future employee can not be hired or fired based
on race, age, gender, religion, or any other discriminatory act;
 Off-shoring and exploiting ‘cheap’ labour markets;
 Using child labour;
 Reneging on company pension agreements;
 Longer working hours;
 Increasing work stress;
 Increased job insecurity
 Employee drug or alcohol abuse,
 Falsification of records
5.4 Ethical Practices in HRM
 HR professionals are responsible for adding value to the
organisations they serve and contributing to the ethical
success of those organisations. Accept professional
responsibility for individual decisions and actions, also
advocates for the profession by engaging in activities that
enhance its credibility and value.
 As professionals must strive to meet the highest
standards of competence and commit to strengthen
their competencies on a continuous basis,
 HR professionals are expected to exhibit individual
leadership as a role model for maintaining the highest
standards of ethical conduct,
 Human resource professionals are ethically responsible
for promoting and fostering fairness and justice for all
employees and their organisations,
 HR professional must maintain a high level of trust with
their stakeholders. They must protect the interests of
their stakeholders as well as their professional integrity
and should not engage in activities that create actual,
apparent or potential conflicts of interests,
 HR professionals must consider and protect the rights of
individuals, especially in the acquisition and
dissemination of information while ensuring truthful
communications and facilitating informed decision
making.
 Instill in the employees and the public a sense of confidence
about the conduct and intentions of my employer.
 Maintain loyalty to my employer and pursue its objectives in
ways that are consistent with the public interest.
 Uphold all laws and regulations relating to my employer’s
activities.
 Improve public understanding of the role of human resource
management.
5.2 Dimensions in HR Ethics
 Managers are facing many situations that require ethical
judgements, and often there are no easy answers. Ethical
issues in management, including HR issues, often have five
dimensions:
i. Extended consequences: Ethical decisions have
consequences beyond the decisions themselves. Closing a
plant and moving it to another location to avoid unionization of
a workforce has an impact on the affected workers, their
families, the community, and other businesses.
ii. Multiple alternatives: Various alternatives exist in most
decision-making situations, so the issue may involve how
far to “bend” rules. For example, deciding how much
flexibility to offer employees with family problems, while
denying other employees similar flexibility, may require
considering various alternatives.
iii. Mixed outcomes: Decisions with ethical dimensions
often involve weighing some beneficial outcomes against
some negative ones. For example, preserving the jobs of
some workers in a plant might require eliminating the
jobs of others. For example introduction of a new
machine to be operated by one person instead of
several. The result would be a mix of negative and
positive outcomes for the organization and the affected
employees.
iv. Uncertain consequences: The consequences of
decisions with ethical dimensions often are not known.
Should employees’ personal lifestyles or family situations
eliminate them from promotion even though they clearly
are the most qualified candidates?
v. Personal effects: Ethical decisions often affect the
personal lives of employees, their families, and others.
Allowing foreign customers to dictate that they will not
have a female or minority sales representative call on
them may help with the business relationship short term,
but what are the effects on the employees denied career
opportunities?
iv. Uncertain consequences: The consequences of
decisions with ethical dimensions often are not known.
Should employees’ personal lifestyles or family situations
eliminate them from promotion even though they clearly
are the most qualified candidates?
v. Personal effects: Ethical decisions often affect the
personal lives of employees, their families, and others.
Allowing foreign customers to dictate that they will not
have a female or minority sales representative call on
them may help with the business relationship short term,
but what are the effects on the employees denied career
opportunities?
6.1 Introduction
6.1 Introduction
 Marketing ethics is viewed as important because of
marketing’s interface with many diverse stakeholders.
Marketing is a key functional area in the business
organization that provides a visible interface with not only
customers, but other stakeholders such as the media,
investors, regulatory agencies, channel members, trade
associations, as well as others. It is important when
addressing marketing ethics to recognize that it should be
examined from an individual, organizational, and societal
perspective.
6.1 Introduction
 Examining marketing ethics from a narrow issue perspective
does not provide foundational background that provides a
complete understanding of the domain of marketing ethics.
 Written regulations cannot possibly cover all potential
marketing abuses, and existing laws are often difficult to
enforce. However, beyond written laws and regulations,
business is also governed by social codes and rules of
professional ethics. Enlightened companies encourage their
managers to look beyond what the regulatory system allows
and simply to ‘do the right thing’.
6.1 Introduction
 These socially responsible firms actively seek out ways to
protect the long-run interests of their consumers and the
environment.
 The recent rash of business scandals and increased
concerns about the environment have created fresh interest
in the issues of ethics and social responsibility. Almost every
aspect of marketing involves such issues.
6.1 Introduction
 By definition marketing ethics is defined as marketers’
standards of conduct and moral values. Ethics concern
matters of right and wrong: the responsibility of individuals
and firms to do what is morally right.
 For marketers, ethics in the workplace refers to rules
(standards, principles) governing the conduct of
organizational members and the consequences of marketing
decisions (Ferrell, 2005).
6.1 Introduction
 From a normative perspective approach is defined as
“practices that emphasize transparent, trustworthy, and
responsible personal and organizational marketing policies
and actions that exhibit integrity as well as fairness to
consumers and other stakeholders. Marketing ethics focuses
on principles and standards that define acceptable marketing
conduct, as determined by various stakeholders and the
organization responsible for marketing activities.
6.2 Ethical Issues in
Marketing
Marketing
i. Ethics in Product Strategy
 Product quality, planned obsolescence, brand similarity, and
packaging all raise ethical issues.
 Feeling the competition, some marketers have tried
packaging practices that might be considered misleading,
deceptive, or unethical. Larger packages take up more shelf
space, and consumers notice them. An odd-sized package
makes price comparisons difficult. Bottles with concave
bottoms give the impression that they contain more liquid
than they actually do.
Marketing
 Are these packaging practices justified in the name of
competition, or are they deceptive? Growing regulatory
mandates appear to be narrowing the range of discretion in
this area.
 How do you evaluate the quality of a product like a soft
drink? By flavor or by ingredients? Citing several studies,
some consumer advocates say that the ingredients in soda-
mainly the high sugar content-can be linked to obesity in
consumers, particularly children. Not surprisingly, the
beverage industry disagrees, arguing that lack of exercise
and a poor diet in general are greater contributors to weight
gain than regular consumption of soda.
Marketing
 Another criticism is that products lack the quality they should
have. One complaint is that products are not made well and
services not performed well. A second complaint is that some
products deliver little benefit. For example, some consumers
are surprised to learn that many of the ‘healthy’ foods being
marketed today, such as cholesterol-free salad dressings,
low-fat frozen dinners and high-fibre bran cereals, may have
little nutritional value. A third complaint concerns product
safety. Product safety has been a problem for several
reasons, including manufacturer indifference, increased
production complexity, poorly trained labour and poor quality
control.
Marketing
 Planned obsolescence-critics have charged that some
producers follow a programme of planned obsolescence,
causing their products to become obsolete before they need
replacement. For example, some critics charge that some
producers continually change consumer concepts of
acceptable styles in order to encourage more and earlier
buying. An obvious example is constantly changing mobile
phone versions. Other producers are accused of holding
back attractive functional features, then introducing them
later to make older models obsolete. Critics claim that this
practice is frequently found in the consumer electronics and
computer industry.
Marketing
 Poor service to disadvantaged consumers-marketing has
also been accused of poorly serving disadvantaged
consumers. Critics claim that the urban poor often have to
shop in smaller stores that carry inferior goods and charge
higher prices. Marketing’s eye on profits also means that
disadvantaged consumers are not viable segments to target.
The high-income consumer is the preferred target.
Marketing
ii. Ethics In Distribution
 Two ethical issues influence a firm’s decisions regarding
distribution strategy:
1. What is the appropriate degree of control over the
distribution channel?
2. Should a company distribute its products in marginally
profitable outlets that have no alternative source of supply?
 The question of channel control typically arises in
relationships between manufacturers and franchise dealers.
Marketing
 For example, should an automobile dealership, a gas station,
or a fast-food outlet be forced to purchase parts, materials,
and supplementary services from the parent organization?
The second question concerns marketers’ responsibility to
serve unsatisfied market segments even if the profit potential
is slight. Should marketers serve retail stores in low-income
areas, serve users of limited amounts of the firm’s product, or
serve a declining rural market? These problems are difficult
to resolve because they often involve individuals rather than
broad segments of the general public. An important first step
is to ensure that the firm consistently enforces its channel
policies.
Marketing
 Deceptive packaging includes exaggerating package
contents through subtle design, not filling the package to the
top, using misleading labelling, or describing size in
misleading terms.
Marketing
iii. Ethics in Promotion
 Promotion raises many ethical questions, because it is the
most direct link between a firm and its customers. Personal
selling has always been a target of criticism-and jokes about
untrustworthiness. Salespeople are sometimes accused of
high-pressure selling that persuades people to buy goods
they had no thought of buying. It is often said that cars,
insurance, property and home improvement plans are sold,
not bought. Salespeople are trained to deliver smooth,
canned talks to entice purchase. They sell hard because
commissions and sales contests promise big prizes to those
who sell the most.
Marketing
 Marketers know that buyers can often be talked into
buying unwanted or unneeded things.
 A key question is whether industry self-regulatory or
trading standards bodies, consumer protection laws
and consumer-interest groups are sufficiently effective
in checking and curbing unsavory sales practices. In
this modern era, it is encouraging to note that one or
more of these can work to the advantage of
consumers. Or, where deceptive practices are carried
out, regulators will catch out wrongdoers, who will
invariably pay the penalties for irresponsible
marketing. In most cases, marketers have little to gain
from high-pressure selling. Such tactics may work in
one-time selling situations for short-term gain.
Marketing
 Marketing to children has been under close scrutiny
for many years because children have not yet
developed the skills to receive marketing messages
critically. They simply believe everything they see and
hear. For example, snack foods, candy, soda, and
other junk foods are for sale in abundant quantities in
many parts throughout the country, where children are
a captive audience. The ethical question here is
whether such activities are tailored to them. Some
companies are taking a stance against promoting
certain products to children for example plans to cut
back advertising on fatty and sugary foods to children,
adding new logos to its food and drinks that highlight
its more nutritional offerings.
Marketing
 Modern marketing is also accused of pushing up prices
because of heavy advertising and sales promotion.
Differentiated products-cosmetics, detergents, toiletries-
include promotion and packaging costs that can amount
to 40 per cent or more of the manufacturer’s price to the
retailer. Critics charge that much of the packaging and
promotion adds only psychological value to the product
rather than real functional value. Retailers use
additional promotion -advertising, displays and
sweepstakes -that add even more to retail prices.
 Brandname products may cost more, but branding gives
buyers assurances of consistent quality.
Marketing
 Heavy advertising adds to product costs but is needed
to inform millions of potential buyers of the availability
and merits of a brand.
 Deceptive promotion includes practices such as
overstating the product’s features or performance, luring
the customer to the store for a bargain that is out of
stock, or running rigged contests.
Marketing
iv. Ethics in Pricing
 Pricing is probably the most regulated aspect of a firm’s
marketing strategy. As a result, most unethical price
behavior is also illegal. Some aspects of pricing,
however, are still open to ethics abuses. Deceptive
pricing includes practices such as falsely advertising
‘factory’ or ‘wholesale’ prices or a large price reduction
from a phone high retail than the reality when the
customer is before the shopping counter.
 Credit card companies often walk a fine line between
ethical and unethical pricing practices. While consumers
are almost always informed of credit card terms on their
agreements, the print is usually tiny and the language
hard to understand.
7.1 Introduction
7.1 Overview
 ICT (information and communications technology-or
technologies) is an umbrella term that includes any
communication device or application, encompassing: radio,
television, cellular phones, computer and network hardware
and software, satellite systems and so on, as well as the
various services and applications associated with them, such
as videoconferencing and distance learning. Information
technology is impacting all walks of life all over the world. ICT
developments have made possible a transition in information
storage, processing, and dissemination, from paper to virtual
and from atoms to bits, which are now setting new standards
of speed, efficiency, and accuracy in human activities.
7.1 Overview
 Computerized databases are extensively used to store all
sorts of confidential data of political, social, economic or
personal nature to support human activities and bringing
various benefits to the society. However, the rapid
development of ICT globally also has led to the growth of
new forms of national and transnational crimes. These
crimes have virtually no boundaries and may affect any
country across the globe. Thus, there is a need for
awareness, policy formation, and enactment of necessary
legislation in all countries for the prevention of computer
related crime.
7.1 Overview
 Globally, internet and computer-based commerce and
communications cut across territorial boundaries, thereby
creating a new realm of human activities, and undermining
the feasibility and legitimacy of applying laws based on
geographic boundaries. The new boundaries, which are
manifested in the monitor screens, firewalls, passwords,
intruder detection, and virus busters, have created new
personalities, groups, organizations, and other new forms of
social, economic, and political groupings in the cyber world of
bits. Traditional border-based law making and law enforcing
authorities find this new environment of cyber boundaries
very challenging.
7.1 Overview
 Cyber systems across the globe have many different rules
governing the behaviour of users. Users are completely free
to join or leave any system whose rules they find comfortable
or uncomfortable. This flexibility may at times lead to
improper user conduct. Also, in the absence of any suitable
legal framework, it may be difficult for System Administrators
to check on frauds, vandalism or other abuses, which may
cause the lives of many online users to be miserable. This
situation is alarming because any element of distrust for the
internet may lead to people avoiding doing transactions
online, thereby directly affecting the growth of e-commerce.
7.1 Overview
 The use or misuse of the internet as a medium of
communication may in some situations lead to direct damage
to real physical society. Non-imposition of taxes on online
transactions may have its destructive effect on physical
businesses, and also government revenues. Terrorists may
also make use of the web to create conspiracies and
violence. Wide and free sharing of ideologies, beliefs,
convictions, and opinions between different cultures might
cause physical and emotional stress and confusion that
might lead to physical violence.
7.2 ICT Ethical Issues
 Analysing and evaluating the impact of a new technology,
such as ICT, can be very difficult. ICT does not only involve
technological aspects, but also epistemology since the main
component of ICT is information which represents data,
information, and knowledge. ICT assists and extends the
ability of mankind to capture, store, process, understand,
use, create, and disseminate information at a speed and
scale which had never been thought possible before. Some
of the impact and changes of ICT are obvious, but many are
subtle. Benefits and costs need to be studied closely for a
nation to progress and improve the quality of life for its
citizens.
 Various ethical issues that have arisen from the adoption of
ICT, such as the application of automated teller machines are
summarized hereunder.
l. Unemployment
 The automation of work has caused creative destruction by
eliminating some vocations and creating new ones. How
does this affect the employment or unemployment of the
work force of a nation?
2. Crime
 Stolen and counterfeit ATM cards are used to steal millions of
dollars each year throughout the region. The anonymity of
the machines makes some crimes easier and creates many
new types of crimes.
3. Loss of privacy
 Transactions are transmitted and recorded in databases at
banks, hospitals, shopping complexes, and various
organizations, in the public or private sector. The contents of
electronic communications and databases can provide
important and private information to unauthorised individuals
and organizations if they are not securely guarded.
4. Errors
 Information input into the databases is prone to human and
device error. Computer programmes that process the
information may contain thousands of errors. These errors
can create wrong and misleading information about
individuals and organizations. Information and programme
errors might result in financial loss, or even the loss of lives.
5. Intellectual property
 Millions of dollars of software is illegally copied each year all
over the world. This phenomenon has a great impact on the
software industry in the region. Local and foreign software
industries need consumers support all over the world to
maintain the progress of technology. Most importantly, for the
sake of growth in indigenous ICT innovation and invention,
local software industries in Asia-Pacific need local support in
protecting their intellectual property rights and investment.
6. Freedom of speech and press
 How do the constitutional rights of individuals in terms
of the freedoms of speech and press apply to electronic
media? How seriously do the problems of pornography,
harassment, libel, and censorship on the net affect
individuals and society? What government initiatives
have been used in handling this crisis?
7. Digital Divide
 How does ICT affect local community life? The
increasing use of computers has increased the
separation of rich and poor, creating a digital divide
between the information “haves” and “have-nots.” What
subsidies and programmes have been provided by
governments of the region to address the issue?
8. Professional Ethics
 How well trained and ethical are our ICT professionals in
dispensing their duties? Faulty and useless systems that cause
disasters and hardships to users might be built by incompetent
ICT professionals. In dispensing their duties ICT professionals
must demonstrate their best practices and standards as set by
professional bodies for quality assurance.
7.3 UNESCO’s Info-Ethics
Programme
 The development of digital technologies and their application in
worldwide information networks are opening vast new
opportunities for efficient access to and use of information by
all societies. All nations can fully benefit from these
opportunities on the condition that they meet the challenges
posed by these information and communication technologies.
Thus, UNESCO’s Info-Ethics Programme was established for
the principal objective of reaffirming the importance of universal
access to information in the public domain, and to define ways
that this can be achieved and maintained in the Global
Information Infrastructure.
Programme
 It seeks to address the areas of ethical, legal and societal
challenges of cyberspace, as well as privacy and security
concerns in cyberspace. It aims to encourage international
cooperation in the following aspects:
i. Promotion of the principles of equality, justice and mutual
respect in the emerging Information Society;
ii.Identification of major ethical issues in the production, access,
dissemination, preservation and use of information in the
electronic environment; and
iii.Provision of assistance to Member States in the formulation of
strategies and policies on these issues.
Programme
 Through the UNESCO programme Code of Ethics for the
Information Society was developed which cover various
agreements including:-
i. Internet in particular and ICTs more generally should be
recognized as a key public service for building a people-centred,
inclusive and development-oriented information society and are
crucial to promote the exercise and enjoyment of universally
recognised human rights and fundamental freedoms.
2. Every person irrespective of where they live, their gender,
education, religion, social status shall be able to benefit from the
Internet and use of ICTs.
Programme
 Everyone shall be able to connect, access, choose, produce,
communicate, innovate and share information and knowledge
on the Internet.
iii. Affordable access to the Internet should serve as a tool for
development, social cohesion and for enabling everyone’s
potentials. Active social participation in public life through the
use of Internet and other ICTs shall be enabled on a non-
discriminatory basis.
iv. Information should be made available, accessible and
affordable across all linguistic, cultural and social groups and to
both genders, including people with physical, sensory or
cognitive disabilities, and people who speak minority languages.
Programme
 Internet and other ICTs shall serve to reduce digital
divide and deploy technology and applications to ensure
inclusion.
v. Technological and methodological standards, access
solutions, portability and interoperability shall allow the
widest possible access to content and content production,
and encourage the evolution and improvement of the
Internet and other
vi. ICTs to bring about greater inclusion and overcome forms
of discrimination. Creation, preservation and processing
of, and access to, educational, cultural and scientific
content in digital form should be encouraged, so as to
ensure that all cultures can express themselves and have
access to Internet in all languages, including indigenous
Programme
vii. Everyone should have a freedom of association on the Internet
and ICT-mediated assembly. Member States should take
preventive steps against monitoring and surveillance of
assembly and association in a digital environment.
viii. Member States and respective stakeholders should take all
steps to develop trustworthy Internet and other ICTs ensuring
security, reliability and stability of critical and pervasive
applications and services.
ix. Member States should encourage and extend the availability of
information in the public domain, recognize and enact the right
of universal online access to public and government-held
records, including information relevant to citizens.
Programme
 Publicly-relevant information should be placed in the public
domain and disseminated online in an easily accessible way
using compatible and open formats.
x. Media and information literacy is a fundamental prerequisite for
access to information, the exercise of cultural rights and the right
to education through use of Internet and other ICTs. It is
essential to ensure that all user groups have the knowledge and
skills to act and make informed and clear consent-based
choices using Internet and ICTs so that they can be fully
responsible members of the information society.
Programme
xi. Everyone has a right to freedom of expression, participation
and interaction on the Internet that should not be restricted,
except in those narrowly defined circumstances that are based
on internationally recognized laws and universal human rights
standards.
8.1 Introduction

BMU 08104: Business Ethics: For BMU 08104-III Semester I

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