BUSINESS ETHICS IN PRODUCTION

INTRODUCTION
Ethics -is the branch of philosophy concerned with the rules of human
behaviour. It considers what is right and wrong and examines how moral principles and values are created and evolve.

Business ethics-The study and establishment of moral and social

responsibility in relation to business practices and decision making in business.

Setting ethical objectives is therefore a process by which organizations apply

ethical values to their targets and establish basic principles about their behaviour in achieving these targets.

Ethics in production and operation

It is a subset of business ethic that is meant to ensure that the production function or activities are not damaging to the consumer or the society.

Like other ethics there is a certain code of conduct or standards to be followed. In order to survive in the competitive sphere organizations try to reduce the costs
involved in production processes.

This cost efficiency is sometimes achieved at the cost of quality, Poor processes and
technology is used to keep the cost down

This is especially true for small players who cannot afford economies of scale. Industry giants that compromised on certain production processes, cola companies make
up for a good example.

Factors Affecting Ethics In Operations

Major factors which have to be considered in production and operations ethics are

Technology used or process involved Products manufactured or service offered testing or experimentation

environment that lead to pollution, global warming, increase in water toxicity and diminishing natural resources.

Ethical practices in procurement

How to establish ethical procurement practices?

Purchasing code of conduct Integrate ethical purchasing to the existing management Rewards and reviews Top management and support Business environment and culture Training to employees and staff

Ethical audits-Surprise visits to factories,

warehouses

PRODUCTION: The processes and methods employed to

transform tangible inputs (raw materials, semi finished goods, or subassemblies) and intangible inputs (ideas, information, knowledge )into goods or services.

Ethical Objectives
Ethical values cover all aspects of business conduct. This includes: corporate strategies. treatment of employees. treatment of suppliers. sales and accounting practices Most activities of business have some ethical features.

Strategic Questions & Ethical Issues

Is it ethical to reduce costs by exploiting cheaper
resources in less economically developed countries? Eg: large Western MNCs have been accused of using child labour in some of their overseas factories.

Is it ethical to sell products that are legal, but known to

harm those who use them? Eg: tobacco.

Strategic Questions & Ethical Issues

Is it ethical to target young children with advertising
messages?

Is it ethical to manufacture products that are used to kill? Eg:

The arms industry?

Is it ethical to look for loopholes in the law to avoid paying

tax?

Individual Behaviour and Ethical Questions

Examples of questions about individual behaviour which contribute to the overall ethical approach of an organization include: How do I manage my team? Should I massage the truth? Can I ever justify being disrespectful when selling products or services to my customers?

Ethical issues related to worker:

Working environment Odd jobs

Proper work study

Proper incentives Safety issues

Training program
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Effects on Human Health

Respiratory Disorders Irritation to the lungs, causing coughing and/or
shortness of breathing. Higher exposure caused build up of fluids (pulmonary edema). Caused Asthma.

Cancer Hazard Caused mutation (genetic changes). It caused cancer. Reproductive Hazard Association between exposure to Methyl Isocyanate
and miscarriages. It may damage the growing fetus.May also affect fertility in men and women.

Traces of many toxins were found in the Brest Milk of mothers and were
intern transmitted to the recipient babies.
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Ethical Issues related to packaging:a) Label information

b) Packaging graphics
c) Packaging safety d) Environmental issues e) Amount of packaging material used f) Disposal
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Y EMPLOYEES ARE FIRED ???????

Being Dishonest Being Unreliable Abusing & Using Alcohol Bossing Others Not taking the responsibility Not following the proper code of conduct

ADVANTAGES OF ETHICS

Attention to business ethics has substantially improved society Ethics programs help maintain a moral course in turbulent times

Ethics programs cultivate strong teamwork and productivity

Ethics programs support employee growth and meaning

CONTDDDD
Ethics programs are an insurance policy they help ensure that policies are
legal

Ethics programs help avoid criminal acts of omission and can lower fines Ethics programs help manage values associated with quality management,
strategic planning and diversity management

Ethics programs promote a strong public image

REASONS BEHIND MAINTAINING HIGH ETHICAL STANDARDS

Improved employee and organizational morale
Increased ability to attract new customers Improved customer loyalty

Reduced risk of negative exposure and public backlash caused by poor ethics
Attraction of new stakeholders Making a positive impact on the community

Business ethics offer companies a competitive advantage

DISADVANTAGES OF ETHICS
Business ethics reduce a company's freedom to maximize its profit. For example, a multinational company may move its manufacturing facility to
a developing country to reduce costs. Practices acceptable in that country, such as child labor, poor health and safety, poverty-level wages and coerced employment, will not be tolerated by an ethical company.

Less Revenue

CONTDDDD.
Personal Gain: Some employees may use the conducts as a way to use a law suite against the company for any minor misbehavior.
Expanding the problem: If for instance the ethical problem is not worth firing a verbal warning or suspension would do. The code of ethics within a company may be used to expand the problem further than it should be which is a waste of time, money and sometimes employees may leave.

Health and Safety of Employees

Occupational Safety and Health Administration (OSHA) responsibility

1. Researching, Identifying and determining workplace health hazards 2. Setting safety and health standards 3. Enforcing the standards
According to OSHA safety standards, employers are obliged to provide informations on following:

1. 2. 3. 4.

Risks and Health hazards related to work Products and environment exposed to those risks

Health insurance program

Benefits to employees exposed to workplace hazards

Family and Medical Leave Act (FMLA)

LABOUR LAWS

PROVISIONS OF HEALTH OF WORKERS

Sections 11 to 20 of the Act deal with the provisions of health of workers in factory. These are:

Sec 11 Cleanliness

Sec 12 Disposal of wastes and effluents

Sec 13 Ventilation and Temperature Sec 14 Dust and Fumes

Sec 18 Drinking Water

Sec 19 Latrines and urinals Sec 20 Spittoons

PROVISIONS OF SAFETY TO THE WORKERS

Sections 22 to 41

Sec 22 Work on or near machinery in motion Sec 29 Lifting machines, chains, ropes and lifting tackles

Sec 32 Floors, stairs and means of access

Sec 36 Precautions against dangerous fumes, gases etc and use of portable electric light

Sec 38 Precautions in case of fire

Sec 40 Safety of buildings and machinery/(A &B) SAFETY OFFICERS -1000 workers

Sec 41 Power to make rules to supplement the provisions.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

CSR is an umbrella term under which the ethical rights and duties existing
between companies and society are examined.

There is a distinct crossover between ethics and CSR, since CSR is often
about doing ethical things.

In both cases the business attempts to maximize its positive impacts on

stakeholders and society and minimize its negative impacts

What is the difference between ethics and CSR?

Ethics are the concerns of individual managers and employees. CSR is a concern of the entire organization.

Legal Issues and CSR

All organizations will need to comply with the legal requirements in day to day operations, but CSR means going beyond these legal duties and accepting that the sole function of a business is not just making profit for its shareholders.

Sweatshops: Are Companies Willing to Solve the Problem?

Employees are exploited to the core by denying them their due human rights Rampant in developing countries Big brands turn a blind eye to the problem Notoriously famous in industries like footwear, apparel and electronics

Race to the Bottom Large no of contractors and sub contractors in the manufacturing chain aim absolute lowest cost.

 Large retailers like Wal-Mart and Target Low price strategy Outsourcing is profitable not only because of cost factor but also because of evading
compliance to CSR and Local laws.

Acc to Investor Responsibility Research Centre, only 4% of S&P 500 companies

overlook if their suppliers address issues like child labor, forced labor and discrimination.

 In US and Canada, student-led anti-sweatshop demonstrations and protests ensured that

many universities adopted no-sweat purchasing policies.

In 2003, Fair Labor Association (FLA) whose members include Adidas-Salomon, Levi
Strauss, Nike, Reebok began publicizing audits of factories regarding sweat shop conditions.

This put pressure on Wal-Mart, Disney etc

 Currently 3 Major groups oversee factory inspections to monitor sweatshop conditions.

SAI (Social Accountability International) FLA (Fair Labor Association) ETI (Ethical Trading Initiative)

But all of them follow different methodologies and measures to combat sweatshops Because of this Wal-Mart says it does self-monitoring

 30 month experiment called the Initiative on Corporate Accountability & Workers

Rights

To devise a single set of labor standards with a common factory-inspection

system.

Only about 100 large, mostly Western companies actively involved in the anti sweatshop
movement.

Unfair for those companies adopting anti-sweatshop initiatives to compete against those
not adopting it.

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Thank You