DEPARTMENT OF MANAGEMENT STUDIES

II YEAR/ IV SEMESTER
BATCH 2014-2016
REGULATION 2013
SYLLABUS
BA7402 - Business Ethics, Corporate Social Responsibility and Governance
UNIT I INTRODUCTION 9

Definition & nature Business ethics, Characteristics, Ethical theories; Causes of unethical behavior; Ethical
abuses; Work ethics; Code of conduct; Public good.

UNIT II ETHICS THEORY AND BEYOND 9

Management of Ethics -Ethics analysis [ Hosmer model ]; Ethical dilemma; Ethics in practice-ethics for
managers; Role and function of ethical managers-Comparative ethical behaviour of managers; Code of
ethics; Competitiveness, organizational size, profitability and ethics; Cost of ethics in Corporate ethics
evaluation. Business and ecological / environmental issues in the Indian context and case studies.

UNIT III LEGAL ASPECTS OF ETHICS 9

Political –legal environment; Provisions of the Indian constitution pertaining to Business; Political setup –
major characteristics and their implications for business; Prominent features of MRTP & FERA. Social –
cultural environment and their impact on business operations, Salient features of Indian culture and values.

UNIT IV ENVIRONMENTAL ETHICS 9

Economic Environment; Philosophy of economic grow and its implications for business, Main features of
Economic Planning with respect to business; Industrial policy and framework of government contract over
Business; Role of chamber of commerce and confederation of Indian Industries.
UNIT V CORPORATE SOCIAL RESPONSIBILITY AND GOVERNANCE 9
Definition-Evolution-Need for CSR; Theoretical perspectives; Corporate citizenship; Business practices;
Strategies for CSR; Challenges and implementation; Evolution of corporate governance; Governance
practices and regulation; Structure and development of boards; Role of capital market and government;
Governance ratings; Future of governance-innovative practices; Case studies with lessons learnt.
TOTAL: 45 PERIODS
TEXTBOOKS
1 S.A. Sherlekar, Ethics in Management, Himalaya Publishing House, 2009.
2 William B. Werther and David B. Chandler, Strategic corporate social responsibility, Sage
Publications Inc., 2011
3 Robert A.G. Monks and Nell Minow, Corporate governance, John Wiley and Sons, 2011.

REFERENCES
1 W.H. Shaw, Business Ethics, Cengage Learning, 2007.

2 Beeslory, Michel and Evens, Corporate Social Responsibility, Taylor and Francis, 1978.3.Philip
Kotler and Nancy Lee, Corporate social responsibility: doing the most good for companyand your cause,
Wiley, 2005.4.Subhabrata Bobby Banerjee, Corporate social responsibility: the good, the bad and the
ugly,Edward Elgar Publishing, 2007.

3. Satheesh kumar, Corporate governance, Oxford University, Press,2010.

 UNIT –I -INTRODUCTION OF BUSINESS ETHICS

Unit Structure:

1.0 Objectives
1.1 Introduction
1.2 Definition & nature of business ethics,
1.3 Characteristics of business ethics
1.4 Ethical theories
1.5 Causes of unethical behavior
1.6 Ethical abuses
1.7 Work ethics
1.8 Code of conduct
1.9 Public good.

Objectives

· The meaning of ethics and business ethics.

· The importance of business ethics.

· The various types of Ethics.

· Code of conduct etc.,

Introduction

Some years ago, one sociologist asked business people,"What does an ethic mean to you?"
Among their replies were the following:

"Ethics has to do with what my feelings tell me is right or wrong." "Ethics has to do with my religious
beliefs." "Being ethical is doing what the law requires." "Ethics consists of the standards of behavior our
society accepts." "I don't know what the word means.
1.1 Definition & Nature of business ethics:
The term "ethics" is derived from the Greek word "ethos" which refers to character or customs or
accepted behaviors. The Oxford Dictionary states ethics as "the moral principle that governs a person's
behaviour or how an activity is conducted". The synonyms of ethics as per Collins Thesaurus are-
conscience, moral code, morality, moral philosophy, moral values, principles, rules of conduct,
standards. Ethics refers to well-founded standards of right and wrong that prescribe what humans
ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues.
Ethics is a set of principles or standards of human conduct that govern the behavior of
individuals or organizations. Using these ethical standards, a person or a group of persons or an
organization regulate their behavior to distinguish between what is right and what is wrong as perceived
by others. It is not a natural science but a creation of the human mind. For this reason, it is not
absolute and is open to the influence of time, place and situation.

— Ethics can be defined as the discipline dealing with moral duties and obligation, and explaining
what is good or not good for others and for us.

— Ethics is the study of moral decisions that are made by us in the course of performance of our
duties.

— Ethics is the study of characteristics of morals and it also deals with the moral choices that are
made in relationship with others.

— Ethics is concerned with truth and justice, concerning a variety of aspects like the expectations
of society, fair competition, public relations, social responsibilities and corporate behavior.

Business Ethics

Business ethics is a form of applied ethics. In broad sense ethics in business is simply the
application moral or ethical norms to business. Business ethics refers to a 'code of conduct' which
businessmen are expected to follow while dealing with others. 'Code of conduct' is a set of principles
and expectations that are considered binding on any person who is member of a particular
group. The alternative names for code of conduct are 'code of ethics' or 'code of practice'.

Business ethics comprises the principles and standards that guide behaviour in the conduct of
business. Businesses must balance their desire to maximize profits against the needs of the
stakeholders. Maintaining this balance often requires tradeoffs. To address these unique aspects of
businesses, rules -articulated and implicit, are developed to guide the businesses to earn profits
without harming individuals or society as a whole. The coverage of business ethics is very wide as it
deals with norms relating to a company and its employees, suppliers, customers and
neighbours, its fiduciary responsibility to its shareholders. It reflects the philosophy of business,
one of whose aims is to determine the fundamental purposes of a company.
Business ethics stands for the saneness or purity of purpose that is upheld through carefully
designed actual practices of business enterprises. It is an embodiment of conscience concern towards
execution of business processes in tune with the nobility of the purpose.

SCOPE OF BUSINESS ETHICS

Ethical problems and phenomena arise across all the functional areas of companies and at all levels within
the company which are discussed below: 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.
Ethics in Finance

The ethical issues in finance that companies and employees are confronted with include:

— In accounting -window dressing, misleading financial analysis.

— Related party transactions not at arm’s length
— Insider trading, securities fraud leading to manipulation of the financial markets.
— Executive compensation.
—Bribery, kickbacks, over billing of expenses, facilitation payments.
— Fake reimbursements

Case of unethical practice

Mr. A, is a respected senior officer in the company, he enjoyed all the benefits and perquisites from
the company including car with driver, medical facility, reimbursements of certain expenditures.

During the months September, October, December it was observed that his telephonic
reimbursements were on a rising note, from Rs. 500 p.m it went up to Rs. 2500 p.m. The matter was
reported and was investigated. It was found that Mr. A has made arrangements with the Telephone
Company for making a single bill for two telephone numbers at his residence.

Case of unethical practice

A middle level executive, Mr. X, based in Delhi, opts for a 3 day training programme in
Bangalore, which happens to be his hometown. He also applies leave for 3 days immediately following
the training which is granted to him. Mr. X reaches the venue of the training. On the first day,
registers himself, takes the training kit, attends the training for two hours, befriends a dealing
officer and arranges to have the presentations etc. sent to him. He does not attend the training
programme thereafter.

1.2 Characteristics of Business Ethics:

(i) A Discipline:
Business ethics are the guiding principles of business function. It is the knowledge through
which human behaviour is learnt in a business situation.
(ii) Ancient Concept:
Business ethics is an ancient concept. It has it origin with the development of human civilization.
(iii) Personal Dignity:
The principles of ethics develop the personal dignity. Many of the problems of ethics arise
due to not giving dignity to individual. All the business decisions should be aimed by giving
dignity to the customers, employees, distributors, shareholders and creditors, etc. otherwise they
develop in immorality in the business conducts.
(iv) Related to Human Aspect:
Business ethics studies those activities, decisions and behaviors which are concerned with
human aspect. It is the function of the business ethics to notify those decisions to customers,
owners of business, government, society, competitors and others on good or bad, proper or improper
conduct of business.
(v) Study of Goals and Means:

Business ethics is the study of goals and means for the rational selection of sacred objects and their
fulfilment. It accepts the principles of Pure goals inspire for pure mean and Means justifies the end. It is
essential that goals and means should be based on morals.
(vi) Different from Social Responsibility:

Social responsibility mainly relates to the policies and functions of an enterprise, whereas
business ethics to the conduct and behaviour of businessmen. But it is a fact that social responsibility of
business and its policies is influenced by the business ethics.

(vii) Greater than Law:

Although the law approves various social decisions, but the law is not greater than ethics.
Law is usually related to the minimum control of social customs whereas ethics gives
importance to individual and social welfare actions.

1.3 Ethics Theories

Ethical theories are based on the previously explained ethical principles. They each emphasize
different aspects of an ethical dilemma and lead to the most ethically correct resolution according to the
guidelines within the ethical theory itself. People usually base their individual choice of ethical theory
upon their life experiences.

Deontology

The deontological theory states that people should adhere to their obligations and duties when
analyzing an ethical dilemma. This means that a person will follow his or her obligations to another
individual or society because upholding one's duty is what is considered ethically correct.

Deontology provides a basis for special duties and obligations to specific people, such as those
within one's family. For example, an older brother may have an obligation to protect his little sister when
they cross a busy road together. This theory also praises those deontologists who exceed their duties and
obligations, which is called "supererogation" (1). For example, if a person hijacked a train full of
students and stated that one person would have to die in order for the rest to live, the person who
volunteers to die is exceeding his or her duty to the other students and performs an act of supererogation.

Utilitarianism

The utilitarian ethical theory is founded on the ability to predict the consequences of an
action. To a utilitarian, the choice that yields the greatest benefit to the most people is the choice
that is ethical correct. One benefit of this ethical theory is that the utilitarian can compare similar
predicted solutions and use a point system to determine which choice is more beneficial for more
people. This point system provides a logical and rationale argument for each decision and allows a person
to use it on a case-by-case. There are two types of utilitarianism, act utilitarianism and rule
utilitarianism. Act utilitarianism adheres exactly to the definition of utilitarianism as described in the
above section. In act utilitarianism, a person performs the acts that benefit the most people, regardless
of personal feelings or the societal constraints such as laws. Rule utilitarianism, however, takes into
account the law and is concerned with fairness. A rule utilitarian seeks to benefit the most people but
through the fairest and most just means available. Therefore, added benefits of rule utilitarianism are
that it values justice and includes beneficence at the same time.

Rule utilitarianism also contains a source of instability that inhibits its usefulness. In rule
utilitarianism, there is the possibility of conflicting rules (1). Let us revisit the example of a person
running late for his meeting. While a rule utilitarian who just happens to be a state governor may
believe that it is ethically correct to arrive at important meetings on time because the members of the
state government will benefit from this decision, he may encounter conflicting ideas about what is
ethically correct if he is running late. As a rule utilitarian, he believes that he should follow the law
because this benefits an entire society, but at the same time, he believes that it is ethically correct to be
on time for his meeting because it is a state government meeting that also benefits the society.
There are two types of utilitarianism, act utilitarianism and rule utilitarianism. Act utilitarianism adheres
exactly to the definition of utilitarianism as described in the above section. In act utilitarianism, a person
performs the acts that benefit the most people, regardless of personal feelings or the societal constraints
such as laws. Rule utilitarianism, however, takes into account the law and is concerned with fairness. A
rule utilitarian seeks to benefit the most people but through the fairest and most just means available.
Therefore, added benefits of rule utilitarianism are that it values justice and includes beneficence at the
same time.

Rights

In the rights ethical theory the rights set forth by a society are protected and given the highest
priority. Rights are considered to be ethically correct and valid since a large or ruling population
endorses them. Individuals may also bestow rights upon others if they have the ability and
resources to do so. For example, a person may say that her friend may borrow the car for the afternoon.
The friend who was given the ability to borrow the car now has a right to the car in the afternoon.

Casuist
 The casuist ethical theory is one that compares a current ethical dilemma with examples of similar
ethical dilemmas and their outcomes. This allows one to determine the severity of the situation and to
create the best possible solution according to others' experiences.

Virtue

The virtue ethical theory judges a person by his character rather than by an action that may
deviate from his normal behaviour. It takes the person's morals, reputation and motivation into account
when rating an unusual and irregular behaviour that is considered unethical. For instance, if a person
plagiarized a passage that was later detected by a peer, the peer who knows the person well will
understand the person's character and will be able to judge the friend.

1.4 What Are the Causes of Unethical Behaviour in the Workplace?

What is an Unethical Behaviour?

The Civil Service Commission of Philippines defined an unethical behaviour as any behaviour
prohibited by law. An unethical behaviour would therefore be defined as one that is not morally
honourable or one that is prohibited by the law. Much behaviour will fall in the classification including
corruption, mail and wire fraud, discrimination and harassment, insider trading, conflicts of interest,
improper use of company assets, bribery and kickbacks, compliance procedures, ethical relations with
others, disciplinary action, fraud, illegal business donations, patent infringement and product liability
(Barrcus & Near, 1991, 12).

False Communications
False communications fall into various categories. They include falsification of auditor‘s or
controller‘s report or any form of manipulation that does not tell the whole truth. These include cheating
on tax returns or inappropriate depreciation schedule and wrong expenses. Feeding the public with wrong
report of the organization‘s business performance to make the organization look good is another
common practice.
Collusion
Collusion, especially with competitors, to fix prices, is an unfair business practice today. This
could be considered stealing from customers. However, there are differences of opinion on whether or
not price fixing is stealing from customers.
Gifts and Kickback
Some organizations do not allow their employees to receive gifts from clients during normal
course of business. Those who do, generally provide guide lines on limitations as to the amount an
employee can receive as gift. Sometimes a buyer may request for kickbacks or entertainment which, if not
provided, may lead to the loss of the customer. An employee frequently receives pressure from the
management to behave unethically or to obtain profitable business at any cost, which may include
the use of any possible dirty tricks.
Conflict of Interest

Conflict of interest occurs when ones private interest interferes or appears to interfere in any way
with the interest of the organization. According to Sliglitz, it can be argued that there is no conflict of
interest because, based on Adam Smith‘s view, the individuals, when pursuing their own self-interest are
actually pursuing the general interest of society (Sliglitz, 2003, 2). Some examples of conflicts of interest
are:
 Diverting from the organization for personal benefit, a business opportunity,

 Using the organization‘s assets for personal benefit,

 Accepting any valuable thing from the organization‘s customers or suppliers, and

 Having a financial interest in an organization‘s competitor.

Unethical practices in the Health

Care Sector
There are three common unethical practices in the Health Care Sector. The first is refusing to
provide health care services to the patients who have no medical insurance. Some Health Centers do not
admit patients who have no insurance unless they can provide evidence that they have the ability to pay for
the health service. The second unethical practice in the health care sector is over treating patients to boost
income.

Insider Trading

Insider trading is an unethical behaviour which occurs when a person who has access to
confidential information uses or shares the information for securities trading purposes or any other
purpose except the conduct of regular company business. The confidential information of the company
are not to be used for achieving personal gain neither are they to be disseminated directly or
indirectly, to friends, family members and other outsiders who may in turn trade on or misuse the
information.

Discrimination and Harassment

Discrimination involves not providing equal opportunity in employment on merit but on other
basis such as race, sex, national origin, age, religion, or any other basis not related to the job.
Harassment is a derogatory comment or unwelcome sexual advances (FS Networks, Inc., 2004,

Wrong Doing

A large number of people, including top management, are involved in wrong doing both in the
public and in the private sectors. The managers of E.E. Hutton, for example, were found guilty of 2000
mail and wire fraud. Similarly, the supervisors of a defense contractor were accused of falsifying time
cards (Gellerman, 1986, 85).

Why People Behave Unethically

Dedicated employees, who are usually honest, sometimes behave unethically because
of four rationalizations: that no one will ever find out, that the behavior is not really illegal, that it is in
the best interest of the organization, and that the organization will protect them. Although the costs of
unethical behaviour are hard to measure, they can add, according to research, more than 20% to the
cost of doing business. The costs will include low wages, unemployment, and poverty. If top
management wants to improve organizational performance, they must stand firm that ethical methods are
the only ways business should be done.

Causes of Unethical Behaviours

The study that was commissioned by American Management Association (AMA) and
which was conducted by the Human Resource Institute (HRI) using 1121 managers and Human
Resource experts as participants revealed that the leading cause of unethical corporate behaviour is
―pressure to meet unrealistic business objectives and deadlines. The study also showed that the
second leading factor that causes unethical behaviour is the desire to further one‘s career while the third
leading factor is the desire to protect one‘s livelihood. Causes of employees to engage in unethical
behaviours that include cutting corners on quality control, covering up incidents and lying to customers.
Ignorance is another major cause of unethical behaviours.
Recommendations

The National Defence University proposed three ethical responses to unethical behaviours
in their Strategic Leadership and Decision Making: exit, voice and loyalty. With respect to
exit is recommended that if one cannot live with the behaviour, or the behaviour does not meet
one‘s ethical standards, one should leave.
The second response, ―voice, is to express discomfort with and opposition to the unethical
behaviour. The third response, ―loyalty, supports the idea of remaining in the organization and trying
to change it instead of leaving. In order to restore and maintain a culture that upholds honest and
ethical behaviours, the organizational leaders must verbally promote ethical environment and
relentlessly ―walk the talk, by making ethical behaviour part of the organization‘s agenda.

Conclusion

People act unethically for a number of reasons. Unethical behaviour is defined as behaviour that
contravenes rules designed to maintain the fairness and morality of a situation. An example of unethical
behaviour is a representative of a company taking kickbacks from a salesman for preferential treatment.
Behaviour like this is motivated by various things.

KINDS OF UNETHICAL BEHAVIOUR IN BUSINESS

Theft

Theft at work comes in a variety of forms, and oftentimes employees do not view it as unethical
behaviour, believing no one gets hurt by the action. Employees take home office supplies, use business
computers for personal tasks, pad expense accounts and abuse sick time or allotted personal days.
Unethical behaviour also includes having another employee punch a time card, or not punching out
for lunch hours or other no approved time off. Though these may seem like minor infractions, they
eventually have an impact on the bottom line of the company, which then hurts all employees. Theft also
affects employee morale and is disheartening to those who choose to behave ethically.
Vendor Relationships

Businesses that buy from and sell products to other businesses are sometimes subject to unethical
behaviour. The practice of accepting gifts from a vendor in exchange for increased purchasing is not only
unethical, it may have legal repercussions. The same can be said for offering customer kickbacks to
increase his purchasing habits. Ethics policies often contain guidelines for giving or accepting gifts
with vendors or other business associates, such as a cap on the value of the gift. Other businesses strictly
forbid giving gifts or any other item with monetary value. This is a safeguard to prevent any perception of
unethical behaviour.

Bending the Rules

Bending the rules in a business situation is often the result of a psychological stimulus. If an
employee is asked to perform an unethical task by a supervisor or manager, he may do it because his
allegiance to authority is greater than his need to abide by the rules. Turning the other way to avoid
trouble for another employee is still unethical, even though the motivation may be empathetic. For
example, knowing that a co-worker is having issues outside work justifies watching him leave early
each day without reporting it. Withholding information that can change an outcome also falls under the
umbrella of unethical behaviour, even if the perpetrator believes he is doing what is in the best interest
of the business. For example, if a poor earnings report is withheld until after a stockholder meeting.

Environmental issues

Unethical behaviour by companies, such as releasing pollutants into the air, can affect
cities, towns, waterways and masses of people. Though accidents can occur, the release of harmful
toxins into the environment due to lax safety standards, improper maintenance of equipment or other
preventable reasons is unethical. If a business willingly continues production of a product knowing
inherent environmental risks exist, it can certainly be categorized as unethical behaviour.

Wages and Working Conditions

Other unethical practices include not paying workers a fair wage, employing children under
the legal working age and unsafe or unsanitary working conditions. Any practices that are not in
compliance with fair labour standards and federal working guidelines fall into this category.

1.5 WORK ETHICS

Work ethic is a value based on hard work and diligence. It is also a belief in the moral benefit of
work and its ability to enhance character.
 Workers exhibiting a good work ethic in theory would be selected for better positions, more
responsibility and ultimately promotion. Workers who fail to exhibit a good work ethic may be
regarded as failing to provide fair value for the wage the employer is paying them and should not be
promoted or placed in positions of greater responsibility.

Five Characteristics of a Good Work Ethics Reliability

Reliability goes hand in hand with a good work ethic. If individuals with a good work ethic say
they are going to attend a work function or arrive at a certain time, they do, as they value punctuality.
Individuals with a strong work ethic often want to appear dependable, showing their employers that they
are workers to whom they can turn. Because of this, they put effort into portraying --and proving --this
dependability by being reliable and performing consistently.

Dedication

Those with a good work ethic are dedicated to their jobs and will do anything they can to ensure
that they perform well. Often this dedication leads them to change jobs less frequently, as they become
committed to the positions in which they work and are not eager to abandon these posts. They also
often put in extra hours beyond what is expected, making it easy for their employers to see that they
are workers who go beyond the rest of the workforce and truly dedicate themselves to their positions.
Productivity

Because they work at a consistently fast pace, individuals with a good work ethic are often
highly productive. They commonly get large amounts of work done more quickly than others who lack
their work ethic, as they don't quit until they've completed the tasks with which they were presented. This
high level of productivity is also due, at least in part, to the fact that these individuals want to appear
to be strong workers. The more productive they are, the more beneficial to the company they appear to
those managing them.
Cooperation

Cooperative work can be highly beneficial in the business environment, something that
individuals with a strong work ethic know well. Because they recognize the usefulness of cooperative
practices -such as teamwork --they often put an extensive amount of effort into working well with
others. These individuals commonly respect their bosses enough to work with any individuals with
whom they are paired in a productive and polite manner, even if they do not enjoy working with the
individuals in question.
Character

Those with a good work ethic often also possess generally strong character. This means they
are self- disciplined, pushing themselves to complete work tasks instead of requiring others to intervene.
They are also often very honest and trustworthy, as they view these traits as befitting the high-quality
employees they seek to become. To demonstrate their strong character, these workers embody these
positive traits daily, likely distinguishing themselves from the rest.

1.6 CODE OF CONDUCT

Code of conduct or what is popularly known as Code of Business Conduct contains standards of
business conduct that must guide actions of the Board and senior management of the Company.

The Code may include the following:

(a) Company Values.
(b) Avoidance of conflict of interest.
(c) Accurate and timely disclosure in reports and documents that the company files before Government
agencies, as well as in Company's other communications.
(d) Compliance of applicable laws, rules and regulations including Insider Trading Regulations.
(e) Maintaining confidentiality of Company affairs.
(f) Non-competition with Company and maintaining fair dealings with the Company.
(g) Standards of business conduct for Company's customers, communities, suppliers,
(h) Prohibition of Directors and senior management from taking corporate opportunities for shareholders,
competitors, employees. Themselves or their families.
(i) Review of the adequacy of the Code annually by the Board.
(j) No authority of waiver of the Code for anyone should be given.
The Code of Conduct for each Company summarises its philosophy of doing business. Although
the exact details of this code are a matter of discretion, the following principles have been found to occur
in most of the companies:

— Use of company's assets;

— Avoidance of actions involving conflict of interest;
— Avoidance of compromising on commercial relationship;
— Avoidance of unlawful agreements;
— Avoidance of offering or receiving monetary or other inducements;
— Maintenance of confidentiality;
— Collection of information from legitimate sources only.
— Safety at workplace
— Maintaining and Managing Records
— Free and Fair competition
— Disciplinary actions

To create a code of ethics, an organization must define its most important guiding values,
formulate behavioural standards to illustrate the application of those values to the roles and
responsibilities of the persons affected, review the existing procedures for guidance and direction as to
how those values and standards are typically applied, and establish the systems and processes to
ensure that the code is implemented and effective. Codes of ethics are not easily created from
boilerplate. Ideally, the development of a code will be a process in which Boards and senior
management actively debate and decide core values, roles, responsibilities, expectations, and behavioral
standards.

MODEL CODE OF BUSINESS CONDUCT & ETHICS

Commitment to ethical professional conduct is a MUST for every employee of the company in
all of its businesses/units/subsidiaries. This code, consisting of imperatives formulated as statements of
personal responsibility, identifies the elements of such a commitment. It contains many, but not
all issues, employees are likely to face.

The code is intended to serve as a basis for ethical decision-making in the conduct of professional
work. It may also serve as a basis for judging the merit of a formal complaint pertaining to violation of
professional ethical standards.

It is understood that some words and phrases in a code of ethics and conduct document are
subject to varying interpretations and that any ethical principle may conflict with other ethical principles
in specific situations. Questions related to ethical conflicts can best be answered by thoughtful
consideration of fundamental principles rather than reliance on detailed regulations. In case of conflict,
the decision of the Board shall be final.

Applicability
This code is applicable to the Board Members and all employees in and above Officers level
(hereinafter collectively referred to as "Employee(s)"). All employees must read and understand this code
and ensure to abide by it in their day-to-day activities.

GENERAL MORAL IMPERATIVE

Contribute to society and human well being

This principle concerning the quality of life of all people, affirms an obligation to protect
fundamental human rights and to respect the diversity of all cultures. We must attempt to ensure that the
products of our efforts will be used in socially responsible ways, will meet social needs and will avoid
harmful effects to health and welfare of others. In addition to a safe social environment, human well-
being includes a safe natural environment. Therefore, all of us who are accountable for the design,
development, manufacture and promotion of company's products, must be alert to, and make others aware
of, any potential damage to the local or global environment.

Avoid harm to others

"Harm" means injury or negative consequences, such as loss of property, property damage or
unwanted health and environmental impacts. This principle prohibits use of men, material and
technology in ways that result in harm to our consumers, employees and the general public. Well-
intended actions, including those that accomplish assigned duties, may lead to harm unexpectedly. In
such an event, the responsible person or persons are obligated to undo or mitigate the negative
consequences as much as possible.

Be honest and trustworthy

Honesty is an essential component of trust. Without trust an organization cannot function

effectively. All of us are expected not to make deliberately false or deceptive claims about our
products/systems, but instead provide full disclosure of all pertinent limitations and problems.

Be fair and take action not to discriminate

 The values of equality, tolerance, respect for others, and the principles of equal justice
govern this imperative. Discrimination on the basis of race, sex, religion, age, disability, national origin,
or other such factors is an explicit violation of this code.
Practice integrity in our inter-personal relationships

In our relationships with colleagues, we should treat them with respect and in good faith. In the
same way we ourselves would expect them to treat us. The principle to be adopted to guard against loose
talk or in its worst form-character assassination is not to say anything behind one's back and never
utter something, which cannot be put in writing.
Honour confidentiality

The principle of honesty extends to issues of confidentiality of information. The ethical

concern is to respect all obligations of confidentiality to all stakeholders unless discharged from such
obligations by requirements of the law or other principles of this code. We therefore, will maintain the
confidentiality of all material non-public information about company's business and affairs.
Professional Responsibilities
Live the Company's Values-each day. We must live the Company's Values-each day. For
quick reference our core values are:
Ownership

Passion for winning

This is our company. We accept personal responsibility and accountability to meet us all are
leaders in our area of responsibility with a deep commitment to deliver results. We are determined
to be the best at doing what matters most.
Passion development
People are our most important asset. We add value through result driven training and we
encourage & reward excellence.
Consumer focus

We have superior understanding of consumer needs and develop products to fulfill them better.
Teamwork

We work together on the principle of mutual trust and transparency in a boundary less
organization. We are intellectually honest in advocating proposals, including recognizing risks.
Innovation
 Continuous innovation in products and process is the basis of our success.

Integrity

We are committed to the achievement of business success with integrity. We are honest with
consumers, business partners and each other. Strive to achieve the highest quality, effectiveness
and dignity in both the processes and products of professional work Excellence is perhaps the most
important obligation of a professional. We must strive to achieve the highest quality, effectiveness and
dignity in all that we are responsible for each day. Acquire and maintain professional competence
Excellence depends on individuals who take responsibility for acquiring and maintaining professional
competence. We must participate in setting standards for appropriate levels of competence, and strive to
achieve those standards.

Know and respect existing laws

We must obey existing local, state, national, and international laws unless there is a compelling
ethical basis not to do so. We should also obey the policies, procedures, rules and regulations of the
company. Violation of a law or regulation may be ethical when that law or rule has inadequate moral basis
or when it conflicts with another law judged to be more important. If one decides to violate a law or rule
because it is viewed as unethical, or for any other reason, one must fully accept responsibility for one's
actions and for the consequences.

Accept and provide appropriate professional review

Quality professional work depends on professional reviewing and critiquing. Whenever
appropriate, individual members should seek and utilize peer review as well as provide critical review of
the work of theirs.

Manage personnel and resources to enhance the equality of working life

Organizational leaders are responsible for ensuring that a conductive environment is created for
fellow employees to enable them delivering their best. We all, therefore, are responsible for ensuring
human dignity of all our colleagues, ensuring their personal and professional development and
enhancing the quality of working life.

Deal with the Media tactfully

We should guard against being misquoted and finding ourselves compromised. Our role as individuals is
always to be tactful and to avoid comment and to pass enquiries to those who are authorized to respond to
them.

Be upright and avoid any inducements

Neither directly nor through family and other connections indirectly, should we solicit any
personal fee, commission or other form of remuneration arising out of transactions involving Company.
This include gifts or other benefits of significant value, which might be extended at times, to
influence business-especially during bulk purchase of commodities for the organization or awarding a
contract to an agency etc. We are likely to be offered various gifts by vendors/parties/agencies and
people associated with Company under different wraps or generally on personal celebrations or functions
or religious festivals etc.

Our flow of communication is not rigid and people are free to express themselves at all levels.
However, this informality should not be misunderstood. What it means is that though there is a free
exchange of opinions in the process of arriving at a decision, but after the debate is over and a policy
consensus has been established, all are expected to adhere and abide by it, even when in certain
instances we may not agree with it individually. In some cases policies act as a guide to action, in others
they are designed to put a constraint on action. We all must learn to recognise the difference and
appreciate why we need to observe them.

Conduct ourselves in a manner that reflects credit to the Company

All of us are expected to conduct ourselves, both on and off-duty, in a manner that reflects
credit to the company. The sum total of our personal attitude and behaviour has a bearing on the standing
of Company and the way in which it is perceived within the organization and by the public at large.

Be accountable to our stakeholders

All of those whom we serve, be it our customers, without whom we will not be in
business, our shareholders, who have an important stake in our business and the employees, who have a
vested interest in making it all happen-are our stakeholders. And we must keep in mind at all
times that we are accountable to our stakeholders.
Identify, mitigate and manage business risks
It is our responsibility to follow our institutionalized Company's Risk Management Framework to
identify the business risks that surround our function or area of operation and to assist in the company-
wide process of managing such risks, so that Company may achieve its wider business objectives. All
of us should continuously ask ourselves "What can go wrong and what am I doing to prevent it from going
wrong."
Protect Company's properties
We all are perceived as Trustees of Company's properties, funds and other assets. We owe
fiduciary duty to each stakeholder, as their agent, for protecting the Company's assets. We, therefore, must
safeguard and protect the Company's assets against any misappropriation, loss, damage, theft, etc. by
putting in place proper internal control systems and procedures and effectively insuring the same against
any probable fire, burglary, fidelity and any other risk.
Compliance with the Code
As employees of Company, we will upheld and promote the principles of this code
The future of the organization depends on both technical and ethical excellence. Not only is it
important for employees to adhere to the principles expressed in this Code, each employee should
encourage and support adherence by other employees.
Adherence of professionals to a code of ethics is largely a voluntary matter. However, if any of
us do not follow this code by engaging in process misconduct, the matter would be reviewed by the
Board and its decision shall be final. The Company reserves the right to take appropriate action
against the guilty employee.
Miscellaneous
Continual updating of code
This code is subject to continuous review and updating in line with any changes in law,
changes in company's philosophy, vision, business plans or otherwise as may be deemed necessary by the
board.
Credo
Most Companies skip the important part of developing the company's credo. A good credo
gives the company a reason to exist; it develops the spirit of employees motivating them at all times. It is a
statement of common values that allows employees to understand the importance of the stakeholders
and services provided. It is the force which makes them work together to achieve a consistent high
standard. Sam Walton, founder of Wal-Mart, established the "Three Basic Beliefs" as his company's
credo. These are:
- Respect for the Individual
 - Service to our Customers

- Strive for Excellence

Johnson & Johnson

The overarching philosophy that guides business in Johnson & Johnson is their Credo termed
as 'Our Credo', a deeply held set of values that has served as the strategic and moral compass for
generations of Johnson & Johnson leaders and employees.

The Credo challenges Johnson & Johnson to put the needs and well-being of the people we serve
first. It also speaks to the responsibilities it has to its employees, to the communities in which the
company lives and works and the world community, and to its shareholders. Johnson and Johnson
believes that its Credo is a blue print for long-term growth and sustainability that's as relevant today as
when it was written.

SAIL
Credo of SAIL talks about stakeholder respect, and ethical practices to be followed. We build lasting
relationships with customers based on trust and mutual benefit. We uphold highest ethical standards in
conduct of our business. We create and nurture a culture that supports flexibility, learning and is proactive
to change. We chart a challenging career for employees with opportunities for advancement and rewards.
We value the opportunity and responsibility to make a meaningful difference in people's lives.

Mr. X sends a report of the training as soon as he returns. His reporting officer summons him and asks
him where he was during the training. At first, Mr. X reacts in a defensive manner that he was at the
training. The reporting officer then tells him that the organization in order to extend the training to other
employees had got in touch with the programme organizers requesting them for a one to one meeting
with Mr. X already present and were informed of the absence. When confronted with this, Mr. X had to
admit that he had not attended the training programme.
Ethics in Marketing

Marketing ethics is the area of applied ethics which deals with the moral principles behind the
operation and regulation of marketing. The issue of marketing ethics is not limited to the kind of
products alone. It also deals with how such products are delivered to the customers. The ethical issues
confronted in this area include:

— Pricing: price fixing, price discrimination, price skimming.

— Anti-competitive practices like manipulation of supply, exclusive dealing arrangements, tying
arrangements etc.
— Misleading advertisements.
— Contents of advertisements.
— Use of decision
— Children and marketing.
— Surrogate advertising: Many liquor firms carry advertisements of products like apple juice, soda water
etc.
— Black markets, grey markets.

Ethics in Production

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 difficult to
define 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
E t h i c a l problems arising out of new technologies for eg. The most systematic approach to fostering
ethical behaviour is to build corporate cultures that link ethical standards and business practices. More
and more companies recognize the link between business ethics and financial performance.
Companies displaying a "clear commitment to ethical conduct" consistently outperform companies that do
not display ethical conduct.
1.7 Public Good:

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. Ethical 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. Retaining talented
people is as big a challenge as getting them in the first place. Work is a means to an end for them, not an
end in itself. The relationship they have with their employer must be a mutual, win-win one, in which
their loyalty should not be taken for granted. Talented people will invest their energy and talent only in
organizations with values and beliefs that match their own. In order to achieve this match, managers
need to build cultures, compensation and benefits packages, and career paths that reflect and foster
certain shared values and beliefs.
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 efficiency, productivity and profits. 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 identified 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

Business should act ethically not only to benefit itself and its reputation but also all the key stakeholders.
Regulators eye companies functioning ethically as responsible citizens. The regulator need not always
monitor the functioning of the ethically sound company. The company earns profits and reputational gains
if it acts within the confines of business ethics.
To summarize, companies that are responsive to employees' needs have lower turnover in staff.

— 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.

CONCLUSION

In making ethics work in an organization it is important that there is synergy between vision
statement, mission statement, core values, general business principles and code of ethics. A commitment
by corporate management to follow an ethical code of conduct confers a variety of benefits. An effective
ethics program requires continual reinforcement of strong values. Organizations are challenged with
how to make its employees live and imbibe the organization codes and values. To ensure the right
ethical climate, a right combination of spirit and structure is required.

Corporate Ethics is much needed to stress the importance of sustainability, social

development, stakeholders, consumer satisfaction and service orientation in place of profit orientation.
Ethics point out what is good and what is bad, so also what is right or wrong. It brings to the notice
of the business community the importance of honesty, sincerity and fairness which makes them
alert and socially conscious. This also expedites a better relation between business and the society. It
reconciles conflicting interest of various sections of the society such as workers, shareholders, consumers,
distributors, suppliers, competitors and government.
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