Teacher: JETHRO G.

OREJEULA Subject: Business Ethics and Social Responsibility

Week: 6 Module: 6

RESPONSIBILITIES AND ACCOUNTABILITIES

OF ENTREPRENEURS
Intended Learning Outcomes:
Discuss the responsibilities and accountabilities of entrepreneurs to:
a. employees b. government c. creditors d. suppliers e. consumers f. general
public g. other stakeholders
Discuss a morally defensible position on ethical issues in entrepreneurship like
basic fairness, personnel and customer relations distribution dilemmas, fraud,
unfair competition, unfair communication, non-respect of agreements,
environmental degradation, etc.

E
ntrepreneurs have a moral obligation to reconcile and balance the rights and
obligations of their stakeholders. Conflict of interest is also an important issue
which concerns both employer and employees. This unethical behavior is
committed by some members across an organization. Intellectual property rights also
affect stakeholders because intellectual property consists of all original works and
inventions which any of the stakeholders may possess.

SOCIAL RESPONSIBILITY TO:

“EMPLOYEES”

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.
Paychecks should always be on time and without delay so the workers can meet
individual financial obligations. The government also requires entrepreneurs to pay
PhilHealth, Social Security, taxes out of employee wages for each employee working
their business.

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.

MR. JETHRO G. OREJUELA | 0951967174 | jethroorejuela101@gmail.com

KING THOMAS LEARNING ACADEMY | SENIOR HIGH SCHOOL DEPARTMENT

Facilitate Workers’ Compensation Insurance
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.

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.

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 exist and is profitable and that as better feel, the better they will do their
job.

Respect Human Rights

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.

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.

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.
Give Rewards and Benefits
Reward 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
reward structures remain competitive. Our reward system is well structured and
transparent in its application.

“GOVERNMENT”
 
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.

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.

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.

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.

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. 

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

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.

Contribute to Government Treasury

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

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.
 
“CREDITORS”
 
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.

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.

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.

“SUPPLIERS”
 
Practice Fair Pricing and Licensing
Companies must seek fairness and truthfulness in all dealings with suppliers
especially pricing and licensing.

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.
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.

“CONSUMERS”
 
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. Quality goods should be produced and supplied. Distribution system
should make goods easily 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.

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.

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.
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.

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.

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 your competitors.

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.

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.

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 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.

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.

“GENERAL PUBLIC”
 
Be Fiscally Responsible
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.

Consider Public Input

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.

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 firefighting 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.

MAJOR ETHICAL ISSUES IN

ENTERPRENEURSHIP
 
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.
 
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 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.
 
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.
 
PERSONNEL AND CUSTOMER RELATIONS
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.
 
Discrimination and Harassment in the Workplace – Maintaining professional
workplace 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.
 
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.
 
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.
 
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 & 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.
DISTRIBUTION DELIMMAS
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.

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.
 
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.
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.
 
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.
 
UNFAIR COMPETITION
Or distortion of completion is a situation in which competitors compete on
unequal terms because favorable or disadvantageous conditions are applied tos ome
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.
 
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.
 
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.
 
Misappropriation of Trade Secrets – when one competitor uses espionage, bribery, or
outright theft to obtain economically advantageous information in the possession of
another.
 
Trade Libel – is the spreading of false information about the quality or characteristics of
competitor’s products
  
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.
 
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.

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.

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

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

market.

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

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

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.
 
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.

NON-RESPECT OF AGREEMENTS
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.

  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.
 
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
Name: ______________________________________ Strand/Section: ____________
Teacher: JETHRO G. OREJEULA Subject: Business Ethics & Social Responsibility
Week: 6 Type of Assessment: Formative Assessment Deadline: April 23, 2020

Discuss a morally defensible position on ethical issues in entrepreneurship like

basic fairness, personnel and customer relations distribution dilemmas, fraud,
unfair competition, unfair communication, non-respect of agreements,
environmental degradation, etc.

Direction: Read the article below and answer the questions that follow.

“Advertisements help in convincing customers to buy product or service.

Advertisers and marketers should be careful in creating ads for the general
public. Ads were pulled after figuring in some controversy. It was ads for LBC.”

LBC’s Spelling Bee Commercial (2009)

The department of Education (DepEd) called the attention of LBC management

for showing a commercial that encouraged wrong spelling among children. In a spelling
bee contest, the emcee played by Edu Manzano called the contestants to spell
remittance, affordable, and instant. They spelled out LBC (Luzon Brokerage
Corporation) instead. DepEd said that the commercial was encouraging wrong spelling
of words.

What is the social responsibility of entrepreneur or advertiser to customers based on the

example given in the article?
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MR. JETHRO G. OREJUELA | 0951967174 | jethroorejuela101@gmail.com

KING THOMAS LEARNING ACADEMY | SENIOR HIGH SCHOOL DEPARTMENT

Name: ______________________________________ Strand/Section: ____________
Teacher: JETHRO G. OREJEULA Subject: Business Ethics & Social Responsibility
Week: 6 Type of Assessment: Summative Assessment Deadline: April 30, 2020

Discuss the responsibilities and accountabilities of entrepreneurs to:

a. employees b. government c. creditors d. suppliers e. consumers f. general
public g. other stakeholders

Direction: Assess yourself and relate this statement to yourself:

“I have enjoyed a number of the basic rights of consumers”

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MR. JETHRO G. OREJUELA | 0951967174 | jethroorejuela101@gmail.com

KING THOMAS LEARNING ACADEMY | SENIOR HIGH SCHOOL DEPARTMENT