CSE332

INDUSTRY ETHICS
AND LEGAL ISSUES
ETHICS

UNIT 1
 ETHICS
• Ethics is the field of study that is concerned
with questions of value, i.e., judgments about
what human behavior is "good" or "bad" in
any given situation. Ethics are the standards,
values, morals, principles, etc., which are used
to base one's decisions or actions on; often
there is no clear "right" or "wrong" answer.
 ETHICS
• Ethics is a set of belief about right and wrong
behaviour.
 Cisco “World’s Most Ethical Company”

1. It believes “A strong commitment to ethics is critical to our

long-term success as a company. Any success that is not achieved
ethically is no success at all.

2. Cisco conducts numerous programs aimed at fulfilling what it

sees as its corporate social responsibilities, Donations, manages
energy and greenhouse emission generated by its operations.
 Cisco “World’s Most Ethical Company”
1. It believes “A strong commitment to ethics is critical to our
long-term success as a company. Any success that is not achieved
ethically is no success at all.

2. Cisco conducts numerous programs aimed at fulfilling what it

sees as its corporate social responsibilities, Donations, manages
energy and greenhouse emission generated by its operations.

3. Cisco Chairman and CEO Advocates Ethical Behaviour It

communicates its Code of Conduct to suppliers, monitors their
compliance, and helps them improve performance.
 Answer the question
• What does it mean for an individual to act in
an ethical manner? What does it mean for an
organization to act ethically?
• How should an organization balance its
resources between pursuing its primary
mission for existence and striving to meet
social responsibility goals?
What is difference between moral,
ethics and law?
 Ethics and Morality

Ethics refers to standards of conduct, standards

that indicate how one should behave based on
moral duties and virtues, which themselves are
derived from principles of right and wrong.
 Moral Relativism
Values are determined by the society
we grow up in, and there are no
universal values. Moral values are
simply customs or conventions that
vary from culture to culture.
Describe the characteristics of justice.
 The Relationship Between
Ethics and Law

If everyone made the same ethical decisions

with the same results, there would be no need
for law. In the real world, however, some
people engage in conduct that most people
agree is wrong.
 Why Law is Necessary
• Law is the system of rules of conduct
established by the government of a society to
maintain stability and justice.
• Law defines the legal rights and duties of the
people and provides the means of enforcing
these rights and duties.
 Ethics and Legal Conflicts
• Because law is made by people, it is imperfect.
• Legislators and judges bring their own
personal opinions on ethics to the lawmaking
process.
• As a result, ethics and law will sometimes
conflict.
Define Law
Ethics
Ethics
 Software Piracy

• The software is being copied or used in a way

that violates the terms of service. This often is
cited as a cause for low sales of a piece of
software or poor profits when the software
itself is very popular.
 Example
For example:-
Attitudes toward software
piracy- the practice of illegally
making copies of software or
enabling others to access
software to which they are not
entitled—range from strong
opposition to acceptance of
the practice as a standard
approach to conducting
business.
Why Piracy happens?
Survey
 IMPORTANCE OF
INTEGRITY
Integrity means following your moral or ethical
convictions and doing the right thing in all
circumstances, even if no one is watching you.
Having integrity means you are true to yourself
and would do nothing that demeans or
dishonour you..
Example:- Temptation of picking money or cell
phone from the bench
 Importance of integrity in business
world
• Open your notebook and write ,
• If you have 1 lakh rupee only to buy a phone
which phone will you buy. and why?
• Write any 5 reason.
 ETHICS IN THE BUSINESS WORLD.
Why promoting Good business ethics is important:-
• To gain the goodwill of the community
• To create an organization that operates consistently.
• To produce good business
• To protect the organization and its employees from
legal action
• To avoid unfavourable publicity.
Example :-the Peanut Corporation of America allegedly
shipped tainted products from its plant in Georgia, which
led to a salmonella outbreak in 2008 that killed at least
eight people and sickened over 550 people in 43 states.
To gain the goodwill of the community

Blake Mycoskie started Toms Shoes on the premise

that for every pair of shoes sold, one pair would be
donated to a child in need. This innovative idea
resulted from a trip to Argentina where Mycoskie
saw an overwhelming number of children without
shoes. Toms Shoes recognized that consumers want
to feel good about what they buy, and thus directly
tied the purchase with the donation. In just four
years, Toms Shoes has donated more than 400,000
shoes, evidence that consumers have clearly
embraced the cause
 CSR
Corporate social responsibility (CSR) is the
concept that an organization should act ethically
by taking responsibility for the impact of its
actions on the environment, the community,
and the welfare of its employees
No doubt organization exist primarily for profits
and customer satisfaction but they also have
some basic responsibilities to society.
Philanthropy is one way in which an
organization can demonstrate its values in
action and make a positive connection with its
stakeholders.

.
To create an organization that operates
consistently.
Consistency also means that shareholders, customers,
suppliers, and the community know what they can expect
of the organization that it will behave in the future much
as it has in the past
• Operate with honesty and integrity, staying true to organizational
principles.
• Operate according to standards of ethical conduct, in words and
action.
• Treat colleagues, customers, and consumers with respect.
• Strive to be the best at what matters most to the organization.
• Value diversity.
• Make decisions based on facts and principles
Example :- Need of 30 megapixel phone
 TO PRODUCE GOOD BUSINESS

• Companies that produce safe and effective products avoid

costly recalls and lawsuits.
The recall of the weight loss drug Fen-Phen cost its maker,
Wyeth-Ayerst Laboratories, almost $14 billion in awards to
victims, many of whom developed serious health problems as a
result of taking the drug.
Example :- MAGGI
 Avoiding Unfavourable Publicity
• In 2012, Google agreed to pay a fine of $22.5
million to end an FTC investigation into
allegations that the firm utilized cookies and
bypassed privacy settings to track the online
habits of people using Apple’s Safari browser..
• ANSWER: why did Google agree to pay?
The amount of the fine, while the largest in FTC
history, represented less than one day’s worth of
Google’s profits. Why ?
• The public reputation of a company strongly
influences the value of its stock, how consumers
regard its products and services,
• The degree of oversight it receives from
government agencies,
• The amount of support and cooperation it
receives from its business partners.
Thus, many organizations are motivated to build a
strong ethics program to avoid negative publicity
Lecture 2

Unit 1
 Improving corporate ethics
• Assume one scenario, you want to start a
company (any company) what type of rules
you will going to make for your employee.
 Improving corporate ethics
• Ethics Resource Centre found
Attended Ethical workshop NOT attended ethical
workshop
86% of them are perceiving 25% of them are perceive a
strong ethical culture culture that promote integrity
 Characteristics of a successful ethics
program
• Employees are willing to seek advice about
ethics issues.
• Employees feel prepared to handle situations
that could lead to misconduct.
• Employees are rewarded for ethical behaviour.
• The organization does not reward success
obtained through questionable means.
• Employees feel positively about their
company.
 Survey after completion of workshop
• National business survey
How can we improve business ethics ?
Appointing a Corporate Ethics Officer
• A corporate ethics officer (also called a corporate
compliance officer) provides an organization with
vision and leadership in the area of business
conduct.
• the corporate ethics officer should be a well-
respected, senior-level manager who reports
directly to the CEO.
• Ethics officers come from diverse backgrounds,
such as legal staff, human resources, finance,
auditing, security, or line operations.
 Need of appointing CEO
• Started in 1980 when series of defence-
contracting scandals when firms used bribes
to gain inside information that they could use
to improve their contract bids.
• increase in appointments followed in the
aftermath of the mortgage loan scandals
uncovered beginning in 2008.
 Specific responsibilities include the
following:
• Responsibility for compliance—that is, ensuring
that ethical procedures are put into place and
consistently adhered to throughout the
organization
• Responsibility for creating and maintaining the
ethics culture that the highest level of corporate
authority wishes to have
• Responsibility for being a key knowledge and
contact person on issues relating to corporate
ethics and principles
 Ethical Standards Set by Board of
Directors
• responsible for careful and responsible management of an
organization.
• In a for-profit organization, primary objective is to oversee the
organization’s business activities and management for the benefit
of all stakeholders
• A board of directors fulfils some of its responsibilities directly and
assigns others to various committees. The board is not normally
responsible for day-to-day management and operations
• However, the board is responsible for supervising the management
team. Board members responsibilities are :-
1. set highest standard for personal and professional integrity
2. ethical conduct
3. compliance with laws and regulations.
• News Corporation is a media conglomerate founded by Rupert Murdoch—
with recent annual revenue over $30 billion generated by its cable networks
(including Fox News Channel), film and television production subsidiaries,
and publishing units. In 2009, it came to light that News Corporation’s
British subsidiary, News International Ltd., publisher of the highly popular
Sunday tabloid paper, News of the World, used telephone hacking and
bribes to police to obtain stories about celebrities, sports figures,
politicians, and ordinary citizen’s. It was alleged that the practice was well
known to senior executives within the company. Based on strong negative
public reaction, News Corporation stopped publication of the News of the
World tabloid, and the British government blocked a major deal in which
News Corporation was to fully acquire the highly successful British
broadcasting company BskyB. These actions resulted in a $3 billion drop in
the stock value of News Corporation. In addition, the scandal led to the
arrest of over 60 former and current journalists, and many high-level
executives resigned from the firm. In a lawsuit filed in March 2011,
shareholders claimed lack of board oversight for failing to react to warning
signals that should have alerted them to the telephone hacking.
Establishing a Corporate Code of Ethics
• A code of conduct defines how a company’s
employees should act on a day-to-day basis.
• It reflects the organization’s daily operations,
core values and overall company culture
• every code of conduct is unique to the
organization it represents.
 Conducting Social Audits
• conduct regular social audits of their policies
and practices.
• In a social audit, an organization reviews how
well it is meeting its ethical and social
responsibility goals, and communicates its
new goals for the upcoming year.
 Intel CSR report 2011
Each year Intel prepares its “Corporate Responsibility Report,”
In 2011,Intel focused on goals in three primary areas:
(1) the environment—with targets set for global-warming
emissions, energy consumption, water use, chemical and solid
waste reduction, and product energy efficiency
(2) corporate governance—with goals to improve
transparency and strengthen ethics and compliance reporting
(3) social—with goals to improve the organizational health of
the company as measured by its own Organizational Health
Survey, to expand the number of supplier audits, and to
increase the number of community education programs
 Requiring Employees to Take Ethics
Training
• The ancient Greek philosophers believed that
personal convictions about right and wrong
behaviour could be improved through
education.
• organization’s code of ethics must be
promoted and continually communicated
within the organization, from top to bottom.
• Motorola, designer of wireless network equipment, cell phones,
and smartphones, is committed to a strong corporate ethics
training program to ensure that its employees conduct its business
with integrity. The focus of the training is to clarify corporate values
and policies and to encourage employees to report ethical concerns
via numerous reporting channels. Motorola investigates all
allegations of ethical misconduct, and it will take appropriate
disciplinary actions if a claim is proven—up to and including
dismissal of all involved employees. All salaried employees must
complete an online introduction to the ethics program every three
years. All managers in newly acquired businesses or high-risk
locations must take further classroom ethics training. Motorola
operates a 24-hour toll-free service for reporting any suspected
ethical concerns. In 2011, the firm introduced a Code of Business
Conduct in 10 languages and updated its suite of ethics training
courses to include new anticorruption and anti bribery training
 Including Ethical Criteria in Employee
Appraisals
• Performance
• Self improvement
• Successful completion of projects
• Initiatives
• Maintenance of good customer relation
 Think !
• You and your best friend both are working in a
same company and you are doing very well and
you are expecting a promotion in a week and
your friend is not serious about his job. He got so
many warnings from boss ,a small mistake and he
can lose his job and this morning he calls you at 9
a.m. at work and ask for a favor that he is having
trouble this morning and will be an hour late for
work. He ask you to mark his manual attendance .
And one thing for sure boss is on checking. What
would you do?