INTRODUCTION

As a senior high school student, you are already being prepared for life outside of
school. Because soon, you will be facing the world of adults-working for corporations, putting
up your own business, or providing services on your own. When you face bigger roles in your
life later on, you will need to make ethical business decisions and hopefully, your ethical values
will guide you in the right direction.

This set of modules introduces you to business ethics and corporate social responsibility.
The first unit focuses on the understanding of business ethics, and how it should be integrated
in business practices. You will encounter cases and situations where you will be asked to weigh
things in order to make a business decision. You will be given an overview of how a corporate
culture works, and some of the most common ethical issues that businesses face today. You will
also learn the philosophical roots of some of the ethical frameworks being practiced today, as
well as the prevalence of different Filipino traits and practices that affect the corporate culture.

Business organizations are an important component of the modern society. They help
economies grow, offer desired products for consumption, and create jobs for the population. In
return, they make profits when people patronize their products.

In a capitalist world, business organizations are seen only as profit generators that have
no regard for ethics. However, most organizations do have ethics. Ethics, in the business
context, is about ethical decision-making that is, decisions must be based on promoting the
greater good and doing what is morally right.

This unit focuses on philosophical ethics. It compares and contrast different ethical
frameworks of utilitarianism, ethics of principles and rights, and virtue ethics. It also looks at
the impact of the different belief systems on ethics, as well as the different Filipino traits and
practices.

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Lesson Coverage

Second Topic Competencies Activities

Semester
Week 1 Social 1. Discuss the responsibilities Pre Assessment
Responsibility of and accountabilities of Activities:
Entrepreneurs entrepreneurs to:
employees, government, 1. Relate!
creditors, supplier, 2. Go Online!
Week 2 consumers, general public,
other stakeholders
2. Formulate a morally 3. Reflect Upon!
defensible position on 4. Did you know!
ethical issues in 5. Find out!
Week 3 entrepreneurship like basic
fairness, personnel and
customer relations 6. Think About!
distribution dilemmas, 7. Present it!
fraud, unfair competition,
unfair communication,
Week 4 nonrespect of agreements,
environmental degradation,
etc.
3. Describe the different
models and frameworks of
social responsibility
4. Formulate a framework of
social responsibility that
reflects the practice of
sound business

Expected Skills:

5. Discuss the responsibilities and accountabilities of entrepreneurs to: employees,

government, creditors, supplier, consumers, general public, other stakeholders
6. Formulate a morally defensible position on ethical issues in entrepreneurship like basic
fairness, personnel and customer relations distribution dilemmas, fraud, unfair
competition, unfair communication, nonrespect of agreements, environmental
degradation, etc.
7. Describe the different models and frameworks of social responsibility
8. Formulate a framework of social responsibility that reflects the practice of sound
business

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 Module Map

Social Responsibility of
Entrepreneurs

The responsibilities and accountabilities of

entrepreneurs toward the employees,
government, creditors, suppliers,
consumers, general public and other
stakeholders; major ethical issues in Models and frameworks of social
entrepreneurship (basic fairness, responsibility in the practice of
personnel and customer relations sound business
distribution dilemmas, fraud, unfair
competition, unfair communication,
nonrespect of agreements, environment
degradation, etc.)

Pre- Assessment

Guide Question:

1. Have you made decisions or actions that deliberately practiced your responsibility
to prevent harm? How did you do them?

__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________

2. Do you make purchase based on a company’s contribution to the society? Are you
more likely to buy something from a company that supports a cause that is
important to you? Why?

__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________

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 Explore

Social Responsibility of Entrepreneurs

Business ventures are a unit of society in which they operate. These enterprises depend
on society for the needed resources like men, material, capital and also for selling their
products. In fact, business depends on the society for its existence, growth and promotion.
Hence entrepreneurs have a definite social role and responsibility towards the society. Social
responsibility denotes the responsibility of the business towards various sections of the society.

Businessmen must consider wider public interest while taking business decisions. A few scholars
have defined ‘social responsibility’ in the following way :
According to Koontz and O’Donnell, “Social responsibility is the personal obligation of every one,
as he acts in his own interest, to assure that the rights and legitimate interests of all others are
not infringed.”

In the words of Adolph Berle, “Social responsibility is the business’s responsiveness to public

consensus, i.e., the obligation of the business to meet those demands and aspirations of the
society about which there is public consensus. ” H.R. Bowen defines as “Social responsibility is
the obligation to pursue those policies, to make those decisions or to follow those lines of action
tv hich are desirable in terms of objectives and values of our society,”

Nicholas Sirpolis has defined social responsibility as: “The circle of care and concern that a
business has for the well-being of society.”

Firm Up

Responsibilities and Accountabilities of Entrepreneurs (as cited in Jerusalem, Palencia,

&Palencia, 2017)

A. Responsibilities and Accountabilities to the Employees

1. Pay Wages and Taxes

Entrepreneurs have the responsibility to pay their employees of their business at least the
minimum hourly wage in their locality and to pay each employee money owed from working per
pay period, including overtime, sick leave, and vacation wages. Pay checks should always be on
time and without delay so the workers can meet individual financial obligations. The
government also requires entrepreneurs to pay Phil Health, Social Security, taxes out of
employee wages for each employee working their business.2.

2. Create and Maintain a Safe Workplace

The government requires businesses to create and maintain a safe working environment for
their employees as per standards. Entrepreneurs must also make employees aware of areas in
their business that have a high risk for injury and train their employees in safety procedures to
minimize the risk of injury. Continual inspection of their facilities and employee knowledge of
safety standards is necessary to make certain their workplace remains as safe as possible.

3. Facilitate Workers’ Compensation Insurance

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Despite business owners’ best efforts to maintain a safe working environment, accidents will
happen. When injuries occur through no fault of their employees, it’s their responsibility to file a
claim with their workers’ compensation insurance provider. This coverage provides for medical
care and wage replacement for their injured employee. Businesses must treat their injured
employee with respect and file the claim without attempting to cause a delay in processing or
attempt to defer the worker from filing a claim at all. This is illegal and can cost the business
hefty fines and possible jail time if the entrepreneur refuses to honor their commitment and
requirements as a business owner.

4. Enforce Anti-Discrimination Law

It is illegal to discriminate against anyone according to their culture. This means not only race,
religion, and country, but also age, gender, sexual preference, disability, a way of life and
beliefs. “EEO” stands for “Equal Employment Opportunity”, which means that employees cannot
be disadvantaged, dismissed, or not given employment for any of these reasons. It is the
employer’s responsibility to ensure that all staff is trained and aware of their obligations under
anti-discrimination laws.

5. Create and Maintain a Favorable Working Environment

As an entrepreneur and employer, you should try to provide a healthy working environment,
which respects each person and their opinion is considered. Listen to all your collaborators and
worry about their welfare. Remember that they are working for your company exists and is
profitable and that as better feel, the better they will do their job.

6. Respect Human Rights

The Mitsubishi Electric Group understands that its business operations are interrelated with a
wide range of peoples and societies throughout the world, and implements and enforces a code
of conduct that fosters respect for human rights.

7. Support Career Development

Mitsubishi Electric provides a human resources development system that supports the careers
of employees, a self-development support program, and transfer opportunities for willing
employees.

8. Train and Educate Employees

Promoting knowledge is important in changing the business environment. Acquisition of new

knowledge and skills through the professional and personal development of employees is a
prerequisite and a guarantee of business success.

9. Manage Performance

"What gets measured gets done" is an expression you will often hear when talking about
performance management and the simple meaning behind this statement is the key to our
philosophy of rewarding and managing performance. We want all our employees to have clearly
defined goals, which they defined themselves with their managers, on the basis of business
goals, through three main performance areas profit, process, and people.10.

10. Give Rewards and Benefits

We reward our employees fairly and attractively, in line with the prevailing conditions on the
local market. We gather data from the labor market on a regular basis, ensuring that our
reward structures remain competitive. Our reward system is well structured and transparent in
its application. It:

• Allocates appropriate people to appropriate job positions

• Set requirements and standards, outcomes and measures
• Provides effective orientation, education, and training

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• Provides ongoing coaching and feedback
• Designs a foundation for effective systems that reward people for their contributions
• Provides promotional/career development opportunities for employees

B. Responsibilities and Accountabilities to the Government

In any country, the government tries to preserve the community and improve its conditions. In
that respect, the business has to extend its cooperation to the government. If the business
discharges its responsibilities the government sincerely and effectively, the government can
function more efficiently.

1. Observe Laws, Rules, and Regulations

A number of legislative are formed from time to time by the government for proper regulation
and control of the business. Businessmen should comply with all legal requirements, execute
government contracts, pay taxes honestly and in time, make services of executives available for
government, suggest measures and send proposals to enact new laws for the business.

2. Pay Taxes

Businesses must pay taxes and fees to the government in the course of carrying out their
operations. These can include taxes on revenues, tariffs on imported products, and a number of
administrative fees necessary to register the business. Withholding these payments, particularly
taxes, is considered a crime.

3. Follow Environmental Regulations

Many companies, particularly those in the industrial and manufacturing sectors, face heavy
regulations regarding the number and variety of pollutants that they are allowed to emit.

Some companies, feeling a "social responsibility" toward the common good, may seek to limit
their pollution more than the law requires.

4. Abide by Labor Laws

Businesses that hire employees must abide by a slew of laws relating to how they treat their
employees. These include laws related to how much an employee can be paid, how many hours
he may work, and the criteria under which he can be hired and fired.5.

5. Avoid Restrictive Trade Practices

Companies are forbidden from engaging in certain kinds of restrictive trade practices that limit
competition. For example, most companies may not develop monopolies within a particular
sector or provide substantial barriers for new companies to compete with them. Restrictive
trade practices of this kind can often reduce the quality of products available to consumers and
drive up prices.

6. Disclose Financial Statements

Companies must disclose a number of financial statements to the government in the form of tax
returns, and, if the company makes ownership of shares of stock commonly available, to the
public as well. This financial transparency helps to ensure that the company is not violating any
laws, such as withholding taxes and to aid the public in deciding whether to invest in the
company.

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7. Avoid Corruption

The commercial organization should not take any type of favor from government officials by
bribing or influencing them.

8. Assist in Implementing Socio-Economic Policies

The government expects co-operation and help from the business sector to help in
implementing programs and policies relating to social and economic development.

9. Help Earn Foreign Exchange

The government also expects from a business organization that it will earn foreign currency by
exporting goods in the foreign market. The government requires this foreign currency for
importing valuable and important products.

10. Advise the Government

The business organization has to provide timely advice to the government in respect of framing
important policies such as Industrial policy, Import & Export policy, Licensing policy, etc.

11. Contribute to Government Treasury

The commercial organization must contribute the funds to the government during emergencies
and natural calamities like floods, earthquakes, etc.

12. Contribute to Political Stability

The commercial organizations should work towards the political stability of the country. The
stable government often brings more return and peace in a democratic country.

C. Responsibilities and Accountabilities to the Creditors

1. Give Correct Information

Shareholders who are the owners of the business should be provided with correct information
about the company to enable them to decide about further investments.

2. Provide Fair Return on Investment

The company should provide a fair return on the investment made by shareholders. If
shareholders do not get the proper dividend, then they will hesitate to invest additional funds.

Shareholders should be kept fully informed about the working of the company for healthy
growth of the business. The Companies Act 1956 also requires the company to give full
disclosure in the published statements.

3. Strengthen Share Prices

The company should strengthen the share prices by its growth, innovation, and diversification.
At the same time, shareholders should also offer wholehearted support and co-operation to the
company to protect their own interests.

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D. Responsibilities and Accountabilities to the Suppliers

In strict business structure, the suppliers are primarily responsible for providing or delivering
the raw materials and resources that a company needs in the production. Suppliers indirectly
affect marketing and business aspects such as product quality, price, and production of goods.
Good quality raw materials also mean quality-made final products and fair market price.
Availability of supplies determines production workload and quantity.

1. Practice Fair Pricing and Licensing

Companies must seek fairness and truthfulness in all dealings with suppliers especially pricing
and licensing.

2. Avoid Coercion and Litigation

Companies should make certain that any business transaction with suppliers must be free from
any form of coercion and unnecessary litigation.

3. Maintain Stability

Firms must promote long-term stability in their relationship with the suppliers to pay back the
good value, quality, and reliability they gained.

4. Maintain Confidentiality

Dealing with suppliers properly means sharing information with them and making them part of
the planning processes. They must keep their clients and purchasers abreast of any new
information on new technology and latest raw materials. Confidentiality must be strictly
practiced. This means no unnecessary disclosure of information shared by the company and its
activities.

5. Pay on Time

One of the best ways to deal with suppliers is to be responsible for making timely payments
according to the agreed terms and conditions of the trade.

6. Select Suppliers with discernment

A business that aims at succeeding must have a good discernment in selecting suppliers. There
are three fundamental requirements every company must need from their suppliers: legal
compliance, quality control, and environmental conservation.

E. Responsibilities and Accountabilities to the Consumers

A business cannot work without the consumer. The survival and growth of a business depend
on consumer satisfaction, service, and support. The commercial organization should win the
confidence of the customers. This is possible by following a positive attitude towards customers
and fulfilling following social responsibilities towards them.

1. Ensure Quality of Products and Services

Your responsibility is to offer customers the highest quality in your products and services
provide the best care and never lie to get a sale. A good entrepreneur is honest and gives a
good price/ benefit. Never use marketing to deceive or sell false expectations.

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Quality goods should be produced and supplied. Distribution system should make good seasily
available "to avoid artificial scarcities and after-sales service should be prompt. Buying capacity
and consumer preferences should be taken into consideration while deciding the manufacturing
policies.

2. Ensure Consumer’s Health and Safety

A key consumer issue is the quality and safety of products. Customers need clear instructions
for safe product use, including assembly and maintenance. To avoid customer harm and
danger, anticipate potential risks of your product and services in the design stage and
throughout the product lifecycle, from R & D to manufacturing, storage, and distribution, use
and disposal, reuse and recycling. Whether or not legal safety regulations exist, products should
be safe for their intended use and if mi used in a way that can be foreseen.

3. Provide Free Training

The commercial organization should arrange to train the customers either free or for a fee. It
must be in the case of computers, etc.

4. Be Fair with Prices

The customers should not be cheated by charging high prices. It is not possible to fool the
customer at all the time. Thus, fair price converts a customer into a permanent customer.

5. Be Honest in Advertising and Marketing

The customers want to know the facts, features, advantages, side-effects, etc, of the product.
The advertisement conveys this information. Thus, the company must see that the
advertisement is not being misleading and it must be done by providing the true and actual
information.

6. Be Honest in Dealings

Never lie to your customers. It is foolish to cook false stories. You will be caught. In today's
world, where information is just a click away, everyone does his/her thorough research before
purchasing something. Unnecessarily you will lose your respect in front of them. If you can't
deliver something, please mention it clearly. They might not invest in that particular product but
believe me, would definitely come back to you in near future just because you were honest,
and guided them correctly. It is pointless to badmouth yourcompetitors.

7. Attend to Complaints

The consumer complaints must be attended immediately. When major issues occur, employ a
system for making quick and accurate decisions on steps and measures to take while placing
top priority on not inconveniencing the customers.

8. Service Even After Sales

The company is expected to provide after sale service for maintenance of goods during the
period of warranty. Efficient and effective after sale service helps to establish a good
relationship between the customers and the company.

9. Respect Customers’

Time Respect your customer's time. Do not decide the time and venue as per your availability
and comfort. If the customer wants to meet you at 6 in the evening, make sure you are there

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on time. Neither arrives too early nor too late. Do not keep your customers waiting. Do not
forget that there are several options available in the market. Your loss is someone else's gain.

10. Treat Customers well

Treat your customers as kings and do not think of them only when you have a pressure to meet
your targets within the stipulated time frame. Understand that a customer buys your products
or services only when he/she trusts your brand and most importantly believes in you.
Understand the needs and requirements of your clients. Find out as to why they need a
particular product and how your product would benefit them. You need to build a strong
relationship with your customers for them not only to remain your loyal clients but also bring
more people along with them. It is the responsibility of the organization to give correct
suggestions and feedbacks to customers. Avoid making fake promises and commitments which
you yourself know are difficult to fulfill.

F. Responsibilities and Accountabilities to the General Public

To maintain a positive public image and attract new clients, a company must understand its
corporate responsibilities to the public. Ultimately, any business that encounters the public has
responsibilities.

1. Be Fiscally Responsible

One of the actions that prompted failure of companies such as Enron and Adelphia occurred
when executives gave themselves loans using company funds, according to RR Donnelley.
While it can be disappointing to consumers that companies need legislation to be fiscally
responsible, it would be naive to allow company executives to keep raiding corporate bank
accounts for their own needs. When a company is caught up in a scandal caused by executive
greed, it can be fiscally fatal for that company. That is why a company needs to enact and
enforce guidelines of its own that agree with the law but also apply specifically to the company,
to avoid misuse of company funds. There is a bond of trust between a consumer and a
company that is broken when fiscal fraud occurs. This goes for public or private companies.

2. Consider Public Input

A company should be able to operate under its own rules and ideals, but a company should also
take into account the input of its customers to remain competitive, according to the World Bank
Institute's report titled "Public Policy for Corporate Social Responsibility." A company should
reach out to its customers and benefit from the insight of what customers are looking for in
product improvements. A company that creates an advisory board of a cross-section of its
target audience gathers recommendations on how to keep in touch with the customer base and
how to improve the company's public image. It is the responsibility of the company to remain
accountable to its customers; otherwise, the company will lose its customers and cease to exist.

3. Take Care of the Community

A company exists because of the customers it serves and the community in which it is located.
The community provides most of the employees for the company, and the community provides
all the public services the company enjoys, such as electricity and fire fighting protection. In
some cases, companies are given breaks on their utilities and taxes in order to entice them to
establish a location within the community. The company has a responsibility to give back to the
community that supports it with tax breaks and a labor force. When there is a community
event, the company should contribute volunteers, money, or something that would support the

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event. The company should use local suppliers as much as it can to help support local
businesses.

G. Responsibilities and Accountabilities to the Environment

1. Comply with Environmental Legislation

There is a range of environment rules your business may have to follow:

 Comply with legislation regarding emissions into the air.

 Store waste safely and securely, make sure it is treated appropriately, ensure it is
collected by an authorized organization and complete a waste transfer note or
consignment note when waste is handed over.
 Manage your business waste for recycling by separating paper, card, plastic, metals, and
glass prior to collection.
 Join an approved compliance scheme if you handle more than 50 tons of packaging.
 Make sure that you comply with restrictions on the storage and use the
hazardoussubstances.

2. Dispose Waste Properly

Appropriate steps should be taken to prevent environmental pollution and to preserve ecological
balance. The industrial waste should be disposed of carefully or if possible can be recycled to
minimize pollution. The toxic wastes, excessive noise, chemical pesticides, automobile exhaust
etc. need to be checked from time to time.

3. Recycle
Businesses are required to separate the following forms of commercial waste for recycling:
paper, card, plastic, metals, and glass. If your business processes prepare or distribute food
and produce over 50kg of food waste per week, you are required to separate food waste. It is
illegal to dispose of food waste directly or indirectly into a public drain or sewer.

4. Conserve and Protect Biodiversity

Biodiversity refers to all species of plants and animals, including any genetic variations within
those species, and the complex ecosystems they live in. The world is losing b10diversity at an
ever-increasing rate as a result of human activity. All types of business operating near protected
areas should be aware of their responsibilities for conservation and protect biodiversity. This
doesn't just apply to land-based industries such as forestry or farming, but to all offices,
factories and other business activities based on or near these areas.

Protected areas include:

• Local nature reserves - places with wildlife or geological features that are of special interest
locally.
• National scenic areas - areas of particular natural beauty in need of conservation.
• National parks - tracts of the countryside that have been given protection for the conservation
and enhancement of their special qualities.
• National nature reserves - important areas of wildlife habitat.
• Sites of special scientific interest - good examples of the natural heritage of wild life habitats,
geological features, and landforms.
• Special areas of conservation - strictly protected sites for habitat types and species that are
considered to be most in need of conservation at a European level.
• Special protection areas - strictly protected sites classified for rare and vulnerable birds.
• Wetlands

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• UNESCO biospheres - areas of terrestrial and coastal/marine ecosystems which are
internationally recognized under UNESCO's Man and the Biosphere program.

5. Prevent and remedy damages to environment

Every year there are thousands of cases of damage to the environment covering:
• damage to species and habitats
• damage to water
• risks to human health from contamination of land
If you are responsible 'operator' of the activity that causes or threatens the damage you must
take the immediate action to prevent or remedy this.

6. Report an incident
You should report incidents such as:
• damage or danger to the natural environment
• pollution to water or land
• poaching or illegal fishing
• fish in distress or dead fish
• watercourse blocked by a vehicle or fallen tree causing risk of flooding
• illegal dumping of special (hazardous) waste or large amounts of industrial waste
• incidents at waste sites
• illegal abstraction from watercourses
• unusual drops in river flow
• collapsed or badly damaged river or canal banks

You should report incidents such as gas leaks, burst water mains, or domestic odors, noise,
waste or pest nuisances to your local authority or utility company. Business should protect the
environment which has acquired great importance all over the world.

7. Use Scarce Natural Resources Sparingly

Scarce natural resources should be used very carefully as these are depleting at a very fast
rate. The alternative sources can also be found out to save natural resources like to save
forests alternative to wood and pulp can be found, the use of coal can be reduced by an
alternative source of energy. Start by recycling paper, making the most of digital way and
reusing the recording sheets. Separate garbage dumps and avoids using disposable plates,
especially Styrofoam. Implement energy saving systems such as LED lighting, and invite your
team to tum off lights and equipment when not in use. Encourage the use of bicycles and car-
pooling. In addition, invite them to perform activities such as planting trees.

Deepen

Activity 1 Relate!

1. Have you ever experienced being in a group where you felt you do not belong, but you had
to bear with it because you had no choice but to work together? How did you manage it? Did
you end up being friends with the group?

__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________

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2. If you will be in the same situation again, will you do the same actions you did?

__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________

Activity 2: Go Online!

1. What happens when a company does not care about the health and safety of its employees?

In a tragic incident in May 2015, a fire in a slipper factory happened in Valenzuela City.
Seventy-two workers who got trapped on the second floor due to poor fire safety standards
perished in the fire.

Read more about this incident in the following articles and then answer the questions
that follow.

 http://www.manilatimes.net/valenzuela-city-factory-fire-death-toll-reaches-72/183412
 http://www.manilatimes.net/valenzuela-inferno-unmasks-workers-abuse/183866/

1. What were the fire safety violations that the company incurred, which resulted in the tragic
incident?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________

2. What were the other violations of the company? How did they exploit their employees?
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________

3. Why is it important for a company to ensure the health and safety of its employees?
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________

Firm Up

Major Ethical Issues in Entrepreneurship (as cited in Jerusalem, Palencia, &

Palencia, 2017)

A. Basic Fairness– Ethical decision-making processes should center on protecting employee

and customer rights, making sure all business operations are fair and just, protecting the
common good and making sure individual values and beliefs of workers are protected.

1. Partners– Suppose you are a partner in a business and see a great deal of profitability on
the horizon. You don't believe that your partner deserves to profit from the business' future
success because you don't like his personality. You may wonder if you could simply take his

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name off the bank accounts, change the locks, and continue without him. If you proceed with
this course of action, you would likely be in violation of your ethical and legal obligation to act in
good faith concerning your partner. The better course of action may be to simply buyout his
interest in the business.

2. Gross Negligence– Suppose you are on the board of directors for a publicly traded
corporation. You and your fellow board members, in hopes of heading off early for the holidays,
rush through the investigatory process involved in a much-anticipated merger. As a board
member, you have a duty to exercise the utmost care respecting decisions that affect the
corporation and its shareholders. Failing to properly investigate a matter that affects their
interests could be viewed as gross negligence supporting a breach of your ethical and legal duty
of care.

B. Personnel and Customer Relations

1. Mistreating Employees– Every year, lawsuits are filed against employers who are accused
of sexual harassment or discrimination against their employees. Some employers have been
sued for threatening or firing whistle-blowers, or employees who point out illegal practices or
safety violations in the workplace.

2. Discrimination and Harassment in the Workplace– Maintaining professional work place

relationships between employees is a continuing challenge for employers regardless of the
industry. This challenge can become more difficult when the image companies choose to
project has a significant sexual charge. There’s never an excuse or a justifiable reason for
harassment of any kind in any workplace. If a supervisor discriminated against an employee
based on her gender, religion, or ethnicity when making recommendations for a promotion,
legal action could be sought.

3. Family-Run Businesses– In the area of small business, some major ethical result from
hiring, firing, and dealing with employees. For example, conflicts of interest may cause ethical
issues in small business, especially if they are family run. When personal family issues interfere
with business decisions, this is a conflict of interest and an ethical concern.

4. Employee Behavior– From large corporations to small business, individuals involved in all
types of business often face ethical issues stemming from employee behavior. For example,
whether an employee can spend work time checking personal email accounts, how a manager
deals with claims of harassment and to what extent manager can “groom” a certain employee
for a promotion are all examples of ethical issues regarding employee behavior. There are legal
consequences for some unethical employee behavior.

5. Employee Working Conditions– Employers must be aware of the safety of their work
environment and if they have compensated employees for all the time they have worked. They
must also consider if they have required an employee to work an unreasonably long period of
time or if they have him doing an unusually difficult task.

6. Side Deals and Sub-Standard Work– When dealing with customers or clients,
businesspeople must ensure that they use their information correctly, do not falsely advertise a
product or service and do not intentionally do sub-standard work.

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 Deepen

Activity 3: Reflect upon!

1. What is discrimination? What is the impact of age discrimination in the Philippines?

__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________

2. What is workforce diversity and why should companies promote it?

__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________

Have you ever felt that you were discriminated based on your appearance, age, gender, or
religion? How did it happen? What made you feel that you were discriminated?

__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________

C. Distribution dilemmas

Ethics is a prime concern in marketing, and the areas of price, placement, and promotion are
no exception. Pricing refers to the way in which prices are set for consumers considering the
cost of inputs, distribution, and overhead. Placement involves the strategic positioning of
products within retail stores. Promotions involve short-term price discounts or giveaways. Each
of these areas presents its own set of ethical dilemmas, challenges, and legal guidelines to
navigate.

1. Pricing Strategy Ethics– Price collisions can be a major source of ethical pressure in many
industries, and artificial price-fixing is illegal in a wide range of countries. Price collusion exists
when a number of competitors agree to set prices at a certain level, bypassing the natural
market forces of supply and demand and creating an unfair advantage over consumers.

2. Product Placement Ethics– End-caps, point-of-sale displays, and demo kiosks are all
examples of positioning techniques that are inherently harmless, but which can be used
inarguably unethical ways.

3. Ethics and Promotions– Promotions are designed to boost short-term sales by providing
irresistible value propositions to consumers. Coupons, holiday sales events, mail-in rebates, and
giveaways all fall under the promotions category. The “bail and switch” tactic is widely
considered unethical, yet many companies still practice this promotions technique.

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D. Fraud

In business takes up so many forms and sizes. It can be in the form of financial misconduct or
misrepresentation. Examples of financial misconduct include price-fixing, or an illegal agreement
between industry competitors to “fix” the price of a product at an artificially inflated level;
physicians who refuse to treat non-insured patients, or perform unnecessary procedures to
make more money; tax evasion; tax fraud; and “cooking the books” to make the company look
more profitable than it is. Corporate misrepresentation can take many forms. It can be as
simple as a salesman who lies about his company’s products, or it can be false or misleading
advertising. Misrepresentation can involve a cover-up of illegal workplace conditions or
transactions; falsified data in a shareholder report; lying to a union about corporate profits, or
hiding or denying safety problems with a product.

E. Unfair Competition

Or distortion of completion is a situation in which competitors compete on unequal terms

because favorable or disadvantageous conditions are applied to some competitors but not to
others. The concept can also refer to situations in which the actions of some competitors
actively harm the positions of others with respect to their ability to compete on equal and fair
terms.

1. Antitrust Law or Competition Law– when one competitor attempts to force others out of
the market or prevent others from entering the market, through tactics such as predatory
pricing or obtaining exclusive purchase rights to raw materials needed to make a competing
product.

2. Trademark Infringement– when the maker of a product uses a name, logo, or other
identifying characteristics to deceive consumers into thinking that they are buying the product
of a competitor.

3. Misappropriation of Trade Secrets– when one competitor uses espionage, bribery, or

outright theft to obtain economically advantageous information in the possession of another.

4. Trade Libel– is the spreading of false information about the quality or characteristics of
competitor’s products

5. Tortious Interference– when one competitor convinces a party having a relationship with
another competitor to breach a contract with, or duty to the other competitor.

6. Anti-competitive practices– prevent or reduce competition in a market.

7. Dumping– 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 a result.

8. Exclusive dealing– A retailer or wholesaler is obliged by contract to only purchase from

the contracted supplier.

9. Price fixing– companies collude to set prices, effectively dismantling the free market.

10. Refusal to deal– two companies agree not to use a certain vendor.

11. Dividing territories– an agreement by two (2) companies to stay out of each other’s way
and reduce competition in the agreed-upon territories.

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12. Limit pricing– is set by a monopolist at a level intended to discourage entry into a
market.

13. Tying– products that aren’t naturally related must be purchased together.

14. Resale price maintenance– resellers are not allowed to set prices independently.

15. Religious/minority group doctrine– business must apply tribute to a significant

normally religious part of the community in order to engage in trade with that community.

F. Unfair Communication

Here are some examples of unfair communication in business practices.

1. Matthias Rath is a vitamin entrepreneur who used to be a doctor and is considered to be the
most powerful of all “crackpots”. He recommends vitamin pills to cure even serious ailments. In
UK ads, he claimed that 90% of cancer patients die within several months of starting chemo,
arguing that corporations let them die for profit. Yet, he uses his lies to sell an HIV/AIDS
“miracle cure”, saying that HIV doesn’t cause AIDS and antiretroviral drugs won’t work, leading
to the spread of infections in South Africa.

2. Johnson & Johnson to pay $417m in cancer lawsuit - A Los Angeles jury ordered Johnson&
Johnson to pay a record $417 million to Echevarria, a hospitalized woman who claimed in a
lawsuit that the talc in the company's iconic baby powder causes ovarian cancer when applied
regularly for feminine hygiene.

G. Non-respect of Agreements

Is a breach of contract. A breach of contract is a legal cause of action in which a binding

agreement or bargained for exchange is not honored by one or more of the parties to the
contract by non-performance or interference with the other party’s performance.

H. Environmental Degradation

Is the deterioration of the environment through depletion of resources such as air, water, and
soil; the destruction of ecosystems and the extinction of wildlife.

I. Contractualization

Or labor contractualization is the replacing of regular workers with temporary workers who
receive lower wages with no or fewer benefits. These temporary workers are also known as
sometimes called contractures, trainees, apprentices, helpers, casuals, piece raters, agency-
hired, and project employees among others. They do the work of regular workers for a
specified and limited period of time, usually less than six months.

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 Deepen

Activity 4: Did you know?

1. Do you know someone who is affected by the contractual arrangement of employment? How
does he or she feel about it?

__________________________________________________________________
__________________________________________________________________
__________________________________________________________________

2. What are the challenges or issues that a contractual employee experiences?

_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________

Activity 5: Find out!

Read the case study below and then answer the questions that follow.

Gardo Varela, an employee of Diva Pawnshop, was accused of stealing funds from
pawnshop transactions. His officemate noticed that Gardo has been living a lavish lifestyle
traveling in and out of the country and purchasing major items for his house. Upon knowing
this, the management immediately called his attention and decided to suspend him without
probable cause. There were no major losses reported by the accounting department to support
that Gardo is stealing funds. After terminating Gardo, his supervisor gathered that Gardo had a
part time job selling his paintings in art fairs. His artwork were sold at premium prices to VIP
customers.

1. Why is it important for any accused to undergo due process before receiving the verdict?

_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________

2. After Gardo’s supervisor found out the real source of Gardo’s funds, can he or the
management can still do anything to make amends to Gardo?

_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________

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 Firm Up

Models and Framework of Social Responsibility in the Practice of Sound Business

A. Models of Socially Responsible Business

Accessibility Partners Gift of Happiness Pedigree Whole Foods

Altered Seasons Google People Water Xerox

Ben & Jerry’s Headbands of Hope Rainbow Light

Burt’s Bees Juntos Shoes Starbucks Coffee

Children Inspire Design Kenneth Cole Target

Do Good Buy Us Krochet Kids The Body Shop

Fashion Project Method Toms Shoes

General Electric Out of Africa Twillory

B. Framework of Socially Responsible Businesses

1. Top 100 Socially Responsible Businesses

Reputation Institute (RI) has announced the company’s annual Global RepTrak ® 100 rankings.
Based on over 170,000 ratings collected in the first quarter of 2017, the survey by the provider
of stakeholder measurement, membership, and management services is the largest corporate
reputation study of its kind. It includes comparative ratings, trends by demographic cuts, and
unique insights into which companies are best regarded by stakeholders as well as what drives
trust and supportive behaviors such as willingness to purchase a company’s products
recommends the brand, invests in or even work for the company.

The top 10 companies in RI’s 2017 Global RepTrak ® 100 are

1. Rolex
2. LEGO Group
3. The Walt Disney Company
4. Canon
5. Google
6. Bosch
7. Sony
8. Intel
9. Rolls-Royce
10. Adidas

“The annual Global RepTrak ® 100 spotlights the companies that truly understand what they
stand for and how to reinforce the emotional bond with their stakeholders across all the
markets they serve”, said Michele Tesoro-Tess, RI executive partner. “This year’s Top 10
companies come from different sectors: reputation is a cross-industry asset and companies

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continuously invest on it because their leadership finally recognized its impact on business
performance.”

RI’s RepTrak ® System measures the general public’s perception of the world’s top companies
on seven key rational dimensions of reputation: products and services, innovation, workplace,
governance, citizenship, leadership, and performance. An “Excellent” reputation is represented
by an overall RepTrak® Pulse score of 80 or higher. For the first time, the company with the
highest rating and the top spot (Rolex) falls into the “Excellent” range. A RepTrak ® Pulse score
of 70-79 is considered “Strong,” while 60-69 is “Average.” None of the companies in
2017RepTrak® Top 100 scored below 64.

Regarding specific stakeholder expectations, respondents identified Rolex as the global leader in
products and services, and LEGO Group as best in governance, while, Google was perceived as
leading in 5 dimensions: innovation, workplace, citizenship, leadership, and performance.

Key trends by industry

In terms of trends, 2017 saw the rise of heritage luxury brands like Rolex and Rolls-Royce,
while consumer products took seven of the top ten spots in this year’s survey, with LEGO Group
jumping four spots to 2nd, and Adidas moving into the top 10.

In the tech sector, Intel returned to the top 10 (to 8th place) in 2017 after a one-year absence.
Meanwhile, Google (5th place) fell two spots, Microsoft fell out of the top 10 to 11th, and Apple
slipped 10 spots to 20th place with a drop of 1.7 points. Samsung posted the most notable
decline with its RepTrak® Pulse score dropping 4.0 points vs. 2016 and is now in 70th place
overall.

Among automakers, both BMW Group (12th place) and Daimler (27th place) both fell out the
top 10, while Toyota, Honda, Ford and GM all showed modest gains vs. 2016. Meanwhile,
Volkswagen, who continues to deal with the aftermath of its emissions scandal nonetheless
returned to the top 100 (in 100th place) and saw its RepTrak® Pulse score recover by 3.4
points to 64.73 – one of the largest increases in 2017.

“For brands looking to benchmark how their reputation compares to industry peers, our Global
RepTrak® 100 is the place to start”, said Allen Bonde, RI chief marketing officer.“ Looking at
top performers, it’s clear that offering high-quality products, standing behind them, and
meeting customer needs is foundational to delivering on the brand promise. But our data also
shows that companies with a strong sense of purpose who are committed to improving on all
dimensions of reputation – especially governance and citizenship – tend to be the mosthighly
regarded.

2. Google’s CSR Framework

Google’s stakeholders are diverse because of the company’s wide array of products. The
company’s diversification includes its original products, such as Google Search, as well as recent
products like Google Glass and Google Fiber Internet and cable television service. The firm’s
stakeholders come from different groups impacted through these varied businesses. To
maintain its leadership as an innovative technology firm, Google must address the interests of
its stakeholders through suitable corporate social responsibility (CSR) policies. The company’s
current CSR efforts are comprehensive and satisfactory, based on international standards and
expectations. Still, there is room to improve these CSR efforts to make Google a stronger
contender in the international arena.

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Google’s Stakeholder Groups

Google has many stakeholders, but they can be grouped based on shared interests. Many of
the company’s CSR programs are directed toward these stakeholder groups. Google considers
the following as the most significant stakeholders:

1. Users
2. Employees
3. Advertisers and other Investors
5. Governments
6. Communities

The list above is arranged to indicate the priority or importance of the stakeholders based on
Google’s CSR efforts. These stakeholders affect the company by pushing for the satisfaction of
their interests. Google considers users as the most significant in terms of their effect on the
firm.

A. Users: Google’s Top-Priority Stakeholders

Users are individuals and organizations that use Google’s products. In general, these
stakeholders do not necessarily pay the company. For example, users include people who use
Google’s search engine and Chrome. This stakeholder group is interested in the usefulness of
the company’s products. These stakeholders are important because their behaviors define the
company’s popularity. Google’s popularity corresponds to the firm’s business value. In Google’s
business philosophy, users are the top priority in its CSR efforts. The company’s philosophy
states: Focus on the user and all else will follow . Thus, users are the core stakeholders in
Google’s business. Every product is developed with the users’ needs in mind. In this way, the
firm’s CSR efforts effectively address the stakeholder group of users.

B. Employees

Employees are the second priority among Google’s stakeholders. Employees are interested in
proper compensation and a rewarding experience in working for the company. For example,
many workers want to work for Google because the company is perceived as one of the best
firms to work for. This stakeholder group is important because they define the company’s
capabilities, such as the capability to innovate rapidly. Google’s CSR efforts address the
interests of its employees as a major stakeholder group through competitive compensation and
a fun workplace design. The company’s compensation strategy includes high salaries and
various incentives and benefits, such as free meals and flexible workflows. Google’s facilities are
also fun workplaces where workers can exercise, play games and enjoy sharing ideas with each
other. Also, the company indirectly addresses the working conditions of suppliers’ employees
through the Google Supplier Code of Conduct, which covers concerns on employment practices
and occupational health and safety. Thus, Google’s CSR efforts effectively satisfy the interests
of employees as stakeholders in the business.

C. Advertisers and Other Customers

Google’s success is based on the ability of the firm’s CSR efforts to satisfy the needs of
advertisers and other customers as a stakeholder group. Advertisers are the main source of the

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company’s revenues. These stakeholders are interested in getting effective services, such as
effective online advertising campaigns. Advertisers and other customers are an important
stakeholder group because they directly determine Google’s financial performance. Google’s
CSR efforts address the interests of advertisers and customers based on the firm’s popularity.
As noted, the prioritization of the stakeholder group of users makes the company popular. In
turn, this popularity increases the firm’s market reach and effectiveness. Thus, advertisers and
other customers benefit more from the firm’s services. Google’s holistic CSR efforts satisfy the
interests of the stakeholder group of advertisers and other customers.

D. Investors

Since it went public in 2004, Google now considers investors as a major stakeholder group
influencing CSR activities. Investors are interested in ensuring that Google grows its profits.
Investors are important stakeholders because they determine the availability of capital that the
company uses in its business. Google’s CSR efforts generally focus on providing useful products.
While these efforts satisfy stakeholders like users and advertisers or customers, they also satisfy
Google’s investors. The usefulness of these products makes them popular, widely used, and
profitable. In addition, Google’s research and development strategies can be considered as part
of the firm’s holistic approach to its corporate social responsibilities. These R&D strategies aim
to provide useful products that are profitable.

E. Governments

Governments are a major stakeholder group. They affect Google through regulations. The
company deals with many governments because its business is global. As stake holders,
governments are interested in ensuring Google’s regulatory compliance. These stakeholders are
important because they can approve or prohibit Google’s business operations in their
jurisdictions. Google’s holistic CSR approach involves an emphasis on following the law. The
company’s business philosophy states: You can make money without doing evil. To follow this
philosophy, the firm ensures that all of its business activities comply with regulatory
requirements. Thus, Google’s CSR policies satisfy the interests of governments as stakeholders.

F. Communities

Communities are also stakeholders in Google’s business. Communities are interested in direct or
indirect benefits that they get from the company. Theoretically, firms can benefit communities
through charity programs, philanthropy, and related activities. Communities are important
stakeholders because they can affect customers’ perception and response to Google’s products.
Google’s CSR efforts include charity programs through Google.org, which has already provided
more than $100 million in grants and investments. Google.org aims to address climate change,
global public health, and global poverty. In addition, to address the stakeholder group of
communities, Google also includes international environmental standards and ethics in its
Supplier Code of Conduct. These efforts also relate to the firm’s philosophy: You can make
money without doing evil. Thus, the company’s CSR efforts have considerable effectiveness in
satisfying the interests of the stakeholder group of communities.

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3. Total Corporate Social Responsibility Framework

Here is a model for evaluating an organization’s social performance. The model indicates that
total corporate social responsibility can be subdivided into four criteria economic, legal, ethical,
and discretionary responsibilities.

These responsibilities are ordered from bottom to top in the following illustration.

a. Economic responsibilities: The first criterion of social responsibility is economic

responsibility. The business institution is, above all, the basic economic unit of society. Its
responsibility is to produce goods and services that a society wants and to maximize profit for
its owners and shareholders. Economic responsibilities, carried to the extreme, are called profit
maximizing view; it was advocated by Nobel economist Milton Friedman. This view argued that
a company should be operated on a profit-oriented basis, with its sole mission to increase its
profits so long as stay within the rule of the game.

b. Legal responsibilities

All modem societies lay down ground rules, laws and regulations that businesses are expected
to follow. A legal responsibility defines what society deems as important with respect to
appropriate corporate behavior. Businesses are expected to fulfill their economic goals within
the legal framework. Legal requirements are imposed by local councils, state and federal
governments and their regulating agencies. Organizations that knowingly break the law are
poor per formers in this category. Intentionally manufacturing defective goods or billing a client
for work not done is illegal. Legal sanctions may include embarrassing public apologies or
corporate 'confessions'.

c. Ethical responsibilities

Ethical responsibility includes behavior that is not necessarily codified into law and may not
serve the organization's direct economic interests. To be ethical, organization's decision makers
should act with equity, fairness, and impartiality, respect the rights of individuals and provide
different treatments of individual only when differences between them are relevant to the
organization's goals and tasks. Unethical behavior occurs when decisions enable an individual
ororganization to gain expense of society.

d. Discretionary responsibilities

Discretionary responsibility is purely voluntary and guided by an organization's desire to make

social contributions not mandated by economics, laws, or ethics. Discretionary activities include
generous philanthropic contributions that offer no payback to the organization and are not
expected. Discretionary responsibility is the highest criterion of soda' responsibility because it
goes beyond societal expectations to contribute to the community’s welfare.

Deepen

Activity 6: Think about!

1. Which do you think best fits the social entrepreneurship process? Why?

__________________________________________________________________
__________________________________________________________________

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__________________________________________________________________
__________________________________________________________________

2. Do you think it is enough for a social enterprise to have a social mission, or does it also need
to produce a good product for the market to succeed? Explain?

__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________

Transfer

Activity 7: Present it!

You are one of the most successful entrepreneurs at the young age in the country. You are
invited to speak in a social business workshop which will be attended by senior high school
students who are taking the ABM track.

For this workshop, prepare a slide presentation about three social enterprises with best
practices, which serve as your model in establishing your own business. Your presentation
should be based on the following outline:

1. Names of the identified social enterprises

2. Mission and vision of each social enterprises

3. Social issue(s) being addressed by the social enterprises

4. Specific actions of the social enterprises to provide solutions to the social problems

5. Products, with their corresponding prices, which are sold by the social enterprises

Make sure to organize a comprehensive, substantive, and creative presentation. You may use
photos, graphs, or illustrations as visual aids that are applicable to your presentation and that
will support your data.

References:

Jerusalem, V., Palencia M, & Palencia J. (2017).

Business ethics and social responsibility:concepts, principles, & practices of ethical standards.

Manila, Philippines:FASTBOOKS Educational Supply, Inc.Orjalo, V. & Frias S. (2016).

Business ethics and social responsibility: principles, policies, programs, and practices.

Quezon City, Philippines: The Phoenix Publishing House, Inc.Cortez, F. (2016).

Business ethics and social responsibility.

Quezon City, Philippines: VibalGroup, Inc.

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