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Business Ethics and Social Responsibility GAS11 ABM


2ND SEMESTER

What is Business?

Business is a complex activity that involves major activities like production,


manufacturing, marketing, advertising, selling, and the like.

Is business an integral part of society? Yes, business is an activity that is part and parcel
of human society, therefore, its activities must be examined from the ethical
perspective.

What is the fundamental reason for examining the activities of business from the moral
perspective?

Ans. For the promotion of the common goods, protection of the individuals interests,
and the preservation of human society in general

The Importance of Ethics in Business

The study of 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.

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.

Moral Reasoning in Business

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.

What is Moral Reasoning?

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.

Responsibility of Managers

Since managers are tasked to solve problems in the organization and its activities, it is
also the responsibility of managers to help in the resolution, if not, prevention of moral
problems in business activities and the enterprise.

Characteristics of a Good Moral Standard

1.A good moral standard is one that looks at the issue as something very serious, e.g.,
murder, graft and corruption, stealing.

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.

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.
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Characteristics of a Good Moral Judgment

1. A good moral judgment must be logical. This means, that the decisions 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.

The Morality of Good Moral Judgment 1.Why people go into business?

People go into business for a numbers of reasons like, personal satisfaction, to earn a
livelihood, to serve the society through the goods and services they offer to the
customers, but the most common, if not, the most dominant motive why people go into
business is to make a profit.

2. How do businessmen viewed profit through their eyes?

Businessmen consider profit as a form of anticipated reward or a compensation for the


efforts they spend, skills they apply, and returns for the capital they invested in
organizing the business.

Milton Friedman , a noted economist, says that 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.

Peter Drucker, a famous management guru, on the other hand, disagrees with this view
by saying, that the enterprise is an organ of the society and therefore, its actions and
decisions have a great impact on society and people.

Reading between the line

Drucker is simply hinting that albeit, profit is an important aspect of business, there are
other factors that the businessman must consider in doing business such as: customer
satisfaction, fair treatment of the employees, and respect for the environment.

Because of these differences of opinion, the issue of profitmotive is a subject matter


that needs to be considered in the study of business Ethics. Is profit motive in business
good or bad? Is it moral or immoral?

Understanding the nature and morality of profit motive starts with the examination of
some given factors and assumptions in which the idea of profit motive operates. These
factors are the following:

1. Profit-motive in business is an ethical issue. Since business is an integral part of


society, its activities including profit-making, must be examined from the
perspective of morality.
2. Profit-motive is an ethical issue operates within two important aspects of our
human conduct-freedom and the structure of business. The element of freedom
implies that businessmen have the right to decide on the amount of profit they
want to earn in the process of selling goods and services to customers.

The Good and the Bad Sides of Profit-Motive 1.Profit motive motivates people to do
something meaningful, e.g., it gives human life a goal to pursue and something to live
for.

2. Profit-motive promotes ingenuity and cleverness in running a business, e.g., business


leaders and entrepreneurs have to struggle to overcome obstacles in order to achieve
success.
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3. Profit-motive makes people productive. Because of their desire for money


businessmen have become productive and some of their products have been useful
and have enhanced human life.

4. Profit-motive generates potential capital for the business. Profit is potential capital,
something that can be invested to establish new businesses. In this way, profit also
results in more jobs and more goods and services for the public and the society as a
whole.

The Bad Side of Profit-Motive

1. Profit-motive promotes rivalry among competitors. Sometimes the competition


becomes stiff that it results into a dog-eat-dog world of business where sources is
achieved by competing with others and pushing them down in order that ones own
business might succeed. This certainty dramatizes business as an important human
activity.

2. Profit-motive makes people focus only on making money, that is, to sell as many
goods as possible without considering whether or not these products satisfy the needs
and wants of consumers and end users.

3. Profit-motive turns businessman from being a reflective and a questioning person


because it focuses his attention on the practical activity of making money. Thus, a life
centered on profit results into a narrow existence, deficient in many important human
dimensions.

4.Profit-motive promotes self-interest rather than the common good. The profit-motive,
has to some extent, benefited some businessmen but it has also created some social
costs that many people, if not the majority have to bear, e.g., depletion of the natural
resources, toxic waster being thrown into the rivers, pollution of the environment, and
disregard for the next generation to come

Business Ethics Defined

Business Ethics is the study of what is right and wrong human behavior and conduct in
business.

Business Ethics is a study of the perceptions of people about morality, moral norms,
moral rules, and ethical principles as they apply and institutions in business.

Business Ethics is the study, evaluation, analysis and questioning of ethical standards,
policies, moral norms and ethical theories that managers and decision makers use in
resolving moral issues and ethical dilemmas affecting business.

Explain the phrase Not all that is legal is moral, but what is moral is worth legalizing.

Business Ethics is

What is appropriate and what is not- in short or long term from the business viewpoint ..
Appropriate in Business is Trust of the customer/party Long term relations Horizontal rapport
With a feeling of service to the society After a certain level of satisfaction society pays back
to the business

Business Ethics/Corporate Ethics

Business Ethics (also known as Corporate Ethics) is a form of applied ethics or professional
ethics that examines ethical principles and moral or ethical problems that arise in a business
environment Business ethics has both normative and descriptive dimensions. As a corporate
practice and a career specialization, the field is primarily normative. Academics attempting to
understand business behavior employ descriptive methods. The range and quantity of business
ethical issues reflects the interaction of profit-maximizing behavior with non-economic concerns.
Interest in business ethics accelerated dramatically during the 1980s and 1990s, both within
major corporations and within academia.
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Ethical Issues in Business

Adulteration in edible items Product Safety/ Unequal Standards Product storage


and logistics irresponsibility Customers as quantity of consumption Surrogate
Advertising/ Treacherous Campaigns Finished accountability after selling the product.
Less expenditure on social causes/wellbeing Environmental issues

Genesis

Ethics come from [Middle English ethik, from Old French ethique (from Late Latin
thica, from Greek thika, ethics) and from Latin thic (from Greek thik), both from
Greek thikos, ethical, fromthos, character; see s(w)e- in Indo-European
roots.]European meant for character/ manner or

1: (a) A set of principles of right conduct.

(b) A theory or a system of moral values: "An ethic of service is at war with a craving
for gain" (Gregg Easterbrook).

2: Ethics : The study of the general nature of morals and of the specific moral choices to
be made by a person; moral philosophy.

3: Ethics : The rules or standards governing the conduct of a person or the members of a
profession: medical ethics.

Major branches

Meta-Ethics, about the theoretical meaning and reference of moral propositions and
how their truth-values (if any) may be determined; Normative Ethics, about the
practical means of determining a moral course of action. Applied Ethics, about how
moral outcomes can be achieved in specific situations. Moral Psychology, about how
moral capacity or moral agency develops and what its nature is. Descriptive Ethics,
about what moral values people actually abide by.

Inventory of ethical Issues in Business

Employee Employer Relations


Employee Employee Relations
Company- Customer Relations
Company-Shareholder Relations
Company- Community /Public Relations

Ethics, Economics & Law

Ethical etiquette is personal but larger in implications. Ethics pays in economic


transactions and strengthens the mutual relations than anything in business expansion.
Law is a watchdog, can check when it sniffs and affect the repercussions not the ethics
straight.

Business, Society & Ethics

It is society that makes the business sustain, business is a tool to increase the frequency
of economic activities, not to rule, control or govern the society. Exchange based
society continued for long in the past with minimum conflicts than modern business.
Physical form of business has less likelihood to incur crisis related to business than
abstract form of business.