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BUSINESS ETHICS:
Ethics is a code of conduct that guides an individual while dealing with others. Rules or principles that
define right and wrong conduct. It relates to social rules and values that motivate people to be honest in
dealing with others. Ethics direct human behavior differentiating between good and bad, right and
wrong, fair and unfair human behavior and actions.
The word ethics has a wide application to various fields e.g. economics, social, political, religion,
engineering, law, teaching, accounting e.t.c. Businesses are expected to follow a fair code of conduct
while managing their business activities. They can make profits but not by exploiting customers,
employees and the society as a whole.
The quality of business activities mainly depends on ethical values respected by the business
community. This results in business expansion and social recognition of a business. Today’s business is
more concerned with making profits and expands as fast as possible.
When dealing with customers, a business should avoid unfair trade practices, give correct information to
shareholders through company reports, pay fair wages to employees and provide a conducive working
environment.
A professional should evaluate his/her decisions/actions to ensure it will not produce a harmful effect
on others.
Importance of Ethics:
Ethics correspond to human needs since man desires to be ethical both in private and in
business affairs. Most people prefer to deal with an enterprise they can respect.
Values create respectability with the public if it perceives a company as ethical and socially
responsive.
Management earns credibility with employees and the public.
Better decision making by management in the interest of the public.
Profits a company which is inspired by ethical conduct is a profitable one in the long run.
A business that is ethics oriented will take steps to prevent pollution and protect the workers’
and public health.
The Need for Business Ethics:
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To check business malpractices that is make business activities fair to consumers and offer
protection to them.
Improving consumer confidence as regards quality, price, and reliability of goods/services.
To make business people conscious of their duties and responsibilities towards consumers and
other social groups.
To safeguard consumer welfare.
To protect the interests of all who deal with the business namely employees, shareholders,
dealers and suppliers.
Developing cordial relations between business and society.
To create a good image for the business and avoid public criticism.
People have become increasingly aware of their rights (Government, consumers, employees,
shareholders and the local community).
Unethical Business Practices:
Business practices that not fair are treated as unethical practices used to exploit and cheat consumers
and social groups. The aim is to maximize profit at the cost of the social good. Examples of such
unethical practices are:
Supplying inferior quality good to consumers.
Charging high prices by hoarding to create artificial shortages.
Giving false, confusing and misleading advertisements of products/services.
Adulteration, underweights/measures of products.
Misbranding and black marketing.
Supplying false/inadequate information on packaging.
Use of unfair sales promotion techniques.
Providing inefficient services. Give examples.
Paying low wages and indecent treatment of employees.
Disregard to labour laws including the right to form a trade union.
Lack of safety measures for employees.
Child labour.
Paying low dividends to shareholders.
Tax evasion.
Forming cartels and monopolies (Oil sector).
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Disregard to business laws, Government policies and misuse of incentives offered by
Government.
Giving bribes, donations, kickbacks to politicians and Government officials for certain benefits
e.g. BAT, Delarue e.t.c.
Inadequate measures in regard to pollution control.
Creating inconveniences to local people through industrial activities without due regard to local
community.

Unformatted Attachment Preview

BUSINESS ETHICS: Ethics is a code of conduct that guides an individual while dealing with others. Rules or principles that define right and wrong conduct. It relates to social rules and values that motivate people to be honest in dealing with others. Ethics direct human behavior differentiating between good and bad, right and wrong, fair and unfair human behavior and actions. The word ethics has a wide application to various fields e.g. economics, social, political, religion, engineering, law, teaching, accounting e.t.c. Businesses are expected to follow a fair code of conduct while managing their business activities. They can make profits but not by exploiting customers, employees and the society as a whole. The quality of business activities mainly depends on ethical values respected by the business community. This results in business expansion and social recognition of a business. Today’s business is more concerned with making profits and expands as fast as possible. When dealing with customers, a business should avoid unfair trade practices, give correct information to shareholders through company reports, pay fair wages to employees and provide a conducive working environment. A professional should evaluate his/her decisions/actions to ensure it will not produce a harmful effect on others. Importance of Ethics: ❖ Ethics correspond to human needs since man desires to be ethical both in private and in business affairs. Most people prefer to deal with an enterprise they can respect. ❖ Values create respectability with the public if it perceives a company as ethical and socially responsive. ❖ Management earns credibility with employees and the public. ❖ Better decision making by management in the interest of the public. ❖ Profits – a company which is inspired by ethical conduct is a profitable one in the long run. ❖ A business that is ethics oriented will take steps to prevent pollution and protect the workers’ and public health. The Need for Business Ethics: ❖ To check business malpractices that is make business activities fair to consumers and offer protection to them. ❖ Improving consumer confidence as regards quality, price, and reliability of goods/services. ❖ To make business people conscious of their duties and responsibilities towards consumers and other social groups. ❖ To safeguard consumer welfare. ❖ To protect the interests of all who deal with the business namely employees, shareholders, dealers and suppliers. ❖ Developing cordial relations between business and society. ❖ To create a good image for the business and avoid public criticism. People have become increasingly aware of their rights (Government, consumers, employees, shareholders and the local community). Unethical Business Practices: Business practices that not fair are treated as unethical practices used to exploit and cheat consumers and social groups. The aim is to maximize profit at the cost of the social good. Examples of such unethical practices are: ❖ Supplying inferior quality good to consumers. ❖ Charging high prices by hoarding to create artificial shortages. ❖ Giving false, confusing and misleading advertisements of products/services. ❖ Adulteration, underweights/measures of products. ❖ Misbranding and black marketing. ❖ Supplying false/inadequate information on packaging. ❖ Use of unfair sales promotion techniques. ❖ Providing inefficient services. Give examples. ❖ Paying low wages and indecent treatment of employees. ❖ Disregard to labour laws including the right to form a trade union. ❖ Lack of safety measures for employees. ❖ Child labour. ❖ Paying low dividends to shareholders. ❖ Tax evasion. ❖ Forming cartels and monopolies (Oil sector). ❖ Disregard to business laws, Government policies and misuse of incentives offered by Government. ❖ Giving bribes, donations, kickbacks to politicians and Government officials for certain benefits e.g. BAT, Delarue e.t.c. ❖ Inadequate measures in regard to pollution control. ❖ Creating inconveniences to local people through industrial activities without due regard to local community. Name: Description: ...
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