2. NATURE OF BUSINESS ETHICS
The Nature of Business
Business is as old as human civilization.
in the beginning of human existence, men took care of
their own needs and wants.
they hunted animals and cultivated the land for food
and clothing, and people simply provided for their own.
some people sought their products and services so
that they need not spend more time, money, and effort to
acquire these goods that they need.
3. the “manufacturer” then found out that he could
continue supplying the products or services to people if he had
enough funds or goods to barter with.
he learned that he could expand his trades if he was
able to acquire more capital needed to continue his
entrepreneurial activities.
the more he acquired funds, the more he is able to
supply goods and services to his cutomers.
the requirement therefore is for him to earn profit in
order to stay in business and provide the goods and services
needed by the customers.
4. For as long as people have needs and wants, there will
always be business.
Those who have capital will continue to produce and sell
goods and services that will satisfy the needs and wants of
customers.
Business is an activity that is part and parcel of human
society. Society will not exist without business.
5. Since business is an integral part of society, its activities
must be examined from the ethical perspective, in the
same way that society examines politics, economics,
government, culture, and religion from the moral point of
view.
The fundamental reason for examining the activities of
business from the moral perspective:
for the promotion of the common good
protection of the individual’s interests
the preservation of the human society in general
6. Without Ethics, business will be a chaotic human
activity because there will be no common understanding
and agreement about what is wrong and right human
conduct.
Business is also a complex activity that involves major
activities like production, manufacturing, marketing,
advertising, selling, purchasing, accounting, and the like.
Businessmen deal with suppliers, customers, workers,
employees, and even competitors.
7. It is within this structure of interaction of people that a
lot of questionable practices occur-misrepresentation,
questionable pricing policies, false advertising,
misbranding, lying, adulteration, unfair competition,
and local price-cutting, among others.
The bottom line is, somewhere, somehow people’s
rights are being violated, their values disrespected, and
the interest of the common good disregarded.
8. Business is a good human activity. It is the
wrong motive and personal interests of
unscrupulous businessmen that make
business bad.
9. The Importance of Ethics in Business
The study of Business Ethics paves the way for common
ground in our understanding of the fundamental idea of
what is good and what is bad in our human conduct.
without Ethics, people, especially businessmen,
will set their own moral standards, moral rules, and moral
principles.
business people will consider some of their actions
good but unacceptable to others.
Example: cheating the customers may be acceptable for
10. Ethics as a science does not only evaluate the morality of our
human conduct but also provides us with a common
understanding of the universal, objective, and irreversible
moral principles that govern our human conduct and guide
our moral decisions.
Some business enterprises today are using quantitative
techniques to measure the viability and profitability of
business. However, the resolution on some ethical issues like
sexual harassment, bribery, ,misrepresentation, graft, insider
trading, among others, cannot be solved by quantitative
techniques but by moral reasoning.
11. Business Ethics opens a novel way of resolving moral
issues and ethical dilemmas in business and in the
corporate world.
The study of Business Ethics will prepare and equip
managers for a more effective way of managing people
and organizations.
12. THE BUSINESSMAN’S MYTHS
ABOUT BUSINESS ETHICS
Business, certainly is a good human activity. However,
it is the business leaders’ wrong perception of the role
of Ethics in business that affect their decisions, and in
some cases, forget to be ethical.
13. MYTHS OF BUSINESSMEN
ABOUT BUSINESS ETHICS
Myth 1. Ethics is a Personal Affair and not a Public Debatable
Matter.
one’s concept of morality is a result of the
environmental factors, like religion, culture and family
values that have had a great impact on the person however
man is also a social being, which means- he is always a being
in relation with other men.
The individual’s moral values may be very subjective but
in the exercise of this value system, he must also consider the
impact and gravity of his actions on others.
14. Myth 2. Ethics and Business do not Mix
Any business activity that is devoid of morality will
bring more harm than good to people in particular, and the
the society in general.
Further, the belief that Ethics does not mix with
business will only justify illegal activities and will most
likely promote questionable practices in business activities.
15. Myth 3. Ethics in Business is Relative
the study of Ethics paves the way for our common
understanding of the fundamental ideas of right and wrong as
as reflected in our human nature and our human conduct.
Myth 4. Good Business Means Good Ethics
The study of Ethics in business encourages businessmen
and managers to look closely into the end and the means of
doing business. The end does not justify the means.
16. Myth 5. Business is a War
for some business leaders and businessmen the market
market is an arena of gladiators trying to fight for survival
survival and vying for the number one position. As an
integral part of the society, business must promote healthy
healthy competition and not destroy the competitors.
17. MORALITY VS. LEGALITY
«What is legal may not necessarily be moral.»
People tend to confuse legality with morality. An
action may be legal but not necessarily moral, e.g.,
capital punishment (death by lethal injection). For some,
this is legal but in truth, this is immoral. Ethics provides
us with a clear distinction between morality and legality.
18. Laws are insufficient. They cannot regulate all aspects
of our human behavior.
Laws are sometimes absent or unclear in some areas of
our human conduct.
Ethics is the unwritten law, written in the hearts of
men.
In the absence of the law, Ethics dictates the correct
conduct to follow.
19. Ethics and Law are closely related.
Ethics deals with morality, and when we speak of
morality, we mean primarily the moral law.
Law may be defined as crystallized ethics.
Law and morality presuppose the concepts of right
and wrong, good and bad, even the rules of conduct.
20. DIFFERENCE BETWEEN
WHAT IS MORAL AND LEGAL
Law covers the external actions of man.
in the making of the law, the items covered in
that Law is the external action and behavior of a
person.
Ethics speaks about the study of motivation and
intention, including the internal disposition of the
person.
21. Many acts that would be widely condemned as
unethical are not prohibited by law
(Example: Lying or betraying the confidence of
a friend)
A man can commit adulteries in his mind,
yet a person is not legally or criminally guilty
because the exercise is innate within the person.
he may not be legally or criminally
responsible, but he is morally responsible.
23. The essence of studying Business Ethics is to provide
managers and decision makers with a framework for the
resolution of moral issues and problems affecting
business activities and the organization.
Moral Reasoning is a process in which ethical issues
and problems are benchmarked against a moral
standard so that a moral judgment is made possible.
24. Framework for Moral Reasoning
Decision
Analysis
Ethical
Issues /
Problems
Reality
Check
Moral Norm
Moral Standard
Company
Policy/Ethical
Principle
Moral
Judgment
Situation
Analysis
Problem
Analysis
Resolution
Examples:
Graft
Sexual
Harassment
Theft
Bribery
-gravity of offense
-frequency of
offense
-harm done
-number of people
affected
-cost
-company
rules/policies
-ethical
principles
-codes of
conduct
-moral norms
-Moral or
Immoral
-Legal or
Illegal
25. CHARACTERISTICS OF
A GOOD MORAL STANDARD
1. A good moral standard is one that looks at
the issue as something that is very serious.
(example: murder, graft and corruption,
stealing)
26. 2. A good standard must be grounded on good moral
argument.
a good argument is an argument that always tells
the truth.
a solid moral argument leaves no room for
loopholes and counterarguments.
27. 3. A good standard should be objective and not
subjective.
it should be universally accepted and should
apply to all.
what is good for one person should be at the same
time good for everybody.
4. A good standard, when violated, brings about feelings
of guilt, shame, and remorse of conscience.
28. CHARACTERISTICS OF
A GOOD MORAL JUDGMENT:
1. A good moral judgment must be logical.
the decision maker must arrive at an informed
resolution of the issue based on logical reasoning.
2. A good moral judgment must be based on facts and solid
evidence.
the information used in the process of moral
reasoning must not come from weak sources like, hearsay,
rumors and grapevine.
29. 3. A good moral judgment must be based on sound and
defensible moral principles.
A weak ethical principle is open to a lot of
criticisms.
30. REASONS
PEOPLE GO INTO BUSINESS
1. For personal satisfaction
2. To earn livelihood
3. To serve the the society through the goods and
services they offer to the customers.
4. To make a profit
31. Profit is a form of anticipated reward or a
compensation for the efforts that
businessmen spend, skills they apply, and
returns for the capital they invested in
organizing the business.
32. «The only responsibility of business is to make
profit so long as it stays within the rules of the
game, which is to say, engage in open and free
competition without deception or fraud.»
(Milton Friedman, a noted economist)
33. «Enterprise is an organ of the society and
therefore, its actions and decisions have a great
impact on society and people.»
(Peter Drucker, a famous management guru)
