Business Ethics

Ethics Science of morals Rules of conduct Judgement of good, bad, right and wrong Business ethics. Measurement of business behaviour on standards of right and wrong Trust comes with ethics Click to edit Master subtitle style Ethics have a role in buyer seller relationship.

5/24/12

Objectives
Studying human behaviour Making evaluative assessment Establishing moral standard Expressing opinions or attitude about human conduct in general

Click to edit Master subtitle style

5/24/12

Characteristics of Ethics

Differs from person to person. Differs with situations. Ambiguous in nature. Long term impact. Individual liability.

Click to edit Master subtitle style

5/24/12

Sources of Ethics
Ethics Genetic inheritance Religion Culture Philosophical System Legal System Codes of Conduct 1.Company codes subtitle style Click to edit Master 2.Companys operating policies 3.Codes of industries

5/24/12

Ethics and Profit

Go hand in hand Ethical business attract more customers. Even dishonest people love to work with ethical people. Ethics have a lasting effect , profits do not. Ethics give way to low executive turnover and less labour unrest Ethics increase productive efficiency resulting into Click to edit Master subtitle style higher profits.

5/24/12

Social Responsibility of Business

Refers to businessmans decisions and actions taken for reasons of concern for welfare of society and preventing any such activities which adversely affect public welfare.

According to one aspect Business is a social function also. Financial soundness goes with social performance of Click to edit Master subtitle style business. Business actions are for humans, society and nations Another aspect Exploitation of human natural resources Political funding if business Spreading Pollution 5/24/12 Spreading materialism

Accountability of business to society Is business only accountable to share holders? Because it is using its resources for running business Why not accountable to society? In real terms it uses societys resources. Accountability to society is its primary responsibility. CSR is about seriously considering impact of companys decision and actions upon society and environment .Existence of business depends on society.
Click to edit Master subtitle style

5/24/12

Keith Daviss of CSR Social responsibility arises from social power

Business shall operate as two way open system in terms of receiving input from society and open disclosure of operations to public

Social cost benefit of business activity

Click to edit Master subtitle style

Social cost of social benefit to be passed on to customers.

Business to be a part of social problems

5/24/12

Forces inducing social responsibility Organized labour. Growing public awareness of improved quality of life

Threat of nationalisation or severe regulations on business

Increased consumer protection measures managerial revolution enabling distribution of surplus

Click to edit Master subtitle style

5/24/12

Business has responsibility towards:

1 Shareholders

Create wealth Give good returns Cater to edit Master subtitle style Click to needs of minority as well Cater to needs to equity by EVA

5/24/12

2 Employees Fair treatment , fair wages Fair appraisal system No discrimination on basis of caste , creed Establishment of fair work standards Labour welfare schemes Opportunity for participating in mgmt. Effective grievance handing Click to edit Master subtitle style Proper training and development programs Family welfare

5/24/12

3 Consumers

Quality product Augment innovation Charging reasonable prices Provide required post style service Click to edit Master subtitle sales Provide sufficient info. of products Hear and redress customer grievance Avoid cartel info. for increasing profits 5/24/12

4 Community

Upgradation of backward areas Giving fillip to small scale sector Taking steps to conserve scarce resources
Click to edit Master subtitle style

5/24/12

Major social responsibility of business Optimum utilisation of scarce natural resources Responsibility not to make losses Improved quality of life Responsibility of employment and income Offering quality products at fair prices Environmental protection Click to edit Master subtitle style Following fair trade practices Local development

5/24/12

Argument against CSR

Loss of profit maximisation Extra Lack of skills Dilution ofMaster subtitle style Click to edit purpose Lack of support Lack of Accountability
5/24/12

Argument for CSR Public expenditure Long run viability Public image of business Better environment Avoidance of govt. regulation Balance of responsibility and power Opportunities for business over social Click to edit Master subtitle style institutions Business has resources Shareholders interest Problem solving can earn profits

5/24/12

Social responsibility and profit Social responsibility is said to reduce profits which is main aim of business. It is said all the people are hired and guided to enhance profits . So logically business is answerable to its stakeholders only. Yet the importance of social responsibility cant be ignored by way of Decreased cost Click to edit Master subtitle style content employees would be more efficient and more satisfied . They are less distracted by the family issues if medical and educational facilities are also provided to them.

Brand loyalty and high sales 5/24/12 social responsibility has a direct impact on

Social Audit .Krep founded social audit It is a balance sheet which shows what the business has taken from society and what is gives. It involves identification of firms activities having social interest. Assessment and evaluation. Click to edit Master subtitle style Reporting in a proper format , social performance of a firm.

5/24/12

Benefits Data for comparison with policy standards. Encourages greater concern for social performance Effectiveness of different programmes can be checked The external claimants will be provided with relevant information style Click to edit Master subtitle A recognized method would be developed An appraisal can be made people who are outside the organisation A specialised group can be developed

5/24/12

Methods Social Audit process-cost benefit analysis of objectives Financial statement format Constituency audit-All the constituencies measure firms performance Inventory approach-list is prepared Cost or outlay approach-cost for each activity Click to edit Master subtitle style is mentioned Cost-benefit approach-benefits of each expenditure is indicated

5/24/12