Vinzons Pilot High School

Vinzons, Camarines Norte

Course Subject Title: BUSINESS ETHICS AND SOCIAL REPONSIBILITY

Course Description: The course deals with the fundamental concepts, principles and practices of ethical
standards in the business environment. It combines the theoretical foundations of
setting up business enterprises with the conduct of entrepreneurial activities in the
context of one’s accountability and social responsibility.
Learning Objectives: 1. Provide with a basic understanding of the mechanisms whereby companies can
be made to act in the interest of shareholders, other stakeholders and society as a
whole.
2. Provide with knowledge of general ethical principles as applied to the special
situations of business and the ability to make informed judgements through case
analyses.
3. Equip with the ability to formulate basic strategies in relation to corporate ethics
and governance.
Learning Content: 1. The Role of Business in Social and Economic Development
2. Foundations of the Principles of Business Ethics
3. Social Responsibility of Entrepreneurs
4. Business beyond Profit Motivation
Grading System: Written Work 25%
Performance Task 45%
Quarterly Assessment 30%
Requirements: Notebook
Project

Whistle Blowing
Whistle blowing is the act, for an employee (or former employee) of disclosing what he believes to
be unethical or illegal behaviour to higher management (internal whistle –blowing) or to an external
authority or the public (external whistle-blowing).

Topic: CORE PRINCIPLES OF FAIRNESS, ACCOUNTABILITY, AND TRANSPARENCY

Objectives: 1. Explain the meaning of fairness, accountability and transparency
2. Identify the principles of fairness

FAIRNESS
It is a quality of making judgments that are free of discrimination. Judges umpires and teacher should
all strive to practice fairness. Fairness comes from the old English faeger meaning “pleasing attractive”. This
makes sense given that the word is also used to describe physical beauty.
Fairness in the context of business organization involves balancing the interest involved in decision-
making including any decisions related to hiring, firing and the compensation and reward system. Fairness can
be subjective, what one person sees as unfair may be perfectly appropriate for another. In general, people see
allocations or procedures favouring themselves as fair.
Overall, fairness has to do with justice, which is to give another that which is due him or her. More
concretely, justice (1) looks at the balance of benefits and burdens distributed among members of a group and
/or (2) can result from the application of rules, policies or laws that apply to a society of a group.

Principles of Fairness
1. Treat all people equitably based on their merits and abilities and handle all essentially similar situations
similarly and with consistency.
2. Make all decisions on appropriate criteria, without undue favouritism or improper prejudice.
3. Never blame or punish people for what they did not do and appropriately sanction those who violate
moral obligations or laws

References: Business Ethics and Corporate Social Responsibility, Business Ethics, Contemporary Entrepreneurship
Business Ethics and Social Responsibility by Aliza Racelis
file:///C:/Users/Acer/Desktop/656.pdf Page 1
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Ms. Rica G. Canaba
 4. Promptly and voluntarily correct personal and institutional mistakes and improprieties
5. Not take unfair advantage of people’s mistakes or ignorance.
6. Fully consider the rights, interest and perspective of all stakeholders, approach judgement with open-
minded impartiality, conscientiously gather and verify facts, provide critical stakeholders with an
opportunity to explain or clarify and carefully evaluate the information.

ACCOUNTABILITY
Corporate accountability refers to the obligation and responsibility to give an explanation or
reason for the company’s action and conduct.
What it is:
 To be accountable is to be liable to explain or justify one’s actions and decisions
 Accountability is the process of explanation and justification
 Holding to account is the process of requiring explanation and justification, but it is also testing,
forming a judgement and if necessary taking action.
 Accountability implies responsibility, it is reasonable only to hold people to account for those
things for which they are responsible.

Accountability is the ability to account for your actions and performance to your stakeholders.
Accountability includes the fact that persons (your stakeholders) are willing and able to hold you accountable.
With the willing and able aspects of the definition, we have an operational understanding of accountability which
can guide us in asking questions to accountability structures in the organization. Accountability, then, is the
obligation to demonstrate that work has been conducted in compliance with agreed rules and standards or to
report fairly and accurately on performance results based from mandated roles and/ or plans.

RESPONSIBILITY
Refers to the duty or obligation to satisfactorily perform or complete a task assigned by someone
assigned by someone or created by one’s own promise or circumstances

TRANSPARENCY
A principle of good governance is that stakeholders should be informed about the company’s activities,
what it plans to do in the future and any risks in its business strategies.
Transparency means openness, a willingness by the company to provide clear information to
shareholders and other stakeholders. For example, transparency refers to the openness and willingness to
disclose financial performance figures which are truthful and accurate.
Disclosure of material matters concerning the organizations performance and activities should be timely
and accurate to ensure that all investors have access to clear, factual information which accurately reflects the
financial, social and environmental position of the organization. Organizations should clarify and make publicly
known the roles and responsibilities of the board and management to provide shareholders with a level of
accountability.
Transparency ensures that stakeholders can have confidence in the decision- making and management
process of a company.

Topic: CODE OF ETHICS AND BUSINESS CONDUCT

Objectives: 1. Explain what codes of ethics and business conduct
2. Explain the meaning of corporate ethical culture; and

Code of Ethics
A code of ethics document may outline the mission and values of the business or organization, how
professionals are supposed to approach problems, the ethical principles based on the organization's core values
and the standards to which the professional is held.

References: Business Ethics and Corporate Social Responsibility, Business Ethics, Contemporary Entrepreneurship
Business Ethics and Social Responsibility by Aliza Racelis
file:///C:/Users/Acer/Desktop/656.pdf Page 2
cc: GAS-A , GAS-B, GAS-C, GAS-D
Ms. Rica G. Canaba
 A code of ethics is usually established by a professional order as a way to protect the public and the
reputation of the professionals. Indeed, people who breach their code of ethics incur disciplinary actions that
can range from a warning or reprimand to dismissal or expulsion from their professional order.
A well-written code of conduct clarifies an organization's mission, values and principles, linking them
with standards of professional conduct. It can also serve as a valuable reference, helping employees locate
relevant documents, services and other resources related to ethics within the organization.
It is the policy of the Company to provide our Code of Ethics and Business Conduct, which will serve as
a guide to proper business conduct for all employees. We expect all employees to observe the highest standards
of ethics and integrity in their conduct.

Topic: The Filipino Value system and Business Ethics Challenges

Objective: To be able to explain the major Filipino values affecting business

The Filipino Values

1. Utang na loob – it is a technique of reciprocity of debt of gratitude to others within the family circle or
primary group, sometimes unlimited in nature, emotional rather than financial or rational.
*It is sign of marginal economy where no place available in bargaining, forma agreements, written
contracts, specific rights and responsibilities.
*Portrays our true identity based on our concern and response to others
2. Pakikisama – it is the value of belongingness and loyalty to the small in – group with sensitivity to the
feelings of others on the principle of “give and take”.
*it is the unending gratitude but this is not enough because the responsibility to others does not end since
pagpapakatao has no limits, same with pakikipagkapwa-tao.
* it is yielding to the will of the majority or to the leader which could result to both to positive and negative
behaviour. It refers to one’s effort to get along with everybody.
3. Bahala na – is an expression which expresses that fatalistic outlook of Filipino. It happens when one
simply resigns to the consequences of life difficulties.

Topic: Major Ethical Issues in Entrepreneurship

Ethical Issue- is a problem or situation that requires a person or organization to choose between alternatives
that must be evaluated as right (ethical) or wrong (unethical)

.Ethical Dilemma- arises in a situation concerning right or wrong when values are in conflict

Unethical Business Practices- these are business actions which usually don’t meet the standards of acceptable
business operations

“Ethics are beyond legal and doing right whether or not anyone is looking”
“ Unethical actions are not always illegal but they will hurt society.”

A. BASIC FAIRNESS
1. Partners
. Gross Negligence- is a conscious and voluntary disregard
B. PERSONNEL AND CUSTOMER RELATIONS
1. Mistreating Employees
2. Discrimination and Harassment in the Workplace
3. Family-Run businesses
4. Employee Behavior
5. Employee Working Conditions
6. Side Deals and Sub-Standard Work
C. DISTRIBUTION DILEMMAS

References: Business Ethics and Corporate Social Responsibility, Business Ethics, Contemporary Entrepreneurship
Business Ethics and Social Responsibility by Aliza Racelis
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 1. Pricing Strategy Ethics
 Price collusion – exists when a number of competitors agree to set prices at a certain level,
bypassing the natural forces of supply and demand and creating an unfair advantage over
consumers.
2. Product Placement Ethics
 Slotting allowances – are cash payments paid by large and financially strong brands to
secure the best shelf space in retail stores , making it artificially difficult for small brands
to gain shopper’s attention.
3. Ethics and Promotion
Promotions are designed to boost short-term sales by providing irresistible value
propositions to consumers
7. Conflict of interest
D. FRAUD
E. UNFAIR COMPETITION
1. Antitrust Law or Competition Law
- Occur when one competitor attempts to force others out of the market or prevent others from
entering the market.
2. Trademark Infringement
10 - Occurs when one maker of product uses a name, logo, or other identifying characteristics to
deceive consumers
3. Misappropriation of Trade Secrets - occurs when one competitor uses espionage, bribery, or outright
theft to obtain economically advantageous information in the possession of another. .
9. 4. Trade Libel is the spreading of false information about the quality or characteristics of a
comPEtitox’s products.
11. Torti0us Interference occurs when one competitor convinces a party having a relationship with
another competitor to breach a contract with, or duty to the other c<>mpetitor. '
6. Anti-competitive practices ("Anti-Competitive Practices," 2016)
Anti-competitive practices prevent or reduce competition in a market.
7. Dumping
A company sells a product in a competitive market at a loss. Though the company loses money for each
sale, the company hopes to force other competitors out of the market, after which the company would
be free to raise prices for a greater profit (”AntiCompetitive Practices,” 2016). '
Foreign countries often use dumping as a competitive threat, selling products at prices lower than their
normal value. This can lead to problems in domestic markets. It becomes difficult for these markets to
compete with the pricing set by foreign markets, leading to local producers and the local economy to
suffer as a result. Dumping is often seen as an ethical issue, as larger companies are taking advantage of
other less economically advanced companies. (Boundlesscom)
8. Exclusive dealing
A retailer or wholesaler is obliged by contract to only purchase from the contracted supplier (”Anti-
Competitive Practices,” 2016).
9. Price fixing
Companies collude to set prices, effectively dismantling the free market (”AntiCompetitive Practices,”
2016).

10. Refusal to deal - Two companies agree not to use a certain vendor (”Anti-Competitive Practices,"
2016)

References: Business Ethics and Corporate Social Responsibility, Business Ethics, Contemporary Entrepreneurship
Business Ethics and Social Responsibility by Aliza Racelis
file:///C:/Users/Acer/Desktop/656.pdf Page 4
cc: GAS-A , GAS-B, GAS-C, GAS-D
Ms. Rica G. Canaba
 11. Dividing Territories an agreement by two companies to stay out of each other’s way and reduce
competition in the agreed-upon territories (”Anti-Competitive Practices,” 2016).
12. Limit Pricing - the Price is set by a monopolist at a level intended to discourage entry into a market.
For example, licensing ("Anti-Competitive Practices," 2016).

13. Tying - Product that aren’t naturally related must be purchased together (“Anti' Competitive
Practices,“ 2016).

Topic: Social Responsibility of Entrepreneurs

Objective: To be able to explain the social responsibility of entrepreneurs

Responsibilities of Business
1. To general public
a. Public health issue – what to do about inherently dangerous products such as alcohol, tobacco,
vaccines and steroids.
b. Protecting the environment – using resources efficiently, maximizing pollution. (recycling )
c. Developing the quality of the workforce – enhancing quality of the overall workforce through
education and diversity initiatives.
d. Corporate philanthropy – cash contributions, donations of equipment and products and supporting
the volunteer efforts of company employees.
2. To customers
a. The right to be safe – safe operation f product and avoiding product liability
b. The right to be informed – avoiding false or misleading advertising and providing effective customer
service
c. The right to choose – ability of consumers to choose the products and services they want
d. The right to be heard – ability of consumers to express legitimate complaints to the appropriate
parties.
3. To employees
a. Workplace safety – programs for occupational safety and health administration
b. Quality-of-life issues – balancing work and family through flexible work schedules
c. Ensuring equal opportunity on the job – providing equal opportunities to all employees without
discrimination many aspects regulated by law.
d. Gender discrimination – equal pay for equal work without regard to gender.
e. Sexual harassment – avoiding unwelcome actions of a sexual nature
4. To investors and financial community
a. Obligation to make profits for shareholders
b. Expectation of ethical and moral behaviour
c. Investors protected by regulation by the securities and exchange commission and state regulations
Responsibilities to suppliers/ vendors partners
- Prompt payment for delivered goods
- Regular orders with acceptable profit margin
Responsibilities to creditors
- Principal and interest payment
- Repayment of debt according to the agreed schedule
Responsibilities to retailers/wholesalers
- Accurate deliveries of products on time
- Products at a reasonable cost
- Safe and reliable products
Responsibilities to government
- Tax revenue
- Operation in compliance with all relevant legislations

References: Business Ethics and Corporate Social Responsibility, Business Ethics, Contemporary Entrepreneurship
Business Ethics and Social Responsibility by Aliza Racelis
file:///C:/Users/Acer/Desktop/656.pdf Page 5
cc: GAS-A , GAS-B, GAS-C, GAS-D
Ms. Rica G. Canaba
Topic: Corporate Social Responsibility
Objective: To be able to define CSR

CSR – refers to a corporation’s responsibilities or obligations toward society.

- The actions of an organization that are targeted toward achieving a social benefit over and above
maximizing profits for its shareholders and meeting all its obligations.
- It is a shared pattern of beliefs, expectations and meaning that influence and guide the thinking and
behaviours of the members of that organization
Components of CSR
1. Economic Responsibilities
- Based on the underlying foundation of why firm has been created which is to develop economic value
- Firm has a responsibility to use the resources available to produce goods and services for society.
2. Legal responsibilities
- The laws and regulations that all firms are expected to abide by as they perform their daily functions
3. Ethical responsibilities
- Change overtime because they are based on expectations of society
4. Discretionary responsibilities
- Those responsibilities in which society does not have a clear message to present to business as to what
their course of actions should be
- Left in the hands of the managers to make the proper judgement
- Not considered unethical if they do not participate in these discretionary responsibilities

Topic: Business beyond profit Motivation

What is corporate citizenship?

- Implies that the organization is the responsible citizen in meeting all its obligations
What is corporate conscience?
- Implies that the organization is run with an awareness of its obligations to society
Approaches
1. Instrumental approaches
- Argue that the only obligation of a corporation is to maximize profits for its shareholders in providing
goods and services that meet the needs of its customers
2. Social contract approach
- The perspective that a corporation has an obligation to society over and above the expectations of its
shareholders
Stakeholder’s theory development
1. Berle
- All powers given to a corporation are to be used to create benefits to the interests of the shareholders
- Argued that managers within a corporation should consider themselves trustees and guardians of the
investments made by the shareholders
2. Dodd
- Not only should the interests of the shareholders be considered but corporations also need to
recognize their obligations to the community to their workers and to the consumers
- Argued that corporations are allowed to become legal entities because they serve a purpose to the
community instead of just providing opportunities for financial gain by its owners.
3. Freeman
- Believed a stakeholders was any individual or group that can impact or be impacted by the actions of
the firm

References: Business Ethics and Corporate Social Responsibility, Business Ethics, Contemporary Entrepreneurship
Business Ethics and Social Responsibility by Aliza Racelis
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 - Definition encompasses any individual or group that has a vested interest in the operations of the firm

REASONS TO DO BUSINESS BEYOND PROFIT

1. Purpose and Values motivate and unify management and staff.
2. Purpose and values give a company a solid foundation from which to make decisions
3. Purpose and values provide a navigational compass to all elements of the business.
4. Customers will have more to buy and engage with.
5. Purpose and values encourage loyalty of booth staff and customers.
6. Purpose and values encourage a strong culture and ethos within a business.

The starting point of great companies is Purpose

4 Main types of Purpose (Nikos Mourkogiannis)

1. Discovery is rooted in intuition that life is a kind of adventure.
2. Excellence implies standards and supports the belief that excellent performance in our role in life
represents the supreme good.
3. Altruism is a purpose built in serving customers in a way that is beyond standard obligation.
4. Heroism demonstrates achievement, often with a charismatic and visionary leader.

Ethical Considerations on Employment

1. RECRUITMENT
 Screening – to identify those applicants who have a good chance of qualifying for the
job.
Job description – lists pertinent details about the job, including its duties, responsibilities, working
conditions, and physical requirements.
Job specification – describes the qualifications an employee needs, such as skills, educational
experience, appearance, and physical attributes.

2. SELECTION
Tests - are designed to measure the applicant’s verbal, quantitative and logical skills.
 Aptitude tests – help determine job suitability.
 Skill tests – measure the applicant’s proficiency in specific areas.
 Personality tests – helps determine the applicant’s maturity and sociability.
 Dexterity tests – determine how nimbly applicants can use their hands and fingers.
Interviews – cautions against rudeness, and hostility in interviewing applicants

3. PROMOTION
 Seniority – longevity on a job or with a firm.
 Inbreeding – the practice of promoting exclusively from within the firm
 Nepotism – the practice of showing favouritism to relatives and close friends

“The problem we face today cannot be solved on the same level of thinking we were at when we
created them.” – Albert Einstein
He remarked “The hero is the one with ideas”. – Jack Welch
He is the founder and leader of the Land Gift Movement, he caused the redistribution of more than
7,000,000 acres of land to aid India’s untouchable landless. – Vinoba Bhave

References: Business Ethics and Corporate Social Responsibility, Business Ethics, Contemporary Entrepreneurship
Business Ethics and Social Responsibility by Aliza Racelis
file:///C:/Users/Acer/Desktop/656.pdf Page 7
cc: GAS-A , GAS-B, GAS-C, GAS-D
Ms. Rica G. Canaba