Chapter 1

Chapter 1
Introduction to Ethi
cs
EIB20103
LECTURER:
PUAN AZIZAN BT MOHAMED ISA
Chapter Outlines
01 Definitions of Ethics
02 Nature of Ethics
03 Objectives of Ethics
04 Relationship between Ethics and

Business
05 Views of Ethics: Unitarian,

Separatists and Integration
06 Stages of Ethical Consciousness in

Business
07 Need for Business Ethics
Discussion Questions:
• What possible issues/concerns might this
scenario raise?
• How could this situation become a violation of the
law, the “Code” or other policies?
• In this situation, what are some potential negative
consequences for the community?
• What responses/actions will result in a more
positive outcome and/or what proactive
measures might be considered?
• List unethical/ethical values based on the picture
given
I S E T HIC ?
WHAT
DEFINITION OF ETHICS
 Ethics concern on what is good or right in human interac
tion. It revolves around three central concept: self, good
and other.
 “Ethics is not about being better than someone else; it’s

about being the best we can be.”
 “as the set of moral principles that differentiate between

what is right and wrong”.
 Moral and ethics are closely related and are often interc
hangeable.
NATURE OF ETHICS AND BUSINESS ETHICS
 Business ethics is about identifying and

implementing standards of conduct that will
ensure that business does not detrimentally impact
on the interests of its stakeholders.
 Standards of behavior that will enhance the

interests of all who are affected by business.
MEANING OF ETHICS
Good or
Taken Bad,
Decided by Leads to Series of together Right or
Character Conduct
of a man of a person Actions Considered As wrong,
Moral or
Immoral
By which
we can
Known as
Judge
Moral
again
Judgement
Moral
Standards Requires
Continue…
 Most businesses encounter two types of ethical proble
ms known as overt and covert ethical problems.
 Overt ethical problems deal with bribery, theft, sabota

ge etc. They are clear for everyone to see and are gen
erally considered reprehensible.
 Covert ethical problems involves corporate acquisitio

ns, marketing and personnel policies, insider tradings,
market war etc. They are complex, difficult to locate,
to eliminate and are consequently much more danger
ous and threatening to business.
OBJECTIVES OF ETHICS
 Ethics help in developing a good values in people and the organiza
tion such as :
– Integrity
– Excellence
– Accountability
– Respect
 Ethics deals with human behavior .It weighted a particular act or d

ecision taken by an individual is moral or non moral.
 To judge human behavior based on these standards and norms.
To establish moral standards and norms of the behavior.

RELATIONSHIP BETWEEN ETHICS AND
BUSINESS
 Businesses that exhibit and promote strong corporate codes of ethic
s are more prosperous in the long run because they show a commit
ment to an expectation of sound moral behavior.
 This demonstrates a dedication to society, customers, employees an
d the business itself.
 Its also enhance a company’s reputation if they become commonly
known as an ethical company, and this brings more value to the org
anization.
 Manager that shows unethical behavior and perhaps even justify it
even though they know to be wrong, this eventually becomes a part
of organizational culture and might affect on decision making.
 People followed by example, and the lack of moral judgment will s
pread among the workers and will affect the business.
Why is Business Ethics important
• It corresponds to basic human needs. People want to be part
of an organization which they can respect & publicly proud o
f, because they perceive its purpose and activities to be ho
nest and beneficial to the society.
• These basic needs compel the organizations to be ethically o
riented
• Values create credibility with the public.
• Values give management credibility with employees
• Values help better decision making
• Ethics and profit: value driven companies are sure to be suc
cessful in the long run.
• Law cannot protect society, ethics can. E.g. technology
VIEWS OF ETHICS
SEPARATIST
UNITARIAN INTEGRATION
UNITARIAN
Business & morality cannot be separated
and it must play by the rules of ethics
of the community.
Moral Structure
Business
Moral Ethics
SEPARATISTS
Proposed by Adam Smith and Milton Friedman: Bu

siness is a distinct entity and does not include et
hics and morality
Business Ethics
INTEGRATION
 Ethical behaviour and business should be integrate
d in a new era called business ethics.
Law
Government
Morality
Business &
Ethics
Business
Market Systems Society
Ethics
BUSINESS ETHICS
When business people speak about “business ethics” they usually mean one
of three things:
1. Avoid breaking the criminal law in one’s work related activity
2. Avoid action that may result in civil law suits against the company
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.
COMMON UNETHICAL BEHAVIOUR
lying and withholding needed information
abusive or intimidating behavior
misreporting time worked
discrimination and sexual harassment
stealing
breaking environmental and safety laws
falsifying records
drug or alcohol abuse
giving or accepting bribes

WHY MISCONDUCT IS NOT REPORTED
• Believe that nothing will be done
• Fear of retaliation
• Fear of being viewed as troublemaker
• Do not care, let other people do it
• Fear of changes
ETHICS IN ISLAM
Ethics – Akhlaq
The Six pillars of Iman
– Belief in Allah
– Belief in Angles
– Belief in Kitab
– Belief in the commissioned messengers
– Belief in the resurrection and the events of Qiyamah
– Belief in the predestination by Allah of all things, both the
(seemingly) good and the (seemingly) bad.
MORALITY IN ISLAM
• Ayat Al-Baqarah 177
• This verse teaches us that righteousness and piety
is based before all else on a true and sincere fai
th.
• The key to virtue and good conduct is strong relat
ion with Allah swt., who sees all, at all times an
d everywhere.
• Morality in Islam addresses every aspect of a Musl
im’s life, from greetings to international relati
ons.
STAGES OF ETHICAL CONSCIOUSNESS IN
BUSINESS Stage 3
Stage 1 Stage 2 Profit
Law of Anything Maximization
Jungle for Profit in the Short-
Term
Stage 4
Stage 6 Stage 5 Profit
Corporate Stakeholder Maximization
Citizenship Concept in the Long-
Term
NEED FOR BUSINESS ETHICS
a) Introduced Socialism in Business
- The concept of socialism in business say that workers shareholders, consumers al
l others who contribute to the success of the business must share its gain.
b) Interest of Industry
- Protect the interest of small business firms.
- By following code of conduct, small firms can fight for their existence and stay i
n the business for long.
c) Buyers Market
- Seller market to buyer market
- Importance of consumer satisfaction and service orientation over profit orientatio
n
d) Better Relations with Society

- Reconcile conflicting interest of various sections of the society such as workers,
shareholders, consumers, distributors, suppliers, competitors and government
CONCLUSION
 Living in an ethical manner is full of challenges and n
eeds a high level of determination.
 Businesses are expected to be operated in such a way

as to meet the ethical standards of responsible behavi
or.
 Effective, efficient and responsible businesses will ge

nerate higher revenue by retaining existing customer
and hence attracting new customers.
Class Discussion
Form a group of 5, write about your experience on one ethics p
roblem in Malaysia. You need to provide only one incident ha
ppened to you or your team members and explain how you overc
ome the issue/incident.
THANKS

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04 Relationship between Ethics and

05 Views of Ethics: Unitarian,

06 Stages of Ethical Consciousness in

 “Ethics is not about being better than someone else; it’s

 “as the set of moral principles that differentiate between

 Business ethics is about identifying and

 Standards of behavior that will enhance the

 Overt ethical problems deal with bribery, theft, sabota

 Covert ethical problems involves corporate acquisitio

 Ethics deals with human behavior .It weighted a particular act or d

 To judge human behavior based on these standards and norms.

To establish moral standards and norms of the behavior.

Proposed by Adam Smith and Milton Friedman: Bu

lying and withholding needed information

abusive or intimidating behavior

misreporting time worked

discrimination and sexual harassment

breaking environmental and safety laws

drug or alcohol abuse

giving or accepting bribes

d) Better Relations with Society

 Businesses are expected to be operated in such a way

 Effective, efficient and responsible businesses will ge

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