ethics and business

• Business


  An organization designed to provide goods, services, or both to consumers
• Etymology of "business"


  The state of being busy either as an individual or society as a whole, doing commercially viable and profitable work
• Ethics


  Also known as moral philosophy, a branch of philosophy that addresses questions about morality—that is, concepts such as good and evil, right and wrong, virtue and vice, justice, etc.
• Business is a part of human society
• Business is a part of the complex web of interaction among institutions & people
• Business activities must be examined from the perspective of morality
• Business without ethics threatens the survival of human society
• When did business start?

  1. As old as human civilization

  2. Men took care of their own needs

  3. Some became more proficient in doing one type of work or producing several types of goods

  4. Other people started to sought their products and services

  5. To save time, money & energy to acquire the goods that they need

  6. Manufacturer discovered that he can continue supplying goods & services if he had enough funds or goods to barter with
• Target of business


  To earn profit
• For as long as people have needs & wants, there will always be business
• Society will not exist without business
• Reasons for examining business activities

  • Promotion of common good
  • Protection of the individual interests
  • Preservation of human society in general
• Without ethics, there is chaos in human activities and no common understanding & agreement about what is wrong and right human conduct
• Business activities

  • Production
  • Manufacturing
  • Marketing
  • Advertising
  • Selling
• Businessmen deal with

  • Supplier
  • Customers
  • Workers
  • Employees
  • competitors
• Unethical business practices

  • Misrepresentation
  • Questionable pricing policies
  • False advertising
  • Misbranding
  • Lying
  • Adulteration
  • Unfair competition
  • Local price cutting
• Importance of ethics in business

  • Paves the way for common ground in understanding of the fundamental idea of what is good and what is bad in our human conduct
  • Without ethics, people especially businessmen will set their own standards, moral rules & moral principles
  • Ethics provides with common understanding of the universal, objective & irreversible moral principles that govern our human conduct & guide our moral decisions
  • Business ethics opens a novel way of resolving issues & ethical dilemmas in business & in the corporate world
  • Prepares & equip managers for a more effective way of managing people and organizations
• Myths about Business Ethics

  • Ethics is a personal affair & not a debatable public matter
  • Ethics & Business do not mix
  • Ethics in business is relative
  • Good business means good ethics
  • Business is a war
• Relationship between ethics & business

  • Business is an integral part of human society, therefore actions of individuals & institutions in business must be subjected to moral rules & moral evaluation
  • Ethics provides us with clear distinction of morality & legality
  • Laws are insufficient, in the absence of law, ethics dictates the correct conduct to follow
  • Aside from maximizing profit & quantifying the operations of business managers & business leaders must also be prepared to respond to complex ethical situations
  • Business organizations are not just created to make profits but to consider its moral & social obligations to the stakeholders
• Moral Reasoning in Business

  • Essence of business ethics provide framework for resolution of moral issues & problems
  • Moral reasoning is a process in which ethical issues & problems are benchmarked against a moral standard so that moral judgment is made possible
• Characteristics of good moral standard

  • Looks at the issue as something that is very serious
  • Grounded on good moral argument, meaning always tell the truth, leaves no room for loopholes & counter arguments
  • Objective & not subjective
  • A good standard when violated, brings about feelings of guilt, shame & remorse of conscience
• Characteristics of good moral judgment

  • Must be logical
  • Must be based on facts & solid evidence
  • Must be based on sound & defensible moral principles
• Profit-motive


  The most dominant reason why people go into business
• Reasons why people go into business

  • Personal satisfaction
  • Earn a livelihood
  • Want to serve the society through goods & services that they offer
• Profit as viewed by Milton Friedman


  The only responsibility of business is to make profit so long as it stays within the rules of the game which is to say engage in open & free competition without deception or fraud
• Profit as viewed by Peter Drucker


  Enterprise is the organ of the society & therefore, its actions & decisions have a great impact on society & people. To put it simply profit is important but other important factor must also be considered (e.g. customer satisfaction, fair treatment of the employee & respect for the environment)
• Assumption of profit-motive


  Profit-motive in business is an ethical issue. Activities including profit-making must be examined in the perspective of morality. Success of business is measured by profit
• The good side of profit-motive

  • Motivates people to do something meaningful
  • Promotes ingenuity & cleverness in running a business
  • Makes people productive because of the desire for money
  • Generates potential capital for the business
• The bad side of profit-motive

  • Promotes rivalry among competitors
  • Makes people focus only on making money without considering whether needs & wants of consumers & end users are satisfied
  • Turns businessman from reflective to a questioning person because it focuses its attention on practical activity of making money
  • Promotes self-interest rather than common good
• Ethical considerations of profit-motive in business

  • Earning profit is a good & valid activity in business, as long as all factors have been considered
  • Making excessive profit is totally wrong. It leads to greed, avarice & manipulation of the customers
  • Profit is not the "be-all and the end-all" of doing business, other factors must also be considered
• Business Ethics


  • The study of what is right & wrong human behavior & conduct in business
  • The study of perceptions of people about morality, moral norms, moral rules & ethical principles as they apply to people & institutions in business
  • The study, evaluation, analysis & questioning of ethical standards, policies, moral norms & ethical theories that managers & decision makers use in resolving moral issues & ethical dilemmas affecting business
• 1. Ethics is a personal affair & not a debatable public matter

  • Some business men may claim that ethics is a private matter, maybe true but not entirely.
  • Ethics is not subjective o Truth is, our personal rights is always limited by the rights of others.
  • Always think & consider what will be good for the many
• 2. Ethics & Business do not mix

  • Some businessmen think that ethics has no place in business. Not true!
  • The absence of ethics in business will only justify illegal activities & questionable practices in business.
  • Any business activity that devoid of morality will bring more harm than good to people in particular & in society in general
• 3. Ethics in business is relative

  • Some businessmen claims that morality is relative, meaning the concepts of right & wrong depend on cultural values of people. What is good in one place maybe bad for another or v-v.
  • This shouldn’t be the case, bec. Who is going to tell us actions are good and which are bad?
  • Truth is, people agree & share with one universal moral principle regardless of religion, culture & values.
  • Ethics provides us with common idea of what is right & wrong. (ex. Murder is always wrong & cheating is always bad)
• 4. Good business means good ethics

  • Not true!
  • A business maybe profitable but the means of acquiring maybe questionable.
  • Ethics encourage businessmen & managers to look closely into the ends & means of doing business
• 5. Business is a war

  • Some businessmen believe that they must fight for survival & destroy competitors.
  • This is wrong!
  • Business is a good human activity & an integral part of the society, therefore it must promote healthy competition & not destroy competitors.
• BUSINESS

  enterprise or firm
• Profit


  Most important aspect of business