BusinesshEthics
Business Ethics h
Definition
Businesshethicsharehthehmoralhprincipleshthathacthashguidelineshforhthehwayhahbusinesshconductshits
elfhandhitshtransactions.hInhmanyhways,hthehsamehguidelineshthathindividualshusehtohconducththemsel
veshinhanhacceptablehwayh–hinhpersonalhandhprofessionalhsettingsh–happlyhtohbusinesseshashwell.
• Businesshethicshrefershtohimplementinghappropriatehbusinesshpolicieshandhpracticeshwithhr
egardhtoharguablyhcontroversialhsubjects.
• Somehissueshthathcomehuphinhahdiscussionhofhethicshincludehcorporatehgovernance,hinsiderht
rading,hbribery,hdiscrimination,hsocialhresponsibility,handhfiduciaryhresponsibilities.
• Thehlawhusuallyhsetshthehtonehforhbusinesshethics,hprovidinghahbasichguidelinehthathbusinessesh
canhchoosehtohfollowhtohgainhpublichapproval.
(importanthtohexplainhethicshpaperhwithhexamples)
exampleh1,
CompanyhXYZhsellshcerealshwithhall-
naturalhingredients.hThehmarketinghdepartmenthwantshtohusehthehall-
naturalhingredientshashahsellinghpoint,hbuthithmusthtemperhenthusiasmhforhthehproducthversus
hthehlawshthathgovernhlabelinghpractices.
Somehcompetitors'hadvertisementshtouthhigh-
fiberhcerealshthathhavehthehpotentialhtohreducehthehriskhofhsomehtypeshofhcancer.hThehcerealhc
ompanyhinhquestionhwantshtohgainhmorehmarkethshare,hbuththehmarketinghdepartmenthcannot
hmakehdubioushhealthhclaimshonhcerealhboxeshwithouththehriskhofhlitigationhandhfines.hEvenhth
oughhcompetitorshwithhlargerhmarkethshareshofhthehcerealhindustryhusehshadyhlabelinghpracti
ces,hthathdoesn'thmeanheveryhmanufacturerhshouldhengagehinhunethicalhbehavior.
exampleh2,
considerhthehmatterhofhqualityhcontrolhforhahcompanyhthathmanufactureshelectronichcompone
ntshforhcomputerhservers.hThesehcomponentshmusthshiphonhtime,horhthehmanufacturerhofhtheh
partshriskshlosinghahlucrativehcontract.hThehquality-
controlhdepartmenthdiscovershahpossiblehdefect,handheveryhcomponenthinhonehshipmenthface
shchecks.
Unfortunately,hthehcheckshmayhtakehtoohlong,handhthehwindowhforhon-
timehshippinghcouldhpass,hwhichhcouldhdelayhthehcustomer'shproducthrelease.hThehquality-
controlhdepartmenth canhshiphthehparts,hhopinghthathnothallhofhthemharehdefective,horhdelayhth
ehshipmenthandhtestheverything.hIfhthehpartsharehdefective,hthehcompanyhthathbuyshthehcompo
nentshmighthfacehahfirestormhofhconsumerhbacklash,hwhichhmayhleadhthehcustomerhtohseekhah
morehreliablehsupplier.
DetermininghRighthandhWrong
Actinghethicallyhultimatelyhmeanshdetermininghwhathish“right”handhwhathish“wrong.”hBasichstandard
shexistharoundhthehworldhthathdictatehwhathishwronghorhunethicalhinhtermshofhbusinesshpractices.
exampleh3,
Considerhanhemployeehwhohishtoldhinhahmeetinghthaththehcompanyhwillhfacehanhearningshsho
rtfallhforhthehquarter.hThishemployeehalsohownshshareshinhthehfirm.hIthwouldhbehunethicalhforhth
ehemployeehtohsellhtheirhshareshsincehtheyhwouldhbehsubjecthtohinsiderhinformation.
Alternatively,hifhtwohlargehcompetitorshcamehtogetherhtohgainhanhunfairhadvantage,hsuchhashcon
trollinghpriceshinhahgivenhmarket,hthishwouldhraisehserioushethicalhconcerns.
exampleh4,
BusinesshEthicsh-hDefinition,hneed,hscopehandhbenefith-hArgumentshforhandhagainsthbusinesshethicsh-
hStructurehandhbusinesshethicsh-hEconomic,hcompetitive,hlegalhandhregulatoryhissuesh-hFrameworkhforhethicalhdecisionhmakingh-
hRolehofhmoralhphilosophieshinhdecisionhmaking
, BusinesshEthics
assumehCompanyhAhworkshwithhahcontacthathCompanyhB,hanhindividualhthroughhwhichhtheyh
negotiatehallhthehpriceshforhsupplieshtheyhbuyhfromhCompanyhB.hCompanyhAhnaturallyhwantsh
tohgeththehbesthpriceshonhthehsupplies.hWhenhthehindividualhfromhCompanyhBhcomeshtohtheirh
homeh officeh toh negotiateh ah newh contract,h theyh puth himh uph inh ah top-
tierh hotel,h inh theh veryhbesthsuite,handhmakehsurehthathallhhishwantshandhneedsharehmethwhileh
he’shthere.
Inhtechnicalhterms,hthehpracticehishnothillegal.hHowever,hithmighthbehconsideredhahgreyhareah–
hclosehto,hbuthnothquite,hbriberyh–
hbecausehthehindividualhishthenhlikelyhtohbehmorehinclinedhtohgivehCompanyhAhahpricehbreakha
ththehexpensehofhgettinghthehbesthdealhforhhishownh company.
Need
1. Stophbusinesshmalpractices:hSomehunscrupuloushbusinessmenhdohbusinesshmalpracticesh
byhindulginghinhunfairhtradehpracticeshlikehblack-
marketing,hartificialhhighhpricing,h adulteration,hcheatinghinhweightshandhmeasures,hsellinghofh
counterfeith(duplicate)handhharmfulhproducts,hillegalhhoarding,hetc.hThesehbusinesshmalpracti
cesharehharmfulhtohconsumershandhthehsafetyhofhsociety.hBusinesshethicshhelphtohstophtheseh
malpracticeshandhsafeguardhsociety.hIthcreateshahhealthyhbusinesshenvironmenthforheveryone.
2. Improvehcustomers'hconfidence:hBusinesshethicsharehneededhtohimprovehthehcustomers'hc
onfidencehabouththehquality,hutility,hreliability,hquantity,hprice,hetc.hofhthehproducts.hThehcustom
ershhavehmorehtrusthandhconfidencehinhthehbusinessmenhwhohfollowhethicalhbusinesshruleshorh
principles.hTheyhfeelhsafehthathsuchhbusinessmenhwillhnothcheaththem.hEthicshbindshbusiness
menhtohmaintainhtrusthbyhofferinghqualityhproductshandhserviceshtohcustomers.
3. Survivalhofhbusiness:hBusinesshethicsharehmandatoryhorhcompulsoryhforhthehsurvivalhofhanyh
business.h Theh businessmenh whoh doh noth followh ith willh onlyh haveh short-
termh success,h buththeyhwillhfailhinhthehlonghrun.hThishishbecausehtheyhcanhcheathahconsumerho
nlyhonce.hAfterhrealizinghbeinghcheated,hthehconsumerhwillhnothbuyhgoodshorhserviceshfromhth
athbusinessman.hHehwillhalsohtellhothershnothtohbuyhfromhthathbusinessman.hSo,hthishwillh defa
mehhishgoodwillhorhimagehandhprovokehnegativehpublicityhinhthehmarket.hThishwillhresult
BusinesshEthicsh-hDefinition,hneed,hscopehandhbenefith-hArgumentshforhandhagainsthbusinesshethicsh-
hStructurehandhbusinesshethicsh-hEconomic,hcompetitive,hlegalhandhregulatoryhissuesh-hFrameworkhforhethicalhdecisionhmakingh-
hRolehofhmoralhphilosophieshinhdecisionhmaking
Business Ethics h
Definition
Businesshethicsharehthehmoralhprincipleshthathacthashguidelineshforhthehwayhahbusinesshconductshits
elfhandhitshtransactions.hInhmanyhways,hthehsamehguidelineshthathindividualshusehtohconducththemsel
veshinhanhacceptablehwayh–hinhpersonalhandhprofessionalhsettingsh–happlyhtohbusinesseshashwell.
• Businesshethicshrefershtohimplementinghappropriatehbusinesshpolicieshandhpracticeshwithhr
egardhtoharguablyhcontroversialhsubjects.
• Somehissueshthathcomehuphinhahdiscussionhofhethicshincludehcorporatehgovernance,hinsiderht
rading,hbribery,hdiscrimination,hsocialhresponsibility,handhfiduciaryhresponsibilities.
• Thehlawhusuallyhsetshthehtonehforhbusinesshethics,hprovidinghahbasichguidelinehthathbusinessesh
canhchoosehtohfollowhtohgainhpublichapproval.
(importanthtohexplainhethicshpaperhwithhexamples)
exampleh1,
CompanyhXYZhsellshcerealshwithhall-
naturalhingredients.hThehmarketinghdepartmenthwantshtohusehthehall-
naturalhingredientshashahsellinghpoint,hbuthithmusthtemperhenthusiasmhforhthehproducthversus
hthehlawshthathgovernhlabelinghpractices.
Somehcompetitors'hadvertisementshtouthhigh-
fiberhcerealshthathhavehthehpotentialhtohreducehthehriskhofhsomehtypeshofhcancer.hThehcerealhc
ompanyhinhquestionhwantshtohgainhmorehmarkethshare,hbuththehmarketinghdepartmenthcannot
hmakehdubioushhealthhclaimshonhcerealhboxeshwithouththehriskhofhlitigationhandhfines.hEvenhth
oughhcompetitorshwithhlargerhmarkethshareshofhthehcerealhindustryhusehshadyhlabelinghpracti
ces,hthathdoesn'thmeanheveryhmanufacturerhshouldhengagehinhunethicalhbehavior.
exampleh2,
considerhthehmatterhofhqualityhcontrolhforhahcompanyhthathmanufactureshelectronichcompone
ntshforhcomputerhservers.hThesehcomponentshmusthshiphonhtime,horhthehmanufacturerhofhtheh
partshriskshlosinghahlucrativehcontract.hThehquality-
controlhdepartmenthdiscovershahpossiblehdefect,handheveryhcomponenthinhonehshipmenthface
shchecks.
Unfortunately,hthehcheckshmayhtakehtoohlong,handhthehwindowhforhon-
timehshippinghcouldhpass,hwhichhcouldhdelayhthehcustomer'shproducthrelease.hThehquality-
controlhdepartmenth canhshiphthehparts,hhopinghthathnothallhofhthemharehdefective,horhdelayhth
ehshipmenthandhtestheverything.hIfhthehpartsharehdefective,hthehcompanyhthathbuyshthehcompo
nentshmighthfacehahfirestormhofhconsumerhbacklash,hwhichhmayhleadhthehcustomerhtohseekhah
morehreliablehsupplier.
DetermininghRighthandhWrong
Actinghethicallyhultimatelyhmeanshdetermininghwhathish“right”handhwhathish“wrong.”hBasichstandard
shexistharoundhthehworldhthathdictatehwhathishwronghorhunethicalhinhtermshofhbusinesshpractices.
exampleh3,
Considerhanhemployeehwhohishtoldhinhahmeetinghthaththehcompanyhwillhfacehanhearningshsho
rtfallhforhthehquarter.hThishemployeehalsohownshshareshinhthehfirm.hIthwouldhbehunethicalhforhth
ehemployeehtohsellhtheirhshareshsincehtheyhwouldhbehsubjecthtohinsiderhinformation.
Alternatively,hifhtwohlargehcompetitorshcamehtogetherhtohgainhanhunfairhadvantage,hsuchhashcon
trollinghpriceshinhahgivenhmarket,hthishwouldhraisehserioushethicalhconcerns.
exampleh4,
BusinesshEthicsh-hDefinition,hneed,hscopehandhbenefith-hArgumentshforhandhagainsthbusinesshethicsh-
hStructurehandhbusinesshethicsh-hEconomic,hcompetitive,hlegalhandhregulatoryhissuesh-hFrameworkhforhethicalhdecisionhmakingh-
hRolehofhmoralhphilosophieshinhdecisionhmaking
, BusinesshEthics
assumehCompanyhAhworkshwithhahcontacthathCompanyhB,hanhindividualhthroughhwhichhtheyh
negotiatehallhthehpriceshforhsupplieshtheyhbuyhfromhCompanyhB.hCompanyhAhnaturallyhwantsh
tohgeththehbesthpriceshonhthehsupplies.hWhenhthehindividualhfromhCompanyhBhcomeshtohtheirh
homeh officeh toh negotiateh ah newh contract,h theyh puth himh uph inh ah top-
tierh hotel,h inh theh veryhbesthsuite,handhmakehsurehthathallhhishwantshandhneedsharehmethwhileh
he’shthere.
Inhtechnicalhterms,hthehpracticehishnothillegal.hHowever,hithmighthbehconsideredhahgreyhareah–
hclosehto,hbuthnothquite,hbriberyh–
hbecausehthehindividualhishthenhlikelyhtohbehmorehinclinedhtohgivehCompanyhAhahpricehbreakha
ththehexpensehofhgettinghthehbesthdealhforhhishownh company.
Need
1. Stophbusinesshmalpractices:hSomehunscrupuloushbusinessmenhdohbusinesshmalpracticesh
byhindulginghinhunfairhtradehpracticeshlikehblack-
marketing,hartificialhhighhpricing,h adulteration,hcheatinghinhweightshandhmeasures,hsellinghofh
counterfeith(duplicate)handhharmfulhproducts,hillegalhhoarding,hetc.hThesehbusinesshmalpracti
cesharehharmfulhtohconsumershandhthehsafetyhofhsociety.hBusinesshethicshhelphtohstophtheseh
malpracticeshandhsafeguardhsociety.hIthcreateshahhealthyhbusinesshenvironmenthforheveryone.
2. Improvehcustomers'hconfidence:hBusinesshethicsharehneededhtohimprovehthehcustomers'hc
onfidencehabouththehquality,hutility,hreliability,hquantity,hprice,hetc.hofhthehproducts.hThehcustom
ershhavehmorehtrusthandhconfidencehinhthehbusinessmenhwhohfollowhethicalhbusinesshruleshorh
principles.hTheyhfeelhsafehthathsuchhbusinessmenhwillhnothcheaththem.hEthicshbindshbusiness
menhtohmaintainhtrusthbyhofferinghqualityhproductshandhserviceshtohcustomers.
3. Survivalhofhbusiness:hBusinesshethicsharehmandatoryhorhcompulsoryhforhthehsurvivalhofhanyh
business.h Theh businessmenh whoh doh noth followh ith willh onlyh haveh short-
termh success,h buththeyhwillhfailhinhthehlonghrun.hThishishbecausehtheyhcanhcheathahconsumerho
nlyhonce.hAfterhrealizinghbeinghcheated,hthehconsumerhwillhnothbuyhgoodshorhserviceshfromhth
athbusinessman.hHehwillhalsohtellhothershnothtohbuyhfromhthathbusinessman.hSo,hthishwillh defa
mehhishgoodwillhorhimagehandhprovokehnegativehpublicityhinhthehmarket.hThishwillhresult
BusinesshEthicsh-hDefinition,hneed,hscopehandhbenefith-hArgumentshforhandhagainsthbusinesshethicsh-
hStructurehandhbusinesshethicsh-hEconomic,hcompetitive,hlegalhandhregulatoryhissuesh-hFrameworkhforhethicalhdecisionhmakingh-
hRolehofhmoralhphilosophieshinhdecisionhmaking
