Ethics

Question 1

What is the meaning of Ethics and why do ethical problems occur in a business?

Answer 1

The word Ethics is derived from the Greek word “Ethos” which means character or moral nature that a person exhibits. It is the branch of philosophy that defines the concepts of Right and Wrong, Good and Evil and Vice and Virtue. It is one of the fundamental subjects that influences a person’s decision-making. According to Potter Stewart, “Ethics is knowing the difference between What you have a right to do and What is right to do”.

Features of Ethics are:
- It is concerned with what is right or wrong in human behaviour.
- It is concerned with personal and professional codes of conduct. Thus, it prescribes what is ethical code of conduct and an unethical code of conduct is.
- It is derived from social values. Thus, it deals with moral choices we make with respect to society.
- Legality and Ethics do not necessarily match. It is unethical to not help an injured person in a road accident but it is not illegal.
- Ethical principles are universally accepted and practised. They can be applied to business, journalism, environment and politics and are practised in every country and society.
- There is no sharp difference between what is ethical and what is unethical behaviour. Therefore, it is difficult to take clear decisions in some situations while applying ethics.

Why do Ethical Problems occur in a business?

1. Relationships- The relationships between the owner and all the stakeholders of the business like employees, managers, vendors, suppliers and customers influence the working of a business. Negative relationships with stakeholders can create unethical behaviour within the organization which can further lead to a decrease in productivity. There should be a positive relationship between all the stakeholders of the business.
2. Conflict of Interests- conflict of interests between employees’ personal goals and the organization’s goals can cause unethical behaviour within the organization. Employees should give priority to organizational goals and the organization should set objectives keeping in mind the individual objectives of employees.
3. Policies- In some cases, managers and employees exhibit poor ethical behaviour because of poor ethical policies set by the organization. Unclear ethical policies set by the organization lead to poor decision-making. Businesses should set clear ethical policies with effective ethical principles that will lead to the growth of the organization.
4. Unethical Culture- Unethical Cultural practices like gender discrimination, unfriendly employee competition, abusive behaviour and harassment within an organisation leads to ethical problems. Businesses should have a set of values defining appropriate cultural behaviour that should be followed by every employee while working in the organization.
5. Nepotism- Nepotism in a business is hiring employees based on familiarity with the employee. The employee hired because of nepotism may not have the skills required for the job which will lead to poor performance and ethical problems. A company should only hire an employee based on his skills and experience and not on familiarity.
6. Favouritism- Management’s favouritism towards a particular employee causes an unfair atmosphere within the organization and causes distrust between other employees of the business. Every employee should be given equal opportunities.

Question 2

What are the various Ethical/Moral issues in businesses?

Answer 2

1- Ethical issues in Compliance
- Balancing legal obligations and Ethics. For example, A business which has a legal obligation to take customers’ data and share it with a third-party company is legally right but not ethical as it may take customers’ personal information.
- Businesses may face Unethical leadership due to the pressure of achieving targets and profitability goals. Leaders may force employees and practise unethical activities to achieve targets
- Businesses have to consider the interests of all stakeholders such as shareholders, employees, vendors and customers. The Interests of stakeholders sometimes do not match with other stakeholders, so businesses perform unethical practices to comply with the interests of each stakeholder
- Businesses operating in different countries cannot adopt the same ethical standards in every country because of cultural differences. It forces businesses to adopt ethical standards that comply with the cultural norms and beliefs of every country.

2- Ethical Issues in Finance
- Misleading financial reports released by the company to display financial soundness for deceiving investors, stakeholders or lenders
- Employees engage in Insider trading by taking the advantage of their company by receiving financial information before other investors
- Companies create shell companies to invest in their own shares for manipulating the share market and displaying fake growth in the share market
- Companies recommending investments to the clients for the sake of increasing their own revenue even if it causes loss for the clients
- Fake reimbursements by employees by using fake bills

3. Ethical Issues in Human Resource
   - Discrimination of employees based on their gender, age, qualification, religion, physical appearance etc.
   - The privacy of employees getting affected because the company uses sensitive information against what it was meant to be used
   - Harassment and Bullying faced by employees in the workplace which includes sexual harassment, verbal abuse and other forms of mistreatment
   - Unethical recruitment and retention practices by the company like hiring employees based on personal relationships and not based on skills
4. Ethical issues in Marketing
   - Unethical pricing practices like price gouging, hidden price, price manipulation etc
   - Deceptive advertisements such as showing inappropriate or misleading information about the product to increase sales
   - Unethical packaging practices such as not providing safety instructions on the package or poor packaging of products that damage the product
   - Promoting marketing activities that have a bad impact on the environment or increase carbon emission
   - Invasive marketing practices such as invading the personal space of people by incessant e-mails and sms or unsolicited phone calls or using personal data without permission
5. Ethical issues in Production
   • Production processes causing harmful impacts on the environment such as air pollution, water pollution, deforestation, carbon emission etc
   • Waste generated by the production process such as E-waste, medical waste, radioactive waste, debris etc
   • Unfair labour practices such as child labour, low wage, long working hours, unsafe working conditions and no security
   • Companies prioritizing profit over quality and condition of the product and manufacturing defective product

Question 3

What is Utilitarianism, Define “Act Utilitarianism” and “Rule Utilitarianism?

Answer 3

Utilitarianism theory was proposed by English philosopher Jeremy Bentham. He proposed “Act Utilitirainism” which includes “Greatest good for the greatest number”. This means that a decision is considered ethical even if it sacrifices someone’s happiness for the happiness of the maximum number of people. According to this theory, a decision made by a doctor to harvest the organs of a healthy patient to save the lives of five patients is considered an ethical decision. This theory focuses on the overall Pleasure and Pain that some action generates for the maximum number of people. Bentham proposed that we should preciously calculate how much pleasure and pain an action would cause in every situation and decide the best course of action accordingly.

John Stuart Mill further modified Jeremy Bentham’s theory of Utilitarianism. He proposed “Rule Utilitarianism”. He encouraged “Greatest good for the greatest people” but also proposed that this concept should be incorporated with rules that will prevent people from doing wrong. Mill said that the amount of pleasure and pain in every action cannot be measured and suggested taking actions that result in the best outcomes and turning those into rules.

Mill proposed that people should seek higher pleasures more than lower pleasures.
Lower Pleasures- include pleasures that stimulate a body and provide pleasure for a short duration for example smoking, drinking, sex etc.
Higher pleasures- include pleasures that stimulate intellectualism and the pleasures mind of a person. For example reading, writing, meditation etc.

Question 4

What is Corporate Governance? What are its principles?

Answer 4

Corporate Governance is a system by which companies are directed and controlled. It involves a set of relationships between the board of directors, shareholders, employees and other stakeholders. It is the responsibility of the board of directors to provide fair, transparent and efficient administration to all the stakeholders of the company.
The Principles of Corporate Governance are:

1- Responsibilities of the Board- Board of Directors are responsible for defining a clear aim and objective of the organization, setting rules & policies and constantly monitoring and supervising the organization.
2- Roles of Stakeholders- The Primary role of stakeholders like employees, suppliers and vendors is to help the organization meet its objectives by contributing their skills, expertise and knowledge and experience.
3- Rights and Equitable Treatment of Shareholders- Organizations should respect the rights and equal treatment of the shareholders. It should recognize voting rights, rights to inspect books & records, rights to participate and other rights to take action.
4- Transparency and Disclosure- There should be complete transparency about the flow of information in the organization. The management should disclose all the consequences and requirements of the policies and decisions before implementing them. Stakeholders should be transparent about all the internal issues and problems they are facing with the management. This leads to an increase in trust and confidence between the stakeholders and the board of directors.
5- Accountability- Both Management and Stakeholders should be accountable for their actions. This helps in identifying the cause of problems and taking preventive measures.

Question 5

What are the factors affecting corporate governance?

Answer 5

There are Internal and External factors that affect corporate governance. Internal factors are within the control of the organization while the organization has little or no control over external factors.
Internal Factors:
1- Objectives- Objectives set by the organization affects corporate governance. Unrealistic or unachievable objectives can affect the organization badly. If employees give priority to personal objectives over organizational objectives, organizational objectives will never be achieved.
2- Shareholders- Shareholders can influence the board of directors and affect the decision-making of the organization. They can pressure the board of directors to change policies and rules for their benefit.
3- Communication & Reporting- The flow of Communication taking place within the organization can affect corporate governance. How accurate, adequate and timely the information is flowing affects the communication.
4- Code of Conduct- The Code of Conduct are the set of rules that every employee has to follow to work in an organization. An extreme code of conduct can restrict employees to work freely in the organization and affect their productivity.

External Factors:
1- Legislation- The rules, policies and laws related to countries affect corporate governance. The legal system of a country gives an amount of freedom to corporate governance. If the legal system is strict, an organization cannot run smoothly.
2- Political system- The Type of government affects the corporate government. An autocratic government can influence the functioning of corporate governance. Whereas, the democratic government gives more freedom and independence to corporate governance.
3- Competition- Competition within a market forces companies to change their strategies of corporate governance. A company operating smoothly can be affected by new competition in the market that can pressurize the company to change its corporate strategies to sustain itself in the market.
4- Innovation- Innovation of new methods, technologies or ways of working can affect corporate governance. A company should keep evolving its corporate governance structure and strategies with time.

Question 6

What are the Mechanisms of Corporate governance?

Answer 6

Mechanisms of Corporate governance are the sub-systems that are used to control corporate governance. Various Mechanisms of corporate governance are:
Internal Mechanisms
1- Board of Directors- Board of directors are responsible for the overall functioning of the organization. They formulate rules & regulations for the basic functioning of the organization and Primary decision-making is taken by the board of directors.
2- Internal Stakeholders- Internal Stakeholders of the companies are employees, managers and admin staff responsible for executing the plans and objectives set by the board of directors. Every internal stakeholder work in coordination to achieve the goals of the organization.
3- Financial Statements- Financial statements are documents that provide information about the financial performance of the organization. Every organization presents their financial report on a monthly, quarterly or yearly basis. Financial statements are used by the organization to measure growth and take necessary actions. Investors in the company also seek financial reports to take investment decisions.
4- Remuneration- Remuneration is the mechanism of corporate governance that is used by companies to motivate employees. Remuneration includes salary, bonus, incentives etc. Without remuneration will not be motivated to do work.

External Mechanisms
1- Government- the rules, policies and standards are used by the government to influence corporate governance. The organization has no control over these mechanisms and they have to implement corporate governance according to government policies.
2- Regulators- Regulators are Regulating bodies appointed by the government for the smooth functioning of organizations. Regulators keep check on management policies and strategies for safeguarding stakeholders’ interests. In India, the Competition Commission of India (CII) works to ensure fair competition practices in the market.
3- Financial Institutions- Financial institutions like banks, non-banking financial institutions (NBFCs) and Insurance companies are the external mechanisms that affect corporate governance. Organizations take funding from these institutions for operation, infrastructure development and expansion.
4- Audit- Organizations appoint external auditors for risk assessment and to find loopholes in the organization. An Audit report provided by the auditors helps a company assess financial risks and various Operation problems. Thus, improving corporate governance by mitigating the risk factors.

Question 7

What is Communication and what are the steps involved in a communication process?

Answer 7

Communication is a means through which an individual understands another individual. It is a continuous process of exchanging verbal and non-verbal messages like information, thoughts, emotions and feelings through speech signals, writing and behaviour. According to the Greek philosopher Aristotle, Communication is means of persuasion to influence people for getting the desired effect. The steps involved in the Communication process are:

1- Idea formation- Idea formation is the first in the communication process. In this step, the sender forms the idea for the message he wants to deliver. The purpose of the idea is clearly defined and the idea should be formed keeping in mind who should be the receiver, what information should the receiver receives and what should the receiver do with the information.
2- Encoding- In the next step, the sender encodes the message in the form of words, symbols or gestures. The message should be encoded in a way that can be easily understood by the receiver. The sender should encode the message keeping in mind the communication and interpretation skills of the receiver.
3- Message Transmission- In the next step, the sender selects the Channels of Communication or medium by which the message will be transferred and then the message is transferred. The Channels of Communication can be Verbal, Non-Verbal, Written or Visual.
4- Decoding- When the receiver receives the message sent by the sender, he decodes the message as per his understanding. This is one of the most crucial stages of the communication process because if the information is not decoded correctly by the receiver, it can lead to misunderstandings and misinterpretations.
5- Feedback- Feedback is the final stage of the Communication process in which, the feedback is shared by the receiver. The purpose of the feedback is to make sure the information is understood as intended. Feedback is a shared responsibility between the sender and receiver because a sender can elicit feedback from the receiver by asking “Do you have any questions” and the Receiver can encourage the feedback process by giving a clear and timely reply.

The complexity of the communication process is that the message can be transmitted to more than one receiver and each receiver can interpret the message differently because of different perceptions and understandings which may even create confusion between the sender and the receivers. Communication should be done before completely understanding each and every consequence of the message.

Question 8

What are the Types of Communication?

Answer 8

1. Verbal Communication- Verbal Communication involves the exchange of information using words. It is further divided into two types:

a) Oral Communication- It involves the exchange of information using Spoken Words. Oral communication can be transferred through face-to-face conversation, video calls, telephonic conversation, voice messages etc. Oral communication is influenced by speed, tone, volume and clarity of words.
Advantages- Oral communication allows instant feedback on the words and can solve problems more quickly
Disadvantages- Oral communication demands a quick interpretation of the information. If the information is not quickly interpreted by the receiver, it may cause confusion and misunderstanding

              B) Written Communication- It involves the exchange of information using written words, symbols or signs. Written communication can be transferred through E-mails, letters, text messages or memos.  Advantages- A written communication can be edited or changed. It can be stored as a backup. It gives time for the receiver to completely interpret the message Disadvantages- It takes more time to compose a written message than an oral message and it does not provide instant feedback like in face-to-face communication.

2. Non-Verbal Communication- Non-Verbal communication involves the exchange of information without using words. It involves using facial expressions, gestures, posture, eye contact, proximity, use of environment etc. Non-verbal communication is used with the verbal-communication to emphasize the message exchange between the sender and receiver. Types of Non-verbal communication are:

a) Kinesics- The use of body language to communicate. It involves facial expressions, gestures, head nodding, posture, appearance
b) Oculesics- It is the subcategory of kinesics which involves communicating using eye contact and eye movements
c) Haptics- The use of touch to communicate is called haptics. It is used by both humans and animals to communicate
d) Chronemics- Chronemic is the way time is used to communicate the message. For example, people have to take an appointment for meeting a person with high status or superiority while a superior person can do not need to take an appointment to talk to his subordinates. This reflects the power and status of a person who uses time

Advantages- Non-verbal communication like smiling, crying, touching and anger is universal and can be understood in all parts of the world. Non-verbal communication strengthen a first impression which is very important in engaging in further communication with someone.
Disadvantages- Non-verbal communication is ambiguous and lacks clarity or explanation which can even lead to misunderstanding and misinterpretation. Non-verbal communication cannot be stored and kept as a record like Verbal communication

Question 9

What are the types of communication based on Direction?

Answer 9

1. Downward Communication- Downward communication from the top level of an organization to the bottom level. It involves any communication that is being transferred from a person with a higher rank to a person with a lower rank in an organization. Examples of downward communication are orders, instructions, rules, policies, publications, circulars and letters to employees
2. Upward Communication- Upward Communication is just the opposite of Downward Communication. In upward communication, the communication flows from the bottom level and up to the topmost level in an organization. It involves any communication that flows from a person with a lower rank in an organization to a person with a higher rank.
3. Lateral Communication/Horizontal Communication- Lateral communication is that in which communication flows between people with the same level of the organization. It involves communication between peers, managers and employees of different departments, employees of different departments and managers of different departments.
4. Diagonal or Crosswire Communication- It involves communication taking between people who are neither in the same department nor at the same level in an organization. An example of Diagonal communication is communication between a manager and employees of his superior department.

Question 10

What are the Barriers to Communication and How to overcome barriers to communication?

Answer 10

Barriers to communication mean obstacles that hinder the effectiveness of communication at some stage in the communication process. Barriers collectively or individually affect the effectiveness of communication. Barriers either prevent the whole communication or incorrect the meaning of the communication. Barriers to communication can be divided into four categories:

1. Semantic Barriers- Semantic means something that is related to a language or logic. It is concerned with the problems in the process of coding and decoding messages into words or impressions. Examples of Semantic Barriers are Symbols with different meanings, badly expressed messages, technical jargon, assumptions, faulty translation and decoding of gestures.
2. Psychological Barriers- Psychological barriers are those barriers that are caused due to emotional state of a speaker or receiver. If a speaker is anxious or has low-self esteem then he would not be able to deliver the message properly while if the receiver is angry, then he would not be able to understand the true meaning of the message. Some major causes of psychological barriers are premature evaluation, inattention, resentment, distrust from the speaker or lack of interest.
3. Organizational Barriers- Organizational barriers are those barriers that are caused due to certain prescriptions prescribed by the organization about how the work should be performed. These prescriptions are not conducive to the flow of communication. Some factors that can act as a barrier to communication are policies related to communication, rules & regulations, status, complex organizational structure and lack of communication facilities
4. Personal Barriers- Personal barriers are concerned with the internal reasons of the sender or receiver. It includes fear of challenge to authority, lack of confidence in subordinates, lack of awareness, lack of incentives and unwillingness to communicate.
5. Physical Barriers- Physical barriers are related to physical objects or things that cause interference in communication like faulty or outdated equipment, inadequate staff availability, background noise and extreme weather condition.

Overcoming Barriers to Communication
One can overcome the barriers to communication by:

1. Clarity of Idea- Idea formation is the first step in the communication process. If the speaker does not have clarity about the idea that he will communicate, then he will not be able to express himself properly. The speaker should have concrete clarity and a clearly defined purpose for the idea before communicating the message
2. Empathy- There should be empathy in the process of communication. The speaker should look at the problems from the receiver’s point of view and keep himself in his shoes to communicate the message more efficiently.
3. Two-way communication- The communication between a subordinate and superior should be two-way communication. The superior should not be the only one who is communicating and the subordinate should be given an equal chance to reply and give his opinions. Two-way communication allows helps in finding the loopholes between the communication process of the speaker and receiver.
4. Appropriate Language- The language used in communication should be understandable by the receiver. The speaker should avoid using too many technical terms and jargon which are not familiar to the receiver. The message should be communicated by using the language which is familiar to the receiver
5. Concise Information- The information exchanged in communication should be brief and concise. Unnecessary information should be avoided in communication because it can lead to unnecessary problems and confusion. The speaker should also avoid sending a lengthy message because the receiver may lose track of the information and lose interest in the topic.
6. Good Listening- The communicator should be a good listener and should listen to the other speaker carefully and avoid interrupting him. Good listening can help the communicator in finding additional information that may be useful in solving the problem.
7. Supporting words with Actions- The speaker should also emphasize his message by delivering some action related to the message. For example, while explaining the law of gravity, the speaker should show a demonstration by dropping a pen from a certain height. The Use of actions emphasizes the message and helps the receivers better understand the message.

Question 11

What is the role of Information Technology in Communication?

Answer 11

Communication is a means through which two or more people interact and understand each other. It is a continuous process of exchanging verbal and non-verbal messages like information, thoughts, emotions and opinions through speech signals, writings or behaviour. The use of information technology (IT) in communication means using technological tools like e-mail, text messages, telephone and the internet to exchange information.

Information technology plays a pivotal role in the communication process. It has completely revolutionized and made communication more convenient because information can now be accessed and transferred more quickly and to any part of the world through the internet. Although IT-based communication is not as effective in providing clarity of information as face-to-face communication, it is now very reliant on IT as more than 90% of businesses use some IT tools to communicate. Information technology has eased and strengthened the communication of businesses through e-mails and video conferencing. Information technology allows important communication to be stored and kept as a record for future use. It has revolutionized the education system as knowledge can now be shared easily throughout the world and students can learn almost everything with the use of the internet. The literacy rate has improved tremendously since the advent of communication technology. The government also use information technology to communicate important information like policies, budget, schemes and plans. Some important roles of Information technology in communication are:
* Improves communication in the Education system
* Allows universal communication
* Allows to communicate with multiple sources
* Removes the linguistic barriers to communication between two or more countries
* Saves time in communication

Despite having several benefits, the use of Information technology in communication has its disadvantages. The advent of information technology has enabled the emergence of cybercrime and cyber frauds which has caused a serious threat to the privacy of communication. Valuable communication between two people can be easily accessed through the wrong use of information technology. It has also become easy to deceive people by using deceitful IT tools. Information Technology can also be used to hide and mispresent the truth of the communication. The authenticity of communication is another issue that IT has brought because the emergence and innovation of IT in communication have created excessive availability of information so it is sometimes hard to identify the right source of communication to rely upon.

However, IT for communication is a vital tool if used correctly. Communication technology can solve various problems related to communication in the area of business, education, economic development, poverty alleviation and sustainable development. Communication technology should be tailored in such a way that it cannot be used as a deceitful tool. Communication technology is still evolving and no one knows how far will it go

Question 12

What is Communication Channel?

Answer 12

A communication channel is a medium or means through which information is transferred between a sender and a receiver. There are various types of communication channels that vary in “information richness”. Information richness means the understanding of the information a communication channel provides. Types of communication channels are:
a) Face to Face conversation, Video call
b) Telephonic conversation
c) Voice message
d) E-mails, Text message
e) Memos, letters etc.
Face to Face conversation and video conferencing have high information richness because it involves gestures, facial expressions, voice tone etc. While communication channels like formal reports and letters have low information richness. The sender should select a communication channel based on the nature of the message. If a message is straightforward, recurrent and less ambiguous, then the sender should use communication channels that are low in information richness like E-mail, text messages and letters. If the nature of the message is complicated, ambiguous and has a potential for misunderstanding, then the sender should use communication channels with high information richness like Face to Face conversation and
Video call.