ETHICAL ISSUES IN FUNCTIONAL

AREAS
Module 4

WHAT IS ORG. FUNCTIONAL

AREA

FUNCTIO
NS
Marketin
g

HR

Productio
n

IT/Syste
ms

Finance

Ethics in

MARKETING

MARKETING
Marketingis the process of communicating
the value of a product to customers, for the
purpose of selling that product (goods or
services)

ETHICS IN MARKETING

Marketing ethics addresses principles and standards

that define acceptable conduct in the market place.
Unethical activities usually develop from the
pressure to meet performance objectives.
Marketing which goes beyond the mere provision of
information about (and access to) a product may
seek to manipulate our values and behavior.
Some obvious ethical issues in marketing involves
clear cut attempts to deceive or take advantage of a
situation

SOME UNFAIR MARKETING

PRACTICES
False and misleading presentation of
facts.
Deliberate omitting of required
information.
Implying a benefit that hardly exists.
Trade puffing and exaggerations
Opinions rather than facts Statements such as "this car is in good
shape" and "your wife will love this
watch" constitute puffing.

ETHICAL ISSUES IN MARKETING

FUNCTION
1. ETHICS IN MARKETING RESEARCH
Consumers are concerned about privacy, and Internet
has increased privacy concerns.
government also maintains a Do Not Call Registry to
prevent unwanted telemarketing.
2. ETHICS IN PRODUCT STRATEGY
Example: Package strategy.
Larger packages are more noticeable on the shelf.
Oddly sized packages make price comparison difficult.

3.ETHICS IN DISTRIBUTION
Manufacturers offers not getting passed on
Should a company distribute its products in marginally
profitable outlets that have no alternative source of supply?
4.ETHICS IN PROMOTION
Truth in advertising is the bedrock of ethics in promotion.
Marketing to children has come under increased scrutiny.
Marketing beer to college students, including through
providing promotional items such as shirts and hats, raises
ethical questions.
5.ETHICS IN PRICING
Artificial scarcity & Black marketing
Fixing a high price and charging less false impression

Ethical Issues & the

Marketing Mix
Product
Issues

Pricing
Issues

Customers
Promotion
Issues

Distribution
Issues

Ethics in

HUMAN RESOURCE

ETHICS IN HRM
The ethics of human resource
management (HRM) covers those
ethical issues arising around the
employer-employee
relationship,
such as the rights and duties owed
between employer and employee

HR Activities

HR Planning and Analysis

Equal Employment Opportunity
Staffing
HR Development
Compensation and Benefits
Health, Safety, and Security
Employee and Labor/Management
Relations

How HR Spends Its Time

What Organizations expect from

Employees

Commitment
Intelligent & hard work
Discipline
Loyalty
Maintaining confidentiality
Value addition

What Employees expect from

organizations
Non statutory benefits
Compensation
Collective bargaining
Whistle blowing
Privacy
Data Security
Psychological contract
Outplacement

Recruitment
Recruitment of kith and kin without assessing
abilities
Recruitment based on financial favours
Recruitment of relatives of other employees
Recruitment of under-qualified persons
Recruitment of over-qualified persons
Gender based recruitments
Employing child behavior
Giving less than minimum wages as fixed by
government.

Training
Arranging training for only pet employees
Getting outsiders to train at high costs when insiders
are available
Planning training programmes without assessing their
real need
Organizing training programmes during peak seasons,
upsetting the business rhythm.
Getting high profile trainers with expectations of a
reciprocal favour.
Training programmes without proper preparation just
to show achievements in the annual report.
Extending the duration of training programmes
Supplying outmoded training materials
Getting useless trainers as an obligation

Administration
Tampering with leave records of employees
Playing with employee records adverse
remarks in a few cases
Allow selective absenteeism on personal
considerations
Giving promotion letters to favourites earlier
than others (making him more senior)
Favourite supplier for office purchases
Favourite security agency
Favourite uniform suppliers
Unclean premises.

IR
IR Managers not averse to siding wherever there were
monetary benefits
Bargaining with the management till they want to be
seen as true in the eyes of workers
IR Managers felt they were a superior lot with great
powers and used this to recruit their known ones
Try to delay the solution as far as possible as their work
depended on IR disputes
Incite (Provoke) workers to go on strike.
Inducing Management/Workers to indulge in unhealthy
practices.
Pressurize workers and state their genuine demands as
not genuine
Divide and Rule
Frame stringent and complicated rules to keep the
conflicts going.

Ethics in

PRODUCTION

 This area of business ethics deals

with the duties of a company to
ensure that products and production
processes do not cause harm.

ETHICAL ISSUES IN
PRODUCTION
Defective, addictive and inherently dangerous products
and services (e.g. tobacco, alcohol, weapons, motor
vehicles, chemical manufacturing)
Ethical relations between the company and the
environment: pollution, environmental ethics, carbon
emissions trading
Ethical problems arising out of new technologies:
genetically modified food, mobile phone radiation and
health.
Product testing ethics: animal rights and animal testing,
use of economically disadvantaged groups (such as
students) as test objects.
Medical products duty to test adequately, side effects,
safety instructions, risk factors in financial products.
Substitutes for published ingredients

Ethics in

IT/SYSTEMS

Ethics and IT
Developments that took place in the last 50
years in the field of science is more than the
entire period before.
Transition from man tool machine
automation chip a progression that has
made the human race less and less human.
As a result of technological growth,
materialism took precedence over ethical
considerations and meeting the end through
any means became standards of society.

IT & SOCIETY
The use of information technology in
business has major impact on society, thus
raises serious ethical considerations in the
areas such as privacy,crime,health,workingcondition, inividuality,employment.

UNETHICAL PRACTISES
CRIME IN THE COMPUTER
MONEY THEFT
SERVICE THEFT - (bypassing) a utility meter so
that the true level of consumption is understated
DATA THEFT
MALICIOUS ACCESS
COMPUTER VIRUS
HEALTH ISSUES
CYBER ETHICS.
SOFTWARE OWNERSHIP.
CENSORSHIP.

Ethics in

FINANCE

ETHICS IN ACCOUNTANCY
Accounting is The process by which any business
keeps track of its Financial activities by
recordings its Debits and Credits and
balancing its accounts.
Accounting by its nature, is a system of
Principles applied to present the
Financial position of a business and the
results of its operations and cash flows..

ETHICAL ISSUES SURROUNDING

ACCOUNTING PRACTICES:
o Underreporting income
o Falsifying Documents
o Illegally evading income taxes
o Or otherwise engaging in Frauds
o Creative Accounting
Example- The accounting Fraud case of
Mr. Ramalinga Raju in Satyam
Computers

IN ORDER TO PREVENT SUCH ACCOUNTING

FRAUDULENT--

GAAP(Generally Accepted
Accounting Principles)
AICPA Code of Professional Conduct
(American Institute of CPAs)
Indian Accounting Standard

ETHICAL ISSUES IN FINANCIAL

MARKETS:
Ethical issues are related to savings and credit banks,
investment banks
finance companies and fund managers,
intermediaries and advisers,
insurance companies and
financial managers of large industrial
organizations.

STOCK MARKET FRAUD

The country has witnessed various stock market frauds by
brokers in collusion with corporate to cheat investors and fool
regulator SEBI. There were two major securities scam in the
recent past Harshad Mehta securities fraud and Ketan Parekh
scam.
Brokers pushed the prices of selected shares through artificial
trade to attract retail investors and than suddenly withdraw
from the trade. In several cases the shares of bogus and paper
companies were raised to unreasonable levels. Once the scandal
was exposed, the share prices collapsed resulting in huge loss to
investors, especially those who invested their money on rumour
without ascertaining the credentials of the company. Heard
mentality proved expensive for many. Having suffered huge
losses, few investors even committed suicide

ETHICAL ISSUES IN Merger &

Acquisition
o Adverse Effect on Competition in the
Market
o Anti competitive Business Practices
o Monopoly Business activities
o Forced M&A