PART 3: Business Ethics

What Is Business Ethics?

Applying moral principles to business situations.

"Ethics is knowing the difference between what you have a right to do and what is right to do." — Potter Stewart

Importance

• Builds consumer trust and loyalty

• Enhances reputation

• Encourages transparency

• Avoids legal scandals

Ethics vs. Law

Law is the minimum standard. While Ethics goes beyond legal requirements.

Not all legal actions are ethical (e.g., legal layoffs purely for profit)

Core Ethical Principles

Integrity Honesty + strong moral principles

Fairness Treating stakeholders equally

Respect Valuing others' rights and dignity

Responsibility Being accountable

Transparency Open communication

Types of Ethics

Personal Ethics

Individual beliefs at work

Professional Ethics

Standards specific to a profession

Organizational Ethics

Values guiding the company

Global Ethics Ethical

issues in international business

Common Ethical Dilemmas

• Bribery

• Misleading advertising

• Insider information

• Discriminatory hiring/promotion

• Environmental pollution

Corporate Social Responsibility (CSR)

Commitment to contribute positively to society — environmental protection, social equity, ethical labor.

Ethical Decision-Making Model (5 Steps)

1. Recognize the ethical issue.

2. Gather facts and stakeholder views.

3. Consider ethical principles (fairness, harm, honesty).

4. Evaluate alternatives and decide.

5. Reflect on the outcome.

Role of Leadership

Leaders set the ethical tone.

Ethical culture starts at the top.

Consequences of Unethical Behavior

Loss of reputation and trust

Legal penalties

Decline in employee morale

Financial losses