Business ethics 1

• 3PS or tbl (triple bottom line)


  People, Planet, and Profit
• Triple bottom line


  • A sustainability framework that examines a company's social, environment, and economic impact
  • To encourage businesses to track and manage economic (not just financial), social, and environmental value added or destroyed
• People


  The positive and negative impact an organization has on its most important stakeholders (employees, families, customers, suppliers, communities, and any other person influencing or being affected by the organization)
• Planet


  The positive and negative impact an organization has on its natural environment (reducing its carbon footprint, usage of natural resources and toxic materials, active removal of waste)
• Profit


  The positive and negative impact an organization has on the local, national, and internal economy (creating employment, generating innovation, paying tax)
• Ethical issues


  A problem or situation that requires a situation to choose between alternatives that must be evaluated as right or wrong (ethical or unethical)
• Ethical dilemmas


  • Arises in situation concerning right or wrong when values are in conflict
  • Ethics are beyond legal and doing right whether or not anyone is looking
• Basic fairness


  • Concerned with actions, processes, and consequences, that re morally right, honorable, and equitable
  • Fair decisions are made in an appropriate manner based on appropriate criteria
• Two types of Basic fairness

  • Substantive Fairness
  • Procedural Fairness
• Substantive fairness


  A fair result is one in which people receive what they are due and what they deserve (include resource allocation based on effort, social contribution, seniority, and legal rights)
• Procedural fairness


  • Requires that the process of decision making reveals a conscious concern with reaching a fair, just, and equitable result
  • Decisions should be made, and should appear to be made, carefully, honestly, and objectively
• How to implement procedural fairness

  1. Fair Notice

  2. Impartiality

  3. Gather facts

  4. Fair hearing

  5. Evaluation
• How to implement procedural fairness

  • Treat all people equitably based on their merits and abilities with consistency
  • Make all decisions an appropriate criteria, without undue favoritism or improper prejudice
  • Never blame or punish people for what they did not do
  • Not take unfair advantage of people's mistake or ignorance
• Employee relations - Employer


  • Not paying workers a fair wage
  • Employing children under legal working age
  • Unsafe or unsanitary working conditions
  • Discrimination
  • Abusive Behavior/Harassment
• Employee relations - Employee


  • Misusing company time
  • Employee theft
  • Violating company's policies
• How to maintain ethical employee relations

  1. Creating a Code of Conduct

  2. Lead by example

  3. Reinforce consequences for unethical behavior

  4. Show employee appreciation

  5. Crate check and balances
• Customers relation


  • Misleading by introducing non-existent features
  • Hide extra service charges
  • Unable to provide a factual comparison
  • Negative marketing for competitors
  • Unauthentic info about self-company
  • Privacy issue
  • Unethical promotion activity
• How to maintain ethical customers relation

  1. Promotion and advertisements of products and services must be true to the actual offering

  2. Honesty and transparency in financial transactions and accounting procedures

  3. The company's commitment to high standards of customers service and fair practices for its employees
• Exclusive Distribution


  A strategy in which the seller allows only certain outlets to carry its products
• Exclusive Dealing


  When the seller requires that these dealers will not handle competitors' products
• Exclusive arrangements


  Are legal as long as "they do not substantially lessen competition or tend to create a monopoly" and "both parties should voluntarily enter into the agreement"
• Fraud


  Consists of dishonest and illegal activities perpetrated by individuals or companies in order to provide an advantageous financial outcome to those persons or establishments (examples: stealing cash, making false expense reimbursement claims, taking non-cash assets of the organization, theft of services, corruption, hidden liabilities, inflated assets, bribery, extortion, etc.)
• Fraud prevention


  1. Know your employee

  2. Make employees aware/set up a reporting system

  3. Implement internal controls

  4. Monitor vacation balances

  5. Create a positive work environment
• Unfair competition


  Occurs when another business gains a competitive advantage or attempts to do so by using deceptive, unfair, wrong, or fraudulent business practices
• Unfair competition


  • Trademark infringement
  • Product disparagement
  • Stealing a competitor's trade secrets or confidential information
• Protection against unfair competition

  1. Non-compete and non-disclosure agreements

  2. Strong company policies

  3. Limited access to trade secrets

  4. Training and protocols

  5. Audits
• Unfair communication


  A term to describe any form of communication, both verbal and nonverbal, that promotes unethical behavior (effects: poor decision-making, lack of respect for self and others, negative reputation, general morale and productivity can decline, threated the well-being of individuals and society and job loss)
• How to prevent unfair communication

  1. Build culture of transparency, openness, and good communication

  2. Truth and truthfulness
• Non-respect of agreements


  A breach of contract may occur when a party to a valid contract has failed to fulfill their side of the agreement (can be partial or complete)
• How to deal with Non-respect of agreements

  1. Ensure that contractual terms are in writing

  2. Check that all terms of contracts are properly understood by the parties

  3. Seek consent about any proposed changes in any of the terms of the contract before reaching any final decision
• Responsibility


  The state or act of being responsible, answerable, or accountable for something within one's power, control, or management
• Accountability


  Equated with answerability, blameworthiness, liability, and the expectation of account-giving. The quality or state of being accountable.
• Responsibility vs. Accountability


  • Responsibility is an ongoing duty to complete the task at hand
  • Accountability is what happens after a situation occurs
• Stakeholder


  A party that has an interest in a company and can either affect or be affected by the business. The primary stakeholders in a typical corporation are its investors, employees, customers, and suppliers.
• Responsibilities and accountabilities of entrepreneur towards the Employees


  • Development of Mutual Understanding and Trust
  • Assignment of Right Jobs
  • To give Security of Employment
  • Reasonable Attractive Remuneration
  • Effective Leadership
  • To give Best working Conditions
  • Adoption of Welfare Schemes
• Responsibilities and accountabilities of entrepreneur towards the Creditors


  • To obtain loans on reasonable conditions
  • To follow mortgage rules
  • To follow business ethics
  • Proper utilization of debt capital
  • Regular payment of installment and interest
  • Repayment of loan
• Responsibilities and accountabilities of entrepreneur towards the Suppliers


  • To pay fair prices of goods
  • To pay in reasonable time
  • To inform about changes in market
  • To give guarantee of minimum price
  • To motivate indigenous supplies
  • To provide technical advice
  • To inform suppliers with future developments
  • To promote healthy competition
• Responsibilities and accountabilities of entrepreneur towards the Depositors


  • To safeguard money
  • Regular payment of interest
  • Provide easy drawing facilities
  • To render special facilities
• Responsibilities and accountabilities of entrepreneur towards the Customers


  • Determination of fair prices
  • To render good and economic services
  • Standardization of goods
  • Best and economic packaging of products
  • Right and true advertising
  • To avoid adulteration, low weight and measurement of products
• Responsibilities and accountabilities of entrepreneur towards Other Businesses


  • Healthy competition should continue
  • Participation in business seminars for safeguarding their own interest
  • Undue rise or reduction in prices should be caused by fake dealings in the market
  • Efforts should not be made for knowing the business secrets from the managers and employees to other organization and institutions
  • Should not encourage politics among the managers of other business institutions
  • Should not instigate and mislead the suppliers of raw materials and customers
  • Should follow the code of conduct prepared by business confederations
  • Should never attempt to instigate the customers of other organizations, by making wrong criticism
  • Good business relations should be established and maintained with other organizations and institutions