Busniess Ethics

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Business Ethics: An overview, Concept, Nature

Ethics is a branch of social science. It deals with moral principles and social values. It helps
us to classifying, what is good and what is bad? It tells us to do good things and avoid
doing bad things.
So, ethics separate, good and bad, right and wrong, fair and unfair, moral and immoral and
proper and improper human action. In short, ethics means a code of conduct. It is like the
10 commandments of holy Bible. It tells a person how to behave with another person.
In short, business ethics means to conduct business with a human touch in order to give
welfare to the society.
So, the businessmen must give a regular supply of good quality goods and services at
reasonable prices to their consumers. They must avoid indulging in unfair trade practices
like adulteration, promoting misleading advertisements, cheating in weights and
measures, black marketing, etc. They must give fair wages and provide good working
conditions to their workers. They must not exploit the workers. They must encourage
competition in the market. They must protect the interest of small businessmen. They
must avoid unfair competition. They must avoid monopolies. They must pay all their
taxes regularly to the government.
Defini몭on of Business Ethics

According to Andrew Crane,
“Business ethics is the study of business situations, activities, and decisions where issues
of right and wrong are addressed.”
According to Raymond C. Baumhart,
“The ethics of business is the ethics of responsibility. The business man must promise
that he will not harm knowin몭y.”
According to Wikipedia,
“Business ethics (also corporate ethics) is a form of applied ethics or professional ethics
that examines ethical principles and moral or ethical problems that arise in a business
environment. It applies to all aspects of business conduct and is relevant to the conduct of
individuals and entire organizations.”
Nature of Business Ethics

The characteristics or features of business ethics are:
Code of conduct: Business ethics is a code of conduct. It tells what to do and

what not to do for the welfare of the society. All businessmen must follow
this code of conduct.
Based on moral and social values: Business ethics is based on moral and
social values. It contains moral and social principles (rules) for doing
business. This includes self-control, consumer protection and welfare,
service to society, fair treatment to social groups, not to exploit others, etc.
Gives protection to social groups: Business ethics give protection to
di몭erent social groups such as consumers, employees, small businessmen,
government, shareholders, creditors, etc.
Provides basic framework: Business ethics provide a basic framework for
doing business. It gives the social cultural, economic, legal and other limits
of business. Business must be conducted within these limits.
Voluntary: Business ethics must be voluntary. The businessmen must
accept business ethics on their own. Business ethics must be like self-
discipline. It must not be enforced by law.
Requires education and guidance: Businessmen must be given proper
education and guidance before introducing business ethics. The
businessmen must be motivated to use business ethics. They must be
informed about the advantages of using business ethics. Trade Associations
and Chambers of Commerce must also play an active role in this matter.
Relative Term: Business ethics is a relative term. That is, it changes from
one business to another. It also changes from one country to another. What
is considered as good in one country may be taboo in another country.
New concept: Business ethics is a newer concept. It is strictly followed only
in developed countries. It is not followed properly in poor and developing
countries.
Advantages of Business Ethics

More and more companies recognize the link between business ethics and 몭nancial
performance. Companies displaying a “clear commitment to ethical conduct”
consistently outperform companies that do not display ethical conduct.
1. Attracting and retaining talent
People aspire to join organizations that have high ethical values. Companies are able to
attract the best talent and an ethical company that is dedicated to taking care of its
employees will be rewarded with employees being equally dedicated in taking care of the
organization. The ethical climate matter to the employees.
Organizations create an environment that is trustworthy, making employees willing to

rely, take decisions and act on the decisions and actions of the co-employees. In such a
work environment, employees can expect to be treated with respect and consideration for
their colleagues and superiors. It cultivates strong teamwork and Productivity and
support employee growth.
2. Investor Loyalty
Investors are concerned about ethics, social responsibility and reputation of the company
in which they invest. Investors are becoming more and more aware that an ethical climate
provides a foundation for e몭ciency, productivity and pro몭ts. Relationship with any
stakeholder, including investors, based on dependability, trust and commitment results
in sustained loyalty.
3. Customer satisfaction
Customer satisfaction is a vital factor in successful business strategy. Repeat

purchases/orders and enduring relationship of mutual respect is essential for the success
of the company. The name of a company should evoke trust and respect among customers
for enduring success. This is achieved by a company that adopts ethical practices. When a
company because of its belief in high ethics is perceived as such, any crisis or mishaps
along the way is tolerated by the customers as a minor aberration. Such companies are
also guided by their ethics to survive a critical situation. Preferred values are identi몭ed
ensuring that organizational behaviours are aligned with those values. An organization
with a strong ethical environment places its customers’ interests as foremost. Ethical
conduct towards customers builds a strong competitive position. It promotes a strong
public image.
4. Regulators
Regulators eye companies functioning ethically as responsible citizens. The regulator

need not always monitor the functioning of the ethically sound company. The company
earns pro몭ts and reputational gains if it acts within the con몭nes of business ethics. To
summaries, companies that are responsive to employees’ needs have lower turnover in
sta몭.
Shareholders invest their money into a company and expect a certain level
of return from that money in the form of dividends and/or capital growth.
Customers pay for goods, give their loyalty and enhance a company’s
reputation in return for goods or services that meet their needs.
Employees provide their time, skills and energy in return for salary, bonus,
career progression, and learning.
Scope of Business Ethics

Ethical problems and phenomena arise across all the functional areas of companies and at
all levels within the company.
1. Ethics in Compliance
Compliance is about obeying and adhering to rules and authority. 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. An ethical climate in an organization ensures that
compliance with law is fuelled by a desire to abide by the laws. Organizations that value
high ethics comply with the laws not only in letter but go beyond what is stipulated or
expected of them.
2. Ethics in Finance
The ethical issues in 몭nance that companies and employees are confronted with include:
In accounting – window dressing, misleading 몭nancial analysis.

Related party transactions not at arm’s length
Insider trading, securities fraud leading to manipulation of the 몭nancial
markets.
Executive compensation.
Bribery, kickbacks, over billing of expenses, facilitation payments.
Fake reimbursements
3. Ethics in Human Resources

Human resource management (HRM) plays a decisive role in introducing and
implementing ethics. Ethics should be a pivotal issue for HR specialists. The ethics of
human resource management (HRM) covers those ethical issues arising around the
employer-employee relationship, such as the rights and duties owed between employer
and employee.
The issues of ethics faced by HRM include:
Discrimination issues i.e. discrimination on the bases of age, gender, race,

religion, disabilities, weight etc.
Sexual harassment.
A몭rmative Action.
Issues surrounding the representation of employees and the
democratization of the workplace, trade.
Issues a몭ecting the privacy of the employee: workplace surveillance, drug
testing.
Issues a몭ecting the privacy of the employer: whistle-blowing.
Issues relating to the fairness of the employment contract and the balance
of power between employer and employee.
Occupational safety and health.
Companies tend to shift economic risks onto the shoulders of their employees. The boom
of performance-related pay systems and 몭exible employment contracts are indicators of
these newly established forms of shifting risk.
4. Ethics in Marke몭ng
Marketing ethics is the area of applied ethics which deals with the moral principles behind
the operation and regulation of marketing. The ethical issues confronted in this area
include:
Pricing: price 몭xing, price discrimination, price skimming.

Anti-competitive practices like manipulation of supply, exclusive dealing
arrangements, tying arrangements etc.
Misleading advertisements
Content of advertisements.
Children and marketing.
Black markets, grey markets.
5. Ethics of Produc몭on
This area of business ethics deals with the duties of a company to ensure that products
and production processes do not cause harm. Some of the more acute dilemmas in this
area arise out of the fact that there is usually a degree of danger in any product or
production process and it is di몭cult to de몭ne a degree of permissibility, or the degree of
permissibility may depend on the changing state of preventative technologies or
changing social perceptions of acceptable risk.
Defective, addictive and inherently dangerous products and

Ethical relations between the company and the environment include
pollution, environmental ethics, and carbon emissions trading.
Ethical problems arising out of new technologies for eg. Genetically
modi몭ed food
Product testing ethics.
The most systematic approach to fostering ethical behaviour is to build corporate cultures
that link ethical standards and business practices.
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Evolving ethical values

Dated back to Code of Hammurabi some 4,000 years ago, business ethics is a social
science, whose main aim is to de몭ne and examine the responsibilities of businesses and
their agents as a part of the general moral environment of a given society.
Business ethics refers to how ethical principles guide a business’s operations. Common
issues that fall under the umbrella of business ethics include employer-employee
relations, discrimination, environmental issues, bribery and insider trading, and social
responsibility. While many laws exist to set basic ethical standards within the business
community, it is largely dependent upon a business’s leadership to develop a code of
ethics. Practicing strong ethics keeps a business within the parameters of the law; as well
as building goodwill and brand equity. Popular social issues largely drive business ethics;
as di몭erent issues come to the forefront, organizations respond by bringing their ethical
tenets in line with the new social norms.
Business Ethics in the ’60s
The 1960s brought the 몭rst major wave of changes in business ethics. Cultural values were
shifting, with individualism and 몭erce dedication to social issues such as
environmentalism and world peace coming into vogue. While young workers were
idealistic and wanted to make the world a better place, employers found their work ethic,
compared to that of previous generations, to be lacking. Drug use was rampant, and the
new focus on individualism caused many workers to look upon their employers with
disdain.
Companies responded by bee몭ng up human resources departments and establishing

mission statements and codes of conduct. In response to the changing desires of their
employees, however, businesses also began embracing social responsibility at a level not
previously seen; the 1960s saw companies trumpet environmental friendliness for the
몭rst time and 몭nd new ways to give back to their communities.
Major Events in the ’70s and ’80s
During the 1970s and 1980s, two events shaped changes in business ethics: defense
contractor scandals that became highly publicized during the Vietnam War and a
heightened sense of tension between employers and employees. In response, the
government implemented stricter policies governing defense contractors, and companies
revamped contracts with employees to focus less on rigid compliance and more on values;
popular management philosophy shifted from pure authoritarianism to more
collaboration and working on equal footing.
The ’90s and Environmentalism
The 1990s saw a rebirth of environmentalism, social responsibility reaching new heights
and graver legal rami몭cations for ethical missteps. Tobacco companies and junk food
manufacturers faced heightened scrutiny, along with several highly publicized lawsuits,
over the public health rami몭cations of their products. Oil companies and chemical
companies had to contend with increasing public pressure to answer for environmental
damage. Class action lawsuits rapidly gained in popularity; in response, businesses were
forced to spend more on their legal departments.
The Online Realm in 2000+
From the year 2000 forward, business ethics have expanded to the online realm. The big
ethical dilemmas of the 21st century have mostly centered on cybercrimes and privacy
issues. Crimes such as identity theft, almost unheard of 20 years before, remain a huge
threat to anyone doing business online—a majority of the population. As a result,
businesses face social and legal pressure to take every measure possible to protect
customers’ sensitive information. The rise in popularity of data mining and target
marketing has forced businesses to walk a 몭ne line between respecting customers’ privacy
and using their online activities to glean valuable marketing data.
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Arguments against Business Ethics

Businesses are not real: They are conceptual, abstractions. The big change that moved us
towards the huge multinational businesses we see today was the legal decision to allow
businesses to be treated as their own entities and we should honour that separation.
The same is true of government when people talk about government morality.
The sole purpose of any business is to make money.
The sole purpose of a government is to retain stability, order and retain power.
Ethics are personal. This is not to say they aren’t important, they are. They should be
venerated to the degree that wealth and youth are in western society, even if they aren’t.
Businesses and democratic governments are abstractions we created to ful몭l human

needs and desires. We want to have lots of money and not have a dangerous, chaotic
environment.
Politics and business leverage evolution. We have created arti몭cial environments with
arti몭cial rewards. Organisms that can’t get enough food, keep themselves safe and attract
a mate die. This works remarkably well and has for a very very long time. It is the only
successful way to create an e몭cient economy that can improve quality of life, alternatives
like communism fail in the large scale because they can’t provide this evolutionary
simulation.
Business has a clear metric – money. If you make a pro몭t you survive, if you don’t you
‘die’ (bankruptcy). Businesses can breed (merge), they can grow. A characteristic of any
living organism has to be passed on through breeding but business ideas that work spread
regardless. Think agile programming, or the idea of specialisation at work even at a more
basic level. Businesses that implemented them had a greater chance of success, more of
them survived. Now most surviving businesses implement them.
So where does ethics come in? Two places. Businesses should be ethical if it makes them
money. There are de몭ned markets for ethical goods. People are attracted by fair trade
labels, they will (sometimes) pay more to know the workers who made their clothes live
acceptable lives.
The second is people in the business. They have the responsibility to ethical because they
are people, real people, not abstract concepts.
Which has two implications:
1. People should not be overly celebrated for being rich. This is not a virtue.
2. People should be celebrated for their ethics.
The reverse obviously being true for companies.
The problem is a western culture that overvalues entrepreneurs, apologies entrepreneurs.

There are many dangerous side e몭ects of this.
When evaluating the success of a company you might say how wonderful apple is for
example. They hit the $1 trillion valuation today. You remark about how great their pro몭t
margins are. How wonderful they are at marketing their products. How good they are at
turning relatively cheap hardware into a product that feels and seems to react in a
premium way. How good they are at trapping people in their ecosystem.
But there is no point judging apple by its ethics because it isn’t designed to be ethical.
But this DOESN’T transfer to the person in charge, or the people in charge. It is strange.
Why judge those peoples success on their ability to generate wealth, which is their
profession and not judge an engineer by his ability to write code or build bridges? It
doesn’t make any sense. Someone making lots of money is neither good nor bad. Whether
they make that responsibly is entirely di몭erent.
People whinge all the time about businesses not being ethical, when it isn’t their purpose
to be ethical. It is, purely, people shirking their responsibility to exercise ethics. You can’t
defer the problem by blaming these other entities. That leads to the weak thinking that
there is no point trying to be ethical because these huge entities are evil and have all the
power.
The key for people is to remember you have no control businesses or anyone else, all you
can do is attempt to exercise self control and act ethically, as well as encourage everyone
else to do the same. This applies at work and at home
The key for business ethics is for the workers to exercise ethics and to remember that the
business is the abstract concept, made of people making decisions. It is NOT the case that
you are just ‘a cog of the system’ and thus your role is purely pro몭t driven, because it isn’t
the case.
Whether or not the company is considered “ethical” with the positive connotation we
normally give this word is another matter that involves judgments based on morality.
Such a label is subjective, but the business community, as a whole, looks at key factors to
decide whether or not a business is practicing good business ethics:
Business structuring
Moral decision making
Ethical business principles
One of the foundations of business ethics is the theory of utilitarianism. Utilitarianism

states that, when weighing all options, the option that produces the greatest net bene몭ts
for the least net cost, is the most ethical option. Which factors are considered in this
cost/bene몭t analysis, however, could greatly skew the results one direction or another.
Successful companies recognize the need for fair and responsible ethical behavior, not
just from a moral standpoint, but from a business standpoint, as well.
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Indian ethos for work life

The silent ideas and thoughts of Indian Ethos in Management revealed by Indian’s ancient
scriptures are:
1. Atmano Mokshartham Jagat Hitaya Cha: All work is an opportunity for

doing well to the world and thus gaining materially and spiritually in our
lives.
2. Archet Dana Manabhyam: Worship people not only with material things
but also by showing respect to their enterprising divinity within.
3. Atmana Vindyate Viryam: Strength and inspiration for excelling in work
comes from the Divine, God within, through prayer, spiritual reading and
unsel몭sh work.
4. Yogah Karmashu Kaushalam, Samatvam Yoga Uchyate: He who works
with calm and even mind achieves the most.
5. Yadishi Bhavana Yasya Siddhi Bhavati Tadrishi: As we think, so we succeed,
so we become. Attention to means, ensure the end.
6. Parasparam Bhavatantah Shreyah Param Bhavapsyathah: By mutual
cooperation, respect and fellow felling, all of us enjoy the highest good both
material and spiritual.
7. Tesham Sukhm Tesham Shanti Shaswati: In몭nite happiness and in몭nite

peace come to them who see the Divine in all beings.
8. Paraspar Devo Bhava: Regard the other person as a divine being.
All of us have the same consciousness though our packages and containers are di몭erent.
Indian ethos is needed due to the following reasons:

1. Maintain Holistic Universe: Modern science has accepted that in this
holistic universe, all minds and matters are interconnected at a deeper level.
The basic unity of life cannot be broken. Love, sacri몭ce therefore emerges as
the only means for a meaningful living. On the basis of this holistic vision,
Indians have developed work ethos of life. This helps in living life to the
fullest.
2. Elucidate Motivation: Concept of motivation can be explained holistically

by Indian ethos. Considering motivations as internal, every human being
has the same divine atman with immense potentialities within. Vedanta
brings in몭nite expansions of the mind, breaks down all the barriers and
brings out the God in man. Motivation is to be internal and not external.
Such motivation involves the inner beauty and does not promote any greed
in an individual to have more and more in return for his work.
3. Welfare: Indian ethos teaches welfare of all (yagna spirit). “Atmano

Mokharth Jagat Hitay Cha” (serve your personal interest but do not forget
others). This philosophy is needed in modern times.
4. Unique Work Culture: Indian ethos helps in development of unique work

culture. Work is considered as duty or Sadhana and there is no di몭erence
between Karma(work) and Dharma(religion). The term Dharma does not
indicate any particular religion. Dharma is a duty to be performed in a given
situation. Thus, Dharma is possible through Karma only.
5. Evenness of Mind: Indian ethos helps in evenness of mind. Means are
equally important as the ends. Thus, society acceptable values are to be
followed in determining the objectives as well as in the process of achieving
these objectives.
6. Self-development: Integrated human personality of self-developed

manager can assure best and competent management of any enterprise,
involving collective works and e몭orts. The re몭ned or higher consciousness
will adopt holistic attitude. It will bring out the divine in man. It will achieve
perfection or excellence in whatsoever sector of work. One shall achieve
peace, harmony and prosperity within and without, i.e., in the internal world
and in the external world simultaneously.
7. Provides Concentration: Vedanta provides the ways and means of
controlling the mind. It helps to concentrate, increase e몭ciency,
productivity and prosperity. It is not religion of resignation and retirement.
One cannot renounce their action. As the Gita says “You have to be a man of
action, do not run away from your action or Karma but the same should be
according to your Dharma”. The second aspect, is while doing the Karma; do
not be tempted by worldly pleasures, materialism and the results. One has
to be man of action, working in a spirit of renunciation. Renunciation does
not mean living a life of isolation or living in a forest. One has to face the
world and should not run away from your action. Do not get attached to
anything.
8. Establishes Value System: Many of the present ills are the results of decline
in our value system and loss of character. Forces of 몭erce competition in the
technology driven era of globalisation have taken a heavy toll of traditional
values. People need to re-imbibe the sanatan values of honesty, integrity,
compassion, care and cooperation.
There is again a need to establish conduct, based on truth and non-violence, peace, and
harmony. One needs to promote a secular ethos that entails ‘sarva-dharm-sambhav’.
That alone will promote enshrined in our ancient maxim of ‘Vasudhaiv Kutumbakam’.
That will be India’s unique contribution towards enrichment of content of globalisation
which today has its focus only on trade and commerce.
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Indian values for the work place

The most highly engaged employees tend to hail from emerging economies and the least
engaged come from countries in well-established markets. Analysis of the data identi몭ed
a pattern that the country where employees live, its culture and the resulting expectations
have an impact on how engaged and satis몭ed they are with their workplace.
When we talk about Indian workers, there are certain aspects in a workplace that
rejuvenate and inspire them. For instance, given the infrastructure and real estate
constraints in growing markets, Indian organizations need to create a voluminous
environment within a smaller space. In much of India, public transportation can be a
nightmare. Thus, a company that wants positive, engaged employees has to worry about
their experience not from the moment they enter the workplace, but from the moment
they leave their homes.
In-house Work-Cafe:
Every 9 to 5 employee needs a third place to rejuvenate away from work. Unlike many
western countries, we may not have the luxury to choose where we work. While in some
parts of the world employees can go down the street to a co몭ee shop for a meeting or just
to think, the reality in growth markets these places might be di몭cult to reach or not an
option for a quick break. Organizations are increasingly trying to provide their employees
with access to environments that o몭er some of the relaxing amenities of home.
Migrating desks:
In a majority of Indian organizations, most people have their own assigned workstation,
but a good number of workers spend two to four hours every day working someplace else.
What kinds of spaces are they looking for? Is it as simple as adding some sofas and a
barista bar to give people the kind of workplace they want?
Whether younger or older generations, everyone likes informal spaces and uses them
regularly- but for di몭erent reasons. Millennials are more likely to use dining spaces to do
focus work while older generations use these spaces for collaboration and socialization.
Organizations are increasingly allowing workers more control and choice so that they can
migrate around their o몭ce space.
9 to 5 Wellbeing:
The most important thing employers in India can do is send a very clear message to their
employees that they care about each person’s overall well-being. Due to the unique
histories, traditions and memories, the newest generation of workers have their own sets
of aspirations, expectations, and needs. Whether its access to natural light, treadmill
desks, or an in-house gym, the current and future generation of workers demand spaces
that make them feel rejuvenated.
Understanding diverse Indian workers and their impact on the workplace is important for
any organization that seeks to succeed in the hugely hot centers of business opportunity.
Although there’s e몭ciency gained with global real estate standards, it’s also true that
workplaces that support distinct worker needs ensure better productivity and increase the
ability to attract and retain the best talent out there.
1. Management Attitude: Top management having 몭rm belief in value-

oriented holistic management. Pro몭t is earned through service and
satisfaction of all stakeholders – employees, customers, shareholders and
citizens. Ful몭llment of social responsibility must be ensured.
2. Humanising the Organisation: Looking at the three aspects of humane
organisations, i.e., inter personal relations, man-machine equation where
man is the prime concern and inner management through mental and
spiritual growth of individuals.
3. Interiorising Management: self management or management by
consciousness. When the soul manages the other four members of the
human being, namely, the body, mind, intellect and the heart, the con몭ict
these four have amongst themselves can be resolved. This is called
management by consciousness. The objective of self-management is to
몭rst know and manage oneself and then manage others.
4. Self-Introspection: Embark upon self-study, self-analysis and self-
criticism to locate areas of friction and disharmony, a self examination of
one’s own feelings, thoughts, emotions, sensations and passions and a
desire to reduce and subdue the ego.
5. Brain-Stilling: For rational and enduring decisions, silent mind is a
necessity. A perfect Mounum(calm mind enjoying tranquillity) is necessary.
Brain-stilling or meditative silence is the most reliable method to discover
solutions to problems which seem to be di몭cult to tackle by reason and
intellect, because through this, one can come into contact with the inner
mind or higher consciousness, called Chetana.
6. Stepping-back (for a While): Never decide anything, never speak a word
and never throw yourself into action without stepping-back. The stepping-
back from a situation for a while enables one to control and master a
situation.
7. Self-Dynamising Meditation: A dynamic meditation helps in
transformation of lower consciousness into higher consciousness and hence
is called transforming meditation. Through meditation, one reaches a
higher level of consciousness with a silent and calm mind, which o몭ers
guidance in the form of intuitions to tackle a multitude of problems. This is
called consciousness approach to management.
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Work life balance

Following are the few basic principles of Indian ethos management:
1. Immense potential, energy and talents for perfection, as a human being

has the spirit within his heart.
2. Holistic approach indicating unity between the Divine (the Divine means
perfection in knowledge, wisdom and power), individual self and the
universe.
3. Subtle, intangible subject and gross tangible objects are equally important.
One must develop one’s third eye, Jnana Chakshu, the eye of wisdom,
visions, insight and foresight.
4. Inner resources are much more powerful than outer resources. Divine
virtues are inner resources. Capital, materials and plant and machinery are
outer resources.
5. Karma yoga (sel몭ess work) o몭ers double bene몭ts, private bene몭t in the
form of self-puri몭cation and public bene몭t.
6. Yogah karmasu kaushalam, which means excellence at work through self
motivation and self development with devotion and without attachment.
7. Cooperation is a powerful instrument for team work and success in any
enterprise involving collective work.
Three elements of Indian ethos are as follows:
1. Focus on the permanent: In real life fashions change, concepts change,

situations change, environments change, however, certain things do not
change. These are the values of the good, truth and beautiful. The recent
experience in the 90s and the early part of this century shows, that the
world is re-discovering the principle of ‘honesty is the best policy’. After all,
honesty is linked to truth and that is the 몭rst principle which perhaps
underlines human existence.
In these days, the operational word for integrity is corporate governance. Corporate
governance has two elements. Transparency, which helps to 몭x accountability, which in
turn highlights that accountability, is for the shareholders and stakeholders.
Transparency and accountability are nothing but exercises in integrity and ensuring that
clever 몭nancial engineering or window dressing do not mislead the investing public. If
there is a crisis today, whether in the Indian capital market or the U.S. market, it is the
crisis of con몭dence of the investors in the business enterprises. It is therefore found that
one of the central elements of Indian ethos, namely, the focus on truth and integrity is
also eminently relevant in the business context.
2. Quest for Perfection: It has been immortalised in the shloka:
“Om poornamada poornamidam poornathpurana mudachyate
poornasya poornamadaya poornameva vashistate”
Out of perfection comes perfection. This quest for perfection ultimately, is the quest for
quality. When it comes to quality, the concepts like total quality management, etc., have
only once again underlined this principle of the fact that quality products and services
cannot come out of an organisation unless the principle of quality pervades every function
of that organisation. This all pervasive quality is also re몭ected in the shloka of
Vallabhacharya, who found that every aspect of Lord Krishna was beautiful:
“Adharam madhuram vadhanam madhuram
Nayanam madhuram hasitam madhuram
Hridayam madhuram gamanam madhuram
Madhurathipathe akhilam madhuram”
All pervasive sense of sweetness and elegance is not only the re몭ection of quality but also
of excellence. In any management today, this ultimate focus on excellence can never be
lost. Thus, it is found that this aspect of Indian ethos is also not only relevant to India but
globally.
3. Joy in Performing One’s Function: It was Deming who said that ’quality’ is
the pride, which an artisan takes in his craft. It is the pride which an artist
takes in his art. If one is enjoying what one is doing, automatically, he is
bound to do extremely well; and while excellence becomes a by-product or a
spin of the bene몭t of happiness, it also leads to success. After all, every
excellent organisation has excellent morale.
Excellence, in terms of enjoyment through doing is the third aspect of Indian ethos. It is
found that this aspect is not only restricted to India, but is universally applicable.
Read More https://theintactone.com/2019/02/08/shrm-u2-topic-9-quality-of-work-

life-work-life-balance/
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Rela몭onship between Ethics & Corporate

Excellence
Life has become one gigantic game. To succeed in this game, we have to struggle. This
struggle is consuming our life silently.
Do not discard success because of the simple reason that the creative process which is
installed in your DNA, has to be allowed to express itself. Creativity has to be encouraged.
But in this process, if you are not alert, your inner joy will be destroyed. Hence, make sure
that your commitment to corporate excellence is based on the foundation of work ethics.
Ethics is not some set of rules based on laws. Ethics is based on goodness. Goodness is not
bound by one’s de몭nition; it is like intelligence; it is free-몭owing, but has its intrinsic
wisdom. Ethics is order and action born out of goodness. Goodness in action mode is
ethics. It is an indicator of health to be ethical in an unethical society.
An ethical process is order in motion and hence immensely crucial in the corporate world.
An important aspect of being altruistic is a high degree of integrity. From a spiritual
dimension, it is integrating the physical, emotional, intellectual and spiritual aspects.
Abusing the body is unethical.
Corporate Excellence is de몭ned as the ability of the company to outsmart Competitors

consistently over a long period of time. In this context, successful organizations are
di몭erent from excellent organizations. Success may be of one dimensions but excellence
is of multiple dimensional in the company. In the ever-changing business environment,
the following are the critical areas that facilitate the company to achieve excellence
(1) BUSINESS PROCESS REENGINERING:
As the business scenario is fast changing day by day, to meet the ever-changing demands
of the market the organizations need to restructure & redesign their Business processes.
The BPR facilities sweeping changes in all the functional areas of the organization. It
reinvents the way the business is carried out, and ultimately helps the company to
engender corporate excellence. As, striving to become excellent is a continuous process,
corporate excellence can’t be a Destination, it is a journey.
(2) GROWTH – SUSTAINABLE DEVELOPMENT:
The corporate objective of mere growth may just lead to maximization of sales Revenue or
pro몭ts, which don’t help the organization to be excellent. Many organizations are
growing at a rapid speed, but they failed to develop consistently. Hence the companies
need to rede몭ne their objectives towards sustainable development.
(3) CORE – COMPETENCE:
A unique strength either in technology or in the processing of functional areas, that an

organization enjoys exclusively and which can’t be copied by the competitors is called –
Core Competence. This unique strength helps the company to get competitive advantage
over a long period of time, which in turn facilitates the company to excel.
Core competencies contribute signi몭cantly to customer bene몭ts and satisfaction, which

is a primary aim of any business. Core competencies help the 몭rm in a multifaceted
manner. A company can achieve competence superiority only by means of core
competence, and it will lead to corporate excellence.
E.g.: Honda has got its core competence in the design and manufacturing of automobile
engines.
(4) RESOURCE UTILIZATION:
Excellence in organization can be achieved through proper utilization of the basic Human,
Physical & 몭nancial, resources. New and advanced technologies have to be adopted in all
the functional areas like – production, marketing, 몭nance, HRD, of the organization.
Organizations need to strengthen their Research and Development departments in order
to embrace latest technologies.
(5) E-COMMERCE:
As the competition in business area is growing rapidly the business organizations started
rede몭ning their business activities. According to Fortune Magazine – “Electronic
Commerce is the new industrial order. It will change the relationship between consumers
& Producers.
As Electronic Commerce involves the exchange of products, Services, and information of

payment through the electronic medium of computers & networks, it facilitates the
continuum relation between the company and the customer, which is a pre requisite for a
company to excel.
(6) CRM (CUSTOMER RELATIONSHIP MANAGEMENT):
In the process of achieving corporate excellence in the present day highly competitive
market, the organizations ability to compete depends on its relationship with its target
customers. The basis for continuity of relation between the company and the customer,
over a period & time is value maximization to customers, which will lead to customer
loyalty. In an attempt to achieve corporate excellence the organizations should try to
develop strong Customer Relationship Management.
(7) SOCIAL CONSCIOUSNESS:
Organizations can achieve corporate excellence by means of contributing to the well being
of the society. As the customers are becoming aware of the cause and e몭ect of polluted
environment, all the business 몭rms should have a concern for society, by introducing
ecologically friendly products or services.
Many companies in India are redesigning their business activities, giving importance to
society and are launching Non-Government Organizations.
Example :- Satyam Computers of Hyderabad started Byrraju Foundation, which is

specialized in the 몭eld of rural development. Emergency ambulance services by the name
108 has been a mega hit in various districts of Andhara Pradesh.
Dr. Reddy’s Laboratories of Hyderabad 몭oated Dr. Reddy’s Foundation in 몭eld of youth
welfare and development.
(8) BUSINESS ETHICS:
In order to achieve excellence, the companies should have basics positive values and
attitudes. Ethics deals with what is wrong and what is right in various disciplines of the
organization. Unethical practices may yield short term gains but organization can’t be
successful in the long run. The organization should develop and formulate the right
approaches and strategies to excel. Because it is to be noted that being right in ethical
behavior always pays o몭.
Besides the above said elements, there are certain areas by which corporate excellence is
facilitated in the modern business world. Young entrepreneurs and business mangers
must pay attention to all these areas in order to see their organization excel
(a) EXCELLENCE THROUGH MANUFACTURING:
In the manufacturing area, a new concept called – World Class Manufacturing ( WCM ) has
emerged recently. The companies adopting WCM are able to introduce the products and
services very much closer to the needs and wants of the costumer. This helps the company
to be successful because WCM has the following characteristics
I) Products of high quality

II) Products with enhanced features
III) Products at the right price.
(b) EXCELLENCE THROUGH MARKETING MIX:
In the ever changing, highly competitive business 몭eld new directions have to be shown in
order to strive & ultimately to achieve corporate excellence.
All organizations, irrespective of the product they o몭er and the service they provide are
always in search of achieving excellence. The basic area of concern to accomplish
corporate excellence is e몭ective management of Marketing Mix of the company.
Innovation in product attributes, reasoning in prices, wide spread & easy reach in placing,
the right distribution networks, objective in promotion, are the 몭elds that a 몭rm seeking
excellence should concentrate on.
(c) EXCELLENCE THROUGH HRM:
Among all the organizational resources, the human resources are the most vital and
require constant re몭nement. Organizational objectives and strategies must match with
HR strategies. Since the change is the fundamental element in achieving corporate
excellence, change management is to be backed by human resources of the 몭rm. The
change can be facilitated by means of HR activity- Training. Hence the training
programmes in the new age business organizations should focus on – Team work,
leadership, initiation, interpersonal communication.
(d) EXCELLENCE THROUGH INFORMATION:
In this present networking era, information has become a major resource after physical,
몭nancial, human resources of the organization. Proper management of information is the
best way to get competitive advantage. Computer based information systems help the
organization to convert raw data in to meaningful information, which helps the manger in
taking e몭ective decisions, which in term improve business performance and ultimately
lead to corporate excellence. Information systems like TPS (Transaction Processing
System), MIS (Management Information Systems), DSS (Decision Support Systems), ESS
(Executive Support Systems) if used intelligently helps the organization to reach the
pinnacle in the competition.
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Code of ethics, Guidelines for developing code

of ethics
Code of ethics
A code of ethics is a guide of principles designed to help professionals conduct business
honestly and with integrity. A code of ethics document may outline the mission and
values of the business or organization, how professionals are supposed to approach
problems, the ethical principles based on the organization’s core values and the standards
to which the professional is held. A code of ethics, also referred to as an “ethical code,”
may encompass areas such as business ethics, a code of professional practice and an
employee code of conduct.
Both businesses and trade organizations typically have some sort of code of ethics that
their employees or members are supposed to follow. Breaking the code of ethics can result
in termination or dismissal from the organization. A code of ethics is important because it
clearly lays out the rules for behavior and provides the groundwork for a preemptive
warning.
Regardless of size, businesses count on their management sta몭 to set a standard of

ethical conduct for other employees to follow. When administrators adhere to the code of
ethics, it sends a message that universal compliance is expected of every employee.
Compliance‐Based Code of Ethics

For all businesses, laws regulate issues such as hiring and safety standards. Compliance-
based codes of ethics not only set guidelines for conduct, but also determine penalties for
violations.
In some industries, including banking, speci몭c laws govern business conduct. These
industries formulate compliance-based codes of ethics to enforce laws and regulations.
Employees usually undergo formal training to learn the rules of conduct. Because
noncompliance can create legal issues for the company as a whole, individual workers
within a 몭rm may face penalties for failing to follow guidelines.
To ensure that the aims and principles of the code of ethics are followed, some companies
appoint a compliance o몭cer. This individual is tasked with keeping up to date on changes
in regulation codes and monitoring employee conduct to encourage conformity.
This type of code of ethics is based on clear-cut rules and well-de몭ned consequences
rather than individual monitoring of personal behavior. Therefore, despite strict
adherence to the law, some compliance-based codes of conduct do not promote a climate
of moral responsibility within the company.
Value‐Based Code of Ethics

A value-based code of ethics addresses a company’s core value system. It may outline
standards of responsible conduct as they relate to the larger public good and the
environment. Value-based ethical codes may require a greater degree of self-regulation
than compliance-based codes.
Some codes of conduct contain language that addresses both compliance and values. For
example, a grocery store chain might create a code of conduct that espouses the
company’s commitment to health and safety regulations above 몭nancial gain. That
grocery chain might also include a statement about refusing to contract with suppliers
that feed hormones to livestock or raise animals in inhumane living conditions.
Code of Ethics Among Professionals

Financial advisers registered with the Securities and Exchange Commission or a state
regulator are bound by a code of ethics known as 몭duciary duty. This is a legal requirement
and also a code of loyalty that requires them to act in the best interest of their clients.
Guidelines for developing code of ethics

Development Process
The 몭rst step in developing a code of conduct is to establish the purpose of the codes and
why they matter. In a KPMG survey of Fortune Global 200 companies, the three most
common reasons for adopting business codes were to comply with legal requirements,
create a shared company culture, and protect and improve the organization’s reputation.
KPMG’s survey also found that the most commonly cited core values of Fortune Global
200 companies are integrity, teamwork, respect, innovation, and client focus. Schwartz
also recommended that code provisions should be consistent with “six universal moral
values” (trustworthiness, respect, responsibility, fairness, caring, and citizenship), which
should prevail over 몭nancial objectives.
Once the purpose is established, the framework for developing a code requires a full
understanding of the operational and reputational risks an organization faces. These
issues de몭ne the organization’s objectives when developing code content, policies,
communication, and training that address individual and collective responsibilities
regarding risk management.
To achieve the organization’s risk management standards it is important to draft a code

that clearly states expectations and guidelines for acceptable behavior, and provides
options for seeking advice and for reporting concerns or suspected misconduct. In his
research on the many dimensions of code development, Schwartz found that employees,
managers, and ethics o몭cers consider codes more e몭ective when they are readable,
relevant, and have a positive tone.
In addition, choosing your language carefully is important, as the authors of

an article analyzing Lehman Brothers’ Code of Ethics concluded: “몭nding the right words
to express ideas and behaviors is a key strategic action for an organization.” The authors
studied Lehman Brothers’ code using the Competing Values Framework (CVF) to reveal
the rhetorical elements of the message, and the Erwin method to rate the code’s tone,
readability, and style. They found that Lehman Brothers’ code’s strengths were on the
relational (trust) and informational (facts) side, as opposed to the transformational
(change) and instructional (action) side, of the CVF. This led to their conclusion that:
The Lehman code of ethics and internal code of conduct do not o몭er much vision or
guidance to the reader. . . . While it lays out the basic rules expected of all Lehman
employees, executives missed the opportunity to create a unique code expressing strong
ethical principles. A more transformational code might have identi몭ed their unique
strengths and values, but this would have to be coupled with transformational leadership
and a culture of strong communication. The Lehman code did a basic job of protecting the
organization against illegal actions by employees, but it did little to advance an ethical
culture that might have sustained them.
One of the things the authors found lacking was guidance for employees who are faced
with di몭cult decisions. The American Management Association proposes using the code
of conduct to guide employees who are conducting business and making decisions in
business dealings and relationships around the globe, by simply recommending that
employees ask themselves two questions:
1. Does this comply with the law, the Code of Conduct and the company’s
policies?
2. How would customers, shareholders, general public and co-workers view it?
The best practices for drafting codes of conduct that emerge from these studies include:
Obtain buy-in across the organization with input from a multidisciplinary

team
Include the organization’s mission statement, vision, and values that re몭ect
its commitment to ethics, integrity, and quality
Clarify that the organization expects individuals to act with honesty and
integrity in addition to compliance with legal requirements
Describe expected behaviors rather than stating prohibitions
Cover relevant risks, employment practices, protecting corporate assets,
and managing third-party relationships
Make it user-friendly and applicable to all individuals covered by the code
Use simple, concise, and easily understood language (and provide translated
versions as needed)
Describe enforcement and disciplinary procedures
Solicit feedback on the code from all levels of the organization
Update to improve content and address new issues or risk areas
But the mere existence of a code of ethics, without more, will not create a sense of shared
values and commitment to ethical behavior.
Implementation
Based on their analysis of the e몭ect that Lehman Brothers’ code of ethics had on its
corporate culture, the authors concluded that “silence can be deadly,” “codes fail when
poorly communicated,” and “codes themselves cannot create ethical organizations.”
In fact, their research found that these two actions are key to code implementation:
Communicate codes through the right channels and explain why they’re
important
Integrate codes into the organization’s practices and back it up with
enforcement
Once drafted, an organization needs to embed the code into its culture. The KPMG report
recommends that the code become a “living” document to guide and create ethical
behavior throughout the organization through:
Communication and training

Personnel and other policy measures
Monitoring, auditing, and reporting
At the companies KPMG surveyed, training courses were commonly used to:
Explain the importance of the code

Reinforce ethical behavior
Strengthen the moral compass
Identify and deal with dilemmas
Provide guidance on how to implement the code more e몭ectivel
At Lehman Brothers, the ethical code contained the phrase “compete aggressively in
furthering the interests of the 몭rm.” However, the authors raise the question of whether
explaining to employees the level of acceptable risk in “competing aggressively” would
have avoided leveraging the company “into a lethal situation.”
E몭ective implementation requires ethical leadership and support, training, and

continuous reinforcement and updates to keep the code current. Ongoing administration
and reinforcement of code standards embeds an organization’s values into its culture,
which stimulates ethical re몭ection and action, and encourages compliance so that
employees speak up when they see others engaging in unethical behavior. And for the
skeptics who question whether an e몭ective code of ethics is worth all this e몭ort, the
bottom line is that good ethics are good for business.
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Corporate Mission Statement

A good mission statement is useful tool for well-run business. It’s the “why” of business
strategy.
A mission statement de몭ne a company’s goals in three important ways:
It de몭nes what the company does for its customers

It de몭nes what the company does for its employees
It de몭nes what the company does for its owners
Some of the best mission statements also extend themselves to include fourth and 몭fth
dimensions: what the company does for its community, and for the world.
Developing your company’s 몭rst mission statement, or writing a new or revised one, is
your opportunity to de몭ne the company’s goals, ethics, culture, and norms for decision-
making. The daily routine of business gets in the way sometimes, and a quick refresh with
the mission statement helps a person take a step back and remember what’s most
important: the organization has a purpose.
Don’t waste your time with a bad mission statement
That a traditional business plan often includes a mission statement isn’t a reason to do
one. And make it useful or don’t bother. The vast majority of the mission statements are
just meaningless hype that could be used to describe any business in the category.
1. Start with a market‐defining story

You don’t have to actually write the story—it’s de몭nitely not included in the mission
statement—but do think it through:
Imagine a real person making the actual decision to buy what you sell. Use your
imagination to see why she wants it, how she 몭nds you, and what buying from you does
for her. The more concrete the story, the better. And keep that in mind for the actual
mission statement wording: “The more concrete, the better.”
A really good market-de몭ning story explains the need, or the want, or—if you like jargon
—the so-called “why to buy.” It de몭nes the target customer, or “buyer persona.” And it
de몭nes how your business is di몭erent from most others, or even unique. It simpli몭es
thinking about what a business isn’t, what it doesn’t do.
This isn’t literally part of the mission statement. Rather, it’s an important thing to have in
your head while you write the mission statement. It’s in the background, between the
words. If you’re having trouble getting started, make a quick list of what your company
does and doesn’t do.
2. Define what your business does for its customers

Start your mission statement with the good you do. Use your market-de몭ning story to
suss out whatever it is that makes your business special for your target customer.
Don’t undervalue your business: You don’t have to cure cancer or stop global climate
change to be doing good. O몭ering trustworthy auto repair, for example, narrowed down
to your specialty in your neighborhood with your unique policies, is doing something
good. So is o몭ering excellent slow food in your neighborhood, with emphasis on organic
and local, at a price premium.
This is a part of your mission statement, and a pretty crucial part at that—write it down.
If your business is good for the world, incorporate that here too. But claims about being
good for the world need to be meaningful, and distinguishable from all the other
businesses. Add the words “clean” or “green” if that’s really true and you keep to it
rigorously. Don’t just say it, especially if it isn’t important or always true.
3. Define what your business does for its employees

Good businesses are good for their employees too or they don’t last. Keeping employees is
better for the bottom line than turnover. Company culture matters. Rewarding and
motivating people matters. A mission statement can de몭ne what your business o몭ers its
employee.
My recommendation is that you don’t simply assert how the business is good for
employees—you de몭ne it here and then forever after make it true.
Qualities like fairness, diversity, respect for ideas and creativity, training, tools,
empowerment, and the like, actually really matter. However, since every business in
existence at least says that it prioritizes those things, strive for a di몭erentiator and a way
to make the general goals feel more concrete and speci몭c.
With this part of the mission statement, there’s a built-in dilemma. On the one hand, it’s
good for everybody involved to use the mission statement to establish what you want for
employees in your business. On the other hand, it’s hard to do that without falling into the
trap of saying what every other business says.
Stating that you value fair compensation, room to grow, training, a healthy, creative work
environment, and respect for diversity is probably a good idea, even if that part of your
mission statement isn’t unique. That’s because the mission statement can serve as a
reminder—for owners, supervisors, and workers—and as a lever for self-enforcement.
If you have a special view on your relationship with employees, write it into the mission
statement. If your business is friendly to families, or to remote virtual workplaces, put
that into your mission.
And this is rare in mission statements. The vast majority are focused on messaging for
customers. My recommendation here is not the norm. I include it because it’s good
practice, even though not common.
While I consulted for Apple Computer, for example, that business di몭erentiated its goals
of training and empowering employees by making a point of bringing in very high-quality
educators and presenters to help employees’ business expertise grow. That was part of
the culture and, to my mind, part of the mission; but it wasn’t part of the mission
statement. It could have been.
American Express, however, includes the team in its mission:
“We have a mission to be the world’s most respected service brand. To

do this, we have established a culture that supports our team
members, so they can provide exceptional service to our customers.”
4. Add what the business does for its owners

In business school they taught us that the mission of management is to enhance the value
of the stock. And shares of stock are ownership. Some would say that it goes without
saying that a business exists to enhance the 몭nancial position of its owners, and maybe it
does. However, only a small subset of all businesses are about the business buzzwords of
“share value” and “return on investment.”
In the early years of my business I wanted peace of mind about cash 몭ow more than I
wanted growth, and I wanted growth more than I wanted pro몭ts. So I wrote that into my
mission statement. And at one point I realized I was also building a business that was a
place where I was happy to be working, with people I wanted to work with; so I wrote that
into my mission statement, too.
However, this element too, as with the suggestion about including employees, is unusual.
Few mission statements do it. That’s understandable, since most mission statements are
outward facing only, aimed at customers and nobody else.
Still, some of the best mission statements incorporate a much broader sense of mission
that includes, or at least implies, the mission of ownership.
Warby Parker, an eyewear company, does a great job at voicing a higher mission that
includes customers, employees, and owners.
“Warby Parker was founded with a rebellious spirit and a lofty

objective: to o몭er designer eyewear at a revolutionary price, while
leading the way for socially-conscious business.”
5. Discuss, digest, cut, polish, review, revise

Whatever you wrote for points two through four above, go back and cut down the
wordiness.
Good mission statements serve multiple functions, de몭ne objectives, and live for a long
time. So, edit. This step is worth it.
Start by considering developing a full mission statement for internal use and using a
customer-facing subset for general publication. That’s common. Many companies have
segmented mission statements, with sections set aside and categorized by type or goal.
Use bullet points or sections if that works for you. Part of the reason people confuse
mission with mantra and vision is that many businesses use them together, and many
others also rede몭ne them to 몭t their context. So what a company does for customers is
often called vision, despite the formal de몭nition.
Remember, form follows function, in mission statements, as in all business. Make it

work for your business. Or don’t do it at all. If you want to call it a vision, and that works for
employees and customers, then do that.
As you edit, keep a sharp eye out for the buzzwords and hype that everybody claims. Cut as
much as you can that doesn’t apply speci몭cally to your business, except for the occasional
special elements that—unique or not—can serve as long-term rules and reminders.
Unique itself, the word, means literally, the only one in the world. Use it sparingly. Phrases
such as “being the best possible,” “world-class,” and “great customer service” mean
little because everybody uses them. Having great customer service is way harder than
writing that into a mission statement.
Read other companies’ mission statements, but write a statement that is about you and
not some other company. Make sure you actually believe in what you’re writing—your
customers and your employees will soon spot a lie.
Then, listen. Show drafts to others, ask their opinions, and really listen. Don’t argue, don’t
convince them, just listen. And then edit again.
And, for the rest of your business’s life, review and revise it as needed. As with everything
in a business plan, your mission statement should never get written in stone, and, much
less, stashed in a drawer. Use it or lose it. Review and revise as necessary, because change
is constant.
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Organiza몭onal Culture
Organizational culture can be de몭ned as the group norms, values, beliefs and
assumptions practiced in an organization. It brings stability and control within the 몭rm.
The organization is more stable and its objective can be understood more clearly.
Organizational culture helps the group members to resolve their di몭erences, overcome
the barriers and also helps them in tackling risks.
Elements of Organiza몭onal Culture

The two key elements seen in organizational culture are:
Visible elements: These elements are seen by the outer world. Example,
dress code, activities, setup, etc.
Invisible elements: These inner elements of the group cannot be seen by
people outside the group or 몭rm. Example, values, norms, assumptions, etc.
Now let us discuss some other elements of organizational culture. They are:
Stories: Stories regarding the history of the 몭rm, or founder.
Rituals: Precise practices an organization follows as a habit.
Symbol: The logo or signature or the style statement of a company.
Language: A common language that can be followed by all, like English.
Practice: Discipline, daily routine or say the tight schedule everyone follows
without any failure.
Values and Norms: The idea over which a company is based or the thought
of the 몭rm is considered as its value and the condition to adopt them are
called norms.
Assumptions: It means we consider something to be true without any facts.
Assumptions can be used as the standard of working, means the employees
prepare themselves to remain above standard.
Different Types of Organiza몭onal Culture
The culture a 몭rm follows can be further classi몭ed into di몭erent types. They are:
Mechanistic and Organic culture

Authoritarian and Participative culture
Subculture and Dominant culture
Strong and Weak culture
Entrepreneurial and Market culture
Mechanis몭c and Organic Culture

Mechanistic culture is formed by formal rule and standard operating procedures.
Everything needs to be de몭ned clearly to the employees like their task, responsibility and
concerned authorities. Communication process is carried according to the direction given
by the organization. Accountability is one of the key factors of mechanistic culture.
Organic culture is de몭ned as the essence of social values in an organization. Thus there
exists a high degree of sociability with very few formal rules and regulations in the
company. It has a systematic hierarchy of authority that leads towards free 몭ow of
communication. Some key elements of organic culture include authority, responsibility,
accountability and direct 몭ow towards the employee.
Authoritarian and Par몭cipa몭ve Culture

Authoritarian culture means power of one. In this culture, power remains with the top
level management. All the decisions are made by the top management with no employee
involvement in the decision making as well as goal shaping process. The authority
demands obedience from the employee and warns them for punishment in case of
mistake or irregularity. This type of culture is followed by military organization.
In participative culture, employees actively participate in the decision making and goal
shaping process. As the name suggests, it believes in collaborative decision making. In
this type of culture, employees are perfectionist, active and professional. Along with
group decision making, group problem solving process is also seen here.
Subculture and Dominant Culture
In subculture, some members of the organization make and follow a culture but not all
members. It is a part of organizational culture, thus we can see many subcultures in an
organization. Every department in a company have their own culture that gets converted
to a subculture. So, the strength and adaptability of an organizational culture is
dependent on the success of subculture.
In dominant culture, majority of subculture combine to become a dominant culture. The

success of dominant culture is dependent on the homogeneity of the subculture, that is,
the mixture of di몭erent cultures. At the same point of time, some cold war between a
dominant culture and a minor culture can also be seen.
Strong and Weak Culture

In a strong culture, the employees are loyal and have a feeling of belongingness towards
the organization. They are proud of their company as well as of the work they do and they
slave towards their goal with proper coordination and control. Perception and
commitment are two aspects that are seen within the employees. In this culture, there is
less employee turnover and high productivity.
In a weak culture, the employees hardly praise their organization. There is no loyalty
towards the company. Thus, employee dissatisfaction and high labor turnover are two
aspects of this culture.
Entrepreneurial and Market Culture

Entrepreneurial culture is a 몭exible and risk-taking culture. Here the employees show
their innovativeness in thinking and are experimental in practice. Individual initiations
make the goal easy to achieve. Employees are given freedom in their activity. The
organization rewards the employees for better performance.
Market culture is based on achievement of goal. It is a highly target-oriented and

completely pro몭t-oriented culture. Here the relationship between the employees and the
organization is to achieve the goal. The social relation among the workers is not
motivating.
How to Create an Organiza몭onal Culture
An organizational culture is created with the combination of certain criteria that are
mentioned below:
The founder of the organization may partly set a culture.

The environment within which the organization standards may in몭uence its
activities to set a culture.
Sometimes interchange of culture in between di몭erent organizations create
di몭erent new cultures.
The members of the organization may set a culture that is 몭exible to adapt.
New cultures are also created in an organization due to demand of time and
situation.
The culture of an organizational can change due to composition of workforce, merger and
acquisition, planned organizational change, and in몭uence of other organizational culture.
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Indraprastha University (MBA) (MDU) BBA Notes Indraprastha University (BBA)
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of GGSIPU,New Delhi 6 Apr 2019 of GGSIPU,New Delhi
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Total Quality Management (TQM)

Total Quality Management (TQM) is the continual process of detecting and reducing or
eliminating errors in manufacturing, streamlining supply chain management, improving
the customer experience, and ensuring that employees are up to speed with their training.
Total quality management aims to hold all parties involved in the production process
accountable for the overall quality of the 몭nal product or service.
A total approach to quality is the current thinking of today; which is popularly called total
quality management (TQM).
TQM is a philosophy that believes in a company-wide responsibility toward quality via

fostering a quality culture throughout the organization; involving continuous
improvement in the quality of work of all employees with a view to best meeting the
requirements of customers.
Advantages of TQM
(i) Sharpens Competitive Edge of the Enterprise
TQM helps an organization to reduce costs through elimination of waste, rework etc. It
increases pro몭tability and competitiveness of the enterprise; and helps to sharpen the
organization’s competitive edge, in the globalized economy of today.
(ii) Excellent Customer Satisfaction
By focusing on customer requirements, TQM makes for excellent customer satisfaction.

This leads to more and more sales, and excellent relations with customers.
(iii) Improvement in Organisational Performance
Through promoting quality culture in the organization, TQM lead to improvements in

managerial and operative personnel’s performance.
(iv) Good Public Image of the Enterprise
TQM helps to build an image of the enterprise in the minds of people in society. This is due
to stress on total quality system and customers’ requirements, under the philosophy of
TQM.
(v) Better Personnel Relations
TQM aims at promoting mutual trust and openness among employees, at all levels in the
organization. This leads to better personnel relations in the enterprise.
Limita몭ons of TQM
The philosophy of TQM su몭ers from the following major limitations
(i) Waiting for a Long Time
TQM requires signi몭cant change in organization; consisting of:
1. Change in methods, processes etc. of organization.

2. Change in attitude, behaviour etc. of people
Launching of TQM and acceptance of the philosophy of TQM requires a long waiting for
the organization. It is not possible to accept and implement TQM overnight.
(ii) Problem of Labour Management Relations
Success of TQM depends on the relationships between labour and management; because
participation of people at all levels is a pre-requisite for TQM programme
implementation. In many organizations, here and abroad, labour-management relations
are quite tense. As such, launching, acceptance and implementation of TQM programme
is nothing more than a dream for such organizations.
Basic Principles of TQM

In TQM, the processes and initiatives that produce products or services are thoroughly
managed. By this way of managing, process variations are minimized, so the end product
or the service will have a predictable quality level.
Following are the key principles used in TQM
(i) Top management – The upper management is the driving force behind TQM. The
upper management bears the responsibility of creating an environment to rollout TQM
concepts and practices.
(ii) Training needs – When a TQM rollout is due, all the employees of the company need to
go through a proper cycle of training. Once the TQM implementation starts, the
employees should go through regular trainings and certi몭cation process.
(iii) Customer orientation – The quality improvements should ultimately target
improving the customer satisfaction. For this, the company can conduct surveys and
feedback forums for gathering customer satisfaction and feedback information.
(iv) Involvement of employees – Pro-activeness of employees is the main contribution

from the sta몭. The TQM environment should make sure that the employees who are
proactive are rewarded appropriately.
(v) Techniques and tools – Use of techniques and tools suitable for the company is one of
the main factors of TQM.
(vi) Corporate culture – The corporate culture should be such that it facilitates the
employees with the tools and techniques where the employees can work towards
achieving higher quality.
(vii) Continues improvements – TQM implementation is not one time exercise. As long
as the company practices TQM, the TQM process should be improved continuously.
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Gandhian Philosophy of Wealth Management

Gandhian Philosophy of Wealth Management: The Gandhian Philosophy of Wealth
Management is based on the principle that a wealthy man does not truly have the right to
hoard wealth solely for the self; the only right he has is that to an honourable livelihood. It
is described as the concept of “lok sangraha”, oriented towards the common good. This is
distinct from capitalistic economics, with its attendant social ecological and psychological
woes.
Trusteeship Management
Trusteeship, as applicable to the corporate world, refers to the act of holding and
managing resources on behalf of the stakeholders of the 몭rm. “What’s new about that”,
one may query. Given that the traditional take on wealth has almost always been tilted
towards owners of corporations, this concept brings in an element of equity, by placing
other stakeholders such as employees, customers and society on the same rung as large
and small shareholders.
The idea is that all wealth, including human, 몭nancial and technological resources,
belongs to society and the rewards accruing from their use must revert to society at large.
The principles of trusteeship can be traced to the concept of collective Endeavour and
community living. Brie몭y, these are: Resources must be held and utilized for the bene몭t of
society. Managers are the trustees of the stakeholders and must work towards optimizing
stakeholder value, not merely maximizing shareholder value. The small investor has as
much a say in decisions as the large investor.
Thus, the overall approach is towards the macro and the long-term perspective, rather
than the short-term, micro perspective which is often geared exclusively to suit the
shareholder and top management. At 몭rst sight, this seemingly idealistic concept
invariably raises a few protests.
“The owner/s must be rewarded for bearing risks and supplying expertise”: De몭nitely. But
the reward must be in proportion to the skills and expertise supplied. The increasing
instances of ethical transgressions on the part of leaders and CEOs indicates the need for
better balance in the risk-reward relationship. The Enron 몭asco and the sale of shares
worth over $70m by erstwhile chief Rebecca Mark, a few months before its bankruptcy, is
a case in point. “Corporations exist for pro몭ts”: They exist to ful몭l the needs of society
and in the process, generate pro몭ts. Moreover, even if pro몭ts were to be the only
determinant of policies trusteeship would still score over inequitable sharing of wealth,
since De management automatically leads to more lasting and stable equations with
stake in turn, leads to higher pro몭ts, goodwill and trust. “Trusteeship might lead to an
e몭ciency and e몭orts”: When individual and group e몭orts are correctly aligned w needs,
the possibility of de motivation or deliberate ine몭ciency does not arise. Con the utility of
the concept, coupled with the commitment of top leadership, would ensure e몭ciency as
well as e몭ectiveness.
The Indian Perspective
The wisdom of the Vedas and Upanishads point towards holistic progress, not fragmented
movement in which one section gains at a cost to others. Moreover, the cycle of give-and-
take is explained at great length. The Arthashastra of Kautilya and The Kural of
Tiruvalluvar both describe the role of the king as trustee, with respect to the citizens and
the wealth of the land. In the last century, Swami Vivekananda taught that sustainable
progress calls for progress for all members and components of society. Fragmented
progress is temporary and often illusory. It is only when all elements of the environment
are taken care of that an individual or organization can hope to consistently succeed in its
ventures.
Indian Corporate Leaders and Trusteeship: One of the most inspiring examples of
corporate trusteeship, in recent times, comes from Infosys, particularly from its former
CEO and current chief mentor, Narayana Murthy. His rationale for creating this company
along with a small group of people (better sharing of wealth in society), the involvement
of employees in the company’s fortunes (through ESOPs) and his contentment with a
mere 7% of company stock (he prefers it that way) re몭ect a deep-rooted commitment
towards trusteeship. Other notable examples include the house of the Tatars with their
corporatized initiatives for socio-corporate bene몭ts; the “WIPRO Cares” Foundation, with
a targeted corpus of Rs 100 core for primary education; and the Birla foundation with its
focus on socio-economic improvement in the lives of the people touched by the
corporation. The possibility of feel-good exercises induced with an eye on the bottom-
line cannot be ignored. Yet, corporate boardrooms are increasingly discovering a match
between the long-term interests of the company and their willingness to expand focus to
all categories of stakeholders. As the roles of wealthy CEOs and in몭uential policy-makers
continue to gain public scrutiny, the question that management must periodically ask
themselves is: Does our existence lead to any bene몭ts for society?
Gandhiji’s Seven Greatest Social Sins
Mahatma Gandhi said that seven things will destroy us. Notice that all of them have to do
social and political conditions. Note also that the antidote of each of these “deadly sins” is
an explicit external standard or something that is based on natural principles and laws,
not on social values.
Wealth Without Work
This refers to the practice of getting something for nothing – manipulating markets and
assets so you don’t have to work or produce added value, just manipulate people and
things. Today there are professions built around making wealth without working, making
much money without paying taxes, bene몭ting from free government programs without
carrying a fair share of the 몭nancial burdens, and enjoying all the perks of citizenship of
country and membership of corporation without assuming any of the risk or
responsibility.
How many of the fraudulent schemes that went on in the 1980s, often called the decade of
greed, were basically get-rich-quick schemes or speculations promising practitioners,
“You don’t even have to work for it”? That is why I would be very concerned if one of my
children went into speculative enterprises or if they learned how to make a lot of money
fast without having to pay the price by adding value on a day-to-day basis.
Some network marketing and pyramidal organizations worry me because many people
get rich quick by building a structure under them that feeds them without work. They are
rationalized to the hilt; nevertheless the overwhelming emotional motive is often greed:
“You can get rich without much work. You may have to work initially, but soon you can
have wealth without work.” New social mores and norms are cultivated that cause
distortions in their judgment.
Justice and judgment are inevitably inseparable, suggesting that to the degree you move
away from the laws of nature, your judgment will be adversely a몭ected. You get distorted
notions. You start telling rational lies to explain why things work or why they don’t. You
move away from the law of “the farm” into social/political environments.
When we read of organisations in trouble, we often hear the sad confessions of executives
who tell of moving away from natural laws and principles for a period of time and begin
overbuilding, over borrowing, and over speculating, not really reading the stream or
getting objective feedback, just hearing a lot of self-talk internally. Now they have a high
debt to pay. They may have to work hard just to survive – without hope of being healthy
for 몭ve years or more. It’s back to the basics, hand to the plow. And many of these
executives, in earlier days, were critical of the conservative founders of the corporations
who stayed close to the fundamentals and preferred to stay small and free of debt.
Pleasure without Conscience
The chief query of the immature, greedy, sel몭sh, and sensuous has always been, “What’s
in it for me? Will this please me? Will it ease me?” Lately many people seem to want these
Knowledge without Character
As dangerous as a little knowledge is, even more dangerous is much knowledge without a
strong, principled character. Purely intellectual development without commensurate
internal character development makes as much sense as putting a high-powered sports
car in the hands of a teenager who is high on drugs. Yet all too often in the academic world,
that’s exactly what we do by not focusing on the character development of young people.
One of the reasons I’m excited about taking the Seven Habits into the schools is that it is
character education. Some people don’t like character education because, they say,
“that’s your custom.” But you can get a common set of values that everyone agrees on. It
is not that di몭cult to decide, for example, that kindness, fairness, dignity, contribution,
and integrity are worth keeping. No one will 몭ght you on those. So let’s start with values
that are unarguable and infuse them in our education system and in our corporate training
and development programs. Let’s achieve a better balance between the development of
character and intellect.
The people who are transforming education today are doing it by building consensus
around a common set of principles, values, and priorities and debunking the high degree
of specialization, departmentalization, and partisan politics.
Commerce (Business) Without Morality (Ethics)

In his book Moral Sentiment, which preceded Wealth of Nations, Adam Smith explained
how foundational to the success of our systems is the moral foundation: how we treat
each other, the spirit of benevolence, of service, of contribution. If we ignore the moral
foundation and allow economic systems to operate without moral foundation and
without continued education, we will soon create an amoral, if not immoral, society and
business. Economic and political systems are ultimately based on a moral foundation.
To Adam Smith, every business transaction is a moral challenge to see that both parties
come out fairly. Fairness and benevolence in business are the underpinnings of the free
enterprise system called capitalism. Our economic system comes out of a constitutional
democracy where minority rights are to be attended to as well. The spirit of the Golden
Rule or of win-win is a spirit of morality, of mutual bene몭t, of fairness for all concerned.
Paraphrasing one of the mottos of the Rotary Club, “Is it fair and does it serve the interests
of all the stakeholders?” That’s just a moral sense of stewardship toward all of the
stakeholders.
I like that Smith says every economic transaction. People get in trouble when they say that
most of their economic transactions are moral. That means there is something going on
that is covert, hidden, secret. People keep a hidden agenda, a secret life, and they justify
and rationalize their activities. They tell themselves rational lies so they don’t have to
adhere to natural laws. If you can get enough rationalization in a society, you can have
social mores or political wills that are totally divorced from natural laws and principles.
I once met a man who for 몭ve years served as the “ethics director” for a major aerospace
company. He 몭nally resigned the post in protest and considered leaving the company,
even though he would lose a big salary and bene몭t package. He said that the executive
team had their own separate set of business ethics and that they were deep into
rationalization and justi몭cation. Wealth and power were big on their agendas, and they
made no excuse for it anymore. They were divorced from reality even inside their own
organization. They talked about serving the customer while absolutely mugging their
own employees.
Science Without Humanity
If science becomes all technique and technology, it quickly degenerates into man against
humanity. Technologies come from the paradigms of science. And if there’s very little
understanding of the higher human purposes that the technology is striving to serve, we
becomes victims of our own technocracy. We see otherwise highly educated people
climbing the scienti몭c ladder of success, even though it’s often missing the rung called
humanity and leaning against the wrong wall.
The majority of the scientists who ever lived or living today, and they have brought about
a scienti몭c and technological explosion in the world. But if all they do is superimpose
technology on the same old problems, nothing basic changes. We may see an evolution,
an occasional “revolution” in science, but without humanity we see precious little real
human advancement: All the old inequities and injustices are still with us.
About the only thing that hasn’t evolved are these natural laws and principles – the true
north on the compass. Science and technology have changed the face of most everything
else. But the fundamental things still apply, as time goes by.
Religion Without Sacri몭ce
Without sacri몭ce we may become active in a church but remain inactive in its gospel in
other words, we go for the social facade of religion and the piety of religious practices.
There is no real walking with people or going the second mile or trying to deal with our
social problems that may eventually undo our economic system. It takes sacri몭ce to serve
the needs of other people – the sacri몭ce of our own pride and prejudice, among other
things.
If a church or religion is seen as just another hierarchical system, its members won’t have a
sense of service or inner workship. Instead they will be into outward observances and all
the visible accoutrements of religion. But they are neither God-centered nor principle-
centered.
The principles of three of the Seven Habits pertain to how we deal with other people, how
we serve them, how we sacri몭ce for them, how we contribute. Habits 4, 5 and 6 – win-win
interdependency, empathy, and synergy – require tremendous sacri몭ce. I’ve come to
believe that they require a broken heart and a contrite spirit – and that, for some, is the
ultimate sacri몭ce. For example, I once observed a marriage where there were frequent
arguments. One thought came to me: “These two people must have a broken heart and a
contrite spirit toward each other or this union will never last.” You can’t have a oneness, a
unity, without humility. Pride and sel몭shness will destroy the union between man and
god, between man and woman, between man and man, between self and self.
The great servant leaders have that humility, the hallmark of inner religion. I know a few
CEOs who are humble servant leaders – who sacri몭ce their pride and share their power –
and I can say that their in몭uence both inside and outside their companies is multiplied
because of it. Sadly, many people want “religion,” or at least the appearance of it, without
any sacri몭ce. They want more spirituality but would never miss a meal in meaningful
fasting or do one act of anonymous service to achieve it.
Political Without Principle
If there is no principle, there is no true north, nothing you can depend upon. The focus on
the personality ethic is the instant creation of an image that sells well in the social and
economic marketplace.
You see politicians spending millions of dollars to create an image, even though it’s
super몭cial, lacking substance, in order to get votes and gain o몭ce. And when it works, it
leads to a political system operating independently of the natural laws that should govern
— that are built into the Declaration of Independence: “We hold these Truths to be self-
evident, that all Men are created equal, that they are endowed by their Creator with
certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of
Happiness….”
In other words, they are describing self-evident, external, observable, natural,

unarguable, self-evident laws: “We hold these Truths to be self-evident.” The key to a
healthy society is to get the social will, the value system, aligned with correct principles.
You then have the compass needle pointing to true north – true north representing the
external or the natural law – and the indicator says that is what we are building our value
system on: they are aligned.
But if you get a sick social will behind the political will that is independent of principle, you
could have a very sick organization or society with distorted values. For instance, the
professed mission and shared values of criminals who rape, rob and plunder might sound
very much like many corporate mission statements, using such words as “teamwork,”
“cooperation,” “loyalty,” “pro몭tability,” “innovation,” and “creativity.” The problem is
that their value system is not based on a natural law.
Figuratively, inside many corporations with lofty mission statements, many people are
being mugged in broad daylight in front of witnesses. Or they are being robbed of self-
esteem, money, or position without due process. And if there is no social will behind the
principles of due process, and if you can’t get due process, you have to go to the jury of
your peers and engage in counterculture sabotage.
In the movie The Ten Commandments, Moses says to the pharaoh, “We are to be governed
by God’s law, not by you.” In e몭ect he’s saying, “We will not be governed by a person
unless the person embodies the law.” In the best societies and organizations, natural laws
and principle govern – that’s the Constitution – and even the top people must bow to the
principle. No one above it.
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Philosophy of Trusteeship
Trusteeship is not merely a principle not even a philosophy. Some witty philosopher has
de몭ned ‘philosophy’ with withering humour, “it is a labyrinth of dead-end streets and
blind alleys leading, from nothing to nowhere·”
To Promote Relationship
Trusteeship is the very stu몭 of life, the material of which life is made because life
ultimately consists of relationships. There is no life without relationship. Relationship is
the essence of life and trusteeship is calculated to promote relationship among men
whose interests and whose roles seem to be con몭icting. That, to my mind, is the very
fundamental truth about trusteeship. So trusteeship is the very condition of our existing
together.
Neighborliness in all walks of life
That’s the basic idea on which the scheme of trusteeship has been based. It is not merely
neighbourliness in certain walks of life, because in Gandhiji’s concept, life could not be
divided into water-tight compartments. Life has been conceived as whole, which can not
be divided into compartments. So trusteeship is not merely for business relations, but for
all relationships of men as they go in everyday a몭airs of life.
A means of Radical Social Change
There is one more aspect of trusteeship. Trusteeship is a means of revolution or radical

social change. In the economic 몭eld there is the idea of description, which has been
propagated by Marxist revolutionaries. There is the method of con몭scation of all property
by the state. Then there is the accepted method of taxation which has been universally
accepted even in the democratic countries. But all these methods agree in not bringing
men closer to each other. This process of social change, to my mind, is a process of accent
and all ascent must ultimately result in approach. So trusteeship is designed with a view to
eliminate the distance between men and bring them, not only in body but also in mind, as
close together as possible.
Change of heart
Trusteeship was Gandhiji’s peculiar contribution to the technique of social change. He

called it “the technique of change of heart.”
Expropriation, con몭scation and taxation are not calculated to conduct to this change of
heart. Gandhiji is often quoted as saying that in the Ramarajya of his dream the status of
the prince and the pauper will b- the same. If Gandhi means that in the Ramarajya of his
dream the prince as well as the pauper will exist as prince and pauper, the be the same as
long as status of the prince and the pauper can never the prince is prince and pauper is
pauper. The prince and pauper will come together only when the prince is shorn of his
royalty and the pauper is able to live a richer life, a fuller life. So Gandhiji’s idea of
trusteeship should not be linked with the idea of class-collaboration, We stand for the
elimination of classes with the co-operation of men but collaboration of men for the
elimination of classes. This idea of class-collaboration is not only vicious in principle but
also abnoxious in practice. There can be no class-collaboration as long as the employer-
employee relationship continues. You convert the whole people into a nation of
government employees. That’s not the idea of trusteeship. Trusteeship; my being
responsible for my life, as well as for the life of my neighbour. This mutuality, mutual
responsibility, is real trusteeship.
Now let us think who really feels the pinch? It is the underdog, who lives a life of perpetual
misery, drudgery and humiliation. It is for him that social change is the immediate need
and it is necessary that this should come mainly through his e몭orts.
Human Dignity and Charity
Human dignity cannot be preserved on charity. If those who live in perpetual misery are
condemned to live on the su몭erance of those who are well to do, I think no human dignity
could be preserved and civilisation will come to an end sooner than later. So, this social
change must in the main come through the e몭orts of those who are in misery and who
need social change immediately.
If this does not happen I think this idea of trusteeship will lapse with the device of charity
i.e. giving alms to the poor. The Christian scriptures say that the poor shall never cease
from out of the land. Trusteeship does not conceive of a society in which the from out of
the land.
Mutuality and Well-being
Trusteeship does not conceive of a society in which the poor shall remain poor and the rich
shall remain rich. Both poverty and a몭uence for a few shall be eliminated. Mutuality and
well-being shall be the rule of the society, in which men learn to live together in goodwill
for one-another. That’s trusteeship as I understand it and that is trusteeship as I think
Gandhiji enunciated. Gandhiji was not, obscurantist, nor did he stand for statism. He
believed in antyodaya -‘the coming up of the last man.’
Promote Relationship
Relationship is the oxygen of life. Trusteeship is calculated to promote relationship. That

is why trusteeship is the vital breath of all our social relationships, more particularly our
industrial relationships. I am reminded of the words of Daniel Defoe with which I shall
conclude. These words are as true of labour as of capital. I do not like the crew, I shall not
sink the ship. Rather I shall do my best and save it from disaster at the cost of my life. You
see, w, are all in the same craft and sail or swim together.” That is the basic idea which lies
at the root of this scheme of trusteeship.
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Gandhiji’s Seven Greatest Social Sins
Wealth without Work

This refers to the practice of getting something for nothing – manipulating markets and
assets so you don’t have to work or produce added value, just manipulate people and
things. Today there are professions built around making wealth without working, making
much money without paying taxes, bene몭ting from free government programs without
carrying a fair share of the 몭nancial burdens, and enjoying all the perks of citizenship of
country and membership of corporation without assuming any of the risk or
responsibility.
How many of the fraudulent schemes that went on in the 1980s, often called the decade of
greed, were basically get-rich-quick schemes or speculations promising practitioners,
“You don’t even have to work for it”? That is why I would be very concerned if one of my
children went into speculative enterprises or if they learned how to make a lot of money
fast without having to pay the price by adding value on a day-to-day basis.
Some network marketing and pyramidal organizations worry me because many people
get rich quick by building a structure under them that feeds them without work. They are
rationalized to the hilt; nevertheless the overwhelming emotional motive is often greed:
“You can get rich without much work. You may have to work initially, but soon you can
have wealth without work.” New social mores and norms are cultivated that cause
distortions in their judgement.
Justice and judgement are inevitably inseparable, suggesting that to the degree you move
away from the laws of nature, your judgement will be adversely a몭ected. You get distorted
notions. You start telling rational lies to explain why things work or why they don’t. You
move away from the law of “the farm” into social / political environments.
When we read of organisations in trouble, we often hear the sad confessions of executives
who tell of moving away from natural laws and principles for a period of time and begin
overbuilding, over borrowing, and over speculating, not really reading the stream or
getting objective feedback, just hearing a lot of self-talk internally. Now they have a high
debt to pay. They may have to work hard just to survive – without hope of being healthy
for 몭ve years or more. It’s back to the basics, hand to the plow. And many of these
executives, in earlier days, were critical of the conservative founders of the corporations
who stayed close to the fundamentals and preferred to stay small and free of debt.
Pleasure without Conscience

The chief query of the immature, greedy, sel몭sh, and sensuous has always been, “What’s
in it for me? Will this please me? Will it ease me?” Lately many people seem to want these
pleasures without conscience or sense of responsibility, even abandoning or utterly
neglecting spouses and children in the name of doing their thing. But independence is not
the most mature state of being – it’s only a middle position on the way to
interdependence, the most advanced and mature state. To learn to give and take, to live
sel몭essly, to be sensitive, to be considerate, is our challenge. Otherwise there is no sense
of social responsibility or accountability in our pleasurable activities.
The ultimate costs of pleasures without conscience are high as measured in terms of time
and money, in terms of reputation and in terms of wounding the hearts and minds of
other people who are adversely a몭ected by those who just want to indulge and gratify
themselves in the short term. It’s dangerous to be pulled or lulled away from natural law
without conscience. Conscience is essentially the repository of timeless truths and
principles – the internal monitor of natural law.
A prominent, widely published psychologist worked to align people with their moral
conscience in what was called “integrity therapy.” He once told me that he was a manic-
depressive. “I knew I was getting suicidal,” he said. “Therefore, I committed myself to a
mental institution. I tried to work out of it, neutralize it, until I reached the point where I
could leave the hospital. I don’t do clinical work now because it is too stressful. I mostly do
research. And through my own struggle, I discovered that integrity therapy was the only
way to go. I gave up my mistress, confessed to my wife, and had peace for the 몭rst time in
my life. “”
Pleasure without conscience is one of the key temptations for today’s executives.
Sometimes on airplanes I’ll scan the magazines directed at executives, noting the
advertisements. Many of these ads, perhaps two-thirds of them, invite executives to
indulge themselves without conscience because they “deserve it” or have “earned it” or
“want it,” and why not “give in” and “let it all hang out”? The seductive message is,
“You’ve arrived. You are now a law unto yourself. You don’t need a conscience to govern
you anymore.” And in some ads you see sixty-year-old men with attractive thirty-year
old women, the “signi몭cant others” who accompany some executives to conventions.
Whatever happened to spouses? What happened to the social mores that make cheating
on spouses illegitimate behaviour?
Knowledge without Character

As dangerous as a little knowledge is, even more dangerous is much knowledge without a
strong, principled character. Purely intellectual development without commensurate
internal character development makes as much sense as putting a high-powered sports
car in the hands of a teenager who is high on drugs. Yet all too often in the academic world,
that’s exactly what we do by not focusing on the character development of young people.
One of the reasons I’m excited about taking the Seven Habits into the schools is that it is
character education. Some people don’t like character education because, they say,
“that’s your value system.” But you can get a common set of values that everyone agrees
on. It is not that di몭cult to decide, for example, that kindness, fairness, dignity,
contribution, and integrity are worth keeping. No one will 몭ght you on those. So let’s start
with values that are unarguable and infuse them in our education system and in our
corporate training and development programs. Let’s achieve a better balance between the
development of character and intellect.
The people who are transforming education today are doing it by building consensus
around a common set of principles, values, and priorities and debunking the high degree
of specialization, departmentalization, and partisan politics.
Commerce (Business) without Morality (Ethics)

In his book Moral Sentiment, which preceded Wealth of Nations, Adam Smith explained
how foundational to the success of our systems is the moral foundation : how we treat
each other, the spirit of benevolence, of service, of contribution. If we ignore the moral
foundation and allow economic systems to operate without moral foundation and
without continued education, we will soon create an amoral, if not immoral, society and
business. Economic and political systems are ultimately based on a moral foundation.
To Adam Smith, every business transaction is a moral challenge to see that both parties
come out fairly. Fairness and benevolence in business are the underpinnings of the free
enterprise system called capitalism. Our economic system comes out of a constitutional
democracy where minority rights are to be attended to as well. The spirit of the Golden
Rule or of win-win is a spirit of morality, of mutual bene몭t, of fairness for all concerned.
Paraphrasing one of the mottos of the Rotary Club, “Is it fair and does it serve the interests
of all the stakeholders?” That’s just a moral sense of stewardship toward all of the
stakeholders.
I like that Smith says every economic transaction. People get in trouble when they say that
most of their economic transactions are moral. That means there is something going on
that is covert, hidden, secret. People keep a hidden agenda, a secret life, and they justify
and rationalize their activities. They tell themselves rational lies so they don’t have to
adhere to natural laws. If you can get enough rationalization in a society, you can have
social mores or political wills that are totally divorced from natural laws and principles.
I once met a man who for 몭ve years served as the “ethics director” for a major aerospace
company. He 몭nally resigned the post in protest and considered leaving the company,
even though he would lose a big salary and bene몭t package. He said that the executive
team had their own separate set of business ethics and that they were deep into
rationalization and justi몭cation. Wealth and power were big on their agendas, and they
made no excuse for it anymore. They were divorced from reality even inside their own
organization. They talked about serving the customer while absolutely mugging their
own employees.
Science without Humanity

If science becomes all technique and technology, it quickly degenerates into man against
humanity. Technologies come from the paradigms of science. And if there’s very little
understanding of the higher human purposes that the technology is striving to serve, we
becomes victims of our own technocracy. We see otherwise highly educated people
climbing the scienti몭c ladder of success, even though it’s often missing the rung called
humanity and leaning against the wrong wall.
The majority of the scientists who ever lived or living today, and they have brought about
a scienti몭c and technological explosion in the world. But if all they do is superimpose
technology on the same old problems, nothing basic changes. We may see an evolution,
an occasional “revolution” in science, but without humanity we see precious little real
human advancement. All the old inequities and injustices are still with us.
About the only thing that hasn’t evolved are these natural laws and principles – the true
north on the compass. Science and technology have changed the face of most everything
else. But the fundamental things still apply, as time goes by.
Religion without Sacrifice

Without sacri몭ce we may become active in a church but remain inactive in its gospel. In
other words, we go for the social facade of religion and the piety of religious practices.
There is no real walking with people or going the second mile or trying to deal with our
social problems that may eventually undo our economic system. It takes sacri몭ce to serve
the needs of other people – the sacri몭ce of our own pride and prejudice, among other
things.
If a church or religion is seen as just another hierarchical system, its members won’t have a
sense of service or inner workship. Instead they will be into outward observances and all
the visible accoutrements of religion. But they are neither God-centered nor principle-
centered.
The principles of three of the Seven Habits pertain to how we deal with other people, how
we serve them, how we sacri몭ce for them, how we contribute. Habits 4, 5 and 6 – win-win
interdependency, empathy, and synergy – require tremendous sacri몭ce. I’ve come to
believe that they require a broken heart and a contrite spirit – and that, for some, is the
ultimate sacri몭ce. For example, I once observed a marriage where there were frequent
arguments. One thought came to me : “These two people must have a broken heart and a
contrite spirit toward each other or this union will never last.” You can’t have a oneness, a
unity, without humility. Pride and sel몭shness will destroy the union between man and
god, between man and woman, between man and man, between self and self.
The great servant leaders have that humility, the hallmark of inner religion. I know a few
CEOs who are humble servant leaders – who sacri몭ce their pride and share their power –
and I can say that their in몭uence both inside and outside their companies is multiplied
because of it. Sadly, many people want “religion,” or at least the appearance of it, without
any sacri몭ce. They want more spirituality but would never miss a meal in meaningful
fasting or do one act of anonymous service to achieve it.
Poli몭cs without Principle

If there is no principle, there is no true north, nothing you can depend upon. The focus on
the personality ethic is the instant creation of an image that sells well in the social and
economic marketplace.
You see politicians spending millions of dollars to create an image, even though it’s
super몭cial, lacking substance, in order to get votes and gain o몭ce. And when it works, it
leads to a political system operating independently of the natural laws that should govern
– – that are built into the Declaration of Independence: “We hold these Truths to be self-
evident, that all Men are created equal, that they are endowed by their Creator with
certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of
Happiness . . . . “
In other words, they are describing self-evident, external, observable, natural,

unarguable, self-evident laws: “We hold these Truths to be self-evident.” The key to a
healthy society is to get the social will, the value system, aligned with correct principles.
You then have the compass needle pointing to true north – true north representing the
external or the natural law – and the indicator says that is what we are building our value
system on : they are aligned.
But if you get a sick social will behind the political will that is independent of principle, you
could have a very sick organization or society with distorted values. For instance, the
professed mission and shared values of criminals who rape, rob and plunder might sound
very much like many corporate mission statements, using such words as “teamwork,”
“cooperation,” “loyalty,” “pro몭tability,” “innovation,” and “creativity.” The problem is
that their value system is not based on a natural law.
Figuratively, inside many corporations with lofty mission statements, many people are
being mugged in broad daylight in front of witnesses. Or they are being robbed of self-
esteem, money, or position without due process. And if there is no social will behind the
principles of due process, and if you can’t get due process, you have to go to the jury of
your peers and engage in counterculture sabotage.
In the movie The Ten Commandments, Moses says to the pharaoh, “We are to be governed
by God’s law, not by you.” In e몭ect he’s saying, “We will not be governed by a person
unless that person embodies the law.” In the best societies and organizations, natural
laws and principles govern – that’s the Constitution – and even the top people must bow
to the principle. No one is above it.
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Social Responsibility of business with respect

to different stakeholders
Business depends on society for inputs like money, men, and skills and also for market
where products have to be sold to the customers. The business depends on society for
existence, sustenance and encouragement.
Being so much dependent on society, business also has a de몭nite responsibility towards
di몭erent segments of society. Though pro몭t making is one of main objectives of business
but it has to satisfy employees, consumer, government, community, shareholders also.
1. Employees:
No Enterprise can succeed without the whole-hearted cooperation of the employees.
Responsibility of business towards employees is in the form of training, promotion,
proper selection, fair wages, safety, health, worker’s education, comfortable working
conditions, participation management etc.
The employees should be taken into con몭dence while taking decisions a몭ecting their
interests. The workers should be o몭ered incentives for raising their performance. Mental,
physical, economic and cultural satisfaction of employees should be taken care of. If
business looks after the welfare of employees then they will also work whole heartedly for
the prosperity of business.
The committee that conducted ‘social audit’ of TISCO (Tata Iron and Steel Company)
observes, “not only should the company carry out its various obligations to the employees
as well as the larger community as a matter of principle, but this has also led to a higher
degree of e몭ciency in TISCO works and an unparalleled performance in industrial peace
and considerable team spirit and discipline which have all resulted in high productivity
and utilisation of capacity.”Thus, by discharging its responsibility to employees the
business advances its own interests.
‘TATAS’ have been the 몭rst to enforce certain laws in favour of employees. Similarly Godrej
& Boyce, Shriram Industries and TVS groups are also good employers. Financial position of
company and economic conditions of nation should be taken into consideration while
spending on labour welfare during performance of responsibility towards employees.
2. Owners:
Business is accountable towards owners as well as managing business pro몭tably, ensuring
fair and regular return on capital employed, consolidating 몭nancial position of business,
guaranteeing capital appreciation so as to enable the owners to withstand any business
contingencies.
3. Consumers:
Responsibility of business towards consumer extends to:
(i) Product:
Quality goods should be produced and supplied. Distribution system should make goods
easily available to avoid arti몭cial scarcities and after sales service should be prompt.
Buying capacity and consumer preferences should be taken into consideration while
deciding the manufacturing policies. The care must be exercised in supplying the goods of
quality which has no adverse e몭ect on the health of consumers.
(ii) Marke몭ng:
To avoid being misled by wrong claims about products through improper advertisements
or otherwise, the consumer should be provided full information about the products
including their adverse e몭ects, risks and care to be taken while using the products.
Consumers all over the world are, by and large, dissatis몭ed because the performance of
businessman is far from satisfactory. Consumer is not the king in our country but a vehicle
used by businessmen for driving towards the goal of pro몭t maximisation.
As a result of which the concept of ‘consumerism’ has come up to protect the rights of
consumers. Even the government is interfering in a big way to protect the interests of
consumers.
4. Government:
A number of legislatives are formed from time to time by the government for proper
regulation and control of business. Businessmen should comply with all legal
requirements, execute government contracts, pay taxes honestly and in time, make
services of executives available for government, suggest measures and send proposals to
enact new laws for the business.
A number of taxes are imposed on business for collecting revenue. Businessmen should
pay various taxes in time and help government in collecting funds. They should not resort
to tax evasions rather declare their incomes honestly and correctly.
But series of raids conducted on business houses clearly show that businessmen have
failed to discharge their responsibility towards government.
5. Shareholders:
Shareholders who are the owners of business should be provided with correct information
about company to enable them to give them true and fair position of the company to
enable them to decide about further investments.
Company should provide a fair return on the investment made by shareholders. If

shareholders do not get proper dividend then they will hesitate to invest additional funds
in the concern. Shareholders should be kept fully informed about the working of the
company for healthy growth of the business. The Companies Act 1956 also requires
company to give full disclosure in the published statements.
Company should strengthen the share prices by its growth, innovation and
diversi몭cation. At the same time shareholders shall also o몭er wholehearted support and
co-operation to the company to protect their own interests.
6. Community:
Responsibility of business towards community and society includes spending a part of
pro몭ts towards civic and educational facilities. Every industrial undertaking should take
steps to dispose of Industrial wastes in such a way that ecological balance is maintained
steps to dispose of Industrial wastes in such a way that ecological balance is maintained
and environmental pollution is prevented.
Rehabilitating the population displaced by business units should also De part of

responsibly of business? Business houses should set up units at those places where
su몭cient space is available for housing colonies of workers. The promotion of small scale
industries will help not only nation but will also help in building up a better society.
7. Environment:
Business should protect the environment which has acquired great importance all over
the world. Business can discharge the responsibility of protecting environment in
following way:
(i) Preserva몭on of Natural Resources:
Scarce natural resources should be used very carefully as these are depleting at a very fast
rate. The alternative sources can also be found out to save natural resources like to save
forests alternative to wood and pulp can be found, the use of coal can be reduced by
alternative source of energy.
(ii) Pollu몭on Control:
Appropriate steps should be taken to prevent environmental pollution and to preserve

ecological balance. The industrial waste should be disposed o몭 carefully or if possible can
be recycled to minimise pollution. The toxic wastes, excessive noise, chemical pesticides,
automobile exhaust etc. need to be checked from time to time.
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Arguments for and against Social

responsibility of business
“If you are in the luckier of 1% of humanity, you owe it to the rest of humanity to think
about the other 99%,” said Warren Bu몭ett. Mr. Bu몭ett understood that the purpose of
any business is not only to make a pro몭t but also to be responsible for its actions and
decisions. Social responsibility is the duty of businesses towards society. Businessmen
must review their impact of decisions and actions on the di몭erent sections of society.
The Need for Social Responsibility
Self-interest: It is in the self-interest of the business to have a social

responsibility as it opens opportunities for understanding the problems and
issues of society.
A better environment for Business: In today’s cynical age, social
responsibility keeps the businesses honest and the markets stable.
Public image: When a business takes initiative to solve the problems of the
society, it puts the business in the goodwill of the people.
Social power: A leader is a helper. Helping the society is a form of social
responsibility. Executing social work helps the business attain social power
within the society.
Arguments Supporting Social Responsibility
The justi몭cation for existence and growth: The primary goal of business is
to make pro몭ts as only pro몭ts can help the business sustain and expand.
Pro몭ts should only be made as a return of service to the society by producing
goods and services.
The long-term-term interest in the 몭rm: A 몭rm is to gain maximum
pro몭ts in the long run if it has it’s the highest goal as service to society. As
humans are social beings, when they notice that a particular corporation is
not serving its the best interest socially, they do not support the
organization further.
Avoidance of government regulations: Government is the highest
authority in the nation. When a government feels that the business is not
socially responsible or is creating problems like pollution, the government
limits its freedom.
Maintenance of Society: Business is one of the important pillars on which
society survives. It is the responsibility of business to take care of society’s
needs. Law alone cant help people with the issues they face. Therefore
businesses contribute to the well being, peace and harmony of society.
Availability of resources with Business: Business enterprises have huge
몭nancial resources, very e몭cient managers & contacts and thereby they can
ensure that a social problem can be solved easily.
Converting problems into opportunities: Business means risk. And turning
risky situations into pro몭ts can also be related to solving social problems.
Holding Business responsible for Social problems: Business enterprises
are responsible for many problems such as pollution, discriminated
employment, corruption, etc. It is the duty of the business to solve the
problems created by them.
Arguments Against Social Responsibility
Violation of maximization of the pro몭t motive: This statement argues that

business exists only for maximizing pro몭ts and businesses ful몭l their social
responsibility best by maximizing pro몭ts by increasing e몭ciency and
reducing costs. They need not take up any additional obligations.
Side e몭ects on Consumers: Customers su몭er because of the solving social
problems and taking social care require huge 몭nancial investment. As the
money within the business is used in social help, the business increase the
cost of their products and services.
Lack of Social skills: It is often stated that businessmen don’t fully under the
social problems and thus can’t solve them e몭ciently.
Personal resistance: People tend to dislike interference from businesses in
their problems.
The Reality of Social Responsibility
The threat of Public Regulation: Government agencies keep watchful eye

on all the business operations. So to avoid government action, business
should behave in a responsible manner.
The pressure of Labour movement: Labour play an important role not only
in production but also in the managerial factors of the organization. Labour
nowadays are more educated and their movements are more powerful. ‘Hire
and 몭re’ policy no longer work. Managers now have to be more responsible
while dealing with labors.
Impact of Consumer Consciousness: In this era, consumers are well aware
of the quality and price of the product. Consumers are understanding their
rights over the product and even in small issues, they 몭le a suit in consumer
court.
Development of a Social standard for Business: New social standards
consider business enterprises as legitimate but with a condition, they must
also serve social needs.
Development of Business Education: Business education has created an
awareness among investors, consumers, employees, etc and the world is
more sensitive towards social issues.
The relationship between Social interest and Business Interest: People
know that social interest and business interest are complementary. This
means long-term bene몭ts of the business.
Development of Professional and Managerial Class: Earlier business
houses only aimed at pro몭t maximization but now professional
management and educational institution have made a new kind of
managers that give similar importance to social responsibility.
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Social Audit and Social Responsibility of

Business
Social Audit
A social audit is a formal review of a company’s endeavors in social responsibility. A social
audit looks at factors such as a company’s record of charitable giving, volunteer activity,
energy use, transparency, work environment, and worker pay and bene몭ts, to evaluate
what kind of social and environmental impact a company is having in the locations where
it operates.
Social audits are optional. Companies can choose whether to perform them and whether
to release the results publicly or only use them internally.
A social audit is an internal examination of how a particular business is a몭ecting a society.

It serves as a way for a business to see if the actions being taken are being positively or
negatively received and relates that information to the company’s overall public image.
A social audit examines issues regarding internal practices or policies and how they a몭ect
the identi몭ed society. The activities included tend to pertain to the concepts of social
responsibility. This can include activities a몭ecting the 몭nancial stability of a region, any
environmental impact resulting from standard operations and issues of transparency in
reporting.
There is no standard regarding what must be considered as the society during the audit.
This allows a business to expand or contract the scope based on its goals. While one
company may wish to understand the impact it has on a small-scale society, such as a
particular city, others may choose to expand the range to include an entire state, country
or the world as a whole.
Social Responsibility of Business
Social responsibility of business implies the obligations of the management of a business
enterprise to protect the interests of the society.
According to the concept of social responsibility the objective of managers for taking
business decisions is not merely to maximize pro몭ts or shareholders’ value but also to
serve and protect the interests of other members of a society such as workers, consumers
and the community as a whole.
Thus, Sachar Committee on Companies and MRTP Acts appointed by Government of India
states, “In the development of corporate ethics we have reached a stage where the
question of social responsibility of business to the community can no longer be sco몭ed at
or taken lightly. In the environment of modern corporate economic development, the
corporate sector no longer functions in isolation. If the plea of the companies that they are
performing a social purpose is to be accepted, it can only be judged by the test of social
responsiveness shown to the needs of the society”.
But in today’s world the interest of other stakeholders, community and environment
must be protected and promoted. Social responsibility of business enterprises to the
various stakeholders and society in general is considered to be the result of a social.
Responsibility of Business Enterprises towards Stakeholders and Society in General
contract.
Social contract is a set of rules that de몭nes the agreed interrelationship between various
elements of a society. The social contract often involves a quid pro quo (i.e. something
given in exchange for another). In the social contract, one party to the contract gives
something and expects a certain thing or behaviour pattern from the other.
In the present context the social contract is concerned with the relationship of a business
enterprise with various stakeholders such as shareholders, employees, consumers,
government and society in general. The business enterprises happen to have resources
because society consisting of various stakeholders has given them this right and therefore
it expects from them to use them to for serving the interests of all of them.
Though all stakeholders including the society in general are a몭ected by the business
activities of a corporate enterprise, managers may not acknowledge responsibility to
them. Social responsibility of business implies that corporate managers must promote
the interests of all stakeholders not merely of shareholders who happen to be the so called
owners of the business enterprises.
1. Responsibility to Shareholders
In the context of good corporate governance, a corporate enterprise must recognise the
rights of shareholders and protect their interests. It should respect shareholders’ right to
information and respect their right to submit proposals to vote and to ask questions at the
annual general body meeting.
The corporate enterprise should observe the best code of conduct in its dealings with the
shareholders. However, the corporate Board and management try to increase pro몭ts or
shareholders’ value but in pursuing this objective, they should protect the interests of
employees, consumers and other stakeholders. Its special responsibility is that in its
e몭orts to increase pro몭ts or shareholders’ value it should not pollute the environment.
2. Responsibility to Employees
The success of a business enterprise depends to a large extent on the morale of its
employees. Employees make valuable contribution to the activities of a business
organization. The corporate enterprise should have good and fair employment practices
and industrial relations to enhance its productivity. It must recognise the rights of workers
or employees to freedom of association and free collective bargaining. Besides, it should
not discriminate between various employees.
The most important responsibility of a corporate enterprise towards employees is the

payment of fair wages to them and provides healthy and good working conditions. The
business enterprises should recognise the need for providing essential labour welfare
activities to their employees, especially they should take care of women workers. Besides,
the enterprises should make arrangements for proper training and education of the
workers to enhance their skills.
However, it may be noted that very few companies in India follow many of the above good
practices. While the captains of Indian industries generally complain about low
productivity of their employees, little has been done to address their problems. Ajith
Nivard Cabraal rightly writes, “It should perhaps be realised that corporations can only be
as e몭ective and e몭cient as its employees and therefore steps should be taken to
implement such reforms in a pro-active manner, rather than merely attempting to
comply with many labour laws that prevail in the country. This is probably one area where
good governance practices could make a signi몭cant impact on the country’s business
environment.”
3. Responsibility to Consumers:
Some economists think that consumer is a king who directs the business enterprises to
produce goods and services to satisfy his wants. However, in the modern times this may
not be strictly true but the companies must acknowledge their responsibilities to protect
their interests in undertaking their productive activities.
Invoking the notion of social contract, the management expert Peter Drucker observes,
“The customer is the foundation of a business and keeps it in existence. He alone gives
employment. To meet the wants and needs of a consumer, the society entrusts wealth-
producing resources to the business enterprise”. In view of above, the business
enterprises should recognise the rights of consumers and understand their needs and
wants and produce goods or services accordingly.
The following responsibilities of business enterprises to consumers are worth
mentioning:
1. They should supply goods or services to the consumers at reasonable prices

and do not try to exploit them by forming cartels. This is more relevant in
case of business enterprises producing essential goods such as life-saving
drugs, vegetable oil and essential’ services such as electricity supply and
telephone services.
2. They should not supply to the consumers’ shoddy and unsafe products
which may do harm to them.
3. They should provide the consumers the required after-sales services.
4. They should not misinform the consumers through inappropriate and
misleading advertisements.
5. They should make arrangements for proper distribution system of their
products so as to ensure that black-marketing and pro몭teering by traders
do not occur.
6. They should acknowledge the rights of consumers to be heard and take
necessary measures to redress their genuine grievances.
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Read MBA, BBA, B.COM Notes

Business Ethics: An overview, Concept, Nature

Deﬁni몭on of Business Ethics

According to Raymond C. Baumhart,

Nature of Business Ethics

Code of conduct: Business ethics is a code of conduct. It tells what to do and

Advantages of Business Ethics

1. Attracting and retaining talent

Organizations create an environment that is trustworthy, making employees willing to

Customer satisfaction is a vital factor in successful business strategy. Repeat

Regulators eye companies functioning ethically as responsible citizens. The regulator

Scope of Business Ethics

In accounting – window dressing, misleading 몭nancial analysis.

3. Ethics in Human Resources

The issues of ethics faced by HRM include:

Discrimination issues i.e. discrimination on the bases of age, gender, race,

Pricing: price 몭xing, price discrimination, price skimming.

Defective, addictive and inherently dangerous products and

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Evolving ethical values

Business Ethics in the ’60s

Companies responded by bee몭ng up human resources departments and establishing

The ’90s and Environmentalism

The Online Realm in 2000+

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Arguments against Business Ethics

The sole purpose of any business is to make money.

Businesses and democratic governments are abstractions we created to ful몭l human

Which has two implications:

The reverse obviously being true for companies.

The problem is a western culture that overvalues entrepreneurs, apologies entrepreneurs.

One of the foundations of business ethics is the theory of utilitarianism. Utilitarianism

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