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Business Ethics


 1. Business ethics are those principles, policies or philosophies that are concerned with moral judgment and good conduct as they are applicable to a business situation.

2. Business ethics refers to right or wrong behaviour in business decisions.

3. Business ethics involves morally accepted behaviour in business practices.


Business ethics refer to a code which businessman are expected to follow while dealing with others. The coverage of business ethics is very wide as it deals with norms relating to customers, shareholder, employees, dealers, government and competitors. These are, in fact, the different areas of business ethics.


• Business ethics is the code of conduct which businessmen should follow while conducting their normal business activities.

• Business ethics has universal application.

• It is a relative term. It changes from one business to another. It differs from country to country.

• It is a new concept. It is strictly followed only in the rich western countries. It is not followed properly in the poor and developing countries.

• It has universal application. Only the degree of it may vary from country to country.

• It is a far-reaching concept and goes beyond the idea of making money legally.

• Ethical values are way ahead of earning money. It is more about earning long-lasting relationships in business.

• Business ethics is based on well accepted moral and social values. It suggests more principles of conduct for businessmen. They include self control service to society, fair treatment to social groups and not to harm others.

• Business ethics gives protection to customers and other social groups such as shareholders, employees and the society at large.

• Business ethics provides the framework within which business is to be conducted. It suggests legal. It suggests what is and  what is bad in business.

• Business ethics cannot be enforced by law or by force. It must be accepted as self-discipline by businessmen. It should come from within
 Businessmen should go for ethics trade practices on their own and not force of law.

• Businessmen should by given proper education, guidance and training in order to motivate them to follow ethical business practices. Trade associations and chambers of commerce have to play a positive role in this regard.

• Business ethics is not against fair profit making. However, it is against profiteering by cheating and exploring consumers, employees or investors.

• It supports expansion of business activities but by fair means and not through illegal activities or corrupt practices.


There are four basis approaches of business ethics:-

Empirical approach

• It States that ethics is derived through experiences of businessmen who determine what is and what is wrong.

• Intuitive approach

It States that business ethics is not necessarily derived from experience of businessmen or logic but businessman automatically process an understanding of what is good and what is bad.

• Rational approach

It States that businessman need not require any past experience for determination of ethics.

• Revelation approach

It States that religious moral principles help life to rise to its greatest potential.


The framework has to be outlined before the business activity starts.

1. Criminal behavior and framework

Every business needs to have a code of ethics pertaining to criminal behavior and legal issues. The employees in a business need to be trained sufficiently regarding legalities of the business and the consequences their actions would have upon them and the business.

2. Human values and personal behaviour

Every business needs to have an ethical framework at policy for human values and behaviour. Employees should be given training on how to interact with different people, be it customers, suppliers or competitors. They need to be aware of how they are expected to behave with people at different levels and that inappropriate behaviour will have consequences.

 3. Corporate and business ethics

Business ethics pertains to the corporate ethics, ethical policies for business and actions that are going to be under check and need to be in compliance with legal framework and standards.


• Customer will be satisfied only if the business follow all the business ethics.

• Business ethics is needed in order to make businessman conscious as regards their duties and responsibilities towards consumer and other social groups.

• Business ethics is needed to make business activities Fair. It checks business malpractices and offers protection to consumers.

• Business ethics is needed in order to improve the confidence of consumers as regards quality, Price, reliability, etc. Of goods and services supplied.

• Business ethics is needed for the protection of right of consumers at the business level such as right to health and safety, right to be informed, right to choose, right to be heard etc.

• Business ethics is needed in order to protect the interest of all those concerned with business-the employees, shareholders, dealers, and suppliers. It avoids their exploitation through unfair trade practices.

• Business ethics is needed in order to create a good image of businessmen in the society and also for avoiding public criticism. Ethics business gets public support while unethical business is criticized by all.

• Business ethics leave a long-lasting impression on the customers and the impression on their minds builds trust, fetching a business more customers while retaining the folder ones.

• Without following certain ideals in business, one cannot become successful.
Success that is attained without a foundation of strong ethics is bound to be short-lived. A business cannot continue to prosper without an ethical base. A few successes can be coincidences or flukes but persistent success can only be a result of a strong foundation of  ethics.

• Public will be ready to invest or lend money only if they are convinced that the organization is following fair business practices.

• Business ethics gives protection to customers and other social groups such as shareholders, employees and the society a large.

• Business ethics is needed in other to develop cordial and friendly relations between business and society.

• It is also needed for social recognition and support to business.

• Organizations doing business ethically will continue to survive and prospers for a long time.

• It is a social movement of consumers that has come into existence to educate and unite consumers to fight for the protection of their rights. It has gained momentum which has compelled businessmen to follow business ethics for survival.


Survival is the name of any business game. It a company wants to survive it has to think about its profits Most businesses operate on the principle that profit is not liked to ethical consideration. But there are instances, which nullify the above principle.

The term 'profit' in business is appropriate but only profit' is not acceptable any more.

Today, every organization, whether big or small, has to justify its existence in the marketplace. It is felt that if a company cannot generate profits, it has no right in the marketplace. A firm that is not performing well is considered as liability and burden to the society, as it cannot discharge its responsibility to its community-welfare to its employees, revenue to shareholders and meet customer demand.

Thus, profit today is recognized as a characteristic of the success of a business and a justification for its existence.

A sick or loss making company is bound to misuse scarce resource. Such a loss making company makes huge liabilities: upsets the business, promotes inefficiency and finally cannot discharge its social responsibility.

Considering this situation, it may be unethical for a firm to make loss. Such firms cannot exist in the marketplace as they force employees into economic insecurity.

The need for business ethics is felt more in recent years. This may be the result of various factors such as growing competition in business, growing consulting as regards their right and growing awareness among employees, shareholders and the local community. People are not in a mood to tolerate unethical business.



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