INTRODUCTION TO BUSINESS

ETHICS
PRESENTATION BY
Prof. Basavaraj S.Kudachimath
 Why ethics required?
• Ethics contribute to customer satisfaction
• Ethics contribute to employee commitment.
• Ethics leads to investors loyalty and trust.
• Ethics helps to earn profit.
• Helps for survival.
 What is Ethics?
• Ethics is the inquiry in to the nature about
grounds of morality. Morality is the moral
judgments, standard and rules of conduct.
• Business ethics are moral principles that define
right and wrong behavior in the world of
business. The right and wrong behavior in
business is determined by the public interest,
groups and business organizations as well as
individual personal morals and values.
 What is Challenge for Business?
Balancing ethics and economics:
Points to be considered in ethics:
1. Right
2. Proper.
3. Just.
 Objectives of Ethics
1. Diagnostic objective: Judges human behavior
based on moral values.
2. Fixing Moral standards.
3. Implementing moral standards on human
behavior.
4. Therapeutic objective: Prescribing moral
behavior based on analysis of present situations.
5. Generalizing ethical code of conduct.
 Nature of Ethics
• Ethics is a subject that deals with human
beings.

• Ethics is more a science than an art.

• Ethics is a normative science

• Ethics deals with voluntary human conduct.

 Sources of Ethics:
1. General inheritance
2. Religion
3. The philosophy.
4. The legal system.
5. Code of conduct.
6. Cultural experience.
 Business Ethics
• Business Ethics refers to the application of
ethical judgments to business activities.
• Business Ethics concerns itself with what is
right or wrong in the workplace.
• It is the normative study of moral standards as
they apply to business policies, institutions
and human behavior.
 Characteristics of Business Ethics
• Business ethics is more a matter of religion than
management
• Business ethics is a discipline best led by philosophers,
academics etc.
• Business ethics is superfluous -- it only asserts the obvious:
"do good!"
• Business ethics is a matter of the good guys preaching to the
bad guys.
• Business ethics in the new policeperson on the block.
• Ethics can't be managed.
• Business ethics and social responsibility are the same thing.
• Managing ethics in the workplace has little practical
relevance.
 Ethical Problems.
• Overt – deals with bribery, theft, collusion.
• Covert – deals with corporate acquisitions,
marketing and personnel policies, capital
investment.
 Ethical Issues in Business
1. Honesty and Fairness
2. Conflicts of Interest
3. Fraud
4. Discrimination
5. Information Technology.
 Ideal Ethical decision
• Right – Morally correct
• Equitable – Just and equal
• Good – Highest good for all concerned
• Proper – appropriate and acceptable
• Fair – Honesty
• Just - Action
 Characteristics of Ethical Decisions in
Business
• Ethical decisions differ according to an
individual’s perspective.
• Ethical decisions do not have a unique
solution, but a multitude of alternatives.
• The consequences of unethical decisions are
ambiguous in nature.
• Ethical or unethical decision depends upon
individual actions.
 MODEL OF ETHICS

Our Belief
Ethical What is Our
Guidance/ Leading to Determines
right & Actions
Sources Wrong

Type-I Ethics : The sources of ethics= Beliefs

Type-II Ethics: What one believes = What one
Behaves
 STAKE HOLDER MODEL OF ETHICS
1. The Management
2. Owners
3. Suppliers
4. Customers
5. Local Community
6. Employees
 Types of Ethics:
1. Transactional Ethics: Equality Principle
2. Participatory Ethics: Good can only be realized
by participation of parties.
Principle of Decency.
3. Recognition Ethics
END OF CHAPTER-I
 CHAPTER-II

THEORIES OF ETHICS
 Ethical Relativism
The concept of relating any given decision about
right or wrong or true or false to the specific
situation seemed appealing. It is the analysis of
every action or situation through good or bad
angles. The ethical relativism depends upon.
• 1. Situation ( Situational ethics)
• Pragmatic approach ( Pragmatism)
Pragmatism is philosophy that evaluates actions
according to their practical consequences.
 How to sort-out the ethical dimensions of a
given situation
Joseph Fletcher defines four factors:
1. Goals.
2. Methods.
3. Motives
4. Consequences.
 Ethical Reasoning
A set of guidelines has to be used by business as
a need for thinking about ethics. These guidelines
would help corporate managers in identifying
ethical problems and decide course of action to
produce best ethical results. Three methods are
used in ethical reasoning.
1. Utilitarian: Should have benefit.
2. Human rights: Should protect human rights
3. Justice: Fair, impartial, and reasonable.
 Ethical Theories
• Ethics or moral philosophy is at its simplest a
study of right and wrong behavior, with the
ultimate aim of defining what is right and
wrong.
Ethical theories are commonly divided into
three subject areas:
– Meta Ethics
– Normative Ethics
– Applied Ethics
 Meta ethics
• Meta ethics deals with the entire gamut of
ethical issues.
• It can be defined as “the study of the origin
and meaning of ethical concepts.”
• Meta ethics deals with 3 issues:
Physical issues
Psychological issues
Linguistic issues
 Normative ethics
• The term ‘normative’ implies something that
‘guides’ or ‘controls’.
• It is that branch of ethics that guides human
conduct.
• It sets out certain moral standards that help us to
determine what is right and what is wrong.
• Golden Rule:
“Treat others the same way that we want others
to treat us”
 Acceptance of moral principles
• Moral Principle to be accepted must be
Prescriptive
Universal
Overriding
Public
Practical
 Applied Ethics
• Applied ethics branch of ethics that deals with
• Applied ethics is a branch of ethics that deals with
specific, often controversial moral issues such as
Abortion
Female feticide and infanticide
Displacement of tribal people due to various projects
Cloning
Testing drugs on animals
Misleading advertising
Insider trading
Bribery
corruption
 Theories of Ethics
Teleological Ethical Theory/ Consequentialist
Theory
Deontological Ethical Theory
Virtue Theory
 Teleological Ethical Theory/ Consequentialist Theory

• The word ‘Teleological’ is derived from two Greek words

“Telos” meaning ‘end’, ‘goal’ or ‘purpose’ and “logos”
meaning ‘logic’ or ‘reason’.
• Thus teleological means “thinking rationally about ends”
• An action is considered morally correct if the consequences of
that action are more favorable than unfavorable.
• Consequentialists have offered three definitions of ‘good’
based on 3 theories.
– Egoism
– Utilitarianism
– Altruism: is selfless concern for the welfare of others
 Deontological Ethical Theory
• The word ‘deontological’ is derived from the Greek word
‘deno’ meaning ‘duty’ or ‘obligation’
• DT focus on certain fundamental duties that we have as
human being, such as not committing murder or theft.
• The duties upheld by deontological theory is classified into 3
headings.
– Duties to God, including honoring him and praying to him.
– Duties to Oneself includes preserving ones life and sharing
happiness.
– Duties to others, including family duties, social duties and
political duties.
 Virtue Ethics
• VE is associated with Greek Philosopher
Aristotle.
• Virtue Mainly strength or courage; bravery;
daring; spirit;
• Virtue may be defined as any disposition of
character or personality that an individual
desires in himself or others.
Four key virtues: wisdom, courage,
temperance and justice.
END OF CHAPTER-II
 CHAPTER-III

ETHICAL DECISION MAKING IN

BUSINESS
A Framework of Ethical Decision Making in
Business
Ethical issue
intensity

Individual
factors Business Ethical or
ethics Unethical
Evaluations Business
Organizational
Factors

Opportunity
 Ethical Issue Intensity
• It is the analysis of the perception level of
Individuals and their sensitivity towards the
ethical issues. It is the study of relevance or
importance of an ethical issue in the eyes of
individual, workgroup ar organizations.
 Individual Factors
1. Values
2. Attitudes
3. Perception
4. Goals etc.
 Organizational Factors
1. Corporate Culture: It can be defined as set of
values, beliefs, goals, norms that members of
an organisation share.
2. Significant others: Those who have influence
on work group such as peers, competators,
co-workers etc.
 Opportunity
Opportunity describes the conditions in an
organization that permit or limit ethical or unethical
behavior.
Opportunity either provide rewards for ethical or
erect barrier for unethical behavior.
The rewards may be internal or External.
Internal is the feeling of goodness and personal
worth generated.
External may be social approval, status and esteem.
 Business ethics evaluations
Corporate governance: It considers three things,
1. Accountability: How an organisation work
with its strategies to satisfy ethical and legal
bindings
2. Oversight: It provides a system of checking
deviations from ethical practices
3. Control: Auditing and proving organisational
ethical practices.
 ETHICAL ISSUES IN GLOBAL BUSINESS

• Multinational Company – Overview

• Ethical Issues in Multinational Companies
• Ethical Issues in Global Business- Overview
• Ethical Issues in various countries
• Regulatory Actions in Acquisitions of Global
Business
• Social Obligations in Global Business
 Top Multinationals
• Microsoft
* Nokia
* Toyota Motor
* Intel
* Coca-Cola
• * Sony
* IBM
* General Electric
* Nike
* Citigroup
 Multinational Company – Overview

• A multinational corporation (MNC) or multinational

enterprise (MNE) or transnational corporation (TNC)
or multinational organization (MNO) is a
corporation/enterprise that manages production
establishments or delivers services in at least two
countries.
• A multi-national company, or commonly known as a
MNC, is a firm that operates in more than one country,
with a headquarters in one particular country. These
companies are usually among the largest firms in the
world, often selling billions of dollars worth of goods
and services, and employing hundred thousands of
workers across the globe.
 Reasons for Companies Going Global

• Lower wage rates

• Reduced transportation cost
• The opportunity to be closer to the suppliers
• Saturation of local markets
• To maintain growth rate
• To exploit opportunities in new markets
• Recession or domestic completion
 Ethical Issues in Multi-National Companies
S ta k e h o ld e r E th ic a l/S o c ia l E x a m p le P r o b le m F o r th e
A ffe c te d R e s p o n s ib ilit y M N C
Is s u e

S h o u ld a n M N C d e le te
s a fe ty fe a tu re s to m a k e a
C u s to m e r P ro d u c t s a fe ty
p r o d u c t m o r e a ffo rd a b le fo r
p e o p le in a p o o r e r n a tio n ?

If a p ro d u c t is b a n n e d
b e c a u s e it is u n s a fe in o n e
F a ir re tu rn o n c o u n tr y , s h o u ld it b e s o ld in
S to c k h o ld e r s c o u n tr y w h e r e it is n o t
in v e s tm e n t
b a n n e d to m a in ta in p r o fit
m a r g in s ?
S h o u ld a n M N C u s e c h ild
E m p lo y e e s C h ild L a b o r la b o r if it is le g a l in th e
c o u n try o f th e ir lo c a tio n ?
S h o u ld a n M N C fo llo w lo c a l
F o llo w in g L o c a l la w s th a t v io la te h o m e
H o s t C o u n try
Law s c o u n tr y la w s a g a in s t
d is c r im in a tio n ?
Is a n M N C o b lig a te d to
P r o te c tio n o f
S o c ie ty in c o n tro l its h a z a rd o u s w a s te
th e
G e n e ra l to a d e g r e e h ig h e r th a n
E n v iro n m e n t
lo c a l la w s re q u ir e ?
 MNCs have been accused of indulging in
unethical practices in several areas.
• Political Activities
• Sales, Marketing and Advertisement
• Environmental
• Technology
• Economic Activities
• Personnel Management and Industrial
Relations
Ethical Issues in Various Countries
• Japan
• France and Germany
• China