1.

Business Ethics and its Importance

Business ethics are moral principles that guide the way a business behaves.
Business ethics as defined is a form of applied ethics or professional ethics that
examines ethical principles and moral or ethical problems that arise in
a business environment. It applies to all aspects of business conduct and is relevant to
the conduct of individuals and entire organizations. It is the study of proper business
policies and practices regarding potentially controversial issues, such as corporate
governance, insider trading, bribery, discrimination, corporate social responsibility and
fiduciary responsibilities. Business ethics are often guided by law, while other times
provide a basic framework that businesses may choose to follow in order to gain public
acceptance.
It is very important for the companies to understand and recognize the
relationship between the decision related to ethics and the legal aspects of business
organizations. The importance of business ethics was first recognized, during the
1960s, when the social issues in business rise to large extent in the American societies.
There were increased issues related to the public safety, and ecological problems
related to the pollution, waste management system, disposing the toxic wastes etc. in
these societies. The then president of America, John F. Kennedy, gave a special
message to the general public and the companies to safeguard the consumer rights of
safety, the right to be informed and right to choose, which is widely known as consumer
bill of rights.
Wherefore, it is necessary for the entrepreneurs to follow good business ethics
for every part of their business. There are several global entities, that offer brands to the
public for general and specialized use, are engaged in the bad business practices and
many of them have been fined by the related authorities which accounts for millions.
The companies are fined due to their failure to adhere to the business ethics and ethical
laws. The main problem with these companies is the amount of money they generate is
much higher than the fines imposed on them. This outweighs the opportunity costs
associated in their business and they happily pays off all the fines.
Business ethics can remove the minor issues like the lower wage rates, work
force exploitation as well as the big issues like the children in sweat shops making
sneakers or footballs for the large companies.
2. Six Most Important Business Ethical Issues

a. Conflict of Interest
A conflict of interest exists when a person must choose whether to advance his
or her own personal interests or those of others.
As an example, a manager in a corporation is supposed to ensure that the
company is profitable so that its stockholder-owners receive a return on their
investment. In other words, the manager has a responsibility to investors. If she
instead makes decisions that give her more power or money but do not help the
company, then she has a conflict of interest. She is acting to benefit herself at the
expense of her company and is not fulfilling her responsibilities.
To avoid conflicts of interest, employees must be able to separate their personal
financial interests from their business dealings. It is considered improper to give
or accept bribes such as payments, gifts, or special favours intended to influence
the outcome of a decision. A bribe is a conflict of interest because it benefits an
individual at the expense of an organization or society.
b. Fairness and Honesty
Fairness and honesty are at the heart of business ethics and relate to the general
values of decision makers.
Business persons are expected to follow all applicable laws and regulations. But
beyond obeying the law, they are expected not to harm customers, employees,
clients, or competitors knowingly through deception, misrepresentation, coercion,
or discrimination.
One aspect of fairness relates to competition. Although numerous laws have
been passed to foster competition and make monopolistic practices illegal,
companies sometimes gain control over markets by using questionable practices
that harm competition. Another aspect of fairness and honesty relates to
disclosure of potential harm caused by product use. Dishonesty has become a
significant problem in North America. In a study conducted by the Josephson
Institute, 92 percent of older teenagers admitted to lying and 70 percent admitted
to cheating on tests. However, 97 percent of those surveyed say that good
character is important, while 69 percent believe that the ethics of this generation
are satisfactory.
c. Communications

Communications is another area in which ethical concerns may arise. False and
misleading advertising, as well as deceptive personal-selling tactics, anger
consumers and can lead to the failure of a business. Truthfulness about product
safety and quality are also important to consumers.

However, ample opportunities remain for unethical firms to mislead consumers
about herbal products. Some manufacturers fail to provide enough information
for consumers about differences between products.
Another important aspect of communications that may raise ethical concerns
relates to product labelling. Health warnings on cigarette packages were first
imposed by federal law in 1989. Now, they have imposed more stringent
measures requiring even more graphic warnings on 50 percent of the package
panels, combined with inside package messages about health damage caused
by tobacco and information about quitting, has also been challenged in court. In
the Philippines, we have imposed sin tax on these leisurely commodities.

d. Business Relationships

Ethical behaviour within a business involves keeping company secrets, meeting
obligations and responsibilities, and avoiding undue pressure that may force
others to act unethically. Managers, in particular, because of the authority of their
position, have the opportunity to influence employees actions.

For example, a manager can influence employees to use pirated computer
software to save costs. The use of illegal software puts the employee and the
company at legal risk, but employees may feel pressured to do so by their
superiors authority. On the other hand, new network management programs
enable managers to try to control when and where software programs can be
used. This could introduce an issue of personal privacy. It is the responsibility of
managers to create a work environment that helps the company achieve its
objectives however, the methods that managers use to enforce these
responsibilities should not compromise employee rights.
Organizational pressures may encourage a person to engage in activities that he
or she might otherwise view as unethical, such as invading others privacy or
stealing a competitors secrets. Managers who offer no ethical direction to
employees create many opportunities for manipulation, dishonesty, and conflicts
of interest.

e. Plagiarism

Taking someone elses work and presenting it as your own without mentioning
the source is another ethical issue. As a student, you may be familiar with
plagiarism in school, for example, copying someone elses term paper or quoting
from a published work without acknowledging it. In business, an ethical issue
arises when an employee copies reports or takes the work or ideas of others and
presents them as his or her own. A manager attempting to take credit for a
subordinates ideas is engaging in another type of plagiarism.

f. Pay Equality

Pay equality represents one of the longest-running ethical issues facing the
business community. In 1963, the year the Equal Pay Act became law, women
earned 58.9 percent of what men earned for full-time work, according to the
National Committee on Pay Equity. As of 2011, women earned on average only
77 percent of what men earned for full-time work. These figures suggest an
entrenched policy of underpaying women for the same jobs men perform, even
while many companies claim to embrace gender equality in terms of pay.


3. Five Strategies to create ethical culture in business
a. Setting the ethical standards
The ethical standards of an organization need to be clearly defined via the
companys values and rules, including the code of conduct and policies. The
values should identify the desired behavioural parameters, which should be
translated into acceptable and unacceptable behaviours in the companys code
of conduct and supporting policies.
The impact of leaders in following these standards is even more influential
because they are such powerful role models. They effectively set, and entrench,
the ethical standards of the organization by the values they demonstrate, by what
they say and by what do.
b. Setting up an ethics committee
The Companies Act now mandates that most companies (except small
companies) establish a social and ethics committee. But, even in the absence of
legislation, an ethics committee can be a valuable facet of an ethics strategy.
The value of this committees contribution will rest on its composition:
members need to be senior enough that they can make decisions and authorize
necessary actions. However, the ethics committee should not assume the role of
the sole custodian of ethics in the workplace. Instead, each and every member of
the organization should recognize their role and contribution to the companys
ethical status and the committees success will rest on the extent to which they
achieve this buy-in.
c. Building ethical awareness
Ethics awareness is a powerful approach in the pursuit of improved
workplace ethics, particular as regards reducing unethical behaviour.
Visible policing provides a good example of the impact of awareness. The
private security vehicle which patrols the neighbourhood may not result in many
(or any) criminals being apprehended, but their regular presence serves to raise
ethical awareness and, in so doing, acts as a deterrent to crime being committed
in that area. So too can a high level of ethical awareness in the workplace realise
the same outcome of reducing misconduct.
Ethical awareness can also promote ethical behaviour by providing a
constant reminder of what is acceptable behaviour within the organization. This is
especially effective when the visible examples stem from the positive behaviour
of the leaders of the organization.
d. Measuring and monitoring ethical status
The measurement and monitoring of a companys ethical status is also a
crucial part of an effective ethics strategy. The dictum that if you cant measure
something, you cant manage it applies to ethics as much as any other area of a
business. A positive ethical status lends itself to many benefits, among others, for
customer retention, corporate reputations and brand equity, while a negative
status can be very damaging on many fronts.

A comprehensive method to do this is to conduct an ethics survey, such
as the Ethics Monitor. The survey results will identify the most important ethical
issues requiring attention and what action to take to improve ethics in the
organization. The results will also provide an Ethics Report which meets the
ethics reporting requirements of the social and ethics committee and of King III.
e. Taking action
Improving workplace ethics is optimally addressed by a dual approach
which includes actions to improve ethical behaviour and actions to reduce
unethical behaviour (much as increasing revenue and reducing costs are
addressed separately to improve profits).
If an ethics survey has been conducted, the results will indicate what
actions should be taken in what area of the organization. The most likely areas to
increase ethical behaviour will be via values, leadership, organizational culture,
communication and training, while reducing unethical behaviour will largely be via
laws, rules and regulations (including a code of conduct and policies), systems
and procedures and transparency.

4. Two Ethical Principles in dealing with ethical issues

a. Professionalism, Competency and Awareness
Professionalism can be defined as having the business qualities and
abilities required for the successful performance of one's professional duties.
Professionalism is a key principle in ethics for business. Decisions made
without due professional care harm the interests of all parties and damage
both the corporation and all parties to corporate relations. Therefore,
professionalism is a key prerequisite for people responsible for making
complex business decisions such as the board of directors members and
managers.

b. Confidentiality and Professional Secrecy
Confidentiality is the term used to refer to respect for and the protection of the
secrecy of the affairs of a company, its shareholders, directors, managers, and
other stakeholders. The principle of confidentiality should be disregarded with
respect to information on mala fide and unlawful conduct. Situations involving
incompetence or the concealment of information that should be disclosed
demand adherence to the principle of information disclosure, even if this involves
informing the executive bodies of a company or the competent official authorities
of the unlawful or unethical conduct.
In the interests of institutionalizing measures to protect confidentiality,
companies are advised to establish and adhere to a common regulation
stipulating that any information received in the course of the professional activity
of a beneficial owner, director, manager or employee that relates to the business
of the company or its contracting parties shall be treated as confidential.
Directors and managers must provide assurance to beneficial owners
(shareholders) and other affected parties that employees who work with
confidential information that, if disclosed, could harm the said parties, have been
made aware of that fact, and that the company has viable mechanisms and
procedures (instructions, briefings, control mechanisms) to prevent such
disclosure.
It is important to bear in mind also that the protection of confidential
information must be permanent. Employees, directors and managers serving at a
company must undertake to refrain from disclosing confidential information
coming into their possession in the course of their professional duties even after
they have left the company or terminated their employment. The confidential
information belongs to the company, and directors, managers and employees
must continue to respect the relationship of mutual trust and loyalty that existed
between the company and its people.

5. Ethical Dilemmas

ANSWER:
D. Review your companys internal policies and have an open and frank
discussion with your supervisor about the standard complimentary package and
airfare reimbursement

EXPLANATION:

Honesty is the Best Policy. We should never take any action which is not
honest, open and truthful, and which would not be proud to see reported widely.
This principle is based upon the teachings of Aristotle and Plato on the personal
virtues of integrity, transparency and moderation.
It is easier to deal with situations if we keep it honest and simple rather
than unjustly benefit at the expense of our integrity and peace of mind. We
should never take any action that is not in the long-term self-interests of yourself
and/or of the organization to which you belong.
We should always be mindful of our actions and ever be vigilant of its
consequences. In dealing with this issues, we should weigh the impact that the
situation would have in our lives and its subsequent effect to the people around
us.
In this situation, if we are to accept the complimentary package which
includes the airfare reimbursement, we are placing ourselves accountable for
fraud and receiving of bribes. To elaborate further, if we accept the offer, it would
appear that we have decided greedily without considering the possible
repercussions of our decision. We could have asked for discount instead.
Though we might have enriched ourselves in this transaction, we would have
been bothered forever by our conscience when we let ourselves be corrupted by
other people giving favourable offers. If we seek another conference center to
see if they are willing to offer the same or better complimentary package then we
are sinking ourselves deeper into trouble. If we however choose the standard
complementary package but decline the airfare reimbursement and play it safe,
we are merely mitigating our faults but the fact remains the same, that we are
being bribed.
The best way to deal with this situation is to review the company policy
and ascertain the legal impediments of the decision that we are to make. We
should be wise enough to understand that this transaction is not good to our
reputation as it is a form of bribery.
Nevertheless, we must relay this issues to the persons concerned in order
to desist any liability for dishonesty. The possible disclosure of information must
at all times inform the analysis of any action contemplated by corporate
members. The matter of how other people would react if an action, if carried out,
became widely known, acts as a considerable restraint on the performance of
unethical actions.
The disclosure of information on all actions or inaction having ethical
implications is crucial to the successful implementation of an event. Therefore,
the concealment of information in conflict situations, even if the information in
question is not unethical, must be seen as a breach of ethical standards even if
the consequences have not been adverse.
Therefore, it is imperative that we should set aside our personal interest
and adhere to company policies. We should take into consideration first the
interest of our company by asking discounts that would lessen the cost of the
corporate executive off-site meeting instead of considering our personal gains.