BBM 4201 ETHICS AND SOCIAL RESPONSIBILITY NOTES

TOPIC 1: INTRODUCTION TO BUSINESS ETHICS AND SOCIAL

RESPONSIBILITY
Meaning of Ethics

The term ‘ethics’ defines the standards that bear on right and wrong issues of society.
Business ethics is thus a set of professional standards, which emphasize principles of
honesty and duty to the business and the general public. The other significant
principles included in business ethics are:

• Fairness
• Integrity
• Commitment to agreements
• Broad-mindedness
• Considerateness
• Importance given to human esteem and self-respect
• Responsible citizenship
• Attempt to excel
• Accountability

These principles, if strictly pursued, lead to a decent business environment and create
healthy relationships in the organization. However, deviations from these principles
can occur due to the following factors:

• Ignorance and indifference to issues

• Selfishness
• Imperfect reasoning

Concept of Business
Just like human beings function with limbs, corporations or companies function
through their businesses. The term business can be broken as ‘busy-ness’ meaning
thereby an activity that keeps an individual busy. In the economic sense, the creation
of utility is called business while in the commercial sense, the activities concerned with
the purchase and sale of goods and services are called business. A business includes

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that part of production, which is equally exchanged and results in mutual benefits to
the parties who exchanged goods in the transaction.

Business Definitions
According to Peterson and Ploughman, ‘Business may be defined as an activity in
which different persons exchange something of value, whether goods or services for
mutual gain or profit.’
According to James Stephenson, ‘Business is the sum total of those processes which
are engaged in the removal of hindrances of persons (trade), places (transport and
insurance) and time (warehousing) in the exchange (banking) of commodities.’
According to F.C. Hooper, ‘Business means the whole complex field of
commerce and industry, the basic industries, processing and manufacturing industries
and the network of ancillary services, distribution, banking, insurance, transport, and
so on, which serve and interpenetrate the world of business as a whole.’
According to Section 2(13) of the Indian Income Tax Act, 1961, business means,‘any
trade, commerce or manufacture or any adventure in the nature of trade, commerce
or manufacture’.
Nature of Business
Business is a wide term. It includes all occupations in which people are busy in
earning income either by production or purchase, sale and exchange of goods and
services to satisfy the needs of people and to earn profit. The following points may be
discussed to reveal the true nature of a business:

• Economic activity: Business is an essential economic activity. Profit

motive is the key element that inspires a businessman to work efficiently.
• Human activity: Business is a human activity. In this sense, business is
considered to be an economic activity of human beings only. A business is by the
people and for the people.
• Social process: Business is a social process. All the individuals involved in a
business, such as owners, customers and employees, are an integral part of society.
Business has to fulfil its social responsibilities.
• System: A system is a combination of things or parts forming a unitary whole.
It is an established arrangement of components for the attainment of objectives.

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Similarly, business is a system consisting of various subsystems that are operated in a
balanced and coordinated way.

Types of Business Activities

All human activities concerned with earning money are included under the term
business. Cultivation by a farmer, teaching by a teacher and treatment taken by a
patient from a doctor are also treated as business activities.
There are different types of business activities, which may be classified as
follows:

• Industry: An industry includes the activities connected with the

production and processing of goods. Manufacturing enterprises are engaged in the
production of goods. These kinds of industries can be classified as follows:

 Analytical enterprises: An oil refinery that separates crude oil into petroleum,
kerosene and diesel oil is an analytical concern.
 Synthetic enterprises: An enterprise which combines several materials to
produce one product is a synthetic enterprise. All soap mills and cement
factories are synthetic enterprises.
 Assembling enterprises: All those plants engaged in the production of
products, such as radios, scooters and television sets are assembling enterprises.
A few enterprises involved in mining are involved in mineral resource
production, for example, iron ore, coal, gold and silver.
• Commerce: It is the total of all those activities that are engaged in the removal
of hindrances of persons or trade, places or transportation, risk of loss or insurance
and time, such as warehousing, banking and financing of commodities. Commerce
can be divided into two categories: trade and aid to trade. Trade can be further
divided into two categories, which are as follows:

 Internal: This includes the trade that is done with the country, such as
wholesale and retail trade.
 External: This includes the trade that is done with various countries, such
as export and import.Aid to trade can be divided into transport, banking and
insurance.
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Characteristics of Business
Business means the creation of utilities. There are many features of business activities
and, thus, the business. The essential characteristics of business may be summarized
as follows:

 Exchange or sale: A business includes the sale, purchase and exchange of goods
and services.
 Creation of utilities: A business creates transfers and utilities of goods by
making them available in proper form at the appropriate time and place.
 Social institution: A business deals with the people of society. All the persons
engaged in the business, such as owners, customers, employees and other
professionals, belong to the society. A business has to fulfil its social
responsibilities towards each part of the community and has to follow the
business ethics as well.
 Profit motive: Business activities are carried out to make profit. A non-
profitable business cannot continue to exist for long. Profits are essential for
growth of a business.
 Risk and uncertainty: There are two types of risks in a business. The first type
of risk is floods and thefts. The second type of risk is loss due to fall in demand
and labour trouble.
 Uncertainty arises because of unpredictability of profit in a business. Profit is
such an element which cannot be predicted in advance.
 Customer satisfaction: A business always tries to satisfy its customer with better
quality and reasonable prices.
Objectives of Business
Objectives are needed in every field where performance and results affect the survival
and prosperity of a business. Success in a business cannot be achieved without the
proper selection of objectives. The structure, direction and management of a business
closely depend upon its objectives. Some of the important objectives are as follows:
 Economic objectives: Profit earning is the most important objective of a
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 business. Profits must be earned by a business to provide for its own
survival, coverage of risks, growth and expansion. It is a necessary
motivating force and it is in terms of profits that the efficiency of a
business is measured. All business activities are performed to achieve the
following economic objectives:
Incentive: Profit is the biggest incentive for work. It is the driving force behind the
business enterprise. It encourages a man to work to the best of his ability and capacity.
Survival: Profit is essential for the survival of a business. In the absence of profits,
an organization will not be able to survive. It also helps in replacing obsolete
machinery and equipment and, thus, ensures the continuity of a business.
Growth: Stagnation is the biggest setback for any industry. The prosperity and
continuity of an industry largely depends upon its growth and expansion.
Measurement of efficiency: Profits measure the performance of the business. It is
the accepted yardstick for the evaluation of the efficiency of the business.
Prestige: An unsuccessful business concern carries no good will.
Higher profits not only provide economic power and status businessman but also
improve the creditworthiness and bargaining strength of the business.

 Social objectives: The purpose of a business is not only to earn profits

but also to discharge responsibilities towards society as well as
employees. These objectives are as follows:
o Service to society: A business must serve the society by
considering the following factors:
 Better product: Customer satisfaction is the backbone of a
business. Therefore, a business must ensure a supply of better
quality of goods and services to its customers.
 More employment: A business provides a large number of
employment opportunities to the members of the society. This is
a very important service especially in developing countries like India
where the pressure of population is high and thus unemployment
prevails.
 Better environment: No business can survive for long if it is
harmful to the society. It must not cause any kind of air, water or
noise pollution. All effort must be made to reduce the adverse
effects of business on the quality of life. Men, animals and birds
must also be protected from industrial pollution of the environment.
 Better living standard: Good employment opportunities and
good quality of products improve the living standard of the people.

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 o Service to employees: A business must serve its employees by
considering the following features:
 Fair wages: Social justice requires that employees get fair
remuneration for their work. Apart from the wages, if their employers
acknowledge their contribution, the employees would be satisfied and
would work more sincerely.
 Growth and promotion: The work of the employees must be
acknowledged and they should be given adequate training to improve
themselves so that they will be ready to accept better positions in an
organization, if offered.
 Partnership in the prosperity of business: Employees should
not be considered servants in an organization. Their contribution must
be given due recognition. They must be allowed to share in the prosperity
of the business either by sharing of profits or capital.
 Fair wages, bonus, dearness allowance, provident fund, medical
facilities and educational and other facilities to employees
 Workers’ participation in management
 Encouragement of creativity, initiative and provision of growth
opportunities for employees
 Job satisfaction and other provisions to raise the morale of
workers
 Congenial working conditions
 Security of employment for workers
 Profit sharing schemes for the workforce

 National objectives: Apart from the other objectives, there are some
national objectives as well which are as follows:
o Ensuring social justice
o Development of skilled personnel
o Development of small entrepreneurs o
Export development
o To abide by laws passed by local, state and central governments

Responsibilities of a Business towards Various Interest Groups

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Interest groups consist of the various persons connected with a business, such as
consumers, shareholders and the community. The responsibilities of a business
towards various interest groups are as follows:

• Responsibilities towards consumers: A consumer is a person who

determines what goods shall be produced and whether they should be sold in the
market or not. Consumers not only determine the income of the business but also
affect the success and survival of the business. Therefore, a business has some
basic responsibilities towards the consumers and these are as follows:
 To produce those goods that meet the needs of consumers of different tastes,
classes and purchasing power
 To establish the lowest possible price with efficiency and reasonable profit
to the business
 To ensure fair distribution of products among all sections of the consumers
 To make the products more satisfactory to consumers through the study of
consumer needs
 To handle the complaints of consumers more carefully and to analyze them
properly
 To answer consumers’ enquiries related to the company, its products and
services
Responsibilities towards shareholders: The basic responsibility of a
business is to ensure the safety of investment and higher rate of return on the
investment. Owners of a business may be proprietors, partners or shareholders. The
interest of shareholders lies in participating in the management and getting regular
dividends at appropriate rates. It is, therefore, the responsibility of the
management to improve communication between the company and its
shareholders. This can be done by providing maximum information to the
shareholders through newsletters, annual reports or by holding the annual general
meeting of the company at an appropriate time and place so that the maximum
number of members can come and participate in the discussions.
• Responsibilities towards community: The management has the
responsibility of informing the community about the organizational policies, activities
and contribution towards the betterment of society. The various other responsibilities
towards the community are as follows:

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  Financial help to the municipal and district boards for the improvement
of housing conditions
 To help the community by aiding hospitals, schools, colleges, religious
institutions, and so on
 To organize community forums and group discussions to promote better
understanding of national and local affairs
 To encourage sports and provide recreational facilities

TOPIC 2.ETHICAL CONCEPTS

Ethics is the branch of philosophy that is used to evaluate human actions. Some basic
ethical concepts in business are as follows:
Ethical subjectivism: This concept emphasizes that the ethical choice of the
individual decides the rightness or wrongness of his behaviour.
Ethical relativism: According to this concept, no principle is universally applicable
and so it would be inaccurate to measure the behaviour of one society with another’s
principles or standards. Relativism overlooks the fact that there may be enough
evidence to believe that an ethical practice is based on false belief, illogical reasoning,
and so on.
Consequentialism: Consequentialism is based on two ideas: the concept of value
and the maximization of value. If, for example, honesty is considered a value, an act is
considered ethical only if it maximizes this value. An act, which does not maximize
the said value, is not ethically permissible.

Deontological ethics: This concept stresses that ethical values can be developed
from the concepts of reason as all rational individuals possess the ability to reason.
We may, for example, end up causing pain unknowingly while trying to create
happiness. Therefore, the ethical value of an action cannot be determined by its
consequences. Instead, it is in the motive that lies behind the particular action.
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Ethics of virtue: This concept emphasizes those traits that give the individual a sense
of satisfaction from ethical point of view. Virtuous acts like courage, honesty,
tolerance and generosity are done as a way of living and not by chance.
Whistle blowing: Whistle blowing refers to the attempt of an employee to disclose
what he or she believes to be illegal behaviour in or by the organization. From one
point of view, this seems to deceive the principle of honesty in business ethics, as it is
taken for granted that the employees of an organization need to be loyal to its
workings. However, when loyalty to one’s organization in particular is perceived to be
harming one’s general loyalty to mankind, the act of whistle blowing is justified.
Failure on the part of the management of the organization to fulfill its social
obligations calls for whistle blowing. It is the responsibility of the whistle blower to be
careful about revealing the organization’s secrets and to consider the harm it may
cause to his colleagues and shareholders.
The steps that should be taken into consideration by the whistle blower are:
i. Ascertain the gravity of the situation before whistle blowing
ii. Scrutinize the purpose
iii. Authenticate and keep a record of the concerned information
iv. Determine the type of offence and to whom it should be reported
v. Assert your claim in a proper way
vi. Stick to the facts
vii. Determine if the whistle blowing need be external or internal
viii. Decide if the whistle blowing should be anonymous or otherwise
ix. Make sure to follow proper rules in reporting the offence
x. Consult a lawyer (if required)
xi. Anticipate and document vengeance
Ethical dilemmas in business: An organization’s ethical problems indicate a
conflict between its economic and social performance. This results in a dilemma for
managers. Since people handle business, it is a crucial requirement to check and
ascertain ethical behaviour at a personal level. This will confirm ethically correct
responses from the organization to the mutual actions of individuals
Ethical Models
Ethical models can be used to define ethical situations and manage ethical dilemmas
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that may occur in the organizations. The Golden Rule Model and The Right-driven
or Kantian model are two operational models that have emerged from the work
of philosopher Immanuel Kant .

The Golden Rule Model

This model—originated from the New Testament—specifies people should treat
others in the same manner that they themselves would like to be treated. It is a
fundamental principle found in every culture and religion and it is the most important
basis for the modern concept of human rights. It is also called the ethics of reciprocity
as it stimulates an individual to put oneself in the other person’s shoes and then
evaluate how one would wish to be treated in that particular situation. This proves
that this rule is absurd without identifying the receiver and the situation. The ethics
of reciprocity should not be confused with revenge or penalizing justice. The
ethics also mentions that one has the freedom to do anything as long as those
activities do not harm anyone. If this golden rule is applied to every anomaly, then
many unethical consequences may result in causing harm to others and
perfectionists may charge others with critical analysis, which may lead to
harassments. Different people have different ideologies, beliefs and may belong to
different cultural heritages. This difference is the reason behind the difference
people’s behaviour towards various situations.

The Kantian Model

This model is based on the hypothesis that everybody has some fundamental rights in
this ethical universe. So any action is ethically correct if it reduces the stakeholders
‘collective violation of rights. This model willingly provides assistance in the internal
audit review and helps in managerial decision-making. Kant did not believe that any
outcome was good from its origin. According to him good is not always intrinsic. He
did not believe in ‘good’ character traits like ingenuity, intelligence and courage. In
fact, he used the term ‘good’ to describe ‘goodwill’, by which he meant the resolve
to perform the act purely in accordance with one’s duty.
If the actions are predetermined then they cannot be described as free and moral. He
believed that to act morally, freedom is required. According to Kant there are two
concepts of duty. According to one concept, duty is just following orders imposed by
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others. The other concept is that duty is internal and can be imposed on oneself. He
considered that inclinations constitute motivation whereas others believed that it
was the physical world that acted as motivation.
Kant also introduced maxims, which are subjective rules that guide actions and help
an individual to act according to the relevant description. There is sufficient generality
in description. All actions have maxims like:

• Never lie to your colleagues.

• Never act in a manner that would make your family or organization ashamed of
you.
• Always work hard to be the best performer.
The following principles should be broad and adaptable enough to be used with any
ethical decisions. The principles are based primarily on Kantian and deontological
ethics (it is right to do the right thing).
(1) Justice; double obligation: a) not to do the injustice b) to prevent and mend the
injustice
(2) Do no harm: endeavors not to do harm unto others, exceeding pragmatism and
selfishness

(3) Loyalty: keeping promises, keeping the given word, not only the formalism of the
contract
(4) Credibility: lies and manipulations do not last long, they create distrust. The
greatness of man is demonstrated in acknowledging one’s mistakes, either deliberate
or not.
(5) Liability: if I do harm to someone I need to mend it. It is extremely unjust and
unethical when someone who has caused material damage to another person and thus
pushed him to the edge of survival manipulates with legal procedures in order to save
his own interests, and makes others look insignificant (the consequence of which are
many tragic stories of individuals and families).
(6) Charity: sense of solidarity and the common good. Or as put in the Talmud, a
poor man does more good to the rich by accepting their almsgiving then vice versa.
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(7) Personal growth: the importance of self-initiative of the employees, personal
pleasure; a company’s success grows with the sense of responsibility of all employees
towards the company. At the same time, an individual should feel accomplished in his
job, he should nurture all dimensions of his life (culture, sports...)
(8) Gratitude: being grateful, praising other people and their success. Envy and
jealousy belong to the most destructive tendencies, and they destroy interpersonal
relationships and man’s creativity.
(9) Freedom: striving for man’s personal freedom and dignity. Freedom includes
rights and responsibilities. Naturally, freedom is something completely different from
ruthless self-will which is triggered by momentary impulse and pragmatic
individualism.
(10)Respect: respect towards others, self-respect, forgiving yourself first and then your
colleagues if something was done wrong, relationships of trust and integrity,
exceeding prejudice; man should never be a means, man presents the end.
How to make true ethical decisions? These ten sound-minded principles summarize
the obligations and present the starting point for making ethical decisions. The
following standpoints, or rather stages in decision making, can help us make wise, fair
and prudent decisions.
(1) Prioritizing: the question which helps us prioritize is: what are my obligations in
this case? For more help, we can add questions like: is it my obligation to be just, not
to do any harm, to be loyal etc.? We simply follow the ten above-mentioned ethical
principles. Once we answer these questions, it is much easier to decide which
principles we should abide by.
(2) Acknowledging conflicts of responsibility: the question to guide us in
acknowledging conflicts is: which obligations contradict each other? We soon realize
that it is of vital importance how we handle the contradicting obligations. Some ways
of how to do good are just wrong (a good end does not justify any means) and
sometimes we need to postpone certain actions, reconsider and reassess them.

(3) Ethical judgment of obligation: the leading question here is: what is the
significance of the contradictory obligations? Sometimes we have to choose between

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options which are contradictory in themselves. The most dangerous factors in our
decision-making are populism and current favorites.
(4) The choice of ethically feasible options: we often have to choose between different
options, each being difficult and demanding in it. It is of vital importance that
whenever we need to convey an unpleasant piece of news to someone that we do so
in a respectful manner, without humiliation or judgment. It is important that the
receiver of our message feels our benevolence and good intention.
(5) The choice of action: if we considered obligations at the first four levels, it is now
time to act, or rather make a decision. The worst thing at this point is to be indecisive,
to avoid responsibility, and leave questions to be answered sometime in the future. A
person who knows exactly what he wants, a person with a vision, usually has enough
courage and strength to make decisions, even though it is difficult to please everyone.
Quite the opposite, critical and contrary remarks should be understood as a sign that a
person is going in the right direction. Indecisiveness and populism lead to the point
when a person no longer encounters either opponents or supporters; he loses his
identity and turns into a faceless person.
Ethical decision making We have alluded to the importance of ethical decision
making, but it is useful to treat it briefly as a distinct topic. Decision making is at the
heart of the management process. If there is any act or process that is synonymous
with management, it is decision making. Though there is a need for improved
managerial performance in the private and public sectors, there is a special need for
improved ethical decision making by managers. Petrick and Quinn (1997: 24-5) state
five reasons for managers to improve their ethical decision making:

(1) The costs of unethical workplace conduct

(2) The lack of awareness of ethically questionable, managerial, role-related acts

(3) The widespread erosion of integrity and exposure to ethical risk

(4) The global corruption pressures that threaten managerial and organizational
reputation
(5) The benefits of increased profitability and intrinsically desirable organizational
order.
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In the academic literature, there is much written about ethical decision making,
including the use of models of ethical decision making. Most business ethicists would
advocate the use of ethical principles to guide organizational decision making. A
principle of business ethics is a concept, guideline, or rule that, if applied when you
are faced with an ethical dilemma, will assist you in making an ethical decision. There
are many different principles of ethics, but an extensive coverage of them is outside
the scope of this chapter. Suffice it to say here that such useful principles include the
principles of justice, rights, utilitarianism and the golden rule (Buchholz and
Rosenthal, 1998). The basic idea behind the principles approach is that managers may
improve the quality of their ethical decision making if they factor into their proposed
actions, decisions, behaviors and practices, a consideration of certain principles of
ethics. A very practical approach to ethical decision making has been suggested by
Laura Nash (1981: 80) who argues that there are twelve questions managers should
systematically ask in a quest to make an ethical decision:
(1) Have you defined the problem accurately?

(2) How would you define the problem, if you stood on the other side of the fence?
(3) How did this situation occur in the first place?
(4) To whom and what do you give your loyalties as a person, and as a member of the
corporation?
(5) What is your intention in making this decision?

(6) How does this intention compare with the likely results?
(7) Whom could your decision or action injure?
(8) Can you engage the affected parties in a discussion of the problem, before you
make your decision? (9) Are you confident that your position will be as valid over a
long period of time as it seems now?
(10) Could you disclose without qualms your decision or action to your boss, your
CEO, the board of directors, your family, or society as a whole?

(11)What is the symbolic potential of your action if understood? If misunderstood?

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(12)Under what conditions would you allow exceptions to your stand? Another set of
useful questions to aid ethical decision making has been offered by Blanchard and
Peale (1988).
They recommend that managers ask these questions before making a decision, and
they call these three questions the “ethics check.”

(1) Is it legal? Will I be violating either civil law or company policy?

(2) Is it balanced? Is it fair to all concerned in the short term as well as the long term?
Does it promote win-win relationships?
(3) How will it make me feel about myself? Will it make me proud? Would I feel good
if my decision was published in the newspaper? Would I feel good if my family knew
about it?

TOPIC 3: BUSINESS ETHICS

Business ethics is nothing but the application of ethics in business. Business ethics is
the application of general ethical ideas to business behavior. Ethical business behavior
facilitates and promotes good to society, improves profitability, fosters business
relations and employee productivity. The concept of business ethics has come to
mean various things to various people, but generally it‘s coming to know what it right
or wrong in the workplace and doing what‘s right - this is in regard to effects of
products/ services and in relationships with stakeholders.
Business ethics is concerned with the behavior of a businessman in doing a
business. Unethical practices are creating problems to businessman and business
units. The life and growth of a business unit depends upon the ethics practiced by a
businessman. Business ethics are developed by the passage of time and custom. A
custom differs from one business to another. If a custom is adopted and accepted by
businessman and public, that custom will become an ethic.
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Business ethics is applicable to every type of business. The social responsibility of a
business requires the observing of business ethics. A business man should not ignore
the business ethics while assuming social responsibility. Business ethics means the
behaviour of a businessman while conducting a business, by observing morality in his
business activities
According to Wheeler Business Ethics is an art and science for maintaining
harmonious relationship with society, its various groups and institutions as well as
reorganizing the moral responsibility for the rightness and wrongness of business
conduct.
According to Rogene. A. Buchholz , ―Business ethics refers to right or wrong
behaviour in business decisions ―.
Business Ethics or Ethical standards are the principles, practices and philosophies that
guide the business people in the day today business decisions. It relates to the
behaviour of a businessman in a business situation. They are concerned primarily with
the impacts of decisions of the society within and outside the business organizations
or other groups who keep interest in the business activities . Business ethics can be
said to begin where the law ends. Business ethics is primarily concerned with those
issues not covered by the law, or where there is no definite consensus on whether
something is right or wrong

IMPORTANCE OF BUSINESS ETHICS

There may be many reasons why business ethics might be regarded as an increasingly
important area of study, whether as students interested in evaluating business
activities, or as managers seeking to improve their decision-making skills.

It is generally viewed that good business ethics promote good business.

 The power and influence of business in society is greater than ever before.
Business ethics helps us to understand why this is happening, what its
implications might be, and how we might address this situation.
 Business has the potential to provide a major contribution to our societies, in
terms of producing the products and services that we want, providing
employment, paying taxes, and acting as an engine for economic
development and thereby increases the goodwill.

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  Business malpractices have the potential to inflict enormous harm on
individuals, on communities and on the environment. Through helping us
to understand more about the causes and consequences of these
malpractices, business ethics helps to create mutual trust and
confidence in relationship.
 The demands being placed on business to be ethical by its various stakeholders
are constantly becoming more complex and more challenging. Business
ethics provides the means to appreciate and understand these challenges
more clearly, in order that firms can meet these ethical expectations more
effectively.
 Business ethics can help to improve ethical decision making by providing
managers with the appropriate knowledge and tools that allow them to
correctly identify, diagnose, analyze, and provide solutions to the ethical
problems and dilemmas they are confronted with.
 A business can prosper on the basis of good ethical standards and it helps to
retain the business for long years.
 Business ethics can provide us with the ability to assess the benefits and
problems associated with different ways of managing ethics in
organizations.
 In the age of complexity in business fields, competition is increasing day by day
Good ethical standard helps the business to face the challenges

CHARACTERISTICS OF BUSINESS ETHICS

The following are the important features of business ethics:-

 Business ethics are the principles, which govern and guide business people to
perform business functions and in that sense business ethics is a discipline
 It is considered both as a science and an art.
 It continuously tests the rules and moral standards and is dynamic in nature
 It is based on theological principles such as sincerity, human welfare, service,
good behavior etc.
 It is based on reality and social customs prevailing in business environment.
 It studies the activities, decisions and behavior which are related to human
beings
 It has universal application because business exists all over the world
 Many of the ethical principles develop the personal dignity

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  Business ethics keeps harmony between different roles of businessman, with
every citizen, customer, owner and investors.
PRINCIPLES OF BUSINESS ETHICS

The Principles of business ethics developed by well known authorities like Cantt, J.
S.Mill, Herbert Spencer, Plato, Thomas Garret, Woodrad, Wilson etc are as follows

 Sacredness of means and ends: The first and most important principles of
business ethics emphasize that the means and techniques adopted to serve
the business ends must be sacred and pure. It means that a good end cannot
be attained with wrong means, even if it is beneficial to the society.
 Not to do any evil: It is unethical to do a major evil to another or to oneself,
whether this evil is a means or an end.
 Principle of proportionality: This principle suggests that one should make
proper judgment before doing anything so that others do not suffer from
any loss or risk of evils by the conducts of business.
 Non co-operation in evils: It clearly points out that a business should with any
one for doing any evil acts.
 Co-operation with others: these principles states that business should help
others only in that condition when other deserves for help
 Publicity: According to W. Wilson, anything that is being done or to be done,
should be brought to the knowledge of everyone. If everyone knows, none
gets opportunity to do an unethical act.
 Equivalent price: According to W. Wilson, the people are entitled to get goods
equivalent to the value of money that he will pay.
 Universal value: According to this principle the conduct of business should be
done on the basis of universal values.
 Human dignity: As per this principle, man should not be treated as a factor of
production and human dignity should be maintained.
 Non violence: If businessman hurts the interests and rights of the society and
exploits the consumer by overlooking their interests this is equivalent to
violence and unethical act.

Benefits of Business Ethics

The various benefits of managing ethics in a business are as follows:

• Business ethics helps in improving society by establishing government agencies,
unions, laws and regulations in the society.

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• Business ethics helps an organization maintain ethical values during times of
crisis. Business ethics programmes guide leaders about the right or wrong ways of
dealing with complex dilemmas and how they should act during that time.
• Business ethics helps employees behave according to the ethical values that are
preferred by the top management of an organization. An organization discovers many
differences between the values that reflect in the actions of the employees and the
values preferred. Employees experience a relationship that is strong between the
values of the organization and their values. Ethical values induce teamwork and
increase the efficiency of the employees.
Ethics supports employee growth. When an employee pays attention to ethics,
it induces confidence in the employee to deal with reality and face both good and bad
circumstances. Bennett, in his article ‘Unethical Behaviour, Stress Appear Linked’,
explained that the more an employee is emotionally healthy, the more ethical he is.
• Ethics have become legal instruments. These days, there are several
lawsuits regarding personnel matters and the influence of the services of the
organization on the investors and customers. Major ethical principles that are applied
in the organization are the laws that are made by the government. A greater attention
on ethical issues on the part of the government ensures high ethical procedures
and policies in the workplace. An employee, for example, is subject to breach of
contract on non-compliance of the terms and conditions of the contract.
• Business ethics helps to avoid criminal acts of ‘omission’ and it also helps in
lowering the fines. Ethics helps in ascertaining the violation of ethical issues and helps
in rectifying the violation that is committed by the organization. The guidelines set by
an organization about ethical values helps to lower fines. An organization, for
example, that has knowingly violated a contract is considered to have committed a
criminal act and the organization is subject to penalty.
• Business ethics helps to identify and manage the values associated with quality
management, strategic management and diversity management. For managing these
values, ethical programmes record the values, develop policies and procedures and
then provide training to the employees on these policies and procedures. These ethical
programmes manage certain values of quality management, such as reliability,
performance, measurement and feedback. Similarly, these programmes also manage
various strategic values, such as reducing cost and increasing market share.
• Business ethics helps in building a strong and positive public image of an
organization. Ethical values enable an organization to increase their goodwill in the
market. Those organizations that value their customers have a positive influence in
the market. Ethical values are the milestones that enable the establishing of a
successful and socially responsible business.

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• Business ethics strengthens organizational culture. Ethical values improve
relationships between an organization and its customers. They strengthen the
organization by ensuring consistency in the standard and quality of the product.
• Business ethics makes sure that the right activities are performed in an
organization.

RELEVANCE OF VALUES IN MANAGEMENT

In the growing age of complexities corporate must attach great importance to
customer values, shareholder values, employee values, societal values and leadership
values. According to Dr. Athreya ―value based management is a good recipe for
long-term success of a corporate.
Living on principles and values is a must for every corporate manager ―
Values and ethics are the key elements for the success of a business. Organization is
just a composite of individuals and that the values of the organization are only a
derivative and inference from the collective value of individuals. Human values based
on spiritual reality constitute the bedrock and foundation to build the ethical and
moral edifice of management on top.
Management must work continuously to develop organizational values. Excellent
organizations must have values and it is the duty of management to shape values that
are service oriented and ethical. Values are previous reminders that the individual
obey to bring order and meaning into their personal values. Without values there is no
guideline for direction. The key ingredient of any culture is values. Often
misunderstood, values are simply preferences and priorities, which reflect what‘s more
important. In all organizations, values are at work every day.
If an organization values profit, productivity and quality it will prefer to operate in a
way that prioritizes action and behavior that reflects those values. Another
organization that values innovation, research and learning will prefer to operate in a
way that prioritizes action and behavior that reflects those values. For either
organization, if the values that are influencing daily behavior and actions are not
aligned with the strategies then their performance and results will suffer.

ETHICAL MANAGEMENT

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To create an ethical organization certain steps are to be taken. Ethical or unethical
behavior of individual employees is influenced in the workplace both by their own
moral development and the influence that the organization culture exerts on them.
They are influenced by a group of forces that surround them such as their peers, their
supervisors, and superiors, the reward system, group norms , company values and
policies and the manner of their implementation. Ethical behavior can be developed
and managed in a number of ways. The pivotal role to manage and develop ethical
behavior among employees lies with the human resource management of that
organization. Human resource management department can execute this through
training, communication and discipline. The big organizations which are ethically
committed, assign the primary task of managing and monitoring ethical behavior to
HRM department. In some other organizations, there may be ethics officers who are
entrusted with the responsibility to bring ethics and managed ethics in every endeavor
of their organization.
STRUCTURE OF ETHICS MANAGEMENT

Everyone who is entrusted to manage ethics in this organization is bound to prepare a

sound ethical programme which should include the following components:-
1. Code of conduct
Several organizations that have undertaken to implement ethical behavior at their
workplaces have started the process with developing and implementing codes of
conduct for their employees. Codes of conduct are statements of organizational
values. It comprises of three elements such as a code of ethics, a code of conduct and
statement of values. a code of conduct is a written document, inspirational in contents
and specifies clearly what is acceptable or unacceptable behavior at workplace and
beyond ,when the employees represent their organizations outside. In general the
code should reflect the managements desire to incorporate the values and policies of
the organization. The statement of values envisages by the management to serve the
public and normally addresses the stakeholders groups.

Code of Ethics
Every time a new business is launched anywhere in the world , whether a one man
operation or a full blown brick – and- mortar corporate enterprise, the owners must

21
adopt a code of ethics for the business. For small businesses the code is usually
unwritten. And sometimes not even discussed and decided upon, but still a code
exists. Larger businesses often have written codes of ethics and employees are twined
in them and required to adhere to the code. A code of ethics is a buzzword to
employees to observe ethical norms and forms the basis for rules of conduct. It is
comprehensive enough to cover the entire scheme of organizational ethics expected
to be followed by everyone in the company. It usually specifies methods for reporting
violations, disciplinary action for violations and a structure of the due process to be
followed.
A code of ethics in business is just as important as a sound marketing plan, a solid
financial strategy, and an organized business plan.
A code of ethics must summarize the beliefs and values of the organization. Those
beliefs and values should become internalized by all employees and used regularly in
all business practices, no matter the type of business. Owners of businesses that
routinely engage in unethical practices cannot help but pass those values and
principles along to the other people working in the business. Small businesses suffer
even more, because unethical behavior and actions are easier for customers to take
notice of. Once customers become aware that a business does not have high ethical
ideals, they will take their business elsewhere.
Codes of ethics vary among businesses, and also from one country to another,. When
business grows large enough to expand its operations into other countries, It is critical
to hire talent to assist in training existing personnel with regard to the integrity,
understanding, responsibility, and cultural norms of the country where the new
operation is located. All employees must be treated equally, and any issues of
inequality must be dealt with quickly, fairly, and in a manner that is satisfactory to all.
Today, more than ever before, consumers pay a great deal of attention to corporate
governance and proper behavior of businesses and their owners. Because the
marketplace is flooded with numerous variations of the same businesses, promises
must be fulfilled and the price and quality of products must be equal to what is
advertised, or another business will step into deliver. Therefore a code of ethics where
unarticulated or formally documented – is vital to ensuring that a business will
succeed.

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A code of ethics that is both defines and acted upon is part of the business culture of
every successful business, and must become the mantra of every business owner.
Growing a flourishing business through the use of sound ethical principles will reap
not only the benefits of grown and prosperity, but also the satisfaction of being able
to sleep soundly at night.

2. Ethics committee
Ethics committee is formed in many organizations. They are wholly devoted at work
places. These committees can rise concerns of ethical nature; prepare or update code
of conduct, and resolve ethical dilemma in organizations. they formulate ethical
policies and develop ethical standards. The committee evaluates the compliance of the
organization with these ethical norms. The members of the ethical committee
should be selected from those persons who have knowledge in their industry,
their code of ethics and community standards. The committee members are also
conscious about the corporate culture and ethical concise of the organization.

The following committees are to be formed :-

i. Establishing an ethics committee at the board level

The committee would be charged to oversee development and operation of the ethics
management programme.
ii. Establishing an Ethics Management committee
Ethics Management committee would be charged with implementing and
administrating an ethics management programme, including administrating and
training about policies and procedures, and resolving ethical dilemmas. The
committee should be comprised of senior officers.

3. Ethical communication system

The next step is the establishment of an effective ethical communication system.

Ethical communication system place an important role in making an ethics
programme successful. It should allow employees to make enquiries, get advice if
needed or report wrong doing. Ethical communication system is a necessity to
educate employees about the organizations ethical standard and policies. It has the
following objectives
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  To communicate the organizations‘values and standards of ethical conduct or
business to employees.
 To provide information to the employees on the company‘s policies and
procedure regarding ethical conduct of business.
 To help employees to get guidance and resolve questions regarding compliance
with the firms standards of conducts and values.
 To set up the means of enquiry such as telephone hotlines, suggestion boxes
and email facilities for employees to contact with and get advice from
competent authorities.
Along with these means of communication there are other ways, that can be used to
communicate an organization‘s moral standards to its employees. Top management
can communicate the ethical standards to lower level managers and they can
communicate it to operational levels. Sometimes the organization publishes
newsletters. It can be used to expose company‘s code or ethics. If an organization has
briefing and management meeting, these can be used as a means of communicating
values. Certain companies use attractive multi colored posters to publicize their codes
and ethics, these posters are placed in most visible places of the organization
premises.
4. Ethics office and officers
Ethics offices are to be established to communicate and implement ethics policies
among employees of the organization. For this purpose an ethics officer is to be
appointed. The ethics officer should develop a reputation for credibility, integrity,
honesty and responsibility through establishment of such ethics monitoring bodies.
Functions of the ethics officers

 Ethics officers are responsible for assessing the needs and risks that an
organization-wide ethics programme must address.
 To develop and distribute a code of conduct or ethics
 To conduct ethical training programme for employees
 To establish and maintain a confidential service to answer employees questions
about ethical issues.
 To ensure that the organization is in compliance with governmental regulations
 To monitor and audit ethical conduct
 To take action on possible violations of the company‘s code

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  To review and update code in time
5. Ethics Training Programme
To ensure a good ethical behavior in the organization the employees are to be given
training. For this purpose a corporate ethical training programme is to be devised.
The main objective of an ethical training program is to offer assistance to employees
to understand the ethical issues that are likely to arise in their work place. When new
employees are to be recruited, the induction training should be arranged for them.
This training will help to familiarize with the company‘s ethical code of behavior.
Importance of abiding code should be dealt with at the induction meeting. A well
developed and proper training programme will help the employees to understand the
organizations policies and expectations, important and relevant rules, bye laws and
regulations which are to be complied in the organization by the employees. For the
success of the training programmes , the senior executive from every department
must involve fully in the training programme.
6. Disciplinary system
Code of conduct or ethical behavior codes should be properly enforced in the
organization to achieve the organization‘s objectives. A disciplinary system should be
established to deal with ethical violations promptly and severely. If unethical behavior
is not properly dealt with, it will threaten the entire social system that supports the
ethical behavior of the organization. While enforcing disciplines to ensure ethical
conduct, companies should be consistent. ,i.e., the company should adopt a fair
attitude towards every one without any discrimination or bias.
7. Establishing an ombudsperson

The ombudsperson is responsible to help coordinate development of the policies and

procedures to institutionalize moral values in the workplace. This position usually is
directly responsible for resolving ethical dilemmas by interpreting policies and
procedures.

8. Monitoring

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To become an ethical programme fruitful and successful, an effective monitoring
committee is to be formed. It can be monitored through keen observation by ethics
officers, internal audits, surveys, investigations and supporting systems.

Advantages of Managing Ethics in Workplace

1. Significant improvement to society

Application of business ethics helps to avoid many evils from the society. It includes
child labour, unscrupulous price fixing, harassment of employees, poverty and
starvation of employees etc.

2. Cultivate strong team work and productivity

Ethical programme helps to tune employee behavior in accordance with the values
preferred by leaders of the organization. It helps to build openness, integrity and a
sense of oneness among all. Employees feel strong alignment between their values
and those of the organization and they react with strong motivation and performance.

3. Support Employee Growth

Ethics programme help employees to face reality, both good and bad in the
organization and themselves. They feel full confidence to admit and deal with
whatever comes their way.

4. Insurance policy
Ethical programs help to ensure that policies are legal. Ethical principles are often
applied to current, major ethical issues and become legislation. A major intent of well
designed personnel policies is to ensure ethical treatment of employees.

5. Avoid Penal action

Ethical programs help to detect issues and violations early so that they can be
reported or addressed which helps to avoid subsequent penal actions and lower fines.

6. Helps in Quality Management, Strategic planning and diversity management

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Ethical programme identify favorite values and ensure organizational behaviors which
are associated with those values. This complex effort can be aligned with values,
including quality management, strategic planning and diversity management

ROLE OF ORGANIZATION CULTURE IN ETHICS

An organization culture can potentially influence the ethical conduct of the
organization. Organization culture has been identified as one of the main factor which
influenced the ethical conduct at workplaces. An organization can guide the conduct
of its employees by embedding ethical values in its dominant culture.
Organization culture refers to a system of shared meaning held by members that
distinguishes the organization form other organizations. It is a set of assumptions,
beliefs, values and norms that are shared by organization members. It is the basic
pattern of shared assumptions and values that governs behavior with in a particular
organization. It can be created by the founder of the organization based on his or her
values and expectations. Eg. Jamshedgi Tata in Tata Industries and Dhirubhai Ambani
in Reliance Industries. Each organization tries to develop its own culture based on the
values of its founder wants to transmit in the workplace.
Organization culture represents the common perception shared by members of an
organization. Individuals with different backgrounds in an organization altogether
have a tendency to describe the organization culture in almost similar terms. The
strength of an organization culture has an influence on ethical behavior of managers.
If the culture is strong and supports high ethical standards, it should have a very
powerful positive influence on a manager‘s ethical behavior, In a weak culture
managers are more likely to rely on sub cultural norms to guide their behavior.
An effective organizational culture should encourage ethical behavior and discourage
unethical behavior. The corporate culture of a firm is evolved by its people imbibing
values, good or bad which its top executives have an ethical and social conscience,
than they will, by their thoughts and deeds, inspire their subordinates to exhibit these
values, both inside and outside their workplace.
HOLISTIC APPROACH FOR MANAGERS IN DECISION MAKING

Profit maximization is the guiding principle for decision making in an economics –

based view of management. Executives who follow this ―rational‖ style of
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management believe that objectives of the business can be achieved through precise
and calculated means. This dominant style of management sometimes could not
produce the desired results and in such situation a more forward thinking decision
making strategy called ―holistic ― approach can be followed by management.
Holistic decision making encourages us to be aware of our actions and their impact on
the whole; it ensures that we take responsibility and accept accountability for the
decisions we make and empowers us to be part of the ongoing process of change. In
order to provide managers with the necessary tools to manage modern organizations
with a view to building long-term sustainable competitive advantage, it is imperative
that organizations embrace a more holistic approach to problem solving.
A holistic approach takes into account any number of different factors. These
managers believe firm value is derived from ― socially complex resources and
relationships‖, and they better understand the impact of their decisions on the overall
culture of their company. Holistic approach to decision making is a comprehensive
planning and management process that helps people to improve their quality of life
and their finances while simultaneously restoring the environment on which we all
depend.
It is a process that allows people to make decisions, based on their deeper values,
which will be economically, socially and environmentally sound.
Holistic Management addresses all the separate parts as an integrated whole, instead
of as separate parts. Holistic management is a new framework for decision making on
all levels that is based on resource management of the whole. This method helps the
decision makers identify all the important people and resources relating to the issue at
hand and bring these elements together into a new ―Whole‖, represented by a short
―statement of purpose‖. With this broad holistic goal in place, the group has a bench
mark by which they can measure their future decisions. A subsequent testing phase
reaches back to often ignored considerations to make sure that none are being
forgotten.
In holistic approach which is characterized by attention to multiple factors, including
relationships are seen as visionary. Holistic managers are more likely to have a positive
impact on their organization by encouraging a greater sense of employee optimism
and improving overall performance of the firm. It may seem that holistic decision
28
making may create better long term results for a company than the more traditional
rational approach. The holistic managers are seen as more visionary and less
autocratic.

Steps in the Holistic approach to Decision Making Process

Decision making of an organization is influenced by ethical behavior of employees,
corporate culture etc It is a conscious process of making choices among alternatives
with the intention of moving toward some desired state of affairs. The holistic
approach to decision making involves the following process

1. Define the whole under Management.

The first step in the holistic process of management is to take stock of what is to be
managed. A group of decision makers agree to use holistic management in their
business, community, family, government agency etc. They identify anyone else whose
decisions will affect the entity that they are managing and invite them to become part
of the process. This includes owners, administrative assistants, volunteers, laborers,
agency heads, elected officials and so forth. Then they identify the physical resources
and financial resources

2. Develop a Written goal statement

A written goal statement incorporates the decision makers do the following : (a) The
quality of life you desire based on your deepest values.

(b) What you need to produce to support this quality of life.

(c) A description of your resource base such as farm landscape, people, community
far into the future to sustain what you need to produce

3. Assess Current situation

The next step is to assess the current situation which would assess how far we are
away from your goal. It is also necessary to examine the major barrier that prevents us
to realize the goals.

4. Brainstorming to achieve goal

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At this point it is advised to arrange brainstorming sessions gathering all members of
management team together, plus at least one creative person from outside. Human
creativity and new ideas are to be encouraged.

5. Clarify possible tools and actions

Now the various ideas produced in brainstorming can be discussed and make sure
everyone understands the possible actions.

6. Test possible actions against goal

Holistic management uses seven testing guidelines that help to ensure that any
decision is consistent with the goal and is socially, economically and environmentally
sound. The seven testing guidelines are [1].Cause and Effect [2] Weak Link [3]
Marginal Reaction [4]Gross Profit Analysis [5]Energy/Money Source and Use[6]
Sustainability [7]society and Culture
7. Research or Homework
The first test run will throw out some of the possible actions. Others may need more
information to fully assess. This requires to consult with extension agent or other
experts, library etc.
8. Retest remaining possible tools and actions.

When the home work has completed and the decision makers retest each remaining
action through the testing guidelines, again quickly, remembering not to ignore on
specific questions.

9. Develop Plans each year

Based on the outcome of testing, develop a biological as well as financial plan.

10. Monitor

Even a careful decision making and planning may not assure that everything is
moving in the right direction and be therefore on the lookout for the earliest possible
sign of deviation from our plan.

11. Control.

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If any deviations are found, take corrective action.

12. Replan

If corrective actions do not solve the problem, develop a new plan.

Holistic Decision Making

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TOPIC 4: ETHICAL FRAMEWORKS

Morality
People should be self-disciplined in order to carry out ethical actions
successfully. Morality refers to the concept of human action which pertains to matters
of right and wrong. Individuals who oppose with determination inducement towards
the wrong spend a good moral life.
Ethical actions should be performed as a community standard rather than as an
individual responsibility. Individuals in a society can perform three types of
ethical actions. These actions are:
• Morality: Morality actions are performed to secure the future of others.
• Religion: Religion is the collection of ethical actions that can affect a
group or society.
• Civil law: Civil law actions are a collection of ethical actions that can be
used to change or control the behaviour of an individual in society.

Therefore, morality can be defined as the collection of concepts and attitude that can
be used by a culture or a group in society to control or change the behaviour
of an individual. Different societies or cultures have their different opinions on
morality. Morality can be applied to the generality or the part of the fields in which
the personal opinions of the individual have some relation or reference to other
individuals. These individuals may belong to some other community too. Therefore,
morality can exist in isolation or in a generic society.
There exist different types of groups or societies having different views on behaviour.
Some groups put heavy restrictions on behaviour and some groups allow the
individuals to be self-determined. Morality can also be defined as the personal ethical
behaviour that an individual creates for himself.
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The terms ‘morality’ and ‘ethics’ have a strong relationship with each other. Morality
refers to moral character or standards. Morality is used to analyse the behaviour of the
individual and the standards of conduct. Ethics is used to refer to the formal study of
these standards. Morality can be considered as ethics in action.

The mind is responsible for the thoughts and feelings of individuals. The
existence of individuals and their activities is only due to their mind. The feelings and
opinions of persons depend on their mind. A person having a good mind has good
feelings and a person having a disturbed mind has disturbed feelings.

Professor Gardner suggests five types of minds. The ethical mind is one of them. The
others are disciplined mind, synthesizing mind, creating mind and respectful mind.
The ethical mind of a person is affected by the nearby surroundings and culture.
Ethical minds can be of two types. These are:
• Subjective mind: The subjective mind faces motivation from the
different objects of the world. This type of human mind is also called the
outer mind.
• Objective mind: This type of mind reacts to the encouragement received
from the outside world. This type of human mind is also called the inner
mind.

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Figure 1.3 shows the two types of ethical minds.

The objective mind of the human being is under the control of the subjective mind.
The objective and subjective minds of human beings are separated by layers of
egoistic desires. The confidence of an individual depends on the distance between
these two minds. The greater the distance between these two minds, the more
confused is the person. If the distance between the two minds is large, then the
objective mind does not receive any message from the subjective mind. If the mind is
in a state of confusion, then the mind of the individual becomes nervous, unsteady
and confused. Thus, the person loses his morale. If the emotions of the person are
separated from his mental power, then the objective mind would not be under the
control of the subjective mind. This situation can make a man wild and come to some
unintelligent conclusions.
Each person should try to decrease the distance between the subjective mind and the
objective mind. This can only be accomplished by training the mind. Each person
should be able to identify support that will maintain mental energy, intellectual vision
and physical patience to spend the ethical action life.

Training of the mind can be accomplished by two methods. These methods are:
• Art of disengagement: Mental disengagement can only be developed by
developing a mind that is free from abstracted and fractional feelings and is more
concentrated. Every person should identify his role and keep the subjective and
objective mind steady to fulfil his role. The mind of the person should be integrated

34
so as to keep him aware of each situation. The integrated mind does not allow the
individuals to cross the boundaries of his current role.
• Self-denial: Self-denial is an inner characteristic of a person, by which he does
not let any extraneous thoughts enter his mind so as to achieve something. This is one
of the methods to train the mind. Some examples of self-denial are the state of mind
of a student before an examination, and the state of mind of a dancer before the
performance.

Self-development
Self-development is the responsibility and duty of the individuals to learn and develop
themselves. Individuals can use the process of assessment, reflection, and take
necessary action to achieve self-development. Self-development is the only way for
individuals to update their skills and knowledge in order to face the new problems
that emerge in life. Self-development also determines one’s future career direction.
Some of the characteristics of self-development are:
• The person undergoing self-development does not depend on the support of
the outside world. Such type of person becomes self-sufficient. Self- development in
individuals makes them independent.

• Self-development brings in the feature of objectivity in individuals. Such a

feature gives individuals an impersonal attitude.
• A self-developed person looks happy in life. His inner nature looks full of
cheer and joy. He will not be depressed and miserable.
• A self-developed person becomes dynamic, active and brighter in life.

• A self-developed person is more lovable.

Self-development Methods

Individuals can use different methods for self-development. Some of the methods are:
• Path of action: The path of action is also called as karma yoga. Karma yoga is
one of the four pillars of yoga. The path of action states that people should only
35
perform their job and should not care for the fruits or results. This is also the Indian
philosophy. Ethical actions are a way to perform one’s duties or responsibilities in an
unselfish manner.
• Path of knowledge: The path of knowledge means to move towards acquiring
knowledge. The path of knowledge also eliminates the distance between the subjective
mind and the objective mind. Thus, the path of knowledge makes a man confident
and self-developed.
• Path of discrimination: The path of discrimination assists a person to identify
his inner faults. The person has to transform the inner motives and mental attitudes
to train the mind. The path of discrimination forces individuals to control the
emotions of attachment, fear and anger.
• Path of sacrifice of wealth: The path of sacrifice of wealth refers to donations
of wealth in charities without a consequence in mind. This feature makes people more
positive towards life and helps individuals overcome greed.
• Path of self-control: Self-control is an internal characteristic of
individuals. Self-control can be of five types. These are:

o Non-injury
o Truthfulness o Non-stealing o Celibacy
o Non-acceptance of gifts
• Path of mind-control: The path of mind-control consists of
concentration and meditation. Concentration refers to focusing on the object on
which one is working. Devotion to God helps in achieving concentration. Meditation
refers to the state of the body in which the person feels relaxed and the mind is more
focused. Therefore, meditation helps in achieving concentration. The path of
meditation is also called the path of yoga. Yoga is the only way to keep the mind calm
and focused and hence to get concentration.

Moral development

Kohlberg's stages of moral development and criticisms

Understanding the stages of moral development should help in developing or
improving upon one’s morals or values. This is especially true if the characteristics of
highly moral people are clearly described. Lawrence Kohlberg’s theory of moral
36
development was influenced by the thinking of the Swiss psychologist Jean Piaget and
the American philosopher John Dewey. He was also inspired by James Mark Baldwin.
These men emphasized that human beings develop philosophically and
psychologically in a progressive fashion.
Piaget studied many aspects of moral judgment, but most of his findings fit
into a two-stage theory. Children younger than 10 or 11 years think about moral
dilemmas one way; older children consider them differently. Younger children regard
rules as fixed and absolute and believe rules are handed down by adults or by God
and that they cannot change them. The older child's view is more relativistic. He or
she understands that it is permissible to change rules if everyone agrees. Rules are not
sacred and absolute but are devices that humans use to get along cooperatively.
At approximately the same time--10 or 11 years--children's moral thinking
undergoes other shifts. In particular, younger children base their moral judgments
more on consequences, whereas older children base their judgments on intentions.
When, for example, the young child hears about one boy who broke 15 cups trying to
help his mother and another boy who broke only one cup trying to steal cookies, the
young child thinks that the first boy did worse. The child primarily considers the
amount of damage--the consequences--whereas the older child is more likely to judge
wrongness in terms of the motives underlying the act (Piaget, 1932, p. 137). There are
other aspects to Piaget's work on moral judgment, but he essentially found a series of
changes that occur between the ages of 10 and 12, just when the child begins to enter
the general stage of formal operations.

Kohlberg believed, and was able to demonstrate through studies, that people
progressed in their moral reasoning (i.e., in their foundations for ethical behavior)
through a series of six identifiable stages that could be more generally classified into
three levels. Kohlberg’s six stages might be viewed in this form:

Level 1 (Pre-Conventional) (up to age 9)

1. Obedience and punishment orientation

2. Self-interest orientation

Level 2 (Conventional) (10 years old to adolescence)

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 3. Interpersonal accord and conformity

(a.k.a. The good boy/good girl attitude)

4. Authority and social-order maintaining orientation

(a.k.a. Law and order morality)

Level 3 (Post-Conventional)(adulthood)

5. Social contract orientation

6. Universal ethical principles

(a.k.a. Principled conscience)

The first level of moral thinking is that generally found at the elementary
school level. In the first stage of this level, people behave according to socially
acceptable norms because they are told to do so by some authority figure (e.g., parent
or teacher). This obedience is compelled by the threat or application of punishment.
The second stage of this level is characterized by a view that right behavior means
acting in one's own best interests. The second level of moral thinking is that generally
found in society, hence the name "conventional." The first stage of this level (stage 3)
is characterized by an attitude which seeks to do what will gain the approval of others.
The second stage is one oriented to abiding by the law and responding to the
obligations of duty. The third level of moral thinking is one that Kohlberg felt is not
reached by the majority of adults. Its first stage (stage 5) is an understanding of social
mutuality and a genuine interest in the welfare of others. The last stage (stage 6) is
based on respect for universal principle and the demands of individual conscience.
While Kohlberg always believed in the existence of Stage 6 and had some nominees
for it, he could never get enough subjects to define it, much less observe their
longitudinal movement to it.
Between the Stage 4 (“law and order”) and Stage 5, there is a transitional stage,
maybe Stage 4.5. . Many college-age students in the 1960s and early 1970s, for
example, saw conventional morality as relative and arbitrary, but had not yet
discovered universal ethical principles or their own adulthood and parenthood. This
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stage thus involved a hedonistic ethic of "do your own thing." This was observed in
the hippie culture of the l960s. Disrespect for conventional morality was especially
infuriating to the Stage 4 mentality (“We will have law and order”), and indeed was
calculated to be irritating to those over 30. Certainly this did not apply to all Baby
Boomers in the 1960s but it did apply to many.
Kohlberg believed progression through these stages was one stage at a time.
That is, individuals could not skip stages. They could not, for example, move from an
orientation of selfishness to the law and order stage without passing through the good
boy/girl stage. They could only come to a comprehension of a moral rationale one
stage above their own. Thus, according to Kohlberg, it was important to present them
with moral dilemmas for discussion which would help them to see the reasonableness
of a "higher stage" morality and encourage their development in that direction. The
last comment refers to Kohlberg's moral discussion approach. He saw this as one of
the ways in which moral development can be promoted through formal education.
Note that Kohlberg believed, as did Piaget, that most moral development occurs
through social interaction. The discussion approach is based on the insight that
individuals develop as a result of cognitive conflicts at their current stage.

Another way to view the stages is as follows, taken primarily from Piaget
(1932), Kohlberg (1975), and Rosen (1980):

Stage 1: Respect for power and punishment.

A young child (age 1-5) decides what to do--what is right--according to what
he/she wants to do and can do without getting into trouble. To be right, you must be
obedient to the people in power and, thus, avoid punishment. Motto: "Might makes
right."

Stage 2: Looking out for #1.

Children (age 5-10) tend to be self-serving. They lack respect for the rights of
others but may give to others on the assumption that they will get as much or more in
return. It is more a matter of "you scratch my back and I'll scratch yours," instead of
loyalty, gratitude, or justice. Motto: "What's in it for me?"

Stage 3: Being a "Good Boy" or "Nice Girl."

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 People at this stage (age 8-16) have shifted from pleasing themselves to pleasing
important others, often parents, teachers, or friends. They seek approval and conform
to someone else's expectations. When they are accused of doing something wrong,
their behavior is likely to be justified by saying "everyone else is doing it" or "I didn't
intend to hurt anyone." Motto: "I want to be nice."

Stage 4: Law and order thinking.

The majority of people 16 years old and older have internalized society's rules
about how to behave. They feel obligated to conform, not any longer to just family
and friends, but also to society's laws and customs. They see it as important to do
one's duty to maintain social order. Leaders are assumed to be right; individuals adopt
social rules without considering the underlying ethical principles involved. Social
control is, therefore, exercised through guilt associated with breaking a rule; the guilt
in this case is an automatic emotional response, not a rational reaction of conscience
based on moral principles (as in stage 6). People at this stage believe that anyone
breaking the rules deserves to be punished and "pay their debt to society." Motto: "I'll
do my duty."
Stage 5: Justice through democracy.
People at this stage recognize the underlying moral purposes that are supposed to
be served by laws and social customs; thus, if a law ceases to serve a good purpose,
they feel the people in a democracy should get active and change the law. Thought of
in this way, democracy becomes a social contract whereby everyone tries continually
to create a set of laws that best serves the most people, while protecting the basic
rights of everyone. There is respect for the law and a sense of obligation to live by the
rules, as long as they were established in a fair manner and fulfill an ethical purpose.
Only about 20-25% of today's adults ever reach this stage and most of those that do
supposedly only get there after their mid-twenties. Motto: "I'll live by the rules or try
to change them."
Stage 6: Deciding on basic moral principles by which you will live your life and
relate to everyone fairly.
These rather rare people have considered many values and have decided on a
philosophy of life that truly guides their life. They do not automatically conform to

40
tradition or others' beliefs or even to their own emotions, intuition, or impulsive
notions about right and wrong. Stage 6 people carefully choose basic principles to
follow, such as caring for and respecting every living thing, feeling that we are all
equal and deserve equal opportunities, or, stated differently, the Golden Rule. They
are strong enough to act on their values even if others may think they are odd or if
their beliefs are against the law, such as refusing to fight in a war. Motto: "I'm true to
my values."

Example
Kohlberg used moral dilemmas to determine which stage of moral reasoning a
person uses. The dilemmas are short stories in which a person has to make a moral
decision. The participant is asked what this person should do. A dilemma that
Kohlberg used in his original research was the druggist's dilemma:

Heinz steals the drug

In Europe, a woman was near death from a special kind of cancer. There was one
drug that the doctors thought might save her. It was a form of radium that a druggist
in the same town had recently discovered. The drug was expensive to make, but the
druggist was charging ten times what the drug cost him to make. He paid $200 for the
radium and charged $2,000 for a small dose of the drug. The sick woman's husband,
Heinz, went to everyone he knew to borrow the money, but he could only get
together about $ 1,000 which is half of what it cost. He told the druggist that his wife
was dying and asked him to sell it cheaper or let him pay later. But the druggist said:
"No, I discovered the drug and I'm going to make money from it." So Heinz got
desperate and broke into the man's store to steal the drug-for his wife. (Kohlberg,
1963, p. 19)
Should Heinz break into the laboratory to steal the drug for his wife? Why or why
not?
From a theoretical point of view, it is not important what the participant thinks
that Heinz should do. The point of interest is the justification the participant offers.
Below are examples of possible arguments that belong to the six stages. It is
important to keep in mind that these arguments are only examples. It is possible that a

41
participant reaches a completely different conclusion using the same stage of
reasoning:
Stage one (obedience): Heinz should not steal the medicine, because he will be put
in jail.
Stage two (self-interest): Heinz should steal the medicine, because he will be much
happier if he saves his wife, even if he will have to serve a prison sentence.
Stage three (conformity): Heinz should steal the medicine, because his wife expects
it.
Stage four (law-and-order): Heinz should not steal the medicine, because the law
prohibits stealing.
Stage five (human rights): Heinz should steal the medicine, because everyone has a
right to live, regardless of the law. Or: Heinz should not steal the medicine, because
the scientist has a right to fair compensation.
Stage six (universal human ethics): Heinz should steal the medicine, because saving
a human life is a more fundamental value than the property rights of another person.
OR: Heinz should not steal the medicine, because that violates the golden rule of
honesty and respect. OR: (transcendental morality) Heinz should choose to spend
more time with his wife in their remaining days, both acknowledging the cycle of life-
and-death which is a part of the human condition.

General criticisms of Kohlberg's Stages

Kohlberg's conception of moral development is based on thinking and logic,
not on feelings for others. Surely feelings cannot be neglected. Likewise, Kohlberg
believed that morals were based on age and "wisdom," rather than real life experience
and empathic identification with others. But 3- and 4-year-olds can and do empathize
with others and try to help. Caring doesn't require a high level of education or
advanced age. It requires feelings. Coles (1986) describes some impressively moral
children and teenagers. Some children have stood up to mobs of unfair adults. Lastly,
Kohlberg's focus is on the individual, not on what makes for a moral community.
Thus, he doesn't balance a self-orientation as opposed to a group-orientation. He
doesn't ask, as the Greeks did, the question "what would accomplish the greatest good
42
for the greatest number of people?" And, he doesn't question, as do the Quakers, the
morality of settling issues by voting (resulting in as few as 51% imposing--often with
glee--their preferences on the remaining 49%) rather than by consensus (everyone
agreeing to a carefully considered compromise). Yet, these stages can be a useful way
to begin assessing one's own morals.
A second critique of Kohlberg's work was made by Carol Gilligan in her
popular book, "In a Different Voice: Psychological Theory and Women's
Development" (1982). Kohlberg's theory, Gilligan said, emphasizes justice to the
exclusion of other values. As a consequence of this, it may not adequately address the
arguments of people who value other moral aspects of actions. Gilligan argued that
Kohlberg's theory is overly androcentric because it was the result of empirical
research using only male participants. Gilligan argued that Kohlberg's theory therefore
did not adequately describe the concerns of women. She developed an alternative
theory of moral reasoning that is based on the value of care. By listening to women's
experiences, Gilligan suggested that a morality of care can serve in the place of the
morality of justice and rights espoused by Kohlberg. In her view, the morality of
caring and responsibility is premised in nonviolence, while the morality of justice and
rights is based on equality. Another way to look at these differences is to view these
two moralities as providing two distinct injunctions - the injunction not to treat others
unfairly (justice) and the injunction not to turn away from someone in need (care).
She presents these moralities as distinct, although potentially connected. Gilligan
argued that the morality of care emphasizes interconnectedness and presumably
emerges to a greater degree in girls owing to their early connection in identity
formation with their mothers. The morality of justice, on the other hand, emerges
within the context of coordinating the interactions of autonomous individuals. A
moral orientation based on justice was proposed as more prevalent among boys
because their attachment relations with the mother, and subsequent masculine identity
formation entailed that boys separate from that relationship and individuate from the
mother. For boys, this separation also heightens their awareness of the difference in
power relations between themselves and the adult, and hence engenders an intense set
of concerns over inequalities. Girls, however, because of their continued attachment
to their mothers, are not as keenly aware of such inequalities, and are, hence, less
concerned with fairness as an issue.

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 Further research has suggested, however, that moral reasoning does not follow
the distinct gender lines which Gilligan originally reported. The preponderance of
evidence is that males and females reason based on both justice and care. While this
gender debate is unsettled, Gilligan's work has contributed to an increased awareness
that care is an integral component of moral reasoning. Educational approaches based
on Gilligan's work have emphasized efforts to foster empathy and care responses in
students.

Kohlberg's Stages 5 & 6 specifically

Kohlberg's evaluation of moral decisions was based on the quality of the
reasoning behind a person's decision, rather than whether or not some specific
behavioral decision was made. The thinking process used by some in stage 6 to decide
what is fair and reasonable in a moral dilemma is called "second-order Golden Rule
role taking" (Kohlberg, 1984). There are two steps:

(1) Understanding how each person involved sees the situation and
(2) imagining how each person would feel if placed in each other person's situation.
The aim of this empathic process is to find a "reversible" solution, one that would be
seen as equally just from each person's perspective and considered fair by a high
percentage of rationally thinking people. Example: (1) Imagine the situation of a poor
dying patient, her husband, and a druggist who wants $1,000 profit (10 times its cost)
for an effective drug and (2) imagine how each would feel in the other's shoes, e.g.,
how the patient would feel as the druggist, the druggist as the dying patient, the
patient as the husband thinking about stealing the drug, etc. A solution that might
result from this process would be for the druggist to give the patient the drug, and the
couple, in turn, would agree to pay for it by working part-time for the druggist after
the patient gets well. As we will see later, an 11-year-old girl in Gilligan's study (1982)
arrived at a similar solution.
Current theorists believe it takes time for most people (40-50 years of age),
experience with different cultures and values, emotional maturity, self-control and
self-esteem, considerable thought about values, and/or moral development training to
acquire this kind of moral reasoning. I suspect stages 5 and 6 will be achieved at age
12 or 14, when we know enough to provide the proper training and experience at that
age. Good but extraordinary examples of stage 6 morality are Jesus Christ (he spoke
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cogently of universal principles but he died at age 33!), St. Francis of Assisi, Albert
Schweitzer, Abraham Lincoln, Martin Luther King (he became a civil rights activist at
age 26!), and Sister Teresa of Calcutta. Don't let this awesome list of saintly people
scare you or discourage you. Try to become a stage 5 or 6 person by finding some
good causes you are willing to argue for, decide what lifestyle you most value, and
start doing it.
As you understand these stages better, you might understand more about why you
have made certain moral decisions in the past. Also, you might realize you and others
operate on several levels at the same time. For example, you might avoid shoplifting
for the fear of punishment (stage 1), you might watch your little brother carefully to
be sure he doesn't get more attention than you (stage 2), you might want to impress
your parents or a teacher (stage 3), you might unthinkingly enforce school rules as a
monitor (stage 4), and you might be active in the women's movement or help support
a child in India through CARE (stage 5 or 6). Furthermore, you might find your moral
reasoning on one level and your behavior on another: 20% of the people at stage 6 of
moral reasoning still conformed (stage 3 or 4) when asked by an authority to hurt
another person (Kohlberg, 1984). Likewise, one’s value system might say to share
most of one’s worldly possessions, but often one doesn’t (partly because of what
others might think or say).
TOPIC 8: CONSUMERS PROTECTION-Refer to Consumer Protection Act
2012 revised edition 2016

CONCEPT OF CONSUMER PROTECTION

Consumer protection means safeguarding the interest and rights of consumers. In other
words, it refers to the measures adopted for the protection of consumers from unscrupulous
and unethical malpractices by the business and to provide them speedy redressal of their
grievances. The most common business malpractices leading to consumer exploitation are
given below.

(a) Sale of adulterated goods i.e., adding something inferior to the product being sold.

(b) Sale of spurious goods i.e., selling something of little value instead of the real product.
(c) Sale of sub-standard goods i.e., sale of goods which do not confirm to prescribed
45
 quality standards.
(d) Sale of duplicate goods.
(e) Use of false weights and measures leading to underweight.
(f) Hoarding and black-marketing leading to scarcity and rise in price.
(g) Charging more than the Maximum Retail Price (MRP) fixed for the product. (h)

Supply of defective goods.

(i) Misleading advertisements i.e., advertisements falsely claiming a product or service to

be of superior quality, grade or standard.

(j) Supply of inferior services i.e., quality of service lower than the quality agreed upon. The
above instances show the exploitation of consumers in the context of goods and
services. In a democratic nation like Kenya, should we allow this to happen? So the measures
adopted by the government or non-government organisations (NGOs) for safeguarding
the interests of the consumers constitute consumer protection.

NEED FOR CONSUMER PROTECTION

The necessity of adopting measures to protect the interest of consumers arises mainly
due to the helpless position of the consumers. There is no denying fact that the
consumers have the basic right to be protected from the loss or injury caused on
account of defective goods and deficiency of services. But they hardly use their rights
due to lack of awareness, ignorance or lethargic attitude. However in view of the
prevailing malpractices and their vulnerability there to, it is necessary to provide them
physical safety, protection of economic interests, access to information, satisfactory
product standard, and statutory measures for redressal of their grievances. The other
main arguments in favour of consumer protection are as follows:
(a) Social Responsibility
The business must be guided by certain social and ethical norms. It is the moral
responsibility of the business to serve the interest of consumers. Keeping in line with

46
this principle, it is the duty of producers and traders to provide right quality and
quantity of goods at fair prices to the consumers.

(b) Increasing Awareness

The consumers are becoming more mature and conscious of their rights against the
malpractices by the business. There are many consumer organisations and associations
who are making efforts to build consumer awareness, taking up their cases at various
levels and helping them to enforce their rights.

(c) Consumer Satisfaction

Father of the Nation Mahatma Gandhi had once given a call to manufactures and
traders to “treat your consumers as god”. Consumers’ satisfaction is the key to success
of business. Hence, the businessmen should take every step to serve the interests of
consumers by providing them quality goods and services at reasonable price.
(d) Principle of Social Justice
Exploitation of consumers is against the directive principles of state policy as laid
down in the Constitution of India. Keeping in line with this principle, it is expected
from the manufacturers, traders and service providers to refrain from malpractices
and take care of consumers’ interest.

(e) Principle of Trusteeship

According to Gandhian philosophy, manufactures and producers are not the real
owners of the business. Resources are supplied by the society. They are merely the
trustees of the resources and, therefore, they should use such resources effectively for
the benefit of the society, which includes the consumers.

(f) Survival and Growth of Business

The business has to serve consumer interests for their own survival and growth. On
account of globalisation and increased competition, any business organisation which
indulges in malpractices or fails to provide improved services to their ultimate
consumer shall find it difficult to continue. Hence, they must in their own long run
interest, become consumer oriented.
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RIGHTS OF CONSUMERS
John F, Kennedy, the former USA President, in his message to consumer had given
six rights to consumers. These rights are (i) right to safety, (ii) right to be informed,
(iii) right to choose, (iv) right to be heard, (v) right to redress and (vi) right to
represent. These rights had paved the way for organised consumer movement in the
USA and later it spread all over the world. In India, the Consumer Protection Act,
1986 has also provided for the same rights to consumers. Let us have a brief idea
about these rights of consumers.

(a) Right to Safety

It is the right of the consumers to be protected against goods and services which are
hazardous to health or life. For example, defective vehicles could lead to serious
accidents. The same is true of electrical appliances with sub-standard material. Only
recently, there were mass protests and boycott of soft drinks due to presence of
hazardous pesticides beyond permissible limits. Thus, right to safety is an important
right available to the consumer which ensures that the manufacturers shall not
produce and sell sub-standard and dangerous products.
(b) Right to be Informed

The right to be informed is an important component of consumer protection. The

consumer must be provided with adequate and accurate information about quality,
quantity, purity, standard and the price of the goods and services. Now-a-days the
manufacturers provide detailed information about the contents of the product, its
quantity, date of manufacturing, date of expiry, maximum retail price, precautions to
be taken, etc. on the label and package of the product. Such information helps the
consumers in their buying decision and use of the product.

(c) Right to Choose

The right to choose provides that the consumer must be assured, whenever possible,
access to a variety of goods and services at competitive prices. If the market has
enough varieties of products at highly competitive prices, the buyers have an
opportunity of wide selection. However, incase of monopolies like railways, postal
service and electricity supply etc. it implies a right to be assured of satisfactory quality
of service at a fair price.
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(d) Right to be Heard
The rights to safety, information and choice will be frivolous without the right to be
heard. This right has three interpretations. Broadly speaking, this right means that
consumers have a right to be consulted by Government and public bodies when
decisions and policies are made affecting consumer interests. Also, consumers have a
right to be heard by manufactures, dealers and advertisers about their opinion on
production, marketing decisions and any grievances of the consumers. Now-a-days,
most of the top manufacturers and firms have set up consumer service cells to attend
to consumers’ complaints and take appropriate steps for their redressal. Thirdly,
consumers have the right to be heard in legal proceedings in law courts dealing with
consumer complaints

e) Right to seek Regressal

The consumers have been given the right of redressal of their grievances relating to
the performance, grade, quality etc. of the goods and services. If required, the product
must be repaired / replaced by the seller/ manufacturer. The Consumer Protection
Act has duly provides for a fair settlement of genuine grievances of the consumers. It
has also set up a proper mechanism for their redressal at district, state and national
levels.

f) Right to Consumer Education

It means the right to receive knowledge and skill to become informed consumer. In
this direction the consumer associations, educational institutions and the policy
makers can play an important part. They are expected to impart information and
knowledge about (i) the relevant laws which are aimed at preventing unfair trade
practices, (ii) the ways and means which dishonest traders and producers may adopt
to deceive the consumers, (iii) insistence on a bill or receipt at the time of purchase,
and (iv) the procedure to be followed by consumers while making complaints.
Effective consumer education leads to an increased level of consumer awareness and
help them to enforce their rights more effectively, and protect themselves against
fraudulent, deceitful and grossly misleading advertisement, labeling, etc.
RESPONSIBILITIES OF CONSUMERS

(a) Be quality conscious

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To put a stop to adulteration and corrupt practices of the manufacturers and traders,
it is the duty of every consumer to be conscious of the quality of product they buy.
They should look for the standard quality certification marks like ISI, Agmark, FPO,
Woolmark, Eco-mark, Hallmark etc. while making the purchases.

(b) Beware of misleading advertisements

The advertisement often exaggerates the quality of products. Hence, the consumers
should not rely on the advertisement and carefully check the product or ask the users
before making a purchase. Incase there are discrepancies, the same should be brought
to the notice of the sponsors and the appropriate authority, if need be.

(c) Responsibility to inspect a variety of goods before making selection

The consumer should inspect a variety of goods before buying the goods and service.
For this purpose he/she should compare their quality, price, durability, after sales
service etc. This would enable the consumers to make the best choice within the limit
of their own resources.

(d) Collect proof of transaction

The consumer should insist on a valid documentary evidence (cash memo/invoice)
relating to purchase of goods or availing of any services and preserve it carefully. Such
proof of purchase is required for filing a complaint. In case of durable goods the
manufactures generally provide the warrantee/guarantee card along with the product.
It is the duty of consumers to obtain these documents and ensure that these are duly
signed, stamped and dated. The consumer must preserve them till the warrantee/
guarantee period is over.
(e) Consumers must be aware of their rights
The consumers must be aware of their rights as stated above and exercise them while
buying goods and services. For example, it is the responsibility of a consumer to insist
on getting all information about the quality of the product and ensure himself/ herself
that it is free from any kind of defects.

(f) Complaint for genuine grievances

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As a consumer if you are dissatisfied with the product/services, you can ask for
redressal of your grievances. In this regard, you must file a proper claim with the
company first. If the manufacturer/company does not respond, then you can
approach the forums. But your claim must state actual loss and the compensation
claim must be reasonable. At no cost fictitious complaints should be filed otherwise
the forum may penalise you.

(g) Proper use of product/services

It is expected from the consumers that they use and handle the product/services
properly. It has been noticed that during guarantee period, people tend to reckless use
of the product, thinking that it will be replaced during the guarantee period. This
practice should be avoided.
Apart from the responsibility enumerated above, the consumers should be conscious
of their duty towards other consumers, society and ecology and make responsible
choice. In other words, their purchases and consumption should not lead to waste of
natural resources and energy and environmental pollution.
WAYS AND MEANS OF CONSUMER PROECTION

We have enumerated several instances of exploitations and malpractices on the part of

manufacturers, traders, dealers and services providers. Now the question arises as to
how can these be eliminated. Actually it is very difficult to stop such exploitation by
any consumer single handedly. The consumers have to collectively act against such
malpractices and take the help of consumer organisations and the government
agencies. Infact, consumer protection essentially needs consumer awareness,
education and guidance, and it cannot be assured by voluntary business conduct or
self-regulation. The following are the various ways and means of consumer protection
followed in Kenya

 Public Interest Litigation

Public Interest Litigation (PIL) is a scheme under which any person can move to
the court of law in the interest of the society. It involves efforts to provide legal
remedy to un-represented groups and interests. Such groups may consist of
consumers, minorities, poor persons, environmentalists and others. Any person or

51
organisation, though not a party to the grievances, can approach the court for
remedial action in case of any social atrocities.

 Awareness Programme
To increase the level of awareness among the consumers the Government of India
has initiated various publicity measures. It regularly brings out journals, brochures,
booklets and various posters depicting the rights and responsibilities of consumers,
redressal machineries etc. It observes World Consumer Rights Day on 15 March
and National Consumer Day on 24 December. Several video programmes on
consumer awareness are broadcasted through different television channels.
Similarly, audio programmes are also broadcasted through All India Radio and FM
channels. The poster and slogan competition on consumer protection are also
organised at various level. To encourage the participation of public in the field of
consumer protection the Government has also instituted National Awards to the
persons who have done outstanding work in this field.

 Consumer Organisations
Consumer organisations have been active all over the world to promote and
protect consumer interests. A number of such organisations have also been set up
in recent years in different parts of India. It is felt that neither it is possible to
discipline all members of the business community through moral sanctions and a
code of fair business practices nor can administrate orders and legislative
provisions to ensure consumer protection without the active involvement of
consumer associations. Now with an increasing number of consumer organisations
involved in consumer protection, the consumer movement is getting a foothold in
India and helping individuals to seek quick and adequate redressal of their
grievances. Look at the box for some of such consumer organisations.

 Consumer Welfare Fund

The government has created a consumer welfare fund for providing financial
assistance to strengthen the voluntary consumer movement in the country
particularly in rural areas. This fund is mainly used for setting up facilities for
training and research in consumer education, complaint handling, counseling and
guidance mechanisms, product testing labs, and so on.
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 Legislative Measures
A number of laws have been enacted in Kenya to safeguard the interest of
consumers and protect them from unscrupulous and unethical practices of the
businessmen.- Consumer Protection Act 2012(Revised 2016)

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