Business Ethics

CHAPTER 3

Concept
ETHICS is derived from the Greek word ETHOS which means Character . ETHICS refers to codes of conduct, set of rules and principles to be followed while dealing with people . Business Ethics refers to codes of conduct, set of rules and principles to be followed by Business Firms while dealing with consumers and other business firms.

ETHICS

SOCIAL RESPONSIBILITY

SOCIAL AUDIT

DEFINITION :
According to B.O WHEELER , Business ethics is an art or science of maintaining harmonious relationship with society , its various groups and institutions as well as reorganizing the moral responsibility for the rightness or wrongness of business conduct .

 GOOD ETHICS IS GOOD BUSINESS NO ETHICS , NO BUSINESS ETHICAL BUSINESS IS PROFITABLE ETHICAL BUSINESS GENERATES GOODWILL UNETHICAL BUSINESS LEADS TO EXPLOITATION OF CONSUMERS AND SOCIETY AT LARGE

UNETHICAL PRACTICES
CONSUMERS:
SUPPLYING INFERIOR QUALITY PRODUCTS. CHARGING HIGH PRICES BY CREATING ARTIFICIAL SCARCITY FOR PROFIT MAXIMISATION . SELLING EXPIRED PRODUCTS. MISBRANDING, HOARDING, BLACKMARKETING, ADULTERATION.

 UNFAIR SALES PROMOTION TECHNIQUES (FALSE ADVERTISING CLAIMS) EMPLOYEES :

PAYING LOW WAGES AND SALARIES, INADEQUATE WELFARE FACILITIES . LACK OF SAFETY AND SECURITY MEASURES. EXPLOITATION OF CHILD LABOUR AND WOMEN WORKERS.

 DISREGARD TO DEMANDS OF LABOUR UNIONS .

SHAREHOLDERS :

PAYMENT OF LOW RATE OF DIVIDEND.

MISUSE AND MISMANAGEMENT OF FUNDS INVESTED BY SHAREHOLDERS. NO REGULAR RETURN.

NO PROTECTION OF INVESTORS INTEREST.

 GOVERNMENT :
AVOIDING PAYMENT OF TAXES AS PER LAWS. DISREGARD TO BUSINESS LAWS, GOVERNMENT POLICIES.

MISUSE OF INCENTIVES AND SUBSIDIES GIVEN BY GOVERNMENT.

CREATING MONOPOLIES AND AVOIDING COMPETITION.

 ENVIRONMENT :
DISREGARD TO POLLUTION CONTROL MEASURES AND VIOLATION OF LEGAL PROVISIONS RELATING TO ECOLOGICAL BALANCE. MISUSE AND EXPLOITATION OF NATURAL RESOURCES .

ROLE OF CFBP
CFBP : Code of fair business practices. It is a non-profit, non-political organization formed by businessmen for promoting business ethics. The following obligations are included in this code:

1. To charge fair and reasonable prices.

2. To provide efficient and timely after-sales service. 3. To invoice goods at fair and reasonable prices. 4. Not to engage in black-marketing and hoarding, profiteering . 5. Not to publish mislead advertising.

6. Not to produce poor quality products.

7. Not to engage in illegal business activities.

 Members of CFBP can develop a good image in the society . This code of ethics is recognized by the International Chamber of Commerce, Advertising Councils of India and other Apex bodies. Every year, Awards are given to members showing excellent performance in regard to fair trade . These Awards are given to Individual Businessmen and Business enterprises.