Business Studies

Grade 12
Ethics and professionalism Notes

Define/Elaborate on the meaning of ethical behaviour.

 Refers to acting in ways consistent with what society and individuals think are
good values.
 Ethical behaviour is expected from every employee in the business.
 It means that the highest legal and moral standards are upheld when dealing
with stakeholders.
Give practical examples of ethical and unethical behaviour, e.g. using fair vs.
unfair advertising techniques.

Ethical business practices Unethical business practices

 Using fair advertising  Unfair advertising
 Clients and employees information  Pricing of goods in rural areas
are not disclosed/used for the benefit  Taxation/Tax evasion
of the business.  Starting a venture at the expense
 Business deals are conducted of someone else
openly.  Paying employees unfair wages
 Paying fair wages  Disobeying the law
 Operating within the law  Using bribery to gain business
 Ensuring that the environment is not  Engaging in illegal business
polluted. practices
 Not engaging in illegal business  Polluting the environment
practices
 Not using child labour
 Adopting codes of good ethical
practice.
 Establishing corporative social
responsibility initiatives.
 Encouraging employees to adopt
ethical behaviour.
 Treating all employees equally
 Shareholders and employees
personal interest and business
interest do not conflict with one
another.
Define/Elaborate on the meaning of professional behaviour.

• Refers to the ethical and skilled behaviour that are appropriate within a particular
work environment
• Professional behaviour entails to the specific work context
• Professional boards that dictate behaviours for people working within particular
professions

Give practical examples of professional and unprofessional behaviour, e.g.

good use of work time and abuse of work time.

Professional business practice Unprofessional business practice

 Using polite language to colleagues.  Using rude/impolite language
 Good use of work time  Abuse of work time.
 Keeping clients details confidential/Not  Discussing clients’
using clients’ information for personal information/using clients’
gain. information for personal gain.
 Treating all people the same.  Giving some people special
favours.
 Overstating the number of hours
worked.
 Unauthorised use of business
resources.

Outline the differences/Differentiate/Distinguish between ethical and professional behaviour

Professional behaviour/Professionalism Ethical behaviour/Ethics

 Refers to what is  Refers to the principles of right and
right/wrong/acceptable in a business wrong/acceptable in society
 Set of standards of expected behaviour  Conforms to a set of values that are
morally acceptable
 Applying a code of conduct of a  Forms part of a code of conduct to
profession or business guide employees to act ethically
 Focuses on developing a moral  Focuses on upholding the reputation
compass for decision making of a business/profession
 Includes guidelines on employees’  Involves following the principles of
appearance/communication/attitude/ right and wrong in business
responsibility, etc. activities/practices/dealings
Explain how businesses can apply the King Code principles of transparency,
accountability and responsibility for good corporate governance to improve
ethical business conduct.

Transparency
 Decisions/Actions must be clear to all stakeholders.
 Staffing and other processes should be open and transparent.
 Employees/Shareholders/Directors should be aware of the employment policies
of the business.
 Auditing and other reports must be accurate/ available to
shareholders/employees.
 Regular audits should be done to determine the effectiveness of the business.
 Business deals should be conducted openly so that there is no hint/sign of
dishonesty/corruption.
 Businesses should give details of shareholders' voting rights to them before/at
the Annual General Meeting (AGM).
 The board of directors must report on both the negative and positive impact of the
business on the community/environment.
 The board should ensure that the company's ethics are effectively implemented.

Accountability
 There must be regular communication between management and stakeholders.
 Company should appoint internal and external auditors to audit financial
statements.
 The board should ensure that the company's ethics are effectively implemented.
 Businesses should be accountable/ responsible for their decisions/actions.
 Businesses should present accurate annual reports to shareholders at the
Annual General Meeting (AGM).
 Top management should ensure that other levels of management are clear
about their roles and responsibilities to improve accountability.

Responsibility
 The business/ board should develop and implement programmes that should be
aimed at protecting the communities in which they operate.
 The business/ board should develop remedial programmes to protect the
environment for example, reduce air and water pollution.
Suggest/Recommend ways in which professional, responsible, ethical and
effective business practice should be conducted, e.g. payment of fair wages,
providing quality goods and services, not starting a business venture at
someone else's expense, etc.

 Businesses should treat all their employees equally, regardless of their

race/colour/age/gender/disability etc.
 Mission statement should include values of equality/respect.
 Treat workers with respect/dignity by recognising work well done/the value of
human capital
 Pay fair wages/salaries which is in line with the minimum requirements of the
BCEA/Remunerate employees for working overtime/during public holidays.
 All workers should have access to equal opportunities/positions/resources.
 Plan properly and put preventative measures in place.
 Ensure that employees work in a work environment that is conducive to safety/
fairness/ free from embarrassment.
 Refrain from starting a venture using other businesses' ideas that are protected
by law.
 Engage in environmental awareness programmes/Refrain from polluting the
environment, e.g. by legally disposing of toxic waste.
 Employers and employees need to comply with legislation with regard to equal
opportunities/ human rights in the workplace.
 Businesses should develop equity programmes/promote strategies to ensure
that all employees are treated equally regardless of status/rank/power.
 Training/Information/Business policies should include issues such as diversity/
discrimination/ harassment.
 Employers should respond swiftly and fairly to reported incidents of
discrimination in the workplace.
 Orders/Tasks should be given respectfully and allow the recipient/employee to
have a say in the manner in which the task should be performed.
Identify the following types of unethical business practices from given
scenarios/ statements: Unfair advertising and examples; Pricing of goods in
rural areas; Taxation/Tax evasion

Type of unethical/Unprofessional Examples

business practices
Sexual harassment -Manages who promise employees
promotions if they agree to have a
relationship with them.
Unauthorised use of workplace funds and -Employees who download music and
resources movies using the business’s
resources
-An employee who uses business
resources for his/her own personal
gain.
Abuse of work time -Making personal calls during work
hours.
-Taking extended lunch breaks
-Doing personal business during work
hours
Unfair advertising -Giving goods deceptive names/False
labelling.
-Selling second hand goods as new
goods.
-Exaggerating the merits of the
product/False promises
-Using fine print to conceal important
information.
-Criticising competitor's goods.
-Exploitations of children's lack of
understanding.
-Misuse of people with disabilities in
advertisements.
-Advertising that encourages
violence.
-Advertising goods at a very low price
to attract customers but when the
customer reaches the store the item
is no longer there/Bait and switch.
-Advertising a product showing
additional items, but do not clearly
state that these items are excluded.
Pricing of goods in rural areas -Inflating prices
-Charging higher for goods of inferior
quality in rural areas.
Taxation/Tax evasion -Businesses that do not declare all
their income to SARS.
-Falsifying the business financial
statements.
Explain how the below-stated types of unethical business practices pose
challenges to businesses.

Sexual harassment
 Manager promises an increase in salary/ a promotion/Quid pro quo harassment
in exchange for sexual favours.
 A violation of basic human rights that normally happen when someone in power
abuses his/her power/position, e.g. gesture/remark/action/suggestive behaviour
which victimises the worker.
 The affected party is normally reluctant to report the incident due to fear of
victimisation.
 Sexual harassment causes discomfort/humiliation and interferes with the job.

Unauthorised use of workplace funds and resources

 This form of fraud is the misuse of money without prior authorisation from a senior
manager.
 Fraud increases the cost of doing business/affects competition/discourages investors
when prices are increased to absorb the losses.
 Use of company assets for private use/personal gain.

Abuse of work time

 Employees abuse work time by arriving late/leaving early and taking longer lunch
breaks.
 Employees use working hours for personal gain.
 Abuse of work time decreases productivity and loss of profits.
 Businesses can lose customers and not meet work deadlines.

Unfair advertising
 The use of false or misleading statements in advertising leading to
misrepresentation of the concerned product, which may negatively affect
consumers.
 Advertising influences a buyer’s decision to purchase a product.
 Businesses can make unwise advertising choices when they are under pressure
to increase their profits.
 Unfair advertisements could be harmful to consumers.
 Some advertisements may be regarded as discriminatory because they
exclude/target some sections of the population.
Pricing of goods in rural areas
 Some businesses in the rural areas exploit their customers by adding much
more than necessary to their prices.
 Some consumers in rural areas have little economic power and are vulnerable to
exploitation.
 Business may form monopolies in rural areas and increase their prices
unilaterally.
 It may be common practice to pay higher prices for goods of inferior quality in
rural areas.
 Business may form monopolies in rural areas and increase their prices
unilaterally.

Taxation/Tax evasion
 The payment of tax reduces a business’s profit margin forcing some businesses
to evade tax.
 Many businesses and individuals do not declare all their income to SARS.
 The accountant may charge high fees for falsify financial statements.
 Businesses who evade tax may face prosecution and fines/sent to prison if found
guilty.
 Tax evasion may negatively impact on the business image.
 Businesses may lose key stakeholders if the act of tax evasion is reported.
 Businesses may not be familiar with the latest changes in tax legislation.
Identify the following types of unprofessional business practices from given
scenarios/ statements: Sexual harassment Unauthorised use of workplace
funds and resources Abuse of work time

Recommend/Suggest ways in which businesses could deal with above stated

types of unethical business practices.

Sexual harassment
 Implement internal complaints and disciplinary procedures.
 Educate employers on sexual harassment matters.
 Formulate a policy regarding sexual harassment.
 Create a good working environment where all employees' rights and dignity are
respected.
 Internal investigation should be made in order to determine the seriousness of the
harassment.
 Serious cases/matters on sexual harassment should be reported to the
appropriate institutions such as the South African Police Services (SAPS).
 Ensure compliance with the law/business code of conduct.

Unauthorised use of workplace funds and resources

 Conduct regular audits.
 Identify risk areas/ vulnerable areas
 Limit the number of employees having access to business funds/assets.
 Implement/Introduce fraud prevention strategies.
 Educate employees about the impact of fraud.
 Fraud prevention should be a collective responsibility of business and workers.
 Clear policies should be in place so that employees are aware of what is
considered to be fraud.
 Set up systems in the organisation for the reporting of fraud and corruption.

Abuse of work time

 Speak directly to those employees who abuse work time.
 Code of conduct/ethics should contain clear rules about abuse of work time.
 Conduct training on the contents of the code of conduct/ethics.
 Code of conduct/ethics should be signed by all employees so that they are aware
of its contents.
 Monitor employees to ensure that tasks are completed.
 Structure working hours in such a way that employees have free/flexible time for
personal matters.
 Create a culture of responsibility/strengthen team spirit in order for all employees
to feel responsible for what has to be achieved

Unfair advertising
 Consumers must report unfair advertisements to the Advertising Standards
Authority.
 Business should be encouraged to keep their advertising fair and in line with the
constitution.

Pricing of goods in rural areas

 A business may lobby with other businesses in the area to convince government
to improve infrastructure in the rural area.
 Charge fair/market related prices for goods and services.
 Avoid unethical business practices to attract customer loyalty.
 Investigate cost-effective ways of transporting products/Hire a large truck to
combine deliveries to shop-owners in the same area.
 Work together with suppliers to share delivery costs to remote rural areas.

Taxation/Tax evasion
 Submit all tax returns on time.
 Businesses should pay the correct amount of tax to SARS.
 Keep financial records honestly and accurately.
 Make sure that all financial records are checked and audited.