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Entrepreneurship Project on Ethics in Business
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Submitted to:
Mr.Mohsin-ul-Mulk
Dept of Management Sciences.
Submitted by:
M Jamil 062
Rana Saqib 071
M Nadeem 131
Rafaqat Hayat 089
COMSATS Institute of Information Technology,
M.A Jinnah Campus, LAHORE.
With
THE NAME
OF ALLAH,
THE Most BENEFICENT,
THE MERCIFUL
DEDICATED
TO OUR PARENTS
WHO ALWAYS
LOVE US
& all those who have a soft corner for us in their hearts…
Acknowledgement
All gratitude and thanks to almighty “ALLAH” the gracious, the most merciful and beneficent who gave us courage to undertake and complete this task. We are very much obliged to our ever caring and loving parents whose prayers have enabled to reach this stage.
We are highly grateful to our course instructor Mr. Mohsin-ul-Mulik for providing us an opportunity to present on Ethical Issues in Business. Which gave us a great understanding on this knowledgeable topic We are very great full to our teacher Mr. Mohsin-ul-Mulik for providing us guideline for the completion of this Task.
This is a moment of great pleasure as well as great pride for us on the accomplishment of this Presentation.
DEFINING BUSINESS ETHICS
Understanding the landscape of business ethics can be problematic. The field is vast; often encompassing such concerns as corporate governance, reputation management, accurate accounting and audits, fair labor practices and environmental stewardship to name but a few. In fact, the field addresses the entire scope of responsibilities - or obligations - that a company has to each of its stakeholders: those who have a vested interest - or stake - in the decisions and actions of a company, like clients, employees, shareholders, suppliers and the community. Depending upon the company in question, one may even be able to identify additional stakeholders.
The field of business ethics is further complicated by the fact that many terms exist to refer to corporate offices and programs intended to communicate, monitor, and enforce a company's values and standards. In theory, one can make some rough distinctions among the various domains related to business ethics, e.g., corporate responsibility, social responsibility, corporate compliance,
Corporate and Social Responsibility etc.For the purpose of clarity, definitions will be provided for each of the terms that can be understood as related to the goal of improving the conduct of business, namely, business ethics, corporate compliance, corporate responsibility and corporate and social responsibility. Please note that these definitions are not being offered as official definitions, but only to impart how they are commonly used in the business ethics industry.
Business Ethics
Business ethics defines how a company integrates core values - such as honesty, trust, respect, and fairness -- into its policies, practices, and decision making. Business ethics also involves a company's compliance with legal standards and adherence to internal rules and regulations
.Business ethics is a form of applied ethics. It aims at including a sense within a company's employee population of how to conduct business responsibly. Because the term "ethics" can pose problems in an international context, i.e., the term does not translate well and it can be difficult to find a common understanding of the term, some organizations choose to recall the concept of business ethics through such other terms as integrity, business practices or responsible business conduct.
Corporate Compliance
U.S. business scandals that occurred in the 1980s - particularly related to government contracts - gave rise to corporate compliance, which is most often narrowly focused on complying with national and local laws and regulations. Corporate compliance offices and programs have been criticized for falling short of respecting the spirit of the law in favor of the letter of the law. It should, however, be noted that corporate offices of compliance may now function in much broader contexts.
Corporate Responsibility
Corporate responsibility refers to fulfilling
the responsibilities or obligations that a company has toward its stakeholders.
When examining a particular corporate practice, like profit versus environmental
protection, corporate responsibility can help distinguish between a stakeholder
expectation and a corporate obligation, i.e., is the company obliged to provide
absolute environmental protection at all cost or is it obligated to maximize
profits for its investors at the cost of damaging the environment?
Corporate Governance
Corporate governance refers to the mistake in company
operations by bodies (e.g., board of directors) that bear the responsibility to
oversee, direct, and evaluate company operations on behalf of the company’s
investors.
Corporate and Social Responsibility
Corporate and social responsibility can be understood in terms
of corporate responsibility, but with greater stress laid upon the obligations a
company has to the community, particularly with respect to charitable activities
and environmental stewardship. Corporate and social responsibility is sometimes
described as being a unstated contract between business and a community, whereby
the community permits the business to operate within its jurisdiction to obtain
jobs for residents and revenue through taxation. Additionally, the community
expects the business to preserve the environment and to make the community a
better place to live and to work through charitable activities.
it speaks of corporate social responsibility in the following terms: "Socially
responsible business practices strengthen corporate accountability, respecting
ethical values and in the interests of all stakeholders. Responsible business
practices respect and preserve the natural environment. Helping to improve the
quality and opportunities of life, they empower people and invest in communities
where a business operates."
Currently, companies in Europe seem to be adopting offices of corporate and
social responsibility more often than in other part of the world. It should be
noted that some business ethics organizations - the Institute included - believe
that corporate responsibility encompasses all
responsibilities that a company has to
all of its stakeholders, which includes
social and environmental responsibilities.
Different types of Ethics
Meta-ethics:
There are two main strands of thought attempting to explain what ethical values and claims are actually about.
One strand are commonly termed 'non-realist', because they suggest moral values are creations, dependent on people's feelings and goals regarding themselves and their belief systems. Despite the name 'non-realist', such theories may see reality as important in shaping the human choice of ethical values (indirectly by, for example, the evolutionary or developmental shaping of human psychology, or directly through, for example, people assessing and debating the likely consequences of their actions).
Normative ethics:
Normative ethics
bridges the gap between meta-ethics and applied ethics. It is the attempt to arrive at general moral standards that tell us how to judge right from wrong, or good from bad, and how to live moral lives. This may involve articulating the character or good habits that we should acquire, the duties that we should follow, or the consequences of our behavior on ourselves and others.Applied ethics:
There are several sub-branches of applied ethics examining the ethical problems of different professions, such as
business ethics, medical ethics, journalism ethics, engineering ethics and legal ethics, while technology assessment and environmental assessment study the effects and implications of new technologies or projects on nature and society.Environmental ethics:
Ethics has been applied to analyze human use of Earth's limited resources. This has led to the study of environmental ethics. A growing trend has been to combine the study of both ecology and economics to help provide a basis for sustainable decisions on environmental use. Ethics in the professions
Each branch characterizes common issues and problems that arise in the
ethical codes of the professions, and defines their common responsibility to the public, e.g. to preserve its natural capital, or to obey some social expectations of honest dealings and disclosure. Legal ethicsEthics has been applied to
criminology leading to the field of criminal justice.
Ethics in Different Regions:
Business ethics will likely emerge differently in every region where it is cultivated. In Western Europe, programs have tended to concentrate on corporate and social responsibility. In regions with high levels of corruption – like Africa, Asia and Eastern Europe – business ethics efforts have been distilled into programs designed to combat corruption. The field of business ethics is vast and one that is still quite young. As we move forward, we are apt to see the field grow and, at times, evolve – engendering many different types of programs and initiatives.
U.S and E.U Ethics Programs:
Ø
A "socially responsible" or "Public" enterprise;Ø
Desire to participate in the promotion of human rights at work and to guarantee decent working conditions to its employees;Ø
To serve the surrounding community and participate in its well-being;Ø
To protect the environment, including the working environment;Ø
To satisfy the legal rights of its employees, in particular as regards career development within the enterprise, by eliminating discrimination;Ø
To guarantee a safe and healthy working environment by appropriate and voluntary measures respecting occupational safety and health;Ø
To practice a wage policy which is in accordance with legal requirements and respects local enterprise practice in the sector;Ø
To fix maximum levels as regards overtime;Ø
To practice a policy of transparency concerning recruitment and work contracts;Ø
In the code the enterprise could also define the objectives and methods of its training policy (initial, including apprenticeship, and continuous).Ø
Choice of "keywords" defining human relations within the enterprise such as: loyalty, solidarity, mutual respect.Ø
To fully comply with the requirements of the current legislation and other legal prescriptions or, in case a legal prescription is absent, to proceed from the principles of good faith, reasonability and fairness, to be honest and fair in their business relations, withhold from bad faith in carrying out business;Ø
To honor the right of property, to strive to achieve a balance of mutual benefits derived from transactions;Ø
To immediately inform the top management if there is any issues relating ethics.Ø
not to abuse the official position, insider information, tangible or intangible assets of the Corporation pursuing personal interests;Ø
strive to take collegial decisions and render assistance in the taking vitally important decisions and in extraordinary situation;Ø
To exercise a respectful and polite attitude to their colleagues and representatives of the, Customers business partners of the Corporation without distinction as to their position, gender, age, nationality, or religion;Ø
To interact in business with a welcoming and pleasing approach;Ø
To continuously achieve higher professionalism, acquire new skills and qualifications. To use knowledge in discharging the official functions in the most professional and efficient manner;Ø
To take decisions with due regard of not only the economic effect but also of the decisions made by others, and of the interests of other interested parties to the business relations, to withhold from unethical methods of competition;Ø
To comply with all the rules and regulations so that they should not cause conflicts in business relations to try to settle all conflicts maintaining a balance of interests of the relating parties.Ø
to provide gratuitous financial or other charitable support to social, cultural and educational and other programs;Ø
to carry out economic activities without causing harm to the environment, to take part in environment protection programs;Ø
to build relations between the Corporation and the Named Persons on the basis of long-term cooperation, common goals, respect and concern to mutual interests, good faith and feasibility of the obligations assumed and social partnership;Ø
to create conditions for the Employees, that would not harm their health and dignity, the assure a good level of wages and salaries ensuring a high standard of life;Ø
to be honest in communications, attend carefully to the proposals, ideas, claims and complaints submitted by the Named Persons;Ø
to avoid discriminating policies and guarantee equal rights and possibilities in the spheres of compensation for work and career promotion;Ø
to avoid taking decisions leading to significant job cuts in the Corporation.
1) : If you strive to understand the values of different cultures, you will find common points.
2) : if you analyze the facts, you will realize that honesty and reliability benefit you.
3) : if you analyze case studies from different perspectives, you will discover the benefits of fair play.
4) : Respecting your colleagues is the smartest investment you can make.
5) : To increase productivity, provide safe and healthy working conditions.
6) : To inspire trust, make your performance transparent.
7) : Your loyal dissent can lead your institution in the right direction.
8) : Downsizing your labor force is only beneficial when you respect each stakeholder.
9) : To establish your brand name, act as a fair competitor.
10) : Reduce the gap between the rich and poor by developing a new social security system.
11) : if you act against discrimination, you will increase your productivity and profitability.
12) : If you protect intellectual property, all stakeholders will receive their due share.
13) : Ongoing changes in information technology require new forms of loyalty.
14) : Your public relations strategy will only secure your reputation if it witnesses your drive for quality and excellence.
15) : Your economic achievements will only stand on firm ground if you diminish corruption.
16) : Long-term success urgently calls you to constantly care for the environment.
17) : To become a refined player, sharpen your discernment and cultivate good manners.
18) : Care for your business by caring for society.
ILO:
The preceding analysis shows that the most developed ethical initiatives share a number of common features. Most codes make direct or indirect reference to fundamental ILO standards in the sphere of human rights at work (although, it must be admitted, with few explicit references to freedom of association and the right to collective bargaining). In the same way, there are many references, in the case of relations with external trade partners, to the respect of national legislation and in particular, labour legislation, as well as to the need to monitor the practices of local enterprises (in particular as regards wages, to avoid the creation of distortions on the labour market). Finally, the codes contain a number of more or less structured application principles which, in relations with external trade partners, involve the technical departments responsible for purchasing and the quality control of suppliers and subcontractors. Experiments with external auditing, although promising, are for the moment more of an exception than the rule.
The enterprise could also indicate that it intends to promote the same principles with its external suppliers and subcontractors.
This part of the code could be based on fundamental ILO Conventions and incorporate their contents in a simplified form. It would apply to the enterprise itself as well as to its trade partners.
The provisions could be organized around four themes:
(1) Freely chosen employment, with the following reference texts:
-- Forced Labour Convention, 1930 (No. 29);
-- Abolition of Forced Labour Convention, 1957 (No. 105).
(2) Guarantee of freedom of association, the right to organize and collective bargaining, reference texts:
-- Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87);
-- Right to Organise and Collective Bargaining Convention, 1949 (No. 98).
(3) Non-discrimination in employment, reference texts:
-- Equal Remuneration Convention, 1951 (No. 100);
-- Discrimination (Employment and Occupation) Convention, 1958 (No. 111).
(4) Prohibition of recourse to child labour, reference texts:
-- Minimum Age Convention, 1973 (No. 138).
Note: On this point, the minimum age shall not be less than the age of completion of compulsory schooling. In any case if the age of schooling is not clear then it should not be less than 15 years. However, In addition, the minimum age for work hazardous to the health, safety or morals of young persons shall not be less than 18 years; if the national law does not prescribe the list of such types of work, account should be taken of relevant international labour standards concerning dangerous substances, agents or processes or the lifting of heavy weights. Where as Pakistan concern the age of the workers should not be less than 18 years.
http://www.ilo.org/public/english/dialogue/sector/papers/bzethics/bthics10.htm#Heading33
Unethical practices of Trade marks and copy rights
It is the biggest is the biggest issue of today’s world that trade marks ,services mark and copy rights Laws are not strictly followed in the most developing countries. Like China is still violating the law of software copy rights.
Recently USA and China has conflicts in their free trade due to the violation of the copy laws in china.
Unethical practices of trade marks include the usage of name or logos of big companies those are acceptable by the local producers.
BUSINESS ETHICS: AS CORPORATE ADVANTAGE
What Advantages do Business Practices Programs Provide to Organizations?
Business leaders increasingly recognize the direct relationship between fulfilling a company’s responsibilities and corporate survival. An effective business practices program ensures:
·
A Marketplace Advantage: Customers and investors cite corporate practices and values as primary considerations in their decision-making.·
Superior Employee Performance: Companies with sound business practices and established values report improved employee morale, reduced employee turnover and increased productivity.·
Reputation Management: Once damaged by scandal or unethical behavior, a company’s reputation may never recover - resulting in lost revenue, low employee morale and increased governmental and public scrutiny. Emphasizing responsible business conduct is the surest means of preserving a company’s intangible assets.·
Powerful Legal and Financial Incentives: International regulatory developments provide strong legal and financial incentives to corporations that establish standards of conduct and provide ethics education and training to employees.http://en.wikipedia.org/wiki/Ethics
Wednesday, December 13, 2006
You've Come a Long Way, Baby!
Somehow I missed this last month, even though I did mention the big turn-around at Nike. You can get some sense of just what I meant by checking out this Press Release from Nike, which starts out like this:
Nike's commitment to industry-leading transparency in its social responsibility reporting has led to the company being named the top U.S. company and one of the world's top 10 in the current SustainAbility Global Reporters Program ranking released today.
Islamic ethics in Business:
In the Name of Allah, Most Gracious, Most Merciful.
It is worthy stressing here that when Muslims stick to ethics in their daily lives, they will become good examples to emulate in today's world. They will help rectify some aspects of the distorted image about Islam in today's world and thus they will become worthy ambassadors of their religion.
We beseech Allah to guide us all to the best way through which we can become more committed to Islam with our hearts and souls and thus become better able to exemplify faith and practice in our daily lives as Muslims.
Prophet Shu`aib (peace be upon him) was a great prophet of
Allah. He was sent to the people of Madyan around the time of Prophet Abraham
(peace be upon him). Prophet Shu`aib was sent among a people who were very much
involved in business. These people were very proud of their business knowledge
and success, but they were dishonest. He told them to observe ethics in
business. They became very angry with him and told him, "Don't mix religion with
business." The Qur'an tells us that Allah's punishment came upon those people
and only Prophet Shu`aib and his followers were saved.
It is indeed serious that every one must adhere to ethical standards in business. Business and ethics are not separate, rather they are interconnected. Allah says in the Qur'an,[Foryou in the Messenger of Allah, there is a fine example to follow] (Al-Ahzab 33:21).
O believers, when you contract a debt one upon another for a stated term, write it down, and let a scribe write it down between you justly, and let not any scribe refuse to write it down, as God has taught him; so let him write, and let the debtor dictate, and let him fear God his Lord and not diminish anything of it.....And call in to witness two witnesses, men; or if the two be not men, then one man and two women, such witnesses as you approve of, that if one of the two errs the other will remind her; and let the witnesses not refuse, whenever they are summoned.....And fear God; God teaches you, and God has knowledge of everything. (emphasis added) (Q. 2:282)
Allah Almighty says, [To the Madyan people (We sent) Shu'aib, one of their own brethren: he said: "O my people! Worship Allah: ye have no other god but Him. And give not short measure or weight: I see you in prosperity, but I fear for you the penalty of a day that will compass (you) all round. "And O my people! give just measure and weight, nor withhold from the people the things that are their due: commit not evil in the land with intent to do mischief. "That which is left you by Allah is best for you, if ye (but) believed! but I am not set over you to keep watch!" They said: "O Shu'aib! does thy (religion of) prayer command thee that we leave off the worship which our fathers practiced, or that we leave off doing what we like with our property? Truly, thou art the one that forbeareth with faults and is right-minded!" He said: "O my people! see ye whether I have A Clear (Sign) from my Lord, and He hath given me sustenance (pure and) good as from Himself? I wish not, in opposition to you, to do that which I forbid you to do. I only desire (your) betterment to the best of my power; and my success (in my task) can only come from Allah. In Him I Trust, and unto Him I look.] (Hud 11:84-88)
Prophet Muhammad (peace and blessings be upon him) was an ideal human being in every respect. He was the best teacher, preacher, and guide; the best statesman, lawgiver, judge, diplomat, negotiator of treaties, and military commander; the best family man, a good husband, a compassionate father and grandfather, a good neighbor, and friend of his people. He was also a very honest and successful businessman.
Prophet Muhammad was chosen by God to be His last prophet and messenger at the age of 40. Before that he was very much involved in business. He was born in Makkah, which was a popular trade center in Arabia. Caravans from Syria in the north and Yemen in the south used to pass by Makkah. Prophet Muhammad would join in these caravans. It is reported that he traveled to Syria, Yemen, Bahrain, and many other places in Arabia in these caravans. Some historians have also suggested that he probably traveled to Iraq and Ethiopia.
From his early age, he was involved in commerce. He had a good
reputation as a hardworking, honest, truthful, and very successful businessman.
It was due to this reputation that Khadijah, a wealthy businesswoman, hired him
to work for her business. Many people in Makkah had asked for her hand and
worked for her, but they either cheated her or she was not satisfied with their
work. Finally, she found Muhammad (he was not a prophet at that time) and she
asked him to work for her. He made several business trips on behalf of her and
was very successful. She was impressed with his work as well as his impressive
personality, they later got married.
After marrying Khadijah, Prophet Muhammad continued his work and took several
business trips throughout parts of Arabia. Ancient Arabia used to have
commercial fairs in almost all major towns and regions; it is probable that
Prophet Muhammad visited some of these commercial fairs. After becoming a
prophet, his business activities decreased, although he would occasionally
participate in business transactions. His vast business experience helped him in
dealing with people with great care. He often used to mention the names of
people and tribes whom he met in his journeys. People were often amazed of his
knowledge of people and their regions.
The Prophet emphasized that honesty and kind dealings with customers are the secrets of success in business.
Prophet (PBUH) said, "The truthful and honest merchant is associated with the Prophets, the upright and the martyrs" (Al-Tirmidhi).
"God shows mercy to a person who is kindly when he sells, when he buys and when he makes a claim" (Al-Bukhari).
Prophet Muhammad gave many teachings on business and economic issues; he covered almost every aspect of business and economics. Here are only a few major principles of fair business dealings according to Islam.
1. No fraud or deceit, the Prophet (peace and blessings be upon him) is reported to have said,
" Whena sale is held, say, "There's no cheating" (Al-Bukhari).
2. Sellers must avoid making too many oaths when selling merchandise. The Prophet (peace and blessings be upon him) is reported to have said, "Be careful of excessive oaths in a sale. Though it finds markets, it reduces abundance" (Muslim).
3. Mutual consent is necessary. The Prophet (peace and blessings be upon him) is reported to have said, "The sale is complete when the two involved depart with mutual consent"
(Al-Bukhari).
Prophet (PBUH) told the owners of measures and weights, "You have been entrusted with affairs over which some nations before you were destroyed" (Al-Tirmidhi).
5. The Prophet forbade monopolies. "Whoever monopolizes is a sinner"
(Abu Dawud).
6. Free enterprise, the price of the commodities should not be fixed unless there is a situation of crisis or extreme necessity.
7. Hoarding merchandise in order to increase the prices is forbidden.
The Prophet's general advice to all people was, "What is lawful is clear and what is unlawful is clear, but between them are certain doubtful things which many people do not recognize. He who guards against the doubtful things keep his religion and his honor blameless, but he who falls into doubtful things falls into what is unlawful, just as a shepherd who pastures his flocks round a sanctuary will soon pasture them in it. Every king has a sanctuary, and God's sanctuary is the things he had declared unlawful"
(Al-Bukhari).
http://www.islamonline.net/servlet/Satellite?cid=1145175679974&pename=IslamOnline-English-Ask_Scholar%2FFatwaE%2FFatwaEAskTheScholar
Ethical Issues in Textile Sector
Our primary focus relating to the ethical issues is on the textile sector that’s why we have gather information relation to the Textile ethics and we have find out ethical issues as given below
Ø
Child Labour.Ø
Non implementation of Environmental Laws.Ø
Is it possible for Textile sector to be Ethical as well as profitable?Ø
Level of commitment of Labor.Ø
Working HoursØ
Compensation Plano
Salary/ wageso
Medical PlansChild Labour
Is one the biggest of issue of textile sector of our country. As we have observed in different units of textile that most of small textile units are engaged in this issue. These children do involve in the different departments like spinning, weaving.
But whereas the in the big textile units do follow the rules of child labor like NISHAT.
Compensation plans:-
The biggest that is faced by the labour is specially related to their compensation plans. Because the labour is forced to work at inappropriate rewards that is explained as under.
A) Salary/ Wages:-
The main issue in this regard is the salary/ wages plans because the packages offered by the employers in the form of salary or daily wages are very low as compared to their working.
But even the employers don’t follow the Govt rules and regulations in this regard.
e.g. the Govt has fixed the minimum remuneration of Rs. 4000 according to our observation, even still Rs.2000-2500 are paid to the workers.
B) Medical plans:-
Because the health facilities are the most important the not only for the labour but also for the each and every human being.
This is also the biggest ethical issue that proper medical facilities are not provided to the employees even in case of permanent body disable the employer only takes his responsibility up to the healing up of the harmfully effected part of the body and there are proper funds maintained for the betterment of those disabled employees.
Environmental Laws:
In the textile sector the management do not care aout the environmental protection to the society.
Working hours :-
The ILO says that the employees should not work more than the 40 hrs a week. But the employees work for 48-54 hrs a day in our textile sector.
So this shows another unethical practice to the workers due the non-interference of Govt and other institutes who are the responsible one for that.
Level of commitment of labour:-
So, the all above mentioned unethical practices reduces the overall commitment level of employees and each worker considers the work as a burden upon him. That adversely affects not only the efficiency level of employee but that also contributes greatly toward the reduction in the production or the production of low quality products.
Recommendation about Ethics in today Business:
1. Globalization should mean that all people are considered to comprise one
family. All human beings should be treated with respect, equality, and fairness.
Exploitation of one group by another should be stopped. There should not be any
division among people because of their race, color, nationality, gender, or
faith.
2. The resources of the Earth are not only for us, we share this biosphere with other species, and so we take care not to waste or destroy them.
3. We should use the Earth's resources with great care and should remember that we have a duty to leave this world in a better condition for the generations to come after us.
4. Human beings are one family, although we have our differences. Diversity is natural and beautiful. We should try to understand other people's religions and cultures and we should be sensitive to their feelings and emotions.
5. The universal golden rule states, "Love for others what you love for yourself." We should try to empower others and work to eradicate poverty, hunger, illiteracy, disease, and unsanitary conditions in the world in order that all people can live in peace and happiness.
6. Businesses should promote ethical and moral behavior in their corporations, as well as in the world at large. People involved in business should always be honest, truthful, and fulfill all promises and commitments. We must eliminate fraud, cheating, and cut-throat competition in order to prevent ethical issues.
7. We should also promote more political freedom, open debates, participatory democracies, and representative government so that the rights of the employees should not be suppressed.
8. Our education system should be design in such a way that the people should be aware about the ethical rights from their secondary studies.
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