PPT on business ethics and corporate governance. uploaded for reference by students useful for B.COM, M.COM students notes for business ethics

1. DONE BY
D. SANGEETHA
M.COM ( A & F)
VIDHYA SAGAR WOMEN’S COLLEGE, CHENGALPATTU

2. CONTENTS
BUSINESS ETHICS – INTRO
BASIC CONCEPTS OF BUSINESS ETHICS
CONCEPTS OFJUSTICE
SOURCES OF ETHICS
VALUES AND ETHICS
CODES OF CONDUCT
IMPORTANCE OF EMPLOYEE CODE OF CONDUCT
WHAT IS AN ETHICAL ISSUE?
ETHICAL ISSUES IN BUSINESS?

3. INTRODUCTION TO BUSINESS ETHICS
Business ethics – meaning
• Business ethics is a form of applied ethics or professional
ethics, that examines ethical principles and moral or
ethical problems that can arise in a business
environment. It applies to all aspects of business conduct
and is relevant to the conduct of individuals and entire
organizations
• Business ethics is the study of appropriate business policies
and practices regarding potentially controversial subjects
including corporate governance, insider trading, bribery,
discrimination, corporate social responsibility, and fiduciary
responsibilities.

4. Basic concepts of business ethics
• Businesses as a "Corporate Entity”
• Business Ethics considered as “Good”
• Unethical Business Practices
• Moral Rights
• The Concept of Justice

5. Business ethics as a “corporate entity”:
• Business corporations in most of the nations are
considered legally as entities or persons, i.e. the
rights and liabilities legally applicable to persons
or citizens are also applicable to business
corporations.
• The eventual objective of individual ethics is
developing a set of ethical standards which can
be held as acceptable after considering
everything carefully in a particular situation.
• These individually accepted ethical standards can
also be applied to different situations such as
personal, social and even in a business.

6. Business ethics as “good”:
• Business ethics considered as "Good" requires containing
and following a norm of moral values keeping the
expectations and rights of people ahead of the profit
maximization of business.
• A business’s main goal is to make a profit but peoples’
rights and expectations should not be ignored.
• It Discourages the breaking of laws in business activities.
• It assists businesses to avoid steps for which the company
may come under costly civil lawsuits.
• It demotivates companies to engage in actions which can
damage the image of the company.
• Good business ethics helps to improve businesses
profitability as following ethical values prevents loss of
revenue and company reputation.

7. Unethical Business Practices:
• Many big companies have been fined a large amount
of money for following unethical business practices.
• Unethical business practices go far beyond functions
breaking the law.
• Many renowned companies are engaged in unethical
and questionable practices without breaking any laws.
• They follow practices just to increase their profits
ignoring the rights of the consumers, such as, giving
less in quantity or quality, selling old or low-quality
products with free gifts, etc.
• The businesses have to make a profit but not at the
cost of moral or ethical values.
• Businesses are ethically responsible for their activities
as individuals are responsible for theirs.

8. Moral Rights:
• Generally, a moral right refers to a person’s claim
to something.
• The entitlement of moral or ethical rights implies
that others have particular duties towards the
person bearing the right.
• For example, education, you have the right to
educate yourself. If you are eligible to get yourself
admitted to a varsity to get an education on a
specific subject or do a specific course, the varsity
has to provide you the benefit of education.

9. The Concepts of Justice:
The concepts of justice are based on ethical principles that
determine just means of allocating benefits and burdens to all
people of the society.
Egalitarianism
• It states that all human beings are equal. According to this
belief, all the benefits and burdens of the society should be
circulated according to this principle:
 “Every person should be given exactly equal shares of a
society’s or a group’s benefits and burdens.”
Utilitarianism
• It states that a just society’s laws and institutions promote
the best overall or average welfare of its members.
• According to this belief, the greatest benefits for all, and
the society should be organized in such a way that its
wealth is allocated to meet everyone’s basic needs.

10. • Capitalist justice states that a person should
receive the benefits proportionate to his or her
contribution to the society.
• Libertarian justice states that the free market is
naturally just, and that redistributive taxation
breaches the property rights of people.
• Every business person should follow the business
ethics properly because studies prove that
ethically correct business becomes profitable in
the long run.

11. Sources of ethics
Ethics in general refers to a system of good and
bad, moral and immoral, fair and unfair.
It is a code of conduct that is supposed to align
behaviors within an organization and the social
framework.
But the question that remains is, where and
when did business ethics come into being?

12. Primarily ethics in business is affected by three
sources:
• Culture,
• Religion and
• Laws of the state.
It is for this reason we do not have uniform or
completely similar standards across the globe. These
three factors exert influences to varying degrees on
humans which ultimately get reflected in the ethics of the
organization. For example, ethics followed by Infosys are
different than those followed by Reliance Industries or by
Tata group for that matter. Again ethical procedures vary
across geographic boundaries.

13. RELIGION
• It is one of the oldest foundations of ethical
standards.
• Religion wields varying influences across
various sects of people.
• It is believed that ethics is a manifestation of
the divine and so it draws a line between the
good and the bad in the society.
• Depending upon the degree of religious
influence we have different sects of people

14. Culture
• Culture is a pattern of behaviors and values
that are transferred from one generation to
another, those that are considered as ideal or
within the acceptable limits.
• No wonder therefore that it is the culture that
predominantly determines what is wrong and
what is right.
• It is the culture that defines certain behavior
as acceptable and others as unacceptable.

15. Law
• Laws are procedures and code of conduct that
are laid down by the legal system of the state.
• They are meant to guide human behavior
within the social fabric.
• In business, complying with the rule of law is
taken as ethical behavior, but organizations
often break laws by evading taxes,
compromising on quality, service norms etc.

16. VALUES AND ETHICS
• Values and ethics in simple words mean
principle or code of conduct that govern
transactions; in this case business transaction.
• These ethics are meant to analyze problems
that come up in day to day course of business
operations.
• Apart from this it also applies to individuals
who work in organisations, their conduct and
to the organisations as a whole.

17. ETHICS VALUES
Ethics refers to a system of moral
principles
Values are associated with the thought
process, a person’s sense of what is
wrong and what is right.
Ethics aligns with a professional setup Values are associated with personal
aspects of a person
Ethics has 3 major areas of study –
Meta-Ethics, Normative Ethics, Applied
Ethics.
Different types of values are moral
values, social values, aesthetic values,
religious values, political values.
Ethics will be consistent within a
professional setup but would vary
between 2 different organisations or
institutions.
Values vary from person to person, it
need not be consistent.
Ethics are determined by an institution,
organisation and varied professions.
Ethics that are followed by medical
professionals will be different from
ethics followed in the public
administration domain
Values formed in a person are
determined by family values, religion,
culture, community etc.

18. ETHICS VALUES
Ethics could act as a constraint.
The action that needs to be
taken in an organization could
be consistent with the values
of a person, however, there
could be chances that it
cannot be executed as it may
not align with the ethical
standards of the profession,
organization or institution.
Values could act as a catalyst
for the necessary motivation in
a person.

19. What Is a Code of Ethics?
• A code of ethics is a guide of principles designed
to help professionals conduct business honestly
and with integrity.
• A code of ethics document may outline the
mission and values of the business or
organization, how professionals are supposed to
approach problems, the ethical principles based
on the organization's core values, and the
standards to which the professional is held.

20. • A code of ethics sets out an organization's
ethical guidelines and best practices to follow
for honesty, integrity, and professionalism.
• For members of an organization, violating the
code of ethics can result in sanction including
termination.
• In some industries, including banking and
finance, specific laws govern business
conduct. In others, a code of ethics may be
voluntarily adopted.

21. Importance of Employee Code of
Conduct
Employee code of conduct guides individuals as to how
they should behave at the workplace. Employees need
to be aware as to what is expected out of them in the
office.
 There has to be a proper dress code for employees.
 Employee code of conduct ensures career growth and
also benefits the organization in the long run
 Employee ethics ensures employees attend office on
time and genuinely respect their superiors
 Most essentially, employee ethics is important as it
goes a long way in making the value system of
employees strong.

22. WHAT IS AN ETHICAL ISSUE
Definition:
Ethical issues in business is a situation where a moral
conflict arises and must be addressed. In other words, it
is an occasion where a moral standard is questioned.
What Does Ethical Issues Mean?
Ethical issues occur when a given decision, scenario or
activity creates a conflict with a society’s moral principles.
Both individuals and businesses can be involved in these
conflicts, since any of their activities might be put to
question from an ethical standpoint. Individuals are
subject to these issues in their relationships with other
individuals or in their relationships with organizations and
same goes for organizations.

23.  These conflicts are sometimes legally dangerous, since
some of the alternatives to solve the issue might
breach a particular law.
 In other occasions, the issue might not have legal
consequences but it might generate a negative reaction
from third parties.
 Ethical issues are challenging because they are difficult
to deal with if no guidelines or precedents are known.
 For this reason, many professional and industry
associations have ethical codes that are discussed and
approved by key participants to provide a useful
framework for companies and individuals to make
adequate decisions whenever they face one of these
conflicts.

24. What are ethical issues in business?
1. Sexual Harassment
2. Diversity & Discrimination
3. Social Media
4. Health & Safety
5. Environmental Responsibility
6. Accounting Practices
7. Data Privacy
8. Nepotism

25. THANK YOU!!!