What are Business Ethics and why are they important?

D = Definition. Ethics is the study of what is generally accepted by society as being right or wrong.

I = Importance. It is important for a business to behave ethically – if it does not - that is – it behaves unethically – then
 its reputation with customers may be damaged….

• which may lead to reduced sales and falling profits…
• which may in the long term threaten the long term survival of the business
• which of course if the most important business objective!

E = Example These 2 articles give examples that can be used in an exam.

In this first article Ralph Norris, the Australian Commonwealth Bank’s CEO (Chief Executive Officer) has just received an 80% pay increase. His salary package of $AUD 16,000,000 (approx $USD 16 million) has received lots of criticism.

Is it ethical for businesses to pay such large salaries? Ist is it right for anyone to receive so much money, regardless of the success of the business?

In this second example, many of Chinas super-rich business bosses have been accused of being ‘stingy’ by not attending a Charity event with 2 of the worlds richest men – Bill Gates and Warren Buffet. Chinas richest man. What do you think of this argument from the article?

"Zong Qinghou, named by the Hurun Rich List as China's richest man with a $12bn fortune, told Phoenix television he had a previous engagement and said real philanthropy was creating wealth and jobs.’

‘"If I want to donate, I will; if I don't want to, I won't be persuaded to either. I don't think donating a lot of money is real philanthropy. It is just a way to get around the high inheritance tax and other taxes," he said.’