NATURE AND SCOPE OF BUSINESS ETHICS

Ethics is that branch of philosophy which is concerned with the rightness or wrongness, goodness, badness of human conduct ethics provides the basis for deciding that a particular action is morally good and bad. In the simplest terms, business ethics are moral principles that define right and wrong behaviour in the world of business. The right and wrong behaviour in business is determined by the public interest groups, and business organisations as well as an individuals personal morals and values. The meaning of ethics is that it is the science of moral which is concerned with the human character and conduct. Ethics are the principle of behaviors that distinguish between the rights from the wrong. Business ethics is the evaluations of business activities and behaviors as right and wrong. Ethical conduct conforms with what a group or society, as a whole considers right behaviour. Introduction to Business Ethic There is a combinations of two familiar words, namely business and ethics in business ethics. Business ethics concentrated on moral standards as his apply to business policies institutions and behaviour. It is a specialized study of moral right or wrong. It is a from of applied ethics. It includes not only the analysis of moral norms and moral values but also attempts to apply the conclusions of the analysis to that assortment of institution, technologies, transactions, activities and pursuits that we call business. Business ethics are nothing but the application of ethics in business. It proves that

business can be and have been ethical and still ma!e profits more and more interest is being given to the application of ethical practice in business dealing and the ethics implications of business. Business ethics are rules of business activities may be "udge. It also relates to the behaviour of managers. Business ethics are concerned with moral issues in business "ust as medical ethics are concerned with morality of medical practices and policies or political ethics are concerned with the morality of political affairs in business ethics. Objectives of Business Ethics Business ethics has a twofold ob"ective. Evaluates human practices by calling upon moral standards. #ives prescriptive advice on how to act morally in a specific !ind of situation. The first ob"ective implies analysis and evaluation. It leads to an ethical diagnosis of past actions and events. $nalysis consists of clarifying standards and lines of argument. %ere, ethics can be useful as one is often unaware about most moral values and habits of thought. The basic assumptions behind our moral action and "udgements are mainly ta!en for granted. Ethics develops rational methods for answering the present and future issues. In order to achieve the second ob"ective, one has to informed. Balanced "udgements are based on the careful assessment of the relevant information. The second ob"ective is to provide therapeutic advice. It suggests solutions and policies when facing the present

&

dilemmas

and

future

dangers,

based

on

well'informed

opinions. This especially re(uires an identification of relevant sta!eholder and a clear understanding of the vital issues at sta!e.

Ethics in Business $ll over the words, there is a growing realizations that ethics is important for any business and to achieve the progress of any society. Ethics give rise to efficient economy. It is not the government or law which will protect the society. But ethics alone can protect it. Ethics are good in itself. Ethics and profits go together in the long run. $n ethically responsible company is one which has developed a culture of caring for people and environment, a culture which flows down word from the top managers and leaders. $s a reflections, ethics are the methodical and systematic elaboration of the norms and values we appeal to in our daily activities. )here these activities are organized under business issues. )e faces ethics in the practical and reflective variety of business ethics. *ature of Business Ethics
i. +ost

ethical (uestions could be of two types overt and

convert e.g. Bribery, theft, sabotage, collusion etc.

Ethical issues commonly occur in management it goes many of times for beyond the commonly discussed problems of bribery collusion and theft

reaching into areas of corporate ac(uisitions, merge of firms, mar!eting policies of capital investments. -or e.ample / if two firms are merged, ethical (uestion arises with regarded to demoting or firming the employees of those who have been serving honestly of many years.
iii.

Ethics want a manager to be honest within himself and also in the society. The manager has to perform his "obs well and his (uality reflects in the success of a business ethical issues may be sometimes occur as managerial dilemmas, measured by revenues, cost and profits and the stated performance.

iv.

-ollowing characteristics for a decision to be ethical are needed.

Sco e of Business Ethics 0cope of business is very broad. It includes all those activities, which are related to the production and distribution of goods and services with an ob"ective of earning profit. Industry1 Industry is a part of business. The purpose of industry is to convert the basic raw materials into finished or semi'finished goods. Industry be divided into two parts. a. b. Primary Industry Secondary Industry !" Pri#!r$ Industr$ 2rimary industry is concerned with the production of raw materials.

i.

Orientic etc.

Industry1

The

genetic

industry

is

concerned with the breeding of plants and animals,

ii.

Extractive

Industry1

In

this

industry

hidden

resources below the surface of earth are e.tracted li!e e.traction of oil, gas and coal, etc.
b. i.

Second!r$ Industr$1

Secondary Industry1 This industry is concerned with the convention of basic raw materials into finished or semi'finished goods. Basic raw materials is received from the primary industry. This industry can also be divided into two types.

ii.

Constructive Industry1 $ll !inds of construction are included in the type of industry li!e construction of roads, building bridges, etc. In this industry raw material is converted into some finished or semi' finished goods li!e te.tile mills, sugar mills, etc.

%h!t is the N!ture !nd Sco e of Business& Business includes all those legal activities, which are

underta!en for the purpose of earning profit. It means the ultimate ob"ective of business is to earn profit. %ence, all illegal activities, social activities, self consumption and gifts, etc. are e.cludes from the definition of business. Need for Business Ethics& There are three points for the need of business ethics. They are as follows1
$.

Business Operates within the Society

Business is a part of sub'system of the society. Business functioning must attribute to the welfare of the society. In order to survive, develop and e.cel, business must earn social sanction of the society where it e.ists and functions. )ithout earning social sanctions, business cannot get loyal customers, cannot operate in the mar!et place. It will soon collapse and die away. If business grows larger, the public ta!es more interest in it, since this will lead to a greater impact on the community. +anagers are turned to public opinion and react to it. they see! to maintain a proper image of their company in the public mind. This leads to the assumption of greater responsibilities. B" Ever$ business irres ective of si'e e(ists #ore on ethic!) #e!ns or in tot!) re*!rd to its soci!) concern to survive )on*&

If

business

establishment

resorting

to

unethical

behaviour or not concerning with social welfare, it will call for its own doom. Thus, business should be ethical and socially responsible. $s a statement of purpose, ma.imising of profit is not only unsatisfying. It is not even accurate. Business needs to remain ethical for its own good. 6nethical actions and ta!ing decision will shorten the life of the business li!e a flash in the pan, (uic!ly growing and even more (uic!ly dying and forgotten. Business *eeds To -unction $s 7esponsible 8orporate 8itizens in the 8ountry Business is that organ of the society which creates wealth for the country. %ence, narrow mentally and narrower goals and motives are to be avoided. C" I# ort!nce of Business Ethics& It is the application of general ethical rules to business behaviour. It is not a special set of ethical rules different from ethics in general and applicable only to business. -or E.ample1 if a societys ethical rule says that dishonesty is unethical and immoral, then anyone in business, who is dishonest with employees, customers, creditors, stoc! holders or competitors is acting unethically and immorally. 0imilarly, if protecting people from harm is considered ethical, then business firm that recall a defective and dangerous product is acting in an ethical way.

The general public e.pect business to e.hibit high levels of ethical performance and social responsibility. Business firms and their employees are encouraged to act ethically is to prevent harm to society. :;o no harm< is one of the stronger ethical principles. *e.t is to protect business firms from abuse by unethical competitors. Bribery and !ic!bac! schemes have become very common and penalize honest business firms. %igh ethical performance protects the individual who wor! in business.

Ins ite re!son&

of

the

ositive

benefits

of

*ood

ethic!)

r!ctices+ ethic!)

rob)e#s occur for the fo))o,in*

. 2ersonal gain &. Individual values widely differ with organisatsional goals ,. +anagers values and attitudes 3. 8ompetitive pressures 4. 8ross cultural contradictions -" Person!) .!in

Business that employs people sometimes wrongly whose personal values are less than desirable. This will cause ethical problems. 2eople will be sometimes greedy and put down their own welfare ahead of all others, not bothered about the welfare of the fellow employees. The company or society, since ethical (ualities are difficult to anticipate and measure

at the time of recruiting employees, many people of the above mentioned type will creep in though an effort to without ethically undesirable applicants are made. The embezzler the e.pense account paddler, the chronic sic! leaver and the bride ta!er slip in since the perfect screening system is lac!ing, business is not li!ely to eliminate this !ind of unethical behaviour entirely. Business has to proceed carefully in screening applicants ta!ing care not to trample individual rights in the search for potentially unethically employees.
/"

Individu!) v!)ues vis010vis Or*!nis!tion!) .o!)s1

The goal of a business organizational should be the collective welfare. If the owner of that business organization resort to :$tma 0u!ha Talva<. If the owner of the business sector gives only interests to the individual interest then at a point of time only he flourishes and on the other hand the customer prish.
2"

3!n!*ers 4!)ues !nd Attitudes1

$s decision ma!ers, managers have more'opportunities than others to set an ethical tone for the company. They are the !ey people to act ethically or unethically. Ethical guidance usually will be provided by the top levels to the employees down below. The values held by the top managers are important in promoting ethical activities. >rganizational effectiveness is their central goal while at wor!. If the organisation is to be made effective good management is re(uired.
5"

Co# etitive Pressure&

8ompetitive pressures are more e.hibited in case of private company in order to wipe out the public sector. 2rivate sectors always want to rise at the cost of public sector to public sector cannot be as competitive as a private sector. ;ue to this competitive attitude a private sector adopts to unethical means. 6" Business Ethics is ! 3!n!*e#ent Disci )ine&

The business ethics has grown in recent years into an interdisciplinary area of study that has found a secure niche in the fields of liberal arts and business education. >n this credit goes to many individuals' both philosophers and business scholars / who have succeeded in relating ethical theory to the various problems of ethics that arise in business. Business is a fruitful sub"ect for philosophical e.ploration and practicing managers in the )orld of business can benefit from the results.

M. C. Namara says that, business ethics as came to be considered a management discipline, especially since the birth of the social responsibility of business. Business owned responsibility to wor! to improve society. Environmental protection, e(ual right, public health, educational improvement, etc. Business has replaced the word stoc! holder with sta!eholder.

&.

$s per Rober Kreitner in his boo! :+anagement< says %ighly published accounts of corporate misconduct

in recent years have led widespread cynicism about business ethics.

Gallup Poll as!ed in

??& $mericans to rate the

ethical standards of various professions. Ch!r!cteristics of Business Ethics

Ethical decisions differ with the individual perspective of different persons. Each person views the ethical (uestion in terms of his own frame of reference.

Ethical decisions are not limited to themselves, but effects a wide range of other situations as well. Ethical decisions do not end in themselves, but have widespread ramifications. Ethical decisions are voluntary human actions. $ll human beings have the freedom of choice and of free will. Every person is individually responsible for the ethical or unethical decision or action that he or she ta!es.