1. Session 5 – Corporate Governance and Business Ethics
Sunil Budhiraja

2. Topics to be covered today
Business Ethics
Ethics: Acquisitions and mergers
Ethics of Consumer Production and Marketing

3. No such thing as a free drink!!!
Case Study
No such thing as a free drink!!!

4. Ethics and Business What is Ethics? Morality ?? Moral principles ??
Moral values ??
Norms??
Beliefs??

5. Definition
Ethics is concerned with the study of morality and the application of reason to elucidate (clarify) specific rules and principles that determines right or wrong for a given situation. These rules and principles are called as Ethical theories.

6. Golden Rule of Ethics
"Treat others only as you consent to being treated in the same situation."

7. Issues in Mergers and Acquisition
Lies
Coercion
Deception in negotiation
Maximizing of values without considering the other party’s need
Termination of employees

8. Acquisitions
Friendly and Unfriendly

9. Major Anti-takeover tactics
Poison Pills
Golden parachutes
Greenmail
Change of control covenants
People pill

10. Consumer Protection Consumer Information gap Pattern of information
Performance gap
Absence of informed participation
Poverty of consumers

11. Theories of Consumer Protection
Contractual View
Due Care
Social Costs view

12. Contractual View Duty to comply with the terms of the contract
Disclose the nature of the product
Should not misrepresent the nature of the product or agreement

13. Due Care Design – all possible features Production - quality
Information – should include labels, notices and instructions
Caveat emptor is important

14. Social Cost Theory
Manufacture should pay all cost of any injury sustained through any defect of the product.
Caveat vendor is important

15. Ethical issues in marketing
4 P’s

16. Product
Unethical product - Cigarette, Government's ban on tobacco advertising
Safety of the product - Pepsi and Coke Pesticide controversy, Cadbury chocolates
Product Updating- Availability of spare parts after updating products

17. Pricing Cross subsidizing – King Fisher airlines
High prices – taking advantage of patents- Pharma products
Arbitrary pricing – Cement companies
MRP- not the final price
JAAGO GRAHAK JAAGO

18. Place
Not selling products in some places – Private Telecom players in rural India
Avoid selling certain products in some specific places – Liquor near schools and places of worship

19. Promotion Exchange Offers - are they ethical?
Misleading claims - Cello Pens and Stationery Pvt. Ltd- Cello Maxriter pen is capable of writing words
Unfair practices – Airlines cancellation scheme

20. Contd..
Market research