CHAPTER 1: INTRODUCTION TO BUSINESS ETHICS

1. Semester-IV
“403- Business Ethics”
PREPARED BY,
PROF. MAYURI LONDHE
SANJIVANI ARTS, COMMERCE AND SCIENCE COLLEGE
DEPT. OF BBA-IB

2. CHAPTER 1:
INTRODUCTION TO BUSINESS
ETHICS
 Meaning, Nature and Scope of Business Ethics:
 Ethics in Contemporary Business
 Organizational Ethical Climate – Ethical Decision Making and
Importance of framing ethical policies
 Why Ethical Problems occur in Business
 Difference between workplace Ethics and Laws
 Normative and Individual ethics

3. CHAPTER 1:
INTRODUCTION TO BUSINESS ETHICS
 Ethics:
 Ethics refers to well-founded standards of right and wrong that prescribe
what humans should do, usually in terms of rights, obligations, benefits to
society, fairness, or specific virtues.
 Business Ethics:
 Business ethics is a practice that determines what is right, wrong, and
appropriate in the workplace. Business ethics is often guided by laws, and
these principles keep companies and individuals from engaging in illegal
activities.
 Business ethics ensure that a certain basic level of trust exists between
consumers and various forms of market participants with businesses.

4. Definition:
1. By definition, Business ethics are the moral principles
that act as guidelines for the way a business conducts
itself and its transactions. In many ways, the same
guidelines that individuals use to conduct themselves in an
acceptable way – in personal and professional settings –
apply to businesses as well.
2. “Business ethics is generally coming to know what is right
or wrong in the workplace and doing what is right—this is
in regard to effects of products/ services and in relationship
with stake holders”.
3. "Business ethics is the study of business situations,
activities, and decisions where issues of right and wrong
are addressed."
4. "The ethics of business is the ethics of responsibility. The

5.  Nature of Business Ethics
 The characteristics or features of business ethics are:-
 Code of conduct : Business ethics is a code of conduct. It tells what to do and what not to do
for the welfare of the society. All businessmen must follow this code of conduct.
 Based on moral and social values : Business ethics is based on moral and social values. It
contains moral and social principles (rules) for doing business. This includes self-control,
consumer protection and welfare, service to society, fair treatment to social groups etc.
 Gives protection to social groups : Business ethics give protection to different social groups
such as consumers, employees, small businessmen, government, shareholders, creditors, etc.
 Provides basic framework : Business ethics provide a basic framework for doing business. It
gives the social cultural, economic, legal and other limits of business. Business must be
conducted within these limits.
 Voluntary : Business ethics must be voluntary. The businessmen must accept business ethics
on their own. Business ethics must be like self-discipline. It must not be enforced by law.
 Requires education and guidance : Businessmen must be given proper education and
guidance before introducing business ethics. The businessmen must be motivated to use
business ethics. They must be informed about the advantages of using business ethics.
 Relative Term : Business ethics is a relative term. That is, it changes from one business to
another. It also changes from one country to another. What is considered as good in one
country may be taboo in another country.
 New concept : Business ethics is a newer concept. It is strictly followed only in developed
countries. It is not followed properly in poor and developing countries.

6. Scope of business ethics:
1. Positive consequences
2. Goodwill of the business and businessman
3. Protection- both sides
4. Self satisfaction
5. Encourage others
6. Success and development
7. New management

7. • Ethics in Contemporary Business
1. Integrity
2. Loyalty
3. Trustworthiness
4. Honesty
5. Respect and concern
6. Fairness
7. Leadership
8. Caring
9. Transparency
10. Organizational ethical climate

8. • Ethical Decision Making
 Decision making process includes following steps;
1. Identify the problem
2. Generate alternatives
3. Decide on the course of actions
4. Implementation

9. • Importance of framing ethical
policies
1. To protect organization assets
2. Helps in Team work and productivity
3. Helps In creation of public image and goodwill
4. Helps In decision making

10. • Why Ethical Problems occur in
Business
1. Personal gain and selfish interest
2. Business goals Vs Personal Values
3. Competitive pressure on profits
4. Cross cultural contradictions

11. Difference between workplace
Ethics and Laws
Workplace ethics Laws
Meaning Ethics refers to a system
of moral principles
Laws refers to the written
opinions of the courts
according to act
Nature Ethics aligns with a
professional setup
Law aligns with policies
and procedures.
Areas 3 major areas of study:
Meta-ethics,
Normative ethics,
Applied ethics.
1.Selected workplace
rules;
Which can protect your
business from legal
claims
2.Effectively necessitates
that even the smallest of
businesses set up work
rules.
Consistent within It will be consistent
within professional setup
but would vary between
2 diff. organizations or
Law will not be
consistent within a
professional set up and it
would not vary between

12. Determined by Institution, organization
and varied professions.
Law are not determined
by and institution ,
organization and varied
professions. It is a legal
written framework.
Action Ethics could act as a
constraint. Should be
consistent.
Law could act as legal
framework.
Derived from Greek word ethos that
means character.
Teutonic word ‘Lag’ that
means ‘definite’.

13. Normative and Individual ethics
 There are 3 major area of study within ethics.
 1. Meta-Ethics (the study of the concept of ethics)
 2. Normative Ethics (the study of how to determine ethical
values)
 3. Applied Ethics(the study of the use of ethical values)
 Normative ethics:
 normative ethics, that branch of moral philosophy, or ethics,
concerned with criteria of what is morally right and wrong.
It includes the formulation of moral rules that have
direct implications for what human actions, institutions, and
ways of life should be like

14.  Individual Ethics:
 Personal ethics refers to a person's beliefs about what's right and wrong and
guides individuals in the decisions they make both in and out of the
workplace. Your unique ethics will determine how you handle certain
situations at work as well as how you grow and develop within your career.
 Personal/ Individual ethics refers to the ethics that a person identifies with
in respect to people and situations that they deal with in everyday
life. Professional ethics refers to the ethics that a person must adhere to in
respect of their interactions and business dealings in their professional life.
 An important part of your personal ethics statement is identifying your
personal beliefs and personal values. Some code of ethics examples
include integrity, selflessness, honesty, loyalty, equality, fairness, empathy,
respect, and self-respect.

15.  3 C’s of Business Ethics:
1. Compliance: (The need for compliance of rules including)
 Laws
 Principles of Morality
 Policy Of Company
2. The Contribution:
 The core values
 Quality of Products or Services
 Employment
 Usefulness of activities to surrounding environment &
quality of work life
3. The consequences of business activity:
 Towards environment inside and outside the organization
 Social responsibility toward shareholders, bankers, customers and employees of
organization.
 Good public image, sound activity gives good image
***

16. Assignment No. 1
1) What do you mean by Ethics and Business Ethics? Explain
the scope of business ethics.
2) Explain the importance of promoting an Ethical Business
Climate.
3) Write short Notes on:
a) Ethical Decision Making
b) Ethics in Contemporary business