The need of business ethics can be explained with the help of the following points:
(1) Introducing Socialism in Business: This means the gains of business must be shared by all concerned and not just by owner of business. Profit is the result of group efforts and hence all concerned must share the same. In other words, the concept of socialism in business say that workers, shareholders, consumers all others who contribute to the success of the business must share its gain.
(2) Interest of Industry: Business ethics are required to protect the interest of small business firms. Big firms normally try to dominate and eradicate small firms. If industry follows code of conduct, small firms can fight for their existence and stay in the business for long.
(3) Buyers Market: In recent times, structural changes have taken place in the concept of business. In case of many products, sellers market has been converted into buyers market. Under such changed business conditions business ethics is needed to stress the importance of consumer satisfaction and service orientation in place of profit orientation.
(4) Better Relations with Society: Code of conduct results in better relations between business and society. It will reconcile conflicting interest of various sections of the society such as workers, shareholders, consumers, distributors, suppliers, competitors and government.
(5) Advantages to Business and Society: Ethics point out what is good and bad, so also what is right or wrong. It brings to the notice of the business community the importance of honesty, sincerity, fairness which makes them alert and socially conscious.
In the final analysis, business ethics help the business and society at large. It ensures healthy atmosphere in business which ensures improvement in social, economic and cultural values of the society.