Pressures influencing ethical decision making

Business Ethics

Unit 8

Ethics is the system of moral principles, rules of conduct, and morality of choices that individuals make.

Business ethics is the application of moral standards to business situations. Business ethics has become a matter of public concern.

All business people face ethical issues daily, and they stem from a variety of sources. Although some types of issues arise infrequently, others occur regularly. Let’s take a closer look at several ethical issues.

1. Fairness and Honesty. Fairness and honesty in business are two important ethical concerns. Besides obeying all laws and regulations, business people should refrain from deceiving, mis­representing, or intimidating others.

2. Organizational Relationships. A business person may be tempted to place his or her personal welfare above the welfare of the organization. Relationships with customers and coworkers often create ethical problems – since confidential information should be secret and all obligations should be honoured. Unethical behaviour in these areas includes not meeting one's obligations in a mutual agreement, and pressuring others to behave unethically.

3. Conflict of Interest. Conflict of interest results when a business person takes advantage of a situation for his or her own personal interest rather than for the employer's or organization's interest. Such conflict may occur when payments and gifts make their way into business deals. A wise rule to remember is that anything given to a person that might unfairly influence that person's business decision is a bribe, and all bribes are unethical.

4. Communications. Business communications, especially advertising, can present ethical questions. False and misleading advertising is illegal and unethical, and it can infuriate customers. Sponsors of advertisements aimed at children must be especially careful to avoid misleading messages. Advertisers of health-related products must also take precautions against deception.

5. Relationships. Business ethics involves relationships between a firm and its investors,

customers, employees, creditors, and competitors. Each group has specific concerns, and each

exerts some type of pressure on management

Investors want management to make financial decisions that will boost sales, profits, and returns on their investments.

Customers expect a firm's products to be safe, reliable, and reasonably priced.

Employees want to be treated fairly in hiring, promotion, and compensation.

Creditors require bills to be paid in time and the accounting information furnished by the firm to be accurate.

Competitors expect the firm's marketing activities to portray its products truthfully.

6. Business ethics. Although there are exceptions, it is relatively easy for management to respond in an ethical manner when business is good and profit is high. However, concern for ethics can dwindle under the pressure of low or declining profit In such circumstances, ethical behaviour may be compromised.

Expanding international trade has also led to an ethical dilemma for many firms operating in countries where bribes and payoffs are an accepted part of business. In the U.S. government

agencies have prosecuted several companies for "illegal payoffs", in spite of the fact that there is as yet no international code of business ethics. Until stronger international laws or ethics codes are in place, such cases will be difficult to investigate and effective prosecution is not possible.

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