SWAMI RAMANAND TEERTH MARATHWADA UNIVERSITY, NANDED.

CBCS Syllabus - Bachelor of Business Administration (BBA) 2018-2019

Business Ethics

1. PRINCIPLES OF BUSINESS ETHICS

Introduction, Ethics & Morals, Nature of Ethics. Need for Business Ethics, Ethical Dilemmas,
Benefits of Business Ethics, Fundamental principles of Ethics.

2. CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility, need for CSR, Key Developments, CSR Mechanisms, Benefits
of Corporate Social Responsibility.

3. WORKPLACE ETHICS

Factors Influencing Ethical Behaviour at Work, Ethical Issues Discrimination, Harassment.

Importance of Ethical Behaviour at the Workplace, Guidelines for Managing Ethics in the
Workplace.

4. ENVIRONMENT & ETHICS

Introduction, Sustainable Development, Pollution and Resource Depletion, Ecological Ethics,

Conservation of Natural Resources, Developments in India, Eco-Friendly Business Practices.

5. Ethics in Business

Ethics in Marketing and Consumer Protection: Introduction, Ethical Guidelines, Behaving

ethically in marketing, Healthy competition and protecting Consumer’s interest, Consumer
Protection Councils in India.

Ethics in Accounting and Finance: Introduction, Creating an Ethical Environment, Reasons

for Unethical Behaviour, Safeguards, Ethical Conflict Resolution.
Chapter 1 INTRODUCTION OF BUSINESS ETHICS

Introduction, Ethics & Morals, Nature of Ethics. Need for Business Ethics, Ethical Dilemmas,
Benefits of Business Ethics, Fundamental principles of Ethics.

❖ Introduction
➢ There is a big difference between what you have a right to do and what is right to do. - Justice
Potter Stewart
➢ Never let your sense of morals get in the way of doing what’s right. - Issac Asimov
➢ Man is a social animal. Though rules of nature control humans as they control other living
beings, man himself has derived certain principles to govern his own individual and group
behaviour.
➢ These rules, in the form of behavioural standards may differ across cultures and times, but
their basic objectives are always mutual existence and peace within the particular community
or the social group.
➢ By ensuring security and protection of the group these standards help in the survival of the
particular community or a social group and thus its members.
➢ Few socio-biologists argue that humans have biologically inherited capacity to make ethical
judgments by evaluating actions as either good or evil.
➢ Internally in an organization, apart from the organizational culture, its top leadership and their
ideologies also influence ethical orientation of a people.
➢ Organizations are also monitored and evaluated by a set of ethical standards.
➢ Apart from internal ethical code of conduct, external entities like professional and legal
bodies, government and other public interest groups influence the norms of behaviour for
organizations. International bodies like United Nations and other non-government
organizations like Amnesty International also influence these norms.
➢ They try to govern ethical concerns that are globally important by influencing policies and
rules framed by the governments.

Morals
✓ Morals are the social, cultural and religious beliefs or values of an individual or group which
tells us what is right or wrong.
✓ They are the rules and standards made by the society or culture which is to be followed by us
while deciding what is right.
✓ Some moral principles are:
 o Do not cheat
o Be loyal
o Be patient
o Always tell the truth
o Be generous

✓ Morals refer to the beliefs what is not objectively right, but what is considered right for any
situation, so it can be said that what is morally correct may not be objectively correct.

Ethics

✓ Ethics is a branch of philosophy that deals with the principles of conduct of an individual or
group.

✓ It works as a guiding principle as to decide what is good or bad. They are the standards which
govern the life of a person.
✓ Ethics is also known as moral philosophy. Some ethical principles are:

o Truthfulness
o Honesty
o Loyalty
o Respect
o Fairness
o Integrity
✓ Morals deal with what is ‘right or wrong’. Ethics deals with what is ‘good or evil’.
✓ Morals are general guidelines framed by the society E.g. We should speak truth. Conversely,
ethics are a response to a particular situation, E.g. Is it ethical to state the truth in a particular
situation?
✓ Morals are dictated by society, culture or religion while Ethics are chosen by the person
himself which governs his life.
✓ Morals are concerned with principles of right and wrong. On the contrary, ethics stresses on
right and wrong conduct.
✓ As morals are framed and designed by the group, there is no option to think and choose; the
individual can either accept or reject. Conversely, the people are free to think and choose the
principles of his life in ethics.
 ✓ Morals may vary from society to society and culture to culture. As opposed to Ethics, which
remains same regardless of any culture, religion or society.
✓ Morals do not have any applicability to business, whereas Ethics is widely applicable in the
business known as business ethics.
✓ Morals are expressed in the form of statements, but Ethics are not expressed in the form of
statements.

Examples

❖ If the son of a big politician has committed a crime and he use his powers to free his son from
legal consequences. Then this act is immoral because the politician is trying to save a culprit.
❖ A very close friend or relative of an interviewer comes for an interview and without asking a
single question, he selects him. This act is unethical because the selection process must be
transparent and unbiased.

❖ Nature of Business Ethics

The characteristics or features of business ethics are: -

✓ Code of conduct: Business ethics is a code of conduct. It tells what to do and what not to do
for the welfare of the society. All businessmen must follow this code of conduct.
✓ Based on moral and social values: Business ethics is based on moral and social values. It
contains moral and social principles (rules) for doing business. This includes self-control,
consumer protection and welfare, service to society, fair treatment to social groups, not to
exploit others, etc.
✓ Gives protection to social groups: Business ethics give protection to different social groups
such as consumers, employees, small businessmen, government, shareholders, creditors, etc.
✓ Provides basic framework: Business ethics provide a basic framework for doing business. It
gives the social cultural, economic, legal and other limits of business. Business must be
conducted within these limits.
✓ Voluntary: Business ethics must be voluntary. The businessmen must accept business ethics
on their own. Business ethics must be like self-discipline. It must not be enforced by law.
✓ Requires education and guidance: Businessmen must be given proper education and
guidance before introducing business ethics. The businessmen must be motivated to use
business ethics. They must be informed about the advantages of using business ethics. Trade
Associations and Chambers of Commerce must also play an active role in this matter.
✓ Relative Term: Business ethics is a relative term. That is, it changes from one business to
another. It also changes from one country to another. What is considered as good in one
country may be taboo in another country.
✓ New concept: Business ethics is a newer concept. It is strictly followed only in developed
countries. It is not followed properly in poor and developing countries.

❖ Principles of Business Ethics

The principles of business ethics are related to social groups that comprise of consumers,
employees, investors, and the local community.

principles of business ethics are as follows

o Avoid Exploitation of Consumers − Do not cheat and exploit consumer with measures
such as artificial price rise and adulteration.

o Avoid Profiteering − Unscrupulous business activities such as hoarding, black-marketing,

selling banned or harmful goods to earn exorbitant profits must be avoided.

o Encourage Healthy Competition − A healthy competitive atmosphere that offers certain

benefits to the consumers must be encouraged.

o Ensure Accuracy − Accuracy in weighing, packaging and quality of supplying goods to the
consumers has to be followed.

o Pay Taxes Regularly − Taxes and other duties to the government must be honestly and
regularly paid.

o Get the Accounts Audited − Proper business records, accounts must be managed. All
authorized persons and authorities should have access to these details.

o Fair Treatment to Employees − Fair wages or salaries, facilities and incentives must be
provided to the employees.

o Keep the Investors Informed − The shareholders and investors must know about the
financial and other important decisions of the company.

o Avoid Injustice and Discrimination − Avoid all types of injustice and partiality to
employees. Discrimination based on gender, race, religion, language, nationality, etc.
should be avoided.
 o No Bribe and Corruption − Do not give expensive gifts, commissions and payoffs to
people having influence.

o Discourage Secret Agreement − Making secret agreements with other business people
to influence production, distribution, pricing etc. are unethical.

o Service before Profit − Accept the principle of service first and profit next.

o Practice Fair Business − Businesses should be fair, humane, efficient and dynamic to offer
certain benefits to consumers.

o Avoid Monopoly − No private monopolies and concentration of economic power should

be practiced.

o Fulfil Customers’ Expectations − Adjust your business activities as per the demands,
needs and expectations of the customers.

o Respect Consumers Rights − Honour the basic rights of the consumers.

o Accept Social Responsibilities − Honour responsibilities towards the society.

o Satisfy Consumer Wants − Satisfy the wants of the consumers as the main objective of
the business is to satisfy the consumer’s wants. All business operations must have this
aim.

o Service Motive − Service and consumer's satisfaction should get more attention than
profit-maximization.

o Optimum Utilization of Resources − Ensure optimum utilization of resources to remove

poverty and to increase the standard of living of people.

o Intentions of Business − Use permitted legal and sacred means to do business. Avoid
Illegal, unscrupulous and evil means.

❖ Ethical Dilemmas

➢ Ethical issues arising out of changing norms and contrasting social theories, ethical
dilemmas plague everyone, even individuals who are honest and confident in their moral
stance.

➢ Conflicts result from day-to-day business decisions that are intrinsically influenced by
factors such as loyalty.
 ➢ For example, in choosing a course of action, individuals must ask themselves whom they
are serving with their decision’s to society, the corporation, their God, themselves, their
family, or some other entity.

➢ Saul W. Gellerman, in his essay "Why 'Good' Managers Make Bad Choices" in The Business
of Ethics and the Ethics of Business, identified four common rationalizations that lead to
unethical business behaviour by well-intentioned managers.

➢ One reason often cited for engaging in immoral behaviour is that the activity seemed to
fall within reasonably acceptable moral bounds, because everybody else was doing it, it
was not really illegal or unethical.

➢ A second rationalization was that the unethical act was performed in the interest of the
corporation, perhaps the company even expected or ordered the violator to perform the
act, possibly with the threat of reprisal for inaction.
➢ A third reason was that the offender believed that the conduct was safe because it would
never be discovered—because the risk of getting caught was so low, it was okay to commit
the act.

➢ Fourthly, offenses are carried out because the company condones the behaviour,
minimizes its impropriety, and assures protection for those who engage in it.

➢ In fact, employees often do have a motivation to engage in technically unethical behaviour

for their corporations.

➢ Studies have indicated that whistle-blowing, or divulging unethical corporate behaviour,

is generally frowned upon by American society. Pressure from fellow employees,
managers, and even the local community can cause an employee to continue even highly
unethical behaviour, in the interest of being a team player and not being labelled a
tattletale

❖ Need of business ethics

✓ Improve customers confidence:
o Business ethics are needed to improve the customers confidence about the quality,
quantity, price, etc. of the products.
o The customers have more trust and confidence in the businessmen who follow ethical
rules.
o They feel that such businessmen will not cheat them.
✓ Survival of business:
o Business ethics are mandatory for the survival of business. The businessmen who do
not follow it will have short-term success, but they will fail in the long run.
o This is because they can cheat a consumer only once. After that, the consumer will
not buy goods from that businessman.
o He will also tell others not to buy from that businessman. So, this will defame his
image and provoke a negative publicity. This will result in failure of the business.
o Therefore, if the businessmen do not follow ethical rules, he will fail in the market. So,
it is always better to follow appropriate code of conduct to survive in the market.

✓ Safeguarding consumer rights:

o The consumer has many rights such as right to health and safety, right to be informed,
right to choose, right to be heard, right to redress, etc. But many businessmen do not
respect and protect these rights.
o Business ethics are must safeguard these rights of the consumers.

✓ Protecting employees and shareholders:

o Business ethics are required to protect the interest of employees, shareholders,
competitors, dealers, suppliers, etc.
o It protects them from exploitation through unfair trade practices.

✓ Develops good relations:

o Business ethics are important to develop good and friendly relations between
business and society.
o This will result in a regular supply of good quality goods and services at low prices to
the society.
o It will also result in profits for the businesses thereby resulting in growth of economy.

✓ Creates good image:

o Business ethics create a good image for the business and businessmen. If the
businessmen follow all ethical rules, then they will be fully accepted and not criticised
by the society.
o The society will always support those businessmen who follow this necessary code of
conduct.
✓ Smooth functioning:
o If the business follows all the business ethics, then the employees, shareholders,
consumers, dealers and suppliers will all be happy.
o So, they will give full cooperation to the business. This will result in smooth
functioning of the business.
o The business will grow, expand and diversify easily and quickly. It will have more sales
and more profits.

✓ Consumer movement:
o Business ethics are gaining importance because of the growth of the consumer
movement.
o The consumers are aware of their rights. Now they are more organised and hence
cannot be cheated easily.
o They take actions against those businessmen who indulge in bad business practices.
o They boycott poor quality, harmful, high-priced and counterfeit (duplicate) goods.
Therefore, the only way to survive in business is to be honest and fair.

✓ Consumer satisfaction:
o Today, the consumer is the king of the market. Any business simply cannot survive
without the consumers.
o Therefore, the main aim or objective of business is consumer satisfaction. If the
consumer is not satisfied, then there will be no sales and thus no profits too.
o Consumer will be satisfied only if the business follows all the business ethics, and
hence are highly needed.

❖ Benefit of business ethics

Companies should have ethics code to promote ethical behaviour – not to enhance
productivity, profits or public relations. Still, a sound, well-administered code can benefit a
company and its stakeholders in a variety of ways. It can:

o Guide employees in situations where the ethical course of action is not immediately
obvious.
o Help the company reinforce and acquaint new employees with its culture and
values. A code can help create a climate of integrity and excellence.
o Help the company communicate its expectations to the staff to suppliers, vendors and
customers. Also, by soliciting feedback and questions, a company can use the code
to encourage frequent, open and honest communication among employees.
o Minimize subjective and inconsistent management standards. A code explicitly
outlines the rights and responsibilities of staff members and helps guard against
capricious and preferential treatment of employees.
o Help a company remain in compliance with complex government regulations. The
landmark requires public companies to have an ethics code for senior financial
officers.
o Build public trust and enhance business reputations. Also, a code helps demonstrate
the company’s values to socially responsible investors.
o Offer protection in pre-empting or defending against lawsuits.
o Enhance morale, employee pride, loyalty and the recruiting of outstanding
employees.
o Help promote constructive social change by raising awareness of the community’s
needs and encouraging employees and other stakeholders to help.
o Promote market efficiency especially in areas where laws are weak or inefficient by
rewarding the best and most ethical producers of goods and services.
Chapter 2 Corporate Social Responsibility

Corporate Social Responsibility, need for CSR, Key Developments, CSR Mechanisms, Benefits
of Corporate Social Responsibility.

❖ Introduction
Corporate Social responsibility is a concept that organizations have an obligation to
consider the interests of customers, employees, shareholder, communities and ecological
consideration in all aspects of their considerations.
CSR is closely linked with principles of sustainable development, which argues the
enterprises should make decision based on immediate and long-term consequences of their activities
especially taking consideration of future generations.
It is an integrated combination of policies, programs, education and practices which
extend throughout a corporation’s operations.

CSR can mean different things to different stakeholders.

1. For an employee it can mean fair wages, no discrimination, good working conditions
2. For shareholder it can mean making responsible and transparent decisions regarding
use of capital.
3. For customer it can mean superior quality of product, reasonable price and delivery
on time.
4. For suppliers it can mean receiving payment on time, right price for their materials.
5. For local communities and authorities, it can mean taking measures to protect the
environment from pollution.
6. For non-governmental organizations it can mean disclosing business practices on
issues ranging from energy conservation and global warming to human rights and
animal rights.

Corporate Social Responsibility (CSR) is a concept whereby companies not only

consider their profitability and growth, but also the interests of society and the environment
by taking responsibility for the impact of their activities on stakeholders, environment,
consumers, employees, communities, and all other members of the public sphere.
 ✓ The basic premise is that when the corporations get bigger in size, apart from the
economic responsibility of earning profits, there are many other responsibilities attached
to them which are more of non-financial and social in nature.
✓ These are the expectations of the society from these corporate to give something in return
to the society with whose explicit or implicit help these entities stand where CSR is
understood to be the way firms integrate social, environmental and economic concerns
into their values, culture, decision making, strategy and operations in a transparent and
accountable manner and thereby establish better practices within the firm, create wealth
and improve society.
✓ Corporate Social Responsibility is nothing but what an organisation does, to positively
influence the society in which it exists. It could take the form of community relationship,
volunteer assistance programmes, special scholarships, preservation of cultural heritage
and beautification of cities.
✓ The term Corporate Social responsibility refers to the concept of business being
accountable for how it manages the impact of its processes on stakeholders and takes
responsibility for producing a positive effect on society.

❖ Need of Corporate Social Responsibility

o CSR creates a favourable public image, which attracts customers. Reputation or brand
equity of the products of a company which understands and demonstrates its social
responsibilities is very high.

o Customers trust the products of such a company and are willing to pay a premium on its
products. Organizations that perform well with regard to CSR can build reputation, while
those that perform poorly can damage brand and company value when exposed. Brand
equity, is founded on values such as trust, credibility, reliability, quality and consistency.

o Corporate Social Responsibility (CSR) activities have its advantages. It builds up a positive
image encouraging social involvement of employees, which in turn develops a sense of
loyalty towards the organization, helping in creating a dedicated workforce proud of its
company. Employees like to contribute to the cause of creating a better society.
Employees become champions of a company for which they are proud to work.
o Society gains through better neighbourhoods and employment opportunities, while the
organization benefits from a better community, which is the main source of its workforce
and the consumer of its products.

o Public needs have changed leading to changed expectations from consumers. The
industry/ business owes its very existence to society and has to respond to needs of the
society.

o The company's social involvement discourages excessive regulation or intervention from

the Government or statutory bodies, and hence gives greater freedom and flexibility in
decision-making.

o The internal activities of the organisation have an impact on the external environment,
since the society is an interdependent system.

o A business organisation has a great deal of power and money, entrusted upon it by the
society and should be accompanied by an equal amount of responsibility. In other words,
there should be a balance between the authority and responsibility.

o The good public image secured by one organisation by their social responsiveness
encourages other organizations in the neighbourhood or in the professional group to
adapt themselves to achieve their social responsiveness.

o The atmosphere of social responsiveness encourages co-operative attitude between

groups of companies. One company can advise or solve social problems that other
organizations could not solve.

o Companies can better address the grievances of its employees and create employment
opportunities for the unemployed.

o A company with its “ear to the ground” through regular stakeholder dialogue is in a better
position to anticipate and respond to regulatory, economic, social and environmental
changes that may occur.
 o Financial institutions are increasingly incorporating social and environmental criteria into
their assessment of projects. When making decisions about where to place their money,
investors are looking for indicators of effective CSR management.

o In a number of jurisdictions, governments have expedited approval processes for firms

that have undertaken social and environmental activities beyond those required by
regulation.

Corporate social responsibility: Examples in India

Tata Group

o Tata group conglomerate in India carries out various CSR projects, most of which are
community improvement and poverty alleviation programs. Through self-help groups, it is
engaged in women empowerment activities, income generation, rural community
development, and other social welfare programs. In the field of education, the Tata Group
provides scholarships and endowments for numerous institutions.
o The group also engages in healthcare projects such as facilitation of child education,
immunization and creation of awareness of AIDS. Other areas include economic
empowerment through agriculture programs, environment protection, providing sport
scholarships, and infrastructure development such as hospitals, research centres, educational
institutions, sports academy, and cultural centres.

Ultratech Cement

o India’s biggest cement company is involved in social work across 407 villages in the
country aiming to create sustainability and self-reliance.
o Its CSR activities focus on healthcare and family welfare programs, education,
infrastructure, environment, social welfare, and sustainable livelihood.
o The company has organized medical camps, immunization programs, sanitization
programs, school enrolment, plantation drives, water conservation programs, industrial
training, and organic farming programs.
Mahindra & Mahindra

o Indian automobile manufacturer Mahindra & Mahindra (M&M) established the K. C.

Mahindra Education Trust in 1954, followed by Mahindra Foundation in 1969 with the
purpose of promoting education. The company primarily focuses on education programs
to assist economically and socially disadvantaged communities.
o CSR programs invest in scholarships and grants, livelihood training, healthcare for remote
areas, water conservation, and disaster relief programs.
o M&M runs programs such as Nanhi Kali focusing on girl education, Mahindra Pride Schools
for industrial training, and Lifeline Express for healthcare services in remote areas.

ITC Group

o It is conglomerate with business interests across hotels, FMCG, agriculture, IT, and
packaging sectors has been focusing on creating sustainable livelihood and environment
protection programs.
o The company has been able to generate sustainable livelihood opportunities for six million
people through its CSR activities.
o Their e-Choupal program, which aims to connect rural farmers through the internet for
procuring agriculture products, covers 40,000 villages and over four million farmers.
o Its social and farm forestry program assists farmers in converting wasteland to pulpwood
plantations. Social empowerment programs through micro-enterprises or loans have
created sustainable livelihoods for over 40,000 rural women.

❖ Benefits of CSR

The nature of benefits of CSR for any organization can vary depending on the nature
of the enterprise. The business case for CSR within a company will likely rest on one or more
of these arguments.

1. Human resources

o A CSR programme can be an aid to recruitment and retention, particularly within the
competitive graduate student market.

o Potential recruits often ask about a firm ‘s CSR policy during an interview, and having
a comprehensive policy can give an advantage.
2. Risk management

o Managing risk is a central part of many corporate strategies. Reputation as take

decades to build up can be ruined in hours through incident such as corruption
scandals or environmental accident.

o These can draw unwanted attention from regulators, courts, governments & media.
Building a genuine culture of doing the right thing within a corporation can offset
these risks.

3. Brand differentiation

o In crowded market places, company’s striving for a unique selling proposition. That
can separate them from the competition in the minds of consumers.

o CSR can play role in building customer loyalty based on distinctive ethical values.

4. License to operate

o Corporation are keen to avoid interference in their business through taxation. By

taking substantive voluntary steps, they can pursuit governments that they are taking
issues such as health & safety, diversity, or the environment seriously as good
corporate citizen for positive impact on the environment.

5. Communities as suppliers:
o Innovative CSR initiatives are emerging drastically, wherein companies have invested
in enhancing community livelihood by incorporating them into their supply chain.
o This has benefitted communities and increased their income levels while providing
these companies with an additional and secure supply chain.

6. Enhancing corporate reputation

o The traditional benefit of generating goodwill, creating a positive image and branding
benefits continue to exist for companies that operate effective CSR programs.
o Brand building through this channel allows companies as a socially responsible corporate
citizen.
❖ Key development in CSR

✓ Internal Assessment.

o Before designing a CSR strategy, it is often helpful to assess your current CSR activities,
looking at the whole picture what CSR policies, programs, and structures are already
in place and where the “gaps” are.

✓ Put it in writing.

o Ensure that your company creates a separate CSR statement or embeds its CSR
commitment within the company’s mission or values statement, code of conduct or
other appropriate company policy.

✓ Embed CSR into the company planning and budget processes.

o The ultimate goal of creating a CSR management system is to ensure that CSR
considerations are a part of all business decisions.

✓ Develop processes for employees to raise CSR issues and concerns to appropriate decision-
makers and advocates.

o An open environment is one of the easiest ways to solicit valuable feedback on CSR
issues and problems.

✓ Formalize the board- and executive- level responsibility for CSR issues.

o It is virtually impossible to successfully implement CSR in your company without

board, executive and senior management buy-in, support, and accountability for CSR
performance. Your ability to build senior-level vision and support will have a direct
impact on the depth, breadth, longevity and overall effectiveness of your CSR work.

✓ Communicate CSR performance visibly and frequently to all employees.

o Whether through newsletters, annual reports, intranet communication, meetings,

training or other informal mechanisms, make sure your employees know CSR is a
company priority.

✓ Put CSR on the agenda of meetings at all levels of the company.

 o This includes the board, executive and senior management, companywide meetings
and departmental communications.

✓ Provide training for employees directly involved in CSR activities.

o This is an ongoing commitment since training needs will change as the company’s CSR
issues change and evolve.

✓ Create CSR accountability at all employee levels.

o Build CSR responsibilities into the job descriptions and performance evaluations of
employees at all levels.

✓ Measure and communicate your performance.

o Whether you choose to engage in an internally managed assessment of your CSR

performance or contract out a formal external assessment of your CSR performance,
find an honest and appropriate way to share the results with internal and external
stakeholders.
Chapter 3 – Workplace ethics
Factors Influencing Ethical Behaviour at Work, Ethical Issues Discrimination, Harassment.
Importance of Ethical Behaviour at the Workplace, Guidelines for Managing Ethics in the
Workplace.

❖ Factors influencing ethical behaviour at workplace

➢ The most important influence on ethical behaviour in the workplace is overall
company culture, which determines whether employees are valued and whether
stakeholders are treated with trust or suspicion.

➢ A company that bases its policies and decisions on deeply rooted ethics will create a
culture in which employees are naturally disposed to act ethically, too.

➢ The type of integrity that is at the root of an ethical company culture cannot be faked
or taught, but it can be contagious and inspiring.

➢ As Jill Young of South University's School of Business explains, If you act with integrity,
ethical behaviour is just a natural progression.

1. Customer Service

o The values that shape an ethical company culture influence the relationships that a business
maintains with its customers.

o An ethical company will train employees to treat customers with dignity and respect, and to
be fair and honest with them.

o Employees who see such behaviour as an integral part of customer service will understand
the depth of the company's commitment to ethical behaviour.

o They will likely model their work accordingly because ethical behaviour can inspire kindness,
honesty and fairness.

2. Human Resources

o Ethical human resource policies are vital to creating and maintaining an ethical company
culture.

o Employees who are treated with basic decency are more likely to be content with their jobs.

o When employees feel exploited, they are prone to overt unethical behaviour such as theft, as
well as more subtle offenses such as using company resources for personal gain.
 o When employees are fairly compensated for their work, they are likely to give more to the
company and less inclined to take advantage of opportunities to cut corners or exploit
situations for personal gain.

3. Product Integrity

o A company culture that inspires ethical behaviour in its employees will probably provide
products and services created with ethical values in mind.

o For example, a food business that uses optimally fresh ingredients handled in a clean and
compliant facility most likely won't have to be dishonest with customers who get sick from
eating the company's food.

o Employees who know they can stand behind the products they sell will probably be inspired
to act ethically in other facets of their work life.

4. Competitive Integrity

o Although a company's competitors are often seen as enemies, a truly ethical company extends
its solid values to the way it treats its competitors as well as its stakeholders.

o Calling a competitor, pretending to be a customer and asking questions that you will use to
create competing products is dishonest.

o Employees who are asked to engage in this type of behaviour get the message that all
company values are questionable and this impression will interfere with your overall efforts
to maintain an ethical workplace.

❖ Discrimination

Discrimination occurs when a person, or a group of people, is treated less favourably than another
person or group because of their background or certain personal characteristics.

Discrimination laws protect people from discrimination of the basis of their:

o Race, including colour, national or ethnic origin or immigrant status

o Sex, pregnancy or marital status and breastfeeding
o Age
 o Disability
o Sexual orientation, Gender identity and Intersex status.

Discrimination can happen at different points in the employment relationship, Including

o When recruiting and selecting staff

o In the terms, conditions and benefits offered as part of employment
o Who is considered or selected for training and the sort of training offered
o Who is considered or selected for transfer or promotion.
o Who is considered and selected for retrenchment or dismissal?

❖ Harassment

Under discrimination law, it is unlawful to treat a person less favourably on the basis of
particular protected attributes such as a person’s sex, race, disability or age.

Treating a person less favourably can include harassing or bullying a person.

The law also has specific provisions relating to sexual harassment, racial hatred and disability
harassment.

Harassment can include behaviour such as:

o Telling insulting jokes about particular racial groups

o Sending explicit or sexually suggestive emails or text messages
o Displaying racially offensive or pornographic posters or screen savers
o Making derogatory comments or taunts about a person’s disability, or
o Asking intrusive questions about someone’s personal life, including his or her sex life.

It is important to understand that a one-off incident can constitute harassment.

o The Sex Discrimination Act prohibits harassment in the workplace by employers, co-workers
and other workplace participants, such as partners, commission agents and contract workers.
✓ Sexual harassment is broadly defined as unwelcome sexual conduct that a reasonable
person would anticipate would offend, humiliate or intimidate the person harassed.
o The Disability Discrimination Act prohibits harassment in the workplace based on or linked
to a person’s disability or the disability of an associate.
 o The Racial Discrimination Act prohibits offensive behaviour based on racial hatred. Racial
hatred is defined as something done in public that offends, insults or humiliates a person or
group of people because of their race, colour or national or ethnic origin.

All incidents of harassment no matter how large or small or who is involved – require employers
or managers to respond quickly and appropriately. If issues are left unaddressed, a hostile working
environment can develop which can expose employers to further complaints

Importance of Ethical behaviour at Workplace

1. Asset Protection and Assurance:

o When your workers possess an ethical working environment and ethical behaviour in the
workplace, your company’s maintenance cost decreases to a remarkable extend because they
are well aware of their duties and responsibilities towards the company.

o They also realise that they should not do any damage to any of the machines and equipment
are given to them as they are very valuable for the company and doing damage to these things
will be a wrong act, so automatically things will be taken care of and everything will work
systematically.

2. Productivity will increase:

o When the work staff and the workers value the work given to them and then they will do all
the given work in time and achieve their set targets, this will greatly affect the sales and the
productivity of the company.

o Due to this it is assured that you will have a group of people who will sail your business even
in the worst of the downfall of the market, and keep the growth of the company and business
consistent.

3. Team Work will develop:

o When all the workers do their jobs in a responsible way, then a time comes when they have
achieved the target way before the given deadline, then a question arises What Next? So, the
situation automatically bonds up all the individuals into a team.
 o These individual now work as a team and work in the benefit of the company for which they
will be getting or achieving their incentives.

o This mutual understanding of the employees is a positive signal that the company will sustain
for a very long period in the variable market conditions.

4. Public Image and Brand Value Increases:

o Yes, if all the members of the company are dedicated to work as well as figure out their values
and responsibility towards the environment, then it is for sure that the type of cleanliness and
the disposal of the waste product of the company will be unbeatable in the market,

o Hence resulting in attracting a bigger customer base due to the clean and quality of the
services or products.

o Moreover, increase in the public image and increase in the customer base is directly
proportional to an increase in the brand value. In simpler words when you gain popularity
amongst your customers you start to develop your company into a brand.

5. Adaptive to changes:

o Workers with professional ethics in the workplace is definitely the master key to the lock of
success.

o The team of understanding, trust worthy, reliable, motivate, concern and responsible people
will defiantly adapt themselves into any kind of position and work they are filled with.

o Moreover, in general, it has been seen worldwide that in the digressive market conditions, if
the company asks for any changes in the production or changes in the kind of work then the
workers oppose.

o In some situations, the company is left empty-handed falling short of workers as they leave
the company due to changes, but things are just opposite when you have a trustworthy and
responsible bunch of people as they themselves demand for changes according to the
company’s situation and let the company run even in the hard market situations.
6. Decision making and implementing is always easy:

o Whenever there is a need to take a big decision then the best one made is by the advice of
the employees of the company, and what will be better than every single employ respecting
the decision and supporting the company to go ahead with their decision.

o This is the power of ethics in the employers who respect the decision of the company and let
it go along with the flow.

o This is very rare in the big companies but where this scene happens; the company turns big
brands over the night.

7. Trouble free working environment:

o Generally, where everyone is unknown and moreover no one wants to know each other there
are higher chances of great trouble and where there is a friendly, respectful and
understanding environment between the employees there are fewer chances of least troubles
from the employee’s end.

o If in case, a situation arises where there is some little misunderstanding between the
employees, it gets solved within them due to better and strong understanding between all the
employees.

o Even the management does not have to bother about those small little things as they know
that the employees will take better care of themselves.

8. There is no one left negative:

o When people are detached from one another and someone gets negative regarding the
companies work then it has been seen that from that single negative employee many are
affected.

o Thus, there is a sudden decline in the working of the employees, but when everything is good
to go and everyone is concerned about one another then things become systematic and in
 case if someone gets negative, the positive and supportive environment works as a boost up
for the person and again he/she starts working to their best.

9. Less Legal Issues:

o When everything is systematic and functional and in addition your workers are cooperative
and understanding then you won’t be facing any problems or legal obligations from the
employee’s end, because all the workers are treated equally and all are well known with their
duties which the job requires from them.

o When everything is managed and systematic then all the paperwork and the legal formalities
are the primary things which is considered the most, so there is no question of any legal issues.

10. The company will Touch New level of Success:

o When everything is so managed and systematic along with the understanding of the
employees because of their strong ethics, the company will surely touch new heights of
success and even the growth of your business will be assured.

o When your employees become expert in their respective works and respective fields, then
their dedication and will to do the work will show true colours and give more fruitful results.
Chapter 4 - Environment and Ethics

Introduction, Sustainable Development, Pollution and Resource Depletion, Ecological Ethics,

Conservation of Natural Resources, Developments in India, Eco-Friendly Business Practices.

❖ Introduction

o The environment is everything we depend on. Whether it be the trees that give us oxygen, the
land we live upon and the rivers that provide us with water.

o The environment is crucial for the society and businesses together. We all have a responsibility
to conserve and protect the environment.

o And whether it be governments, businesses, consumers, workers or other members of society,

each much contribute to stop the environment from polluting further.

o Governments must initiate programs to ban the use of hazardous products such as plastic carry
bags.

o Consumers, workers and society can support environmental protection by not using these
hazardous products or other products that are not environmentally friendly.

Steps that can be Taken

Business enterprises should take lead in solving environmental issues. It is their responsibility
to check the consequences of their actions and also to protect environmental resources. Some
initiatives which can be taken by business enterprises for environmental protection are:

o A sincere commitment by the top management of the business to cultivate, maintain and
develop work culture for environmental protection and pollution prevention.

o To ensure that the commitment towards environmental protection is shared by all the
employees of all the divisions of the business.
o Developing clear-cut policies and programmes for purchasing good quality raw material, using
latest technology, using scientific techniques of disposal and waste management and to
develop the skills of the employees for the purpose of pollution control.

o To adapt to the laws and regulations passes by the government for the prevention of pollution.

o Participation in government programmes relating to the management of hazardous

substances, clearing up of polluted water bodies, plantation of trees and to reduce
deforestation.

o Assessment of pollution control programmes in terms of costs and benefits to increase the
progress with respect to environmental protection.

o Also, businesses can arrange workshops and give training material and share technical
information and experience with suppliers and customers to get them involved in pollution
control programmes.

o Promoting green energy that reduces the use of fossil fuels.

❖ Sustainable Development

o In general management, development that meets the needs of the present without
compromising the ability of future generations to meet their own needs.

o The concept of sustainable development was introduced by the Brundtland Report, the first
report of the World Commission on Environment and Development, set up by the United
Nations in 1983.

o It advocates the integration of social, economic and environmental considerations into policy
decisions by business and government.

o Particular emphasis is given to social, cultural, and ethical implications of development.

o Sustainable development can be achieved through environmental management and is a

feature of a socially responsible business.

❖ Pollution and Resource Depletion

✓ Resource depletion involves the consumption of finite or scarce resources.

✓ Pollution involves the undesirable contamination of the environment by the manufacture or
use of commodities.
o Since contamination of air, water, or land diminishes their beneficial qualities.
o Pollution can be viewed as a type of resource depletion itself

✓ A basic difference between pollution and resource depletion

o Pollution

• For the most part pollution affects present generations (with the notable
exception of nuclear waste)
• Polluted resources are for the most part renewable

▪ Air and Water can be renewed by ceasing to pollute them

▪ Allowing them time to recover
o Depletion

• For the most part affects future generations.

• Concerned with finite non-renewable resources -

▪ Since they cannot be renewed

▪ What will be around for future generations is just what's left over
from the present

➢ Air Pollution

✓ A result of Industrial Production & certain Industrial Products. Especially,

o Industrial smokestacks
o Utilities
o Automobiles

1. Global warming

Rising carbon dioxide & other greenhouse gas levels create a "greenhouse effect".

o The atmosphere becomes like a blanket keeping more heat in

 ▪ High wavelength light radiation comes in & warms things up
▪ Lower wavelength heat radiation can't get out
o Trends
▪ 25% increase in CO2 levels since the dawn of the industrial revolution
▪ CO2 levels currently increasing at 1.4% per year
▪ Rising average global temperatures
▪ Measured: now 1° C warmer than 1900
▪ Forecast: to rise 1.5° to 4.5° C during this century
o Ongoing & Expected consequences
▪ Expansion of the world's deserts
▪ Melting of the polar ice caps causing
▪ rising sea levels
▪ flooding of coastal lands
▪ Assorted ill effects
▪ extinction of species
▪ disruption of farming
▪ increase in the severity of respiratory diseases

2. Ozone depletion
o The ozone layer, high in the stratosphere, screens the earth from harmful UV radiation
o Chlorofluorocarbons (CFCs) destroy ozone & their release into the air causes
deterioration of the ozone layer

o CFC facts
▪ CFCs take 7-10 years from release to rise to the level o the ozone layer
▪ Remain there destroying ozone for 75-130 years
▪ Due to international agreements to phase out CFCs their emissions have
dropped by 87% since their 1988 maximum, however gasses already released
will continue to rise upwards for many years
o Ill effects & threats
▪ Skin cancer
▪ Destruction of plankton: small ocean plants on which the entire ocean food
chain ultimately depends
▪ Crop destruction: 75% of the world's major food crops are UV sensitive
 ▪ Unexplained decrease in frog & other amphibian populations: "canaries in the
mine" hypothesis
• Acid rain
o Explained
▪ Nitrogen Oxide & Sulphur Oxide Emissions
▪ React with water in the atmosphere
▪ To form Nitric and Sulfuric acid
o Ill effects
▪ Kills fish & vegetation in lakes
▪ Deforestation: many researchers feel that future emissions will devastate the
world's forests.

3. Water Pollution

• Notable Pollutants & their effects

o Organic wastes & phosphorus compounds - most important sources
o organic wastes

• Sewerage
• Runoff from animal feedlots
• Wastes from the pulp and paper industries
o Phosphorus compounds
• Detergents
• Fertilizers: agricultural runoff
o Ill effects: bacterial contamination (organic wastes)
✓ Direct human health risks
✓ Hepatitis, cholera (especially from sewerage)
o Oxygen depletion in lakes & streams: kills fish

• explosive algae growth:

o phosphates are fertilizers
o organic wastes are nutrient rich

o Inorganic pollutants
▪ heavy metals: e.g., chromium
▪ effects: find their way into the food chain
 o Consumed by fish which are consumed by us & other animals
o Resulting in various afflictions & toxic effects: especially endangering
unborn children
o Heat
▪ Due to use of water as a coolant
▪ Disturbs aquatic ecosystems & kills fish
o Oil spills
▪ Causes: offshore drilling, tanker discharges & accidents
▪ Effects
o Directly lethal to wildlife
o Losses to tourism & fisheries
o Expensive clean-up

✓ Ocean & underground water pollution

o Oceans - What goes into the lakes & rivers finds its way eventually to the sea
o Oceans have been used as disposal sites for low-level radioactive & other wastes.
o Effects: Materials work their way up the food chain & into the fish we eat
▪ Heavy metals
▪ Other toxins (e.g. PCBs)
✓ Underground water supplies: Ground water contamination
o Landfills, waste piles, and legal & illegal dumps
o Surface reservoirs

▪ Risks
o Associated with various afflictions (
o Groundwater is the source for more than 50% of U.S. drinking water

➢ Land Pollution

• Toxic substances: substances that can cause an increase in mortality rates, or an increase in
irreversible or incapacitating illness, or that have other seriously adverse health effects.
o Examples

✓ Acidic chemicals
✓ Pesticides herbicides
✓ Inorganic metals
 ✓ Flammable solvents

o Trends:

✓ 10 times more chemicals were being used in the mid-80s than in 1970.
✓ Many of them toxic.

o Uncertainty

✓ Health effects of many substances is hard to determine

✓ Cancer causing substances for instance
• generally, only result in cancers 15 to 30 years after exposure
• making it hard to identify the cause of the cancer when it develops

• Solid Waste
o Residential Garbage

Only 25% of residential wastes are recovered through recycling due to {up from
10%}
✓ Lack of financial backing for recycling operations
✓ The small size of markets for recycled products
✓ Toxic chemicals present in recyclable garbage

City garbage dumps are significant sources of ground water pollution

o only 25% even test for groundwater contamination

o less than 16% have insulating liners
o less than 5% separate out & collect polluting liquid wastes
o less than 50% put restrictions on types of liquid wastes they'll accept

▪ Effects
▪ harm due to direct human exposure
▪ groundwater contamination

❖ Ecological Ethics

• Ecological ethics holds, a duty to recognize and protect ecosystems

o Ecosystem: a system of interrelated and mutually dependent set of organisms and
environments

✓ Example - a lake:

o Fish eat small aquatic organisms & plants

o Plants & Organisms fed & fertilized by decaying plant and fish waste
products

✓ Prime example: "Spaceship earth"

o The planet's ecosystem is our life-support system
✓ The global ecosystem is bigger than any of us.
o The ecosystem life on this planet has an intrinsic value
• Over and above the values of its human inhabitants
• Value all its own, independently of us

o We have a direct duty to protect the ecosystem

o In order to insure our own survival, we need to protect the

environment
o In order to ensure the survival off future generations we need to
preserve the ecosystem

▪ Non-human parts of the environment - deserve to be preserved for their own

sake
▪ Biodiversity is a good thing in and of itself
▪ Humans have no right to reduce the richness and diversity of the
ecosystem except to satisfy vital needs.
o The current population/industrialization/urbanization explosion is reducing
biodiversity
o Program flowing from recognition of that direct duty & that fact
▪ Decrease of human population: the flourishing of nonhuman life requires
such a decrease
▪ Ideological change: appreciating the quality of life rather than frenzied pursuit
of higher material standards of living
▪ Economic changes: produce & consume less, not more
 ▪ altogether
▪ and per capita
• Variety of Environmental Ethical Claims
o Some utilitarian’s - Jeremy Bentham (the first utilitarian) Peter Singer (most famously,
at present)
▪ Pain is an evil whether is inflicted on humans or animals: "they suffer"
Bentham says
▪ The pains of animals must be considered equal to comparable human pains
▪ To do otherwise is speciesism (Singer)
▪ Comparable to racism & sexism
▪ So, we have a direct duty to animals to avoid causing them pain & suffering
o Rights argument
▪ Every animal life has intrinsic value
▪ So, Animals have rights
▪ To be treated with respect
▪ To have their interests considered in decisions affecting them
▪ Interests in surviving,
▪ Flourishing,
▪ Not suffering

❖ Conservation of Natural Resources

Conservation refers to the saving or rationing of resources for future use

o Rights of Future Generations

• Would-be argument for conservation

o Future generations have an equal right to the planet's limited resources
o By depleting these resources, we are depriving them of what is rightfully theirs
o So, we ought to do our utmost to practice conservation
▪ to minimize depletion
▪ to avoid violating the rights of future generations

o Justice to Future Generations

• John Rawls - Two unjust extremes

 1. To impose disproportionately heavy conservation burdens on the present
generation (unfair to us)
2. To leave virtually nothing for future generations (unfair to them)

o Need to determine the middle point: that's where justice lies

• Imagine you didn't know which generation you belong to: this or
some future one
• The distribution of resources you would accept as fair & reasonable
from behind that "veil of ignorance"
• Is the just distribution
o Inadequacy of market mechanisms for ensuring adequate conservation

o The market a "live for today" kind of mechanism responding to

▪ The effective demands of present participants
▪ Actual supplies currently made available
o Future demands and supplies
▪ So heavily discounted
▪ They hardly effect prices at all
Chapter 5 Ethics in Business

(A) Ethics in Marketing and Consumer Protection: Introduction, Ethical Guidelines,

behaving ethically in marketing, Healthy competition and protecting Consumer’s interest,
Consumer Protection Councils in India.

(B) Ethics in Accounting and Finance: Introduction, Creating an Ethical Environment,

Reasons for Unethical Behaviour, Safeguards, Ethical Conflict Resolution.

A) Ethics in Marketing & Consumer Protection

❖ Introduction – Ethics in Marketing

➢ The task of marketers is to influence the behavior of customers.

➢ To accomplish this goal, marketers have a variety of tools including the design of a
product, the price at which it is offered, the message used to describe it and the place
in which it is made available.

➢ Ethics are standards of moral conduct. To act in an ethical fashion is to conform to

an accepted standard of moral behavior.

➢ Undoubtedly, all people prefer to act ethically. It is easy to be ethical when no

hardship is involved or when life is going well.

➢ The test comes when things are not going well, when pressures build. These
pressures arise in all walks of life, and marketing is no exception.

➢ Marketing executives face the challenge of balancing their own best interests in the
form of recognition, pay, and promotion with the best interests of consumers, their
organizations and society into a workable guide for their daily activities.

➢ In any situation they must be able to distinguish what is ethical from what is
unethical and act accordingly, regardless of the possible consequences.

❖ Behaving Ethically in Marketing

 Marketing executives should practice ethical behaviour because it is morally correct.
Following are the four reasons for ethical behaviour

1. To reverse declining public confidence in marketing

o Periodically we hear about misleading package labels, false claims in ads, phony
list prices, and infringements of well-established trademarks.
o such practices are limited to only a small proportion of all marketing, the
reputations of all marketers are damaged.
o To reverse this situation, business leaders must demonstrate convincingly that
they are aware of their ethical responsibility and will fulfil it.
o Companies must set high ethical standards and enforce them.
2. To avoid increases in government regulation
o Business apathy, resistance, or token responses to unethical behaviour simply
increase the probability of more government regulation.
o Most of the governmental limitations on marketing are the result of
management’s failure to live up to its ethical responsibilities at one time or other.
o Moreover, once some form of government control has been introduced, it is
rarely removed.

3. To regain the power granted by society.

o Marketing executives has a great deal of social power as they influence markets
and speak out on economic issues.

o However, there is responsibility tied to that power and If marketers do not use
their power in a socially acceptable manner that power will be lost in the long
run.

4. To protect the image of the organization

o Buyers often form an impression of an entire organization based on their contact

with one person.

✓ Example - As Procter & Gamble put it in an annual report, when a Procter

& Gamble sales person walks into a customer’s place of business that sales
person not only represents Procter & Gamble, but in a very real sense, that
person is Procter & Gamble.
 ❖ Healthy Competition

Introduction

o Globalization and progressive liberalization of trade during the last decade opened a
widening atmosphere giving rise to different challenges for every country around the
globe.

o Therefore, it became very essential for many countries to have a new line of rethinking
on the existing pattern of policies on trade, customs and usages.

o In India, in the recent years, the corporate and economic reforms and policies had
pervasive effects on the structure of domestic trade and competition.

o The law which was originally enacted to deal with market and competition (The
Monopolies and Restrictive Trade Practices Act, 1969) addressed the problems concerning
Monopolistic, Restrictive and Unfair Trade Practices only. There was no comprehensive
Competition policy.

o Government constituted a High-Level Committee on Competition Policy and Law under

the Chairmanship of Mr. S.V.S. Raghavan, to recommend a legislative framework relating
to Competition Law.

o The Government, after considering the report and suggestions from various
organizations, institutions and general public, introduced the Competition Bill in the
Parliament. And bill became act after receiving approval from the President.

Competition

o Competition is a situation in a market in which firms or sellers independently strike for

the buyers in order to achieve a particular business objective like profit, sales or market
share.

o A pre-requisite for a good competition is trade, trade is the unrestricted liberty of every
man to buy, sell and when, where and how he pleases.

Competition Policy and Law

o Competition Law provides necessary powers to enforce and implement the

Competition Policy.
 o The central economic goal of the Competition Policy is the preservation and
promotion of the competitive process.

o It is a symbolic process, which encourages efficiency in the production and allocation

of goods and services over a period of time through its effects on innovation and
adjustment to technological change.

o In conditions of effective competition, competitors will be having equal opportunities

to compete for their own economic interest.

o Therefore, the quality of their outputs and resource deployment will be given top
priority in order to sustain and succeed in the market by meeting consumers demand
at the lowest possible cost.

Competition Act, 2002

o The Competition Act, 2002 intends to provide, keeping in view of the economic
development of the country, for the establishment of a Commission to prevent
practices having adverse effect on competition,

o to promote and sustain competition in markets, to protect the interests of

consumers and to ensure freedom of trade carried on by other participant in
market.

o The renewed efforts of the Government in implementing a Competition Act, 2002 is

a laudable step in the right direction and a new beginning in the frontiers of India’s
Competition Policy towards harmonizing international trade and policy.

Parameters of Competition Law

1. Prohibition of certain agreements Which are considered to be anti-competitive in

nature. Such agreements [namely tie in arrangements, exclusive dealings (supply and
distribution), refusal to deal and resale (price maintenance) shall be presumed as anti-
competitive if they cause or likely to cause an appreciable adverse effect on
competition within India.

2. Abuse of dominant position by imposing unfair or discriminatory conditions or limiting

and restricting production of goods or services or indulging in practices resulting in
denial of market excess or through in any other mode are prohibited.

3. Regulation of combinations which cause or likely to cause an appreciable adverse

effect on competition within the relevant market in India is also considered to be void.
 ❖ Consumer Interest
o Consumer is a member of a broad class of people who purchase, use, maintain and dispose
of products and services.

o Consumers are affected by pricing policies, financing practices, quality of goods and
services and various trade practices.

o They are clearly distinguishable from manufacturers, who produce goods and wholesalers
or retailers, who sell goods.

o If the consumer is at the fulcrum, consumer interest and consumer welfare should have
primacy in all Governmental policy formulations.

Public Interest

o On the other hand, Public interest is something in which society as a whole has some
interest.

o Governmental policies may be fashioned and introduced which may not be in the
ultimate interest of the consumers.

o The asymmetry arises from the fact that all producers are consumers but most are
producers as well.

o What is desirable for them in one capacity may be inimical in the other capacity.

Consumer Interest and Public interest are considered synonymous. But they are not similar and
need to be distinguished.

A simple example will make the point clear. A farmer wants the price of goods he consumes to be
as cheap as possible but wants the highest price for his produce. A Government wishing to
encourage agriculture for self-sufficiency in food as a national security measure faces the conflict:
should it support high prices to encourage production or low prices to protect the consumer? This
is a characteristic public interest-consumer interest conflict.

❖ Consumer Protection Councils in India

The Central Consumer Protection Council: The objects of the Central Council like The State
Consumer Protection Council & The District Consumer Protection Council shall be to promote
and protect the rights of the consumers. such as,

(a) the right to be protected against the marketing of goods and services which are
hazardous to life and property.

(b) the right to be informed about the quality, quantity, potency, purity, standard and
price of goods {or services, as the case may be} so as to protect the consumer
against unfair trade practices.

(c) the right to be assured, wherever possible, access to a variety of goods, and
services at competitive prices.

(d) the right to be heard and to be assured that consumer’s interest will receive due
consideration at appropriate terms.

(e) the right to seek redressal against unfair trade practices {or restrictive trade
practices} or unscrupulous exploitation of consumers.

(f) the right to consumer education.

Chapter 5 B) Ethics in Accounting & Finance

o Accounting is the process of describing business processes in numbers.

o For a company's accounting to truly represent what is going on in its financial arena, its
bookkeeping numbers must be honest and accurate.

o Bookkeepers and accountants have a responsibility to represent information in ways that

genuinely represent what is going on in the business.

o Failure to do so can have consequences for business owners, stakeholders and tax reporting
agencies.

❖ Creating ethical behaviour

➢ Accountability
o Businesses are accountable to a range of shareholders, from partners, to investors, to
customers.

o Shareholders, partners and investors deserve to know the truth about your company's
finances because this information is critical to sound investment decisions.
 o Customers may be entitled to know whether your company is financially healthy if
they enter into transactions that depend on its longevity.

o For example, a customer taking out a mortgage has a stake in working with a bank
that is financially stable and a customer renting a storage unit has a stake in the
storage company's ongoing solvency.

➢ Planning

o Accountants and bookkeepers have a responsibility to provide the business owners

who employ them with accurate information that facilitates sound planning.

o This obligation involves providing accurate information, and providing it in a time

frame that is prompt enough to be relevant.

o If your bookkeeper takes his time compiling profit and loss statements that could tell
you that your business is spending too much on payroll, you may miss an opportunity
to improve the situation before it puts your business in jeopardy.

➢ Taxes
o Your company has a legal obligation to report financial information fairly and
accurately on tax forms.

o Providing inaccurate information to tax agencies may lower your tax burden, but you
will be subject to fines and perjury charges if you are caught.

o Ethical accounting practices ensure that your tax forms will be completed in a way
that keeps your conscience clear and keeps you out of trouble.

➢ Perception
o Honest and ethical accounting helps to create a positive image for your business.
When a company makes news for dishonest accounting.

o It loses the trust of current and potential customers. This is especially important with
industries that depend on strong working relationships with their custom.

❖ Reason for unethical behaviour

o Emphasize on short term results: This is one of the primary reasons which has led to downfall
many companies like Enron and world com.
 o Ignoring small and unethical issues: It is known fact that most of the compromises we make
are small but however they lead us into committing large infractions and ignoring minor
lapses, lead to better and more huge mistakes.
o Economics Cycles: In Good times, companies are relaxed in their accounting procedures or
disclosures, as there is a pervasive feeling good effect. But when times of hardships follow,
then the hit taken by them is almost fatal, as was proved in the Enron case. So, companies
need to watch out for economic cycles scan and be vigilant in good times as well as bad.
o Accounting Rules: In the era of globalization and massive cross border flow of capital,
accounting rules are changing faster than ever before. The rules have become more Complex
and it is difficult to identify deviations from these complex set of requirements. The
complexity of these principles and rules and the difficulties associated with identifying abuse
are reasons which may promote unethical behaviour.

Ethical safeguards

o It provides an initial set of assumptions values and definitions which are agreed upon and
shared by all those subject to the framework.
o It is stated in relatively general terms so it is easy to understand and communicate.
o It recognises that ethical issues may have no 'correct' answer and therefore provides the
generalised guidelines and principles to apply to any situation.
o Safeguards seek to reduce or eliminate threats.

o They fall into three categories created by the:

1. Profession

These include:

• Education and training including CPD requirements

• Setting of corporate governance regulations and professional standards
• Monitoring of professional work including disciplinary proceeding

2. Work environment

There are many examples which include:

 • Internal control systems
• Review procedures
• Disciplinary procedures
• Organisational codes of ethics
• Separate review and reporting for key engagements.

3. Individual

These include:

• Complying with professional standards

• Maintaining records of contentious issues
• Mentoring
• Contacting professional bodies with queries.

Best of luck…

Regards,

Prof. Vishwanath Rautrao

Assistant Professor

COCSIT, Latur

Contact - mrvish93@gmail.com