What Is Consumerism?

Consumerism is the idea that increasing the consumption of goods and services
purchased in the market is always a desirable goal and that a person's wellbeing and
happiness depend fundamentally on obtaining consumer goods and material
possessions. In an economic sense, it is related to the predominantly Keynesian idea
that consumer spending is the key driver of the economy and that encouraging
consumers to spend is a major policy goal. From this point of view, consumerism is a
positive phenomenon that fuels economic growth.
Consumerism in India – Meaning
The term ‘consumerism’ was first coined by businessmen in the mid-1960s as they
thought consumer movement as another “ism” like socialism and communism
threatening capitalism.
Consumerism is defined as social force designed to protect consumer interests in the
marketplace by organising consumer pressures on business. Consumerism is a protest
of consumers against unfair business practices and business injustices.
It aims to remove those injustices, and eliminate those unfair marketing practices, e.g.,
misbranding, spurious products, unsafe products, planned obsolescence, adulteration,
fictitious pricing, price collusion, deceptive packaging, false and misleading
advertisements, defective warranties, hoarding, profiteering, black marketing, short
weights and measures, etc.”
Consumer organisations could provide united and organised efforts to fight against
unfair marketing practices and to secure consumer protection. The balance of power in
the marketplace usually lies with the seller. Consumerism is society’s attempt to
redress this imbalance in the exchange transactions between sellers and buyers.
Consumerism challenges the very basis of the marketing concept. Can a free market
economy based on competition respond to the rightful public demands? Is there an
inherent defect in the market mechanism? Should that defect be corrected by political
means, i.e., consumer legislation and Government regulations?

Definition and scope:

In simple words consumerism is a protest of consumers against unfair business
practices and business injustices. It is in fact designed to protect the consumer’s
interest in the market place by organizing consumer pressure on the business.
Consumerism means the organized efforts of consumers seeking redress, restitution
and remedy for the dissatisfaction they have accumulated in the acquisition of their
standard of living. Kotler defines consumerism as an organized movement of citizens
and the Government to strengthen the rights and power of the buyers in relation to
sellers. Consumerism is a process through which consumers seek redress for their
dissatisfaction and frustration on the basis of organized efforts and activities.
Consumerism now- a-days includes many things within its compass. The most
common understanding of consumerism is in reference to production of consumer
privileges against clear cut cheating by the seller. This includes cheating and other
malpractices at the market place as well as dangers to health and safety of life from
various types of products. Consumerism is also considered to include protection of
consumers against consumers. For example, smoking is prohibited in auditorium, trains,
buses and public places to avoid nuisance to other persons from smokers. Now-a-days,
consumerism has become wide enough to include protection against environment
pollution and declining quality of physical environment too.
Need for Consumer Protection
Though consumer is said to be the king of entire business sphere, his interests are
virtually neglected. Shortage of goods makes the consumers to be content with
whatever is offered for sale. Quality is sacrificed: warranty of performance has no
meaning; health hazard is never considered; profit maximisation turns out to be sole
consideration of business enterprises. In such a context, consumer protection remains
a vital importance. There are three parties involved in the sphere of business
transactions viz. the Government, business and the consumers. Let us discuss what
each party has to do in this regard
Role of Business
Business enterprises should do the following towards protecting consumers.
1. Avoidance of Price Hike
Business enterprises should desist from hiking the price in the context of acute
shortage of goods /articles.
2. Avoidance of Hoarding
Business enterprises should allow the business to flow normally. It should not indulge in
hoarding and black marketing to earn maximum possible profit in the short term at the
cost of consumers.
3. Guarantees for Good Quality
Business enterprises should not give false warranty for the products. It should ensure
supply of good quality.
4. Product Information
Business enterprises should disclose correct, complete and accurate information about
the product viz. size, quality, quantity, substances, use, side effects, precautions, weight,
exchange, mode of application etc.
5. Truth in advertising
Business enterprises should not convey false, untrue, bogus information relating to the
product through the advertisements in media and thus mislead the consumers.
6. Protection from the Hazard
Business enterprises should not market the product which is potentially hazardous and
harmful. It should test the safety of the product before they are marketed. As regards
food items, business enterprises should withdraw spoiled and contaminated food items.
7. Money Refund Guarantee
Where the product becomes defective, business enterprises should replace it with new
one or refund the purchase price. If the product causes injury or harm to consumers, it
should reimburse the expenditures done by the consumers concerned.
8. Consumer Grievances
Where the business enterprises have customer care department, it should handle the
grievances’ of consumer immediately or within a definite time frame.
 
Role of Government
Since most of consumers including academically educated are illiterate about their
rights and hence passive. Government should assure an active role in safeguarding the
consumers. Government both the central and the state have brought out a number of
legislations to protect the interest of consumers across the country. Other statues have
been listed out in the ‘Do you know’ segment of this lesson. Despite the existence of
legal system to protect the consumers, consumers in India are still illiterate and passive.
Mere statue book will not address the problem. Law enforcement authorities should see
that penal clause is not mere paper jaws-they should sting the offenders mercilessly.
 
Role of Consumers
Ultimately it is the consumer who alone can put an end to all their unethical trade
practices. Business enterprises may break the codes and Government may rest content
with mere enaction of laws and do little to protect consumers. In this context
consumers have to be vigilant and organise themselves into a movement for concerted
action.
 
Activation of Consumer Action Councils
1. Consumer action councils established at village levels should educate consumers of
the right.
2. Consumer protection agencies should take necessary steps to investigate consumer
complaints and grievances and arrange to forward them to correct forum.
3. It should regulate business enterprises according to the rules of the industry.
4. Voluntary consumer groups should provide information so as to educate consumers
on matters affecting them through media.
5. It should organise movement against the malpractice of manufacturers and traders.
6. Consumer cooperatives need to be strengthened.
7. Consumer groups should contact the legislators to raise the consumer issues in
Assembly and Parliament.
8. There should be testing laboratories at each district to test the purity of goods.
9. Voluntary consumer organisations should publicise the malpractices of
manufacturers and traders by media.
10. It should take initiation to report such officials and authorities who let the offender
to go scot free to follow enforcement agencies.
 
United Nations Guidelines for Consumer Protection
The General Assembly of the United Nations passed a Resolution on April 9, 1985
adopting a set of guidelines for consumer protection to persuade the member countries
to adopt policies and laws for better protection of the interests of the consumers. The
guidelines provided that the governments should develop or maintain a strong
consumer protection policy, taking into account the guidelines.
 
Why Is Consumer Protection Important?
Consumer protection makes markets work for both businesses and consumers.
Consumers 
Consumers need to be able to obtain accurate, unbiased information about the
products and services they purchase. This enables them to make the best choices
based on their interests and prevents them from being mistreated or misled by
businesses. Consumer protection policies, laws and regulations help increase
consumer welfare by ensuring that businesses can be held accountable.
Businesses
Businesses that are known to treat consumers fairly will gain a good reputation and
become more sought after. This increases their profitability and competitiveness which
will also lead to economic growth in the long run. Consumer protection policies, laws
and regulations guarantee that businesses are kept in check.
Economic growth and competitiveness
Consumer protection contributes to dynamic and effective markets for businesses to
grow. Consumer demand drives innovation and economic development as businesses
are required to maintain fair prices and good quality of their products and services.
Regional Integration
With the emergence of cross-border and digital trade, cooperation on consumer
protection amongst jurisdiction becomes a necessity. ASEAN has been trying to tackle
these issues by developing the ASEAN Strategic Action Plan for Consumer Protection
(ASAPCP) 2025.
Consumer Rights
Right to safety
Means right to be protected against the marketing of goods and services, which are
hazardous to life and property. The purchased goods and services availed of should not
only meet their immediate needs, but also fulfil long term interests. Before purchasing,
consumers should insist on the quality of the products as well as on the guarantee of
the products and services. They should preferably purchase quality marked products
such as ISI,AGMARK, etc
Right to choose
Means right to be assured, wherever possible of access to variety of goods and services
at competitive price. In case of monopolies, it means right to be assured of satisfactory
quality and service at a fair price. It also includes right to basic goods and services. This
is because unrestricted right of the minority to choose can mean a denial for the
majority of its fair share. This right can be better exercised in a competitive market
where a variety of goods are available at competitive prices
Right to be informed
Means right to be informed about the quality, quantity, potency, purity, standard and
price of goods so as to protect the consumer against unfair trade practices. Consumer
should insist on getting all the information about the product or service before making a
choice or a decision. This will enable him to act wisely and responsibly and also enable
him to desist from falling prey to high pressure selling techniques.
Right to consumer education
Means the right to acquire the knowledge and skill to be an informed consumer
throughout life. Ignorance of consumers, particularly of rural consumers, is mainly
responsible for their exploitation. They should know their rights and must exercise them.
Only then real consumer protection can be achieved with success.
Right to be heard
Means that consumer's interests will receive due consideration at appropriate forums. It
also includes right to be represented in various forums formed to consider the
consumer's welfare. The Consumers should form non-political and non-commercial
consumer organizations which can be given representation in various committees
formed by the Government and other bodies in matters relating to consumers.
Right to Seek redressal
Means right to seek redressal against unfair trade practices or unscrupulous
exploitation of consumers. It also includes right to fair settlement of the genuine
grievances of the consumer. Consumers must make complaint for their genuine
grievances.Many a times their complaint may be of small value but its impact on the
society as a whole may be very large. They can also take the help of consumer
organisations in seeking redressal of their grievances.

Consumer Responsibilities

Be Critically Aware
 The responsibility to be more alert and to question more – about prices, about
quantity and quality of goods bought and services used.
Be Involved
 The responsibility to be assertive – to ensure that you get a fair deal as a
consumer. Remember, if you are passive, you are likely to be exploited.
Be Organized
 The responsibility to join hands and raise voices as consumers; to fight in a
collective and to develop the strength and influence to promote and protect
consumer interest.
Practice Sustainable Consumption
 The responsibility to be aware of the impact of your consumption on other
citizens, especially the disadvantaged or powerless groups; and to consume
based on needs – not wants.
Be Responsible to the Environment
 The responsibility to be aware and to understand the environmental
consequences of our consumption. We should recognize our individual and
social responsibility to conserve natural resources and protect the earth for
future generations.
 Consumer Rights Vs Responsibilities

Sl.No Rights Responsibility

1 Right to be heard 1. Ensure that the company has provided you the contact details of the consumer
grievance handling system and are easily accessible.
2. Avoid purchase of products/services from a company which do not provide
details of the consumer grievance officers to handle consumer grievances

2 Right to Redress 1. Ignoring the loss suffered on purchase of defective goods and services and not
filing complaint encourages the corrupt business man to supply low standards or
defective goods and services. Therefor file a complaint even for a small loss. File
only a genuine complaint.
2. Consumer must file a complaint if not satisfied with the quality of
product/services.
3. Claim the penalties/compensation as provided under rules and regulations to
ensure that the quality delivery system improves.
4. Study carefully all terms and conditions related to return/replacement of
defective goods, refund and warranty policies.

3 Right to Safety 1. While purchasing the goods or services, Consumer must look for standard
quality mark such as ISI, Hallmark, Agmark, ISO, FSSAI , etc.
2. Do not buy any spurious/ fake/duplicate/ hazardous products

4 Right to Consumer 1. Do not get carried away by advertisements only or believe on the words of the
Education/ Right to seller. Consumer must look market reviews/feedback. Similarly inform offers if
be Informed product and services of companies are of substandard.
2. Consumer must insist on getting complete information on the quality, quantity,
 utility, price etc. of the product or services.
3. Ask for complete contact details of the consumer grievance mechanism of the
company the consumer wish to buy from

5 Right to Choose 1. Access the information available on various alternatives available for the
product and services under purchase consideration.
2. Compare specifications, competition and fair prices of the goods and services
before finalizing on the purchase
3. Study various feedbacks/reviews of the products/services

Reasons for Consumerism

The major causes for the evolution of consumerism have been the continuous rise in
prices, underperformance of product, quality of the service, Shortage of product and
deceptive advertising.
1. Rising prices: The value of a rupee was a rupee in 1949 matching its full face value.
But now it is worth less than 10 paise. The pricing theory holds that price is directly
related to quality and quantity. But prices of mass consumer goods such as soaps,
tooth paste etc., are 10% — 20% above the real prices. So, often dealers earn a good
margin of profit and create an artificial demand for them.
2. Adulteration: Unscrupulous traders indulge in adulteration. They make illegitimate
and abnormal profit through adulterated products. Adulteration involves cheap
ingredients mixed with the product intended for sale. Such adulterated product is
detrimental to health. A survey says about 25 to 35% of the food we eat today is
adulterated. Presence of stones in grains, cheaper fats in ghee, mixing of coconut oil
with palmoleins etc., are common in adulteration. They all leave behind harmful effects
on consumers.
3. Duplication: Duplicates are made for all types of products like automobile
components, medicines, blades, pens, watches; clothes and even currency notes.
Consumers are not able to differentiate the original products from duplicates. Duplicate
products are available through wide marketing network undertaken by dishonest traders.
Some home made products are stamped “Made in Japan”, “Made in USA” just to lure
the consumers.
4. Artificial demand: When the price of a product is steadily increasing, some traders
buy in bulk and hoard them. They put up a sign “No stock” in front of their shops, though
stocks are in abundance with them. As a result, consumers pay higher prices because
of the artificial scarcity created. In certain cinema houses, selling tickets in black is
quite common. Though seats may be vacant, these theaters will be claiming “full
house“. But the sale in ‘black‘ will be very brisk outside the theater.
5. Sub-standard products: Substandard products are made using inferior raw materials
or by cutting short the required production processes. After a product is well received in
the market, some manufacturers deliberately downgrade the quality of the product
without reducing the price. Customers cannot inspect the goods as they are packed and
sealed. Only after the use of the goods purchased, they will be in a shock.
6. Product risks: Some products are valid or potent only for a particular period. Example:
medicines, drugs, fruits, etc. On the expiry of a particular period, consumption of such
items proves to be detrimental to health.
7. Misleading Advertisements: Misrepresentation of facts, false claims, cheating do
occur in advertising. An advertiser may make a tall claim about the usefulness of his
product, just to lure the consumers to buy them, whereas the product may not be as
useful. So, consumers should be protected against deceptive advertisements.
8. Warranty and service: At the time of sale, sellers guarantee a good performance of
the product they sell. If a product becomes defective after being sold, buyers are not
given any remedy for the defect noticed in the goods. In such cases, remedy is available
through consumer redressal forums.
9. Fitness of products: Salesmen are supposed to assist the buyers in making wise
selection of goods. The products that buyers buy must suit their needs. Product fitness
refers to product quality, durability and suitability in relation to the purchase objective of
the consumers. But most of the goods are sold by pressurizing the buyers.
10. Consumer exploitation:
Consumers are exploited in the following ways:
1.Supply of sub-standard materials
2. Goods that fall short of the actual weight claimed
3. High prices charged for goods and services
 4. False advertisements
5. Artificial scarcity to earn abnormal profit
6. Hoarding and black marketing of goods
7..Cheating through contests, puzzles, etc.
8. Ingenuine mail order sale
9. Denying free repair or replacement during guarantee period
10. Adulteration of goods.
11. Problems of assembling products: Products of the modern days are a combination
of many products assembled to perform a special function. For example, television,
clocks, computers, household appliances, etc. Several such components are not visible
to the eye and therefore cannot be inspected by the consumers. Even if they can be
inspected, consumers may lack the technical knowledge to assess them.
12. Augmenting rights and powers of buyers: In a free democratic society, sellers have
certain rights subject to the condition that the buyers are provided with safe and healthy
products. In the same manner the buyers have certain rights. They have the right to
expect the product to be safe and worth the price they pay. But these traditional rights
of the buyers are not enough to maintain a power balance between the buyer and seller,
where the consumers could not get complete and genuine information about the
products they buy. The genesis of the consumer movement lies in expanding consumer
rights.

Evolution of legislation for consumer protection

INTRODUCTION
Consumer Protection Act, 1986, is an act of parliament which was enacted in 1986 to
protect the rights of the consumers in the territory of India. It was commenced on 24
December 1986 as the consumer protection act. It is Act No. 68 of 1986.
The statute is regarded as the MAGNA CARTA in the field of consumer protection for
checking unfair trade practices (e.g.; black marketing, hoarding, etc.), defects in goods
and deficiencies in services provided to the consumers. It not only checks but also
gives consumer the right to seek redressal in case he/she has any grievances and the
right to be informed about the quality, quantity, potency, purity, standard and price of
goods so as to acquire the goods at the rightful prices and not to be harassed by the
manufacturers/sellers.
He said act gives a consumer 6 rights i.e.
RIGHT TO SAFETY– protection from hazardous goods,
RIGHT TO BE INFORMED– information about the products for weighing alternatives and
protection from misleading claims in advertising and labeling,
RIGHT TO CHOOSE– availability of a variety of goods at competing prices, qualities and
services,
RIGHT TO BE HEARD– in case a consumer is not satisfied with a product that he
purchased then thy have a right to file a complaint against it and this complaint cannot
go unheard,
RIGHT TO SEEK REDRESSAL– in case of injury/grievances the consumer shall have the
right to go to court and seek compensation for this said issue,
RIGHT TO CONSUMER EDUCATION– the consumer has a right to be educated about
his/her rights as a responsible consumer and should be given due education about the
same.

The main aims with which the act was established were:
1. To give the consumers a right to be shielded against the promotion of goods and
services that are a risk to life and property.
2. Give them the right to ensure access to a range of goods and services at viable
prices.
3. Make sure that they are informed about their rights thus the right to consumer
education and ensure that consumer protection will be given due consideration at
appropriate levels.
4. To give consumers the right to be informed about the product they choose to
purchase, are informed about its contents, risks, how to use/deal with the product
and what to do in case of a mishap.
5. Give them the right to search and seek redressal against unfair trade practices or
deceitful exploitation of consumers.
ESSENTIALS
What falls in a consumer rights act and what doesn’t is an important question to be
dealt with. There are certain essentials that constitute the meaning of the terms like a
defect, consumer, seller, etc. being talked from the start of the project. A case comes
under the ambit of the consumer protection act only if these certain essentials are
matched and the scenarios meet the definitions as under the sections of the act. These
essentials/definitions are as under:
1. CONSUMER: Section 2(d) of the consumer protection act says that a consumer
means any person who- (i) buys any good/s for a consideration which has been paid
or promised or partly paid or promised, or under any system of deferred payment. (ii)
hires or avails any service/s for a consideration which has been paid or promised, or
partly paid or promised, or under any system of deferred payment.
2. DEFECT: It is any fault or imperfection; can also be a shortcoming in the quantity,
quality, potency, purity or standards in a GOOD, which was required to be maintained
by or under any law for the time being in force or under any contract expressed or
implied.
3. DEFICIENCY: This is parallel to the case of defects In case of services. That means; it
is the said fault or imperfection in the quality, quantity, potency, purity or standard in
a SERVICE, which was required to be maintained by or under any law for the time
being in force or under any contract expressed or implied.
4. REDRESSAL FORUMS: Consumer dispute redressal forums should be established
under clause (a) of section 9 (sec 2(1)(h)); for e.g. district forums, state commission
and national commission.
5. GOODS: The definition and meaning of goods shall fall under and be the same as
assigned to them under the sale of goods act, 1930 (sec 2(7)(i)).
6. SERVICES: section 2 (1) (O) provides that service means service of any description
which is made available to potential users and includes the provision of facilities in
connection with banking, financing, insurance, transport, etc. but does not include the
rendering of any service free of charge or under a contract of personal service.
7. MANUFACTURER: It is defined in the sec (1)(j) of the consumer protection act which
 includes in its ambit any person who makes or manufactures any goods or part
thereof or any such person who doesn’t manufactures the good but assembles any
part or claims the end product to be manufactured by himself etc. Thus, all such
persons can be held liable under the act.
8. PERSON: Under the section; as per sec 2(1)(m), a person includes- a firm (whether
registered or not), Hindu undivided family, cooperative society every other
association of persons whether registered under the society’s registration act or not.
All such persons are entitled under the act to seek redressal and get their grievances
solved.
9. TRADER: A trader is different from a manufacturer under the act. As per the act a
person who sells or distributes any goods for sale and includes the manufacturers
thereof within its meaning.
10. HAZARDOUS GOODS: The term hazardous goods has not been defined in the Act.
The dictionary meaning; however, of the term is dangerous or risky. The term is not
only used in terms of goods only as a consumer has the right to make a complaint
even when he is not informed about the hazardous nature of the good that he/she
thinks of purchasing. This though is not the same in case of hazardous services. The
rationale behind this is to ensure not only physical but also the mental safety of the
prospective consumer.
What Is Business Ethics?
Business ethics is the study and formulation of business policies based on a framework
of values. This framework defines employee behavior in their interactions with each
other and outsiders. It also defines the values and role of the business within a society.
For example, a company may discourage direct reports from having romantic
relationships with each other to prevent favoritism during quarterly reviews. It may also
choose to pay a high minimum wage to its workers or institute environment-friendly
practices at its facilities to minimize damage to its surroundings due to production
processes.
The application of ethics to business situations has been around since ancient times.
But it became an important field of study only in the 1970s.
Modern corporations design their business ethics policies to achieve two ends:
reconcile their role as public citizens and fulfill their business requirement of
producing goods and profits. As such, business ethics are meant to ensure an orderly
and fair workplace that is also productive and efficient.
Understanding Business Ethics
Previous discussions about the importance of ethics in business was situated in the
context of philosophy. For example, Aristotle emphasized the importance of individual
virtue – intellectual and moral – in business dealings in ancient Greece.
As a term used to describe corporate responsibilities, business ethics gained currency
during the 1970s. The publication of Harvard economist John Kenneth Galbraith’s “An
Affluent Society” in 1958 paved the way for a discussion about income inequality and
wealth redistribution in postwar America. The upheavals of the 1960s, when the
counterculture movements that brought awareness about social and environmental
causes took place, further added to the urgency of rethinking the existing business
order.mportance of Business Ethics
Importance of Business Ethics
1. Control Business Malpractices: Business ethics directly influence the operations
of the business. It is the one which helps business in deciding what is wrong and
what is right. These ethics set certain rules and principles to be followed strictly
by business, and their violation leads to a penalty. Implementation of these
principles ensures that business does not indulge in any unfair practices like
black marketing, providing misleading advertisement, frauds in measures and
weight, adulteration, etc. Through business, ethics works on providing better
products to its customers at reasonable prices.
2. Better Relation with Employees: Employees are an important part of the
business and necessary for the survival of the business. Business ethics ensures
that business works for the welfare of its employees working with it. The
business should not only work for the achievement of its objectives like profit
maximization and higher growth but should also focus on peoples working with it.
These ethics ensures that business provides better monetary compensation and
good working conditions to its employees, active participation in decision making,
addressing complaints, and providing promotions as per their progress. This
 helps in maintaining a good relationship with employees.
3. Improves Customer Satisfaction: The consumer is termed as king in the market
and is the one who decides the success or failure of every business. It is
important that the business fulfills the needs of its customers. Business ethics
provides principles for business operations under which it is required to provide
better quality products at reasonable prices. It ensures that the business
provides better customer support and redressal of all complaints. This helps
businesses in improving the satisfaction levels of its customers.
4. Increase Profitability: Business ethics improve the productivity and profitability
of every business. It sets certain rules to be followed by every person working
with the business. Every employee is required to adhere to these rules and
should focus on its duties with sincerity. These ethics ensure that there is no
wastage of resources, and every resource is efficiently utilized. This eventually
leads to an increase in business profit in the long run.
5. Improves Business Goodwill: Business goodwill has an important effect on
capturing the market. Better goodwill businesses are able to attract more and
more customers. By implementing ethics in its operations business aims at
providing better service to the market. Businesses that work ethically operate at
the low-profit base and with honesty. This develops a better image in front of the
public and is easily accepted by customers with fewer efforts.
6. Better Decision Making: Ethics in business helps them in making better
decisions timely. It provides certain rules and guidelines that every business
needs to follow in its operations. Every decision is taken in light of the moral
principles and social values provide through these ethics. It helps businesses in
deciding what is right and what is wrong. Every person working within the
business is required to respect these ethics, violation of which would lead to the
penalty.
7. Protection of Society: Society is very important for the success of every business.
If a business does not consider the interests of its society, then it will harm its
survival. Business ethics direct that business should work for the welfare of its
society and take part in various infrastructural development programs.
 It ensures that business contributes actively to its corporate social responsibility.
A business should not perform any activity that creates a problem for the society
in which business exists.

Types of Business Ethics

1. Personal Responsibilities: Personal responsibilities refer to the personal code of
ethics of an individual which he follows firmly in his daily activities. Such ethics
are: always behaving honestly, respecting elders, performing accepted duties
properly and timely, promptly settling all dues, not indulging into criminal
activities etc.
2. Official Responsibilities: These are the responsibilities which comes with the
position that a person occupies. Every official position has certain rules and
regulation that are meant to be strictly followed in all situations. An individual
holding such a position should follow all standards and norms set for that
particular official position.
3. Corporate Responsibilities: Corporation is an artificial person which is treated as
a separate legal entity. They have their own moral responsibilities towards the
society that is distinct from personal moral ethics of managers running them.
Such responsibilities are both internal and external which assists in deciding
matters related to employees, shareholders, customers, creditors, society and
government.
4. Economic Responsibilities: These ethics are one which guides actions of an
individual which are of economic nature. Economic responsibilities consist of
moral values which directs toward the usage of resources. Every business should
make efficient use of all resources and try to enhance the profitability without
involving in any fraud. They should avoid any kind of wastage and contribute
towards the welfare of society.
5. Legal Responsibility: Legal responsibilities provides a framework within which a
business should operate. It shall abide by all the rules and regulations imposed
by legal authority. All unethical activities should be avoided as they are treated as
illegal in eyes of law.
 6. Personal loyalties: It means the loyalties that superiors have towards thier
subordinates and loyalty that subordinates have towards their superiors. If a
superior act honestly and treats its subordinates fairly, then the subordinates will
not face any problem. Similarly, the subordinates having strong personal loyalty
for their superior will turn blind eyes towards the blunders of their superior.
7. Organizational loyalties: This involves the loyalty of employees towards their
organization. Some employees develop a deep sense of loyalty out of love and
affection for the organization. Such loyalties are so strong that they even do not
hesitate from neglecting their personal interest for the sake of organization. They
work efficiently toward the achievement of organizational goals.
8. Technical morality: Technical morality is related to state of technology implied
by enterprise for production of its goods or services. Every professional person
having technical morality shall not compromise with quality of goods. They
should properly adhere to all the ethical standards provided by competent bodies.
Organizations focusing on technological advancement are able to attain better
efficiency and create more challenging situation for competitors.
Functions of Business Ethics
1. Protect consumer rights: Business ethics ensures that customers are treated
fairly and provided with their full rights. Organizations that implement ethics
operates economically and provide better quality goods at lower cost. They serve
customers at a reasonable profit without exploiting them. Customers are fully
satisfied with services that makes them loyal to such businesses for a long term.
2. Enhance relations with society: Relationship with society is must for survival of
every business organization. Ethics directs business to consider the interest of
society and work for their welfare. It should not focus only on its growth at the
cost of exploitation of society. Business should actively participate in corporate
social responsibility and should contribute towards infrastructural development
programmes for its society.
3. Safeguard interest of industry: Business ethics protects the small scale
business from exploitation by large firms in an industry. It provides them full
rights to operate efficiently and establish their position in market. Following of
 ethics in an industry ensures that all firms works fairly without the exploitation of
other players in market.
4. Improve business goodwill: Ethics play a key role in enhancing the overall image
of business in market. It monitors all operations of business and avoids any
unethical activities. Practicing of ethics maintains the legality of business
thereby providing better service to customers. All unfair trade activities are
controlled and quality goods are delivered. Customers are happy with the
services which leads to create a positive image of company.
5. Assist in decision making: Supporting in decision making of organization is an
important function played by business ethics. Ethics provides rules and
guidelines to be followed by business in its functioning. All decisions are taken in
light of moral and social values mentioned in these ethics. It guides in deciding
what is right or wrong for business organization. Every ethic need to be practiced
properly and any violation will lead to penalty.
Ethical Practice towards Consumers
1.Build a Positive Image in society
People who have not much knowledge about the business ethics and rules of business
conduct usually prefer to associate with those organizations which have a positive
image in society.
Take the example of an IT company Infosys. Infosys is known for its charitable work,
good corporate governance, and social responsibility initiatives such as providing
scholarship to deserving children and providing medical help to poor elderly people.
People, when learning all about this they built a positive perception about the company.
#2 Ethics helps in satisfying human needs
People, whether they are employee or customers, want to associate with an
organization which works with honesty and in a fair manner.
Therefore, the following ethical practices are important if you want to retain customers
as well as employees for a long period of time.
#3 Ethics plays an important role in decision making
In everyday life, retailers need to take important decisions for the well-being of the
organization. If an organization believe in ethical practices, it tends to make decisions
which are in favor of the organization, its employees as well as customers.
A retailer can take fierce decisions in the absence of ethical practices. For example, an
organization which does not follow ethical practice can take fierce decisions to tackle
competition.
#4 Bringing People together
Employees love and respect organization whose actions are influenced by ethical
practices. The organization which practices ethics will never only think about its own
but also think about its employees and customers. In this way, a healthy relationship
establishes between employees and the owner.
A healthy relationship is important for the well-being of the organization. A happy
employee will never betray his organization and consistently take actions to make his
organization successful.
#5 Makes society a better place to live
Society will become a better place to live if everyone follows ethical practices. A society
where everyone thinks about themselves and take selfish decisions is not a suitable
place for people to live. There will always be contradictions between the people.
However, we know very well that no two people can be the same. There will always be
people who will indulge in unethical practices. At that time, ethical laws come into
action and restrict unethical practices.
#6 Long-term profits
Organizations which practices malice activities might get profit for short period of time,
but can’t retain that success for longer period of time and, on the other hand,
Organizations which are driven by values and ethics are expected to be profitable for a
long time though they might lose money in a short time.
For example, the Tata group faced a great loss of business in the initial 1990s,’ but soon
it turns into one of the most profitable organization by not indulging into unethical
practices. The company is one of the most successful companies in India and also
known for its ethical conduct in business.
In simple words, it can be said that ethics shows the path of right doing to the
organization and let it make decisions which are both in favor of its employees as well
as customers.
Various areas of ethics in the retail business
1.Proper practice of Laws, rules, and regulations:
There are different laws, rules, and regulations such as labor laws, shops and
establishment laws, Companies’ act, and weight and measurements act, etc. related to
the retail sector in every country.
All organizations and their employees are required to follow them in their conduct with
the customers and with each other.
2. Protection of interests of customers and their rights:
The first and foremost obligation of an organization and its employees is to protect the
rights and interests of customers, and they are liable to ensure for the customers’
safety and security.  An organization can’t practice unethical practices by violating the
consumer’s rights to make a profit.
There are various deeds such as deceiving advertising, sharing wrong information with
customers, misbehavior with customers, invading customers’ privacy, lack of quality
control on the products sold by the organization, questionable pricing policies, etc.
violates the customers’ rights and interests.
3. Conflict of interest between the employees of the organization and retailer:
Conflict of interest occurs when the personal interest of an individual does not match
with the interest of the organization. Employees need to abide by the laws and rules set
by the organization, and on the other hand, retailers must always take actions which are
in favor of their employees or at least doesn’t violates the employees’ rights and
interests.
Various examples of conflicts between employees and employers in retail:
1. Sharing confidential information of employers with the third party without the
consent of the employer.
2. Getting employed by a competitor without relieving current job with the current
employer.
3. Making the use of customer’s information for personal benefit.
4. When an employee provides personal benefits to family members and friends by
making the use of his/her position in the company.
4. Confidentiality:
When employees are employed, they are given access to some confidential information
of the organization. If an employee shares that information with competitors or with
anyone outside the organization, then it is called the unethical practice.
5. Receiving gifts in exchange of favors:
Employees are usually asked not to receive gifts from the people outside the
organization.
People give gifts to employees to make the use of the position of the employee, and if
employees accept expensive gifts, then they might feel obliged to return the favor. This
can also cause conflict between employer and employee.
In the next section, you will learn about the ethical practices followed in the
retail environment. The retailer should practice ethical behavior towards employees,
customers, and investors.

Ethical Practice towards consumers

Ethics are important if an organization wants to stay in the market for a long period of
time. In the current dynamic and competitive environment, it is very important for an
organization to follow ethics.
1. The retailer should charge a fair price for the products they sell to consumers.
2. The consumers have the right to get the precise and right knowledge about the
products sold to them. They should be told about all things related to products
such as guaranty, warranty, usage, ingredient, and price, etc.
3. Selling poor quality products to consumers.
Unethical practices of an organization towards its consumers:
1. Selling the item at full prices even when they are on sales without the knowledge
of consumers.
2. Hide the complete truth about the products and their characteristics.
Ethical Practice towards Employees:
An organization should not only follow ethical practice towards consumers but also
towards its employees. In a retail store, a large number of retail employees work at
different levels. If employees are treated badly in the organization, then they will speak
wrong about it in front of others.
Which will create a wrong image of the organization in the eyes of the common public?
In addition to this, this will also lead to low productivity, low staff morale, low profit, and
high labor turnover, etc.
Therefore, an organization must follow ethics to avoid such issues which will impact the
reputation and profitability of the organization in the long run.
Ethical practices towards employees:
1. Giving fair and equal treatment to employees.
2. Providing fair salaries as per their position and job role.
3. Treat employees with respect and courtesy.
Unethical practices towards employees:
1. Unfair treatment to employees working at the same level.
2. Paying them less or not paying them as per the salary mentioned in the
employment act.
3. Making them work overtime without paying for overtime work.
4. Abusing them at the workplace.
5. Ethical practice towards shareholders and investors of a company
6. Don’t forget that your business has started because of the investment made by
your investors. The shareholders and investors are also the owners of your
business.
7. Therefore, it is your obligation to give fair returns on the basis of their investment
in the organization at regular intervals.
8. It is the ethical duty of an organization to let its investors known about the
accurate financial status about the business of the organization. It should
practice business in such a way that it is both in favor of organization as well as
its shareholders and investors.
9. If an organization fails to do this, it might lose the faith of its investors forever,
which is not good for the organization.
legal and ethical issues in retailing
Principles of Business Ethics
Business ethics emerged from divine guidelines, experience, giant corporate house
interest, and existing legal system. Consequently, it has to maintain the following
principles:
1. Be Trustful
Recognize customers want to do business with a company they can trust; when trust is
at the core of a company, it’s easy to recognize. Trust defined is assured reliance on the
character, ability, strength, and truth of a business.
2. Keep an Open Mind
For continuous improvement of a company, the leader of an organization must be open
to new ideas.
Ask for opinions and feedback from both customers and team members, and your
company will continue to grow.

3. Meet Obligations
Regardless of the circumstances, does everything in your power to gain the trust of past
customers and clients, particularly if something has gone awry.
Reclaim any lost business by honoring all commitments and obligations.
4. Have Clear Documents
Re-evaluate all print materials, including small business advertising, brochures, and
other business documents, making sure they are clear, precise, and professional.
Most importantly, make sure they do not misrepresent or misinterpret.
5. Become Community Involved
Remain involved in community-related issues and activities, thereby demonstrating that
your business is a responsible community contributor. In other words, stay involved.
6. Maintain Accounting Control
Take a hands-on approach to account and record-keeping, not only as a means of
gaining a better feel for the progress of your company but as a resource for any
“questionable” activities.
Gaining control of accounting and record-keeping allows you to end any dubious
activities promptly.
7. Be Respectful
Treat others with the utmost respect. Regardless of differences, positions, titles, ages,
or other types of distinctions, always treat others with professional respect and
courtesy.
Recognizing the significance of business ethics as a tool for achieving your desired
outcome is only the beginning.
Nature/Features of Business Ethics
Business ethics go hand in hand with generally accepted norms and values with very
few exceptions. What is unacceptable in general, will not be acceptable in business,
least in a certain locality.
However, the other features of the business are enumerated below:
1. Ethical values
Business ethics is concerned with morality in business in today’s business world, a
community firm is a large part of society, and its action is bond to have a direct impact
on the wellbeing and welfare of the society.
Business affects society in terms of what products it supplies.
Therefore, the business community must conduct its activities with self-control, self-
check, and self scarifies .i.e. acting with less concern for you than for the success of the
joint activity.
And always keeping in mind the interest of the community at large signifies ethical
values.
2. Relative term
Ethics is a relative term in the concept of morality and immorality. It differs from one
individual to another or from society to society. What is moral to one may be immoral to
another.
3. Interest of society
Business ethics implies that business should first do well to society and then to itself.
Business is an important institution and has a social responsibility to protect the
interest of all those groups who are directly or indirectly related to the organization like
employees, shareholders, and consumers, etc. to contribute to the real success of the
business organization.
4. Business social relationship
Business ethics set the terms and standards to understand the societal relationship of
business. It indicates what society expects from business and what it thinks about the
business.
5. Provides the framework
Like an individual, business is also bound by social rules and regulations. Business is
expected to restrict its activities within the limits of the social, legal, cultural, and
economic environment.
6. Facilitates protection of social groups
Business ethics gives protection to consumers and other social groups such as
shareholders, employees, and society at large.
The business should give priority to social interest or social good. Such an ethical
approach creates a good name, add status to business, and helps in its growth and
expansion.
7. Not against profit-making
Business ethics is not against fair profit-making.
However, it is against making a profit by cheating and exploiting consumers, employees,
or investors. It supports the expansion of business activities but by fair means and not
through illegal activities or corrupt practices.
8. Needs willing acceptance
Business ethics cannot be imposed by law or by force. It must be accepted as self-
discipline by businessmen. It should come from within. Businessmen should go for
ethical trade practices on their own and not by force of law.