SCOPE OF BUSINESS ETHICS

Ethical problems and phenomena arise across all the functional areas of companies and at all
levels within the company.
1.Ethics in Compliance
Compliance is about obeying and adhering to rules and authority. The motivation for being
compliant could be to do the right thing out of the fear of being caught rather than a desire to be
abiding by the law. An ethical climate in an organization ensures that compliance with law is
fuelled by a desire to abide by the laws. Organizations that value high ethics comply with the
laws not only in letter but go beyond what is stipulated or expected of them.
2.Ethics in Finance
The ethical issues in finance that companies and employees are confronted with include:
In accounting window dressing, misleading financial analysis.
Related party transactions not at arms length
Insider trading, securities fraud leading to manipulation of the financial markets.
Executive compensation.
Bribery, kickbacks, over billing of expenses, facilitation payments.
Fake reimbursements
3.Ethics in Human Resources
Human resource management (HRM) plays a decisive role in introducing and implementing
ethics. Ethics should be a pivotal issue for HR specialists. The ethics of human resource
management (HRM) covers those ethical issues arising around the employer-employee
relationship, such as the rights and duties owed between employer and employee.
The issues of ethics faced by HRM include:
Discrimination issues i.e. discrimination on the bases of age, gender, race, religion, disabilities,
weight etc.
Sexual harassment.
Affirmative Action.
Issues surrounding the representation of employees and the democratization of the workplace,
trade ization.
Issues affecting the privacy of the employee: workplace surveillance, drug testing.
Issues affecting the privacy of the employer: whistle-blowing.
Issues relating to the fairness of the employment contract and the balance of power between
employer and employee.
Occupational safety and health.
Companies tend to shift economic risks onto the shoulders of their employees. The boom of
performance-related pay systems and flexible employment contracts are indicators of these
newly established forms of shifting risk.
4.Ethics in Marketing
Marketing ethics is the area of applied ethics which deals with the moral principles behind the
operation and regulation of marketing. The ethical issues confronted in this area include:
Pricing: price fixing, price discrimination, price skimming.
Anti-competitive practices like manipulation of supply, exclusive dealing arrangements, tying
arrangements etc.
Misleading advertisements
Content of advertisements.

Children and marketing.

Black markets, grey markets.
5.Ethics of Production
This area of business ethics deals with the duties of a company to ensure that products and
production processes do not cause harm. Some of the more acute dilemmas in this area arise out
of the fact that there is usually a degree of danger in any product or production process and it is
difficult to define a degree of permissibility, or the degree of permissibility may depend on the
changing state of preventative technologies or changing social perceptions of acceptable risk.
Defective, addictive and inherently dangerous products and
Ethical relations between the company and the environment include pollution, environmental
ethics, and carbon emissions trading.
Ethical problems arising out of new technologies for eg. Genetically modified food
Product testing ethics.
The most systematic approach to fostering ethical behaviour is to build corporate cultures that
link ethical standards and business practices.
ADVANTAGES OF BUSINESS ETHICS
More and more companies recognize the link between business ethics and financial performance.
Companies displaying a clear commitment to ethical conduct consistently outperform
companies that do not display ethical conduct.
1. Attracting and retaining talent
People aspire to join organizations that have high ethical values. Companies are able to attract
the best talent and an ethical company that is dedicated to taking care of its employees will be
rewarded with employees being equally dedicated in taking care of the organization. The ethical
climate matter to the employees. Ethical
Organizations create an environment that is trustworthy, making employees willing to rely, take
decisions and act on the decisions and actions of the co-employees. In such a work environment,
employees can expect to be treated with respect and consideration for their colleagues and
superiors. It cultivates strong teamwork and Productivity and support employee growth.
Investor Loyalty
Investors are concerned about ethics, social responsibility and reputation of the company in
which they invest. Investors are becoming more and more aware that an ethical climate provides
a foundation for efficiency, productivity and profits. Relationship with any stakeholder, including
investors, based on dependability, trust and commitment results in sustained loyalty.
Customer satisfaction
Customer satisfaction is a vital factor in successful business strategy. Repeat purchases/orders
and enduring relationship of mutual respect is essential for the success of the company. The
name of a company should evoke trust and respect among customers for enduring success. This
is achieved by a company that adopts ethical practices. When a company because of its belief in
high ethics is perceived as such, any crisis or mishaps along the way is tolerated by the
customers as a minor aberration. Such companies are also guided by their ethics to survive a
critical situation. Preferred values are identified ensuring that organizational behaviours are
aligned with those values. An organization with a strong ethical environment places its
customers interests as foremost. Ethical conduct towards customers builds a strong competitive
position. It promotes a strong public image.
Regulators
Regulators eye companies functioning ethically as responsible citizens. The regulator need not
always monitor the functioning of the ethically sound company. The company earns profits and

reputational gains if it acts within the confines of business ethics. To summaries, companies that
are responsive to employees needs have lower turnover in staff.
Shareholders invest their money into a company and expect a certain level of return from that
money in the form of dividends and/or capital growth.
Customers pay for goods, give their loyalty and enhance a companys reputation in return for
goods or services that meet their needs.
Employees provide their time, skills and energy in return for salary, bonus, career progression,
and learning.
Ten Companies With Best Ethical Corporate Policies Worldwide
Its not often that companies are celebrated for good behavior. Here are corporations with
policies we can support:
Google
Although some may criticize the company, Google(NASDAQ:GOOG) regularly makes good on its
motto: Dont be evil. Through its Google Green Program, the company has donated over $1
billion to renewable energy projects, and has decreased its own footprint by using energy
efficient buildings and public transportation. The company is also a staunch advocate of free
speech, which can be observed from its frequent conflicts with the Chinese government. Google
is also an open supporter of gay rights. Yet all this pales in comparison to Googles status as a
paragon for employee benefits. Just to name a few, Google employees have access to free health
care and treatment from on-site doctors, free legal advice with discounted legal services, a fully
stock snack pantry and onsite cafeteria (staffed by world-class chefs, no less), and a free on-site
nursery. With such a stellar record of social awareness and positive employee relations, Google is
easily the best example of ethics in the corporate world today

Microsoft
Given the fact that it was started by Bill Gates, one of Americas most generous philanthropists,
it follows that Microsoft(NASDAQ:MSFT) would do well in following his example. The tech
company and its employees donate over $1 billion yearlyto charities and non-profit
organizations. If that wasnt enough, Microsofts management and employees have also decided
to tackle Americas IT professionals shortage through its TEALS program. Through the TEALS
program, Microsoft employees are encouraged to volunteer at local schools to instruct students
in computer science, in the hopes that it will inspire them to enter the technology industry. Its
only natural that Microsoft employees would be generous people; in addition to being among the
highest paid employees in America, they also enjoy a plethora of perks, including 100% coverage
on their health care premiums.
Intel
Since 1988, the computer chip manufacturer Intel(NASDAQ:INTC) has been trying to bolster its
reputation through its efforts to strengthen technological education. Through the Intel
Foundation, the company hosts the Intel Science Talent Search and the international Science and
Engineering Fair to help encourage STEM (science, technology, engineering, and mathematics)
education for young people. Intel is also interested in making these areas more diverse; the
company has many donation funds and programs to encourage girls and underprivileged
minorities to study in these fields. Employees of Intel also experience the companys dedication
to education through a very strange corporate perk the company promotes or reassigns them
to different fields and areas every 16 to 24 months, in the interest of making sure that workers
never become bored with their roles, and encouraging them to explore new fields. Accepted
employees are often told, Welcome to your next five jobs.

The other companies which top in practicing business ethics worldwide are Patagonia, NuStar
Energy, SAS Institute, Ultimate Software, Goldman Sachs, Starbucks and Salesforce.com .
Two Indian companies among most ethical in the world:
TATA Steel
Wipro Limited
Social Responsibility
Man is a social animal and cannot live in isolation. He is expected to behave in a manner that is
socially and morally acceptable to others. The same applies to businesses. Though the primary
objective of any business is to earn maximum profits for the owners and shareholders, it is also
expected to conduct its operations in a manner that it fulfils its social obligations also. For
example, though it is not binding on any private sector company to provide employment to the
disabled or weaker sections of the society, it is considered to be a part of the social responsibility
of the company to absorb people from such sections of the society. Similarly though there is not
written law to compel a company to engage in acts to do something to reduce pollution or to do
something for the betterment of environment, taking up projects to clean up environment are
considered to be a part of the social responsibility of the company.
Corporate Social Responsibility
Corporate Social Responsibility (CSR) is a concept whereby organizations consider the interests
of society by taking responsibility for the impact of their activities on customers, employees,
shareholders, communities and the environment in all aspects of their operations. This obligation
is seen to extend beyond the statutory obligation to comply with legislation and sees
organizations voluntarily taking further steps to improve the quality of life for employees and
their families as well as for the local community and society at large.
Corporate social responsibility is related to, but not identical with, business ethics. While CSR
encompasses the economic, legal, ethical, and discretionary responsibilities of organizations,
business ethics usually focuses on the moral judgments and behavior of individuals and groups
within organizations. Thus, the study of business ethics may be regarded as a component of the
larger study of corporate social responsibility.
-Carroll and Buchholtz
Law
Under the Companies Act, 2013, any company having a net worth of rupees 500 crore or more or
a turnover of rupees 1,000 crore or more or a net profit of rupees 5 crore or more should
mandatorily spend 2% of their net profits per fiscal on CSR activities.The rules came into effect
from 1 April 2014.
Difference between Business Ethics and Social Responsibility
Though business ethics and social responsibility seem to be overlapping, there has always been
a contradiction between the two. Companies, though they are committed to be socially
responsible for their behaviour have been found to be engaging in acts that cannot be called
ethical.
What is good for the society is sometimes not good for the business, and what is good for the
business is almost always not good for the society.
If the society is conscious, it responds in such a way that businesses are forced to behave
responsibly. The same applies to the administration and the judiciary of any country.

Selling of liquor and tobacco in any society is not against business ethics though it may be
against the principles of social responsibility. The same applies to lotteries and gambling. But it is
certainly against business ethics as well as against social responsibility to entice minors to
engage in smoking and drinking.
Conclusion
Ethics are the building block of our society and thus should be the building block of our
corporations. Henry Kravis states, If you build that foundation, both the moral and the ethical
foundation , as well as the businessthen the building wont crumble. It is not essential to let
greed cloud judgement.
It can be concluded that it is the high time business ethics should be practiced all over the globe
in the benefit of the common society as described in the paper. It is not only in the favour of the
mass but also has advantages for the corporate.