Business Ethics
chap 1
Introducing business ethics
Business Ethics:- The study of business situations, activities and decisions where issues of
right and wrong are addressed.
# Business Ethics applies for not only commercial business but also government
organisations, pressure groups, not-for-profit business, charities and other organisations.
Ethics vs law:-
Grey area:- Gray area in ethics and law refer to situations where the rules or law are not
clear cut, leaving room for interpretation and debate about what is right or wrong.
Morality:- morality is concerned with the norms, values and beliefs embedded in social
processes which define right and wrong for an individual or community.
Morality vs Law:-
Relationship between morality, ethics and ethical theory:-
Why Ethics Important in Business:-
● Business has huge power within society
● Potential to provide a major contribution to our societies.
● Business malpractice has the potential to inflict enormous harm on individuals,
communities, and the environment.
● The demands being placed on business to be ethical by its various stakeholders are
becoming more complex and challenging.
● Employees face significant pressure to compromise ethical standards.
● Business faces a trust deficit.
Race to the Bottom:-
A process whereby multinationals pitch developing countries against each other by
allocating foreign direct investment to countries that can offer them the most favourable
conditions in terms of low tax rates, low levels of environmental regulation, and restricted
workers’ rights.
Globalization:-
The ongoing integration of political, social, and economic interactions at the transnational
level, regardless of physical proximity or distance
# Globalisation has three main areas were they need to considering terms of Business
Ethics :- cultural, legal, accountability
Cultural Issues:-
Different Norms: Businesses work in different countries with various cultural values and
practices.
Respect: Companies need to respect and adapt to these different cultures to operate
ethically.
Legal Issues:-
Varied Laws: Each country has its own set of laws and regulations.
Compliance: Businesses must follow the laws in each country they operate in to stay legal
and ethical.
Accountability Issues:-
Global Responsibility: Companies are responsible not just in their home country but
wherever they operate.
Transparency: Businesses need to be clear and open about their practices to maintain trust
and ethical standards.
Sustainability:-
The long-term maintenance of systems according to environmental, economic, and social
considerations.
#sustainability has 3 components :-
Economic, social, environmental
#sustainable development is development that meets the needs of the present without
compromising the ability of future generations to meet their own needs.
1. Economic Sustainability
● Ethical Perspective: Businesses should strive for financial health and profitability
while ensuring their operations do not deplete resources or harm the environment.
● Example: Implementing efficient resource management practices to reduce waste
and costs, ensuring the business can thrive and support economic stability without
compromising future generations.
2. Social Sustainability
● Ethical Perspective: Companies have a responsibility to contribute positively to
society by promoting fair labor practices, human rights, and community well-being.
● Example: Ensuring fair wages, safe working conditions, and supporting community
development initiatives, which helps build trust and loyalty among stakeholders and
contributes to social harmony.
3. Environmental Sustainability
● Ethical Perspective: Businesses should minimize their environmental footprint by
adopting eco-friendly practices and preserving natural resources for future
generations.
● Example: Reducing carbon emissions, using renewable energy sources, and
implementing sustainable supply chain practices to protect the planet and maintain
ecological balance.
Triple Bottom Line:-
The Triple Bottom Line (TBL) is a business framework that looks at three key perspectives:
environmental, economic, and social. It encourages companies to go beyond profits and
consider their impact on the planet and people.
1. Environmental Perspective
● Focus: The impact of business activities on the environment.
● Goals: Reduce waste, conserve resources, lower emissions, and adopt sustainable
practices.
● Example: A company implementing recycling programs and using renewable energy
to minimize its environmental footprint.
2. Economic Perspective
● Focus: Financial performance and economic value.
● Goals: Ensure profitability, economic growth, and long-term financial stability.
● Example: A business making smart investments and generating steady profits while
maintaining financial health and sustainability.
3. Social Perspective
● Focus: The impact of business activities on people and society.
● Goals: Promote fair labour practices, support communities, and improve the quality
of life.
● Example: A company providing fair wages, safe working conditions, and engaging in
community development projects.
