Page 167 - DMGT401Business Environment

Business Environment

Notes "With means a right end must come… if we take care of the cause the effect will take care
of itself. The realisation of the ideal is the effect. The means are the cause: attention to the
means is therefore is the great secret of life."

5. The Legal System: Laws represent a rough approximation of a society's ethical standards.
Thus, society regards activities such as hoarding, black marketing, cheating, giving wrong
information, etc., as unethical and there exist laws to curtail such activities. There are also
laws against exploitation of labour, sexual harassment, etc., and all these activities are
considered unethical.

6. Codes of Conduct: Steiner and Steiner identify three primary categories of such codes. The
first are company codes that work on common belief and are highly generalised.
The second are a company's operating policies that often contain an ethical dimension.
These include policies regarding customer complaints, hiring and other decisions. These
serve as a guide to one's conduct and also act as a shield by which the employee can protect
against unethical advances from those outside the firm.
Third, many professional and industry associations have developed their codes of ethics,
such as in Indian Association of Advertising Agencies developing a code of conduct for the
advertising business.

7.5.3 Ethics and Profits

One of the Business Round tables in the US had introduced a survey report on corporate ethics,
which included among others, the following pointers:

One of the myths about business is that there is a contradiction between ethics and profits. The
myths are thoroughly debunked by the attitudes and action of top managers in the companies
that contributed to this report. There is a deep conviction that a good reputation for fair and
honest business is a prime corporate asset that all employees should nurture with the greatest
care.
Ethics and profit go together. It may be possible that in the short run, an organisation steals an
advantage or good profits by unethical means. But ethics are the values that last. For instance, an
organisation may garner good sales initially by disseminating false messages about the product.
But it will not get repeat sales and will earn a bad name in the process.

Example: In India a few years back, TUFF shoes launched an advertisement featuring
Milind Soman and Madhu Sapre where both were naked, covered only by a snake and wearing
TUFF shoes. This advertisement gave them instant publicity and soon TUFF shoes became a
household name in India. But all this sleazy publicity was in vain as TUFF shoes failed to
generate much sales. In fact this advertisement earned a bad name for TUFF shoes and even after
many years, the company is struggling to obtain decent sales.
Take the case of Reliance Infocom that was launched in India with a big bang. The company
initially generated good sales as it adopted every sales gimmick, like frequent changes in price
and tariffs and frequent changes in policy. Even frequently changed its policy regarding its
distribution network, which resulted in losses to thousands of youth who had become their
distributors. All this gave them initial sales and finance but also a rotten image. This influenced
their sales and profits adversely.
By the late 1990s, the Indian automobile market was totally dominated by MNCs like Hyundai,
Daewoo, and Suzuki. At that time, Tata launched an indigenously developed car Indica and got
a good name from day one. Even when critics did not appreciate the product, Indians, strong
believers in Tata's ethics welcomed the product. This resulted in low expenditure in

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