Business Ethics
A topic from Unit 2 | An Entrepreneur | Class 11
What are Ethics?
Ethics are rules about what is right and wrong. They guide how people should behave in a fair, honest, and kind way. For example, ethics tell us that it is wrong to steal or lie, and right to be honest and respectful.
Business ethics refers to the rules and principles that guide a business’s behavior regarding potentially controversial issues, such as corporate governance, insider trading, bribery, discrimination, corporate social responsibility, and fiduciary responsibilities.
Corporate Governance
Corporate governance refers to the system of rules, practices, and processes by which a company is directed and controlled. It defines who makes decisions, how those decisions are made, and who is accountable. For Example: If a company has a strong board of directors that keeps a check on the CEO’s decisions and ensures financial reports are accurate, it is practicing good corporate governance.
Insider Thinking
Insider Trading: Insider trading happens when someone buys or sells a company’s stock using secret information that the public doesn’t know yet. This is unfair because they have an advantage over other investors who don’t have that information. For example, if an employee knows that their company is about to announce a big profit or loss, and they buy or sell shares before the news is public, that is insider trading
Fiduciary Responsibilities
Fiduciary Responsibilities: Fiduciary responsibilities are the legal and ethical duties that a person or group (like company directors or managers) has to act in the best interest of another party (like shareholders or clients). For Example: A company’s board of directors has fiduciary responsibilities to the shareholders. They must manage the company in a way that benefits the shareholders, not just themselves.
Importance of Ethics in Business for Long-Term Success
As entrepreneurs become successful, they must remember that lasting success comes from following ethical business practices. Some important ethics that every business must follow are:
a) Giving customers good quality products and the right amount of goods they pay for.
b) Thinking about environmental protection while making products.
c) Paying workers fair and correct wages.
d) Not using child labor in their business.
e) Using natural resources wisely without wasting them.
