Business ethics

The sustainable advantage of an organization can be determined by its ethical capacity. An organization's ethical capacity is its duty to do the right thing. Some organizations, such as Enron, Sathyam and Tyco, have made false statements in their accounts and deceived stakeholders and governments.

The advantage of sustainable development can be defined as a benefit factor that determines the long-term goals of an organization, which will aim at economic development, creating wealth, meeting the needs of today's people, , So the next generation can also meet their needs. There are many factors that determine the sustainability of an organization, and their ethics, strategies, staff, financial capital, etc. In the present case, human resources are considered to be the competitive advantage of the organization, but it does not provide sustainability. The sustainability of an organization will depend on its impact on people in the form of trust, honesty, integrity, respect, quality and responsibility.

Enron is an American energy company, founded in 1985 by Kenneth Lay to merge with Houston Natural Gas and internorth (citetation) after the establishment. In the early 1990s, Enron sold electricity at market prices. About the same time, the US Congress passed a bill on deregulation of natural gas sales, which will help Enron to sell energy at higher prices. In 1992, Enron was the largest natural gas business in North America. An online transaction model called Enron Online, developed in November 1999, has developed and expanded the ability to negotiate and manage its trading operations. By 2001, Enron owned and operated gas pipelines, pulp and paper mills, broadband assets, power plants and water plants internationally. Enron's stock price at $ 83.13, the market value of more than 60 billion US dollars, Enron was named the United States the most innovative large companies. By the end of 2001, the Enron scandal was uncovered. Jeffrey Skilling, chief executive, has hidden billions of dollars from some of the executives' debts in transactions and project failures. Financial director Andrew Fastow and other executives misled the board and the audit committee by submitting the psydo account statement. Once the scam announced, Enron's stock price of $ 90 per share in 2000 until the end of November 2001 fell to less than $ 1. Decline in stock value resulted in a loss of $ 11 billion to shareholders. The organization's employees received limited wages and pensions in bankruptcy.

Similarly in the case of the Sathyam computer, this is known as the Indian Enron scandal. Sathyam Computer is an information technology company headquartered in Hyderabad, India. Its chairman, Ramalinga Raju, produced an account statement with a $ 70 million fraud. The main auditor was also unable to determine such an adjustment. The result of this scam is that the employee loses his job and the chairman is jailed for fraud

These two cases reveal how an organization and the national economy or the world's great powers are affected by their immoral practices.

Required Business Ethics: For the following

1. Business in Social Management [19​​459002]

2. Every business, big or small, has more ethical meaning, or it takes full account of its long – term social concern


Business is part of the social subsystem, so its operation should be beneficial to the welfare of society. If the enterprise is socially recognized, it will be able to survive, develop, and excel in its activities, because only by gaining social recognition can a firm be a loyal customer. Loyal customers are sustainable advantages, so can survive in the market, without it, it will crash and die. Large organizations are more interested in the public, managers eager to have public opinion, and always seek to maintain the correct image of the company in their minds

Now a day of profit minimization is not the only priority business should have Sustainability, which can only be achieved through moral practice. Any large or small organization should follow ethical practices, because it brings social responsibility and ultimately provides sustainability for the organization.

Intercultural differences

The ethical practice of a state or society will depend on a variety of factors such as religion, belief, history, tradition, social convention and existing political and economic rules or policies . For example, in Japan, China and other Asian countries, loyalty to work groups and enterprises has a strong moral value.

The nature of ethics

The concept of ethics involves only human beings, because they only freedom and means of choice Free will. Humans can distinguish between good and evil, right and wrong, just and appropriate. For example, a Japanese employee thought he was reluctant to take an interview with other companies when he was in the company. So humans can fix a goal and a means to achieve it. Ethics is also science, and now has become a system of knowledge about moral behavior and behavior.

Business Ethics and Profit

Enron and Sathyam's examples point out that ethics and profit are opposed to each other because when an organization is moral, it makes short-term profits if the organization is immoral , It gets huge profits. The same thing proves that we have one thing, it is immoral to earn huge profits, but will not be maintained in the market. Ethical companies not only profitable, but also to overcome their rivals and other turbulent changes occurred for many years, and contributed to social welfare. Ethical companies have a social responsibility to enable them to flourish without diminishing and earning profits. Tata Group is an ethical company. It is said that Tata CEO is also its chief ethics officer. The company follows a number of ethical policies including national interests, open market economy support, gifts and donations to social causes, political non-uniformity, health and safety and environmental protection, quality products and services, and regulatory compliance. Ratan Tata's current chairman of the Tata Group has fallen from the aviation industry because he was told to bribe the then Minister to enter the business, which he claimed was unethical and violated Group policy. His predecessor, JRD Tata, established the first commercial airline in India, "Tata Airways," which was later surpassed by the Indian government and known as Indian Airways. As a result, apart from being a pioneer in the aviation industry, they can not procure because they think it will not sustain them and it will give the company a bad image. That's why people have great respect for the Tata Group because their ethical practices and policies have created brand loyalty, which helps them survive in the market even if many competitors come along.

When the company can not do business at home, the ethical policy becomes a problem, therefore, the ethical policy is free or conducive to other societies. At home, they are not allowed to sell products because the use of unsafe products is unethical, but they may sell to other countries ethical standards allow them to sell these products. It occurs in particular with pharmaceutical products. Some factories that pollute gases are established in neighboring countries because ethical standards at home do not allow factory operations. These polluting gases are dangerous to humans and the environment. In some countries, it is still ethical. These problems lead to cross-cultural conflicts and exploitation. These problems make it difficult for managers and companies to solve.

Leadership, Strategy and Policy, Performance, Personal Characteristics, Corporate Culture and the Environment

Leadership is the people who lead people to achieve common goals.

Leaders can be good or bad, large or small for their needs and opportunities for specific times and places. Not all leaders are considered to be the perfect decision, because every decision they make will depend on the person's personality. A person's personality includes their innate talents, learning and acquiring qualities that impose their lives and experiences upon them. Leaders are the models and mentors of their followers, so they follow the path set by their leaders. In a large organization, senior management or CEO is considered to be the executive and supervisory leader. The CEO should have a firm commitment to ethical and ethical behavior and should continue to lead in the renewal of an organization's values. They play a key role in creating, maintaining and changing ethical culture. Leaders need to set a good example and follow the code of ethics. One such good leader is JRD Tata, who sets a good example for his successors, who still insist.

Corporate Governance: The company follows a set of systems and processes to ensure it is in the best interest of the stakeholders.

Corporate Governance: A set of systems and processes followed by the company to ensure that it is in the best interest of the stakeholders. Stakeholders are shareholders, employees, customers, creditors and communities

Sustainable development has three components, which are economic, social and environmental, according to John Elkington's triple bottom line concept. According to elkington, the enterprise does not have a single goal is to obtain profits, but by increasing the environmental and social values ​​to expand the target.

Economic perspective: On the next generation

Social perspectives: Over-exploitation of employees, while the sustainability of the organization has become a new target

Environmental perspective: Equality is not provided in terms of gender employment, caste-based beliefs and religious-based employment for child labor.

Organizational Culture: A set of common values, beliefs, goals, norms, etc. that are common throughout the organization. Organizational culture emphasizes ethics, but as it grows, it may change, as in tyco's case, its organizational culture supports immoral practices. If the company gains immense profits in an unethical way, the individual who joins the organization must also practice immoral things to survive in the company. As in the case of enron, many executives and managers know the company is following some illegal and unethical practices, but executives and the board do not know how to make moral decisions and corporate ethics culture.

Business ethics is the application of ethical principles in an organization or business. An organization should produce or produce its own ethical culture, but this ethics culture should be from the concept of ethics for all, rather than the organization itself is correct. The organization's employees must also follow the same ethical principles. Ethical organizations will provide certain social responsibilities, such as they do not harm stakeholders, the public and society. (Frederic, Post and Davis)

There are three major types of ethical issues in business, face-to-face ethics, the emergence of ethical issues in business ethics, Corporate Policy Ethics and Functional Area Ethics. Face-to-face ethical issues occur in the organization of employees in their day-to-day organizational lives. Employees face these ethical conflicts when their individual standards differ from their job requirements. Corporate policy ethical issues occur in the company's basic operations. Including the board of directors and the CEO's senior management responsible for the organization's ethics. Functional areas Ethical issues arise at all levels of the organization's functions. In the accounting department, for example, it would be unethical for an employee to unduly exert pressure to deliver an audit report that has changed or failed to show the current account of the organization, since it does not follow the standards and policies set by the organization.

Reasons for immorality:

There are many reasons for organizations to follow unethical practices, which are personal interests and selfish interests, to profit, business goals and Personal goals of the competitive pressures, cross-cultural conflicts. When an employee pays more attention to his greed or attention to his personal interests than to any other problem, whatever harm it may bring to the organization is known as immoral practice due to personal interests and selfish interests. When a company has a strong competitor in a limited or static market; it may involve some unethical practices, just for business or to protect their profits. If an organization uses some unethical means to achieve a goal that its stakeholders do not accept, it will cause ethical issues under the business and personal goals. The organization here sets a goal that conflicts with the personal goals of its stakeholders. In this case, the individual involved has two options: to follow the organization's ethical approach or to "whistle" the organization.

Environmental perspectives relate to the development of natural resources in commerce. Companies should ensure that natural resources are not exploited; it should keep resources so that the next generation can enjoy them as much as we do. One such example is the restriction of fishing in the North Sea, in order to maintain the provision of reduced cod to consumers.

The economic perspective of sustainability relates to economic growth and social decline. Short-term adjustments of companies such as bribery and cartels are only achievable in a short period of time, and the attitude of the organization to its embedded environment will never achieve long-term sustainability. If the organization does not pay taxes, it is said to be unethically similar in the case of organizations donated to public institutions such as schools, hospitals, police and other judicial systems.

Sustainability Social View Refers to

If business ethics are properly implemented in an organization, it will be necessary for its stakeholders (including employees, customers, shareholders, banks and other loans Institutions, governments) to provide scope, personal policy level, social level and internal policy level