

Business Studies Grade 12


Topic 3: Ethics and Professionalism

INTRODUCTION:
o Ethics refers to conduct we perceive as right and wrong.
o Business ethics refers to accepted principles of right and wrong
that direct the behaviour of business people, employers and
employees.
o Business ethics involve:
• Corporate social responsibility.
• Issues regarding the rights and duties of a company and its
shareholders.
• Issues concerning relations between different companies, e.g.
takeovers and industrial espionage.
• Leadership issues, e.g. corporate governance.
• Political contributions made by business enterprises.
• The misuse of corporate ethics policies as marketing
instruments.

ETHICAL BEHAVIOUR AND ETHICAL BUSINESS PRACTICE:
o Ethical behaviour goes beyond obeying laws, rules and
o
o
o
o
regulations and involves doing the right thing.
In simple terms, ethics means the moral principles that serve
as a guide between right and wrong.
Ethical business practices refer to honest when doing
business, safety in the workplace and social and
environmental issues, for example.
It should also be borne in mind that what is ethically for one
culture / population group it is unethical for another group.
Ethical codes have been developed for industries, companies,
managers and employees because the cost of white collar
crime is high – both for businesses and society.

ETHICAL BEHAVIOUR AND ETHICAL BUSINESS PRACTICE:
o A code of ethics is a document which explains a business’ values
and principles.
o Businesses should have a strict code of ethics for their
employees and this code must be strictly enforced.
o White collar crime refers to crimes such as fraud and money
laundering.
o The nature of ethical decisions and actions can be measured
against the following questions:
• Do the decision / action comply with the company’s code of
ethics?
• Are the decision / action within the framework of the law?
• Are the decision / action fair to the company’s stakeholders?
• Do I feel positive about my decision / action?


ETHICAL BEHAVIOUR AND ETHICAL BUSINESS PRACTICE:
The King Code (King III)
o Business entities should act as responsible corporate citizens.
o But issues like ethics and corruption challenge responsible
o
o
o
o
citizenship.
The King Code of corporate governance provides a framework for
dealing with issues such as corporate governance, ethics and
corruption.
Corporate governance refers to the way in which a company is
governed and it explains the relationship between the company and
its stakeholders (e.g. shareholders, customers, directors, managers)
The Code was developed by Judge Mervyn King and the third
version of the King Code (King III) was released early in 2009.
Retired Judge Mervyn King was chairman of the first committee on
Corporate Governance in July 1993.


ETHICAL BEHAVIOUR AND ETHICAL BUSINESS PRACTICE:
The King Code (King III)
o The Code applies to all entities.
o The reason for the development and implementation of the Code
was the occurrence of corruption in businesses.
o King III focuses on:
•
•
•
•
•
•
•
•
Responsibility
Accountability
Discipline
Fairness
Leadership
Independence
Transparency
Social responsibility


ETHICAL BEHAVIOUR AND ETHICAL BUSINESS PRACTICE:
The King Code (King III)
o The Code provides detail on:
• The boards and directors: role, composition, appointment
process, director development, remuneration of directors.
• Audit committees
• Risk management
• Managing stakeholder relationships.
• Internal audits
• Integrated sustainability reporting and disclosure
• Compliance with laws, regulations, rules and standards.
• Compliance and enforcement
• Fundamental and affected transactions


ETHICAL AND UNETHICAL BUSINESS PRACTICE:
Criteria of ethical and professional behaviour
o Businesses are operating in an ethical and professional
manner if the following criteria are met:
The business must create benefits for society.
The business must be sustainable.
The business must not be harmful to society.
Business operations must take place within the
boundaries of the law.
• Business operations must be carried out responsibly.
•
•
•
•


ETHICAL AND UNETHICAL BUSINESS PRACTICE:
Unethical business practices
o Unethical business practice does not comply with the
above criteria.
o Examples of unethical business practice includes:
BUSINES
PRACTICE:
Advertising
UNETHICAL:
Unfair advertising refers to
practices like exaggerating the
abilities of a product, or
marketing second-hand goods
as new goods. It implies that
consumers are being misled on
purpose.
ETHICAL:
Fair advertising implies that a
product is advertised for what it
really is.


ETHICAL AND UNETHICAL BUSINESS PRACTICE:
Unethical business practices
o Examples of unethical business practice includes:
BUSINES
PRACTICE:
Selecting,
appointing and
promoting
employees
UNETHICAL:
Nepotism – appointing or
promoting family members even
if they are not best qualified for
a job.
ETHICAL:
Selecting and appointing
employees based on fair
selection criteria such as
qualifications, skills and
experience


ETHICAL AND UNETHICAL BUSINESS PRACTICE:
Unethical business practices
o Examples of unethical business practice includes:
BUSINES
PRACTICE:
Pricing
UNETHICAL:
Price fixing – competitors agree
to sell their products at the
same prices. Usually
competitors agree on selling
goods at a high price to secure
maximum profit.
ETHICAL:
Determining prices of goods by
taking into account market
related factors like supply,
demand and the state of the
economy.


ETHICAL AND UNETHICAL BUSINESS PRACTICE:
Unethical business practices
o Examples of unethical business practice includes:
BUSINES
PRACTICE:
UNETHICAL:
ETHICAL:
Applying for a
tender
Bribing officials to ensure a
tender.
Applying for a tender in the
prescribed manner by meeting
deadlines and tender
requirements.
Dealing with
waste
Dumping waste in places where
it is not permitted, for example
in a river.
All companies generate waste in
their operations. This waste
should be dealt with and
disposed of responsibly and
legally.


ETHICAL AND UNETHICAL BUSINESS PRACTICE:
More examples of ETHICAL and UNETHICAL behaviour
Examples of ETHICAL behaviour:
• Objective and impartial action.
•
•
•
•
•
•
•
Transparency
Confidentiality of information.
Caring for the environment.
Avoid conflicts of interest.
Stay within legal provisions.
Committed and responsible.
Take reasonable steps to ensure that employees behave
correctly, etc.


ETHICAL AND UNETHICAL BUSINESS PRACTICE:
More examples of ETHICAL and UNETHICAL behaviour
Examples of UNETHICAL behaviour:
• Dishonesty, fraud and lack of transparency: for example:
the truth about the origin of the product is fabricated,
forged products are marketed under a well-known brand,
not honest when information is provided.
• Maximum profit at the expense of customers: price of
products continues to rise while the purchase price was
reduced.
• Falsification of documents: ‘creative accounting’ to keep
shareholders happy or to evade income taxes.
• Infringement on other people’s privacy: use of confidential
information of stakeholders for personal benefits.


ETHICAL AND UNETHICAL BUSINESS PRACTICE:
More examples of ETHICAL and UNETHICAL behaviour
Examples of UNETHICAL behaviour:
• Sexual discrimination: favouring certain genders in the
appointment of employees to fill vacant positions.
• Business espionage: illegally obtain information about the
business of a competitor or new products developed by
competitors.
• Emotional manipulation of people: encourage people to
buy products now because a scarcity in the future will be
encountered or that prices will be increased.
• Tax evasion: do not declare all income that the business
has earned, etc.
• Bribery: e.g. pay someone or give the person an asset
such as a vehicle to receive certain favours in return.

THE DIFFERENCE BETWEEN ETHICS AND PROFESSIONALISM:
ETHICS:
• To do the right thing.
PROFESSIONALISM:
• Certain behaviour expected from a
professional job.

PROFESSIONAL AND UNPROFESSIONAL BUSINESS PRACTICES:
o A professional person is someone who is paid to perform
specialised tasks, e.g. doctors, pharmacists.
o Nowadays, the term is applicable to a broader career
span to include highly qualified professions and skills e.g.
professional artists, football and rugby players, etc.
o Professional business practice describes appropriate
behaviour for an occupation.
o Doctors, accountants and teachers, for example, all have
their own rules of professional conduct.
o Professional behaviour involves doing what you are
supposed to do while you are at work.

PROFESSIONAL AND UNPROFESSIONAL BUSINESS PRACTICES:
o Criteria for professionals:
• Exceptional and specialised knowledge in the professional field
• Excellent skills in the profession
• Good quality performance
• High standards of professional ethics, behaviour and work
activities
• Good motivation and work moral
• Master in his / her area
o Any person can be professional in his / her work. It is no
longer just about qualifications and university degrees,
but also about hard work, honesty, attitude and values
and social responsibility.
o Work should be dealt with, with pride and dedication to
maintain high standards of performance.

PROFESSIONAL AND UNPROFESSIONAL BUSINESS PRACTICES:
o Examples of professional and unprofessional behaviour:
BEHAVIOUR:
Use of work time
PROFESSIONAL:
Appropriate use of work time
involves working productively
during the time an employee
spends at work.
UNPROFESSIONAL:
Abusing work time for
personal use, e.g. making
personal telephone calls,
wasting time, spending hours
surfing the internet on the
employer’s expense.

PROFESSIONAL AND UNPROFESSIONAL BUSINESS PRACTICES:
o
Examples of professional and unprofessional behaviour:
BEHAVIOUR:
PROFESSIONAL:
UNPROFESSIONAL:
Dealing with clients
and customers
Be honest and realistic.
Refrain from saying only what
a client or customer wants to
her, but say things as they are.
Overpromising – making
promises you know you won’t
be able to keep.
Dress
Dress appropriately, especially
when dealing with clients or
customers.
Avoid inappropriate dress, e.g.
clothes that are to casual for
work – people won’t take you
seriously
Being on time
Plan your time so that you are
always on time. Arriving on
time shows respect for other
people’s time.
Being late for appointments
shows lack of respect for
other people’s time.
Conduct towards
colleagues and
employees
Treat employees and
colleagues with respect.
Avoid gossiping at the office.

PROFESSIONAL AND UNPROFESSIONAL BUSINESS PRACTICES:
o Examples of professional and unprofessional behaviour:
BEHAVIOUR:
Pursuing personal
gain at the
employer’s expense
PROFESSIONAL:
Everything in an employer’s
office should be used for work
purposes.
UNPROFESSIONAL:
For example, using and
employer’s computer and
internet service to trade
shares while you are
supposed to be working.

PROFESSIONAL AND UNPROFESSIONAL BUSINESS PRACTICES:
o More examples of unprofessional behaviour:
• Professional misconduct on social media / websites /
blogs, etc.
• Discuss work problems with other people in person or
through on-line talks.
• Hate speech.
• Use of foul language.
• Rudeness.
• Poor telephone etiquette

PROFESSIONAL AND UNPROFESSIONAL BUSINESS PRACTICES:
o Principles for professional behaviour:
PRINCIPLE:
EXPLANATION:
Respect
Respect the rights of others and the image of the profession /
business.
Integrity
Honest behaviour within the law and the norms of the profession /
business.
Competence
Apply skills to the benefit of the business, community and
environment.
Confidentiality
Do not submit customer information to anyone else or use it for own
gain.
Objectivity
Act objectively without bias and prejudice but fair towards others.
Development
Try to continuously improve their own skills and encourage others to
do the same.

THE RELATIONSHIP BETWEEN ETHICAL AND PROFESSIONAL BEHAVIOUR:
o Personal ethics refers to an individual’s conscience, while
professional ethics refers to the adherence to a
professional code.
o The two roles can sometimes be in conflict with each
other:
An auditor audited his friend’s books. It is found that the accounting was irregular and
there was tax evasion over a period of time. His personal ethics will be loyalty to his
friend but professional ethics require him to report the irregularity.
o The difference between ethical and professional
behaviour is based on cultural, religious and community
norms.

THE RELATIONSHIP BETWEEN ETHICAL AND PROFESSIONAL BEHAVIOUR:
ETHICAL BEHAVIOUR:
PROFESSIONAL BEHAVIOUR:
• Refers to a set of values that are
morally acceptable in society.
• A set of desired practices, e.g. treating
people with respect.
• Businesses develop their own codes of
ethics for best practice.
• Specific occupational groups have
developed their own codes of
professionalism.

THE RELATIONSHIP BETWEEN ETHICAL AND PROFESSIONAL BEHAVIOUR:
ETHICAL BEHAVIOUR:
• Ethical conduct is a pre-requisite for
being professional.
PROFESSIONAL BEHAVIOUR:
• Being professional means:
 Demonstrating appropriate behaviour
towards colleagues and clients or
customers.
 Performing tasks to the best of one’s
abilities.
 Not pursuing personal agendas as the
company’s expense.
 Representing your employer with
dignity.
 Keeping work-related promises.

THE RELATIONSHIP BETWEEN ETHICAL AND PROFESSIONAL BEHAVIOUR:
o The link between ethical behaviour and professionalism is
clear.
o Unethical behaviour almost certainly also constitutes
unprofessional behaviour.
o However, being unprofessional doesn’t always involve unethical
behaviour, for example:
BEHAVIOUR:
UNETHICAL:
UNPROFESSIONAL:
Stealing money from an employer.
√
√
Arriving late for an appointment.
x
√

WAYS IN WHICH RESPONSIBLE, ETHICAL AND EFFECTIVE BUSINESS PRACTICES SHOULD BE CONDUCTED?:
o Although the main purpose of business is to make profits for
the owner(s) / shareholders, there is increasing pressure on
businesses to provide professional, ethical and responsible
business practices.
o It requires that businesses always have to find ways to strike a
balance between profit and the application of ethical and
professional business practices.
o The provisions of the King Code should be applied.


WAYS IN WHICH RESPONSIBLE, ETHICAL AND EFFECTIVE BUSINESS PRACTICES SHOULD BE CONDUCTED?:
Not starting a venture at the expense of someone else
o An enterprise should not exist at the detriment of employees,
the community or the environment.
o The enterprise should make a positive contribution towards
alleviating poverty, creating employment and uplifting society.
o The management team may not take unnecessary risks with
investors’ money. E.g. directors of companies should use the
capital invested by shareholders in the company, wisely and
transparently.
o Examples of this unprofessional business practice were Master
Bond in the nineties and Fidentia in the 2000s.


WAYS IN WHICH RESPONSIBLE, ETHICAL AND EFFECTIVE BUSINESS PRACTICES SHOULD BE CONDUCTED?:
Not starting a venture at the expense of someone else
o Master Bond, as a business, stole over R600 million of
pensioners’ savings and retirement money invested in the
business. This business pretended that they were a registered
bank, whose deposits from pensioners are protected by the SA
Reserve Bank.
• They received deposits as investment, especially from pensioners and
these deposits would be used to buy real estate on which dwellings and
shops would be built.
• Most of these developments had never existed and some of the land
Master Bond indicated they have bought was in the sea and not on land.
• Documents were falsified to indicate that it seems that the deposits
(investments) were used to develop property.
• While the investors lost their money, the owners and managers of Master
Bond lived in luxury

WAYS IN WHICH RESPONSIBLE, ETHICAL AND EFFECTIVE BUSINESS PRACTICES SHOULD BE CONDUCTED?:

Not starting a venture at the expense of someone else
o In the Fidentia scandal, the owner and executive management of
Fidentia took R694 million form the pension fund of the “Living
Hands – trust” for widows and orphans to reinvest it.
• While the vulnerable persons (widows and orphans) were waiting for
monthly payments (interest) on the investment, the executive
management of Fidentia never reinvested the money, but it was used to
pay themselves huge salaries.

WAYS IN WHICH RESPONSIBLE, ETHICAL AND EFFECTIVE BUSINESS PRACTICES SHOULD BE CONDUCTED?:

Payment of fair wages
o Employees must be compensated for their contribution towards the enterprise.
o The efforts of employees contribute to the enterprise’s profit and employees
o
o
o
o
o
o
should be compensated accordingly.
The salaries of executives and employees should be in proportion to the position
the employee held.
In some businesses (such as Master Bond and Fidentia) the executives received
exorbitant salaries while employees received meagre salaries.
Employees may not be exploited by giving them minimum salaries just because
jobs are scarce and that they feel that they need to work for a wage / salary that
the employer offer.
Compensation and working conditions may not be weaker than the BCEA
specified for the specific industry.
Provision must be made for fair performance appraisal and promotion
possibilities. This appraisal should be agreed between the employer and
employee. The evaluation of ethical behaviour should be part of the performance
appraisal system.
Nepotism should be avoided.

WAYS IN WHICH RESPONSIBLE, ETHICAL AND EFFECTIVE BUSINESS PRACTICES SHOULD BE CONDUCTED?:

Regular payment of tax
o Legislation compels businesses and individuals that generate
o
o
o
o
o
income, to pay tax.
“Creative accounting” where some income is not recorded,
may not e applied as business practice “.
If people or businesses evade tax, it is unfair to all people and
business enterprises that regularly pay tax.
Tax returns should be submitted in time (before the annual
deadline) at the South African Revenue Service (SARS).
These returns must have a fair statement of revenue and
expenditure.
Information technology may not be used to manipulate income
or to make transactions’ data to occur complex in order to
make inspection difficult.


WAYS IN WHICH RESPONSIBLE, ETHICAL AND EFFECTIVE BUSINESS PRACTICES SHOULD BE CONDUCTED?:
Regular payment of tax
o Tax officers should under no circumstances be bribed to
accept incorrect information.
o In cases where the tax officer suggests that a bribe will be
accepted for incorrect tax information, that officer must be
reported to SARS.
o Tax money is used to the advantage of everybody.
o Tax money is applied for the benefit of all and to keep society
functioning, e.g.
•
•
•
•
•
Funding the police service
Building and maintaining prisons
Building public hospitals
Maintaining and building new roads
Education

WAYS IN WHICH RESPONSIBLE, ETHICAL AND EFFECTIVE BUSINESS PRACTICES SHOULD BE CONDUCTED?:

Use reliable / honest accountants / auditors with good reputation
o No business can afford to make use of accountants / auditors
who are known for their unethical and unprofessional
practices.
o The bookkeepers of Master Bond and Fidentia has been guilty
of “creative accounting” by covering large personal loans to
executives because it is actually a way of stealing the money.


WAYS IN WHICH RESPONSIBLE, ETHICAL AND EFFECTIVE BUSINESS PRACTICES SHOULD BE CONDUCTED?:
Openness and transparency
o All transactions and negotiations of the business must be open
and transparent. This means no information may be withheld
and there may not be hidden agendas.
o The business must make the employees aware of the different
policies in the business, as well as legislation applicable to
specific employees and ensure that employees adhere to these
policies and laws.


WAYS IN WHICH RESPONSIBLE, ETHICAL AND EFFECTIVE BUSINESS PRACTICES SHOULD BE CONDUCTED?:
Social responsibility
o The community should be involved in the decision making and
implementation of plans and programs relating to social
responsibility.
o These programs should work towards the lifting of the
community in which the business operates and must be
sustainable.


WAYS IN WHICH RESPONSIBLE, ETHICAL AND EFFECTIVE BUSINESS PRACTICES SHOULD BE CONDUCTED?:
Adequate internal control
o Control over the business’ ethical code and codes of conduct
should be applied consistently.
o Corrective measures must be implemented when employees
deviate, before it is too late and the company’s image is
harmed.
o Recognition for compliance with these codes should also be
given.

ISSUES THAT COULD CHALLENGE RESPONSIBLE, ETHICAL AND PROFESSIONAL BEHAVIOUR:

Taxation
EXPLANATION:
• The government needs revenue from
taxation to provide essential services
such as housing, education, and
medical care.
• Professional behaviour in this regard
would be to pay due tax to SARS.
• There are businesses and individuals
that do not declare all income to the
Receiver of Revenue.
• This attempt to escape tax is called tax
evasion – tax evasion is a criminal act.
STRATEGY / RECOMMENDATION:
• The best way to reduce tax evasion is to
reduce tax rates.
• As tax rates are reduced, more people
will choose to pay taxes instead of
risking the penalties imposed on
offenders.
• Businesses should pa their taxes to
avoid penalties and interest and even
imprisonment.

ISSUES THAT COULD CHALLENGE RESPONSIBLE, ETHICAL AND PROFESSIONAL BEHAVIOUR:

Sexual harassment
EXPLANATION:
• SH in the workplace involves unwanted
attention of a sexual nature from
someone at work, that causes
discomfort, humiliation, offence or job
interference.
• Sexual harassment includes:
 Unwelcome sexual advances.
 Requests for sexual favours in return for
employment benefits.
 Pressure for sexual favours to clinch
sales deals.
• It is immoral, wrong and unethical to
abuse your position to take advantage of
another person.
STRATEGY / RECOMMENDATION:
• Formulating a clear policy regarding
sexual harassment.
• Making others aware of the problem, of
their rights and of the rights of others.
• Implementing complaints and
disciplinary procedures.
• Formulate an employment equity
programme that ensures well-planned
career paths, based on merit, for all
employees.
• Cultivating a positive corporate culture,
in which the rights and dignity of all
employees are respected.

ISSUES THAT COULD CHALLENGE RESPONSIBLE, ETHICAL AND PROFESSIONAL BEHAVIOUR:

Sexual harassment
EXPLANATION:
• Employers should be proactive and
prevent the problem, rather than having
to address it after the damage has been
inflicted.
STRATEGY / RECOMMENDATION:
.

ISSUES THAT COULD CHALLENGE RESPONSIBLE, ETHICAL AND PROFESSIONAL BEHAVIOUR:

Pricing of goods in rural areas
EXPLANATION:
STRATEGY/
RECOMMENDATION:
• Goods in rural stores are often more expensive than goods • Attention must be
in urban stores.
given to improve the
• The Consumer Price Food Index for rural areas is
infrastructure in rural
considerably higher than the index for metropolitan areas.
areas to address this
• Most of the stores in rural areas are located far away from
problem.
major towns; store-owners buy stock from wholesalers and • Rural store-owners
pay a high price for delivery to the rural store.
can try to negotiate
• The lack of infrastructure in rural areas results in rural
better prices form
store-owners often not having any competition – this
wholesalers.
means that they are the only, or one of very few, suppliers • Gaining the goodwill of
of necessities in the area.
customers by building
• Some rural store-owners abuse their monopolistic position
long-term
by charging excessive prices to these mostly very poor
relationships with
communities.
customers.

ISSUES THAT COULD CHALLENGE RESPONSIBLE, ETHICAL AND PROFESSIONAL BEHAVIOUR:

Price-fixing
EXPLANATION:
STRATEGY/RECOMMENDATION
• The Consumer Protection Act prohibits this business • Adhere to the regulations of
practice. Yet there are still businesses that are guilty
the law.
of this.
• Do not use price-fixing to
• It involves an agreement between different
gain unfairly high profit.
businesses (cartels) which ask the same price for a
• Adhere to ethical business
particular stock item.
practices.
• The consumer is exploited and businesses make a lot
more profit than usual. Such practices can be
reported to the Commission for Competitiveness.
• If businesses are found guilty, they can be heavily
fined.

ISSUES THAT COULD CHALLENGE RESPONSIBLE, ETHICAL AND PROFESSIONAL BEHAVIOUR:

Unfair advertising
EXPLANATION:
• The Advertising Standards
Authority (ASA) is a selfregulating body that was set
up to regulate advertising.
• The National Consumer
Commission (NCC)
investigates deceptive
advertising and has legal
powers to stop deceptive
advertising.
• Three categories of
misleading advertisement
practices are misleading
prices; misleading promotion
and misleading packaging.
STRATEGY / RECOMMENDATION:
• All advertisers must adhere to the Code of
Advertising Practice as determined by ASA.
• According to this Code, all advertising should be
legal, decent, honest and truthful.
• The following points summarise some of the
principles of the Code:
 Advertisements should not show anything which
may encourage acts of violence.
 Advertisements should not show anything which
may encourage or support criminal or illegal activity.
 Advertisements should not use fear tactics without
justifiable reason.
 Advertisements addressed to, or likely to influence
children should not contain anything which may
cause them mental, moral, physical or emotional
harm.

ISSUES THAT COULD CHALLENGE RESPONSIBLE, ETHICAL AND PROFESSIONAL BEHAVIOUR:

Unfair advertising
EXPLANATION:
• Unethical/unfair advertising practices
include:
 Giving goods deceptive names.
 Using false/deceptive advertising.
 Selling second hand goods as new goods.
 Discouraging or criticising a competitor’s
goods.
 Exploitation of children’s lack of
understanding of a product.
 Misuse of people with disabilities in
advertisements.
STRATEGY / RECOMMENDATION:
• Anyone can lodge a complaint over
unfair advertising with the ASA.
• The ASA deals with all complaints,
free of charge.

ISSUES THAT COULD CHALLENGE RESPONSIBLE, ETHICAL AND PROFESSIONAL BEHAVIOUR:

Unfair advertising
Examples:

o Prices are manipulated by “free gifts” that accompanies the product
when the consumers purchase it.
o Businesses advertise a particular item at a very low price to attract
consumers, but when consumers visit the store, the item is not
available at the advertised price.
o Buy one and get one free, but there are hidden costs included that
the consumers had to pay.
o Advertise e.g. a living room set with accessories such as reading
lamps, etc. as shown in the illustration, without specifying that the
reading lamp are not included in the advertised price.

ISSUES THAT COULD CHALLENGE RESPONSIBLE, ETHICAL AND PROFESSIONAL BEHAVIOUR:

Unfair advertising
Examples:

o Advertising of refurbished second hand goods as new goods is
o
o
o
o
misleading and unfair.
The use of a competitor’s name or trademark of a competitor in an
advertisement when different products are compared.
The allocation of misleading characteristics to a product, e.g. a
vacuum cleaner is advertised an described as if it has excellent
suction action, but the product does not have that feature.
Presentation and/or wording in the advertisement amount to
concealment where certain information is purposely omitted, e.g.
advertising a used car, without stating the year of manufacturing or
mileage.
Ambiguity and exaggeration in an advertising may mislead the
consumer.

ISSUES THAT COULD CHALLENGE RESPONSIBLE, ETHICAL AND PROFESSIONAL BEHAVIOUR:

Unauthorised use of funds
EXPLANATION:
STRATEGY /
RECOMMENDATION:
• Unauthorised means: “without permission” and
involves theft or fraud.
• Some employees have access to funds of the enterprise,
putting them in a position to use these funds.
• Unauthorised use of funds involves using the business’
money for personal gain, e.g.
 Using the business’ petrol card to fill up your car to go
on a personal trip.
 A partner who earned money on behalf of the
partnership without telling the other partners about the
earnings.
 An employee who takes business supplies such as
stationary, paper, or cartridges for personal use.
• Fraud cases have been
highlighted in the media.
• Limit. to the absolute
minimum, the number of
employees who have
access to funds.
• Formulate a fraud
prevention strategy.
• Identify vulnerable
areas.
• Combat fraud through
internal auditing.

ISSUES THAT COULD CHALLENGE RESPONSIBLE, ETHICAL AND PROFESSIONAL BEHAVIOUR:

Abusing work time
EXPLANATION:
STRATEGY / RECOMMENDATION:
• Employees get paid for the time
they spend at work.
• It is unethical to use work time
for personal matters.
• Examples of abusing work time
(and money) include:
 Personal telephone calls during
working hours.
 Downloading information for
personal use from the internet
during working hours.
 Wasting time, e.g. going out to
meet a client for “half an hour”,
returning to the office hours
later.
• Structure working hours in such a way that
employees have free time for personal matters.
• Many businesses are allowing their employees to
work flexible working hours – e.g. an employee
works from 7:00 – 16:00 or 9:00 – 18:00 instead
of working from 8:00 – 17:00.
• An employer can allow its employees a particular
number of phone calls, copies or data – once an
employee has used up his / her benefits they are
required to pay for further use of facilities.
• Employers should monitor phone calls, the
number of copies made and the time employees
spend on the internet.

ISSUES THAT COULD CHALLENGE RESPONSIBLE, ETHICAL AND PROFESSIONAL BEHAVIOUR:

Abusing work time
EXPLANATION:
STRATEGY / RECOMMENDATION:
• Employers should remind employees that profit
will increase if expenses (such as telephone and
paper) decreases, thus leaving more money to
pay out in bonuses.