Islamic Studies
Islamic Principle Of business And Marketing & Present Business Evils
By making Allah the goal, and implementing Islamic rules of honesty, truthfulness, and good behavior with customers, Insha Allah, any Muslim business is bound to boom. Following are the characteristic that should need to present in Islamic business and marketing:- (1)Honesty (2)Trust (3)Fair and Kind (4)Truthfulness (5)Justice The Holy prophet (pbuh) was declared not only Sadiq and Amin but he was an honest business man. This is proved by Hazrat Khadija who was richest lady of Makkah. She gave a few things to sell and she sends her servant with him.
But Holy Prophet (pbuh) proved his honesty brilliantly. Honesty is needed in everything we do. From the domestic work of daily routine or office work to studies, honesty makes the real difference. Honesty makes it easy for us to survive because an honest person is truthful and such a person does not fell into any trouble. The sad fact of the present day is the lack of honesty in people. Lies, and dishonesty has become standard in everyday matters and it is a common perception that no one can get rid of them now.
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This point of view is wrong, why cannot we live like honest humans? If one thinks that honesty cannot be achieved or truthfulness is a dream now this is wrong, just by practicing Islam truly in its true spirit we can achieve all this without devising any special plans or any complex system of morals. The world today is a big business hub, i. e. it is a business market now. There are some main stock exchanges that control the money inflow and out flow of the world for example, wall street etc. these stock exchanges are actually business centers where whole world trades.
Unfortunately, with the Jewish intervention in the business and introduction of riba in business, there has left no honesty and no halal money in the business any more. The best examples of the honesty in business are the prophets of Islam. From Quran we learn that prophet Yusuf a. s. used to look after the financial matters of the state as His own choice. That’s why It is called that honesty is the best policy, indeed honesty is the best policy. When a business man is honest, he will never sell a low quality product and will never earn unjustified profit.
Thus, an honest business man will be God fearing and will never ever dodge his customers over the selling. An honest business man will never like to go for unjust means to increase his earnings neither will he ever like to give bribes or accept bribes thus with honesty in business, the curses of bribery and riba can be shunned. Hazrat abu bakar siddique r. a was one of the best and honest business men of Arabia. He was very rich and his financial as well as moral help was appreciated by Muhammad s. a. w. w as well. He was much honored in his region because he was honest in business.
There are several examples in the Muslim world who did not only do business honestly but also earned much more than those who like to earn black money. In honest business ALLAH gives His blessings, thus honesty indeed is the best policy. The Prophet has said the honest and truthful businessman will be in Jannah amongst the Prophets the Truthful and the martyrs. Honesty and truthfulness are essential in this business. And when it comes to Muslim businesses, it means building a relationship of trust with customers, which cannot be done with lies and eceit. The Holy Quran already explains the factor of honesty in business and in every matter of life. The Holy Prophet (pbuh) has a great business skill due to which he was offered marriage. But unfortunately our current business values have been changing day by day. Our environment is lacking in honesty. For having a good business policy we should need to be honest. The Holy Prophet (pbuh) said,if you sell goods on lie basis then your goods would be sold with your faith.
For instance if there is any medicine who will get expire any shop keeper sell to any uneducated person and he got infection, a person who got infected will complain to doctor not to pharmacy shop keeper. Today lie become the trend we just to sell a 300Rs shirt would lie many time. The Holy Prophet (pbuh) said selling thing upon lie basis would break trust of others. TRUST IN BUSINESS For having a successful business a trust of people is require. This does not mean that only one sided trust is require but from both seller and buyer. This enhances better understanding and good communication.
A Unit Trust is an investment vehicle that allows investors to take advantage of investing in a diversified group of stocks which manages risk and exposure to one or a few stocks. It also offers the opportunity to participate in the long-term performance of the stock market. Islamic Unit Trusts add other aspects that are a screening process to remove stocks of companies deemed to be inappropriate for Muslim investors and cleansing or purification of a company’s profits by removing any income derived from non-Shariah complaint sources, such as interest a company would earn on its bank accounts and donating them to charities.
Therefore, Islamic unit trust schemes are required to additionally appoint a Shari’ah committee or to ensure that their operations are in accordance with Shari’ah. Islamic Unit Trusts can invest in many financial products in conventional financial markets which are not interest-based, or where the element of interest could be eliminated, such as property funds, commodities, financial options and futures and forward transactions in foreign currency. They can take advantage of international markets growth by giving priority to equity investments in Islamic banks and financial institutions, stock markets of
Muslim countries; and companies managed under the Islamic system. The manager of a Unit Trust mutual fund would typically invest the pooled money in a portfolio which may include the asset classes such as cash, bonds and deposits, shares, property and commodities; tangible assets represent more than 51% of the portfolio. Islamic Unit Trusts have also a wide range of investment options based on growth and income, open-ended, redeemable, etc. Their investments can cover international equity markets, currencies and properties.
A Mudarabah fund can invest in a specific business activity on the basis of profit and loss sharing; Murabahah fund invest in companies whose transactions are undertaken on a cost-plus basis; Through Musharakah the Unit Trust and the third party contribute funds in a joint venture, producing equity participation; And in Ijarah fund, the Islamic Trust finances equipment, building or entire project for a third party against an agreed rental. Besides, there will be no restriction to stop non-Muslims investing in an Islamic Unit Trust.
A good analogy with Islamic Unit Trusts is one of ethical and green Unit Trusts. Here the universe of investable securities is limited by certain criteria based on moral and ethical considerations (muamalah. com; 2009). An ethical investment is the principle of investing in companies which make a positive contribution to the world and avoiding those which harm the world, its people or its wildlife. Society's increasing awareness of its environmental and social responsibilities is impacting on financial services, more and more investments based on ethical principles are now available.
Some may think that the restrictions imposed by ethical investment with strict criteria may result in weaker performance; however ethical funds have often matched or beaten their non-ethical counterparts. Ethical investments are generally made through managed funds such as unit trusts which specialty is to seek profits for investors while conforming to certain ethical criteria such as that the company is not involved in activities like illegal armaments, gambling or pornography, or that it doesn’t produce or distribute alcohol, tobacco or drugs.
Before buying shares of companies in a chosen sector, an ethical fund manager will run checks on that company to find out if it has interests in a number of areas according to pre-determined criteria. Accordingly, clients who invest in ethical funds can be sure that their money will be invested in companies that engage in legal and ethical activities. Islamic Unit Trusts investments are also based on specific criteria based on morality, the main criteria is to not deal in transactions which involve the paying and receiving of interest.
Islamic Unit Trusts should be run on a transparent and modern corporate basis and up-to-date accounting and within a legal framework in conformity with the Shari’ah. In the same way the decision to invest in the case of ethical unit trusts is made by the fund managers, based on information received from various professional bodies and specially constituted committees of reference, the decision in the case of Islamic unit trusts is conditioned by the a binding approval from the Shari’ah Boards which consist of established religious scholars who make a decision based on the interpretations of particular operations and contexts.
A person can earn money by two means; one is agriculture and the other is business. If business is not done according to the ethics then there will always be inflation and shortage of goods. As it can be seen in the case of many commodities like wheat, sugar etc. It is due to the stocking in, speculation and the selfishness of some businessmen. The government has also become a trader itself, while the shariah has stopped the Islamic government from trading. As it can be seen that business is an important part of life, the Prophet Muhammad (P.
B. U. H) said, "People get 9/10 of their daily bread by trade. " Islam explains the concept of righteous trade by telling business ethics. If trade or any other thing is done against the morals and creed then this will lead to the bad end on the day of resurrection. Also by the law the person guilty of illegal business would end up nowhere. Islam emphasizes on the importance of the business ethics a lot. Allah says in the Quran, "they say that buying is also like interest but Allah has declared buying as permissible and interest as forbidden. And "When you buy or sell then make someone a witness of it. " The Holy Prophet Muhammad (P. B. U. H) said, "If trade was not there then you would have become a burden on others. " He also said that "A trader is the guardian of the means of daily bread and a keeper of the dignity of himself and other people. " The Holy Prophet Muhammad (P. B. U. H) encouraged the trust worthy traders by these words, "A trustworthy and truthful merchant shall be with the prophets and the truthful and the martyrs and the righteous. "God shows mercy to a person who is kindly when he sells, when he buys and when he makes a claim" The prophet emphasized on the truthfulness and the righteousness of the businessmen a lot. He said that "Verily, merchants shall be raised up sinners on the day of resurrection, except he who fears God, and is good, and speaks the truth. As Muslims, we have to adhere to ethical standards, not only in business but also in all aspects of life. Both business and ethics are interrelated. There is a reference to this point in the Qur'an, "For you in the Messenger of Allah is a fine example to follow. Allah Almighty says, "To the Madyan people (we sent) Shu'aib, one of their own brethren: he said: 'O my people! Worship Allah. You have no other god but Him. And give not short measure or weight. I see you in prosperity, but I fear for you the penalty of a day that will compass (you) all rounds. And O my people! Give just measure and weight, nor withhold from the people the things that are their due: commit not evil in the land with intent to do mischief. That which is left you by Allah is best for you, if you (but) believed!
But I am not set over you to keep watch! " At one Place Hazrat Ali said, if you dog your friend then don’t think you had brilliantly dodged but think that how much he still trust upon you.
Fair in Business
Fair is another quality which is also needed for business. WE shouldn’t concern with business whether it is small or big, but we should be fair and kind with people and people with you. The Holy Qur'an and Prophet Mohammad (PBUH) have made it clear that a Muslim must be honest and upright in his business and monetary dealing.
Also the true Muslim should keep his word and fulfill his promises, shun fraud and avoid deceit and perfidy, encroach not upon the rights of others, nor take part in wrongful litigation. Also a good Muslim does not give false testimony, and abstains from making unlawful money as from usury and graft. According to Islam whoever is not free from these vices, is not a true believer but a renegade and a worthless transgressor. And the Qur'an is rich with verses that confirm all this. Allah says in the Quran, "Eat not up each other's property by unfair nd dishonest means. " Allah forbids all unclean and corrupt means of making money, such as, dishonest trading, gambling, and bribery. And the Holy Quran has explained and described such practices in many of its verses. He says, "Woe to those that deal in fraud, - those who, when they have to receive by measure from men, exact full measure, but when they have to give by measure or weight to men, give less than due. Do they not think that they will be asked on a Mighty Day when (all) mankind will stand before the Lord of the lords. Another example is given in the coming verse, where Allah urges Muslims to be very particular about their trusts and about other people's rights. "Allah does command you to render back your trust, to those to whom they are due. " Major principles of fair business dealings According to Islam, the following things must be avoided to commence fair business. 1. No fraud or deceit, the Prophet (P. B. U. H) is reported to have said, "When a sale is held, say, there’s no cheating" 2. Sellers must avoid making too many oaths when selling merchandise. The Prophet (P. B. U.
H) is reported to have said, "Be careful of excessive oaths in a sale. Though it finds markets, it reduces abundance. " 3. Mutual consent is necessary. The Prophet (P. B. U. H) is reported to have said, "The sale is complete when the two involved depart with mutual consent. " 4. Be strict in regard to weights and measures. The Prophet (P. B. U. H) said, "When people cheat in weight and measures, their provision is cut off from them. " He told the owners of measures and weights, "You have been entrusted with affairs over which some nations before you were destroyed. " 5. The Prophet (P.
B. U. H) forbade monopolies. "Whoever monopolizes is a sinner. " 6. Free enterprise, the price of the commodities should not be fixed unless there is a situation of crisis or extreme necessity. 7. Hoarding merchandise in order to increase the prices is forbidden. 8. Transaction of forbidden (Haram) items, such as intoxicants, is forbidden. Fraud and dishonesty in business Prophet Muhammad (P. B. U. H) has stressed the importance of honesty in most of his sermons, saying, "Remember, there is no faith in him who is not trustworthy; there is no place for him in religion who cares not for his ledged word or promise. He (PBUH) also said, "The signs of a hypocrite are three, when he speaks, he is false, when he promises, he fails; and when he is trusted, he plays false. " Condemning those who cheat in business Prophet Mohammad (PBUH) has said, "He who cheats is not of us. Deceitfulness and fraud are things that lead one to Hell. " Once Prophet Muhammad (P. B. U. H) came upon a heap of corn in the market of Medina and thrust his hand onto it. His fingers felt damp. On being asked, the trader replied that rain had fallen upon it. The Prophet (P. B. U.
H) observed, "Why did you not then keep (the wet portion of) it above the dry corn, so that men may see it? He, who deceives, is not one of us. " Thus traders who deceive by showing to customers a false sample or by concealing from them the defects of the product they're selling are not true Muslims in the judgment of Allah Prophet (PBUH) and, they are going to end up in hell. Prophet Muhammad (P. B. U. H) said, "The seller must explain to the buyer the defects, if any, in the quality of the article offered for sale. Should this not be done, the seller will permanently be caught in the Wrath of Allah. In short, all manner of deceit and dishonesty in business is prohibited in Islam. The Holy Prophet has expressed his strong dislike for those who do so. The Prophet's general advice to all people was that, "What is lawful is clear and what is unlawful is clear, but between them are certain doubtful things which many people do not recognize. He who guards against the doubtful things keep his religion and his honor blameless, but he who falls into doubtful things falls into what is unlawful, just as a shepherd who pastures his flocks round a sanctuary will soon pasture them in it.
Every king has a sanctuary, and God's sanctuary is the things he had declared unlawful. "Before the Prophet invited his people towards Islam, it was his truthfulness and trustworthiness which had earned for Muhammad (S. A. W. ) the glorious titles of "Sadiq" (truthful) and "Amin". Therefore, one must follow the teachings of the Holy Prophet (P. B. U. H) in regard to business and all other aspects of life; to become a good Businessman and hence, a better Muslim. Islam puts certain conditions and restrictions to obviate the chances of bitterness between the employer and employees.
Islam encourages and promotes the spirit of love and brotherhood between them. According to the Islamic teachings it is the religious and moral responsibility of the employer to take care of the overall welfare and betterment of his employees. Fair wages, good working conditions, suitable work and excellent brotherly treatment should be provided to the workers. The last Prophet of Allah (sws) has explained this principle in the following words: Those are your brothers [workers under you] who are around you, Allah has placed them under you.
So, if anyone of you has someone under him, he should feed him out of what he himself eats, clothe him like what he himself puts on, and let him not put so much burden on him that he is not able to bear, [and if that be the case], then lend your help to him. The Prophet (sws) also said: I will be foe to three persons on the Last Day: one of them being the one who, when he employs a person that has accomplished his duty, does not give him his due. The Prophet (sws) is also reported to have said: The wages of the laborers must be paid to him before the sweat dries upon his body.
Truthfulness in Business
In order to earn profit and making things Halal truthfulness is essential. People to buy things where ethics like truthfulness is present. Islam encourages truthfulness in business transactions and raises the status of a truthful merchant so much so that he will be at par with the holy warriors and martyrs, in the Hereafter. The Prophet (sws) is reported to have said: The truthful merchant [is rewarded by being ranked] on the Day of Resurrection with prophets, veracious souls, martyrs and pious people. The Prophet (sws) has also exhorted the believers to strictly adhere to truthfulness in business transactions.
He says: The seller and the buyer have the right to keep or return the goods as long as they have not parted or till they part; and if both the parties spoke the truth and described the defects and qualities [of the goods], then they would be blessed in their transaction, and if they told lies or hid something, then the blessings of their transaction would be lost. The tradition implies that Allah blesses business dealings if both the buyer and the seller are true to each other. Telling lies and hiding facts will result in the loss of divine blessing. A tradition reads. The Holy Prophet said: ‘Traders are wicked people’.
The Companions asked: ‘O Messenger, has Allah not permitted business? ’ The Messenger replied: ‘Of course He has declared trading lawful. But they (i. e. the traders) will swear by Allah and do evil, they will not speak but tell lies’. JUSTICE IN BUSINESS The Quran also emphasizes on the concept of justice. It is another types of ethics which is deeply needed for running on the business. The Holy Prophet (PBUH) said, He who deals unfairly with others can never become useful member of society. Among the set of values the Qur'an and the Prophet's sayings emphasize are the concepts of justice and benevolence.
The concept of justice (‘Adl) occupies a central place in the economic system of Islam. This value is prescribed in legal, social, moral and economic dealings. It is to be practiced with individuals, orphans, wives, tribes, communities and nations and even with peaceful enemies. It is applicable to speaking, giving witness, acting as a guardian, writing an agreement, arbitrating between parties, dealing with other people, judging in a court of law and making business transactions. The concept of justice in an economic context encompasses fairness, equity, balance and equilibrium, symmetry and impartiality.
The Quranic verses address individuals not only in their personal capacity but also in their capacity of being rulers, administrators, directors, employers, and all who deal with others. Justice, like truth, is a Divine virtue. Islam does not compromise on this value as it does not compromise on truth. While the Qur'an lays great emphasis on the value of justice, the Prophet has repeatedly persuaded the Muslims to stick to the value of Ihsan, which stands for benevolence, generosity, proficiency and magnanimity. The absence of ‘Adl inflicts harm and disturbs peace and harmony, but the absence of Ihsan does not harm anybody.
It implies a more liberal treatment than justice demands. It begins where the limits of justice end. Absolute justice is a legal requirement and, therefore, essential, but the Prophet, in line with the Quranic requirement, has persuaded his followers to behave magnanimously in claiming their rights and be generous in discharging their duty. ‘While ‘Adl eliminates injustice and exploitation and strikes a real balance between rights and responsibilities in society, Ihsan decorates the society with generosity, kindness, mercy, forgiveness, self sacrifice, mutual cooperation and affection. Adl is the primary condition for setting up an Islamic government, while Ihsan plays a vital role in building up a truly Islamic society; the former is a legal phenomenon while the latter is moral and religious. When we say that prices must be just, or fair, does this justice or fairness involve a moral value? Wholesale prices for all the dealers are almost the same. Can we then justify price variations at different centres? In Islamic law, if anybody charges an extraordinarily high price, it is termed as grave deception and is unacceptable.
The Ottoman Code of Civil Law defines grave deception as higher than 5% (profit) on goods, 10% on animals and 20% on immovable property. The concept lays down the rate of profit but not the sale price. As a matter of fact, the wholesale price alone does not determine the sale price. It is determined by locality, standard of intramural decoration, packing, service, environment and other overhead costs. A trader has to add all the incurred and accrued expenses to the wholesale price, in addition to a profit for himself/herself.
What rate of profit he should charge is determined largely by market forces and the nature of the competition, given a normal or prevailing price. All this proves that the concept of a just price is not a moral concept except where monopolies or oligopolies arbitrarily fix an unrealistically high price quite out of proportion with costs. The concept of the right to justice is mentioned repeatedly in the Qur'an. There is quite a lot of detail in the passages relating to the freedom to justice.
In Islam there are two concepts which are considered, Ihsan and Adl. While Adl is typical of monotheistic religions, referring to the need for balance and equality when judging and individual, in Islam perhaps the more important term is Ihsan. Ihsan refers to making up an imbalance or an injustice by returning or giving back something to the person that is at disadvantage. As such, it is not only important to treat all people equally, but to allow those that are at an objective disadvantage compensation.
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