Unit4business Ethics

Introduction to business ethics
and values
Definition
• Business ethics refers to the moral principles
and standards that guide the behavior of
individuals and organizations in the business
world.
• It involves making decisions and conducting
business in a way that is fair, honest, and
responsible, while considering the impact on
employees, customers, society, and the
environment.
• According to Andrew Crane, “Business ethics
is the study of business situations, activities,
and decisions where issues of right and wrong
are addressed.”
• It focuses on what is right and wrong in
business practices, helping to ensure that
companies operate in a way that is fair,
responsible, and beneficial to all stakeholders,
including employees, customers,
shareholders, and the broader community.
Values
• Values, in a business context, are the core
beliefs or standards that guide an organization's
actions and decision-making. These can include
integrity, honesty, respect, fairness, and
responsibility.
• A company's values shape its culture, influence
how employees interact with one another and
with customers, and help define the
organization's long-term goals and vision.
• In essence, business ethics is about doing the
right thing, while values are the principles that
guide how that right thing is defined and
achieved.
• For every pair of shoes TOMS sells, the company
donates a pair to a child in need. This value of
helping others is at the core of TOMS' business
model and defines its brand.
• It demonstrates the company’s commitment to
social responsibility and community support,
showing how a value can directly shape business
operations and create a positive impact.
• Ethics are about doing what is right according
to societal standards.
• Values are individual or organizational beliefs
that shape how we behave and make
decisions, guiding us toward what we find
important.
Nature of Business Ethics
1. Normative Discipline - it establishes norms
or standards for how businesses should
behave.
 It defines what is considered right or wrong,
fair or unfair, in the context of business
activities, guiding companies to follow moral
rules and societal expectations.
2. Application of Moral Principles
 Business ethics applies general moral

principles (like honesty, fairness,
responsibility) to business activities.
 This means decisions and actions in business
should align with broader ethical
considerations, such as respect for human
rights, transparency, and integrity.
3. Relativity
 The ethical standards of a business can vary
depending on the cultural, legal, and social
context.
 What is considered ethical in one country or
industry may not be seen the same way
elsewhere. Therefore, ethics in business are
not always universal and must adapt to
specific environments.
4. Guiding Behavior
 Business ethics provides a framework for
decision-making in complex situations.
 It helps companies resolve dilemmas (e.g.,
balancing profit with social responsibility or
environmental impact), guiding businesses to
act in ways that respect stakeholders' rights
and the greater good.
5. Protecting Stakeholders
 Ethical business practices aim to protect all
stakeholders
6. Long-Term Perspective
 Ethical practices often involve taking a long-
term view.
 Acting ethically may not always result in
immediate profits but tends to build trust,
enhance reputation, and foster sustainable
business success over time.
7. Balancing Profit and Ethics
• A key aspect of business ethics is finding a
balance between making profits and acting
responsibly.
• While businesses aim to be profitable, they
must also consider the social and
environmental impact of their decisions and
avoid actions that harm society.
Importance of Business Ethics
• The importance of business ethics lies in its
ability to shape a company’s reputation,
ensure long-term success, and create a
positive impact on society
Importance of Business Ethics
• Trust Building: Ethical business practices help build trust among
customers, employees, and the public.
• Sustainability: Companies that operate ethically tend to
achieve long-term success.
Ethical companies avoid risks like fraud, corruption, and
harmful practices
• Legal Compliance: Following ethical guidelines helps businesses
comply with laws and avoid legal penalties.
• Reputation Management: Ethical conduct enhances a
company’s reputation, attracting more customers and investors.
• Employee Satisfaction: A fair and ethical work environment
increases employee morale, productivity, and loyalty.
Factors Influencing Business Ethics
• Corporate Culture: The values, norms, and
beliefs within a company heavily influence
ethical behavior.
• Leadership: The behavior of company leaders
sets the tone for what is considered ethical in
the organization.
• Laws and Regulations: Government
regulations create a legal framework for
business ethics.
• Stakeholder Expectations: Customers,
employees, investors, and the community expect
businesses to behave ethically.
• Globalization: Operating in diverse international
markets presents ethical challenges related to
different cultural norms and practices.
• Technology: Rapid technological advancements
create new ethical issues, especially in data
privacy, cyber security, and artificial intelligence.
Arguments for Business Ethics
• Profitability: Ethical companies often enjoy better
profitability due to customer loyalty and strong
reputations.
• Risk Mitigation: Ethical practices help avoid scandals,
lawsuits, and penalties.
• Social Responsibility: Businesses are integral parts of
society and must contribute to the common good.
• Long-term Growth: Ethical behavior promotes long-term
sustainability and success.
• Employee Loyalty: Ethical practices improve employee
retention and engagement.
Arguments Against Business Ethics
• Profit Maximization: Some argue that a company’s only
responsibility is to maximize profits for shareholders.
• Costly Implementation: Ethical practices may increase
costs, reducing competitiveness in the market.
• Ambiguity: Ethical standards can sometimes be unclear or
subjective, making them difficult to implement
consistently.
• Cultural Differences: Ethical standards vary globally,
making it hard for multinational companies to adhere to
one universal code.
• Short-term Pressures: The need for quick profits can
discourage long-term ethical decision-making.
Types of Ethical Dilemmas
• Conflict of Interest: When personal interests conflict with the
professional duties of employees or management.
• Discrimination: Ethical issues arising from unequal treatment
of employees or customers based on race, gender, age, etc.
• Product Safety: Dilemmas involving product defects, quality, or
safety standards that may harm consumers.
• Environmental Issues: Conflicts over environmental
responsibility versus economic gain (e.g., pollution, resource
exploitation).
• Bribery and Corruption: The ethical challenge of resisting
illegal or unethical business practices like bribery.
• Employee Rights: Balancing the rights of workers (wages,
working conditions) with the financial interests of the business.

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Introduction to business ethics

 Business ethics applies general moral

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