becg typical problems
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Typical Problems in Business
Ethics
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Ethical Issues in meeting
responsibilities towards society
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Responsibilities towards society
Negative responsibility should not do
something
Positive Responsibility should dosomething
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Positive responsibilities
Improve the standard of living TataSteel, Birla mandir
Generously compensate the dislocatedpeople Salem group investment inNandigram in Bengal
Charitable donations Tsunami, Earth
quake Help the local community Coke and
Atlanta Olympics
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Negative responsibility
Dont employ child labor Sivakasi fire
crackers factories
Dont bribe JRD Tata, Murugappa group,Eicher group
Dont exploit animals
But what about Clinical research? Dont spoil communal harmony and social
integration
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Negative responsibility
Dont exploit resources Coke in Kerala
Coke Plachimada in Palakkad Dt, Kerala
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Environmental Pollution
Regular wastage discharges
Chemical Industries,Paper industry- Directly results in
deforestation Uses Chlorine to bleachthe paper
Accidental pollutionsHazardous leak Leakage of mercury from
HLLs thermo meter plant in Kodaikanal
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Protecting Environment has
economic sense also Tata Steel 3000 litres of oil and grease
wastage everyday. Rs 2 per litre . In 2003-
invested Rs7 lakh to inject waste oil into
the furnaces. Every kilo of oil can replace
1.5 kg of coke which cost around Rs 10/kg
Jubilant Orgn, Carbon dioxide wate to
Soft drinks firms
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Ethical issues with Employees
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Responsibility towards employees
Adopt fair policies in the following issues
Hiring policies
Remuneration Promotion policies
Work place environment
Retrenchment
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Hiring policies
How do you select the employees?
Giving preferences to local community
Reservations is it ethical it is againstequal opportunity
Discrimination Referrals, Gender and age,
Credentials
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Remuneration
What basis Needs, Skill, Education
level, effort
Promotion Seniority, Loyalty or Talent
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Work place environment
Ethical issues at the workplace
Safety Accident prevention measures,
medical equipments, ventilation andlighting Protection from hazardous
chemicals and radiation
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Employees responsibility towards
organization Drug and alcohol abuse, Fiddling of expense accounts Intel India fired
250 employees in September 2005
Wasting office hours Sleeping at work BharatForge Ltd Sacked an employee in 1984- Hechallenged it in court Supreme Court dismissedhis plea in Jan 2005
Using abusive language and showing disrespect
Karnataka College Lecturer abused thePrincipal and was sacked- Supreme Courtupheld the decision December 2005
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Misuse of company assets
Receiving gifts which may result in conflict
of interests Loyalty and Integrity Espionage
Friendly behavior with customers The
PSU employees
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Ethical issues with Customers
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Responsibility towards
Customers/Consumers Right product (quality and quantity), right
time, right price, and right place
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Ethical issues 4Ps of Marketing -
Product
Unethical product - Cigarette, CFC
refrigerator, Infant milk products,
Safety of the product -Ford Pinto Recalling automobiles- Pfizer in India
Gelusil MPS, Pepsi and Coke Pesticide
controversy, Cadbury chocolates
Product Updating- Availability of spare
parts after updating products
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Ethical issues Price
Cross subsidizing King Fisher airlines
High prices taking advantage of patents-Pharma products
Arbitrary pricing cement companies
Mahyco Monsanto Biotech India Ltd BTcotton seeds are priced far higher than in
Chinese after adjusting for taxes MRP- not the final price
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Ethical issues Place
Not selling products in some places
Private Telecom players in rural India
Avoid selling certain products in somespecific places Liquor near schools and
places of worship
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Ethical issues Promotion
Exchange Offers - are they ethical?
Misleading claims -
ITC commercials for Sunfeast biscuits Unfair practices Airlines cancellation
scheme
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Ethical Issues with Business
Partners
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Trust the main issue
JV partners, Supply chain partners
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JV partners
They breakup when partners dont trust
each others
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Press Note 18- Foreign partner need
NOC from Indian partners before starting a
venture on their own in India.-
in 2005- replaced with Press Note 1-
needs NOC only if the new venture is in
the same business.
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Responsibility towards Suppliers
Ethical issues in dealing suppliers depends
on the type of relationship
Long-term relationship Japan
Professional relationship- Arms lengthrelationship- US
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Example of Automobile
manufacturers
Why Automobile firms as example?
Supplier management is complicated inautomobile industry
Three levels of suppliers Tier 1,2 and 3
Total number suppliers run into lakhsComponents are custom made
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Which is right .long term or arms length
relationship?
Long-term relationship proved to be better
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Features of Long-term supplier
relationship
Understand how their suppliers work.
Turn supplier rivalry into opportunity.
Supervise their vendors. Develop their suppliers' technical
capabilities.
Share information intensively butselectively
Conduct joint improvement activities.
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Responsibility towards Suppliers
Share information with suppliers Veryimportant in commodities sourcing
Pay suppliers on time
Be fair in pricing, Avoid unilateral price cut
Should not go for coercion (steel industryand Automobile industry)
Settle issues through negotiations, avoidlitigations
Ensuring safety in supplier premises
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Responsibilities Towards
Competitors
Adopt fair business practices
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Espionage
Spying the competitors
P&G and Unilever
Boeing and Lockheed Martin
Internet used to steal documents
Scan emails of employeesnow iPods and Mobiles are used for
steeling data
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Respect Property Rights
Coca Cola and Pepsi May 2006
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Comparative Advertisements
Totally banned in some countries like
Germany In India and US - Providing wrong
information about competitor is banned
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Predatory Pricing
Predatory pricing Times group- entry into
Delhi and Hyderabad markets- priced at
Rs 1
Retail Association of India
Aviation sector in India
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Poaching
Is it ethical?
Generally happens when there is suddengrowth in the industry
Telecom sector, Insurance sector, Retailsector, Indian Aviation sector