Business Ethics Sharvari Notes

Unit 1 Introduction Of Business Ethics
Introduction of ethics
Defining morality, ethics and ethical theory-:
In common passage, the term ethics and morality are often used interchangeably. This probably
does not pose many real problems for most of us in terms of communicating and understanding
things about business ethics. However, in order to clarify certain arguments, many academic
writers have proposed clear differences between the two terms. Unfortunately, though, different
writers have sometimes offered somewhat different distinctions, thereby serving more to confuse
us than clarify our understanding. None the less, we do agree that there are certain advantages in
making a distinction between ethics and morality, and following the most common way of
distinguishing them we offer the following definitions.
Morality- It is concerned with the norms, values and beliefs embedded in social processes which
define right and wrong for an individual or a community.
Ethics-: It is concerned with the study of morality and the application of reason to elucidate
specific rules and principles that determine right and wrong for a given situation. These rules and
principles are called ethical theories.
The laws of a country are based on the customs or moral codes of its society. Penalties are
prescribed for bad actions- actions that contradict the established laws. The laws are a measure
against those people who cross the limits of the code of social conduct, and ensure that good
citizens are protected from the negative consequences of the law breakers.
The object of social codes of conduct is to maintain, promote, and elevate harmonious
relationships. “Honor your parents” is one such code. It maintains a peaceful relationship between
parents and children and promotes respect for each other in the family. Because of its salutary
effects, it is considered as one of the fundamental values to be cultivated.
Meaning of ethics
Ethics refers to the assessment of ethical values, philosophy, and principles of human being
conduct and its purpose in daily life to establish acceptable human performance. Ethics examines
the normal rationalization for moral judgment
Or
BUSINESS ETHICS (SHARVARI.S.K, Lecturer in BGSIMS)

1
Ethics means code of conduct. It tells a person how to behave with another person
Ethics is commonly defined as a set of principles prescribing a behavior code, explaining what is
good and bad. It may even outline moral duties and obligations
Introduction of business ethics
It is worth stressing that by right and wrong we mean morally right and wrong, as opposed to, for
example, commercially, strategically or financially right or wrong moreover, by business ethics, we
do not mean only commercial business, but also government organizations, pressure groups,
nonprofit organizations, charities and other organizations. For example questions of how to
manage employees fairly, or what constitutes deception in advertising, are equally as important
for organizations such as Greenpeace, the University of Stockholm, or the German Christian
democrat party as they are for shell Volvo or deutsche bank.
Definition:
According time to Andrew crane. "Business ethics is the study of businesses situation, activities
and decisions where issues of right and wrong are addressed."
According to Wheeler, “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".
Evolution of business ethics
The study of business ethics evolved through four distinct stages
1. 1960
Before the 1960’s business ethics were discussed primarily through a religious perspective.
It was in 1962 that John F. Kennedy established the consumer’s bill of rights in which he
outlined four basic consumer rights: right to safety, the right to be informed, the right
choose and the right to be heard.
2. 1970’s
In the 1970’s business professors began to write and teach about social responsibility
, an organization obligation to maximize its positive impact on stake holders and minimize
its negative impact. Companies became more concerned with their public image and
wanted to address ethical issues more directly.
3. 1980’s

2
In the 1980’s centers of business ethics provided publications, courses, conferences,
seminars, ethics committees and social policy committees. The defense industry initiative
on business ethics and conduct was developed to guide corporate support for ethical
conduct. Its principal had a major impact on corporate ethics. This effort established a
method for discussing best practices and working tactics to link organizational practice and
policy to successful ethical compliance
4. The 1990’s
In the 1990’s business with international operations set up new ethical issues. The federal
sentencing guidelines for organizations was approved in 1991 to reward organization for
talking actions to prevent misconduct, such as developing effective internal legal and
ethical compliance programs.
Scope of ethics
Stake holder’s level
* EMPLOYEES
 Security to job
 Better working conditions
 Better recommendations
 Welfare facilities
CUSTOMERS
 Better quality of goods
 Goods and services at reasonable price
 Not to practice discriminatory pricing
 Not make false claims about product in advertisements.
Share holders
 Ensure capital appreciation
 Ensure steady and regular dividend
 Disclose all relevant information
 Protect all minority shareholders interest

3
 Not to window dress balance sheets
 Protect interests in terms of mergers, amalgamation and takeovers
Banks and other financial institutions
 guarantee safety and borrowed funds
 Prompt repayment of loan
Government
 Complying with rules and regulations
 Honesty in paying tax and other duties
 Acting as partner in progress of the country
Personal policy level
 Not to use office car, stationery and other facilities for personal use
 Not to fall prey to shot ends
 Not to misuse others for personal gain
 Not to indulge in politics to gain Power
 Not to spoil promotional chances of others
 Promise keeping
 mutual help
Societal level
 Concern for poor and downtrodden
 No discrimination against any particular section or group
 Concern for clean environment
 Preservation of scarce resources for posterity
 Contributing to better quality of life

4
Internal policy level
 Fair practices relating to requirements, compensation, layoff, perks and
Promotions
 Transformational leadership to motivate employees to aim at better and higher things in life
 Better communication at all levels
Characteristics of business ethics
1. Business ethics are principles which govern and guides business people to permit business
function and in that sense business ethics is a discipline
2. It is both as a science and an art
3. It continuously tests the rules and moral standards and is dynamic in nature.
4. It is based on theological principles such as sincerity, human welfare, service, good behavior etc
5. It is based on reality and social customs prevailing in business environment
6. It studies the activities, decisions and behavior which is related to human behavior
7. It has universal application because exist all over world
8. Many of the ethical principles develop the personal dignity.
IMPORTANCE OF BUSINESS ETHICS
1. Business ethics improve customer confidence: business ethics needed to improve the
customer confidence about quality, quantity, price etc. Of the products. The customers have
more trust and confidence in the businessmen who follow ethical rules. They feel that such
business man will not cheat them.
2. Survival of business: if business man will not implement ethics in his business the consumer
do not have a confident to buy his products and he will not sustain in market. In order to exist
in market for long term he should implement ethics in his business.
3. Safeguarding consumer rights: the consumer has many rights such as right to health and
safety, right to information, right to choose, right to be heard, right to redress etc. But many

5
businessmen do not respect and protect these rights. Business ethics help to safeguard rights
of consumer.
4. Stop business malpractices: some unscrupulous businessmen do business malpractices by

indulging in unfair trade practices like black-marketing, artificial high pricing, adulteration,
cheating in weights and measures, selling of duplicate and harmful products etc. These business
malpractices are harmful to consumers. Business ethics help to stop these business malpractices.
5. Protecting employee and shareholders: business ethics are required to protect employees,
shareholders, competitors, dealers, suppliers etc. It protects them from exploitation through
unfair trade practices.
6. Develops good relations: business ethics are important to develop good and friendly relations
between business and society. This will result in a regular supply of good quality goods and
services at low prices to the society. It will also result in profits for the businesses thereby
resulting in growth of economy.
7. It creates good image: business ethics create a good image for the business and businessmen. If
the businessmen follow all ethical rules, then they will be fully accepted and not critized by the
society. The society will always support those businessmen who follow this necessary code of
conduct.
8. Smooth functioning: if the business follows all the business ethics, than the employees,
consumers, shareholders, dealers and suppliers will all be happy. So they will give full cooperation
to the business. This will result in smooth functioning of the business. So the business will grow,
expand and diversify easily and quickly. It will have more sales and more profits.
9. Consumer movement: business ethics are gaining importance because of growth of consumer
movement. Today, consumers are aware of their rights. Now they are more organized and hence
cannot be cheated easily. They take action against those businessmen who indulge in bad
business practices. They boycott poor quality, harmful, high - priced and duplicate goods.
Therefore, the only way to survive is business is to be honest and fair.
10. Consumer satisfaction: business today consumer is the king of the market. Any business
cannot survive without the consumer. Therefore main objective of business is consumer
satisfaction. If the consumer is not satisfied, then there is no sales and no profits too. Consumers
satisfied when business follows all the ethics.
11. Importance of labour : labour I.e. employees or workers play a very crucial role in the success
of the business. Business must give proper wages and salaries along with that they should provide
better working conditions. There must be good relations with employees.

6
12. Healthy competition: the business must use business ethics while dealing with the
competitors. They must have healthy competition with the competitors. They must not do cut
throat competition.
Factors influencing business ethics
1. Personal code of behaviour : personal code of behaviour is an

important factor influencing business ethics. Code of ethics refers to a
written set of guidelines issued by an organisation to its workers and
management to help them conduct their actions in accordance with its
primary values and ethical standards.
2. Company's policy: Ethics start at the top with small and big companies. If owners or executives
not trustworthy and low in morals, employees will follow suits and ethics
too. Business ethics involves everyone in a company and is worthwhile
Endeavour. If a customer is scammed once he will not go back to the firm.
BE is needed for the business for its long survival.
3. Ethical standards imposed on managers: ethical standards are the standard of

ethical environment that are acceptable to most people. generally referred to as
mores, ethical standards are what the majority accepted as good and the way they
behave without imposed rules and regulations.
4. Ethical climate of the country: climate change is one of the most challenging issues facing the
world today. Here we illustrate how ethical analysis can help us to understand both nature of the
climate problems and constraints on possible solutions. in doing so this will focus on how climate
change threaten fundamental values and how action to additional raises serious concerns of
fairness responsibility
5. Unhealthy competition : unethical competition means the unethical business practices to meet
the competition. The right kind of "free market " competition is good; the wrong kind can kill you.
6. Abnormal profit motive: it is generally assumed that businesses are primarily

motivated by the desire to make profit. However, the desire to make profit may
tempt business leaders to act in ways that are regarded as unethical.

7
7. Political uncertainty : political uncertainty is an outcome that is driven by politics where the
end result is known . It is also a state of doubt about the future or what is the right thing to do in
the eyes of the electorate.
8. Corruption; corporate executive and business owners need to realize that there can be no
compromise when it comes to ethics and that are no easy shortcut to
success.
Corruption can include graft, bribery, embezzlement and extortion.
9. Lack of education : lack of education is another influencing factor of business ethics. The lack of
education cannot help to understand the concept and it's importance of business ethics.
Type of Business Ethics
1. Normative ethics-: norms or standards are also known as values or codes. Norms set clear
guidelines for social intersection in a community. Normative ethics is a subject of study wherein
students study moral standards. These moral standards can be applied to human actions to judge
their moral character, that is, whether they are right or wrong. Examples of some of the moral
standards are utility, duty, conscience, use f right means for right ends, justice, prudence and
stewardship. Just as there are several standards to measure distance such as meter, yard, mile etc.

8
2. Applied ethics-: Business ethics comes under the classification of applied ethics because it
concerns itself with the special application of ethics to problems relating to a definite field of
human relationships. Normative standards of moral judgments are applied by business managers
to the business decisions they take. The ethical element is part and parcel of the integral process
of decision making on a business management problem. Business ethics, there, deals with the
application of normative standards to specific business experiences. The study of business ethics is
as essential for a businessman as the study of professional norms for a medical practitioner.
3. Meta- ethics-: The Greek word Meta stands for beyond. Thus, Meta ethics literally means
beyond ethics suggesting an in depth study of the discipline. In other words, it is a scientific study
of the concepts of ethics in itself. You may not find these concepts practical, because nowhere in
the world will you find a perfect human being who is perfectly good, perfectly happy, perfectly
duty bond, and so on. These are abstract ideas that concepts that can be conceived as perfectly as
perfection itself
4. Descriptive ethics
Descriptive ethics is the study of people's beliefs about morality. it contrasts with
prescriptive or normative ethics which is the study of ethical theories that prescribe how people
ought to act and with meta-ethics which is the study of what ethical terms and theories actually
refer.
Arguments For Ethics in Business
1. Ethics should govern all voluntary human activities. Likewise ethics should also govern business
operation, because business is a voluntary human activity.
2. Any human activity cannot exist unless people and the surrounding society adhere to minimal
standards of ethics. business as a cooperative activity needs ethical behaviour
3. A minimal adherence to ethics is required on the part of those who involved in business.
4. All business need a stable society where societal members practice the minimal standards of
ethics

9
5. A society where lying, theft, cheating become rampant business activities breakdown.
6. Several studies have found a positive relationship between socially responsible behaviour and
profitability, some studies found a no relationship. But no studies have at least found a negative
correlation that indicates ethics has an impact on business.
7. Though by being unethical other party sometimes become gainer. But unethical behaviour
undermines the long-term harmonious relationships with customers, employees and community
members upon whom business success ultimately depends.
8.Business becomes short sighted when they fail to implement ethical values in the organization.
Arguments Against Ethics in Business
1. Argument: 1
a. the very purpose of profit in perfectly competitive free market is to serve the greater society in
the most socially beneficial ways
b. Each business firm has to produce only what the members of the society demands, using the
most efficient means of available.
c. the members of the society will benefit most, if managers do not impose their own value of
business
d. on the contrary managers should concentrate more on profit with a single mind and devote to
produce something effectively and efficiently what the members of society value.
4. Managers should single mindedly pursue profit on the ground of some assumed but unproved
moral standards.
2. Argument 2
Alex C Michael says managers as loyal agents of his employer should single mindedly pursue the
interest of the firm and should reject ethical consideration. Loyal agents argument categorized in
to two parts.
a. Manager as a loyal agent should serve his employer, the way the employer wants to be served.
b. An employer wants to be served in a way that will advance his self-interests.
3. Argument 3

10
To be ethical it is enough for business to obey the law. Business ethics mean to obey the law
Basics of business ethics
1. Ethics in marketing: Marketing ethics addresses principles and standards that define acceptable
conduct in the market place. This is the basic principle and values that govern the business
practices of those engaged in promoting products or services to consumers. Sound marketing
ethics are typically those that result in or at least do not negatively impact consumer satisfaction
with the goods and services being promoted or with the company producing with them.
2. Ethics in fulfillment: Fulfillment is about obeying and adhering to rules and ability. The
motivation for being compliant could be to do the right thing out of the fear of being caught
rather than a desire to be abiding by the law.
3. Ethics in finance: it is an art or science of determining the funds of an organization are being
used in a right manner or not. The ethical issues are in finance that companies and employees are
confronted with in accounting window dressing, misleading financial analysis and related party
transactions not at arm's length.
4. Ethics in HRM: The ethics of HRM covers those ethical issues arising around the employer-
employee relationship, such as the rights and duties owed between employer and employee.
5. Ethics of production: Ethics in production is a subset of business ethics that is meant to ensure
that the production function or activities are not damaging to the consumer or the society.
Production area of business ethics deals with the duties of a company to ensure that product and
production processes do not cause damage.
CORPORATE SOCIAL RESPONSIBILITY

11
Corporate social responsibility refers to the thought where by companies make a decision
voluntarily to donate to a better society and a cleaner environment. Under corporate social
responsibility companies incorporate social and environmental concerns in their business
operations and in their interaction with their stakeholders on a charitable basis.
Definition
According to United Nations Industrial Development Organization (UNIDO) "Corporate social

responsibility is a management concept whereby companies integrate social and environmental
concerns in their business operations and interactions with their stakeholders"
Need for Corporate social responsibility
1. Societal approach is very important to business organizations, which demand that they should
be responsible to the social problems of society.
2. To establish a good corporate image, business organization include social responsibility as a

corporate objective
3. Social welfare terms are included in the collaborative agreements, which require the company
to take up the social responsibility of business
4. Legal provisions like pollution and environment laws also direct a company to take up social
problems.
5. Donations approved NGOs are also exempted from the income tax
6. Commitment to social responsibility by an organization also enhances its image, resulting better
business environment.
7. Companies undertaking social responsibility can position their products better and increase
their market share.
8. In case a situation demands, due to natural calamities or accidents, a company has compensat
the victims or provides medical treatment to the affected people.
9. For extraneous consideration also, some time, some organizations are forced to take up social
responsibility
10. In some organizations the culture is so strong that they take up social responsibility as the
moral responsibility.

12
Arguments in favour of Corporate Social responsibility of business
1. business is a creation of society and therefore it should respond to the demands of the
society:
2. The self interest of business is best served by meeting the aspirations of the society.
3. to improve the image of the business: the business will retain the needed credibility with the
public if it performs its social obligations. Good relations with workers, consumers and suppliers
will lead to success of business.
4. It is the moral thing to do: The social responsibilities of business managers must proportionate
to their social power. If the business manager do not assume social responsibility, their social
power will be taken away by the society through government control and regulations and other
measures.
Arguments against corporate social responsibility of business
1. Responsibility of government: welfare schemes are the sole responsibility of the government
business should not have any relationship with welfare schemes. It is for government to adopt
schemes and measures for the up lift ment of the weaker sections of the society.
2. Conflicting considerations of private market mechanism and social responsibility: private

market mechanism and social responsibilities are opposite to each other and therefore a business
man will have to be guided by any one of the two considerations.
3. Disregard of market mechanism: market mechanism is the appropriate way to allocate scare
resources to alternative use. The doctrine of social responsibility interferes with the market
mechanism and results in an inappropriate way to allocate scarce resources.
4. Arbitrary power to business: businessmen will get arbitrary powers in the matter of allocation
of resources in the welfare of the society. they should have no right to interfere with
governmental responsibility.

13
CSR ISSUES OF MANAGEMENT
1. Improved customer attention:

a. There is evidence that the ethical conduct of companies exerts a growing influence
on the purchasing decisions of customers. In a recent survey, more than one in five
consumers reported having either rewarded or punished companies based on their
perceived social performance.
2. Rising investor stress
Investor are changing the way they asses companies performance and are making
decisions based on criteria that include ethical concerns. A separate survey revealed that more
than a quarter of share-owing Americans took into account ethical consideration when buying and
selling stocks
3. The decreasing responsibility of government

In the past, governments have relied on legislation and regulation to deliver social and
environmental objectives in the business sector. Shrinking government resources, coupled
with a distrust of regulations, has led to the exploration of voluntary and non- regulatory
initiatives instead.
4. Demands for greater disclosure:

There is growing demand for corporate disclosure from stakeholders, including customers,
suppliers, employees, communities, investors and activist organizations.
5. Aggressive labour markets

Employees are increasingly looking beyond paychecks and benefits and seeking out employers
whose philosophies and operating practices match their own principles. In order to hire and
retain skilled employees, companies are being forced to improve working conditions.
Meaning of Crisis Management

Crisis management refers to the application of strategies
considered to help an organization agreement with a sudden and
significant negative event.

14
Best Practices of Crisis Management
A crisis can occur as a result of an unpredictable event or as an unforeseeable consequence of
some event that had been considered a potential risk. In either case, crises almost invariably
require that decisions be made quickly to limit damage to the organization. For that reason,
one of the first actions in crisis management planning is to identify an individual to serve as
crisis manager. Other crisis management best practices include:
i) Planning in detail for responses to as many potential crises as possible.

ii) Establishing monitoring systems and practices to detect early warning signals of any
foreseeable crisis
iii) Establishing and training a crisis management team or selecting an external crisis
management firm with a proven track record in your business area
iv) Involving as many stakeholders as possible in all planning and action stages.

15
UNIT 2: PERSONAL ETHICS
Introduction
Personal ethics is a category of viewpoint that determines what an individual believes about
morality and right and wrong. This is usually distinguished from business ethics or legal ethics.
These branches of ethics come from outside organizations or governments, Personal ethics can
affect all areas of life, including family, finances and relationships.
Philosophers typically agree that a divine power instilled personal morality in humankind, creating
a basic universal system of right or wrong.
Religion inspires a large portion of ethics. Personal ethics are motivated by humanitarian
interests it means a person who involved in improving people lives and reducing suffering.
Philosophers might argue that a child will learn to share, tell the truth and work hard because he
sees that these actions benefit him. For example, when a child chooses to break the rules of a
game, he is creating conflict and building a barrier between himself and his peers. On the other
hand, the child who plays by the rules enjoys friendship and intimacy with his peers.
Meaning
Personal ethics are basic principles and values that govern interactions among individuals.
OR
A personal ethics defined as any ethical system or doctrine (set of beliefs) that has been chosen as
a moral guide in a particular life of a person.
Features of personal ethics
1. Honesty:
Ethical workers value honesty and are honest at all costs. This means that they remain
honest even when the not to be honest in certain situations. Ex if an ethical employee makes a
mistake, he does not lie about the situation even if management is culpable (blame) on him.
Ethical Honesty makes the management to trust the employee more implicitly and rely upon him.
2. Responsibility:
Workers who are ethical take responsibility seriously and do all that they can to complete
the tasks with which they are changed. These individual do not shirk responsibility and attempt to
fly under the radar but instead embrace the opportunity to take a leadership role.

16
3. Reliability:
When ethical team members say they are going to do something, they follow through.
They are reliable at all times and can be trusted to complete projects of great importance.
Because these individuals do as they say they will they are often go- to people with in the work
place
4. Goal Oriented:
Ethical individuals are often goal-focused and able to dedicate themselves fully to their job
tasks. These individuals often recognize the importance of working to better them and improve
the overall success of their company; they are willing to work toward reaching potentially
challenging goals.
5. Job-Focused
Ethical employees remain Focused on their jobs at all times, not allowing themselves to
distracted, as doing so pulls them away from the duties of their occupations. These individuals are
never found working on a task that it’s not related to the job in questions as they recognize that
their on-the-job time is to be spent only doing job-related tasks.
Honesty
Honesty refers to an aspect of moral character and connotes optimistic and virtuous
attributes such as integrity, truthfulness and straightforwardness, including straight forwardness,
including straight forwardness of conduct, along with the absence of lying, cheating, theft etc. In
other words honesty means being trustworthy, loyal, fair and sincere.
Meaning of emotional honesty
 Emotional Honesty means expressing the true feelings. To be emotionally honest someone
must be emotionally aware. This emotional awareness is related to the emotional intelligence.
Emotional intelligence combined with necessary learning, practice, and experience which give
us ability to identify our feeling.
 Emotional Intelligence may also give us the ability to decide when it is our best interest to be
emotionally honest by sharing our feelings. There are times when it is not healthy or safe for
us to be emotionally honest.
 If we are more emotionally honest with ourselves we will get to know our true selves on
deeper level. This could help us become more self-accepting. It could also help us make better
choices about how to spend our time and who to spend with him.

17
If we are emotionally honest with others, it may encourage them to be more emotionally honest.
When we are emotionally honest we are more likely not to be asked or pressured to do things
which we do not want to do. We will also find out sooner who respects our feelings.
Emotional Honest and parenting
Parents can create an emotionally safe environment, where the child and adolescent are free to
be emotionally honest, or they may create just the opposite. The way we are parented is probably
the main factor in how emotionally honest we are later in life.
The primary way to create an emotionally safe environment is through emotional validation.
When we are accepted and validated emotionally we aren't afraid of being rejected or punished
for expressing any feelings, thoughts, questions or perceptions we might have. We are free to be
ourselves, and our parents get to know us as we really are. When we are accepted as we really
are, and not just as the image as we believe we need to portray, we feel as strong sense of inner
security.
We can be more emotionally honest with others because we are not as afraid of their rejection.
Since we feel secure within ourselves, the acceptance or rejection from others is simply not as
important to us we are freer to be ourselves with everyone. This quality attracts other people who
are also secure and can be themselves. Therefore, we are likely to be surrounded by secure, self-
confident, emotionally honest people as the years go by.
Elements of Emotions

18
1. Love:
Love refers to a variety of different feelings, states and attitudes that ranges from
interpersonal affection to pleasure. Love offers connection. It is generous.
2. Fear:
Fear is an emotion induced by a threat perceived by living entities, which causes a change
in brain and organ function and ultimately a change in behaviour. Fear is learning "I don’t know."
It teaches us to ask questions and is one way we learn humility. It is important to remember that
uncertainty is a huge part of life.
3. Grief/sadness
Sadness is emotional pain associated with, or characterized by feelings of disadvantage,

loss, despair, helplessness and sorrow. Grief/sadness makes us all smaller and returns us to a
sense of privacy in being alone with ourselves. Sadness reminds us of how fragile our lives are.
Time changes the sorrow, so eventually it takes up less space in our hearts.
4. Anger:
Anger is an emotional response related to one's psychological interpretation of having

been offended, wronged, or denied. Anger if it is aimed at someone, anger is much more hurtful.
Being angry is different than wanting to hurt someone. It draws a line in the sand and separates us
from others. Can be constructive disagreement or destructive. The healthy side of anger defines
you as important; the ugly side of anger is to be too self-important. Conflict is a sign of growth.
Remember, challenge can be an affirmation.
5. Hate:
Hate is a deep and emotional extreme dislike that can be directed against individuals,
entities, objects or ideas. People hate when anger is not constructive working part of their
emotional tool box. It can be destructive and becomes an attempt to eliminate to other. There is
still a powerful connection.
6. Gratitude:
Gratitude, thankfulness, gratefulness or appreciation is a feeling or attitude in

acknowledgment of benefit that one has received or will receive. Gratitude knowing what is
enough and appreciating blessings.

19
7. Joys
Joy is a feeling of great pleasure and happiness. Joy the function is to feel free. Get Fat with
Joy. Fun can be a substitute for real joy.
8. Humor
Humor the quality of being amusing or comic, especially as expressed in literature or

speech. Humor makes the hard parts of life more bearable. This evolves into being even more
precious as we age. Humor is an alternative to despair.
Meaning of Humility
Humility refers to the act or posture of lowering oneself in relation to others or conversely
having a clear perspective and therefore respect, for one's place in context.
Virtue of humility
The virtue of humility refers to a quality by which a person considering his own defects has a lowly
opinion of himself and willingly submits himself to God and to others for God sake.
Definition of Virtue of Humility
According to St.BERNARD "A Virtue by which a man knowing himself as he truly is, abases
himself"
Explanation
1. Humility means Knowledge of self i.e., knowing true about oneself the person should know his
weakness, fears, sins, injuries and also his good qualities. These good qualities is not created by his
own it’s from God and by our superiors.
2. The person good qualities will be presence due to the situations and circumstances.

20
3. Humility at the end it says it is depends on God. When person posses’ humility he knows what
really he is. When person is in humble he does great things with humble soul. Lack of humility is
danger to the society and the person creates harm to others.
6 ways to communicate the virtue of ethics
1. Pray for it: It is safe to say that no virtue is ever formed in our souls except by frequent prayers.
If you truly desire to be humble, pray every day for this grace, asking god to help you overcome
your self-love
2. Accept humiliation: The person one who wants to succeed in life he should accept humiliations.
This may well be the result of a superficial and apparent humility rather than of a humility that is
real and profound. Humility is truth; therefore, let us tell ourselves that since we posses nothing of
ourselves but sin, it is but just that we receive only humiliation.
3. Obey legitimate superiors: Humility is always manifested by obedience to legitimate authority,

whether it is your boss or the government.
4. Distrust yourself: When we completely distrusted ourselves and relied only upon God, they say,
we would never sin.
5. Acknowledge your nothing less: Another highly effective way of cultivating humility is to
meditate on the grandeur and greatness of God, while simultaneously acknowledging your own
nothingness in relation to him.
6. Think better of others than of yourself: When we proud, we inevitably think we are better than
others.
Happiness:
Happiness refers to a psychological or exciting state of well-being characterized by positive or

pleasant emotions ranging from contentment to intense joy.
Definitions of Happiness
According to Mahatma Gandhi, “Happiness is when what you think, what you say and what you
do are in harmony"
Aristotle" Happiness is the meaning and the purpose of life, the whole aim and end
of human existence",

21
Denis Waitely" Happiness is the spiritual experience of living every minute with
love, grace and gratitude".
Promote Happiness
Promote happiness is the process of encouraging for mental or emotional state of well-being
ranging from contentment to powerful delight. A variety of biological, psychological, religious and
philosophical approaches have striven to define happiness and identify its sources.
A person is considered moral when their actions tend to promote utility of general public in
accordance with the greatest happiness principle.
Factors that promote happiness
1. Good physical and mental health
2. Good personal and intimate relationships, such as those of marriage, the family and friendships.
3. The faculty for perceiving beauty in art and nature.
4. Reasonable standard of living and satisfactory work.
5. A Philosophic or religious point of view capable of coping successfully with the necessities of
life.
Promote happiness at workplace
The employee should be happy in their work place then only the productivity of the organization
increases. Therefore the employer should take responsibility to make their employee feel happy
at their work place.
There are several ways to increase employee happiness and productivity
1. Provide opportunities of growth: Compensate continued learning, fund conferences, and make
resources available so employees have the option of advancing in the company. Encourage
leadership at every level, in any way possible.
2. Recognize and Respect your employees: Employer should recognize and respect their
employees. If employees are efficient in their work they should reward them. Provide enough
useful information to help them repeat the good things and discontinue any mistakes.
3. Set clear goals, but grant independence: Setting clear goals infuses daily work with a sense of
purpose, but you don't want to be a micro-manager either. Not only do you need to help your

22
employees set their specific goals, but make sure that they understand the big picture so they
know what they're working towards.
4. Empower your employees: The exchanges of ideas between everyone on your team value their
input, their ideas and their experience. Employees will able to understand their impact on the
company, find more meaning in their work, and offer innovative ideas on how to improve the
company.
5. Make yourself available: Build internal loyalty like you do with their employees. When
employees and employers are in loyalty it builds a good relationship between them.
6. Provide Consistent feedback: Give consistent feedback, focusing on both the positive and
negative. If you don't work in the same office s your employees. Try to check in every day. This can
be done in a group setting or one on one, whichever option is most available to you.
7. Know your employees: Employers should get to know their employees. If they genuinely care
about their employees happiness and wellbeing, and you make the effort to understand them
they will take notice.
8. Practice open communication: Be transparent, be honest, be real and be constructive.

Encourage your employees to do the same, with you and with their coworkers. By doing so, you
will foster an environment of acceptance, understanding, appreciation and respect.
Karma yoga
Karma yoga refers to the process of achieving the ultimate goal of human life through the path of
action. It is understood as the ‘discipline of action’.
Karma Yoga by Swami Vivekananda
 Karma yoga is an English book of Swami Vivekananda.

 Swami Vivekananda delivered a number of lecturers in New York City from December
1985 and January 1986.
 His friend Joseph Josiah Goodwin recorded some of the lecturers of Swami Vivekananda
and those lecturers were published as the book karma yoga in 1986
The main topic of the book was Karma means Work. Swami Vivekananda discussed the concept of
karma in the Bhagavada Gita.
Swami Vivekananda described Karma yoga is a Mental discipline that allows a person to carry out
his/her duties as a service to the entire world, as a path to enlightenment.

23
Importance of Karma Yoga
1. Achieves Mystical Knowledge: Karma Yoga is the pathway of Yoga that achieves mystical
knowledge through the work done in day-to-day life, by doing one’s duty and work in such
a way that the inmost knowledge comes through Work
2. Results of Action: It is used in a particular sense when defining the law of Karma, which
states that we always receive the results of our actions; good results for good actions and
bad results for bad actions.
3. Do our work in a dispassionate manner: It is based on the teaching that if we do our work
in a dispassionate manner, we will be able to achieve an inner tranquillity in life until,
finally, we achieve complete liberation.
4. Correct work: Karma Yoga is concerned with the correct way of doing work
5. Attain proper Karma: It sets out to teach what our duties are and how we should perform
them to attain Karma
6. Bound to do work: If we live in the world, we are perforce bound to do work. We have to
work simply to earn a living for ourselves and for those for whom we care. Our
circumstance in society also leaves us with many duties at a society level.
7. Led Closer to Brahman: Karma Yoga teaches us how to do this work in such a way that,
even by working, we are led closer to the truth of Brahman.
8. To get proper reincarnation: The description of such a law is usually tied up with the
ancient Hindu belief of reincarnation, in which it is used to mean that our Karma will
determine the kind of body we get in the next life.
Important Aspects Of Karma
1. As you sow, so shall you reap?

This is very easy to understand. Swami says that if one sows a lemon seed, one cannot
expect a mango tree from the act. He explains the same variously. He narrates the story of
a shepherd boy who runs to his mother telling that there is an abusive demon in the hills
who always speaks harshly to him. Mother then teaches him the concept of an echo and
advices him to send out positive and love-filled words. The shepherd boy learns and is

24
delighted. It is the same concept in the example of the mirror used while explaining the
greatest secret in life.
2. Different reactions occur in different time-frames

Swami explains this through a very simple example. He says that when a thorn pricks the
foot, the hand immediately rushes to pluck the thorn out of the foot. The reaction is
almost instantaneous. When one eats food, digestion happens in hours and energy is
released for functioning. The reaction takes some time here. But when a seed is sown, it
takes years for the tree to bear fruits. The reaction in this case takes a lot of time.
3. Action and reaction is a definite combo, but they can get vastly separate in time.
A thief commits a robbery and obtains a getaway car to make an escape. Immediately, we
say, “He did evil and was rewarded with a getaway car” the mistake here is in assuming
that the getaway car was the reaction of his robbery. No! The robbery is situation B here
while the getaway car is action A. in a similar manner; we can understand a good act
receiving an apparently bad reaction.
4. There is no escape from action/reaction

a. Action for action sake:
Sadly, most of us are stuck in this. We do our work at our workplace because we
need the money. Or we work at home because we have no other choice. We not
enjoy it and therefore errors, mistakes, carelessness will creep in. no explanation is
needed to say that this kind of action is not desirable.
b. Action done with dexterity: (YOGAHA KARMASU KAUSHALAM)

Here, the person involved in action seeks to do it with dexterity and finesse. He/
she seeks the rewards of doing a job well- a raise in salary, appreciation from peers
ad superiors, better career growth etc. though this is a better form of action, it
suffers from a major disadvantage. Since it is based on expectations, when things
don’t go the expected way, there is disappointment, frustration and anger.
c. Action done with dexterity without expectation: (KARMA PHALA TYAGA)

In this kind of action, the person involved performs to his/her best for being the
best. There is no expectation of any kind of reward from others. Satisfaction is
taken as a reward. Swami says that though this form of action is higher than the
previous two, there is the danger of one losing motivation. It leads to questions
like,” “why am I doing this? The whole world thinks of me as foolish. What am I
gaining ultimately?”

25
d. Pure action ( PAVITRA KARMA)
Every action is done to please God/Atma/Spirit. One puts in his/her
best ad gets the reward that the Lord is pleased. Thus, all actions are
done not only selflessly without any expectation of any reward, but
are also dedicated to God as an offering unto Him. And this
dedication is to the Lord who is the indwellers of all beings.
Proactive
The adjective proactive can describe a person who get things done. If you are proactive, you make
things happen, instead of waiting for them to happen to you.
Active means "doing something." The prefix pro- means "before." So if you are proactive, you are
ready before something happens. The opposite is being reactive, or waiting for things to unfold
before responding. Think about winter cold season. A proactive person washes his hands and
takes vitamins; a reactive person gets sick and takes cold medicine.
Or
Proactive is an action and result oriented behaviour, instead of the one that waits for things to
happen and then tries to adjust to them. Proactive behaviour aims at identification and
exploitation of opportunities and in taking preemptory action against potential problems and
threats, whereas reactive behaviour focuses on fighting a fire or solving a problem after it occurs.
How to be proactive?
Being proactive means thinking and acting ahead of anticipated events; this means using
foresight.
Here some suggestions for helping you to become a more proactive person;
1. Self reflect, look at yourself and ask some questions:
 What kinds of tasks do or don't come your way regularly? For

example, at work, at home, during study etc.
 What kinds of tasks come in large groups?
 What kinds of tasks need attention when they arrive
2. Examine critically how you might perform those tasks more efficiently. Before the next rush:

26
 Create a plan, procedure, checklist or routine to accomplish the task.
 Recruit and instruct others to assist with an urgent or large task.
 Gather information you will need to perform a task, or if necessary information comes from a flow
of people who bring the tasks, create a script, checklist, or form to capture it consistently
3. Try to prevent problems from ever arising
This means tackling possible failing in advance to prevent them

from becoming a reality get into the habit of taking precautions and
developing fall back plans.
4. Develop a mindset that looks to solve problems instead of dwelling on them
Here how:
Define the problem (what is it exactly?)
Decide what needs to happen to overcome the problem

and how you’re going to do that and
Get on with it.
5. Get and stay ahead of less- urgent day to day tasks.
Doing so means that they will be out of the way when

rushes come and will not be worrying you unnecessarily.
Pay particular attention to preventative maintenance,
whether that means checking the fluids in your car,
restocking your pantry, or setting aside a bit of money
in saving each week. A little effort up front could save
you from a larger crisis later.
6.
7.

27
6. Know which tasks are priorities and which can wait
Write out daily lists of tasks ad head the list, “I will do’
and not ‘to do’. Boldly cross off each item as it is
achieved. Keep this list nearby and let it direct your
actions. If it goes too long without crossing anything
off, reassess what you are doing to make you sure that
you do finish the tasks listed on it.
7. Estimate any task that is unnecessary

Some things do not need doing, or do not need to be done by you.
Do not waste time on them and do not allow a misplaced sense of
guilt lead you into thinking that somehow you are responsible for
them. If tasks are unnecessary, they will not add to your effort and
are thus, a waste of energy.
8. Evaluate your procedures and process at you uses them.
What works and what does not? Make notes for

improvements, and incorporate those improvements
during the next lull. Discard anything that does not work
but take care to note when something is in need of
tweaking and adjust it accordingly so that it does work.

28
Unit 3: ETHICS IN MANAGEMENT
Introduction
Management is a Universal Process. It has its place not only in business concern but also
political, religious, charitable, armed force and even educational institution; hence management
in the practice of consciously and continuously shaping organizations. All organizations have
people who are responsible for helping them achieve their goals.
Management occupies such an important place in the modern world that the welfare of the
people and the destiny of any country are very much influenced by proper management.
Ethics in management
Ethics in management can be defined as decision- making and leadership in a firm or

organization that is based on corporate social responsibility, sustainability, fair-trade and similar
concepts.
I. Ethics in HRM
Human Resource Management deals with manpower planning and development related
activities in an organization. It is important for people/managers/employees to be ethical, but it is
totally different from being ethical in private life.
Ethical Issues in HRM
1. Discrimination
2. Privacy of the employee
3. Whistle blowing
4. Trade secrets and Conflict of Interest
5. Affirmative Actions

29
A. Discrimination
Discrimination describes a large number of wrongful acts in employment, housing,

education, medical care and other important areas of public life.
It is a form of unequal treatment but not all unequal treatment is discrimination. The unequal
treatment results from prejudice or some other morally unjustified attitude against members of
the group to which an individual begins; individuals are not treated on the basis of individual merit
but on the basis of membership in a group.
1. Different Forms of Discrimination
a. On the basis of sex: Based on male or female and not on the sex-related matter such as sexual
orientation or marital status
b. Age discrimination: Younger employees preferred by shunting old ones to have ore updated
skills and innovative ideas.
c. Religious discrimination: This is different from discrimination based on sex or race eg:
Employees refuse to hire or promote individuals because they are Jews, Indians in US.
d. Discrimination against handicapped
e. Natural Origin Discrimination: different polices are followed by different employees on the
basis of their natural origin.

30
2. Discrimination practices:
a. Recruitment Practices: Firms that rely solely on the word-of-mouth referrals of present
employees to recruit new workers tend to recruit only from those racial and sexual groups that
are represented in their labor force.
EX: If the firm's labor force is only Hindu community males, this recruitment policy will tend to
discriminate other religions and women.8
b. Screening Practices: Job qualifications are discriminatory when they are not relevant to
the job to be performed. Aptitude or intelligence test used to screen applicants but test are
conducted with unfamiliar language concepts etc. even though they are qualified for job.
c. Promotion Practices: Promotion is given on quality of performance by an employee but

promotion practices are discriminatory when employers place majority on job tracks separate
from those open to women and minors.
d. Conditions of employment: Wages and salaries are discriminatory to extent that equal
wages and salaries are not given to people who are essentially doing the same work.
e. Discharge: Layoff policies that rely on a seniority system where in women and minorities
have the lowest seniority because of past discrimination.
B. Employee Privacy
1. Definition:
According to Warren and Brandeis "Privacy is the right to be let alone. The aim of Privacy
law, they thought, should be to protect ' the privacy of private life; from unwanted possibility
and their proposals all deal with reacts on the publication of information about the private lives
of individuals.

31
2. Types of Privacy
The fundamental right to Privacy consists of an individual's right to control about oneself
and to control situations where such information could be gleaned.
a. Physical Privacy: Physical inaccessibility to others, and the right to 'one's Own space.
EX: Organization that place surveillance cameras in employee's private rest areas might be
said to compromise physical privacy.
b. Social Privacy: Freedom to interact with other people and in whichever way we choose.
EX: Some employers will threaten social privacy by suggesting that employees should not
bring their firm in to 'disrepute ' by behaving in an 'unacceptable'. 'immoral'. or illegal way during
their social lives.
c. Informational Privacy: Determining how, when and to what extent private data about us are
released to others.
EX: When employers hire private security firms to make investigation about employees
without due cause.
d. Psychological Privacy: Controlling emotional and cognitive inputs and outputs, and not being
compelled to share private thoughts and feelings.
Guidelines for safeguarding Privacy
 Use the internet only for professional work and not personal work.
 Keep your personal communication private.
 Agree to any health test or treatment
 Be careful about who handles your personal records.

32
C. Whistle Blowing
1. Meaning
Whistle blowing refers to an employee act of informing the public about the illegal
immoral behavior of an employer or organization.
2. Definition
According to Professor of Philosophy Norm Bowie defines
"A whistle blower is an employee or officer of any institution, Profit or non profit, private
or public, who believes either that he/she has been ordered to perform some act or he/she has
obtained knowledge that the institution is engaged in activities such as
a. are in violation of human rights
b. are believed to cause unnecessary harm to third parties."
3. Types of Whistle Blowing
a. Internal Whistle Blowing: Wrong doing reported only to higher authorities in the
organization; other means also exist for employees to register their concerns with an assurance of
confidentiality.
b. External Whistle Blowing: Wrong doing is reported to external individuals or bodies

such as government agencies, news paper or public interest groups.
4. Components of Whistle Blowing Policy
a. An effective communication statement of responsibility for the employees:

To report all concerns about serious unethical or illegal conduct thro appropriate internal
channels
b. A clearly defined procedure for reporting:
To report their concerns in a confidential manner. The persons and the proper format and
the procedures should be understood by employees.

33
c. Well trained personnel to receive and investigate reports:
Success depends on the skill of the personnel who receive and investigate the reports from
employees
d. A commitment to take appropriate action:

Employees assured that their reports of suspected wrongdoing will not be ignored or
misused.
D. Affirmative Action
1. Meaning
Affirmative Action is defined as increasing the

employment and educational opportunities of women
and minority groups through preferential treatment in
job hiring and college admissions.
or
It means of remedying past wrongs and preventing the same in future. In following an affirmative
action plan,
 employers seek out minorities and women for hiring and promotion opportunities, and
 They often employ goals and time tables to measure progress toward a workforce that is
representative of the qualified labour pool.
2. Affirmative action efforts arise in two ways
a. Courts may order the implementation of affirmative action
b. Employers may voluntarily adopt affirmative action plans.
3. Problems with Affirmative actions

34
a. Produces race consciousness
 Promotes rather than rights discriminations.
 Awareness of sexual, religious, ethnic and other differences.
b. Quality arguments
 Hiring and promoting less qualified people
 Lowering the quality of the workforce.
c. Injury done by affirmative action
 Damaging to the self esteem of employees who are favoured because of race or sex
 Injures the very people it designed to help
 Unintended consequence of impeding racial integration if qualified minority
applicants avoid jobs where race is a factor in selection.
 To reduce the respect of society for may hard won achievements of black and
women.
E. Trade Secrets
Big corporations attempt to protect themselves against the

loss of trade secrets and to utilise what they can learn about their
competitors.
1. Meaning:
Trade secrets involve a complex of set of problems about the rights and obligations of
employees not to disclose confidential valuable information to others.
Such as

35
 Trade secrets include ingredients or chemical compositions of product, the design of a
machine, manufacturing process details, methods of quality control, market survey details,
list of customers and suppliers.
 May be a formula, pattern device or compilation of information used in one business.
F. Conflicts of Interest
1. Meaning
A conflict of interest (COI) is a situation in which a person or

organization is involved in multiple interests (financial, emotional,
or otherwise), one of which could possibly corrupt the motivation
of the individual or organization.
A widely used definition is: "A conflict of interest is a set of

circumstances that creates a risk that professional judgement or actions regarding a primary
interest will be unduly influenced by a secondary interest."
2. Types of Conflict of Interest
a. Public-private conflict: When interests of public office or business influence private concerns.
b. Violation of confidentiality: violation of confidentiality under certain circumstances leads to a

conflict of interest .
c. Exercising Biased Judgment: Judgment is not exclusively a feature of professional work;

decisions to be used in the best interests of the employing firm; but, outside business interests
influence the judgment of an employee
Ex: potential conflict of interest in accepting a gift from a supplier who expects favorable
treatment in the future.

36
d. Engaging in direct competition: If employee engage indirect competition with his employer;
an employee's judgment is apt to be impaired for having another interest leads to conflict
between them.
e. Misuse a position: Employee uses his powers and opportunities for his personal gain. It is
important to use good judgment and conduct one's outside activities so that no one even raise the
suspicion for having misused the position within the company.
3. Methods to avoid Conflict of interest
a. Determine conflict of interest: One must be able to identify the nature of conflict. Most of the
conflict can be determined easily and rectified by disclosures and recusals.
b. Take immediate action; once conflict of interest is identified immediate action need to be
taken.
c. Create a code of conduct: The event of a conflict of interest must try to create a code of
personal conduct. The code of conduct must be re-studied and reworked and must be put into
practice.
d. Apply: After a bad experience of conflict of interest, the organization must set out to
implement its code of conduct like a good learning organizations.
Importance of Ethics in work place
1. Positive ambience: Work ethics leads to happy and satisfied employees who enjoy coming to
work rather than treating it as a mere source of burden.
2. Develops Loyalty: Employees develop a feeling of loyalty and attachment towards the
organisations.
3. Apprisal system: Appraisal system need to be designed keeping in mind employee's

performance throughout the year and his/her career growth.

37
4. Ensures Management guide: Work place ethics ensures management guides and mentors their
employees well.
5. Treat all employees as equal: Work place ethics is important as it enables management to treat
all employees as equal and think from their perspective as well.
6. It strengthening the boundless among employees: Work ethics also so long way in
strengthening the bond among employees and most importantly their superiors.
7. Aware of the organization's policies: Employees need to be induced well into the system. They
must be aware of the organization’s policies from the very first day itself.
8. Employees feel secure: Management needs to make employees feel secure about thier job and
career. Unnecessary favoritisms is against work place ethic.

38
ETHICS IN MARKETING
Ethics in Marketing is the area of applied ethics which deals with the moral
principles behind the operation and regulation of marketing. Some areas of
marketing ethics such as ethics of advertising and promotion overlap with media
ethics.
The suppliers and tax authorize, arguably, marketing ethics should guide a
marketers action in such a way that a marketing action.
 Shall not do any harm knowingly.
 Shall not knowingly promote conflict of interest
 Honest and fair in serving consumers or clients and other stake holders.
 Is seen to be discharged in good faith to all parties concerned.
 Does not deceive especially the communication about the products and services.
 Can quickly and systematically redress grievances; for example, customer

complaints
 Adheres to all applicable laws and regulations
Marketing Mix
1. Ethics in marketing products
2. Ethics in pricing of product
3. Ethics in distribution decisions
4. Ethics in advertising.

39
1. Ethics in marketing products.
Marketers have the responsibility to ensure product safety to disclose all

product risks, and to identify any factor that might change product. The product
development efficiency and effectiveness is depending on a process being well
executed.
During manufacturing and marketing of a product the following criteria should

follow:
a. Design: Product and services should meet all governmental regulations and
specification and be safe under all foreseeable conditions, including misuse by the
consumer.
b. Materials: The materials should meet governmental regulations and durable

enough withstand reasonable use.
c. Production: Product should be made without defects.
d. Quality control: The products should be inspected regularly for quality.
e. Packaging, labelling and warnings: The products should be safely packaged,

should include clear, easily understood directions for use and should include a clear
description of many hazards.
Unethical practices relating to products
 Selling goods abroad which are banned at home
 Omitting to provide information on side effects
 Unsafe products.
 Built in Obsolescence
 Wasteful and unnecessary packaging
 Deception on Size and Content

40
 Inaccurate and incomplete testing of products
 Treatment of animals in product testing.
2. Ethics in Advertising:
Marketers should avoid deceptive and misleading communications must

repeat high pressure sales tactics and must avoid manipulating consumer to buy.
Benefits of ethical advertisement
a. It improves the social and cultural behavior of people.
B. it exposes them to opportunities for employment and for making their lives
better.
c. It gives them new ways of satisfaction.
d. Socially acceptable advertising is good for the people.
e. It is a tool which can be used for the welfare of the society.
f. It educates the people about the product usage.
Unethical practices in advertising
1. Deception: Advertising that gives false information or

that wilfully misleads consumers about the benefits of
the brand is deceptive advertising.
2. Fear factor: The intent of the fear appeal is to create

anxiety in the minds of the consumer and provoke him or
her to make use of a particular product to alleviate the
fear in him or her.

41
3. Advertising to Children: Most of the advertisements such as those for chocolates,
biscuits are directed at children. Children between the ages of two and eleven
spend at least 3 hours a day watching TV. Most of these advertisements are
deceptive as they omit significant information such as the complexity and safety of
operating toys. Force their parents to buy that product.
4. Materialism: Advertisements shows the importance of the materials to the

consumers actually which are not important to the them and induce them to buy
the product.
5. Women Stereotypes: Women are generally associated with household works and
are not supposed to be a good decision maker which contributes to women
stereotyping. Under these women shown as doing domestic work which reflects the
stereotypes image of women.
6. Advertising alcoholic beverages: There is a national concern with the problem of

alcoholism. Children and youngsters are being influenced by such advertisements.
7. Competitive advertising: Competitive advertising is a form of advertising in which

two or more brands of the same products are compared. Comparison is made in
terms of one or more specific attributes leading to consumer confusion and is
ethically questionable.
8. Increasing costs: The ultimate burden of the cost of advertising is passed on to

the consumer.
9. Exploiting visual appeals: Men succumb to usual appeals the use of battling
beauties to attract men's attention is ubiquitous.
10. I am the best: Nearly all the advertisements contain some measure of
exaggerations.
11. Use of celebrities: Most of the advertisements use celebrities from the world of
cinema or of sports. There celebrities would have not used the product even once.

42
12. Fantasy and reality: Now days most of the advertisements make use of
fantasies. For example the advertisements of a popular soft drink show a boy going
in search of the drink in the question and later a lift a bottle from the moving truck.
Ethics in pricing of product
The price of a product or service plays a large part in how well it sells.
Producers and retailers practice ethical pricing strategies to earn profits without
defrauding competitors or consumers. Business ethics protect consumers from
many unethical pricing strategies.
Unethical practices followed:
1. Bid rigging: Bid rigging means the agreement

between tenders who intentionally damage the
contracting authority by not submitting competitive
offers which leads to an increasing price compared to
the price that would be achieved in the situation where
candidates compete with each other.
2. Dumping: Dumping is a kind of predatory pricing,

especially in the context of international trade. It occurs
when manufacturers export a product to another country
at a price either below the price charged in its home
market.
3. Predatory pricing: Predatory pricing is the practice of

selling a product or service at a very low price, intending to
drive competitors out of the market, or create barriers to
entry for potential new competitors.

43
4. Price Discrimination: Price discrimination or price differentiation exists when
sales of identical goods or services are transacted at different prices from the same
provider.
5. Price Skimming: Price skimming is a pricing strategy in which a marketer sets a

relatively high price for a product or service at first, and then lowers the price over
time.
The main objective of price skimming strategy is to capture the consumer

surplus. If this is done successfully, then theoretically no customer will pay less for
the product than the maximum they are willing to pay.
6. Bait and switch pricing: Bait and switch is a form of fraud

used in retail sales but also employed in other context first,
customers are baited by merchants, advertising products or
services at a low price, but when customer visit a store, they
discover the advertised goods are not available, or the
customers are pressured by sales people to consider similar,
but at higher prices (Switching)
7. Price Fixing: Price fixing is an agreement between participants on the same side
in a market to buy or sell a product, service, or commodity only at a fixed price, or
maintain the market conditions such the price is maintained at a given level by
controlling supply and demand.
4. Ethics in Distribution
Product distribution is one of the four elements of the marketing mix.
Distribution of product or service is transporting them from manufacturer to

stockiest, wholesalers, retailers and then to consumers.
There is an ethical dilemmas may arise in the distribution process because sales
performance is the most common way in which marketing representatives and sales
personnel are evaluated.

44
Performance pressure exist that may lead to ethical dilemmas. For example
pressuring vendor to buy more than they need and pushing items that will result in
higher comparison.
Ethical Issues
1. Ethical Issues related to retailing
a. Product assortment (Wide variety of products is sold by the retailer)
b. Pricing
c. Forcing the customers
2. Ethical Issues in Direct Marketing
a. Confidentiality
b. Privacy of the customers
3. Ethical Issues Marketing through Internet
a. Pornographic
b. Product guarantees (No product guarantees)
c. Burglary (Leads to theft by using internet to buy goods)
d. Spam (Unsolicited marketing)
e. Deceptive advertisement

45
Ethics in Finance and Accounting
Accounting ethics
Accounting ethics is primarily a field of applied ethics, the study of moral values and
judgments as they apply to accountancy. It is an example of professional ethics.
Accounting ethics were first introduced by Luca pacioli, and later expanded by government
groups, professional organizations, and independent companies. Ethics are taught in
accounting courses at higher education institutions as well as by companies training
accountants and auditors.
Unethical practices in accounting
 Misappropriation by not recording cash receipts

This may be from the recovery of bad loans, cash loans, and under-recording of
sales proceeds and so on. The amount may be embezzled.
 Misappropriation of cash payments

Cash payment may be inflated, not made at all or a false entry may be made by
showing cash payments.
 Misappropriation of stocks : goods by wrong recording of sales and supply or by

theft, or by showing damages and so on.
 Manipulation of accounts may be done by showing higher values of assets, lower

liabilities, higher sales and so on.
 Window Dressing: False entries made in the books of accounts to show very good
financial position of the company. This is called Window Dressing. For example, it
can be done by recording fictitious sales or profits and the like. This is done to
befool the public

46
Ethics in Finance:
Finance is the set of activities that deals with the management of funds. It helps in
making the decision like how to use the collected fund.
Ethics in finance is one of the main things which everyone has to follow from the
small, medium and big level company because all most all the country depend up on the
financial component no business can run for a long time.
Importance of ethics in finance.
1. Companies and individual in the financial industry must comply with ethical
regulations.
2. It helps to develop client relationships based on trust and respect
3. It protects the financial interests of the clients.
4. Respecting and maintaining confidential of any information entrusted.
5. Knowing when to refer clients to another professional when a planning situation is

outside your areas of practice or skills sets.
Code of ethics in finance
1. Act with honesty and integrity, avoiding real or clear conflicts of interest in personal
and professional relationships.
2. To provide information which is full, fair, accurate, complete, objective, relevant,

timely and understandable, including in and for reports and documents that the
company files with, or submits to the other public communication made by the
company.
3. Act in accordance with all applicable laws, rules and regulations of government

47
4. Act in good faith, responsibility, with due care, competence and carefulness without
representation material facts or allowing independent judgement to be
subordinated.
5. Respect the confidentiality of information acquired in the course of business
6. To promote ethical behaviour among associates
7. Adhere to and promote this code of ethics.
Ethical issues in Financial Management
1. Creative accounting
2. Merger and acquisition
3. Insider trading
4. Window dressing
5. Tax reduction techniques
1. Creative accounting: The term creative

accounting means a process whereby accountants
use their knowledge of accounting rules and
standards to manipulate the account of business.
Definition: Kamal Naser

“ creative accounting is the transformation of
financial figures from what they actually are to what
prepares desire by taking advantage of the existing
rules or ignoring some or all of them.

48
Reasons of Creative accounting
The various reasons for the companies to adopt creative accounting in the preparation
of the accounts are as follows:
1. Income smoothing: Companies

generally prefer to report a steady trend of
growth in profits rather than to report
volatile profits with a series of dramatic rises
and falls..
2. Boost a steady share price: Creative

accounting may help the companies to
maintain and boost a steady share price by
reducing apparently the level of borrowings to make the company seem less risky to
the investors and create a creating a good profit trend.
3. Raise capital : Creative accounting may also help the companies to raise capital
from new issues, offer their own shares in takeover bids and resist takeovers by
other companies.
4. If the directors engage in insider trading in their company’s shares they can use
creative accounting to delay the release of the information into the market, thereby
enhancing their opportunity to benefit from inside knowledge.

49
2. Merger and acquisition :
Mergers and acquisitions involve a wide array of ethical questions, some of which relate to
the degree of "fit" between the value systems of the merging firms. A mismatch can sometimes
lead to serious problems, such as when one firm invests heavily in employees and the other
focuses mainly on shareholders or customers
The various ethical issues involved in Mergers and Takeovers are as below:-
 Disclosure by Target Company

The company being acquired is often called the target company. When negotiations
begin. They might be aware of competitive factors that will make it difficult for the
company to retain its market share in the future. Disclosure of such negative factors
can cause the other company to offer a lower price to the shareholders of the
target company or decide to not go through with the merger at all.
 Unfriendly Takeovers
Acompany might decide to acquire a company that is not for sale. The management
team of the target company might view the acquisition offer with hostility because
they will lose control of the company.
 Terminating Employees
The harsh reality of a consolidation has to fire employees. Valued, loyal employees
who have contributed to the company's success for a number of years might lose
their livelihoods.
 Relocating Employees

50
Those employees fortunate enough to be retained after the merger may still face
the challenge of having to relocate if the company intends to consolidate
operations into one central location. They might not want to move from a smaller
town to a big city.
 Greenmailing
Greenmailing is the practice of purchasing enough shares in a firm to threaten a

takeover and thereby forcing the target firm to buy those shares back at a premium
in order to suspend the takeover.
 Breach of trust
A more serious charge against takeovers is that they transfer wealth to

shareholders by violating implicit contracts with other stakeholders. Businesses often lead
their stakeholders to expect that certain sorts of behavior will be rewarded over the long
term.
3. Insider trading:
Insider trading is the act of buying or selling

a company’s stock on the basis of ‘inside
information’ about the company. Inside
information is confidential or proprietary
information about a company that is not available
to the general or investing public, but has a
material impact on the price of the company’s stock.

51
Outsiders who may have inside information advantage
 Printer who was able to identify several takeovers from legal documents that were
being prepared.
 A financial analyst who uncovered a huge fraud at the high flying firm and advised
his clients to sell.
 Stockbroker who was tipped off by a client who was a relative of the top executive
of a company and who learned about the sale of the business through a chain of
family gossip.
 Psychiatrist treating a family member of a financier attempting to takeover a major
bank.
 Lawyer/ legal advisor advising a client planning a hostile takeover.
In case of outsiders, the factor deciding whether the act is ethical or unethical is
whether or what actions they take based on the inside information obtained by them.
4. Window dressing:
Window dressing is a technique used by companies and financial managers to

manipulate financial statements and reports to show more favourable results for a period.
Although window dressing is illegal or fraudulent, it is slightly dishonest and is usually done
to mislead investors.
5. Tax reduction techniques:

52
Corporate crime
In criminology corporate crime refers to crimes committed either by corporation or by

individuals acting on behalf of a corporation or other business entity.
Some negative behaviors by corporation may not actually be criminal, law vary
between jurisdiction for example some jurisdiction allow Insider trading
Types of Corporate Crime:
1. White collar crime: White collar crimes are

committed by individuals for themselves in the
course of individuals of their occupation for personal
gain. It is committed without the knowledge. The
most common white collar crime is when an
employee steals from the employer or who cheats customer.
2. Organized customers: Organised crime is a

category of transnational, national or local
grouping of highly centralized enterprise run by
criminals who intend to engage in illegal activity.
Most commonly for money or profit. Some
criminal organisation such as terrorist.
3. State-Corporate Crime: The term State

corporate crime refers to serious social harms that result from the interactions of
political and economic organisation.

53
Ethics in information technology
The computer and the World Wide Web are two of the most significant inventions of
the twentieth century. There are many ethical issues that arise from this technology. It
is easy to gain access information. This leads to data mining, workplace monitoring,
and privacy information
Computer ethics
Ethics in computer means moral guidelines to refer to when using the computer and
computer networks. It includes internet
Computer ethics is a system of moral standards or values used as a guideline for

computer users.
Common issues of computer ethics
Intellectual property rights, copy righted electronic computer, privacy concerns and
how computers affect society.
For example while it is easy to duplicate copyrighted electronic or digital content,

computer ethics would suggest that it is wrong to do so without the author’s approval.
And while it may be possible to access someone’s personal information on a computer

system, computer ethics would advise that such an action is unethical.

54
1. Intellectual Property rights
You have certainly heard the word property before. It is generally used to mean a
possession, or more specifically, something to which the owner has legal rights.
You might have also encountered the phrase intellectual during the past few years,
Intellectual property refers to creation of the intellect inventions, literary and artistic
works, symbols, names, images and designs used in commerce are part of it.
Intellectual property is usually divided into two branches namely industrial property:
inventions, trademarks, industrial designs, commercial names (brands) etc.
Copy rights: novels, artistic works, drawings, music, paintings, photographs,

sculptures, and agricultural designs.\
2.Copy right on internet
According to the copy right law, it does not protect ideas, procedures, systems or
methods of operation. This means that once such an online work has been made
public, nothing in the copyright laws prevents from developing another work based on
principles, or ideas.
3. Netiquette.
Netiquette are about the various risks related to using the

internet. It is about proper ways in which to use a network and to
determine whether information is reliable, while emphasizing.

55
Security threats
1. Computer virus threats: A computer virus

is a program it completely destroys the
user information in the computer system.
2. Spyware threats: A spyware is program
that monitors online activities or install
programs without the authorize consent
for profit or to capture personal
information.
3. Hackers: Hackers are programmers who
victimize others for their own gain by
breaking into computer system to steal,
change or destroy information as form of cyber-terrorism.
4. Phishing threats: masquerading as a trustworthy person or business, phishes attempt
to steal sensitive financial or personal information through fraudulent email or instant
messages.

56
Information security
The protection of information and its elements including systems, hardware use, store
and transmit the information.
Primary goals,
1. Confidentiality: make sure that those who should not see information. Data is used by
limited number of private users, and should not be known to the majority of workers.
2. Integrity: making sure that information has not been changed from its original.
3. Availability: making sure the information is available for use when you need it.
4. Privacy: Data is known by the very high authority persons only. Lose of this data cause
critical damage to the company. No one should open any document unless authorized
by the individual who create the data himself.
5. Identification: An information system possesses the
characteristic or identification when it is able to recognize
individual users. Identification and authentication are
essential to establishing the level of access or
authorization that an individual is granted.
5. Authentication:
Authentication occurs when a control provides
proof that a user possesses the identify that he
or she claims.

57
6. Authorization: After the identity of user is authenticated, a process called
authorization provides assurance that the user whether a person or a computer has
been specifically and explicitly authorized by the proper authority to access, updates,
or deletes the contents of an information asset.
7. Accountability: The characteristic of accountability exists when a control provides

assurance that every activity undertaken can be attributed to a named person or
automated process.
Professional Ethics
Professional Ethics is a type of ethics that concerns the moral problems that arise
because of the specialist knowledge that professionals get. It also shows how the use
of this skill should be governed when providing a service to the public. The
professional should carry additional moral responsibilities than those held by the
population in general and in society.
Components of professional ethics are Honesty, Integrity, transparency and

respectfulness

58
ROLE OF CORPORTE CULTURE IN BUSINESS
Introduction:
Corporate culture is the beliefs and behaviors that determine how a company's employees
and management interact and handle outside business transactions. Often, corporate
culture implied, not expressly defined, and develops organically over time from the
cumulative traits of the people the company hires.
Corporate culture influences the ethical conduct at workplace. It helps the employees how
to behave in the organisation. Each organisation as their own culture based on values of
the founder. Strong culture and ethical standards of an organisation results positive
behavior of managers.
Top executives having strong ethical and social conscience inspire their subordinates to
exhibit these values by their thoughts and deeds.
Meaning:
Corporate culture refers to the set of values that helps the organization's employees
appreciate which actions are considered acceptable and which are unacceptable.
Definition:
According to Linda Ferrel, “corporate culture is a set of values, beliefs, goals, norms and
ways of solving problems by the members of the organisation."
Features of Corporate Culture:
1. Innovation and risk taking: Innovation and risk taking is the important features of
corporate culture. Innovation is the better application of better solution that meet new
requirements, existing marketing needs.
2. Attention to detail: Another feature of corporate culture is attention to the detail work
schedule and performance. The organisation should maintain the detail contents regarding
its workforce, resources etc.
3. Outcome orientation: The corporate culture is influenced by maximum outcomes

through a fixed set of inputs. The outcomes should be maximum.

59
4. People orientation: The working situations and conditions are highly influenced by
skilled employees those who contributes their performance to complete a task within a
particular time.
5. Aggressiveness: Aggressiveness is another feature of corporate culture which indicates

the employee’s aggressiveness towards works and better performance.
6. Customer orientation: Corporate culture is customer orientation which mostly focuses

on customized services to satisfy the customer.
Cultural concepts
1. Dominant culture: Dominant culture in an

organisation is the group whose members are in the
majority or who wield more power than other groups. These
traits are often the norm for the organisation as a whole.
2. Sub-culture: Sub culture is formed in departments, divisions and geographical areas

and reflect the common problems or experiences of employees who reside in these areas.
There may be differences and clashes between sub-cultures and the dominant culture.
3. Strong culture: A strong culture will have a significant influence on employee behavior.
It is reflected in reduced turnover, lower
absenteeism, increased positive attitudes.
Values are intensely held and widely spread is
called strong culture.
4. Weak culture: In a weak culture, the

organization's core value are lightly held and
occasionally shared.

60
5. Mechanistic culture: The mechanistic
organizational culture exhibits the values of
bureaucracy and feudalism. Under this, authority
flows downward from top to the bottom level of
the organization through prescribed channels.
6. Organic culture: In this culture, formal

rules and regulations, departmental boundaries,
prescribed channels of communications are
disapproved. It puts more emphasis on team
work and free flow of formal as well as informal
communications.
7. Authoritarian Culture: In the authoritarian culture,

power is concentrated on the leader and emphasis is given
on obedience to orders and maintenance of discipline. Any
disobidedience is punished severely to set an example to
others.
8. Participative culture: The Participative

culture believes that people are more
committed to the decisions if they are made in
participation with them. Participative cultures
tend to emerge where most organizational
members are professionals or see themselves
as equals.
Functions of Corporate culture
1. Co-operation: Corporate culture enhances the better co-operation between the

employees and employers leads to better performance in the organisation. Employees will
feel comfortable to do work in their work place. Top authority gives proper guidance to
employees to do work ethically.

61
2. Decision making: Corporate culture helps the management to take right decisions
without affect on the employees. Management identifies the employee performance and
takes rights decision on them.
3. Control: One of the main functions of corporate culture is control employees in the
organisation. The management regularly monitor the employees whether they are
following corporate culture / not and take proper action on them to adopt strategies of
the organisation.
4. Communication: If corporate culture is followed in the organisation there will be proper

flow of communication from top level to low level management. Communication act as a
guidance to employees to carry regular activities. Therefore corporate culture plays proper
flow of information in the organisation.
5. Commitment: Because of strong corporate culture the employees will commit

themselves to the organisation to achieve the organisation goals. They will dedicate
themselves to the Organisation.
6. Perception: Employees have good perception about their company if the company has
corporate culture. Because of perception it leads to low labour turnover in the
organisation.
7. Justification of behavior: The employer can easily judge the behavior of the employees
because of corporate culture and they can able to give punishments or rewards to the
employees.
Corporate culture V/s Corporate Climate
With the popularization of the term corporate culture, another concept of corporate
climate has emerged. Some managers feel that these two or quite different terms while
other managers feel that these two are similar concepts.
1. Corporate culture is based on anthropology and sociology, and corporate climate is

based on psychology.
2. Corporate culture refers to the historical context and its input on employees behavior
and
Corporate climate refers to the current situations in organizations and the linkage
among team’s employees and performance.

62
3. It is difficult to alter corporate culture in the short-run and people learn and
communicate what is acceptable and unacceptable in an organization through corporate
culture. Whereas corporate climate does not deal with norms and values, it is deals with
the current atmosphere in an organization.
Process of creating corporate culture
1. Step 1: Establishing strategic values
Management determines organisation SWOT (Strength, weakness, opportunities

and Threats) based on environmental analysis. Subsequently, the management formulates
strategies to achieve goals. Management decides the values to achieve the strategies.
2. Step 2: Combaining strategic and cultural values
The next step, after acquiring strategic values and cultrual values is appropriately
combining these two values. Management should encourage the employees to involve in
decision making process, appreciate their ideas and considering them when the strategic
values are participative styles on the part of the management.
3. Step-3: Strategy implementation
Strategic implementation is the process that puts plans and strategies into action to
reach goals. After the appropriate culture is created and implemented, it contributes for
the proper implementation of strategy.
4. Step-4 Reinforce cultural behavior
This process of reminding the employees of their cultural values is called reinforcing
cultural behavior. The management has continuously encouraged the employees to
involve in the decision-making process, express their feeling and ideas openly.
5. Step- 5 Maintaining corporate culture
After the corporate culture is created and developed, the next step is to maintain
corporate culture.
The company should select right personnel at the entry level, placing the employees
on the appropriate job, encourage employees to excel on their jobs, rewarding the
employees based on their performance, adherence to the core values, reinforcing the
employees to maintain corporate culture.
63
Impact of corporate culture
Corporate culture represents the professional values as a company adopts that dictate
how interacts with employees, vendors, partners and clients.
1. Risk impact of corporate culture:
The corporate culture dictates how much risk an organization is willing to take when it
comes to research and development, client, investing involves risk. Corporate culture
promotes environmental responsibility that will impact the risks that the company will
take when developing new products.
2. Employee retention impact:
The main objective of corporate culture is to retain

employees in the organisation. If a low task or mistrust
employees will retain in the organisation it weakness
and reduces the productivity in the organisation.
3. Incentive pay Impact
Incentive pay is something that employees use to

improve productivity and maintain employee morale. But
incentive programs use to be monitored carefully. If profit-
sharing program where every employee gets a bonus to
employees. It may cause more expect the bonus without
having to perform by the employees.
4. Focus among the staff:
A corporate culture that each employees subscribes to

help to create focus among the staff. When the organisation
focuses on staff they neglect to concentrate on other activities
and might not succeed the goals of the organisations with in a
stipulated time.

64
Cross culture
Cross culture means the interaction of people from different backgrounds in the
business world.
Cross culture is a vital issue in international business, as the success of

international trade depends upon the smooth interaction of employees from different
cultures and regions.
Cross culture can be experienced by an employee who is transferred to a location

in another country. The employee must learn the language and culture of those around
him, and vice versa. This can be more difficult is this personal is acting in a managerial
capacity.
Cross cultural environment
Globalization is the expansion of intercontinental trade; technological advances and the

increase in number of companies dealing on the international stage have brought about
dramatic change in the frequently.
1. Cross cultural HR:
HR covers a wide range of business critical areas that need cross cultural analysis.
Consultants may offer advice on a number of areas including recruitment, relocation,
international assignments, staff retention and training programmes.
2. Cross cultural Team-building
Cross cultural consultants will provide tools and

methods to promote staff integration, reduce cross
cultural conflicts and build team spirit.
3. Cross cultural synergy:
International mergers, acquisitions and joint-ventures

require people from different cultural backgrounds to

65
harmonize in order to succeed. Cross cultural consultants counsel on groups and provide
integration process.
4. Cross cultural awareness training:
Working with colleagues, customers or clients from

different cultural backgrounds with different religions, values
can occasionally leads problems. Cross cultural awareness
training is usually a generic introduction into a culture,
country, region or religion.
5. Cross cultural training for expatriate relocation:
Staff that travel overseas need to understand the cultural

basics of the host country or region. Knowledge of the country's
history, culture, laws, traditions, business practices minimizes
the impact of culture shock and hence smooth their transition
overseas.
6. Cross cultural negotiations
Equipped with their knowledge of the two or more

cultures that can be meeting around the negotiation
table, a cross cultural consultant advise on areas such
as negotiation strategies, styles, planning, closure and
in order to increase the chance of a successful
outcome, free from misunderstandings, suspicions and general cross cultural
communication breakdown.
7. Cross cultural PR Consultancy
Brand image, public relations and advertising are all areas companies must be
careful of when moving out of the national context. Tastes and values change dramatically
from continent to continent. It is crucial to understand whether the brand name, image or
advertising campaign is culturally applicable in the target country.

66
8. Cross cultural Language Training
Language training is an area where little investment is made by companies, but

where the business advantages are great. Linguistic knowledge goes a long way in bridging
cultural gaps and smoothing lines of communication.
Cross Cultural Issus in ethics

1. Cross culture issues in HRM: With the rapid increase in the globalization of business,
work forces are becoming increasingly diverse and multicultural. Managing global
workforce has increased pressure on Human Resource managers to recognize and adapt to
cultural differences.
Cultural issues in HRM are
a. HR policies : Due to cross culture in the organisation there is a major problem in Hr

policies like
 Differs in working days, working hours and holiday, method used in hiring, induction
and man power cost
 Differs in providing benefits management and compensation
 Differs in Providing fund and raising fund
b. Work culture
 MNC- The rules and policies of the MNC which are same in their home country and
host country. The rules and policies are favourable to home country employees but
host country employees will feel difficult to adopt foreign culture
 Management style: by using Laissez, democratic and benevolent and autocratic
style of management creates difficult to employees to understand.
 Work practices: Due to improvement in technology the employees will not
performing comfortable in the organisation. Most of the MNC adopt technology to
perform activities and reduces man power in the organisation.

67
c. Mix in Top Tier management:
In top level management there are managers from different country having a different
culture leads to conflicts during the time of decision making.
d. Relations with umbrella organisation
Joint ventures, Mergers and Amalgamations creates problems to employees to

understanding the culture of both the companies and difficult to work with their
Colleagues who are belongs to the holding or subsidiary company.
e. Working population mix
 with in India and working outside India is differs

 Food and dressing habits of the people will differs
 Adaptation to alien culture and working
2. Cross Cultural issues in Marketing
Cross cultural marketing is international marketing on a personal level. There are certain
Cultural issues in
a. Production policies: Based on culture of the country they should produce the product. If
they not understanding the culture of the country it is difficult to acquire market in the
international country.
b. Pricing policies: Even organization face difficulties to fix price for the products. Culture
Plays major role to fix. People in India prefer low price for quality goods. The company
follows different marketing strategies like dumping or price skimming to acquire market.
c. Distribution policies: Distribution channel plays a role to distribute goods to customers.

In some countries they have direct channel and countries like India they prefer indirect
channel to deliver goods to customers.

68
d. Promoting Policies: Promotion is very important to each and every organisation. It is
Way to influencing the consumers to buy their product. Culture will impact on them to
promote the products
3. Cross cultural issues in negotiations
The effective international negotiators need to know not only the fundamentals of
negotiations along, but also how culture can influence the negotiator's behavior and the
negotiation agreement. Understanding, accepting and respecting the cultural values of the
other parties is very important as it will lead to a more successful outcome.

69
UNIT- 5
CORPORATE GOVERNANCE
Introduction
The concept of corporate governance has gained importance in the recent

years among the academies and the corporate world. Modern business organisation
builds their empire on the funds of million people spread across the world.
Corporate governance is a system of structuring, operating, and controlling a

company with the legal and regulatory term goals of the stakeholders.
Corporate governance is based on principles that being transparent with

regard to all transaction, making all the necessary disclosures and decisions,
complying accountability and responsibility towards the stakeholders.
Meaning
Corporate governance refers to the way a corporation is governed. It is the

technique by which companies are directed and managed. It means carrying the
business as per the stakeholder desire.
Or
It is an internal system which includes policies, process and people which serves the
need of the shareholders and other stakeholders by directing and controlling
management activities with objectives.

70
Scope of business ethics
1. Value based corporate cultures:
Value based corporate culture is good practice

for corporate governance. It is a set of beliefs, ethics,
principles which are inviolable. For any organisation to
run in effective way, it needs to have certain ethics,
values. Long run business needs to have based
corporate culture.
2. Holistic view:
This holistic view is more or less godly, religious

attitude which helps in running organization. It is not
easier to adopt it, it needs special efforts and once
adopted it leads t developing qualities of tolerance
and empathy.
3. Compliance with laws:
Those companies which really need progress,

have high ethical values and need to run long run
business they abide and comply with laws of
securities Exchange Board of India (SEBI), Foreign
Exchange Regulation Act, Competition Act 2002,
Cyber laws and Banking laws etc.
4. Disclosure, transparency and accountability
Disclosure, transparency and

accountability are important aspects for good
governance. Timely and accurate information
should be disclosed to share holders,
transparency of their financial records to
government to pay proper tax and also accountable to the creditors.

71
5. Corporate governance and Human resource Management
For any corporate body employees are important for the

growth. Therefore they should give better opportunities to
them. Identify achievements and give rewards to them this is
done by HR department in the organisation. Thus in corporate
governance, human resource has a great role.
6. Innovation:
Every corporate body needs to take risk of innovation i.e. innovation in

products in services and it plays a pivotal role in corporate governance.
7. Globalization helping Indian companies to become global giants based on good

governance:
In today's age of competition and due to globalization our several Indian

corporate bodies are becoming global giants which are possible only due to good
corporate governance.
8. Lessons from Corporate failure:
Corporate body have certain policies which if goes as a failure

they need to learn from it Failure can be both internal as well as
external whatever it may be, in good
Importance of corporate governance
1. Changing ownership structure
In recent years, the ownership structure of companies has changed a lot.

Public financial institutions, mutual funds, etc. are the single largest shareholder in
most of the large companies. In order to effective control on the management of
the companies. They force to use corporate governance in the organisation.

72
2. Importance of social responsibility
Today, social responsibility is given a lot of

importance. The Board of directors has to protect the
rights of the consumers, employees, shareholders,
suppliers, local communities etc. This is possible only if
they use corporate governance.
3. Growing number of scams:
Exploitation and misappropriation of public money are

happening everyday in India and worldwide. It is happening in
the stock market, banks, companies and government offices. In
order to avoid these scams and financial irregularities many
companies have started corporate governance.
4. Indifference on the part of share holders:
Share holders are inactive in the management of their

companies. They only attend the annual general meeting.
Postal ballot is still absent in India Proxies are not allowed to
speak in general meetings. Therefore, directors misuse there
power for their own benefits. In order to protect share
holders they adopt CG in the organisation.
5. Globalization:
Now a day’s every organisation market their

products in other countries. In order to attract foreign
investors and foreign customer they should follow
Corporate Governance. Without CG it is very difficult
survive in foreign market.

73
6. Takeover and mergers:
CG is very important to protect interest of share

holders during takeovers and mergers.
7. SEBI:
SEBI made amendment to all the corporate bodies should compulsory

creation of CG in their organisation in order to protect stake holders.
Principles of Corporate Governance
1. Principle of share holder recognition
Share holder recognition is very important in the

organisation because they are the one who contribute
funds in to the business. CG not only protects majority
shareholders even they recognize minority share
holders and protect their interest. CG makes sure that
all shareholders get a voice at general meetings and are allowed to participate.
2. Principle of stake holder interest:
Along with share holders they should also

recognize stake holders because they will also help
company to establish a positive relationship with
community.

74
3. Principle of Board responsibilities must be clearly outlined
Board responsibilities must be clearly outlined to

majority share holders. All board members must be doing
same for the future.
4. Principle of Ethical Behavior:
Another important principle of CG is creating ethical behavior in the

organisation. By following ethical practices in the organisation it can survive in long,
boost up their steady price and achieve objectives. A code of conduct regarding
ethical decision should be established for all members of the board.
5. Principle of business transparency:
Business transparency is the key to promoting

shareholder trust. Financial records, earnings reports
and forward guidance should be clearly stated
without creative accounting.
Benefits of Good Corporate Governance
1. Good Corporate governance ensures corporate success and economic growth.
2. It maintains investor confidence as a result of which company can raise capital

efficiently and effectively
3. It lowers the capital cost
4. There is a positive impact on the share price.
5. Corporate governance minimize wastages, corruption, risk and mismanagement
6. It helps in brand formation and development

75
7. It ensures organization is managed in a manner that fits the best interest of all.
Limitation of Corporate Governance
1. Ownership management separation:
In organisation the owners are shareholders and

officers and directors who run the day to day affairs of a
corporation and decision is taken by them not by
shareholders. Share holders do not have controlling
interest this separation of management can lead to a
conflict of interest between managers and share holders.
2. Illegal Insider trading
Illegal insider trained occurs when shareholders, while in

possession of confidential information relevant to the future
value of his shares, sell share to other without access
information.
3. Misleading financial statements;
There are many ways to present factually accurate information on a financial

statement in a manner that is misleading to investors. It is also possible to present
factually incorrect information that is difficult to detect by establishing complex
networks of subsidiaries and cross-shareholdings.
4. Costs of regulation
The abuse of corporate governance has triggered the enactment of large body
of state and federal laws designed to prevent such abuses from recurring.
Compliance with these laws can be burdensome and expensive for corporations.

76
Board of Directors
The board of directors is the top administrative body of the corporation. They are
elected by the shareholders as their representatives to foresee the affairs of the
company. The board is expected to lay down policies procedures and programmers
but in order to implement and communicate the policies and programmers, the
board appoints one whole time directors called the chief executive or managing
director.
Meaning of Board of directors
Board of directors are a group of individuals that are elected as, or elected to act as
representatives of the shareholders to establish corporate management related
policies and to make decision on major company issues.
Functions of Board of Directors
1. Board of Directors are involved in recruit, supervise, retain, evaluates and

compensates manager.
The board of directors is involved in recruit, supervise, retain, evaluate and

compensate the manager and other. The search for the best possible candidate for
position. Actively searching within the industry can lead to the identification of very
capable people.
2. Supply direction for the organization
The board of director has a strategic function in providing the vision, mission
and goals of the organization. These are often determined in combination with the
CEO or general manager of the business.
3. Set up a policy based governance system

77
The board of director has the responsibility of developing a governance
system for the business. Board focuses on defining the rules of the group and how it
will function.
The board develops policies to guide it own actions and the actions of the manager.
The policies should be broad and not rigidly defined as to allow the board in
achieving the goals of the business.
4. Administer the organization and the relationship with the CEO
The governance system involves how the board interacts with the general
manager or CEO. Periodically the board interacts with the CEO during meetings of
the board of directors. Typically that is done with a monthly board meeting,
although some boards have switched to meeting three to four times a year.
5. Fiduciary responsibility to protect the organization's assets and member's

speculation.
The board has a fiduciary responsibility to

represent and protect the member's/investors interest
in the company. So the board has to make sure the
assets of the company are kept in good order.
6. Supervise and Control functions
The board of directors has a monitoring and

control function. The board is in charge of the
auditing process and hires the auditor. It is in charge
of making sure the audit is done in a timely manner
each year.

78
Duties of Board of Directors
1. Governing the organisation by establishing board policies and objectives.
2. Selecting, appointing, supporting and review the performance of chief executive
3. Ensure the availability of adequate financial resources
4. Approving annual budget.
5. Accounting to the stake holders for the organisation performance
6. Setting salaries and compensation of company management
Appointment of directors
1. First directors:
Person named in the articles of association as

directors become the first director of the company or in
the absence of the provision in the articles regarding
persons to be appointed first directors, the subscribers
to the memorandum of association will become the first
director
2. Appointment by election
The members at the general meeting of the

company will elect the directors. This is most
common and usual mode of appointing directors.
Sec 255 provides for the procedure for election.

79
3. Appointment by the nomination of central government
Under sec 408 of the Act, the central Government can nominate some
directors to the board in case of mismanagement and oppression.
4. Appointment by nomination by Board of Directors
The board of directors will fill up the casual vacancy arising among the
directory by nomination. Directors so appointed will remain in the office only for the
unexpired period for which the director, whose post is empty, would have remained
in the office.
5. Appointment of alternate directors
The board of directors of a company, may, if so authorized by its articles or by

resolution passed by a company in general meeting, appoint alternate director
during absence of existing directors for a period not less than three months from
the state in which meeting of the board are ordinarily.
Liabilities of directors
a. Civil Liabilities
b. Criminal liabilities
a. Civil liabilities
 Any false statement made in the prospectus.
 Where the director exceed the authority for entering into the contract.
 Where a director is negligent and the company suffers the loss due to the
negligence of directors
 If the director makes any secret profit in connection with affairs of the company

80
b. Criminal Liabilities
 The companies act imposes criminal liabilities upon the directors for the breach
of certain conditions.
 Various provision of the act provide for the imposition of fine for criminal
performance of the prescribed duties.
 Imprisonment is also provided for in certain cases Viz False statement in

prospectus, failure to keep certain registers, falsification of books and reports
Disqualification of Directors
According to sec 253 of the companies Act, 1956, only individual can be appointed
as the director. However a person shall not be capable of being
appointed as director of the company
a. unsound mind
b. Insolvent
c. Convicted by a court
d. Not paid any share.
Composition of Board of Directors
1. Board composition
CA 2013 has introduced significant changes in the composition of the board of

directors of a company.
a. A one person company shall have a minimum of 1 director

81
b. CA 1956 permitted a company to determine the maximum number of directors
on its board by way of its AOA. CA 2013, however, specifically provides that a
company may have a maximum of 15 directors.
c. The person one who want to become director he/she was not a promoter,
director of holding/subsidiary Company and none of his relatives would be director.
2. Committees of the board
a. Audit committee:
 Under companies Act of 1956, public companies with a paid up capital in excess
of 5,00,00,000 Were required to set u an audit committee comprising of not less
than 3 directors.
 At least one third had to be comprised of directors other than managing

directors or whole time directors.
 The audit committee has been entrusted with the task of providing
recommendation for appointment and remuneration of auditors, review
auditors, providing approval of related party transaction and scrutiny over other
financial mechanisms of the company.
b. Nomination and remuneration committee:
 While CA 1956 did not require companies to set up nomination and

remuneration committee,
 CA 2013 requires the board of every listed company to constitute the nomination
and remuneration committee consisting of 3 or more non-executive directors.
 The task of this committee is to identifying persons who are qualified to become
directors and provide recommendations to the board regarding their
appointment and removal, as well as carry out their performance evaluation.

82
c. Stakeholders relationship committee:
CA 1956 did not require a company to set up a stakeholder's relationship

committee. The listing agreement required listed companies to set up a
shareholders/ investors grievance committee to examine complaints and issues of
shareholders.
CA 2013 requires every company having more than 1000 shareholders,

debenture holders, deposit holders and any other security holders at any time
during a financial year to constitute a stakeholders relationship committee to
resolve the grievances of security holders of the company.
d. Corporate social responsibility committee:
CA 1956 did not impose any requirement on companies relating to CSR. CA

2013 however, requires certain companies to constitute a CSR committee, which
would be responsible to devise, recommend and monitor CSR initiatives of the
company. The committee is also required to prepare a report detailing the CSR
activities undertaken and if not, the reasons for failure to comply
3. Board Meetings:
 First board meeting of a company to be held within 30 days of incorporation.
 Notice of minimum 7 days must be given for each

board meeting. Notice for board meeting may be given
by electronic means.
 CA 2013 has permitted directors to participate in

board meetings through video conferencing or other
audio visual means which are capable of recording and
recognizing the participation of directors.
 Requirement for holding board meeting every

quarter has been discontinued. Now at least 4 meetings

83
have to be held each year, with a gap of not more than 120 days between 2
board meetings.
 Certain new actions have been identified that require approval by directors in a
board meeting.
COMMITTEES
1. Cadbury Committee
The Cadbury committee was set up in May 1991 with a view to overcome the
huge problems of scams and failures occurring in the corporate sector worldwide in
the late 1980's and the early 1990. It was formed by the financial reporting council
and the accountancy profession, with the main aim of addressing the financial
aspects of corporate governance.
The committee published its report in December 1992,
Adarin Cadbury the chairman of the Cadbury Committee.
The code of best practices has been divided into four sections they are
1. Role of Board of Directors, duties of the board and its compositions.
2. Role of Non-executive directors
3. Dealing with their Remunerations
4. Addressing questions of financial reporting and financial controls.

84
1. Role of Board of directors, duties of the board and its compositions.
 The board should meet regularly retain full and effective control over the
company and monitor the executive management
 The board should include non-executive directors of sufficient caliber and

number for their views to carry significant weight in the Board decisions.
 All Directors should have access to the advice and services of the company
secretary who is responsible to the board for ensuring that board procedures are
followed and that applicable rules and regulations are complied with any
questions of the removal of the company secretary should be matter for the
board as a whole.
2. Role of Non-executive directors
 Non-executive directors should bring an independent judgment to based on

issues of strategy, performance, resources, including key appointments and
standards of conduct
 Non-executive directors should be appointed for specified terms and re-

appointment should not be automatic
 Non executive directors should be selected through a formal process and both
this process and their appointment should be matter for the board as a whole
3. Dealing with their Remunerations
 Directors recommend that future service contracts should not exceed 3 years
without shareholders approval and that the companies act should be amended
in line with these recommendations.
 Shareholders require that the remuneration of directors should be both fair and
competitive.
 The annual general meeting provides the opportunity for shareholders to make
their views on such matters as director’s benefits known to their boards.

85
4. Addressing questions of financial reporting and financial controls
 It is the board duty to present a balanced and understandable assessment of the

company position.
 The board should ensure that an objective and professional relationship is

maintained with the auditors
 The board should establish an audit committee of at-least 3 non-executive

directors with written terms of reference which deal clearly with its authority
about the reporting responsibilities
 The directors should report on the effectiveness of the company's system of

internal control
 The directors should report that the biz is a going concern with supporting
assumption or qualifications as necessary.

86
The Kumar Mangalam Birla Committee Report
On may 7th 1999, The Securities and Exchange Board of India (SEBI) had set up a
committee under Kumar Mangalam Birla, Member SEBI board, to promote and raise
the standards of good corporate governance.
The report submitted by the committee was the first formal and
comprehensive attempt to evolve a code of corporate governance.
The primary objective of the committee was view corporate governance from
the perspective of the investors and shareholders and to prepare a ‘Code to suit the
Indian Corporate environment
The committee had identified the shareholders, the board of directors and
the management as the three key constituents of corporate governance and
attempted to identify in respect of each of these constituents, their roles and
responsibilities as also their rights in the context of good corporate governance.
The report had been prepared by the committee, keeping in view primarily
the interests of a particular class of stakeholders, namely, the shareholders, who
together with the investors form the principal constituency of SEBI while not
ignoring the needs of other stakeholders.

87
Recommendations
a. Mandatory recommendations
b. Non-mandatory Recommendations
a. Mandatory Recommendations
1. Non- executive directors should form 50% of the BOD, with some independent
directors:
The number of independent directors would depend on the nature of the

chairman of the board. In case a company has non-executive chairman, at least one-
third of board should comprise of independent directors or in case a company has
an executive chairman at least half of board should be independent.
2. Qualified and independent audit committee:
The committee had recommended a qualified and an independent audit

committee which would go long way in enhancing the creditability
3. Audit committee meetings three times a year:
The committee should meet at least thrice a year; one meeting should be held
before finalization of annual accounts and one necessarily every 6 months. The
committee should have minimum 3 members, all being non-executive directors,
majority of independent. Company secretary will act as a secretary of the
committee.
4. Powers of the audit committee:
 To investigate any activity within its terms of reference

 To seek information from any employee’
 To obtain outside legal or other professional advice
 To secure attendance of outsiders with relevant expertise, if it considers
necessary.

88
5. Audit committee functions as the bridge between the board and statutory and
internal auditors and the role should include the following
 Recommending the appointment and removal of external auditor, fixation of

audit fee and also approval for payment for any other services.
 Reviewing the annual financial statements before submission to the board.
 Reviewing the management, external and internal auditors, the adequacy of
internal control systems
 Reviewing the company financial and risk management policies.
6. Remuneration committee of the board should decide the remuneration of non-

executive director
Disclosure of remuneration package of directors to shareholders which should

be made in the section of corporate governance of the annual report.
7. Board meetings:
Board meetings should be held at least 4 times in a year with a maximum time
gap of four months between any two meetings.
8. Board should clearly define the role of CEO and key managers:
The board is responsible for ensuring that the principles of corporate

governance are adhered to and enforced, the real onus of implementations lies with
the management.
It is responsible for translating into action, the policies and strategies of the
board and implementing its directives to achieve corporate objectives of the
company framed by the board.
9. Board and management should be accountable to the share holders:
As a part of disclosure related to management the committee recommends

that as part of directors report or as an addition there to a management discussion
and analysis report should form part of the annual report of the shareholders.

89
The following information is accountable to share holders
 Industry structure and developments

 Risks and concerns
 Internal control system and their adequacy
 Financial performance and operational performance
 Material developments in HR/ Industrial relations front, including number of
people employed.
10. Redressel of shareholders complaints-
Committee of the Board to be set up under the chairmanship of non-

executive directors.
11. Certify by the auditors
Auditors of the company to give a certificate regarding compliance of the

mandatory recommendation and annex the certificate with the directors report. It is
sent annually to all the shareholders of the company. The same certificate should
also be sent to the stock exchanges along with the annual returns field by the
company.
b. Non Mandatory Recommendations
1. Chairman’s role is different from that of CEO
2. A non-executive chairman entitled to maintain a chairman’s office at company’s

expense:
Given the importance of chairman’s role the committee recommends the

nonexecutive chairman should be entitled to maintain a chairman’s office at the
company’s expense and also allowed reimbursement of expenses incurred in
performance of his duties.
3. Remuneration committee of the board should consist of 3 directors:
The committee recommends that to avoid conflicts of interest, the

remuneration committee, which would determine the remuneration packages of

90
the executive directors should comprise of at least 3 directors, all of whom should
be non executive directors, the chairman of committee being an independent
director.
4. Half-yearly declaration of financial performance to be sent to share holders:
The committee recommends that the half-yearly declaration of financial

performance including summary of the significant events in last six-months, should
be sent to each household of share holders.
5. Institutional shareholders take active interest in the composition of the board

and are vigilant
The committee deliberated on the quorum for the meeting and was of the
view that remuneration is mostly fixed annually or after specified periods.
The committee was of the view that it should not be difficult to arrange for a
date to suit the convenience of all the members of the remuneration committee
should be present at the meeting.
Naresh Chandra committee

Naresh Chandra Committee Report on Corporate
Audit and Governance
The Ministry of corporate Affairs had appointed a

high level committee in August 2002 to examine
various corporate governance issues. The committee
had been entrusted to analyze and recommend
changes if necessary, in diverse areas such as
i. The statutory auditor- company so as to further strengthens the professional

nature of this interface.
ii. The need, if any, for rotation of statutory audit firms or partners.

91
iii. The procedure for appointment of auditors and determination of audit fees.
iv. Restrictions, if necessary, on non-audit fees
v. Independence of auditing functions.
vi. Measures required ensuring that the management and companies actually
present true and fair statement of the financial affairs of companies.
vii. The need to consider measures such as certification of accounts and financial
statements by the management and directors.
viii. The necessity of having a transparent system of random scrutiny of audited

accounts.
ix. Adequacy of regulation of chartered accountants, company secretaries and other

similar statutory oversight functionaries.
Committee's recommendations
a. Disqualifications for audit assignments
b. List of prohibited non-audit assignments
c. Independence standards for consulting and other entities that are affiliated to
audit firms
d. Compulsory audit partner rotation.
e. Auditor's disclosure of contingent liabilities
f. Auditor's disclosure of qualifications and consequent action
g. Managements certification in the event of auditor's replacement
h. Auditor’s annual certification of independence.
i. Appointment of auditors.
j. Setting up of independent quality Review Board.

92
k. Proposed disciplinary mechanism for auditors
l. Defining an independent director
m. Percentage of independent directors.
n. Minimum board size of listed companies.
o. Additional disclosure of directors.
p. Audit committee charter.
q. Remuneration of non-executive directors.
r. Training of independent directors
s. SEBI and subordinate legislation
t. Corporate serious fraud office etc.
Narayana Murthy committee
With the belief that the efforts to

improve corporate governance standards in
India must continue because these standards
themselves were evolving in keeping with
the market dynamics.
The SEBI has constituted a committee on CG

in 2002. The SEBI committee was constituted
under the chairmanship of Shri N.R Naryan
Murthy, Chairman and chief mentor of Infosys technologies limited.

93
The terms of reference of the committee were to
a, Review the performance of CG
b. Determine the role of companies in responding to rumor and other price sensitive
information circulating in the market.
Mandatory recommendations:
a. Strengthens the key responsibilities of the audit committees.
b. Improving the quality of financial disclosures.
c. Requiring corporate executives boards to assess and disclose business risks in the
annual reports of companies.
d. Introducing responsibilities on boards to adopt formal codes of conduct
Non mandatory recommendations
a. Moving to a regime where corporate financial statements are not qualified.
b. Instituting a system of training of board members
c. Evaluation of Performance of board members.
As per the committee, these recommendations codify certain standards of good

corporate governance.

94
95
96
97

Business Ethics Sharvari Notes

Uploaded by

Copyright:

Available Formats

Business Ethics Sharvari Notes

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Business Ethics Sharvari Notes

Uploaded by

Copyright:

Available Formats

Unit 1 Introduction Of Business Ethics

BUSINESS ETHICS (SHARVARI.S.K, Lecturer in BGSIMS)

Introduction of business ethics

Evolution of business ethics

The study of business ethics evolved through four distinct stages

BUSINESS ETHICS (SHARVARI.S.K, Lecturer in BGSIMS)

Stake holder’s level

 Better working conditions

 Better quality of goods

 Goods and services at reasonable price

 Not to practice discriminatory pricing

 Not make false claims about product in advertisements.

 Ensure capital appreciation

 Ensure steady and regular dividend

 Disclose all relevant information

 Protect all minority shareholders interest

BUSINESS ETHICS (SHARVARI.S.K, Lecturer in BGSIMS)

 Protect interests in terms of mergers, amalgamation and takeovers

Banks and other financial institutions

 guarantee safety and borrowed funds

 Prompt repayment of loan

 Complying with rules and regulations

 Honesty in paying tax and other duties

 Acting as partner in progress of the country

Personal policy level

 Not to fall prey to shot ends

 Not to misuse others for personal gain

 Not to indulge in politics to gain Power

 Not to spoil promotional chances of others

 Concern for poor and downtrodden

 No discrimination against any particular section or group

 Concern for clean environment

 Preservation of scarce resources for posterity

 Contributing to better quality of life

BUSINESS ETHICS (SHARVARI.S.K, Lecturer in BGSIMS)

 Fair practices relating to requirements, compensation, layoff, perks and

 Better communication at all levels

Characteristics of business ethics

2. It is both as a science and an art

5. It is based on reality and social customs prevailing in business environment

7. It has universal application because exist all over world

8. Many of the ethical principles develop the personal dignity.

IMPORTANCE OF BUSINESS ETHICS

BUSINESS ETHICS (SHARVARI.S.K, Lecturer in BGSIMS)

4. Stop business malpractices: some unscrupulous businessmen do business malpractices by

BUSINESS ETHICS (SHARVARI.S.K, Lecturer in BGSIMS)

Factors influencing business ethics

1. Personal code of behaviour : personal code of behaviour is an

3. Ethical standards imposed on managers: ethical standards are the standard of

6. Abnormal profit motive: it is generally assumed that businesses are primarily

BUSINESS ETHICS (SHARVARI.S.K, Lecturer in BGSIMS)

Corruption can include graft, bribery, embezzlement and extortion.

Type of Business Ethics

BUSINESS ETHICS (SHARVARI.S.K, Lecturer in BGSIMS)

Arguments For Ethics in Business

BUSINESS ETHICS (SHARVARI.S.K, Lecturer in BGSIMS)

Arguments Against Ethics in Business

b. An employer wants to be served in a way that will advance his self-interests.

BUSINESS ETHICS (SHARVARI.S.K, Lecturer in BGSIMS)