IMPORTANCE/ADVANTAGES/ FUNCTIONS/ROLE OF BUSINESS ETHICS
Meaning: - The term ethics is derived from the Greek word ‘ethos’, which means character. Ethics is a branch of social sciences, which deals with concepts such as right and wrong, good and bad, fair and unfair, just and unjust, legal and illegal, moral and immoral, proper and improper in respect of human actions.
Definition: -Thomas M. Garett defines “Business Ethics is primarily concerned with the relationship of business goals and techniques to specific human needs”.
The following points explain the need for and importance of Business Ethics:
1. Protection of Consumer Rights: -Consumer is the centre of all the business activities. In fact, business is essentially meant for satisfaction of consumer wants. Unfortunately, consumers are the most neglected and exploited group. The application of business ethics will help to confer and implement consumer rights.
2. Social Responsibility: -Business Ethics is a means of making business socially responsible for its actions. Exploitation of consumers, employees, discriminate use of natural resources, etc., is quite common in all type of business. Compliance to ethical standards will ensure (a) Protection of consumer rights (b) Public accountability (c) Protection of worker’s interests, and (d) Proper utilisation of natural resources.
3. Concept of Socialism: -The Concept of Socialism in business states that gains of a business must be shared by all and not just by the owner of business. Profit is a sign of business skill and talent. Profit is also a result of group efforts. Employees, shareholders, consumers, suppliers, and others contribute to the success of the business. Therefore, success should be shared by all concerned.
4. Interest of industry: - Business Ethics are necessary to safeguard the interests of the small scale business firms. The tendency of big business firms is always to dominate the market and drive away the small industries out of the market. Small scale units can establish their position and fight for their right if the industry follows a code of ethics.
5. Consumer movement: -The growth in consumer movement is also another important factor that has necessitated the need for business ethics. The spread of education and awareness among consumers about their rights has made the business community to conduct business on ethical principles.
6. Better Relations With the Society: -Business Ethics is needed to develop good relations between business and society. The relationship of business with society has various dimensions such as its relations with shareholders, employees, consumers, distributors, competitors and government.
7. Buyer’s market: - There has been a structural change in the concept of business. The concept of profit has been gradually taken over by consumer satisfaction. The large scale production and increased competitions in the market changed the business scene from a seller’s market to a buyer’s market.
8. Beneficial to Business and Society: - Ethics suggests what is good and bad, right and wrong, ethical and unethical, etc., to businessman. It also brings an element of honesty, sincerity, fairness, and human touch to business activities.