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C o n f i d e n t i a l

Unit-13 Business Ethics and CSR

Program : MBA

Semester : IV

Subject Code : MB0052

Subject Name : Strategic Management and Business Policy

Unit number : 13

Unit Title : Business Ethics and CSR

Lecture number : 13

Lecture Title : Business Ethics and CSR

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Objectives

The objective of this lecture is to:

Define the ethical codes of conduct.

Compare between the ethical and unethical codes of conduct

Describe CSR.

Explain why profit making should not be the only concern of business

organisations.

Describe social audit and Corporate Governance.

Business Ethics and CSR

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Introduction

Ethics and Values

Ethical and Unethical Conduct

Impact of Ethical Conduct

Corporate Social Responsibility (CSR)

Business Profits

Obligations of Business Profits

Social Audit

Corporate Governance

Summary Check Your Learning

Activity

Lecture Outline

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Business ethics are referred as moral rules and regulations governing the

business world to guide in making effective corporate decisions.

Corporate Social Responsibility (CSR) means operating a business that meets

or exceeds the ethical, legal, commercial and public expectations.

CSR focuses in maintaining the effective business features in an organisation.

Ethics and CSR are essential factors which influences a business.

Introduction

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Ethics is defined as the rules or standards which govern the conduct of an

individual or an organisation.

Following are the features of an organisation which are integrated with ethical

standards:

A clear vision and image of integrity exists throughout the organisation.

The mission and vision of the organisation is possessed and represented bythe top management.

Policies and practices of the organisation are aligned according to the vision

of the organisation.

The organisation has different dimensions which are of proper ethical values.

Values are the image of what an organisation stands for and are the basis for

the behaviour of its members.

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Ethics and Values

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Code of ethics is the written guidelines issued by an organisation to its

management which assists in conducting the actions according to the ethical

standards.

The roles of business ethics and business values are as follows:

Maximises profit.

Efficient utilisation of business resources.

Creates goodwill in the market.

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Ethics and Values contd

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The difference between ethical and unethical conduct in a business

environment arises due to the respective proper and improper execution

of ethical codes and standards by the management.

The various principles of ethical conduct are:

Observing high standards of honesty, integrity and fairness in dealing

with the client.

Improving the professional competence.

Obeying all applicable laws, rules, regulations.

The outcomes of unethical conduct are:

Increased risk and decreased productivity.

Increased misconduct and decreased performance.

Increased dysfunctional behaviours and decreased organisational

reputation.

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Ethical and Unethical Conduct

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The features of ethical conduct are:

It has a positive impact on employee behaviour and employee perceptions.

It assists in building a strong ethical culture in the organisation.

Business policy is the guidelines developed by an organisation to govern its

actions.

The impact of ethical conduct in implementing business policies are:

Assists in fulfilling the applicable laws.

Protects the confidential information of the client.

Projects a positive image of the organisation.

Acts ethically in handling and reporting data.

Avoids conflicts of interest.

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Impact of Ethical Conduct

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Corporate Social Responsibility (CSR) is the continuing obligation of a

business to behave ethically and contribute to the economic development of

the organisation.

The features of CSR are:

Improves the quality of an organisation in terms of economic, legal and

ethical factors.

Builds an improved management system.

Creates awareness towards environmental issues.

Enhances information security systems and implementing effective security

measures.

Creates a new value in transportation.

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Corporate Social Responsibility

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Business Profits

Profit is defined as the income earned by a company in a certain period of

time.

There are two types of profit namely gross profit and net profit.

The sources of business profits include the following:

A proper plan including proper market research, availability of raw

materials, research of the competitor and so on.

Execution of the strategic plan with proper adherence to the ethical

standards and business values.

Companys income should be more than its expenses to earn profits.

Obligations of business profits in terms of business are the duties of an

organisation towards the upliftment of the people and the country.

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The various obligations of business profits are:

Social business obligation: Social responsibility is demonstrated by the

determination of the organisation to treat customers, employees and

investors fairly and honestly.

Moral business obligation: Moral obligation is a responsibility of balancing

various needs of an individual by accurate understanding of the right or

wrong actions using the acquired knowledge by an organisation.

Ethical business obligation: A company owes an ethical obligation to the

individuals and groups who are responsible for the success of the company.

An organisation has certain responsibility towards reducing unethical issues.

Environmental business obligation: An organisation must develop ways

to improve the surrounding environment performance by reducing costs and

unnecessary wastes.

Obligations of Business Profits

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Social audit is an auditing process whose purpose is to consider the impact

of a business on the surrounding community, environment, economy and the

people.

The importance of social audit in a business are:

Reputation and image building

Enhancing corporate social responsibility

Tendering the opportunities

Boosting morale of the employees

Making a difference

Measuring employees impact

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Social Audit

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Corporate Governance is the reflection of the business culture, policies,

relationship with the stakeholders and the organisations commitment to its

values.

The features of a company which has good Corporate Governance are:

A culture based on the foundation of a sound business ethics and business

values.

Satisfying the long-term strategic goal of the owners while considering the

expectations of all key stakeholders.Maintaining proper fulfillment in terms of legal and regulatory requirements

under which the company is carrying out its activities.

Corporate Governance

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Business ethics are the rules or standards which govern the conduct of an

organisation and the individuals employed in that organisation.

Organisations can manage ethics in their workplaces by establishing an ethics

management programme. Business ethics and business values maximises

profit, creates goodwill in the market.

The difference between the ethical and unethical conduct in a business

environment arises due to respective proper and improper execution of the

ethical codes and standards by the management.

Corporate Social Responsibility (CSR) is the continuing obligation by a

business to behave ethically and contribute to the economic developmentwhich improves the quality of life in the organisation.

Social audit considers the impact of a business on the surrounding

community, environment, economy and the people.

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Summary

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1. Define code of ethics.

ANS: The code of ethics is the written guidelines issued by an organisation to

its management which assists in conducting its actions according to the ethical

standards.

2. What is CSR?

ANS: Corporate Social Responsibility (CSR) is the continuing obligation of abusiness to behave ethically and contribute to the economic development of

the organisation.

3. Define Corporate Governance.

ANS: Corporate Governance is the reflection of the business culture, policies,

relationship with the stakeholders and the organisations commitment to its

values.

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Check Your Learning

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Refer to http://www.karmayog.org/csr2009/csrdetails.aspx?id=369 and

identify the ideas for implementing CSR in an organisation. What are the

significant areas you can highlight for implementing CSR in your organisation?

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Activity
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