What are the Ethics of Business?

Introduction: Ethics of Business

Ethics is a subject of social science that is related with moral principles and social values. ‘Business Ethics’ can be termed as a study of proper business policies and practices regarding potentially controversial issues, such as corporate governance, insider trading, bribery, discrimination, corporate social responsibility, and fiduciary responsibilities.

Businesses must abide by some basic principles. It should provide quality goods and services at reasonable prices to their consumers. It must also avoid adulteration, misleading advertisements, and other unfair malpractices. Let’s see in detail What are the Ethics of Business.

What are the Ethics of Business?

The Ethics of business follows the following principle.

Principles of Business Ethics

The principles of business ethics are related to social groups that comprise of consumers, employees, investors, and the local community. The important rules or principles of business ethics are as follows:

Avoid Exploitation of Consumers:

Do not cheat and exploit consumer with measures such as artificial price rise and adulteration.

Avoid Profiteering:

Unscrupulous business activities such as hoarding, blackmarketing, selling banned or harmful goods to earn exorbitant profits must be avoided.

Encourage Healthy Competition:

A healthy competitive atmosphere that offers certain benefits to the consumers must be encouraged.

Ensure Accuracy:

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

Pay Taxes Regularly:

Taxes and other duties to the government must be honestly and regularly paid. · Get the Accounts Audited: Proper business records, accounts must be managed. All authorized persons and also authorities should have access to these details.

Fair Treatment to Employees:

Fair wages or salaries, facilities and incentives must be provided to the employees.

Keep the Investors Informed:

The shareholders and investors must know about the financial and other important decisions of the company.

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.

No Bribe and Corruption:

Do not give expensive gifts, commissions and payoffs to people having influence.

Discourage Secret Agreement:

Making secret agreements with other business people to influence production, distribution, pricing etc. are unethical.

Service before Profit:

Accept the principle of “service first and profit next.”

Practice Fair Business:

Businesses should be fair, humane, efficient and dynamic to offer certain benefits to consumers.

Avoid Monopoly:

No private monopolies and concentration of economic power should be practiced.

Fulfil Customers’ Expectations:

Adjust your business activities as per the demands, needs and also expectations of the customers.

Respect Consumers Rights:

Honor the basic rights of the consumers.

Accept Social Responsibilities:

Honor responsibilities towards the society.

Satisfy Consumers’ 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.

Service Motive:

Service and consumer’s satisfaction should get more attention than profit-maximization.

Optimum Utilization of Resources:

Ensure optimum utilization of resources to remove poverty and to increase the standard of living of people.

Intentions of Business:

Use permitted legal and sacred means to do business. Avoid Illegal, unscrupulous and evil means.

Scope of Business Ethics

Ethical problems and phenomena arise across all the functional areas of companies and at all levels within the company

What are the Ethics of Business in Compliance?

Ethics in Compliance: Compliance is about obeying and adhering to rules and authority. The motivation for being compliant could be to do the right thing out of the fear of being caught rather than a desire to be abiding by the law. An ethical climate in an organization ensures that compliance with law is fuelled by a desire to abide by the laws. Organizations that value high ethics comply with the laws not only in letter but go beyond what is stipulated or expected of them.

What are the Ethics of Business in Finance?

Ethics in Finance: The ethical issues in finance that companies and employees are confronted with include:

In accounting – window dressing, misleading financial analysis.
Related party transactions not at arm’s length
Insider trading, securities fraud leading to manipulation of the financial markets. Executive compensation.
Bribery, kickbacks, over billing of expenses, facilitation payments.
Fake reimbursements

What are the Ethics of Business in Human Resources?

Ethics in Human Resources: Human resource management (HRM) plays a decisive role in introducing and implementing ethics. Ethics should be a pivotal issue for HR specialists. The ethics of human resource management (HRM) covers those ethical issues arising around the employer-employee relationship, such as the rights and duties owed between employer and employee. The issues of ethics faced by HRM include:

Discrimination issues i.e. discrimination on the bases of age, gender, race, religion, disabilities, weight etc.
Sexual harassment.
Affirmative Action.
Issues surrounding the representation of employees and the democratization of the workplace, tradeization.
Issues affecting the privacy of the employee: workplace surveillance, drug testing.
Issues affecting the privacy of the employer: whistle-blowing.
Issues relating to the fairness of the employment contract and the balance of power between employer and employee.
Occupational safety and health. Companies tend to shift economic risks onto the shoulders of their employees. The boom of performance related pay systems and also flexible employment contracts are indicators of these newly established forms of shifting risk.

What are the Ethics of Business in Marketing?

Ethics in Marketing: Marketing ethics is the area of applied ethics which deals with the moral principles behind the operation and regulation of marketing. The ethical issues confronted in this area include:

Pricing: price fixing, price discrimination, price skimming.
Anti-competitive practices like manipulation of supply, exclusive dealing arrangements, tying arrangements etc.
Misleading advertisements
Content of advertisements.
Children and marketing.
Black markets, grey markets.

What are the Ethics of Business in Production?

Ethics of Production: This area of business ethics deals with the duties of a company to ensure that products and production processes do not cause harm. Some of the more acute dilemmas in this area arise out of the fact that there is usually a degree of danger in any product or production process and it is difficult to define a degree of permissibility, or the degree of permissibility may depend on the changing state of preventative technologies or changing social perceptions of acceptable risk.

Defective, addictive and inherently dangerous products and
Ethical relations between the company and the environment include pollution, environmental ethics, and carbon emissions trading.
Ethical problems arising out of new technologies for eg. Genetically modified food
Product testing ethics. The most systematic approach to fostering ethical behaviour is to build corporate cultures that link ethical standards and business practices.

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What are the Ethics of Business?

Introduction: Ethics of Business