Business Ethics

1. Business Ethics and
Human value
Dr R Soundararajan
Ref CSV Murthy , Business Ethics Himalaya Publications

2. MODULE-I:
Ethics in Business : Definition of business ethics -
A model of ethics; ethical performance in
business, managerial values and attitudes;
ethical congruence, managerial philosophy; types
of ethics; code of ethics; importance of ethics in
business

3. Class-1 Hour -1

4. Understanding Ethics
What is ethics ?
What are the Theories of Ethics?
Briefly describe the Ethical Concepts?
Compare Ethics with Moral?

5. What is ethics?
Briefly describe the
theories?
Discussion

6. What is Ethics?
• Ethics is a set of
standards
• Many people
think ethics has
to do with set of
social
conventions or
religious decree.
• Value system
Derived from Latin
word ethicus
Greek Word
‘ethikos’
Means character or
manner
Concepts of rights
and wrongs
Work out from human reason and experience by which free
human actions are determined as ultimately right or wrong ,
good or evil.
• If an action
agrees with
these standards
then ethical and
if not it is
unethical
Ethics refers to the assessment of Ethical values Philosophy, and principles of human being conduct and its purpose in daily life
to establish acceptable human performance

7. Ethical Theories
1. Aristotle – proposed theory of virtues- an idea
of Greek culture
2. Theory of Consequentialism – focus on ones
action.
3. Deontology- Study of obligation.

8. What are the Ethical
concepts?
Discussion

9. Ethical concepts
Ethical
Subjectivism Ethical
Relativism
Ethical
Relativism
What is ethically right
or wrong for the
individual depends on
the principle chosen
by him
No absolute truth.
Truth depends on the
individual or culture
believe
Consequences of one’s
conduct are the basis
for the morality of that
conduct
Ethical
Consequentia
lism
Ethics of
virtues Associated with moral
and ethical principle

10. Class-2 Hour -2

11. What are the objectives
of Ethics?
Discussion

12. What are the objectives of
Ethics?
1. Deal with human behavior
2. Assess Whether a particular act or decision taken
by individual is moral or not
3. Establish moral standards and norms and
behavior
4. Judge human behavior based on standard
5. Access the human behavior and express the
opinion
6. Set the standard code for moral behavior

13. Differentiate Ethics and
Moral
Discussion

14. Ethics and Moral
Basis of difference Ethics Morals
Meaning What is good and what is bad. Moral
Duties and Obligations
Principles of right and wrong
Root Ethos- Greek word meaning
character is a personal attributes
Latin word ‘mos’ – meaning customs
– Custom is an attribute of a group
or society.
Nature Accepted because arise from
personally accepted principles
Accepted due to the authority
which may be religious or cultural
Scope Wider in scope. Examines moral
standards of a group or society to
determine whether these standards
are reasonable
Smaller scope
Address human needs for belonging
Expression Norms are abstract. Cannot be
described as general rules
Mostly expressed as general rules.
Example –Always Tell truth
Absorption Adopted by individual gradually by
taking reasonable decision in
appropriate situation
Absorbed since childhood from
family, friends, school, religion,
leaders and so on

15. What are the major
difference between Ethics
and Law?
Discussion

16. What is the basic difference
between Ethics and Law?
Basis of
difference
Ethics Laws
Meaning Cannot be
legislated.
Examines both
individual and
social good in all
dimensions
Concerned with
regulations
necessary for
public order
Ethics and law are quiet independent of each other. What
is lawful need not be ethical.

17. Class-3 Hour -3

18. Characteristics
Moral Standards deal with matters that can
seriously injure the society
In every society theft , rape murder fraud
and law breaking are considered immoral
Characteristics
1
Moral Standards are not changed by any the
decisions of any particular authority like
legislature
The validity of these standards depends on
the reasons that support and justify them
2

19. Characteristics
Some time moral standards can come in
conflict with self Interest
If a person has moral obligation to do
something it has to be done even it causes
harm to selfCharacteristics
3
Moral Standards are based on impartial
consideration.
Not evaluated based on who will benefit or
who will be harmed4

20. Right
Morally Correct
Just
Justice not only
done ; also
seen to have
been done
Proper
Appropriate
and acceptable
Honest
Honest and due
Good
Good for all
concerned
Equitable
Just and Equal
Characteristics
needed for ethical
decision

21. What are the major
branches of Ethics?
Discussion

22. Major Branches of
Ethics
Meta – Ethics:
Concerned with the grounds
used to justify the moral
judgments rather than on
making moral judgments
Practical or applied
Ethics:
Applies ethical
principles to practical
discipline.
Rule based Ethics:
It seeks evaluate
moral consideration
based on rules
Virtue Ethics:
Concerned with
possessing moral
traits and living a
good life
Normative Ethics:
Concerned with
developing theories
that determine which
human actions are
right or wrong
Political Ethics:
Consists of
examination of good
society, the origins,
and the forms of
political power
 Consequentialism or teleology-action judged
based on consequences.
 Deontology : Assumed that right or wrong is
not based on consequences but on the
intrinsic goodness of action itself.

23. Can you tell me the
characteristics that high
light the Moral standards?
Discussion

24. Can you Sum up the meaning of
ethics?
Character of
a Man
Decided by
Conduct of a
Person
Leads to
Series of
action
Taken Together
Considered
as
Good or
Bad , Right
or wrong,
Moral or
Immoral
Known as Moral
Judgment
Moral Standards
Requires
By which we can Judge
again

25. How do you
understand the
subject business
Ethics?
1. Emerging Business Ethical Issues –
management concerns- Stakeholder
relationship.
2. Ethics as a dimension of social responsibility
3. Understand Ethical decision making and
corporate governance
4. Individual factors such as moral
philosophies
5. Organizational factors such as corporate
culture leadership dimensions
6. Organizational factors – relationship and
conflicts
7. Develop ethical program, code of conduct
and audit of ethical program,
implementation
8. Business ethics in global economy

26. Can you Explain Business
Ethics ?
Discussion

27. • What is
Business
Ethics?
• What are the features of Business Ethics?
• Applied Ethics – what is good and what is
bad for business
• Ethics is a study of morality as chemistry is
the property of chemical substances.
• Ethics is a kind of investigation where as
morality is a is the subject matter of
investigation.
• Moral is a standard and ethics examines the
standard.
• For Example Honesty is good and dishonesty
is bad.
Business Ethics
• It is
Specialized
study of
moral
rights or
wrong
• Application
of Ethical
Principles to
business

28. Class-4 Hour -4

29. Case Study-3
• Babu Rao is an officer on special duty in the project analysis wing of the
Finance Department. His job is to look at the financial and economic
viability of projects. Given the available budget, the project with higher
returns are picked up for funding or seeking aid from external donors.
Although the procedure is involved, its principles are Simple.
• The analysts calculate for each year of the useful life, the expected
expenditures and revenues. As these flows occur in different years, they
have to be made comparable.
• For this purpose, the revenue and expenditure flows are discounted using
a particular interest rate. Discounting means that their magnitudes are
reduced by using a factor on the interest rate

30. Case Study -3 Continued
• Due to discounting, the actual numbers of future streams of
expenditure income become smaller. The same numbers of
expenditure and income of say year 5 will smaller than those of year
3. The present values of future income and expenditure depend
on two factors: interest rate and the future year in which they
occur.
• In this process, the present value of the numbers of later years in
future becomes less than that of earlier years in future. These
(benefit) and expenditure (cost) streams, which are reduced to their
present values, are added compared. In short, the projects which
have higher benefit-cost ratios in terms of present values selected for
funding.

31. Case Study -3 Continued
• In this process, a pet project of a powerful minister is dropped. The
incensed minister calls Rao for discussion. Babu Rao tries to explain
things. But the minister berates him for slashing solid Rs 100 crore
revenue of seventh year to almost Rs 15 crore. After some discussion
the minister realizes that if the interest rate used for discounting
expenditure and revenue flows is reduced, project will become
viable. He asks Babu Rao to cut that rate. Babu Rao refuses saying
that the Rate is prescribed by the Department of Economic Affairs.

32. Answer the following questions:
• What should Babu Rao do in the above circumstances?
Follow minister's orders.
• Babu Rao should give up his narrow accounting perspective and
adopt a wider social point of view
• He should politely express his inability to follow the Minister’s
Instruction.
• He should tell the minister that he would write to the Department of
Economic Affairs seeking a lowering of the rate of interest.

33. Class-5 Hour -4

34. What are the major difference
between Business Ethics and
Social Ethics?
Discussion

35. Business Ethics and Social
Ethics
• Business Ethics is different from social ethics in the following 3 ways:
• Provides frame work for evaluating business
• Allows critical analysis of business and development of new and
different methods
• Fuse personal and social responsibility
• It is broader than Social ethics and is more systematic and
constructive

36. What are the issues
investigated under business
ethics?
Discussion

37. Three Issues
• Are the
systematic
issues in which
ethical
questions are
raised about
economic,
political legal
and social
system whit in
which business
operates?
• Are the
Corporate
issues are
raised on
policies and
practices of a
particular
business
enterprices?
• Are the
Individual issues
where in ethical
questions are
asked about
decisions ,
actions, and
characteristics
of a particular
individual within
enterprise?

38. Business
Ethics?
Questions
Economic,
Political
Legal and
Social system
Policies and Practices
Decisions , Actions, and
Characteristics
of a particular individual

39. What is Business Ethics?
• Study of what constitutes right or wrong or
good and bad human conduct in business
context.
• Deals with morality in business environment
• Refers to application of everyday moral or
ethical norms to business. It requires
awareness of how the products and services
of an organization and actions of the
employees can affect its stakeholders and
society as a whole either positively or
negatively.
• Ethics in business relates to
corporate culture, values,
leadership, programs and
enforcement.
• Set of principles which
governs the conduct of
business – at the individual
or collective level by the
application of ethical
reasoning to specific
business situation and
activities.

40. Who are all the stakeholders?
• Owner
• Employees
• Customer
• Government
• Public
• Others

41. What are the principle of
Business Ethics
• Not to do any evil.
• Cooperation with others
• Equivalent Price
• Human Dignity
• Sacredness of means and ends-
good ends should not be attained
with wrong means
• Principle of proportionality- proper
judgment before doing anything so
that others do not suffer from loss
or risk of evil.
• Publicity: Anything done should be
brought to the knowledge of
everyone.
• Business should be conducted
based on Universal value.
• Non Cooperation in evils
• Non Violence

42. What are the factors influence
the Business Ethics?
Nature
of Ethics
Leadership
Strategy and
performance
Environment
Corporate
Culture
Individual
Characteristic
The quality and worth
of leadership can only
be measured in terms of
what a leader intends ,
values believes in or
stands for.
In other words
character
The leader has to foster
learning , offering
choice and building
consensus
If we pollute even
a small amount
world would be
very dirty place in
which we would
not like to live.
In order to act with
integrity the firm should
articulate its value-
Mission, Conduct and
code of ethics

43. What is meant by Golden Rule
• Ethics of reciprocity- ‘Do unto others as you would have them to unto
you.’
• In other words – ‘treat others as you would like to be treated’
• Golden rule is an example of normative theory which establishes a
single principle against which we can judge all actions – whether any
possible action is right or wrong.

44. Briefly describe the history of
business ethics
• Business Ethics has existed in academics since 1970
• Linked with social responsibilities
• The responsibilities has been described as
• Philanthropic
• Ethical
• Legal
• Economic

45. Can you give the scope of
Business Ethics on four
important heads ?
Discussion

46. Scope of Business
Ethics
Stake Holder Level
Internal Policy Level
Societal Level
Personal Policy Level

47. Stakeholder Level
•Employee
•Customers
•Shareholders
•Banks and other
lending
institutions
•Government
•Security of Jobs
•Better Working
Conditions
•Participative
Management
•Welfare Facilities
•Better Quality of goods
•Goods and services at
reasonable price
•No discriminatory price
•No false claims about
products in
advertisement
• Capital appreciation
• Regular dividends
• Disclose all relevant factors
• Protect minority
shareholder interest
• No window dressing
• Protect interest in times of
mergers amalgamation,
and take over
•Guarantee safety of
borrowed funds
•Prompt repayment of
loans
•Comply with rules and
regulations
•Honesty in paying taxes
and other dues
•Acting partner in the
progress of the country

48. Others
• Personal Policy
level
• Social Level
• Internal Policy
• Not to use office car
stationary, and other
• Not to misuse others for
personal gain
• Not to indulge in
politics to gain power
• Promise keeping
• Mutual help
• Concern for poor
• No discrimination
against any particular
section or group
• Concern for clean
environment
• Preservation of scarce
resources for posterity
• Contributing for better
quality life
• Fair practices relating to
requirements,
Compensations, layoff, perks
promotions etc.
• Transformational leadership
to motivate employees, to aim
at better and higher things in
life
• Better communication at all
levels

49. Explain the three different types of ethics are
explained below-
Transactional Ethics
participatory Ethics
Re-cognitional Ethics

50. Each party
have to
accept the
principle of
honesty and
principle of
reciprocity
Transactional Ethics
Principal of
recognition
Recognitional Ethics
Cooperate for
common good
Participatory Ethics
None of the
parties
participate
for survival
Participation
not enforced
All parties
Participate

51. What are the ethical influence on
business?
Areas of business Ethical Practice
Plant Location No adverse impact on community
Production Control on pollution
Purchase No hording of Raw materials
Storage No hording of Finished Goods
Marketing Fair treatment to customers
Advertising Truthful and realistic claims
Administration Concern for social values
Finance Protection and appreciation of capital
Personnel Just and equitable treatment to
employees

52. Code of ethics
of a marketing
association
Presentation by
class

53. What is Ethical Dilemma?
Discussion

54. Prisoner's DilemmaPrisonerAwithPrisonerB
Prisoner B with Prisoner A
A gets one year
B gets one year
Cooperates Not Cooperates
CooperatesNotCooperates
A gets 3 year
B gets NIL
A gets NIL
B gets 3 year
A gets 2 year
B gets 2 year

55. Ethical Dilemma
• Ethical dilemma is a situation where the decision maker has
to choose not between right and wrong but between right
and right.
• In business many issues may seem straight forward and easy
to solve but in most cases conflict arise and no one option is
clear choice.

56. Problem definition:
 Clearly identify the problem
 How would you define the problem
if you stood on the other side of
the fence?
 How did the situation arise?
Decision Making
 What is the intension of decision
making?
 How does this intension compare with
probable results?
 Will your decision change or be valid
over a long period of time as it seems
now?
View Points
 To whom are you loyal as a person and as a member
of the organization?
 Whom could your decision or action injure?
 Can you discuss the problem with the affected
parties before you make your decision?
 Could you disclose without any doubt your decision
or action to your boss, CEO, Board of Directors,
your family, Society as whole?
 Under what condition you allow exception to your
stand?
Effect
 What is the potential of your action if understood
or misunderstood?
State the guidelines used in case of ethical dilemma.

57. What is need for business
Ethics?
Discussion

58. Need for
business Ethics
Business men requires ethical
behavior and should have moral
consciousness.
– no adulteration,
- no overcharging,
- no spurious goods,
- no black marketing ,
- no false advertising.
In a long run ethical business
conduct is the self interest
If good quality and fair price to
customer
If fair dividend to share holders
Pay taxes in time
Then sales and profits increase
Moral
consciousness
Self interest
Social Pressure
Consumer forums, Shareholders
association , other social groups
exert pressure on business firm for
avoiding unethical practices Legal imperative
Follow law of land

59. What are the Benefits of
business Ethics?
Discussion

60. Benefits
Benefits
Improvement of
Society
Team Work and
Productivity
Facilitate
Change
Cordial Employer-
Employee Relations
Adherence to
Law
Public Image
Strategic
Advantage

61. Corporate Social
Responsibility