ETHICS

DEFINITION OF ETHICS:
Moral principles that govern a persons behavior or the conducting of an activity
(www.oxforddictionaries.com)
BUSINESS ETHICS:
DEFINITION:
Business Ethics can be defined as the critical, structured examination of how people and
institutions should behave in the world of commerce. In particular, it involves examining
appropriate constraints on the pursuit of self-interest, or (for firms) profits, when the actions of
individuals or firms affects others.
(www.businessethics.ca)
IMPORTANCE OF ETHICS IN BUSINESS:
Ethics concern an individual's moral judgments about right and wrong. Decisions taken within an
organization may be made by individuals or groups, but whoever makes them will be influenced
by the culture of the company. The decision to behave ethically is a moral one; employees must
decide what they think is the right course of action. This may involve rejecting the route that
would lead to the biggest short-term profit.
Ethical behavior and corporate social responsibility can bring significant benefits to a business.
For example, they may:
Attract customers to the firm's products, thereby boosting sales and profits
Make employees want to stay with the business, reduce labor turnover and therefore increase
productivity
Attract more employees wanting to work for the business, reduce recruitment costs and enable
the company to get the most talented employees
Attract investors and keep the company's share price high, thereby protecting the business from
takeover.

Unethical behavior or a lack of corporate social responsibility, by comparison, may damage a
firm's reputation and make it less appealing to stakeholders. Profits could fall as a result.

(www.businesscasestudies.co.uk)

SIGNIFICANCE OF BUSINESS ETHICS IN GLOBAL:
Stop business malpractices:
Some unscrupulous businessmen do business malpractices by indulging in unfair trade practices
like black-marketing, artificial high pricing, adulteration, cheating in weights and measures,
selling of duplicate and harmful products, hoarding, etc. These business malpractices are harmful
to the consumers. Business ethics help to stop these business malpractices.
Improve customers' confidence:
Business ethics are needed to improve the customers' confidence about the quality, quantity,
price, etc. of the products. The customers have more trust and confidence in the businessmen
who follow ethical rules.
Survival of business:
Business ethics are mandatory for the survival of business. The businessmen who do not follow
it will have short-term success, but they will fail in the long run. This is because they can cheat a
consumer only once. After that, the consumer will not buy goods from that businessman. He will
also tell others not to buy from that businessman. This will result in failure of the business..
Safeguarding consumers' rights:
The consumer has many rights such as right to health and safety, right to be informed, right to
choose, right to be heard, right to redress, etc. But many businessmen do not respect and protect
these rights. Business ethics are must to safeguard these rights of the consumers.
Protecting employees and shareholders:
Business ethics are required to protect the interest of employees, shareholders, competitors,
dealers, suppliers, etc. It protects them from exploitation through unfair trade practices.
Develops good relations:
Business ethics are important to develop good and friendly relations between business and
society. This will result in a regular supply of good quality goods and services at low prices to
the society. It will also result in profits for the businesses thereby resulting in growth of
economy.
Creates good image:
If the businessmen follow all ethical rules, then they will be fully accepted and not criticized by
the society. The society will always support those businessmen who follow this necessary code
of conduct.
Smooth functioning:
If the business follows all the business ethics, then the employees, shareholders, consumers,
dealers and suppliers will all be happy. So they will give full cooperation to the business. This
will result in smooth functioning of the business.
Consumer movement:
Today, the consumers are aware of their rights. Now they are more organized and hence cannot
be cheated easily. They take actions against those businessmen who indulge in bad business
practices. They boycott poor quality, harmful, high-priced and counterfeit (duplicate) goods.
Therefore, the only way to survive in business is to be honest and fair.
Consumer satisfaction:
Today, the consumer is the king of the market. Any business simply cannot survive without the
consumers. Therefore, the main aim or objective of business is consumer satisfaction. Consumer
will be satisfied only if the business follows all the business ethics, and hence are highly needed.
Importance of labor:
Labor, i.e. employees or workers play a very crucial role in the success of a business. Therefore,
business must use business ethics while dealing with the employees. The business must give
them proper wages and salaries and provide them with better working conditions. There must be
good relations between employer and employees. The employees must also be given proper
welfare facilities.
Healthy competition:
The business must use business ethics while dealing with the competitors. They must have
healthy competition with the competitors. They must not do cut-throat competition. Similarly,
they must give equal opportunities to small-scale business. They must avoid monopoly. This is
because a monopoly is harmful to the consumers.
(http://kalyan-city.blogspot.com/)
BUSINESS ETHICS IN GLOBAL BUSINESS PRACTICES:
Global strategy:
Companies such as Sony and Panasonic pursue a global strategy which involves:
Competing everywhere.
Appreciating that success demands a presence in almost every part of the world in order
to compete effectively.
Making the product the same for each market.
Centralized control.
Taking advantage of customer needs and wants across international borders.
Locating their value adding activities where they can achieve the greatest competitive
advantage.
Integrating and coordinating activities across borders.
A global strategy is effective when differences between countries are small and
competition is global.
It has advantages in terms of:
o Economies of scale Lower costs
o Co-ordination of activities
o Faster product development
However, many regret the growing standardization across the world.
(http://www.tutor2u.net/)
Ethical Obligations in Business:

Ethical obligations are a set of ought to standards that define a moral course of action and draw
a line between right and wrong.
Some of the most common internal ethical obligations in business relate to recruiting and hiring
staff, maintaining a safe and healthy work environment, using business resources wisely and
avoiding situations that have the potential to create a conflict of interest, such as accepting gifts
from suppliers or making a hiring decision not because the applicant has the best qualifications,
but because the applicant is a relative of the business owner. Common supplier-side ethical
obligations include considering how and where suppliers get their products and whether to sell
products that are detrimental to the health of customers, such as cigarettes and fatty foods.




Business Issues:
In the complex global business environment of the 21st century, companies of every size face a
multitude of ethical issues. Businesses have the responsibility to develop codes of conduct and
ethics that every member of the organization must abide by and put into action. Fundamental
ethical issues include concepts such and integrity and trust, but more complex issues include
accommodating diversity, decision-making, compliance and governance. There's a wide range of
ethical business issues that can impact business success, and some have a greater impact in
particular sectors and regions. Security of information, bribery and corruption, conflict of
interest, and environmental impact are issues management accountants are likely to encounter.
(http://smallbusiness.chron.com/)
SURVEY ON GLOBAL BUSINESS ETHICS:
A recent survey on global business ethics was conducted by the American Institute of Certified
Public Accountants (AICPA) and the Chartered Institute of Management Accountants (CIMA),
There were approximately 2,000 respondents from close to eighty countries. The survey
Managing Responsible Business: A Global Survey on Business Ethics.
Overall, the survey shows that management accountants recognize the importance of their role
in upholding ethical standards, and that they primarily focus on security of information and the
integrity of the numbers.
In addition, the survey clearly indicates there are increased pressures within the workplace to
compromise ethical standards, despite the increase of ethical codes, policies, and statements that
have been put in place.
It's key that leadership teams ensure that their stated commitment to ethical practices is fully
embedded within the operating culture of the organization. Without it, ethical behavior is likely
to be compromised.