Business Ethics

Q.1) Explain the Need for Business Ethics

Ans. Business ethics is that set of principles or reason which should govern the conduct of business
both at the individual or collective level by the application of ethical reasoning to specific business
situations & activities. Some of the factors justifying the need for business ethics are:-
Society bestows upon businesses the authority to own and use land & natural resources. In
return society has the right to epect that productive organi!ation will enhance the general
interest of consumers" employees & community. Society may also epect that organi!ation will
honour eisting rights and limit their activities within the bounds of justice.
#he products and services of an organi!ation and the actions of its members can affect its
sta$eholders i.e. employees" the community and society as a whole" either positively or
negatively.
Business ethics provides guidance regarding the epectations of the community" principles of
morality" conse%uences & complications of their actions" etc. &ence" business ethics are etremely
needed for well-being of organi!ation as well as community as a whole.
Q. 2) Explain the meaning of terms ethics and business ethics and also state the requirements of
business ethics
Ans. #he term '(thics) has a variety of meanings. *ne of the meaning of '(thics) are #he +rinciples pf
,onduct governing an individual or a group. Another definition describes ethics as relating to what is good
or bad and having to do with moral duty and obligation.

-. Ethics! (thics are the principle of conduct governing an individual or a group.
(thics relates to what is good or bad" and having to do with moral duty and obligation.
2. Business Ethics!
.a/ (thics in business refers to the application of day-to- day moral or ethical
norms to business. Business (thics are the principles and standards that determine
acceptable conduct in business organi!ations.
.b/ Business (thics in a business organi!ation relates to a corporate culture of
values" programs" enforcement and leadership.
.c/ Business ethics is a set of principles or reasons which should govern the
conduct of business 0 at the individual firm 1evel or at the collective Industry 1evel" by the
application of ethical reasoning to specific business situations and activities.
2. "equirements! Being ethical in business re%uires acting with an awareness
of0
.a/ #he need for complying with rules" e.g. 0 .-/ laws of the land" .ii/ customs & epectations of
the community" .iii/ principles of morality" .iv/ policies of the organi!ation" and .v/ general
concerns such as the need s of others and fairness.
.b/ &ow the products" service and actions of a business enterprise" can affect its sta$eholders
.i.e. employees" customers" Suppliers" Shareholders" and community 3 Society as a whole/"
either positively or negatively.
Q. #) $oral %&' Ethics
(articulars $orals Ethics
-.4eaning 4oral is defined as relating to principles of right and
wrong.
(thics relates to what is good or
bad" and having to do with moral
duty and obligation.
5. 6oot word &
Analysis
1atin word 7mos8" meaning 7custom8. ,ustom is
defined by a group over time. Societies have 7,ustom8.
9ree$ word 7ethos8" meaning
7character8. ,haracter is a
personal attribute.
+eople have 7character8
2. :ature 4orals are accepted from an authority. .cultural"
religious" etc./
(thics are accepted because
they follow from personally
accepted principles.
;. (pression 4oral :orms can usually be epressed as general
rules" and statement" e.g. 7always tell the truth8.
(thical :orms are comparatively
abstract and cannot be described
in general rules and statements.
<. Absorption 4orals are typically first absorbed as a child from
family" friends" school" religious teachings and other
associations.
(thics are adopted3 absorbed by
an individual gradually by ta$ing
reasonable actions 3 decisions in
appropriate situations.
=. Scope 4orals wor$ on a smaller scale than ethics" more
reliably" but by addressing human needs for belonging
and emulation.
(thics has a much wider scope"
and includes evaluation of moral
standards of an individual or
society" to see whether these
standards are reasonable or
unreasonable in concrete
situations and issues.
Q. )) *efine Ethical +ssues.
An (thical Issue is an identifiable problem" situation or opportunity that re%uires a person to
choose from among several actions that may be evaluate as right or wrong" ethical or
unethical.
in business" such a choice generally involves comparing monetary profit against what may be
appropriate conduct" i.e. financial vs no- financial implications.
1earning to recogni!e ethical issues is the most important step in understanding Business
(thics.
Q. )) ,hat is Ethical dilemma -ist the guidelines one could follo. to address an ethical
dilemma
Ans. 4any business issues may seem straight forward and easy to resolve by choosing the one option
which appears to be the clear choice but in realty one is faced with having to ma$e a choice from various
alternatives resulting in an ethical dilemma.
Ethical *ilemma in business! In business" the manager 3 decision 0 ma$er is faced with moral and
ethical decisions daily. &e has to tac$le ethical issue and choose between - /i/ right and wrong" .ii/ right
and right. >or eample" in the case of a Salesperson" does offering a gift to a customer constitute a bribe
or sales promotion?
Some guidelines which one can address to ease ethical dilemmas are:-
-. @efine the +roblem clearly
5. &ow it is 6elated to other parties?
2. #he situations arise over which issue?
;. #o whom are you Bound to be loyal as person & as a member of organi!ation.
<. Ahat will you 1oo$ at while ma$ing decisions?
=. Ahat are the (pected results & how they are comparable with actual results?
B. Ahom could your decisions or 4ain results of actions injure?
C. ,an you Save the problem by discussing it with other affected parties?
D. Are you confident that your position will be as valid *ver long period of time as it seems means?
-E. ,an you as$ your boss" ,(*" your family" society as a whole to 1oo$ upon your decisions?
--. Ahat are the Farious potentials of your actions?
-5. Gnder what conditions would you allow (ceptions to your stand?
Q. /) +mportance of Business ethics in present corporate en0ironment.
Ans.
-. 1se of "esources! Society bestows upon businesses" the authority town and use land and
natural resources. In return" In return" society has the right to epect that productive
organi!ation .i.e. business enterprises/ will cater to the general interests of consumers
employees and community.
5. 2airness! Society may also epect that business enterprises honour eisting rights and limit
their activities within the bounds of justice" e%uity and fairness.
2. +mplied 3ontract: All productive enterprises can be viewed as engaging in an implied
contract with the Society. So" under this 7social contract8 between society and business" the
behaviour of business enterprises is guided by 7Business (thics8.
;. 3orporate go0ernance: in the process of corporate decision 0 ma$ing" managers contribute"
consciously or unconsciously to the shaping of human society 0 it is not a choice between
profits and ethics" but profits in an ethical manner. #his has lead to the evolution of 7corporate
governance8.
6e%uirements:
Being ethical in business re%uires acting with an awareness of:-
a/ #he need for complying with rules. (gg.:- 1aws of land" customs & epectation of community"
principles of morality" policies of organi!ation & 9eneral concerns such as the needs of others.
b/ &ow the products" services and actions of a business enterprise can effect its sta$eholders i.e.
employees" the community and society as a whole" either positively or negatively.
+resent corporate scenario of constant change & global competition" ethics is an important factor
because it builds trust and confidence in business relationships and a positive image of the company
ethical programs cultivates a strong team wor$ & productivity" support employee recruitment" retention
and growth. (thical actions may result in negative publicity declining sales & even legal action as
demonstrated by the recent corporate scandals leading to the downfall of giant corporation li$e (:6*:.
Benefits of Business ethics:-
-. &elps to build a strong public image.
5. ,ultivates strong team wor$ & productivity among employees.
2. &elps to manage values associated with %uality management" strategic planning & diversity
management.
;. &elps in creating legal policies.
<. Avoids criminal acts & lower fines.
=. Supports employee growth.
B. Attention to be substantially improves society.
Q.4) ,ho are sta5eholders and ho. do the6 influence the business ethics
4anagement is not accountable solely to Investors .Shareholders/" but to other interest groups 3
constituents who are affected by corporate activity. #he word 7Sta$eholders8 describes such
constituents of an organi!ation 0 the individuals"H groups or other organi!ations which are affected by"
or can affect the organi!ation in pursuit of its goals. Sta$eholders of a company would include-
.a/ (mployees"
.b/ #rade Gnions"
.c/ ,ustomers"
.d/ suppliers"
.e/ Shareholders and investors"
.f/ ,ompetitors"
.g/ 9overnment"
.h/ Industry as a whole" and
.i/ Society at large.
3orporate 7o0ernance and 3orporate 'ocial "esponsibilit6
Q. 1) ,hat is meant b6 3orporate 7o0ernance 'tate the ma8or characteristics of good 3orporate
7o0ernance Benefits of good 3orporate 7o0ernance
Ans.
4eaning: ,orporate 9overnance deals with promoting corporate fairness" transparency and
accountability. It is concerned with structures and processes for decision 0 ma$ing" accountability" control
and behaviour at the top level of organi!ations. It influences how the objectives of an organi!ation are set
and achieved" how ris$ is monitored and assessed and how performance is optimi!ed.
@efinition: ,orporate 9overnance can be defined as 7the formal system of accountability and control for
ethical and socially responsible organi!ational decisions and use of resources8.
Accountability relates to how well the content of wor$place decisions is aligned with the
organi!ation)s stated strategic direction.
,ontrol involves the process of auditing and improving organi!ational decisions and actions.
Scope: ,orporate 9overnance arrangements are $eyH determinants of a >irm)s relationship with the
society at large" and encompass the following aspects-
.a/ +ower given to 4anagement and control over 4anagement)s use of such power"
.b/ 4anagement)s accountability to sta$eholders"
.c/ >ormal and informal processes by which sta$eholders influence management decisions.

9ood ,orporate 9overnance has the following major characteristics: -
-. Efficient and effecti0e .i.e. doing the right things and doing things right/
5. In tune with the applicable legal requirements.
2. transparent as regards decisions and actions.
;. 9ccountable to sta$eholders.
<. 3onsensus: oriented and participatory in decision 0ma$ing" i.e. promote acceptability of decisions
rather then forcing them on the parties concerned.
=. Equitable and inclusive.
B. "esponsi0e and adaptive to environmental change.
Benefits to good ,orporate 9overnance:-
i/ +rotection of investor interest and strong capital mar$ets.
ii/ (nsures commitment of the board in managing the company in a transparent manner.
iii/ Studies show clear evidence that the good ,orporate 9overnance is rewarded with a
higher mar$et valuation.
Q. 2) 'hareholder %&' 'ta5eholder
+oint Shareholder Sta$eholder
- Shareholders are the owners of a
particular organi!ation.
,onstituents of an organi!ationH insiders li$e
employees" trade unionH outsiders li$e customers"
creditors" society" government" competitors" local
communities" shareholders.
5 Shareholder is a narrower term. Sta$eholder is a wider term.
2 (very shareholder is a sta$eholder. (very sta$eholder is not a shareholder.
Q. #) 3orporate 7o0ernance ;37) : issues : *e0elopment abroad and in +ndia.
Ans.
i/ ,9 is concerned with structures & processes for decision ma$ing" accountability control &
behaviour at the top level of organi!ation.
ii/ It influences how the objectives of an organi!ation are set & achieved" how the ris$ is
monitored and assured &how the performance is optimi!ed.
iii/ ,9 measures include non-eecutive directors placing constraints on management power &
ownership concentration.
iv/ It includes ensuring of proper disclosure of financial information & eecutive compensation.
v/ ,9 is getting focused attention for satisfying the divergent interest of the sta$eholders
especially after corporate scandals & loss of shareholders value at (nron.
vi/ #he scandals led to numerous ,9 performs including .(g. +ost Satyam" issue/---,orporate
9overnance Act.
Adoption of :ew listing re%uirement by Stoc$ (hange. In India" various committees were set up by
S(BI & @,A .@epartment of ,ompany Affairs/ to recommend further improvements in ,9 applicable to
Indian companies.
Q. )) ,hat is 3'" ;3orporate 'ocial "esponsibilit6) ,h6 it is needed in +ndian Business
En0ironment
Ans. $eaning ! corporate Social 6esponsibility .,S6/ focuses on the idea that a business has social
obligations above and beyond ma$ing profit and follows from a decision by management to epand
traditional governance arrangements to include accountability to the full range of sta$eholders.
'cope! ,S6 is a way of integrating the economic" social" and environmental imperatives of business
activities. #he term corporate citi<enship denotes the etent to which business enterprises meet the .a/
legal" .b/ ethical" .c/ economic and .d/ voluntary 3 discretionary responsibilities" placed on them by their
sta$eholders.
*efinitions! ,S6 is the continuing commitment by business to behave ethically and contribute to
economic development while improving the %uality of the life of the wor$force and their families as well as
of the local community and society at large.
In short" ,S6 is achieving commercial success in ways that honour ethical values & respect
people" communities & the natural environment.
Need for 3'".
-. +ron -a. of "esponsibilit6: Society gives business its charter to eist and
that charter can be amended or revo$ed at any time if it fails to live up to society)s epectations.
#herefore" if a business intends to retain its eisting social role and social power" it must respond
to society)s needs constructively. #his is called the +ron -a. of "esponsibilit6. In the long-run"
those enterprises who do not use power in a manner that society considers responsible" will tend
to lose it.
5. 3on0ersion of "esistances into "esources: If the innovative ability of a
business is turned to social problems" many resistances problems/ can be transformed into
resources and the functional capacity of resources can be increased many times.
2. ,ealth creation: Social responsibility becomes an integral part of the wealth
creation process 0 which if managed properly should enhance the competitiveness of business
and maimi!e the value if wealth creation to society.
;. Effecti0e use of "esources and (o.er: Businesses command power over
the productive resources of a community. #hey are obliged to use those resources for the
common good of society. #hey should realise that the power to command resources has been
delegated to them by the society to generate more wealth for tits betterment. #hey must honour
social obligations while eercising the delegated economic power.
<. -ong=>erm business +nterest: a better society would produce a better
environment in which the business may gain long-term profit maimi!ation. A firm which sensitive
to community needs would" in its own self-interest" li$e to have a better community to conduct its
business. #o achieve that" it would implement special programmes for social welfare.
=. Better (ublic +mage! (ach >irm must enhance its public image to secure
more customers" better employees and higher profit. Acceptance of social responsibility goals
lead to improved public image.
B. 90oiding 7o0ernment +nter0ention: 6egulation and control are costly to
business" both in terms of energy and money and restrict its fleibility of decision 0 ma$ing.
>ailure of businessmen to assume social responsibilities invites 9overnment to intervene and
regulate or control their activities. #he prudent course for business is to understand the limit of its
power and to use that power responsibly" thereby avoiding 9overnment intervention.
Benefits of 3'".
I Increases productivity & %uality of wor$ life.
I Increases ability to attract & retain employees.
I 6educe regulatory oversight.
I Improves financial performance.
I Increases sales with better image in public as it Improves customer loyalty.
I Access to capital.
I 6educe operating cost.
I Brand image & reputation.
Q. /) -ist the 0arious .a6s in .hich the companies can integrate 3'" into business strateg6 ?
decision ma5ing frame .or5.
@"
3'" $echanism. Ae6 strategies used b6 companies for implementing 3'" policies
Ans. :owadays" ,ompanies are adopting formal techni%ues to discuss ,S6 into business strategy &
decision ma$ing framewor$. Some companies have established committees" standing committees or
special B*@ to include responsibility for ,S6 issues. ,ompanies implement ,S( by putting in place
internal management system that generally promote:-
I Adherence to labour standards
I 6espect for human rights
I ,onsumer protection environment
I Avoiding bribery & corruption
I +rotecting environment
I 6educing the negative impacts of operating in conflict !ones
(ach company differs in how it implements ,S6H distinction depends upon company)s si!e" sector"
culture and the commitment of its leadership.
Jey strategies used by companies for implementing ,S6 policies are as follows:
I 4ission" Fision & Falue statements
I ,ultural Falues
I 4anagement structures
I Strategic planning
I 9eneral accountability
I (mployee recognition & rewards
I ,ommunication" (ducation & #raining
I ,S6 reporting
I Gse of influence.
Q.4) -ist the benefits of 3'"& or sociall6 desirable corporate performance pro0ides 0arious
benefits to 3ompanies. 3omment.
#he benefits of ,S6" i.e. 7good corporate citi!enship8 include-
-. +mpro0ed 2inancial (erformance! Socially responsible business practices are lin$ed to positive
financial performance. Improved financial results are attributed to stable socio- political 0 legal
environment" enhanced competitive advantage through better corporate reputation and brand
image" improved employee recruitment" retention and motivation" motivation" improved
sta$eholder relations and a more secure environment to operate in.
5. @perating 3ost "eduction: ,S6 initiatives can help to reduce operating costs.
Improving environmental performance e.g. reducing emissions of gases that contribute to global
climate change or reducing use of a agrochemicals" can lower costs.
2. Brand +mage and "eputation! A company considered socially responsible can benefit both from
its enhanced reputation with the public as well as its reputation within the business community"
increasing the company) ability to attract and trading partners.
;. +ncreased 'ales ? 3ustomer -o6alt6: Businesses must first satisfy customers) $ey buying
criteria" i.e. price" %uality" availability" safety and convenience. &owever" studies show an
increasing consumer desire to buy .or not buy/ based on other values-based criteria" such as
7sweatshop 0free8 and 7child 0 labour- free8 clothing" lower environmental impact" and absence of
genetically 0 modified materials or ingredients.
<. (roducti0it6 and Qualit6: Improved wor$ing conditions" reduced environmental impacts or
increased employee involvement in decision 0 ma$ing" lead to 0 .a/ increased productivity" and
.b/ reduced erro;r3 defective rate in a ,ompany.
=. 9bilit6 to attract and retain emplo6ees: ,ompanies perceived to have strong ,S6
commitments find it easier to recruit and retain employees" resulting in a reduction in turnover and
associated recruitment and training costs.
,or5 place ethics ;Ethical issues in B" practices and en0ironment )
Q.1) ,rite short notes on ,or5place Ethics.
1. $eaning!
.a/ C,or5place EthicsD relates to how one applies values to wor$ in actual decision ma$ing
0 a set of right and wrong actions that directly impact the wor$place.
.b/ #hey are an etension of the personal standards or lac$ of them that is intrinsic in the
people who comprise the wor$place.
2. Need!
.a/ +ublic concerns about ethical practices in business usually relate to issues li$e 0 .i/
financial scams" fraud and embe!!lement" .ii/ accepting" or promoting bribes" or .iii/ lying or
deceptive advertising of products and services" unfair competitive practices" etc.
.b/ (nsuring the presence of sound values and ethics is a vital and ongoing part of good
governance in companies and an integral part of good management practices.
@utline the importance of Ethical Beha0iour at the ,or5place
#he principle of e%uity re%uires that 7:o man should be eecuted in his wor$ or alienated through his
wor$8 &ence" if an employer 3 enterprise does not ta$e steps to create a wor$ environment where the
employees have a clear" common understanding of what is right and wrong" and feel free to discuss
and as$ %uestions about ethical issues and report violations" the following problems could arise-
-. 6is$ of employees ma$ing unethical decisions.
5. #endency of employees to report violations to outside regulatory authorities because they
lac$ an ade%uate internal forum.
2. Inability to recruit and retain efficient people.
;. 1oss of competitive advantage in the mar$etplace.
<. 1oss of reputation and goodwill in the industry and the community.
=. &igher eposure to legal battles in ,ourts of 1aw.
Q. 2) ,rite a short note on discriminator6 practices.
Ans. #o discriminate means to distinguish one object from another. (mployment discrimination is
treating one person better than another because of their age" gender" race" religion or other protected
class status.
a/ 6ecruitment +ractices: >irms that rely solely on the word-of-mouth referrals of present employees to
recruit new wor$ers only from those racial and seual groups that are already represented in their labour
force. Ahen desirable job positions are advertised only in media that are not used by minorities or women
or are classified as for men only" recruitment would also tend to be discriminatory.
b/ Selection3Screening +ractices: Screening is said to be discriminatory when the parameters re%uired
are such as which are not relevant to the job to be performed. Interviews for the jobs are said to be
discriminatory if the interviewer dis%ualifies certain class of people for reason not related to wor$. (.g. the
occupation is not suitable for women" etc.
c/ +romotion +ractices: +romotion" job progression & transfer practices are discriminatory when
employer place males on job trac$s separate from those open to women & minorities.
d/ @ismissal: >iring on employee on the basis of her3his race or se is a clear form of discriminationH
though not as serious as an offence but the same is considered as discriminative.
e/ ,ondition of (mployment: 4any times e%ual wages & salaries are not given to employees
performing essentially similar tas$s. Another issue is related to fair wages and treatment to wor$ers.
Q. 2) ,rite a short note on CBarassmentD
Ans. &arassment is 7tormenting by subjecting to constant interference or intimidation8. It creates a
negative wor$ environment where wor$ is etracted from the employees by intimidating them & using
coercive measures to get job done. &arassment in business can be of following forms:
a/ 6acial &arassment: 6acial or colour &arassment includes offensive written or physical conduct at
the characteristics of a person)s race" entire or national origin name or colour. It also includes derogatory
name calling racist jo$es & so on.
b/ Seual &arassment: Seual &arassment means situations in which an employee is coerced into
giving into another employee)s seual demands by the threat of losing some significant job benefit" such
as promotion" raise or even the job. It is an unjust misuse of the une%ual power that an employer can
eercise over the employee. Seual &arassment is prohibited & an employer is held responsible for all
seual harassment engaged in by employees 7regardless of whether the employer $new or should have
$nown. #he harassment occurring & regardless of whether if was forbidden by the employer8
Q. #) +mportance of Ethical beha0iour at the .or5 place
Ans. An organi!ation" whether a business or a government agency" is first & >oremost human society. If
an employer does not ta$e steps to create a wor$ environment where the employees have a clear"
common understanding of what is right & wrong & free feel to discuss & as$ %uestions about ethical
issues & reports violations" significant problems could arise which are as follows:-
I @- @iminished reputations in the industry & community
I G- Increased ris$ of employees ma$ing Gnethical decisions
I S- Significant legal eposure & loss of competitive advantage in mar$et place
I #- Increased #endency of employees to report violations to outside regulatory authorities because
they lac$ of ade%uate internal forum.
I (- In the long run" (ffect of this would be that it would render the company unprofitable & the
company would go into li%uidation.
I 6- Inability to 6ecruit & 6etain top people.
Q. )) Explain in brief the measures to ensure ethics in .or5 place.;managing ethics at .or5s
place)
Ans. #he focus on care values & sound ethics" the hall mar$ of ethical management is being recogni!ed
as an important way to ensure the long term effectiveness of governance structures & procedures & avoid
the need for whistle blowing. (mployers who understand the importance of wor$ place ethics" provide
their wor$ force with an effective frame wor$ & guiding principles to identify & address ethical issues as
they arise.
4easure to ensure ethical in wor$ place is
-/ ,ode of conduct & ethics
5/ (stablish open communication
2/ 4a$e ethics decisions in group and ma$e these decision public as appropriate
;/ Integrate ethics management with other management practices
</ Gse of cross-functional teams when developing & implementing the ethics management programme
=/ Appointing an *mbuds person
B/ ,reating an atmosphere of trust
C/ 6egulatory updating of policies & procedures
D/ Include a grievance policy for employees
-E/ Set an eample from the top
Q. E) ,rite a note on .or5 : place ethics.
Ans.
i/ Aor$ place ethics is how one applies values to wor$ in actual decision ma$ing" a set of right and
wrong actions that directly impact the wor$ place.
ii/ (thical decision in an organi!ation are influenced by 2 factors: Individual moral standards" influence
of manages & co-wor$ers & opportunity to engage in misconduct.
iii/ 9ood moral standard help an individual to have a good sense off ethics which he would carry along
with him to enterprise & thereby set a good eample to follow wor$ers.
iv/ #he activities of colleagues along with policies established by the firm are critical in gaining
consistent ethical compliance in an organi!ation.
v/ Acts such arriving late to wor$" engaging in gossips at wor$ place" etc. tempt other employees to
follow the same & thereby lead to a chain of unethical acts throughout the organi!ation.
vi/ #he behaviour of business person towards customers" suppliers & others in their wor$place also
generates ethical concerns.
vii/ (thical behaviour within a business involves $eeping secrets" meeting obligations & responsibilities
avoiding undue pressures that may force others to act unethically.
viii/ &ence" a clear code of conduct practiced at the highest level" fairness & honesty in its dealings
with the sta$eholders & prohibition of any $ind" discrimination & harassment are the characteristics of
highly ethical wor$space.
En0ironment and Ethics
Q. 1) Business is a part of the ecological s6stem. Elaborate
Ans.
An ecological system is an interrelated & interdependent set of organisms & environments.
#he corporate world" the industry or others engaged in the use of natural resources or
environment services are closely lin$ed with environment and natural resources.
Business firms depends on natural environment for their energy" material resources and waste
disposal and that environment in turn is affected by the commercial activities of business firms.
So all business firm must ensure that their activities do not injure the ecological ethical system.
#his resolve is called ecological ethics.
It is based on the idea that the environment should be protected not only for the sa$e of human
beings but for its own sa$e.
&ence" as ecological systems are interrelated & affected by businessH business forms an
important part of it.
Q. 2) ,rite a short note on C3onser0ation of Natural resourcesD
Ans.
-/ ,onservation refers to the strong or rationing of natural resources for later uses.
5/ (nvironment protection should be in mind while achieving economic progress3growth.
2/ If companies redesigned products & adopt latest technologies availableH they can achieve the goals
of reduction in wastage & conservation of resources.
;/ (co friendly technologies throughout the product life cycle & maimi!ation of waste play major role in
protecting the environment & conservation of resources.
</ Business" Industry & 4:,)s have to recogni!e environment management as the priority area & a $ey
determinant to sustainable development.
=/ Sound management of wastes is among the major environmental issues maintaining the %uality of
environment and achieving sustainable development.
B/ ,onservation is the only way of ensuring a supply for tomorrow)s generations.
C/ According" waste management can be achieved by
I 4inimum waste production
I 4aimi!ing re-use of waste and recycle it
I +romoting environmentally sound waste disposal practices.
Q. #) Explain the term sustainable de0elopment .ith reference to pollution ? conser0ation of
natural resources.
Ans. Sustainable development refers to maintaining development. It may be defined as development
that meets the needs of present without compromising the ability of future generation to meet their own
needs.
A nation or society should satisfy its re%uirements 0 social" economic & others 0 without
jeopardi!ing the interest of future generations.
#his is no economic growth without ecological costs 0 &igh economic growth means high rate of
etraction" transformation and utili!ation of non 0 renewable resources. *ne must reali!e that increased
development higher 9:+ are related to environmental damage and resource depletion. #herefore" an
element of resources re-generation and positive approach to environment has to be incorporated in
developmental programmes. Business" Industry & 4:,)s have to recogni!e environment management as
priority area & a $ey determinant to sustainable development.
Q. )) 'tate the special responsibilities of the industries that are based on natural resources
to.ards future generations.
Ans. Industries that are based on natural resources li$e minerals" timber" finer & foodstuffs" etc. have a
special responsibility.
I #o adopt practices that have built in environmental consideration
I #o introduce process that minimi!e the use of natural resources & energy reduce waste and prevent
pollution.
I 4a$e products that are environment 0 friendly with minimum impact on people & ecosystem.
Q. E) Bo. the adoption green accounting s6stem helps in a0oiding polic6 decisions .hich are
non=sustainable for the countr6
Ans.
9reen Accounting system basically focuses on deficiencies in conventional accounts with respect
to the environment.
It ma$es efforts to see that environmental costs are properly reflected in the prices paid for goods
& services.
As a result companies & consumers would adjust mar$et behaviour in a way that would reduce
damage to environment & decrease pollution and waste products.
+rice signal will also influence human behaviour to avoid eploitation or ecessive use of natural
resources.
Such measures will facilitate the approach of 7+ollution +ay +rinciples8 & thus avoid policy
decisions which are non sustainable for the country.
Q. /) -ist the benefit of eco=friendl6 business practices.
Ans. Business & Industry are closely lin$ed with environment & resources utili!ation. If companies
redesigned products & adopts eco friendly business practices they are the ones who are ultimately going
to enjoy the fruits.
#he benefits can be listed below:-
#he goals of reduction in wastage & resources depletion can be achieved.
Incorporating environmental issues in the process of developing a product improves corporate
performance.
(co friendly practices results in more savings. (.g. +rocess of recycling of the waste.
Business firms will be able to create wealth if they respond to the challenges of sustainable
development as unsustainable products will become obsolete.
+roper environmental costs can be reflected with the help of green accounting system & even
consumer would adjust mar$et behaviour in a way that would reduce damage to environment.
Business firms using eco friendly practices will gain competitive $nowledge
Business" Industry & 4:,)s have to recogni!e environment management as the priority area & a
$ey determinant to sustainable development.
Sound management of wastes is among the major environmental issues maintaining the %uality
of environment and achieving sustainable development.
,onservation is the only way of ensuring a supply for tomorrow)s generations.
Ethics in mar5eting and consumers protection
Q. 1) Explain the reasons for&need of ethical beha0iour in mar5eting scenario.
Ans. 4ar$eting is the most important element of any business. It influences sales and behaviour of
customers. #he main reasons for ethical behaviour are:-
i/ #o reverse declining public confidence in mar$eting: Gnethical practice such as misleading
pac$age labels" false claim in ads" infringements of well establishment trademar$s" etc. not
only declines public confidence in mar$eting but also damages reputation of all mar$eters. #o
reverse this situation" ,ompanies must set high ethical standards & enforce them in
consumer)s interest as consumers are lifeblood of business.
ii/ #o avoid increase in 9overnment regulation: 4ost of the governmental limitation on
mar$eting are the results of management)s failure to live up to its ethical responsibilities at
one time or other.
iii/ #o sustain the power granted by society: - 4ar$eting eecutives hold and use a great deal of
social power as they influence mar$et & spea$ out on economic issues. &owever" there are
responsibilities tied to this power & if mar$eters do not use their power in a socially
acceptable manner then that power will be lost in long run.
iv/ #o protect Image of the organi!ation: - Buyers often form as impression of an entire
organi!ation based on their contact with one person & and mostly that person represents the
mar$eting functions.
Q. 2) ,hat are the different rights of the consumers
Ans. #he objective of every company should be to develop" strengthen & maintain a strong consumer
policy and provide for enhanced protection of consumers by enunciated various steps & measures. (very
consumer has the following rights
I +hysical safety
I (conomic interest
I Standards and %uality
I 6ight to $now how
I 6edressal mechanism
I ,onsumer (ducation and information
I Specific areas concerning health
I 6ight to choose
Q. #) Explain the #=tier consumer protection council in +ndia.
Ans. In India" we have 2-tier structure of ,onsumers ,ouncils at ,entral" State & @istrict levels which
are as follows:
K #he ,entral ,onsumer +rotection council at ,entral level
K #he State ,onsumer +rotection council at State level
K #he @istrict ,onsumer +rotection council at @istrict level
#he objects of the consumer protection councils shall be to promote & protect the rights of the consumers
at their representative levels which are as follows:
6ights of consumers:
I 6ight of protection against mar$eting of goods which are ha!ardous to life & property.
I 6ight of information about the %uality" %uantity" purity" standard & price of goods & services.
I 6ight to access to variety of goods & services at competitive prices.
I 6ight to redress against unfair trade practices.
I 6ight to see$ consumer education.
I 6ight to be heard and to be assured that consumer)s interest will receive due consideration at
appropriate terms.
Ethics in 9ccounting ? 2inance
Q. 1) Explain the potential conflicts faced b6 a finance ? accounting professional .or5ing :
a) 9s consultant or auditors
b) 9s an emplo6er
Ans. a/ A >inance & accounting professional wor$ing as consultant3auditors in public practice should
ta$e ade%uate care to identify situation that could pose a conflict of interest. If not followed" they may give
rise to threat to comply with the fundamental principles.
b/ A >inance & accounting professional wor$ing as an employer has professional obligation to
comply with the fundamental principles laid down by the organi!ation. At the same time" he should also
follow the regulation of the law & should ensure that whatever he does complies with ethical code of
conduct. &owever" there are situations when superiors or the top level of management apply pressure on
the employees to perform activities which are:
I ,ontrary to law or regulation.
I ,ontrary to technical or professional standards.
I Gnethical or facilitate illegal earnings management strategies.
I Associated with issue of financial or non financial report that materially misrepresents the facts"
including statements in connection with financial statements" ta compliance" legal compliance or reports
re%uired by security regulators.
Q. 2) (oint to be 5ept in mind for creating a sound ethical en0ironment.
Ans. A sound ethical environment can be created if the following points are $ept in mind:
-/ Awareness of legal and ethical responsibilities
I (thical organi!ation should have policies to train & motivate employees towards ethical behaviours.
#his would re%uire initiation from the top.
I :umber of companies both in Aest & in India have been $nown for their %uality & soundness of their
ethics programmes.
I In India" Aipro was amongst the pioneers to establish an organi!ed set of beliefs to guide business
conduct.
I ,ompanies now are also providing an integrity manual which helps employees whenever they face
ethical dilemmas.
5/ A #ransparent communication system
I (thical organi!ation should provide facilities for employees through which they could communicate
with responsible position for reporting frauds" mismanagement or any other form of non routine
detrimental .harmful/ behaviour.
I ,ompanies li$e Aipro have introduce a helpline comprising of senior members of the company who
are available for guidance on any moral" legal or ethical issues that an employee may face.
2/ >air treatment to whistle blowers: >air treatment to whistle blowers is important" as this encourages
other members of the company to report similar activities in future. *n the contrary" if the company
demotes such whistle blowers" it discourages other employees from reporting on any malpractices within
the organi!ation which might affect its reputation as well as cause financial losses.
Q. #) "eason for unethical beha0ior in accounting practices
Ans. Some of the reasons which encourage employees to act unethically are as follows:
-. (mphasis on short term results: ,ompany)s manipulated accounting entries to depict good
profitability in order to raise further capital from the mar$et. #his is one of the primary reasons for downfall
of companies li$e (nron" Aorld,om" Satyam" etc.
5. Ignoring small unethical issues: #olerance of small lapses lead to larger problems. So" the
companies should develop an environment where small ethical lapses are ta$en seriously so that they are
not repeated in the future.
2. (conomic cycle: #o prevent disclosure of ethical problems in times of depression" companies should
be etremely careful & vigilant during good times. It must ensure itself that the effect of depression on the
company)s financial statements will be limited & company will be able to bear losses & at the same time it
ma$es the situation acceptable for the share holders.
;. Accounting 6ules: In the era of globali!ation" accounting rules are changing faster & becoming more
comple. It becomes difficult to identify deviation from these comple set of re%uirements. #he difficulty
associated with identifying abuse are the reason which may promote unethical behaviour.
Q. )) 2undamental (rinciples relating to Ethics.
Ans. ,ertain fundamental principles need to be adhered for behaving in an ethical manner. #hese
principles have been summari!ed below-
-/ #he +rinciple of Integrity:-
Integrity means 7adherence to moral and ethical principles8 professional have to adhere religiously
to honesty and straight forwardness while disclosing their representative professional duties. #he
following act of responsibility would help to comply with the integrity principles.
I Avoid activities which could affect goodwill of an organi!ation.
I 6efuse to get involved in activities which could adversely affect the achievement of organi!ation
objectives.
I ,ommunicate adverse and favorable information with those concerned.
I Avoid conflicts.
I 6efuse favours or gifts which could influence action ta$en or to be ta$en.
5/ #he +rinciples of *bjectivity:-
According to this principle accounting and finance professionals should not allow bias" personal
views" conflicting interest and undue influence of themselves or other to override business judgement.
#hey should communicate information fairly and objectively in a transparent manner.
2/ #he +rinciples of ,onfidentiality:-
#his re%uires accounting & financial professional to refrain from disclosing confidential information
related to their wor$. Such information may be however disclosed to
a/ Subordinate & ensure that they too maintain confidentiality &
b/ Ahen under legal obligation or because of some statutory ruling.
;/ #he +rinciples of professional competence & due care:-
>inance & accounting professional need to update their s$ills and $nowledge from time to time
and shall ensure the client or employers receives competent professional services based upon current
developments in the related areas.
</ #he +rinciples of professional behaviour:-
#his principle re%uires accounting & finance professional to comply with relevant laws and
regulations and avoid such actions which may result into discrediting the profession.
Q. E) Explain the t6pes of ethical threats.
Ans. #he dynamic environment in which business operate today has posed many situation because of
which compliance with fundamental principles may be potentially threatened.
Such threats are classified as follows:-
-/ Self Interest threats 0 which may occur as the result of the financial or other interest of a finance
and accounting professional or of an immediate or close family members.
5/ Self review threats 0 which may occur when a previous judgement needs to be revaluated by the
finance and accounting professional responsible for that judgement.
2/ Advocacy threats 0 Advocacy is the act of arguing on behalf of a particular issue" idea or person.
#hese threats occur when professional promotes a position or opinion to the point that subse%uent
objectivity may be compromised.
;/ >amiliarity threats 0 occur when professionals has close relationship in the wor$ environment & such
relationship impair his selfless attitude towards wor$.
</ Intimidation threats 0 occur when a professional may be prohibited from acting objectively by threats"
actual or perceived.
Q. /) ,hat are the 0arious ethical threats faced b6 an finance and accounting professional
.or5ing as an emplo6ee of a compan6
Ans. #he dynamic environment in which business operate today may usher a broad range of
circumstances because of which compliance to principles of integrity" objectivity" confidentiality &
professional competence and due care in case of a finance and accounting professional wor$ing as an
employee may be threatened surely and it can be classified as under:
L Self interest threats
>inancial interests" loans and guarantees in the company in which the professional is wor$ing.
Incentive compensation arrangements.
Inappropriate personal use of corporate assets.
,oncerns over employment security.
L Self review threats
K Such threats occur when business decision or data is subject to review and justification is re%uired
to be given by the same professional who was responsible for ta$ing such decisions or preparing that
data
L Advocacy threats
Ahen furthering the legitimate goals & objectives of their employing organi!ationH finance and accounting
professional may promote the organi!ation)s position provided any statement made are neither false nor
misleading.
L >amiliarity threats
1ong association with business contacts influencing business decision.
Acceptance of a gift3preferential treatment unless the value is clearly insignificant.
L Intimidation threats
#hreat of dismissal or replacement over a disagreement about the application of an accounting principle
in which financial information is to be reported for eternal use as well as decision ma$ing purpose.
A dominant personality attempting to influence the decision ma$ing process. (.g. with regard to eclusion
of irrelevant cost from projected cost estimates.
Q. 4) Ethical 3onflict "esolution
Ans. Ahile evaluating compliance with the fundamental principles" finance and accounting professional
may be re%uired to resolve a conflict in the application of fundamental principles.
#he following needs to be considered either individually or together with others" during a conflict
resolution process:
I 6elevant facts.
I (thical issues involved.
I >undamental principles related to matter in %uestion.
I (stablished internal procedure.
I Alternative course of action.
&aving considered these issues" a professional should determine the appropriate course of action
that is consistent with fundamental principles identified & weight the results of each possible course of
action. If the matter remains unsolved" the professional should ta$e following steps:
,onsult the appropriate person within the firm or employing organi!ation fro help in obtaining resolution.
If the matter involves conflict within an organi!ationH then it is advisable to consult with those charged with
governance of the organi!ation of the organi!ation such as B*@.
It may be in the best interest of the professional to document the detail and the substance of issue.
If a significant conflict cannot be resolved" obtain advice from the relevant professional body or legal
advisors & there by obtain guidance on ethical issues without breaching confidentiality.
If after all relevant possibilities" the ethical conflict remain unresolved" it is appropriate to withdraw from
the engagement team or specific assignment or to resign altogether from the engagement team" the firm
or the employing organi!ation.
Q. F) Explain the safeguards .hich ma6 be created b6 business enterprise to o0ercome 0arious
threats faced b6 accounting ? finance professionals.
Ans. Safeguards that may eliminate or reduce the various threats to an acceptable level fall into 5
categories:
.A/ Safeguards created by profession" legislation or regulation.
I ,orporate governance regulations.
I +rofessional or regulatory monitoring & disciplinary procedures.
I (ducational training & eperience re%uirements for entry into the profession.
I +rofessional standards.
I ,ontinuing professional development re%uirements.
.B/ Safeguards in wor$ environment.
I Strong internal controls.
I Appropriate disciplinary process.
I #he employing organi!ations ethics & conduct programs.
I +olicies & procedures to implement & monitor the %uality of employer performance.
Ethical *ecision $a5ing and $oral >heories
Q1) ,hat is Ethics
Simply stated" ethics refers to standards of behavior that tell us how human beings ought to act in the
many situations in which they find themselves-as friends" parents" children" citi!ens" businesspeople"
teachers" professionals" and so on.
It is helpful to identify what ethics is :*#:
(thics is not the same as feelings. >eelings provide important information for our ethical choices.
Some people have highly developed habits that ma$e them feel bad when they do something
wrong" but many people feel good even though they are doing something wrong. And often our
feelings will tell us it is uncomfortable to do the right thing if it is hard.
(thics is not religion. 4any people are not religious" but ethics applies to everyone. 4ost religions
do advocate high ethical standards but sometimes do not address all the types of problems we
face.
(thics is not following the law. A good system of law does incorporate many ethical standards"
but law can deviate from what is ethical. 1aw can become ethically corrupt" as some totalitarian
regimes have made it. 1aw can be a function of power alone and designed to serve the interests
of narrow groups. 1aw may have a difficult time designing or enforcing standards in some
important areas" and may be slow to address new problems.
(thics is not following culturally accepted norms. Some cultures are %uite ethical" but others
become corrupt -or blind to certain ethical concerns .as the Gnited States was to slavery before
the ,ivil Aar/. MAhen in 6ome" do as the 6omans doM is not a satisfactory ethical standard.
(thics is not science. Social and natural science can provide important data to help us ma$e
better ethical choices. But science alone does not tell us what we ought to do. Science may
provide an eplanation for what humans are li$e. But ethics provides reasons for how humans
ought to act. And just because something is scientifically or technologically possible" it may not be
ethical to do it.
Q2.),h6 +dentif6ing Ethical 'tandards is Bard
#here are two fundamental problems in identifying the ethical standards we are to follow:
-. *n what do we base our ethical standards?
5. &ow do those standards get applied to specific situations we face?
If our ethics are not based on feelings" religion" law" accepted social practice" or science" what are they
based on? 4any philosophers and ethicists have helped us answer this critical %uestion. #hey have
suggested at least five different sources of ethical standards we should use.
Q#.) ,hich are the theories on moral standards
>he 1tilitarian 9pproach
Some ethicists emphasi!e that the ethical action is the one that provides the most good or does the least
harm" or" to put it another way" produces the greatest balance of good over harm. #he ethical corporate
action" then" is the one that produces the greatest good and does the least harm for all who are affected-
customers" employees" shareholders" the community" and the environment. (thical warfare balances the
good achieved in ending terrorism with the harm done to all parties through death" injuries" and
destruction. #he utilitarian approach deals with conse%uencesH it tries both to increase the good done and
to reduce the harm done.
>he "ights 9pproach ;>eleolg6)
*ther philosophers and ethicists suggest that the ethical action is the one that best protects and respects
the moral rights of those affected. #his approach starts from the belief that humans have a dignity based
on their human nature per se or on their ability to choose freely what they do with their lives. *n the basis
of such dignity" they have a right to be treated as ends and not merely as means to other ends. #he list of
moral rights -including the rights to ma$e oneNs own choices about what $ind of life to lead" to be told the
truth" not to be injured" to a degree of privacy" and so on-is widely debatedH some now argue that non-
humans have rights" too. Also" it is often said that rights imply duties-in particular" the duty to respect
othersN rights.
>he 2airness or Gustice 9pproach
Aristotle and other 9ree$ philosophers have contributed the idea that all e%uals should be treated e%ually.
#oday we use this idea to say that ethical actions treat all human beings e%ually-or if une%ually" then fairly
based on some standard that is defensible. Ae pay people more based on their harder wor$ or the
greater amount that they contribute to an organi!ation" and say that is fair. But there is a debate over
,(* salaries that are hundreds of times larger than the pay of othersH many as$ whether the huge
disparity is based on a defensible standard or whether it is the result of an imbalance of power and hence
is unfair.
>he 3ommon 7ood 9pproach
#he 9ree$ philosophers have also contributed the notion that life in community is a good in itself and our
actions should contribute to that life. #his approach suggests that the interloc$ing relationships of society
are the basis of ethical reasoning and that respect and compassion for all others-especially the
vulnerable-are re%uirements of such reasoning. #his approach also calls attention to the common
conditions that are important to the welfare of everyone. #his may be a system of laws" effective police
and fire departments" health care" a public educational system" or even public recreational areas.
>he %irtue 9pproach
A very ancient approach to ethics is that ethical actions ought to be consistent with certain ideal virtues
that provide for the full development of our humanity. #hese virtues are dispositions and habits that
enable us to act according to the highest potential of our character and on behalf of values li$e truth and
beauty. &onesty" courage" compassion" generosity" tolerance" love" fidelity" integrity" fairness" self-control"
and prudence are all eamples of virtues. Firtue ethics as$s of any action" MAhat $ind of person will I
become if I do this?M or MIs this action consistent with my acting at my best?M
(utting the 9pproaches >ogether
(ach of the approaches helps us determine what standards of behavior can be considered ethical. #here
are still problems to be solved" however.
#he first problem is that we may not agree on the content of some of these specific approaches. Ae may
not all agree to the same set of human and civil rights.
Ae may not agree on what constitutes the common good. Ae may not even agree on what is a good and
what is a harm.
#he second problem is that the different approaches may not all answer the %uestion MAhat is ethical?M in
the same way. :onetheless" each approach gives us important information with which to determine what
is ethical in a particular circumstance. And much more often than not" the different approaches do lead to
similar answers.
Q).) *iscuss about approach to ma5ing Ethical *ecisions
4a$ing good ethical decisions re%uires a trained sensitivity to ethical issues and a practiced method for
eploring the ethical aspects of a decision and weighing the considerations that should impact our choice
of a course of action. &aving a method for ethical decision ma$ing is absolutely essential. Ahen practiced
regularly" the method becomes so familiar that we wor$ through it automatically without consulting the
specific steps.
#he more novel and difficult the ethical choice we face" the more we need to rely on discussion and
dialogue with others about the dilemma. *nly by careful eploration of the problem" aided by the insights
and different perspectives of others" can we ma$e good ethical choices in such situations.
Ae have found the following framewor$ for ethical decision ma$ing a useful method for eploring ethical
dilemmas and identifying ethical courses of action.
9 2rame.or5 for Ethical *ecision $a5ing
"ecogni<e an Ethical +ssue
,ould this decision or situation be damaging to someone or to some group? @oes this decision
involve a choice between a good and bad alternative" or perhaps between two MgoodsM or
between two MbadsM?
Is this issue about more than what is legal or what is most efficient? If so" how?
7et the 2acts
Ahat are the relevant facts of the case? Ahat facts are not $nown? ,an I learn more about the
situation? @o I $now enough to ma$e a decision?
Ahat individuals and groups have an important sta$e in the outcome? Are some concerns more
important? Ahy?
Ahat are the options for acting? &ave all the relevant persons and groups been consulted? &ave
I identified creative options?
E0aluate 9lternati0e 9ctions
(valuate the options by as$ing the following %uestions:
Ahich option will produce the most good and do the least harm? .#he Gtilitarian Approach/
Ahich option best respects the rights of all who have a sta$e? .#he 6ights Approach/
Ahich option treats people e%ually or proportionately? .#he Oustice Approach/
Ahich option best serves the community as a whole" not just some members?
.#he ,ommon 9ood Approach/
Ahich option leads me to act as the sort of person I want to be? .#he Firtue Approach/
$a5e a *ecision and >est +t
,onsidering all these approaches" which option best addresses the situation?
If I told someone I respect-or told a television audience-which option I have chosen" what would
they say?
9ct and "eflect on the @utcome
&ow can my decision be implemented with the greatest care and attention to the concerns of all
sta$eholders?
&ow did my decision turn out and what have I learned from this specific situation?
QE.) ,hat are the complexities in0ol0ed in ethical decision ma5ing
>ive conclusions concerning the compleity of 4anagerial (thics
- 4ost ethical decisions have etended conse%uences
- 4ost ethical decisions have multiple alternatives
- 4ost ethical decisions have mied outcomes
- 4ost ethical decisions have uncertain conse%uences
- 4ost ethical decisions have personal conse%uences
Q/.) *iscuss about the ethics chec5s as per Aenneth Blanchard and Norman %incent (eale
#he (thics chec$ %uestions for managers .by the +ower of (thical 4anagement- Jenneth
Blanchard and :orma n Fincent +eale
a. Is it legal 0 Aill I be violating civil law or law of the company?
b. Is it balance 0 Is it fair to all concerned in the short term as well as long term?
c. If I am at the receiving end will I accept this?
d. &ow will it ma$e me feel about myself?-will it ma$e me proud" would I feel good if my decision
is $nown to all" would I feel good if my family $new about it
Q4.) Explain about different moral philosophies that determine indi0idual beha0ior in an ethics
decision
4oral philosophy : #hese are principles or rules that people use to decide what is right and what is wrong.
In business the moral philosophies present guidelines for 7determining how conflicts in human interests
are to be settled and for optimi!ing mutual benefit of people living together in groups8
Summary of Beliefs and +roblems in the following philosophies used in Business decision
:ature of (thical Belief +roblems in the (thical System
#eleology Stipulates that acts as morally
right or acceptable if they
produce some desired results
such as reali!ation of self interest
or utility li$e pleasure"
$nowledge" career growth
4ore oriented towards individual
interest i.e. assesses the moral
worth by loo$ing at the
conse%uences for the individual
(ternal law 4oral standards are given in an
(ternal law" which is revealed in
scripture or apparent in nature
and then interpreted by religious
leaders or human philosophersH
the belief is that everyone should
act in accordance with the
interpretation.
#here are multiple interpretations
of the law" but no method to
choose among them beyond
human rationality" and human
rationality needs an absolute
principle or value as the basis of
choice.
Gtilitarian
theory
4oral standards are applied to
the outcome of an action or
decisionH the principle is that
everyone should act to generate
the greatest benefit for the
largest number of people.
Immoral acts can be justified if
they provide substantial benefits
for the majority" even at an
unbearable cost or harm to the
minorityH an additional principle or
value is needed to balance the
benefit-cost e%uation.
Gniversalist
theory
4oral standards are applied to
the intent of an action or
decisionH the principle is that
everyone should act to ensure
that similar decisions would be
reached by others" given similar
circumstances.
Immoral acts can be justified by
persons who are prone to self
deception or self importance" and
there is no scale to judge
between 7wills8 " an additional
principle or value is needed to
refine the categorical imperative
concept.
@istributive
Oustice
4oral standards are based upon
the primacy of a single value"
which is justice. (veryone should
ensure a more e%uitable
distribution of benefits" which is
#he primacy of the value of
justice is dependent upon
acceptance of the propositions
that an e%uitable distribution of
benefits ensures social
essential for social cooperation. cooperation.
+ersonal
1iberty
4oral standards are based upon
the primacy of a single value"
which is liberty. (veryone should
act to ensure greater freedom of
choice" for this promotes mar$et
echange" which is essential for
social productivity.
#he primacy of the value of
liberty is dependent upon
acceptance of the proposition
that a mar$et system of
echange ensures social
productivity.