Ethics in Business. (Business Ethics) Chapter 2

Business Ethics

1. Ethics in Business
Business Ethics
Abdulahi Abukar “ ABAJEY”

2. INTRODUCTION
How,then,mightwedefinebusinessethics?Ina
descriptivesense,“businessethics”referstothosevalues,
standards,andprinciplesthatoperatewithinabusiness.
But“businessethics”alsoreferstoanacademicdiscipline
thatnotonlystudiesthosestandards,values,andprinciples
butalsoseekstoarticulateanddefendtheonesthatought
to or should operatein business.
Inthisway,businessethicsincludesnormativeaswellas
descriptiveelements.
Thischapterisacontributiontothatacademicfieldof
businessethics.Itsaimistodescribe,examine,and
evaluateethicalissuesthatarisewithinbusinesssettings.
Abdulahi Abukar “ ABAJEY”

3. Two sides to every story
•Companiesoftenfinditdifficulttopleasealloftheir
stakeholders,astheyhavedifferentinterests.
• Beingethicaldependsonanindividualviewofwhatis
rightandwrong.Whatmightbeconsidered
goodbehaviourtooneindividual,may
seembadtoanother.
•Ultimatelycompaniesaimtomakeaprofitandsometimes
thiscanconflictwithactinginaresponsibleway.
•Larger,globalcompaniescanoftenfinditdifficulttoregulate
theiractivitiesinothercountries.
Abdulahi Abukar “ ABAJEY”

4. •Customers
•Managers/Owners/Shareholders
•Pressure Groups/Activists
•Workforce
•The Community
•Trading Partners
Abdulahi Abukar “ ABAJEY”

5. Ethics in a Business Setting
Businessethicsisthestudyandformulationofbusiness
policiesbasedonaframeworkofvalues.
Thisframeworkdefinesemployeebehaviorintheir
interactionswitheachotherandoutsiders.Italsodefinesthe
valuesandroleofthebusinesswithinasociety.
Forexample,acompanymaydiscouragedirectreportsfrom
havingromanticrelationshipswitheachothertoprevent
favoritismduringquarterlyreviews.
Applyingethicalstandardstobusinesspracticesmeans
applyingaculture’smoralstandards,whichriseabovelegal
statutes,toascertainwhetherdecisionsorconductare
appropriateandjust,goodorbad,notonlyforthebusiness,
butalsoforsocietyasawhole.
Abdulahi Abukar “ ABAJEY”

6. Nature of Business Ethics
Businessisawideterm.Itincludesalloccupationsin
whichpeoplearebusyearningincomeeitherby
productionorpurchase,sale,andexchangeofgoodsand
servicestosatisfytheneedsofpeopleandtoearnprofit.
Thefollowingpointsmaybediscussedtorevealthetrue
natureofthebusiness:
Abdulahi Abukar “ ABAJEY”
Economicactivity:Businessis
anessentialeconomicactivity.
Profitmotiveisthekeyelementthat
inspiresabusinessmantowork
efficiently.

7. •Humanactivity:Inthissense,
businessisconsideredtobean
economicactivityofhumanbeings
only.Abusinessisbythepeopleand
forthepeople.
•SocialActivity:Businessisa
socialprocess.Alltheindividuals
involvedinabusiness,suchas
owners,customers,andemployees,
areanintegralpartofsociety.The
businesshastofulfillitssocial
responsibilities.
Abdulahi Abukar “ ABAJEY”

8. Types of Business
Activities
Allhumanactivitiesconcernedwithearning
moneyareincludedunderthetermbusiness.
Cultivationbyafarmer,teachingbyateacher
andtreatmenttakenbyapatientfromadoctorarealsotreatedas
businessactivities.
Therearedifferenttypesofbusinessactivities,whichmaybe
classifiedasfollows:
1.Industry:Anindustryincludestheactivitiesconnectedwiththe
productionandprocessingofgoods.Manufacturingenterprises
areengagedintheproductionofgoods.
Thesekindsofindustriescanbeclassifiedasfollows:
Analyticalenterprises:
Syntheticenterprises
Assemblingenterprises
Abdulahi Abukar “ ABAJEY”

9. 9
Commercecanbedividedintotwocategories:
aid to trade.
Tradecanbefurtherdividedintotwo
categories,whichareasfollows:
•Internal:Thisincludesthetradethatisdone
withthecountry,suchaswholesaleandretail
trade.
•External:Thisincludesthetradethatisdone
withvariouscountries,suchasexportand
import.
Commerce:Itisthetotalofallthose
activitiesthatareengagedintheremoval
ofhindrancesofpersonsortrade,placesor
transportation,riskoflossorinsurance
andtime,tradeandsuchaswarehousing,
bankingandfinancingofcommodities.
Abdulahi Abukar “ ABAJEY”

10. Why Is Business Ethics Important ?
Thereareseveralreasonsbusinessethicsareessentialforsuccessin
modernbusiness.Mostimportantly,definedethicsprogramsestablish
acodeofconductthatdrivesemployeebehavior—fromexecutivesto
middlemanagementtothenewestandyoungestemployees.Whenall
employeesmakeethicaldecisions,thecompanyestablishesa
reputationforethicalbehavior:
Brandrecognitionandgrowth
Increasedabilitytonegotiate
Increasedtrustinproductsandservices
Customerretentionandgrowth
Attractstalent
Attractsinvestors
Abdulahi Abukar “ ABAJEY”

11. Types of Ethical Actions
Destructiveactionsarethosethatcanharmthepeople
performingtheactionsaswellasothers.Itisverydifficult
forpeopletofindoutwhichactionsareharmful.Some
actionscancausedamageinonesituationandthesame
actionscanbeusefulinsomeothersituation.
Ethicalactionscanbeoftwotypes.
Thesetypesare:
Abdulahi Abukar “ ABAJEY”

12. Adestructiveactionmustbemotivatedbypassion,angerand
naivetyaboutitseffects.Buddhistethicsdeterminedthatmostof
themental,physicalandverbalactionscouldbedestructive.
ThetendestructiveactionsdeterminedbyBuddhistethicsare:
1.Takingthelifeofothers
2.Takingsomethingfromothersthathasnotbeengiventothem
3.Lying
4.Talkingandspeakinginsensitively
5.Usingcruellanguage
6.Usinglanguageconsistingofidlewords
7.Thinkingthoughtsofmeanness
8.Thinkingjealousthoughts
9.Distortedandaggressivethinking
10.Behavinglikeamoderator
Abdulahi Abukar “ ABAJEY”
Abdulahi Abukar “ ABAJEY”

13. Constructiveactionsarealsoconsidered
asdesirepromptedduties.Constructive
actionsarealwaysdonebypeoplewho
considerittheirresponsibilityordutytoperformthese
actions.Theseactionscanbeperformedeitherdailyoron
somespecialtime.Theseactionsalwaysprovidearesultthat
is purposeful and self-determined.
Constructiveactionscanbeofthreedifferenttypes.These
typesare:
•Obligatoryactions
•Prohibitedactions
•Optionalaction
Abdulahi Abukar “ ABAJEY”

14. Add a footer 14
Themaindifferencebetweenlegal
andethicalstandardsisonthe
basisofeachconcept.
1.Forinstance,ethicsandlaw
aredistinctbecauseaviolation
ofoneispenalizedwhilea
violationoftheotherisnot.
Legalandethicalaredistinct
terms,eventhoughtheyare
sometimes used
interchangeably.
Difference Between Legal
and Ethical Standards
Abdulahi Abukar “ ABAJEY”

15. 2.Aperson'smoralvaluesmayormay
notbeanotherperson'svalues,
dependingonhowthatpersonthinks.
Moreover,ethicalstandardsare
foundedonprinciplesandaretherefore
voluntary.Thismeansthatbreaking
thelawisacriminaloffense,although
breakingethicalstandardsisnot.
3.Inaddition,whereasethicalstandards
existinanabstractform,legalnorms
aredocumentedinwriting.Ingeneral,
legalnormsaremoreprevalentin
largerareas,whileethicalstandardsare
moreprevalentinsmallerareas.
Furthermore,moralsaren'talways
instilledinpeoplefromanearlyage.
4.Thelawislegallyenforceable.Ethics
doesnothavealegalforcebehindit.
Abdulahi Abukar “ ABAJEY”

16. The Relationship Between
Ethics and Law
Lawisthesystemofrulesof
conductestablishedbythe
governmentofasocietyto
maintainstabilityandjustice.
Thelawdefinesthelegal
rightsanddutiesofthe
peopleandprovidesthe
meansofenforcingthese
rightsandduties.
Abdulahi Abukar “ ABAJEY”

17. •Arelationshipexistsbetween
law and ethics.
Insomeinstances,lawand
ethicsoverlap(related)andwhat
issupposedasunethicalis
alsoillegal.
•Inothersituations,theydo
notoverlap.Insomecases,
whatissupposedas
unethicalisstilllegal,andin
others,whatisillegalis
perceivedasethical.
Abdulahi Abukar “ ABAJEY”

18. True or False?
Is the following statement true or false?
“Ethics has to do with whether my feelings are
right or wrong.”
True –but we must realise that
sometimes our feelings can cloud
are judgement and make it difficult
to see both sides.
Abdulahi Abukar “ ABAJEY”

19. True or False?
Is the following statement true or false?
“Ethics has to do with my religious beliefs.”
True –it can be linked to religious
beliefs, but remember it is much more
than this.
Abdulahi Abukar “ ABAJEY”

20. True or False?
Is the following statement true or false?
“Being ethical is doing what the law always
requires.”
True –people and business have to
follow law, but remember that some
laws may be unethical.
Abdulahi Abukar “ ABAJEY”

21. True or False?
Is the following statement true or false?
“Ethics consists of the standards of
behaviour our society expects.”
True –but remember that society
is sometimes unpredictable and
cruel.
Abdulahi Abukar “ ABAJEY”

22. THANK YOU!
[email protected]
ABAJEY
Abdulahi Abukar “ ABAJEY”