A PROJECT REPORT ON BUSINESS VALUES AND CHARACTER ETHICS Submitted in partial fulfillment of the requirements

GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY, DELHI

A TRAINING REPORT SUBMITTED BY

JAIPREET SINGH
In partial fulfillment for the award of the degree Of

BBA

IDEAL INSTITUTE OF MANAGEMENT AND TECHNOLOGY

DEC-JAN 2O12-13 (2nd year)

BACHELOR IN BUSINESS ADMINISTRATION (GENERAL)

SUBMITTED BY: Jaipreet singh

ENROLLME -05021001711 UNDER THE GUIDANCE OF MR. MAYANK SHARMA (ASSISTANT PROFESSOR) (IDEAL INSTITUTE OF MANAGEMENT AND TECHNOLOGY AND SCHOOL OF LAW)

Certificate
This is to certify that the project titled BUSINESS VALUES AND CHARACTER ETHICS is a bonafide work carried out by Jaipreet Singh, a student of ideal Institute of Management & Technology. It is submitted in partial fulfillment of the requirement for the award of the Degree of BBA under our guidance and direction.

To the best of our Knowledge, it is an original piece of work.

ACKNOWLEDGEMENT
I consider it a great privilege to be under the guidance of Mr. Mayank Sharma, Assistant Professor, Ideal Institute of Management and Technology and School of Law, Guru Gobind Singh Indraprastha University. The contribution and significant role played by him helped me in preparation and submission of project report in time. I gratefully acknowledge the team of staff members in B.B.A department for helping me in all aspects and giving their valuable ideas for making my project efficient and effective. Last but not the least I would like to thank my parents and friends for their valuable support and encouragement throughout the course of the project

CONTENTS

Introduction Company profile Product profile Literature review Objectives of the study Limitations of the study Research methodology Data Analysis & Interpretation Findings Recommendation Bibliography

PREFACE
Initial in the one module of the project, which is allotted to me, BUSINESS VALUES AND CHARACTER ETHICS is covered in this project report. The report contains very nice and well arranged topics related to the subject BUSINESS VALUES AND CHARACTER ETHICS. The main contents of this project describes that That what are ethics, Code of Ethics, Business Ethics and many other topics which is countable in the BUSINESS VALUES AND CHARACTER ETHICS. The project report also contains a description of Business Ethics which is very important for an organization to work fairly in an environment. Overall this reports my work like a guide for the subject BUSINESS VALUES AND CHARACTER ETHICS.

OBJECTIVES
The main objectives of the project were: To gain more information about values and character ethics To know the importance of values in business. To study and evaluate human conduct in the light of moral principles. To collect information about the involvement of ethics in human activities including business.

Contents

TOPICS ACKNOWLEDGEMENT,CERTIFICATE ,PREFACE & OBJECTIVES CONTENTS CHAPTER 1-VALUES a)BUSINESS VALUES b)CRITICISMS CHAPTER 2-ETHICS,VALUES AND MORALS CHAPTER 3-INTRODUCTION ON ETHICS a)DEFINITONS ON ETHICS b)FEATURES OF ETHICS c)BUSINESS ETHICS AND ITS TYPES

PAGE NO. 2-4 5 6-13

14 15-26

CHAPTER 4- RELATIONSHIP B/W BUSINESS ETHICS AND 27-28 MANAGERIAL VALUES AND UNETHICAL BUSINESS ETHICS

CHAPTER 5- CONCEPTUAL MODEL OF BUSINESS ETHICS CHAPTER BUSINESS CHAPTER 7- NEED AND IMPORTANCE OF BUS INESS ETHICS CHAPTER 8-ELEMENTS OF BUSINESS ETHICS CHAPTER 9-APPROACHES TO BUSINESS ETHICS 6LEVELS OF ETHICAL DEC ISIONS IN

29 30-31

32-33 33-34 34

STUDY QUESTIONS FOR APPROACHES TO BUS INESS ETHICS CASE STUDY ON HDFC BANK CONC LUS ION REFERENCES

43 45 53 54

Values

Values are convictions and a framework of philosophy of an individual on the basis of which he judges what is good or bad, desirable or undesirable, ethical or unethical. Rokeach defines values as Values represent basic convictions that a specific mode of conduct is personally or socially preferable to an opposite mode of conduct It has some characteristics like Part of culture Learned Responses Inculcated Social Phenomenon Gratifying Responses Adaptive Process

Values are even classified into various categories that are Allports Values Classification Graves Classification Englands Classification Rokechs Classification

Values System is even adopted by Indian Managers in their own way. Various researchers have attempted to identify the value systems of Indian managers. These researchers have used Allport Vernom Lindzey model, Gravess model and Englands model. The major findings are given below Managers tend to have value orientation towards economic, theoretic, political, social, aesthetic and religious in that order. Managerial Values tend to be existential, conformistic, manipulative, sociocentric, tribalistic and egocentric. Indian managers are more pragmatist than moralist. There are generally some acceptable unethical practices in business. In term of work values, Indian managers tend to money orientation during early days of their career and later shifts to matters like job satisfaction. Indian mangers give importance to various occupational values in the order to be free from supervision.

Business values Physical Values Accuracy

The precision, exactness, and conforming to fact in details of work.

Cleanliness
of offices, production and warehouse facilities, equipment, customer service areas, raw material and finished product inventory, closets, bathrooms, and so on

Maximum Utilization of Resources

The desire and ability of the company to improve its performance by full utilization of its current resources (i.e. as time, money, equipment, materials, space, people, etc.).

Punctuality and Timeliness

in arriving on time to work, from breaks, from lunch, to meetings, in replying to letters and phone calls, in paying bills on time, etc. Occurring at the most suitable or opportune time.

Quality of Products and Services

in terms of presentation, functionality, choice, value, speed, timeliness, suitability, repeatability, reliability, life span, repeatability, courtesy, friendliness, etc.

Regularity
of meetings, reports, sales calls, performance reviews, and so forth

Reliability
The way system or persons consistently produce the same results, preferably meeting or exceeding its specifications. Dependability.

Responsiveness
The way people, the organization, systems, etc. react to a need coming from within or without.

Speed of Operations
The measurement of whether actions occur in the fastest time.

Organizational Values Accountability

of individuals, departments and divisions for performance, results, problems, and so on

Communications
up, down, and sideways within the company, with customers and vendors, in terms of openness, frankness, clarity, frequency, accuracy, timeliness, and brevity

Cooperation (Teamwork)
among individuals, departments, divisions, branches, and so on

Coordination
horizontally between departments in terms of plans, activities, and systems

Psychological Values
Continuous Improvement The desire and ability of the company to develop and incorporate ways to improve itself.

Creativity
in terms of new products, new ideas, new systems, new production methods, new applications of technology, new methods of financing, new marketing strategies

Customer Delight
The positive emotional response and joy that the customer feels from interaction with our people and our products and services.

Decisiveness
in solving problems, planning, executing plans, in terms of speed and commitment to decisions once made

Develop People
The desire and ability of the company to improve the lot of its employees, including, ultimately, their personal growth.

Harmony
The overall atmosphere and interaction between people, departments, divisions, systems, activities, rules, and policies within the company and between these elements and the external environment, customers, vendors, community laws, and so on.

Innovation
The desire and ability of the company to venture into new, breakthrough areas of opportunity. (e.g. in the industry, in emerging trends in society, etc.)

Integrity
Keeping to one's word, promises, agreements, being truthful, non-deceitful etc. with employees, customers, vendors, government, etc.

Loyalty
to and from suppliers, customers, and employees

Resourcefulness
The ability to deal resourcefully, i.e. creatively, imaginatively, self-reliably with unusual problems, difficult situations, or unanticipated opportunities.

Respect for the Individual

in establishing rules and policies, design of systems, making decisions, executing instructions, and so on in terms of people's health, safety, self-esteem, feelings, and opinions

Service to Society
Community welfare, environmental protection, development of products and services that meet real physical, social, or psychological needs.

(A Will to) Succeed

in any aspect of work.

Criticisms
Business value is an informal concept and there is no consensus, either in academic circles or among management professionals, on its meaning or role in effective decision-making. The

term could even be described as a "buzz word" used by various consultants, analyst firms, executives, authors, and academics. Some critics believe that measuring economic value, economic profit, or shareholder value is sufficiently complete to guide decision-making. Their logic is that all other forms of value are essentially intermediate to the ultimate goal of economic profit. Furthermore, if they do not contribute to economic profit, they are actually a distraction for the firm. Other critics believe that extensive efforts to measure business value will be more of a distraction than a boon. For example, there is a fear that decision-makers will be confused if there are too many goals and measures that need to be accommodated.

Ethics, Values and Morals

Values are our fundamental beliefs. They are the principles we use to define what is right, good and just. Values provide guidance in determining the right versus the wrong, the good versus bad. They are our standards. Another way to characterize values is that they are what an individual believes to be having worth and importance to their life. Values do not encompass all beliefs, but only those beliefs that define importance. Morals are values that we attribute to a system of beliefs that help the individual define right versus wrong, good versus bad. These values typically get their authority from something outside the individual a higher authority. In business world we often find ourselves avoiding framing our ethical choices in moral terms for fear that doing so might prove offensive to someone whose moral frame of

reference might be different. The moral concept of justice has one meaning concerned with developing rational normative claims and theories. Ethics is the study of what we understand to be good and right behavior and how people make those judgments. When ones action are not congruent with our moral values our sense of right, good and just we will view that are acting unethically. Defining what is ethical is not an individual exercise. However, if it were then one could have argued that what Hitler did was ethical since his action conformed to his definition of right, wrong or just. Ethics is the discipline that examines ones moral standards or the moral standards of the society. It asks how these moral standards apply to our lives and whether these standards are reasonable or unreasonable. Ethics is not the only way to study morality. The social sciences such as anthropology, sociology and psychology also study morality, but do so in a quite different way from the approach to morality that is characteristics of ethics. A descriptive study is one that does try to attain any conclusions about what things are truly good or bad.

Introduction on Ethics

The term ethics refers to value oriented decisions and behavior. It comes from the Greek word Ethos which means character, guiding beliefs, standards or ideals that pervade a group, community or people. Today, ethics is considered as the study of morals behavior. Terms such as business ethics, corporate ethics, medical ethics or legal ethics are used to indicate the particular area of application. Ethics involved in such area must still refer to value oriented decisions and behavior of individuals. A famous saying is there If a man violates some rules he is wrong according to law, but in ethics he is wrong only if he thinks of doing so.

Some Definitions of Ethics

Ethics are kind of like morals and common sense. it is what you think is right or wrong. Being "ethical" means trying to be reasonable and doing what you think is right.

Ethics can be considered as moral philosophy. It deals with critical analysis of morality. Ethics searches a reasonable ground to our moral standards. It deals with answering questions such as `what ought to be`, not `what is`.

The science of moral obligation; a system of moral principles, quality, or practice. The moral obligation to render to the patient the best possible quality of dental service and to maintain an honest relationship with other members of the profession and mankind in general.

Ethics is the science of morality or the systematic study of moral rules and principles. The term "morality" refers to rules which prescribe the way people ought to behave and principles which reflect what is ultimately good or desirable for human beings.

.The study and evaluation of human conduct in the light of moral principles. Moral principles may be viewed either as the standard of conduct that individuals have

constructed for themselves or as the body of obligations and duties that a particular society requires of its members.

Features of Ethics

It contains principles of personnel and professional conduct. Existing norms and judgments may contain valuable insights but ethics sets out to

criticize and test them in terms of ultimate norms. It does not rest on feelings of approval or disapproval but in the careful examination of

the reality around us. It is not a law. Even though law enshrines many ethical judgments. It criticizes law and

customs to obtain more perfect rules for the conduct of life. Law may permit things which are unethical. What constitutes ethical behaviors in one society may be unethical in others. Ethics is involved in all human activities including business. There is need for a science

of ethics in every human Endeavour.

Business Ethics

In business, ethics can be defined as the capacity to reflect on values in the corporate decision making process, to determine how these values and decision affect various stakeholders groups, and to establish how managers can use these observations in day to day company

management. Ethical managers strive for success within the confines of sound management practices that are characterized by fairness and justice. Business Ethics refers to the moral principles which should govern business activities. It provides a code of conduct for the managers. The purpose of business ethics is to guide managers and employees in performing their jobs. Ethics are concerned with what is right and what is wrong in human behavior. They lay down norms of human behavior by the business. A few examples of ethics are: To charge fair prices. To use fair weights for measurement of commodities. To pay taxes to government. To earn reasonable profits. To give fair treatment to workers.

The purpose of business ethics is to regulate both objectives of business and the means adopted to achieve these objectives. Ethics covers all possible areas of business ends and means must be justifiable as per norms of the society. A business is an integral part of the society. It is in fact, a trustee of the resources of the society. So the business must observe the ethical standards of the society while using the resources. If a business fails to observe the social norms it will loose its public image. Business ethics can be both a normative and a descriptive discipline. As a corporate practice and a career specialization, the field is primarily normative. In academia descriptive approaches are also taken. The range and quantity of business ethical issues reflects the degree to which business is perceived to be at odds with non-economic social values.

Types of Business Ethics

General business ethics

This part of business ethics overlaps with the philosophy of business, one of the aims of which is to determine the fundamental purposes of a company. If a company's main purpose is to maximize the returns to its shareholders, then it could be seen as unethical for a company to consider the interests and rights of anyone else. Corporate social responsibility or CSR: an umbrella term under which the ethical rights and duties existing between companies and society is debated. Issues regarding the moral rights and duties between a company and its shareholders: fiduciary responsibility, stakeholder concept v. shareholder concept. Ethical issues concerning relations between different companies: e.g. hostile takeovers, industrial espionage. Leadership issues: corporate governance. Political contributions made by corporations. Law reform, such as the ethical debate over introducing a crime of corporate manslaughter. The misuse of corporate ethics policies as marketing instruments.

Professional ethics
Professional ethics covers the myriad practical ethical problems and phenomena which arise out of specific functional areas of companies or in relation to recognized business professions.

Ethics of accounting information

Creative accounting, earnings management, misleading financial analysis. Insider trading, securities fraud, bucket shops, forex scams: concerns (criminal) manipulation of the financial markets. Executive compensation: concerns excessive payments made to corporate CEO's and top management. Bribery, kickbacks, and facilitation payments: while these may be in the (short-term) interests of the company and its shareholders, these practices may be anti-competitive or offend against the values of society.

Ethics of human resource management

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.

Discrimination issues include discrimination on the bases of age (ageism), gender, race, religion, disabilities, weight and attractiveness. See also: affirmative action, sexual harassment.

Issues surrounding the representation of employees and the democratization of the workplace: union busting, strike breaking.

Issues affecting the privacy of the employee: workplace surveillance, drug testing. See also: privacy.

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: slavery,[4] indentured servitude, employment law.

Occupational safety and health.

Ethics of sales and marketing

Marketing which goes beyond the mere provision of information about (and access to) a product may seek to manipulate our values and behavior. To some extent society regards this as acceptable, but where is the ethical line to be drawn? Marketing ethics overlaps strongly with media ethics, because marketing makes heavy use of media. However, media ethics is a much larger topic and extends outside business ethics. Pricing: price fixing, price discrimination, price skimming. Anti-competitive practices: these include but go beyond pricing tactics to cover issues such as manipulation of loyalty and supply chains. See: anti-competitive practices, antitrust law. Specific marketing strategies: green wash, bait and switch, shill, viral marketing, spam (electronic), pyramid scheme, planned obsolescence.

Content of advertisements: attack ads, subliminal messages, sex in advertising, products regarded as immoral or harmful

Children and marketing: marketing in schools. Black markets, grey markets.

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 services (e.g. tobacco, alcohol, weapons, motor vehicles, chemical manufacturing, bungee jumping). Ethical relations between the company and the environment: pollution, environmental ethics, carbon emissions trading Ethical problems arising out of new technologies: genetically modified food, mobile phone radiation and health. Product testing ethics: animal rights and animal testing, use of economically disadvantaged groups (such as students) as test objects.

Ethics of intellectual property, knowledge and skills

Knowledge and skills are valuable but not easily "own able" as objects. Nor is it obvious that has the greater rights to an idea: the company who trained the employee or the employee themselves? The country in which the plant grew or the company which discovered and developed the plant's medicinal potential? As a result, attempts to assert ownership and ethical disputes over ownership arise. Patent infringement, copyright infringement, trademark infringement. Misuse of the intellectual property systems to stifle competition: patent misuse, copyright misuse, patent troll, submarine patent. Even the notion of intellectual property itself has been criticized on ethical grounds: see intellectual property.

International business ethics

While business ethics emerged as a field in the 1970s, international business ethics did not emerge until the late 1990s, looking back on the international developments of that decade. Many new practical issues arose out of the international context of business. Theoretical issues such as cultural relativity of ethical values receive more emphasis in this field. Other, older issues can be grouped here as well. Issues and subfields include: The search for universal values as a basis for international commercial behavior. Comparison of business ethical traditions in different countries. Comparison of business ethical traditions from various religious perspectives. Ethical issues arising out of international business transactions; e.g. bioprospecting and biopiracy in the pharmaceutical industry; the fair trade movement; transfer pricing.

Issues such as globalization and cultural imperialism. Varying global standards - e.g. the use of child labor.

Ethics of economic systems

This vaguely defined area, perhaps not part of but only related to business ethics, is where business ethicists venture into the fields of political economy and political philosophy, focusing on the rights and wrongs of various systems for the distribution of economic benefits. The work of John Rawls and Robert Nozick are both notable contributors.

Conflicting interests
Business ethics can be examined from various perspectives, including the perspective of the employee, the commercial enterprise, and society as a whole. Very often, situations arise in which there is conflict between one and more of the parties, such that serving the interest of one party is a detriment to the other(s). For example, a particular outcome might be good for the employee, whereas, it would be bad for the company, society, or vice versa. Some ethicists (e.g., Henry Sedgwick) see the principal role of ethics as the harmonization and reconciliation of conflicting interests.

Corporate ethics policies

As part of more comprehensive compliance and ethics programs, many companies have formulated internal policies pertaining to the ethical conduct of employees. These policies can be simple exhortations in broad, highly-generalized language (typically called a corporate ethics statement), or they can be more detailed policies, containing specific behavioral requirements (typically called corporate ethics codes). They are generally meant to identify the company's expectations of workers and to offer guidance on handling some of the more common ethical problems that might arise in the course of doing business. It is hoped that having such a policy will lead to greater ethical awareness, consistency in application, and the avoidance of ethical disasters.

An increasing number of companies also requires employees to attend seminars regarding business conduct, which often include discussion of the company's policies, specific case studies, and legal requirements. Some companies even require their employees to sign agreements stating that they will abide by the company's rules of conduct. Many companies are assessing the environmental factors that can lead employees to engage in unethical conduct. Not everyone supports corporate policies that govern ethical conduct. Some claim that ethical problems are better dealt with by depending upon employees to use their own judgment. To be successful, most ethicists would suggest that an ethics policy should be: Given the unequivocal support of top management, by both word and example. Explained in writing and orally, with periodic reinforcement. Doable....something employees can both understand and perform. Monitored by top management, with routine inspections for compliance and improvement.

Backed up by clearly stated consequences in the case of disobedience. Remain neutral and nonsexist.

Religious views on business ethics

The historical and global importance of religious views on business ethics is sometimes underestimated in standard introductions to business ethics. Particularly in Asia and the Middle East, religious and cultural perspectives have a strong influence on the conduct of business and the creation of business values.

Examples include:
Islamic banking, associated with the avoidance of charging interest on loans. Traditional Confucian disapproval of the profit-seeking motive. Quaker testimony on fair dealing

Relationship between business ethics and managerial values

Ethics refers to the entire body of moral values that society attaches to the actions of human being. Ethics are interrelated with values. In fact values are considered the language of ethics. Ethics in business emanate from the values of top management which are in turn shaped by social, cultural and national values. Values can be moral, immoral or amoral, depending upon whether they conform to, go against or are different towards certain norms of morality. But ethics represent only moral values. The value judgments do have ethical content when they are linked with the element of morality. Values help to establish proper relationship between ends and means. If the management of a business is pursuing sound values, and it will follow those business

practices that are ethical and socially justifiable. And in absence of sound value system, the management of a business may be tempted to pursue unethical business practices.

Unethical behaviors constitutes of

Bribing public officials to obtain undue favors. Using false claims in advertisements. Keeping two sets of books to evade taxes. Using co. property for personal use. Overlooking safety violations to get the job done. Revealing confidential information or trade secrets to competitors. Artificially inflating profits to get re- elected as directors.

Unethical Business Practices Against Employees

Paying salaries lower than those fixed by the government to the employees. Poor working conditions like dirty water, poor lightning. Lack of safety measures for workers.

Against Government
Evasion of excise duty, sales tax, income tax etc. Smuggling of goods. Offering bribes to government officials and politicians for getting favors.

Against consumers and society

Adulteration of goods like mixing of papaya seed with black pepper. Sale of spurious goods

Sale of duplicate products under popular brand names. Sale of products injurious to public health like charas, heroine. Pollution of environment. Deceptive advertisements and false claims in advertisements.

Conceptual model of Business ethics

Business Ethics

Managerial Beliefs

Moral problems that manager face in decision making

Managerial beliefs concerning:

Illegal acts Unethical or questionable practices

Examples:
Fraud, Bribery

Dumping of pesticides

Micro level problems:

Fairness in performance appraisal Accepting Gifts Confidentiality of company Treatment of problem employees Confronting expense account

Levels of Ethical Decisions in business

Level 4 Individual

Level 3 Internal policy

Level 2 Stakeholders

Level 1 Society

Societal level Stakeholders level Internal policy Individual Level

Societal Level: At this level, ethical questions about the basic institutions in society are asked. These represent an ongoing debate among major competing institutions including business.

Stakeholders Level:

In a business enterprise include employees, suppliers etc. Here they ask about how they deal with external groups. For example, should a company inform its customers about the potential dangers of its product?

Internal Policy Level: At this level we ask questions about the nature of enterprise relations with employee both managers and workers. So also questions of motivation techniques, leadership roles, work rules etc. are involved at this level.

Individual Level: At this level, we ask questions concerning how individual person should treat one another within the firm. These questions deal with day to day issues of life in any enterprise but in the ultimate analysis, they set the tone of ethical behavior of business at higher levels.

Need and Importance of Business Ethics

More important is the fact that today a businessman is pressurized by various environmental factors to follow a business practice which is ethical from societys point of view irrespective of its impact on business profits. Such a significance of business ethics is attributable to following reasons:

Environmental Pressures:
As apart of overall economic system, a business organization is pressurized by various environmental factors to act credibly and behave ethically. Thus a business enterprise may have no option but to desist from undesirable trade practices like hoarding and profiteering due to pressure from consumer forums.

2.

Enlightened self interest:

Todays businessman firmly believes that business ethics are in their own self interest. That is if business enterprise follows business practices, it will lead to higher profits and prosperity in the long run.

Moral consciousness:
It would not be an exaggeration to say that most business people behave ethically because of their moral consciousness. Like any other member of the society business people also believe that ethical business conduct is good business as well as good citizenship.

Legal Requirements:
In almost every sphere of business activity laws have been enacted which declare certain business practices. In short, obedience to such laws is ethical.

Elements of business ethics

Business Managers must come to appreciate the key elements that comprise making ethical judgments. There are six major elements that are essential ethical judgments:

1. Ethical Imagination: Developing ethical imagination means being sensitive to ethical issues in business decision making and the ability to identify those situations where people are likely to be detrimentally effected by decision making.

2. Ethical Identification and Ordering: It refers to the ability to judge the relevance or non relevance of ethical factors in decision making situations. In addition to their identification, ethical issues must be ranked.

3. Ethical Evaluation: To evaluate ethical factors business persons have to develop clear principles, basis of weighing those factors and the ability to make out the likely ethical as well as economic outcomes of a decision. 4. Sense of Ethical Obligation: This refers to the intuitive or learned understanding that ethical fibers a concern for fairness, justice and due process to people, groups and communities should be woven into the fabric of managerial decision making.

APPROACHES TO BUSINESS ETHICS

When business people speak about business ethics they usually mean one of three things: (1) Avoid breaking the criminal law in ones work-related activity; (2) Avoid action that may result in civil law suits against the company; and (3) Avoid actions that are bad for the company image. Businesses are especially concerned with these three things since they involve loss of money and company reputation. In theory, a business could address these three concerns by assigning corporate attorneys and public relations experts to escort employees on their daily activities. Anytime an employee might stray from the straight and narrow path of acceptable conduct, the experts would guide him back. Obviously this solution would be a financial disaster if carried out in practice since it would cost a business more in attorney and public relations fees than they would save from proper employee conduct. Perhaps reluctantly, businesses turn to philosophers to instruct employees on becoming moral. For over 2,000 years philosophers have systematically addressed the issue of right and wrong conduct. Presumably, then, philosophers can teach employees a basic understanding of morality will keep them out of trouble.

Deriving Business Ethics from the Profit Motive

Some businesspeople argue that there is a symbiotic relation between ethics and business in which ethics naturally emerges from a profit-oriented business. There are both weak and strong versions of this approach. The weak version is often expressed in the dictum that good ethics results in good business, which simply means that moral businesses practices are profitable. For example, it is profitable to make safe products since this will reduce product liability lawsuits. Similarly, it may be in the best financial interests of businesses to respect

employee privacy, since this will improve morale and thus improve work efficiency. Robert F. Hartley's book, Business Ethics, takes this approach. Using 20 case studies as illustrations, Hartley argues that the long-term best interests of businesses are served by seeking a trusting relation with the public (Hartley, 1993). This weak version, however, has problems. First, many moral business practices will have an economic advantage only in the long run. This provides little incentive for businesses that are designed to exclusively to seek short-term profits. As more and more businesses compete for the same market, short-term profits will dictate the decisions of many companies simply as a matter of survival. Second, some moral business practices may not be economically viable even in the long run. For example, this might be the case with retaining older workers who are inefficient, as opposed to replacing them with younger and more efficient workers. Third, and most importantly, those moral business practices that are good for business depend upon what at that time will produce a profit. In a different market, the same practices might not be economically viable. Thus, any overlap that exists between morality and profit is both limited and incidental.

The strong version of this profit approach takes a reverse strategy and maintains that, in a competitive and free market, the profit motive will in fact bring about a morally proper environment. That is, if customers demand safe products, or workers demand privacy, then they will buy from or work for only those businesses that meet their demands. Businesses that do not heed these demands will not survive. Since this view maintains that the drive for profit will create morality, the strong version can be expressed in the dictum that good business results in good ethics, which is the converse of the above dictum. Proponents of this view, such as Milton Friedman, argue that this would happen in the United States if the government would allow a truly competitive and free market. But this strong view also has problems,

since it assumes that consumers or workers will demand the morally proper thing. In fact, consumers may opt for less safe products if they know they will be saving money. For example, consumers might prefer a cheaper car without air bags, even though doing so places their own lives and the lives of their passengers at greater risk, which is morally irresponsible. Similarly, workers may forego demands of privacy at work if they are compensated with high enough wages. In short, not every moral business practice will simply emerge from the profit principle as suggested by either the weak or strong views.

Business Ethics Restricted to Following the Law

A second approach to business ethics is that moral obligations in business are restricted to what the law requires. The most universal aspects of Western morality have already been put into our legal system, such as with laws against killing, stealing, fraud, harassment, or reckless endangerment. Moral principles beyond what the law requires or supra-legal principles -- appear to be optional since philosophers dispute about their validity and society wavers about its acceptance. For any specific issue under consideration, such as determining what counts as responsible marketing or adequate privacy in the workplace, we will find opposing positions on our supra-legal moral obligations. It is, therefore, unreasonable to expect businesses to perform duties about which there is so much disagreement and which appear to be optional.

The unreasonableness of such a moral requirement in our society becomes all the more evident when we consider societies that do have a strong external source of morality. Islam, for example, contains a broad range of moral requirements such as an alms mandate, prohibitions against sleeping partners that collect unearned money, and restrictions on charging interest for certain types of loans, particularly for relief aid. Thus, in Muslim

countries that are not necessarily ruled by Islamic law, there is a strong source of external morality that would be binding on Muslim businesses apart from what their laws would require. Similarly, Confucianism has a strong emphasis on filial piety; thus, in Chinese and other Confucian societies, it is reasonable to expect their businesses to maintain a respect for elders even if it is not part of the legal system. In Western culture, or at least in the United States, we lack a counterpart to an external source of morality as is present in Muslim or Confucian societies. One reason is because of our cultural pluralism and the presence of a wide range of belief systems. Even within Christianity, the diversity of denominations and beliefs prevents it from being a homogeneous source of Christian values. In short, without a widely recognized system of ethics that is external to the law, supra-legal moral obligations in our society appear to be optional; and, it is unreasonable to expect business people to be obligated to principles which appear to be optional. In our culturally pluralistic society, the only business-related moral obligations that are majority-endorsed by our national social group are those obligations that are already contained in the law. These include a range of guidelines for honesty in advertising, product safety, safe working conditions, and fair hiring and firing practices. In fact, the unifying moral force of businesses within our diverse society is the law itself. Beyond the law we find that the moral obligations of businesses are contextually bound by subgroups, such as with a business that is operated by traditional Muslims or environmental activists. In these cases, the individual businesses may be bound by the obligations of their subgroups, but such obligations are contingent upon one's association with these social subgroups. And, clearly, the obligations within those subgroups are not binding on those outside the subgroups. If a business does not belong to any subgroup, then its only moral obligations will be those within the context of society at large, and these obligations are in the law.

Corporations that assume an obligation beyond the law, either in their corporate codes or in practice, take on responsibilities that most outsiders would designate as optional. A good example is found in the mission statement of Ben & Jerry's Ice Cream, which includes the following: Social Mission -- To operate the company in a way that actively recognizes the central role that business plays in the structure of society by initiating innovative ways to improve the quality of life of a broad community -- local, national, and international.

Consistent with this mission, the highest paid employees of Ben & Jerry's would not earn more than seven times more than the lowest paid full-time employees. "We do this," they explain, "because we believe that most American corporations overpay top management, and underpay entry-level employees -- and because everyone who works at Ben & Jerry's is a major contributor to our success." In spite of the merits of this pay scale policy, it clearly lacks majority endorsement in our national social group, and would not be a binding obligation. In fact, it is not even binding on Ben & Jerrys itself since, in recent years, Ben & Jerrys had to abandon its own ideal pay scale in an effort to attract a CEO with the right skills to expand their company. Strictly following this legal approach to business ethics may indeed prompt businesses to do the right thing, as prescribed by law. Nevertheless, there are two key problems with restricting morality solely to what the law requires. First, even in the best legal context, the law will lag behind our moral condemnation of certain unscrupulous, yet legal business practices.

Deriving Business Ethics from General Moral Obligations

The third approach to business ethics is that morality must be introduced as a factor that is external from both the profit motive and the law. This is the approach taken by most philosophers who write on business ethics, and is expressed most clearly in the following from a well known business ethics essay:

Proper ethical behavior exists on a plane above the law. The law merely specifies the lowest common denominator of acceptable behavior. (Gene Laczniak, "Business Ethics: A Manager's Primer," 1983) The most convenient way to explore this approach is to consider the supra-legal moral principles that philosophers commonly offer. Five fairly broad moral principles suggested by philosophers are as follows:

Harm principle: businesses should avoid causing unwarranted harm. Fairness principle: business should be fair in all of their practices. Human rights principle: businesses should respect human rights. Autonomy principle: businesses should not infringe on the rationally reflective choices of people.

Veracity principle: businesses should not be deceptive in their practices.

The attraction of these principles is that they appeal to universal moral notions that no one would reasonably reject. But, the problem with these principles is that they are too general. These principles do not tell us specifically what counts as harm, unfairness, or a violation of human rights. Does all damage to the environment constitute harm? Does it violate an employee's right to privacy if an employer places hidden surveillance cameras in an

employee lounge area? Does child-oriented advertising mislead children and thus violate the principle of veracity? The above principles are abstract in nature. That is, they broadly mandate against harm, and broadly endorse autonomy. Because they are abstract, they will be difficult to apply to concrete situations and consequently not give clear guidance in complex situations. An alternative approach is to forget the abstract, and focus instead on concrete situations that affect the particular interests of consumers, workers, stockholders, or the community. The recent stakeholder approach to business ethics attempts to do this systematically. It may be expressed in the following:

Stakeholder principle: businesses should consider all stakeholders' interests that are affected by a business practice.

A stakeholder is any party affected by a business practice, including employees, suppliers, customers, creditors, competitors, governments, and communities. Accordingly, the stakeholder approach to business ethics emphasizes that we should map out of the various parties affected by a business practice. But this approach is limited since proponents of this view give us no clear formula for how to prioritize the various interests once we map them out. Should all stakeholders' interests be treated equally from the largest stockholder down to the garbage man who empties the factory dumpster? Probably no defenders of the stakeholder approach would advocate treating all interests equally. Alternatively, should the stockholders' interests have special priority? If we take this route, then the stakeholder principle is merely a revision of the profit principle. Another way of looking at concrete moral obligations in business is to list them issue by issue. This is the strategy behind corporate codes of ethics that address specific topics such as

confidentiality of corporate information, conflicts of interest, bribes, and political contributions. Consider the following issues from Johnson and Johnson's Credo:

Code of Conduct Characteristics

The codes of conduct or codes of practice adopted by a number of mainly multinational enterprises include a variable number of principles which define the ethical standards of the enterprise. These may be general principles such as, for example, the concept of nondiscrimination while, in a number of cases, there is a detailed description of the social practices which the enterprise wishes to see respected in the production and sale of the goods and services which it markets. Some enterprises make a distinction between the basic principles which regulate its internal activity and those which it wants to apply in the selection and monitoring of activities of its subcontractors. A number of codes make explicit reference to ILO Conventions, in particular those concerning the respect of human rights at work. In other cases, the reference is more indirect, even if the principles established are often based on fundamental ILO Conventions. The Agrofood, forestry, chemicals and consumer products sectors are amongst those which have progressively introduced a number of codes of practice. However, while the concept of ethical practice has made a remarkable comeback in recent years in the strategic policy of industrial and commercial enterprises, it is above all in the textile sector, and in particular in clothing and footwear, that the trend is the most evident. United States enterprises have played a pioneering role in this respect. Since Levi Strauss adopted in 1992 a code entitled "Business partner terms of engagement and guidelines for country selection", many other

enterprises producing apparel and footwear as well as major retail groups have followed suit. In Europe, the trend has been longer in coming,

Study Questions for Approaches to Business Ethics Introduction (1) What three things do business people usually mean by business ethics? (2) Why cant philosophers teach people to be ethical? Deriving Business Ethics from the Profit Motive (3) What is the weak version of theory that connects business ethics to the profit motive? (4) What are problems with the weak version? (5) What is the strong version of theory that connects business ethics to the profit motive? (6) What are problems with this? Business Ethics Restricted to Following the Law (7) Define supra-legal principle. (8) Why is it unreasonable to expect businesses to follow supra-legal moral principles? (9) What are some supra-legal moral principles that are binding in Muslim countries? (10) What are the problems with restricting business ethics to what the law requires? Deriving Business Ethics from General Moral Obligations (11) Give an example of a broad moral principle suggested by philosophers. (12) What is the problem with deriving business ethics from broad moral principles? (13) What is a stakeholder?

(14) What is the problem with articulating good business behavior in corporate codes of ethics? Conclusion (15) What are some benefits of all three approaches to business ethics? (16) What can we learn by looking at case studies in business ethics?

CASE STUDY ON HDFC BANK

HDFC PROFILE

HDFC Bank was incorporated in August 1994, and, currently has an nationwide network of 1229 Branches and 2526 ATM's in 444 Indian towns and cities. The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalisation of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its

registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995.

Business Focus
HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services for target retail and wholesale customer segments, and to achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank is committed to maintain the highest level of ethical standards, professional integrity, corporate governance and regulatory compliance. HDFC Bank's business philosophy is based on four core values - Operational Excellence, Customer Focus, Product Leadership and People.

Management
Mr. Jagdish Kapoor took over as the bank's Chairman in July 2001. Prior to this, Mr. Kapoor was a Deputy Governor of the Reserve Bank of India.

The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25 years, and before joining HDFC Bank in 1994 was heading Citibank's operations in Malaysia. The Bank's Board of Directors is composed of eminent individuals with a wealth of experience in public policy, administration, industry and commercial banking. Senior executives representing HDFC are also on the Board.

Senior banking professionals with substantial experience in India and abroad head various businesses and functions and report to the Managing Director. Given the professional expertise of the management team and the overall focus on recruiting and retaining the best talent in the industry, the bank believes that its people are a significant competitive strength.

Business
HDFC Bank offers a wide range of commercial and transactional banking services and treasury products to wholesale and retail customers. The bank has three key business segments:

Fair Practices for lending

The bank would have loan application forms for retail advances and credit cards. These would include information about the fees/charges, if any, payable for processing, the amount of such fees refundable in the case of non acceptance of application, pre-payment options and any other matter which affects the interest of the borrower, so that a meaningful comparison with that of other banks can be made and an informed decision can be taken by the borrower.

As part of the wholesale banking business, the bank has various segments to which credit facilities are provided for their business requirements. These include a wide range of customers and range from small & medium enterprises to large corporate borrowers. The bank has a process for identification of target customers to whom facilities can be provided based on customer selection and risk assessment for that segment. Thus, the focus is on contacting prospective customers and encouraging

them to avail of banking services from HDFC Bank based on the incremental value we can add to a customer's business, rather than customers making applications to the Bank for facilities / services. Thus, for the wholesale banking segment, we do not have any standardized application forms to be submitted by prospective customers.

Code of Ethics
Be aware of frauds Security tips Security Meaasures of HDFC Code of Corporate Governance Code of corporate Rating Composition of board Committee of Directors Profile of Directors Ownership Right Promoters Rights Keyshareholders Right Dividend Policy Memorandum of Association Articles of Association Fair Practices Code of Lending Internet Browsing

Money mules

Introduction:

The Board members / Officials shall engage in and promote honest and ethical conduct of business, including the ethical handling of actual and / or apparent conflicts of interest between personal and professional relationships.

Applicability:
This Code of Ethics/Conduct is applicable to the following persons. 1. The Board Members 2. Officials of the Bank one level below the Board

Ethical Conduct:
The Board members / Officials shall engage in and promote honest and ethical conduct of business, including the ethical handling of actual and / or apparent conflicts of interest between personal and professional relationships.

Conflict of Interest:
The Board members / Officials shall avoid conflict of interest and disclose to the Board any material transaction or relationship that reasonably could be expected to give rise to such a conflict.

Confidentiality of Information:

The Board members / Officials shall ensure and take all reasonable measures to protect the confidentiality of non-public information about the Bank, its business, customers and other materially significant information obtained or created in connection with any activities with the Bank and to prevent the unauthorized disclosure of such information unless required by applicable laws or regulations or legal or regulatory process.

Disclosure of Information:
The Board members / Officials shall endeavor to produce full, fair, accurate, timely and understandable disclosures in reports and documents that the Bank files with or submits to the Securities and Exchange commission and other regulators and in other public communications made by the Bank.Compliance with Governmental Laws, Rules and Regulations: The Board members / Officials shall comply with all the applicable governmental laws and the applicable rules and regulations.

Variation of the Code and Waivers:

The Code shall be reviewed from time to time for updation thereof. Any variation in the Code or any waivers from the provisions of the Code shall be approved by the Board and shall be disclosed on the Bank's website.

Contract or Term of Employment:

Nothing in this Code or other related communications by itself creates or implies an employment contract or terms of employment.

Violation of the Code:

The Board shall have the powers to take necessary action in case of any violation of the code.

Dividend Policy

Your Bank has had a track record of moderate but steady increases in dividend declarations for the last 10 years and dividend payout ratio in the last few years has been in the range of 20-25 %. Your Bank's dividend policy is based on the need to balance the twin objectives of appropriately rewarding shareholders with cash dividends and of retaining capital to maintain a healthy capital adequacy ratio to support future growth. In line with this policy and recognisation of healthy performance during 2007-08, your directors pleased to recommend a dividend of 85% for the year ended on March 31,2008 as against 70% for the year ended March 31, 2007. This dividend shall be subject to distribution tax to be paid by the Bank but will be tax-free in the hands of the members.

Conclusion

Weve looked at three approaches to business ethics, and weve seen that all three have limitations. If we hope to find an approach to business ethics that is free from conceptual problems, we will not likely find any. Ethics is a complex subject and its history is filled with diverse theories that are systematically refuted by rival theories. So, we should expect to find controversies when applying ethics to the specific practices of business. However, following any of the above three approaches to business ethics will bring us closer to acceptable moral behavior than we might otherwise be. Close attention to ones profit motive and the moral interests of consumers might in fact generate some morally responsible business decisions. We can indeed find additional moral guidance by looking at the laws that apply specifically to businesses. In gray areas of moral controversy that are not adequately addressed profit motives and the law, we can turn for guidance to a variety of general and specific moral principles. In addition to the above three approaches to business ethics, it also helps to examine stories of businesses that have been morally irresponsible. By citing specific cases deceptive advertising, environmental irresponsibility, or unsafe products, we can learn by example what we should not do. Such cases often reveal blatantly crude, insensitive, or reckless attitudes of businesses, which we can view as warning signs of unethical conduct.

References
"Ethics the easy way". H.E.R.O... "Miliband draws up green tax plan". BBC. Friedman, Milton (1970-09-13). "The Social Responsibility of Business is to Increase Its Profits", The New York Times Magazine. Hare, R. M. (1979). "What is wrong with slavery". Philosophy and Public Affairs 8: 103121. Enderle, Georges (1999). International Business Ethics. University of Notre Dame Press, 1. ISBN 0-268-01214-8. George, Richard de (1999). Business Ethics. http://www.stthom.edu/academics/centers/cbes/jonachan.html

Further reading Albertson, Todd. (2007). The Gods of Business: The Intersection of Faith and the Marketplace. Los Angeles, CA: Trinity Alumni Press. Behrman, Jack N. (1988). Essays on Ethics in Business and the Professions. Englewood Cliffs, NJ: