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ETHICS AND BUSINESS – CMA STUDY MATERIAL

ETHICS AND BUSINESS – CMA STUDY MATERIAL

ETHICS AND BUSINESS:- Study of ethics is a systematic science. Its scope encompasses all human relationship in a society. Ethics also known as moral philosophy. It involves systematizing, defending and recommending concepts of right and wrong.

ETHICS AND BUSINESS is an important topic in CMA Foundation – Fundamental of Laws and Ethics and we have covered topics like:- Ethics vs Morals, Evolution of Ethics, Application, Seven Principles of Public Life, The relationship between Ethics and Law, Ethics in Business,.

ETHICS AND BUSINESS:- Study of Ethics can be divided into 4 operational areas :-

  • Meta ethics
  • Normative ethics
  • Descriptive ethics
  • Applied ethics

Ethics fundamentally comprises of two elements :-

  • Ethics refers to well founded standards of right and wrong that describe what humans ought to do in terms of rights, obligations, benefits to society, etc.
  • Ethics refers to the study and development of one’s ethical standards.

ETHICS AND BUSINESS:-Difference between Ethics and Morals

Ethics

  • Root word in Greek is ‘ethikos’ which means ‘Character’
  • Deals with right and wrong conduct.
  • Deals with individual character.
  • Character is personal attribute.
  • Ethics is the response of an individual to a specific situation.

Morals

  • Root word in Greek is ‘mos’ which means ‘custom’.
  • Deals with principles of right and wrong.
  •  Deals with customs set by groups.
  • Customs are determined by groups or some authority like religion or culture.
  • Morals are general principles.

EVOLUTION OF ETHICS

Social conduct has evolved along with the evolution of society. Social conduct has developed in society over hundreds of years.The codes of conduct have been passed down from generation to generation, and there is a pattern to the evolution of such codes.

The object of the social codes of conduct is to maintain, promote, and elevate harmonious relationships. ‘Honour your parents’ is one such code.

APPLICATION OF ETHICS

The relevance of ethics is in its application. In our study of ethics, the universal principles have to be applied to individual contexts and situations.

Ethics, in the practical sense, is also known as moral action and is an applied discipline that deals with a particular human action and also assesses to what extent it is compatible with the general principles.

SEVEN PRINCIPLES OF PUBLIC LIFE

  • Selflessness
  • Integrity
  • Accountability
  • Openness
  • Honesty
  • Leadership

Extracted from the “First Report of the Committee on Standards of Public Life” UK May 1995.

COMMITTEE ON STANDARDS IN PUBLIC LIFE

The Committee on Standards in Public Life is an advisory non-departmental public body. The Committee’s First Report established The Seven Principles of Public Life, also known as the “Nolan principles”of the United Kingdom Government.

The relationship between Ethics and Law.

Ethics and Law – The Interface:- Law is essentially an institutionalisation or codification of ethics into specific social rules, regulations and prescriptions.

Ethics in Business

Business Ethics (also called corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment.

It applies to all aspects of business conduct, and is relevant to the conduct of individuals and the entire organizations.

Business Ethics as Professional Code

Business ethics is not a pure science but a professional practice, and society expects businessmen to abide by the principles of a civil society, just as it expects professionals from other areas such as medicine, bureaucracy, politics and sports to do so.

Instead of a value-free business ethics, we have a value loaded or value-based business practice.

Business ethics, professionally adheres to a code of conduct that is in accordance with the normative principles further, it may be concretely stated that professionals bear the following marked characteristics:-

  • competency of educational qualification,
  • professional skills,
  • compensation (salary/remuneration, etc.).

NEED FOR BUSINESS ETHICS

  • Stop business malpractices
  • Improve customers’ confidence
  • Survival of business
  • Safeguarding consumers’ rights
  • Protecting employees and shareholders
  • Develops good relations
  • Creates good image
  • Smooth functioning
  • Consumer movement
  • Consumer satisfaction
  • Importance of labour
  • Healthy competition

IMPORTANT POINTS/SUMMARY

  • The study of Ethics is divided into Four operational areas.
  • The word ethics is derived from Greek word
  • Ethics has evolved with evolution of Society
  • The relevance of ethics is in its Application
  • “It is difficult but not impossible to conduct strictly honest business” is famous quote by Mahatma Gandhi
  • Law is Codification of ethics.
  • The study of ethics is a Systematic Science science.
  • Ethics is also known as Moral philosophy.
  • Business Ethics is the study of business situations, activities and decisions where issues of right and wrong are addressed.
  • Business ethics is also called as Corporate Ethics
  • Compensation, Competency and Character are the Three C’s of Business Ethics
  • According to Andrew Crane “ Business ethics is the study of business situations, activities and decisions where issues of right and wrong are addressed”

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