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Business Ethics!!!

Word ethics meaning character or conduct is that branch of philosophy that deals with rightness or wrongness, goodness or badness of human conduct. Since definition of human would extend to all the activities carried out by people, it covers every aspect of business that is marketing, finance, personnel and purchasing.
Clearly wrong Ethical dilemma Clearly right

Nature of ethics
The inner guiding moral principles, values and beliefs that people use to analyze or interpret a situation and then decide what is right or the appropriate way to behave.

Nature of Business Ethics

Most businesses encounter two types of ethical problems known as overt and covert ethical problem. Overt ethical problems deal with bribery, theft, collusion.etc. They are clear and reprehensible. Whereas covert ethical situations occur in corporate acquisitions, marketing and personnel policies, capital investments, etc. They are complex, clear and have deft ethical solutions.

Need for business ethics

Check business malpractices. Improve consumer confidence. Protect other social groups. Safeguard consumer rights and social welfare. Make businessmen conscious of social responsibilities. To survive in the market, businesses should gain loyal consumers and perform social responsibility.

Sources of ethical norms

attitude Fellow workers Regions of country



The Individual Conscience

The law Religious beliefs



Society at large

The implications
It is clear that for a company to be attractive to potential employees, as also for it to give a sense of pride to its existing employees, it has to have ethics at its core. It is not just about compliance but issues such as concern for its stake holders, commitment to environment sustainability, making of products and services that are ethically sound.

Ethics and laws

Laws and ethics have common aim- defining proper and improper behavior. But the two are not quite the same. Laws are the societys attempt to formalize that is to reduce the written down rules- ideas about what is right and what is wrong in various walks of life Ethical concepts are more subtle than writing rules. Ethics deals with human dilemmas that frequently goes beyond the formal language of laws and the meanings given to legal rules.

Some of the acts which seek to ensure fair business practices in our country are the following: 1. The foreign exchange regulation act,1973 now replaced by FEMA 2. The companies Act, 1956. 3. The monopolies and restrictive trade practices act, 1969. 4. The consumer protection act, 1986. 5. The environment protection act, 1986. 6. The essential commodities act, 1955.

Ethics of production
This area of business usually deals with the duties of a company to ensure that products and production processes do not cause harm. Some of the more acute dilemmas in the area arise out of the fact that there is usually a degree of danger in any product or production process and it is difficult to define a degree of permissibility. (scandal : Bhopal Gas Disaster). Defective, addictive and inherently dangerous products and services .

Ethical relations between companies and the environment: pollution, environmental ethics, carbon emission. Etc. Ethical problems arising out of new technologies: modified food, mobile phone radiation and health. Illegal things: (Abdul Karim Telgi: The fake Stamp Racket).

Ethical issues for business

Product safety standards. Advertising contents. Working environment Unauthorized payments. Employees privacy Environmental issues.

Purchase ethics
Purchasing refers to a business or organisation attempting for acquiring goods or services to accomplish the goals of the enterprise.

Ethics in Purchasing
Improprieties of bids. Cancellation of orders Unearned discounts (they forward cheques 10 to 15 days after the acceptance of the material and yet they deduct cash discounts). E g : IPL scam By Lalit Modi. Personal Requirement (a buyer may ask his vendor who is a gear manufacturer to make a new gear for his vehicle and expect him not to charge.) Discrepancies in consignments Purchase low quality Goods.

Backdoor Selling
Generally illegal practice of enticing buyers to purchase goods or services without competitive bidding where com Professional procurement is about treating suppliers in good faith as true partners and expecting value for money every time a transaction is completed. There are some suppliers of product/services that use the backdoor selling tactic to gain the upper hand in the negotiation/sale.

Backdoor selling is the practice of attempting to sell product/services directly to its end user in an organisation instead of dealing with the company's authorised purchasing personnel. Most companies discourage backdoor selling, prefering to maintain centralised control via purchasing.
Backdoor selling has two main aims (1) closing deals before it can be negotiated (2) obtaining information from potential end users within an organisation, that can be used later to bolster the sales position.petitive biddingis called for.

Backdoor selling occurs when a requisitioner commits to a deal with a supplier without your involvement or approval. Negotiating with a supplier who believes he's already won the order is one of the toughest situations you will ever face.

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