Q.1; What do you understand by the term ethics?

Ans. Ethics is a set of standards, or a code, or a value system worked out from human
reason and experiences, by which free human actions are determined as ultimately right
or wrong, good or evil.

Q.2. Explain the concept of Business Ethics.

Or What is business ethic.

Ans. “Business ethics refers to the application of ethics to business operations. To be

more specific, business ethics is the study of good and evil, right and wrong, just and
unjust actions of a businessman”.

In other words, business ethics maybe defined as a set of moral standards which
people owning and managing business are expected to follow. These standards are the
means to govern the conduct of business persons: Business ethics indicates what is the
right conduct in business matter.

Q.3. Why is business ethics needed in business?

Ans. To fulfil the following obligations business ethics is needed in business:

(a) To give fair and equitable treatment to the employees.

(b) To charge fair prices from the customers.

(c) To use fair weights for measurement of commodities.

(d) To pay taxes to government and other bodies honestly.

(e) To earn reasonable profit.

(fJ To become a good corporate citizen.

Q.4. What are the main elements of business ethics? Explain with suitable
examples.

Ans. Following are the main elements of business ethics:

(a) Values: These are the moral beliefs held by an individual, an organisation and a

society. Values represent moral convictions and are relatively permanent.

For Example: A company may charge reasonable prices due to its value systems in
spite of its monopoly position in the industry.

(b) Rights : These are the claims of an individual or organisation.

For Example: Every citizen of India enjoys certain rights enumerated in the country’s
constitution.
(c) Duties These are the obligations of a person or an organisation.

For Example; Every citizen has the duty to follow the country’s law.

Q.5. What are the different sources of business ethics?

Ans. (a) Religion: One of the oldest sources of ethical inspiration is religion. Despite
doctrinal differences among a number of religions, the major religions speak on the
belief that ethics is an expression of divine will that reveals the nature of right and wrong
in business and other areas of life.

(b) Cultural Experiences : Culture, refers to a set of values, rules and standards
transmitted among generations and acted upon to produce behaviours that fall within
acceptable limits. These rules and standards always play an important role in
determining value, because individuals anchor the conduct in the culture of the group.

(c) Legal System: Laws are rules of conduct, approved by legislatures that guide

human behaviour in society. They codify ethical expectations and keep changing as
new evils emerge. But laws cover the ethical expectations of society. Law is reactive.
New statutes and enforcement always lag behind the opportunity for corporate
expediency.

Q.8. Explain the concept of business ethics.

Ans. Following conceptual points are included in business ethics:

(a) Obligation: Obligations can come into being in various ways. They may be incurred,
as when a person causes another fellow some harm, thus incurring the obligation to
repair the harm done. This may be assumed as when someone promises or undertakes
to do something or that may be imposed on others as when someone does with
authority to do so; orders someone under his authority to do something within the scope
of his authority.

(b) Autonomy-Dependence-Paternalism : Autonomy is either a psychological

condition, reached by all normal adults, of being able to make rational decisions about
what to do or a right to make and act on such decisions. Dependence is the opposite of
autonomy.

(c) Freedom : It is a certain sort of ideal condition on state of affairs, considered by
some to be so central to human lives that they are willing to fight in its defence or
promotion.

{d) Self-respect and Dignity: Self-respect is normally respect for oneself as a person. A

person has respect or is shown respect when his or her interests are taken into account
and when his or her rights are honoured.

.9. Discuss the impact of ethics on business.

Ans. The Indian industry is realizing the impact of ethics on business. This is because
one of the basic facts of globalization is that there is going to be intense competition. In
a competitive

Environment if an enterprise has to survive, it will have to attract and retain talent.
Attracting and retaining talent means having a proper organisational culture of ethics.
This is necessary to retain the loyalty and morale of the people in the organisation. It is
only with loyalty and morale that executives of a company will give their best and come
out with creative ideas. Creativity is a competitive edge that is needed in this era of
globalization. We can therefore see the direct link between the need for ethical
standards in business and its relevance in the context of globalization. ‘Honesty is the
best policy’ is a fact that is being re-discovered.

Q.1O. Why ethics matters in business?

Or What is the need of business ethics?

Ans. “Doing the right thing” matters to employers, employees, stakeholders and the
public. To companies and employers, acting legally and ethically means saving lacs of
rupees each year in lawsuits, thefts and settlements.
Corporations have to pay significant financial penalties for acting unethically. For
example, the tobacco industry discovered that lying about nicotine can be costly to their
business.

For business leaders and managers, managing ethically also means managing with
integrity. Integrity cascades throughout an organisation. It shapes and influences the
values, tone and culture of the organisation; the communication among all the members
and the realism; commitment and imagination of everyone in a company.
Hence, business ethics is needed in business for the following reasons:

(a) To give fair and equitable treatment to the employees.

(b) To raise the morale of the employee.

(c) To develop healthy working atmosphere in the organisation.

(d) To build a good reputation in the industry for long-term growth.

(e) To earn reasonable profit in honest ways.

(f) To become a good corporate citizen.

(g) To preserve the interest of all the stakeholders.

12. Define ethical values.

Ans. Business ethical values vary by company, and are defined largely by the
behaviours and values that govern a business environment. In general, business ethical
values are a set of guiding principles that encourage individuals in an organisation to
make decisions based on the company’s stated beliefs and attitudes toward business
practices within its industry.

The Golden Rule Model

This model—originated from the New Testament—specifies people should treat
others in the same manner that they themselves would like to be treated. It is a
fundamental principle found in every culture and religion and it is the most
important basis for the modern concept of human rights. It is also called the ethics
of reciprocity as it stimulates an individual to put oneself in the other person’s
shoes and then evaluate how one would wish to be treated in that particular
situation. This proves that this rule is absurd without identifying the receiver
and the situation. The ethics of reciprocity should not be confused with
revenge or penalizing justice. The ethics also mentions that one has the
freedom to do anything as long as those activities do not harm anyone. If
this golden rule is applied to ev

ETHICAL CONCEPTS
Ethics is the branch of philosophy that is used to evaluate human actions. Some
basic ethical concepts in business are as follows:
Ethical subjectivism: This concept emphasizes that the ethical choice of
the individual decides the rightness or wrongness of his behaviour.
Ethical relativism: According to this concept, no principle is universally
applicable and so it would be inaccurate to measure the behaviour of one
society with another’s principles or standards. Relativism overlooks the
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Introduction to Ethics
NOTES
fact that there may be enough evidence to believe that an ethical practice
is based on false belief, illogical reasoning, and so on.
Consequentialism: Consequentialism is based on two ideas: the concept
of value and the maximization of value. If, for example, honesty is
considered a value, an act is considered ethical only if it maximizes this
value. An act, which does not maximize the said value, is not ethically
permissible.
Deontological ethics: This concept stresses that ethical values can be
developed from the concepts of reason as all rational individuals possess
the ability to reason. We may, for example, end up causing pain
unknowingly while trying to create happiness. Therefore, the ethical
value of an action cannot be determined by its consequences. Instead, it is
in the motive that lies behind the particular action.
Ethics of virtue: This concept emphasizes those traits that give the
individual a sense of satisfaction from ethical point of view. Virtuous acts
like courage, honesty, tolerance and generosity are done as a way of
living and not by chance.
Whistle blowing: Whistle blowing refers to the attempt of an employee
to disclose what he or she believes to be illegal behaviour in or by the
organization. From one point of view, this seems to deceive the principle
of honesty in business ethics, as it is taken for granted that the employees
of an organization need to be loyal to its workings. However, when
loyalty to one’s organization in particular is perceived to be harming
one’s general loyalty to mankind, the act of whistle blowing is justified.
Failure on the part of the management of the organization to fulfil its
social obligations calls for whistle blowing. It is the responsibility of the
whistle blower to be careful about revealing the organization’s secrets and
to consider the harm it may cause to his colleagues and shareholders. The
steps that should be taken into consideration by the whistle blower are:
o Ascertain the gravity of the situation before whistle blowing
o Scrutinize the purpose
o Authenticate and keep a record of the concerned information
o Determine the type of offence and to whom it should be reported
o Assert your claim in a proper way
o Stick to the facts
o Determine if the whistle blowing need be external or internal
o Decide if the whistle blowing should be anonymous or otherwise
o Make sure to follow proper rules in reporting the offence
o Consult a lawyer (if required)
o Anticipate and document vengeance
Ethical dilemmas in business: An organization’s ethical problems
indicate a conflict between its economic and social performance. This
results in a dilemma for managers. Since people handle business, it is a
crucial requirement to check and ascertain ethical behaviour at a personal
level. This will confirm ethically correct responses from the organization
to the mutual actions of individuals.