Chapter 1...Chapter 1...

An Overview of An Overview of BusinessBusiness

Ethics.Ethics.

Business Ethics...Business Ethics...

Comprises principles and standards Comprises principles and standards that guide behavior in the world of that guide behavior in the world of business.business.

What is right or wrong, acceptable What is right or wrong, acceptable or unacceptable behavior or unacceptable behavior withinwithin the the organization.organization.

It is determined by key It is determined by key stakeholders.stakeholders.

Definitions…..Definitions…..

Business Ethics are morals applied in Business Ethics are morals applied in business where standards are decided business where standards are decided by the society/ organizations.by the society/ organizations.

Business require to maintain balance Business require to maintain balance between ethics and economics. between ethics and economics. Society wants business to be profitable Society wants business to be profitable and ethical too. Balancing this is and ethical too. Balancing this is difficult exercise.difficult exercise.

Objectives & Nature of Objectives & Nature of EthicsEthics

Primary objective is to set Primary objective is to set highest goal of manhood & to set highest goal of manhood & to set standard for the same.standard for the same.

To study the human behavior and To study the human behavior and make assessment of moral –make assessment of moral –immoral.immoral.

Objectives…..Objectives…..

Prescribe norms for moral Prescribe norms for moral behavior.behavior.

Establish moral standard of Establish moral standard of behavior.behavior.

Make judgment on human Make judgment on human behavior and standard base.behavior and standard base.

Nature of Ethics.Nature of Ethics.

It deals with human conduct. It deals with human conduct. It judge the values of facts in ideal It judge the values of facts in ideal

situation. situation. It can distinguish between good It can distinguish between good

/bad./bad. It is a set of systematic It is a set of systematic

knowledge about knowledge about behavior/conduct. behavior/conduct.

Business purpose & social Business purpose & social ResponsibilityResponsibility

1. Business purpose is profit at 1. Business purpose is profit at any cost even through unfair any cost even through unfair trade practices.trade practices.

Profit maximization is impossible Profit maximization is impossible without co-op of the society, without co-op of the society, therefore business has social therefore business has social responsibility / accountability .responsibility / accountability .

Social accountability in Social accountability in businessbusiness

Business is accountable to all Business is accountable to all associate factors for just/ fair associate factors for just/ fair distribution of profit.distribution of profit.

Salary- workers, dividend- Salary- workers, dividend- shareholders, good quality & shareholders, good quality & reasonable cost –consumer taxes- reasonable cost –consumer taxes- govt, left-over balance is for the govt, left-over balance is for the organization.organization.

Two aspects of actionTwo aspects of action

1. Aretaic action means expressing 1. Aretaic action means expressing inner nature , revealing certain inner nature , revealing certain habits good/bad.habits good/bad.

2. Deontic action means expressing 2. Deontic action means expressing the effect of our Action. How our the effect of our Action. How our actions influence our own actions influence our own relationships with others and relationships with others and change the world around.change the world around.

Two aspects of actionTwo aspects of action

Thus in business term Aretaic Thus in business term Aretaic means culture of organization and means culture of organization and Deontic means interest of Deontic means interest of stakeholders. stakeholders.

Thus two paths can be derived:Thus two paths can be derived:

1) Virtue-based thinking. 1) Virtue-based thinking.

2) Stake holder based thinking.2) Stake holder based thinking.

Virtue-based thinkingVirtue-based thinking

Virtue based thinking focuses on Virtue based thinking focuses on developing habits of the heart, developing habits of the heart, character traits and acting on character traits and acting on them.them.

Stake holder based Stake holder based thinkingthinking

1) Interest based- its moral based 1) Interest based- its moral based assessment depending on end assessment depending on end results. Interest of one group may results. Interest of one group may go against the other.go against the other.

Stake holder based Stake holder based thinkingthinking

2) Rights based – fair distribution of 2) Rights based – fair distribution of opportunities & basic freedom to opportunities & basic freedom to stakeholders. Problem arises stakeholders. Problem arises when minority protected against when minority protected against majority,majority,

individual protected against individual protected against community.community.

Stake holder based thinkingStake holder based thinking

3. Duty based- Responsibility is 3. Duty based- Responsibility is directed towards community directed towards community rather than individual. rather than individual.