ASSIGNMENT

ON
Introduction to business Ethics
(CP201: Business Ethics, 2nd semester)

Submitted to:

Dr. Padmalita Routray

(Faculty, Business Management Department)

Submitted by

Name Roll no.

Mousumi Monalisa Nanda 13201FM092019

Jayanta Mohapatra
13201FM092016

Manoj Kumar Bhattray

13201FM092002

Monalisa Mohapatra 13201FM092017

FAKIR MOHAN UNIVERSITY

VYASA VIHAR
BALASORE
 Abstract

Ethical behavior is not an act but a habit. Just as good health

requires cultivating the habits of getting enough sleep and eating
wholesome food, Aristotle believed that right action was the result
of developing good moral habits. In a business context, this means
training at the deepest level, something called as “corporate
culture”.

Every business organization has its own accountability towards its

stakeholders–employees, capital investors, consumers, government,
competitors, suppliers, and other community members and also the
environment. The organizations have to balance its obligations
towards these varied stakeholders to run the firm smoothly. There
are various factors that contribute to business ethics. In order to
ensure ethical business practices of an organization, it is important
to ensure ethical orientation of the people who own, manage, and
work for it.
INTRODUCTION

Whenever we act, our actions are evaluated; whether we are

doing a right kind of action or wrong. In our family, educational
institutions, business organizations and in the society (taking all in
to consideration) we follow certain rule and regulations which guide
our actions. Those rules, regulation and principles are popularly
called as “ethics”.

Many people tend to equate ethics with their feelings. But

being ethical is clearly not a matter of following one’s feelings. A
person following his or her feelings may recoil from doing what is
right. In fact, feelings frequently deviate from what is ethical.

One shouldn’t identify ethics with religion. Most religions

advocate high ethical standards. Yet if ethics were confined to
religion, then ethics would apply only to religious people. But ethics
applies as much to the behavior of the atheist as to that of the saint.
Religion can set high ethical standards and can provide intense
motivation for ethical behavior. Ethics, however, cannot be confined
to religion nor is it the same as religion.

Being Ethical is also not the same as following the law. The law
often incorporates ethical standards to which most citizens
subscribe. But laws, like feelings, can deviate from what is ethical.

Finally, being ethical is not the same as doing “whatever

society accepts.” In any society, most people accept standards that
are, in fact, ethical. But standards of behavior in society can deviate
from what is ethical. An entire society can become ethically corrupt.

Then what ethics stands for?

 Human being is a social animal. Though rules of nature control
humans as they control other living beings, man himself has derived
certain principles to govern his own individual and group behavior.
These rules, in the form of behavioral standards may differ across
cultures and times, but their basic objectives are always mutual
existence and peace within the particular community or the social
group. By ensuring security and protection of the group these
standards helps in the survival of the particular community or a
social group and thus its members. These standards of behavior are
called “ethics.”

The word ethics is derived from “ethos”, which means character.

In literature ethics means a set of principles or morals. Ethics does not
concern with knowledge or science, nor does it concern aesthetic
judgment, it concerns with action. Hence, ethics can be defined as the
set of principles, or values that govern our actions. These principles
consist of a number of components: education, religion, ideology,
instincts. Based on all these components, ethics ultimately rests upon
the arbitrary choice of what we subjectively feel is right or wrong.

Wright defines “ethics is that branch of philosophy which is the

systematic study of reflective choice, of the standards of rights or
wrong by which it is to be guided and of the goods towards which it
may ultimately be directed”.

Ethics are contemporary standards of principles or conducts

that govern the actions and behavior of individuals within the
society. They provide a basis for determining what is right or wrong
in terms of a given situation. Ethics is a set of moral principles or
values which is concerned with the righteousness or wrongness of
human behavior and which guides your conduct in relation to
others. Ethics also means the continuous effort of studying our own
moral beliefs and our moral conduct, and striving to ensure that we,
and the institutions we help to shape, live up to standards that are
reasonable and solidly-based.

BUSINESS ETHICS
Business Ethics is a form of applied ethics. It is a specialized
study of moral right and wrong. It concentrates on moral standards
as they apply particularly to business policies, institutions, and
behavior. It is a study of moral standards and how these apply to
the social systems and organizations through which modern
societies produce and distribute goods and services and to the
behaviors of the people who work within these organizations. It not
only includes the analysis of moral norms and values but also
attempts to apply the conclusion of this analysis to that assortment
of institutions, organizations, activities and pursuits that people call
business.

According to R. Wayne Mondy, ‘ethics is the discipline dealing

with what is good and bad, or right and wrong or with moral duty
and obligation’.

According to John Donaldson, ‘business ethics is the

systematic study of moral/ethical matters pertaining to business,
industry or related activities, institutions, or practices and beliefs’.

It is now recognized that it is good business to be ethical. An

ethical image for a company can build goodwill and loyalty among
customers and clients. It protects or improves reputation of the
organization by creating an efficient and productive work
environment.
 OBJECTIVES OF BUSINESS ETHICS

The objective of business ethics is to establish norms, standards and

codes.

 Norms: norms are expectations of proper behavior. Norms

are the ways an individual expects all people to act, when faced
with a given situation. Business firms aims at developing such
norms within its employees like; punctuality, keep the promises etc.

 Moral standards: Moral standards are standards that deals

with matters that we think are of serious consequence, are based
on good reasons and not on authority. Moral standards includes the
norms we have about the kinds of actions we believe are morally
right and wrong as well as the values we place on the kind of
objects we believe are morally good and morally bad.

 Ethical codes: ethical codes are statements of the norms

and beliefs of an organization which are generally proposed,
discussed and defined by the middle and top level of the
management in the firm and then published and distributed to all
its members. In order to improve standards of behavior codes are
introduced to ensure good conduct.

 It also aims at evaluating human practices on the basis of

moral standards and giving prescriptive advice on how to act
morally in a specific kind of situation.
 Nature of business ethics

• Ethical decisions differ with individual perspective of different

persons. Each person views the ethical question in terms of his or
her own frame of reference. And this frame of reference is the
person’s own unique value system.

• Most ethical decisions involve a tradeoff between cost incurred and

benefits received. Cost and benefits, profits and social
responsibilities are different ends of a single spectrum. All cannot
be maximized simultaneously.

• Business ethics is a specialized study of moral right and wrong. It

concentrates on moral standards as they apply to business
institutions, organizations and behavior.

• Business ethics can be both normative and descriptive. It is said to

be normative because it takes the practical task of arriving at
moral standards through advocating good habits a business firm
should necessarily acquire, duties it should follow, virtues it should
maintain and the overall utility it should maximize. It is sometimes
evaluated as descriptive ethics because it outlines ethical belief
patterns of various business firms and explains them.
• It is meta-ethical, means whether moral terms that are generally
used to describe individuals and the actions they perform can also
be applied to organizations, corporate business and other
collective entities.
• Business ethics is unstructured i.e. it does not have universal
acceptance.
 SCOPE OF BUSINESS ETHICS
Ethical issues exist at all levels of business activity. Business
ethics concern the ground rules of individual company and societal
behavior. Business ethics requires businesses to think about the
impact of its decisions on people or stakeholders who are directly or
indirectly affected by those decisions.

Business must become aware of the ethical diversity of this

world because of increasing globalization of the economy. It must
learn the values of other cultures, how to apply them to its
decisions, and how to combine them with its own values. In a world
where transnational corporations and their affiliates account for two
third of the world’s trade in goods, and employ 73 million people,
corporations cannot afford to ignore the reality of multicultural
ethics.

The scope of business ethics can be applies at five levels. They

are:

SCOP
E

ENVIRONMENTAL LEVEL
STAKE HOLDER’S LEVEL

SOCIETAL LEVEL
 INTERNAL POLICY LEVEL
PERSONAL POLICY
LEVEL

I. STAKE HOLDER’S LEVEL

a) Employees: The business firm along with profit

maximization should also look after its human resources. It’s
should provide Better working conditions to its workers, should
involve employees in management process, should assure job
"Don't be evil." Googlers generally apply those words to how they
serve their users. It’s about providing the customers unbiased access to
information, focusing on their needs and giving them the best products
and services that they can. But it's also about doing the right thing more
generally -- following the law, acting honorably and treating each other
with respect.

security and should provide welfare facilities like free insurance,

hospital facility etc. being honest in serving consumers, clients,
employees, suppliers, distributors and the public.

b) Customers: Business firms should provide better quality of

goods and services at reasonable price to its customers. It should
not practice discriminatory pricing also should not make false
claims about products in advertisement.
 c) Shareholders: Business organization should ensure capital
appreciation, ensure steady and regular dividend, disclose all
relevant information to the shareholders, and Protect minority
shareholders interest. It should not window dress balance sheets
and should protect interests in time of mergers, amalgamation
and takeovers.

d) Banks and other lending institutions: the

business organization should provide Guarantees while borrowing
funds and should pay interest and repay the loan of the bank.

e) Government: Business organization should obey the rules

and regulations formed by the government. It should pay taxes in
time and help the government in the development and progress
of the country.

II. PERSONAL POLICY LEVEL: Nilachala Ispat Nigam

Limited (NINL) situated at
f) The employees should not use office Kalinga Nagar, Orissa has
facilities for their personal purpose. The given employment
opportunity to the people
top level or executives or supervisors who have given their land
to the industry. It also
should not misuse others for personal
provides communication
purpose. They should not indulge in facility to its employees
who are staying far away
politics to gain power and should not spoil from the industry.
promotional chances to others. They
should keep their promises to the customers, or employees. They
should help each other in order to achieve their and the firms
objective.

III. SOCIETAL LEVEL

 It should have concern for poor and downtrodden. It should
provide employment facilities to the socially backward people and
the people who have been displaced by the organization in order to
build their entity. It should contribute to the better quality of life of
its employees and customers and the society in total.

IV. INTERNAL POLICY LEVEL

Many organizations are now The business organization should

promoting to protect our have Fair practices relating to
environment. IDEA, a mobile
company is advertising on requirement, compensation, layoffs, and
not to use paper in order to
perks promotion for employees. It should
save trees. Many paper mills
are now recycling papers in motivate the employees to lead the
order to save trees.
team which will strengthen their morale
and help to achieve better and higher
things in life. It should ensure better communication at each level by
delegating authority, decentralizing the power and providing better
channels of communication.

V. ENVIRONMENTAL LEVEL

Organizations should have Concern for clean environment. It

should use renewable resources, environment friendly products. It
should Preserve scarce resources for posterity like wood, water, iron
ore etc.

FACTORS AFFECTING BUSINESS ETHICS

 Business ethics reflects its responsibility, authority, and dignity. So
the business organization wants to conduct its business without
affecting the interest of society and the business itself by assuming
responsibility exercising authority and maintaining dignity. But there are
some factors affecting the observation or adoption of business ethics.

1. Individual Level

• Lack of education: - education refers to the knowledge of

ethical values. Businessman wants to follow business ethics
strictly. But he doesn’t know what business ethics is relating to his
business.

• Lack of ethical attitude: - a businessman wants to stand

out distinctly from other fellow business man. At the same time he
doesn’t prefer to practice business ethics in spite of his sound
knowledge of them.

• Personal code of behavior of the individual: - the

personal ethics of an individual has an impact on his professional
and organizational behavior. The “man” in the “manager” is more
powerful in setting out the directives and boundaries of behavior.
The personal value system and concept of morality develops a
background for identifying and evaluating the ethically of his
business decision. Further, a person’s value system and definition
moral standards are the result of his own thought process,
perception and learning as well as the complex environment which
influences his life. The process of cognition which combines the
internal meditation and analysis and the external activities of
collection and compilation of information clues from the
surrounding develop an individual’s idea of morality. The up-
 bringing of the individual also has an effect on this process. This
may, induce relativism in moral ideas and the criteria for the
ethical decision-making in business setting.

2. Organizational Level

• Abnormal profit motive: the very purpose of starting is to

earn profit. Only lesser amount of profit is earned during the initial
period of business. But the businessman wants to earn more
profits by economizing establishment expenses.

• Policies of the company: The company policy has an effect

in determining the scope and dimensions of ethical behavior of
employees. A policy explicitly encouraging ethical behavior and
providing clear-cut guidelines for the same acts as a motivating
and directing force for ethical conduct and decisions. The leaders
of company management have decisive role in this regard.
Thomas Garrett says, in this context, that the best protection is the
example presented by the top management and the atmosphere it
creates. When the leaders are scrupulous, employees know what is
considered right. When example is supported by explicit policy, the
followers have a clear idea of how to translate the example of
leaders in to action. When policy is enforced and reinforced the
employees know that honesty is the best policy in this company.

• Non cooperation of workers: workers or employees don’t

care about the business ethics. They want, just, to do their work as
quickly as possible for remuneration. The impact of non-adoption
of business ethics affects the business and the workers or
employees.
• Leadership: A leader plays a crucial role in creating,
maintaining and changing ethical culture. Leaders at every level
serve as role models and employees have more daily contact with
their supervisors. “A leader is best when people barely know he
exists, not so good when people obey and acclaim him and worse
when they despise him”. An honest leader can act as a role-model
for his subordinates. The moral standards of the leader and his
sensitivity towards moral issues influence the decisions and
actions of his subordinates. For instance, if the leader condones
unethical practices like padding the expense account, accepting
expensive gifts from outsiders, eventually overriding the rule and
norms for personal favors, etc., the subordinates assumes such
activities as acceptable practices. Their boss has an impact on
their ethical behavior, because he is the first dictator of ethics in
their work- behavior.

• Business strategy: - Business strategy is the managerial

plan for detecting and running a particular business unit. Such
strategy defines the product market posture of its individual
business units. Business strategy deals specifically with the issues
of:
 How the organization intends to specifically with specific
business
 What the role/thrust of each key functional area will be in
contributing to the success of the business in the market place.
 How resources will be allocated within the business unit.

• Unhealthy competition: business man adopts unfair trade

practices to have edges over other competitors. This will ruin
 business in long run. Unhealthy competition is not preferred by
gentleman businessman.

• Corporate culture: The corporate response to public

demand for ethical behavior and concern for the ‘appearance of
propriety’ is the corporate reputation. The firms engage in ethical
behavior may be due to profit motives. An ethical decision does
not always lead to the highest profit possible. Perhaps the firm
engages in ethical decision making because ‘it is the right thing to
do’. Engaging in ethical behavior, implementing ethical programs
or instituting codes of conduct all contribute both to the internal
culture of the firm as well as to the external stakeholders
perception of the firm.

3. Social and political level

• Political interference: political parties approach the

business man to get donation. Now, the business man is not ready
to deny it as it would affect the smooth running of business.
Donation given to a political party considered unnecessary
expenses from the business point of view. This will affect profit and
smooth running of business.

• Political uncertainty: the policy of government affects the

business ethics to some extent. If a number of governments are in
power for short periods, there is every chance for changes in the
policies of govt. stable government alone does not affect business
ethics.

• Ethical climate of a country: the general environment in

the country and the insistence of the society on moral conduct and
character has a wide and deep influence on business ethics.
Business is a part and parcel of the society and business ethics is a
part of general ethics, value-system, morality and culture of the
society. The moral standards in business are the reflection of the
moral standards of the society. If the society in general looks to
bribes, lies, violations of promises and such other acts liberally and
condone them from time to time, the business men cannot be
expected to remain aloof from indulging into such unethical
practices for personal benefits. In order to foster ethics in business,
we have to strengthen ethics in personal as well as social life.

• Corruption: a business is regulated by the government

through its officials. Straight forward and able officials are working
in the government depts. However, the approach or behavior of
some government officials is not appreciated by the business men.

• Social pressure: social forces and pressures have

considerable influence on ethics in business. Society, in the recent
past has demonstrated how a special status can be conferred on
back ward caste boycotted products and complained and
threatened action to prevent the construction of nuclear power
plants. Such actions by different groups in society may, infact,
force management to alter certain decisions by taking a broader
view of the environment and the society.
 • Red-tapism: the existence of red tapism also affects the
business ethics. Business units should get prior permission of the
government t for all its proceeding at every stages of
development. Red tapism is found to be at its maximum in the
issue of license and in the taxation policy.

CONCLUSION

In the increasingly conscience-focused marketplaces of the

21st century, the demand for more ethical business processes and
actions is increasing. Simultaneously, pressure is applied on industry to
improve business ethics through new public initiatives and laws. The
business organizations should maintain an ethical code of conduct and
communicate those to all its stakeholders and apply these in various
levels in order to survive in the society.

REFERENCE

Murty. C.V.S. (2009), Business Ethics. Himalaya Publishing

House, Mumbai.
Velasquez. M.G (2006), Business Ethics: Concepts and Cases.
5th edition. Prentice’ Hall of India Pvt. Ltd, New Delhi.

http://www.colorado.edu/studentgroups/libertarians/issues/friedman-
soc-resp-business.html