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The word ethics is derived from the Greek word ethos

which means character.

Ethics refers to contemporary standards or set of

values that govern the action & behavior of individuals.

Ethics tells what is right & what is wrong.

Business Ethics are the moral principles or rules of

behaviour which should govern the conduct of business enterprises.

Business Ethics are concerned with what is right &

what Is wrong in the behaviour of business.

It provides the code of conduct which can guide

businessmen in performing their jobs.

Scope of business Ethics

Societal Level

Stakeholders Level

Internal Policy Level

Personal Level

Societal Level: Questions are raised about the overall

working of the business system & its relevance to the Society.

Ex:- Should the govt. intervene in business? Is diversification justified?
Stakeholders Level: The main ethical question is

how should business deal with its stakeholders.

Ex:- should a company state its true financial position? Should a company state true quality of its product in advertising?

Internal policy Level: At this level the ethical

questions about employer-employee relationships are raised. Internal working of a business is involved in theses questions.
These questions are concerned with right of employees, workers participation in management etc.
Personal level: At this level ethics are concerned with

how individual should behave with other individuals in the organisation. These questions are concerned with the day-to-day life in any business enterprise.
Should we be honest with one another irrespective of the consequences?

Moral Consciousness: Businessmen are morally

conscious & believe that ethical business behaviour is good business as well as good citizenship.
Enlightened Self-interest: In long run, ethical

business conduct is in the self-interest of businessmen. It ultimately results in customer satisfaction, healthy competition, sound industrial relations & social peace.

Social Pressure : Consumer forum, trade unions,

shareholders associations & other social groups exerts considerable pressure on business firms to abandon unethical practices

Legal Imperative: Laws reflects ethical conduct &

businessmen must follow them. If business disobeys, it surely looses its power, prestige & the survival will be in danger.

Social Factor: Business is a part of society & social morality determines business morality. Changes in the values & norms of society causes changes in business ethics. 2. Cultural factors: cultural values originates from religion, heritage, education system etc. Cultural factors exercise an ever lasting impact on ethical norms in an organisation. 3. Political factors: ideologies of political party in power exercises influence on business ethics, govt. regulate behaviour of business through legislation.


Organisational factors: philosophy of promoters, policy & attitude of the management exercise influence on the ethical perception, judgment & behaviour of the members. Ethical Codes : Codes of conduct prescribed by the trade associations, chambers of commerce (FICCI), professional bodies (ICAI), guides & governs the behaviour of businessmen & managers.


Code of Ethics is a tangible guide to ethically

desirable behaviour.
it is prepared in the light of the customers,

beliefs, values & laws prevailing in a society.

Types of codes

Company creed or Philosophy

Policy Guidelines

Professional Code of conduct

Company creed or Philosophy: it refers to the guidelines

evolved by an enterprise to guide the behaviour of its staff.

Policy Guidelines: Every Industry may develop certain

ethical guidelines for management decisions & actions in member firms.

Professional Code of conduct: professional bodies have

formulated codes of conduct. Such a professional code of conduct is binding on all the members of the concerned professional body.






Customers: Protected against undesirable transactions,

e.g., price discrimination, misleading advertisements etc.

Employees: Employees know what type of behaviour is

expected from them.

Company: Codes serves as the basis for public relations. Industry: Leads to healthy competition, & fair trade

practices in the industry.

Society: Ethics leads to fulfillment of the social objectives.

Values are the beliefs that guide actions & judgment in

different situations.
Business Values determines what constitutes good

business & what objective business should pursue? & whose interest it should serve?
Ethics is the entire body of moral values & values

are the language of ethics.


Corporate culture: an effective value system creates a strong corporate culture which is necessary for high performance & growth in business. Ends Means chain: values help to establish proper relationship between business goals & means. Guides to action: It serves as a social guides to decisions & actions in business.



Objective standards: Business values serves as the

basis against which the conduct of businessmen & their performance can be judged.
Social responsibility: Business has social obligations.

Business Values help to persuade businessmen to discharge their social obligations.