Business Ethics Lesson 1

Business Ethics

The practice of what is morally and ethically right in the conduct of business in the workplace.

Macro Level (Ethics)

Represents business operations bound by the virtues and norms of political and social systems, guided by national and international ethical standards.

Corporate Level (Ethics)

How a company interprets industry rules and standards, involving moral and legal transactions to benefit the company.

Individual Level (Ethics)

An employee’s own moral principles, which guide their life and must align with the organization’s ethical standards.

Sole Proprietorship

A business managed by one person who owns all assets and profits, with unlimited liability for debts.

Partnership

A business where two or more members share profits, responsibilities, and liabilities, with joint decision-making.

Corporation

A business with a distinct legal identity separate from its owners (shareholders), offering limited liability but subject to government regulations.

Shareholders

Owners of a corporation who elect the board of directors and are accountable only for their invested capital.

Assets

Economic resources owned by a business (e.g., equipment, cash, raw materials).

Liabilities

Obligations of a business to third parties, such as debts or unpaid supplies.

Unlimited Liability

Sole proprietors/partners are personally responsible for all business debts, risking personal assets.

Limited Liability

Shareholders’ financial responsibility is restricted to their investment in the corporation.

Honesty

Truthfulness in words, actions, and product representation.

Integrity

Consistency in actions, decisions, and character.

Keeping Promises

Fulfilling commitments made to stakeholders.

Loyalty

Prioritizing company interests over personal gains.

Fairness

Impartiality in all transactions.

Caring

Compassion and concern for others.

Respect

Courteous treatment of all individuals.

Obeying the Law

Compliance with legal and regulatory requirements.

Excellence

Striving for high-quality products/services.

Leadership

Leading by example.

Morale

Upholding the company’s image.

Accountability

Accepting consequences for decisions.

Accounting Manipulations

Falsifying financial statements.

Overbilling

Charging excessively for services.

Misleading Advertisements

Promising undeliverable features.

False Claims

Taking undeserved credit or using harmful production shortcuts.

Customer Service Failures

Denying warranties or refunds.

Layoffs with High Executive Compensation

Cutting jobs while increasing executive pay.

Poor-Quality Materials

Using substandard materials to cut costs.

Compliance

Adhering to government reportorial requirements.

Office Decorum

Maintaining professionalism.

Asset Use

Restricting company property to business purposes.

Confidentiality

Protecting sensitive information.

Accurate Records

Ensuring truthful financial documentation.

Components of a Code of Ethics

Values, Principles, Management Support, Personal Responsibilities, Compliance.

Wealth Creation

Innovating and efficiently using resources for profit.

Meeting Needs

Serving customers, employees, and supply chain stakeholders.

Social Responsibility

Paying taxes, supporting infrastructure, and ensuring workplace safety.