Fundamentals of

Business Ethics
Prepared for class discussion
By
Prof.S.Suryanarayanan

Ethics in practice
Organizations to abide by ethics or rule of
law, engage in fair practices will benefit
consumer, society and organization
1. Satisfying basic human needs
2. Creating credibilityTATA, Infosys
3. Uniting people and leadership
4. Improving decision making
5. Long term gains
6. Securing the society Law follows
technology, new practices. Law is minimum
ethic.

In reaching decisions, an individual may use ethics as a guide

in legal or religious compliance and in maximising profit.
Discussion:
There was a complaint that Bosch & Lomb was selling
three identical contact lenses under three different brand
names for significantly different prices, Is this wrong,
unethical?
Ethical dilemmaNo such thing as a free drink?

Morality is concerned with the norms, values and beliefs

embedded in social processes which define right and wrong for
an individual or a community.
Ethics is concerned with the study of morality and the
application of reason to elucidate specific rules and principles
that determine right and wrong for any given situation.
These rules and principles are called Ethical Theories.
Ethics rationalizes a morality to produce ethical theory that can
be applied to any situation.

Why is Business Ethics important?

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Power and influence of business in society

Potential to provide major contribution to society
Potential to inflict harm
Increasing demands from stakeholders
Lack of business ethics education or training
Continued occurrence of ethical infractions
Evaluating different ways of managing business ethics
Interesting and rewarding

IS BUSINESS ETHICS OXYMORON?

Relevance of globalization for business

ethics
Cultural issues
Legal issues
Accountability issues
Globalization can affect all stakeholders of the
corporation

Ethical impacts of globalization

Stakeholders

Ethical impacts of globalization

Shareholders

Globalization provides potential for greater profitability,

but also greater risks. Lack of regulation of global capital
markets, leading to additional financial risks and
instability.

Employees

Corporations outsource production to developing

countries in order to reduce costs in global marketplace this provides jobs but also raises the potential for
exploitation of employees through poor working
conditions

Consumers

Global products provide social benefits to consumers

across the globe, but may also meet protests about
cultural imperialism and westernization. Globalization
can bring cheaper prices to customers, but vulnerable
consumers in developing countries may also face the
possibility of exploitation by MNCs.

Suppliers & competitors

Suppliers in developing countries face

regulation from MNCs through supply
chain management. Small scale
indigenous competitors exposed to
powerful global players.

Civil society (pressure groups, NGOs,

etc)

Global business activities brings the

company in direct interaction to local
communities with possibility for erosion
of traditional community life; globally
active pressure groups emerge with aim
to police the corporation where
governments are weak and tolerant.

Government & regulation

Globalization weakens governments

and increases the corporate
responsibility for jobs, welfare,
maintenance of ethical standards, etc.
Globalization also confronts
governments with corporations from
regions with different cultural
expectations about issues such as
bribery,corruption, taxation and
philonthropy.

Sustainability: a key goal for business ethics?

Sustainable development is development that meets the
needs of the present without compromising the ability of future
generations to meet their own needs. (World Commission on
Environment and Development 1987)
Sustainability refers to the long-term maintenance of systems
according to environmental, economic and social
considerations (triple bottom line)

Discussion McDonald
McEthics in Europe and Asia: should McDonalds extend its
response to ethical criticism in Europe?
Main criticisms in Europe include:
Homogenization McDonalds business model as a symbol for
globalization, because it has been adopted more widely. This led
to criticism of the Macdonaldization (homogenization) of
diverse cultures.
Health & Consumer issues McDonalds has been particularly
highlighted for its targeting of children with promotions for
unhealthy food. More broadly, this is part of the trend in the
West to examine the link between food and health
(encompassing obesity, poor nutritional value in food, deceptive
advertising, advertising at children, restricted access to
nutritional information, misleading claims).
Environmental issues particularly of the ethical issue of
cruelty to animals, but also more broadly.
The anti-unionization approach of McDonalds appears to be
particularly vigorous.