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BBA 1st Year Business Ethics Gandhian Philosophy of Wealth Management Short Question Answer

Loyalty and Psychological Contract: What is psychological contract? In a employer- employee context – the psychological contract is, in essence, the set of economic and normative expectations developed mutually between an employer and an employee when he or she enters the organization. This contract, which the participants ground in trust, is a nebulous concept. Psychological contract is the bed pillar of ethics.

The meaning of the psychological contract is as follows:

(1) The employee expects fair compensation for work performed.

(2) The employee expects respect and dignity from the employer.

(3) The employee expects consistent and just evaluations.

(4) The employee expects continual employment in exchange for meritorious job performance.

(5) The employer expects loyalty from the employee.

(6) The employer expects its employee to guard its business secrets which the employee may be exposed to.

(7) The employer expects its employee to work towards benefit of the company – A production worker who has no role in marketing of the product is expected to promote the

company’s products when the Opportunity arises. These tenets of psychological contracts have to be kept in mind during strategic planning You might feel that downsizing of the organjsaj0 is the right strategic move to improve Profitability and think nothing before issuiflg Pink Slips the next day to employees who have been with you for last 20 years. Rest assured that even those who escaped the pink slips will start looking for a new job from the next day. Even their loyalty is no more with you. They will ditch you when you need them the most, during the boom in business they will walk up to your competitor for a small rise in the salaries.

Q.13. Why do you undersnd by ethics in advertising?

Ans. Ethics in Advertising: Advertising is about as ethical as the American public. About as ethical as you and your neighbours. About as selfish as you and your acquaintac5 It has about the same moral standards as the upper socioeconomic strata of society because it is created, approved and paid for by the upper echelons of modern u.s. society. I’ll modi to say that it is a little more ethical, a little more moral, than the upper economic strata of society Why? Because advertising lives in a fish bowl. It is the most visible of all commercial practices It has 200 million critics. And no business, no communication medium, no art form (or whatever you want to call advertising), no other enterprise has so many watchdogs. Morris Hite, quoted these lines in Adman: Morris Hite’s Methods for Winning the Ad Game, 1988.

So, like common public, Advertising too has its ethical values. Advertising communications may be artfiully presented facts with a dash of exaggerai0 and drama to make an impact, but the same are subseent to ethical principles In order to be consumerorieflted an advertisement will have to be truthl and ethical. It Should not mislead the consumers If it so happens and word does get ou the credibility is lost and the communication becomes ineffective, rather futile. Advertisement’s tth should be viewed from the consumers’ point of view, and not in the narrow legalistic frame in order to find a loophole and to get out of an irresponsible action. Many times a clear line of demarcation between truth and falsehood is difficult to establish. But the advertisement is as much judged by its impact as by its acceptance by the Consumers. What it promises must be there in the performance of the products. Advertisements should not be indecent and obscene As advertising is a social act, it must honour the traditional norms of social behaviour, and should not affront the moral senses of a society. Gambling or to encourage gambling is against ethical code. Endorsement of products by celebrities who are Opinion leaders is also sometimes criticized for spreading falsehood. Especially, if the word gets out that the celebrity has endorsed without actual personal experience, it can have a veiy detrimental effect on consumers in an informed society like US. But in a society of demigods Worshippers like India, it is the best known secret. We have seen the Bo1lood heart throbs attributing the secret ofthejr beauty to soaps they would never allow in their homes.

In order to enforce an ethical code, we in India now have Advertising Standards Council of India (ASCi). It is a non-profit organizaj set up by 43 founder members who are involved with advertising in one way or the other. It puts forward a regulating code. ASCI proposes to adjudicate on whether an adversement is offensive and its decision will be binding on its members. It proposeS to deal with government if there are any disputes.

Q.14. Can Profitability and morality coexist? Discuss.

Ans. Many believe that Business Ethics is a self contradicto phrase. But, far from it, the answer to this question is an emphatic YES and let us justi this resounding YES. Nobel Prize winner Friedman said, “There is one and only one social responsibility of business and that is to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engaged in open and free competition without deception or fraud”. This One statement says it all. There is no denying the fact that a business is no charity and

exists to earn profit. But profits should come in an honest way. There should be no deception or fraud in the pursuit of profits. Honest product at honest prices. Profit vs Honesty. A paradox? There are many such paradoxes which exist in real life and a fine balancing act is required in such situations. Give the customer honest prices through efficiency in production and give the shareholder bumper profits through productivity and growth in business rather than rip-off pricing. Honesty does not mean bad business. Adopting moral way of business does not mean surrendering profits. Often a profit opportunity surrendered in the short -run becomes the key to the bigger door of profits in the long-run. Moral practices in business create a new resource called Social Capital through “Trust”; trust of society, trust of customers, trust of suppliers and so on. This capital manifest profits in terms of customer loyalty and increased sales, lesser requirement for marketing effort, higher leverage in dealings, lesser employee turnover etc. We have a live example of co-existence of morality and profitability. Tata Sons, the most respected industry house of India, is a living example. Tatas have been known to be conducting their business with morality. They have been offering honest products at fairly reasonable prices. Job in a Tata company is supposed to be as safe as govt job. Rarely has any one ever been fired from a Tata company. Despite being the largest Indian corporate house for almost whole of the last century, hardly ever was it even suspected of any misdeed by the govt or the public or shareholders or employees and not even by competitors. Tatas have been at the forefront in establishing and financing various institutions of social and national relevance like Tata Institute of Fundamental Research, Tata Institute of Social Sciences, Tata Cancer Hospital, Indian Institute of Sciences and so on. Steel City Jamshedpur is a story of corporate indulgence in social matters like none other. Each of the Tata company has a commitment to adopt a social cause. Despite practising morality like probably no other company in India, profits of the company have constantly grown. Do we need any further justification that morality and profits can coexist? Success of Infosys and Wipro further justifies the maximum that profitability and morality can coexist.

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