Nature of Business Ethics: Facts, Principles, and Examples PDF

SRGG211 PRELIM: NATURE OF BUSINESS EVOLUTION OF BUSINESS  FACTS ABOUT NATURE OF BUSINESS It is as old as human civilization For as long as people have needs, wants, and demands there will always be business. Business is an activity that is part and parcel of human society. Society...

SRGG211 PRELIM: NATURE OF BUSINESS EVOLUTION OF BUSINESS  FACTS ABOUT NATURE OF BUSINESS It is as old as human civilization For as long as people have needs, wants, and demands there will always be business. Business is an activity that is part and parcel of human society. Society will not exist without business. Since business is an integral part of society, its activities must be examined from the ethical perspective. In the same way that society examines politics, economics, government, culture, religion from the moral point of view.  FACTS ABOUT NATURE OF BUSINESS Fundamental reason for examining activities of business from the moral perspectives: 1. To ensure promotion of the common good 2. To ensure protection of the individual’s interests 3. To ensure the preservation of the human society in general Without ETHICS, business will be a CHAOTIC human activity because there will be no common understanding & agreement about what is right and wrong human conduct. FACTS ABOUT NATURE OF BUSINESS Business is also a complex enterprise that involves major activities like purchasing, manufacturing, marketing, advertising, selling and accounting. Businessmen deal with suppliers, customers, workers, employees and even competitors.  FACTS ABOUT NATURE OF BUSINESS Businessmen deal with suppliers, customers, workers, employees and even competitors. Ironically, it is within this structure of interaction of people that a lot of questionable practices occur – misrepresentation, questionable pricing policies, false advertising, misbranding, lying, adulteration, unfair competition, and local price- cutting among others.  FACTS ABOUT NATURE OF BUSINESS The bottom line is, somewhere, somehow people’s rights are being violated, their values disrespected and the interest of the common good disregarded. However, it is the selfish motive and personal interests of unscrupulous businessmen that make business bad and in some instances, unproductive. ETHICS IN BUSINESS  ETHICS IN BUSINESS The study of Business Ethics paves the way for a common ground in our 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 moral standards, moral rules and moral principles. This would result into a kind of subjective morality, in which case, what is good for one may be bad for another and vise versa. The study of Business Ethics will also enhance the human and interpersonal skills of managers so they can be more effective in managing the human side of the organization.  ✔Ethics is the philosophical study of morality and encompasses it. ETHICS & ✔It is the study of framework such as standards, MORALITY rules or codes and traits for ensuring right action, behavior and conduct.  Some ethical principles are: ETHICS & ✔Truthfulness MORALITY ✔Honesty ✔Loyalty ✔Respect ✔Fairness ✔Integrity  ✔Morality is concerned with understanding of what is right and wrong behavior. ETHICS & ✔It is conformance to recognized code, doctrine or MORALITY system of rules in order to behave accordingly. ✔The definition of morality differs according to place, group and time –therefore, there is no universal definition for it  Some moral principles of morals are: ETHICS & ✔Do not cheat MORALITY ✔Be loyal ✔Be patient ✔Always tell the truth ✔Be generous  EXAMPLE: ETHICS If the son of a big politician has & committed a crime and he uses his MORALITY powers to free his son from legal consequences. Is it ethically right/wrong or morally right/wrong?  ANSWER: ETHICS & this act is immoral because the MORALITY politician is trying to save a culprit.  EXAMPLE: ETHICS A very close friend or relative of an & interviewer comes for an interview and MORALITY without asking a single question, he selects him. Is it ethically right/wrong or morally right/wrong?  ANSWER: ETHICS & This act is unethical because the MORALITY selection process must be transparent and unbiased.  EXAMPLE: ETHICS & A grocer sells adulterated products to MORALITY his customers to earn more profit. Is it ethically right/wrong or morally right/wrong?  ANSWER: ETHICS & This act is neither moral nor ethical MORALITY because he is cheating his customers and profession at the same time.  THE BUSINESSMAN’S MYTHS ABOUT BUSINESS ETHICS MYTH#1 MYTH#2 Ethics is a personal affair and Ethics and Business Do Not Mix. not a public debatable matter. Any business activity that is People are entitled to their own lacking of morality will bring more value systems and religious beliefs harm than good to people in but in the exercise of these value particular, and the society in systems, they must also consider general. the values and religious orientations of others.  THE BUSINESSMAN’S MYTHS ABOUT BUSINESS ETHICS MYTH#3 MYTH#4 Ethics in Business is Relative. GOOD BUSINESS MEANS GOOD This is another wrong perception on the ETHICS role that ethics plays in the world of A business may be profitable but the business. Some businessmen claim that means of acquiring profits may be morality is relative, which means, the questionable. fundamental concepts of right and wrong depends on cultural and religious values Profit maximization is a good end in of people. This implies further that what business but the means of getting may be considered a right action in one those profits must also be examined. country may be unacceptable in other The end does not justify the means. country. Ex: Abortion may be legal in Japan, but not in the Philippines  THE BUSINESSMAN’S MYTHS ABOUT BUSINESS ETHICS MYTH#5 Business is a war. Business is a good human activity. And as an integral part of the society, it must promote healthy competition and not destroy the competitors.  RELATIONSHIP BETWEEN ETHICS & BUSINESS 1. Business is an integral part of 3. Laws are insufficient. They human society. - the actions of cannot cover all aspects of our individuals and institutions in human behavior. - In the absence business must be subjected to of the law, Ethics will help us to moral rules and moral evaluation. discern the correct conduct to 2. “What is legal may not follow based on the dictates of necessarily be moral.” - People conscious and reason. tend to confuse legality with morality. An action may be legal but not necessarily moral.  RELATIONSHIP BETWEEN ETHICS & BUSINESS 4. In today’s technocrat-oriented 5. Peter Drucker argues that “the business education, the trend is business enterprise is an organ of to train managers to maximize society and its actions have a profits by quantifying the decisive impact on the social operation of business.- Managers scene. - business corporation is not and business leader must also be just created to make profits but also to prepared to respond to complex consider its moral and social obligations situations bearing ethical to its stakeholders. Business organizations should not just look after consequences their own interests but also the interests of the common good.  THE GOOD AND BAD SIDES OF PROFIT-MOTIVE A. The Good Side of Profit-Motive: 1. Profit-motive motivates people to do something meaningful 2. Profit-motive promotes ingenuity and cleverness 3. Profit-motive promotes ingenuity & cleverness in running a business. 4. Profit-motive makes people productive. 5. Profit-motive generates potential capital for the business. B. The Bad side of Profit-Motive: 1. Profit-motive promotes rivalry among competitors. 2. Profit-motive makes people focus only on making money, that is, to sell as many goods as possible without considering whether or not these products satisfy the needs and wants of customers and end-users. 3. Profit-motive turns the businessman from being a reflective and a questioning person because he focuses his attention only on the practical activity of making money. 4. Profit-motive promotes self-interest rather than the common good.