BUSINESS ETHICS AND SOCIAL RESPONSIBILITY GRADE 12, QUARTER 3

Name of Learner:________________________________________ Grade Level:___________________

Section:_________________________________________________ Date:___________________

LEARNING ACTIVITY SHEET NO. 3

Code of Ethics in Business
I. Introduction

Few years from now, you will be employed whether in a public office or in a private
enterprise. As an employee, it is very important that you display good ethics, especially
in your workplace. This module was prepared for you so that you will have a good
interpersonal relationship with all the people around you, specifically with
the ones you will work with.

II. Learning Competencies

formulate a “code of ethics” that reflect core principles derived from analyses
(ABM_ESR12-IIIa-d-1.6)

III. Objectives
At the end of this learning activity sheet, you are expected to:

1. define ethics and explain why ethics is important in business;

2. classify the given ethical issues and create a good situation from the choices given.
3. explain what code of ethics and identify which of the common practices in the
business organizations are acceptable or not;
3. suggest ways on how some common practices could be improved; and
4. formulate a “code of ethics” that reflects core principles derived from analyses.

IV. Discussion

Definition of Ethics

The term Ethics is derived from the Greek word ethos which means
“characteristic way of thinking”. Ethics, as a science, does not only evaluate the
morality of our human conduct but also provides us with a common understanding of
the universal, objective, and irreversible moral principles that should govern our
human behavior and guide our moral decisions (Roa, 2011).
Ethics are moral principles that guide the conduct of the individual (Racelis,
2017). These are rules of behavior based on ideas about what is morally good and bad
(Merriam-Webster Dictionary).

Why is ethics important in business?

Ethical conduct, whether at the corporate, professional, or personal level, is a

direct reflection of the principles and values which regulate the person and the
1
institution he/she represents. Organizations establish their own culture that is socially
expressed as their ideals. Such principles or ideals have an impact on the relationships
within the company, efficiency, prestige, performance and retention of employees,
legalities, and the wider community they work in.
As a result, most organizations generate a list of organizational values and codes
of conduct to be recognized and adhered by all workers. Motivating and enhancing
constructive actions, and at the same time building an atmosphere that prevents
unethical behavior are vital obligations on the part of both administrators and workers.

How to Apply Ethics

At the individual level, organizations ought to concentrate on improving and

encouraging every employee to respect and adhere to ethical principles. Certain
aspects of individual ethics have their roots in the individual. Achieving a strong sense
of professionalism and recognizing certain professional decisions' ethical implications
are the key components of education, individual reflection, and experience.

Examples of Ethical Issues in Business

1. Ethical Issues in Finance

Under the umbrella of finance and accounting, fairness in trading practices,
trading conditions, financial contracting, sales practices, consultancy services, tax
payments, internal audits, external audits, and executive compensation are included,
whereas specific corporate ethical/legal abuse includes insider trading,
bribery/kickbacks, misleading financial analysis, and fraud on securities.

2. Ethical Issues in Human Resource (HR) Management

Human Resource Management 's tasks include hiring and orientation,
performance evaluation, training and development, labor relations, and health and
safety concerns. Among the ethical issues are discrimination by age (the young ones
are preferred over the older ones), gender preference, sexual orientation, race,
ethnicity, disability, and physical appearance are all ethical issues that the HR
oversees.

3. Ethical Issues in Sales and Marketing

Marketing ethics deals with the beliefs, standards and/or morals that advertisers
and marketing organizations will operate upon. Ethical marketing issues include
promotion of obsolete or harmful products/services; openness about environmental
threats; food ingredients (Genetically Modified Organisms); possible health hazards or
financial risks; protection for the privacy and autonomy of consumers; truthfulness in
advertising; and honesty in price and delivery. Some claim that advertisements can
affect the views of individuals and their relationships with others, suggesting an ethical
obligation to avoid distorting those expectations and relationships.
Ethics in marketing includes practices in pricing, which involves unlawful acts
such as price manipulation and price skimming. According to Hayes (2020), price
skimming is a product pricing strategy by which a firm charges the highest initial price
2
 that customers will pay and then lowers it over time. On the other hand, advertising
has raised concerns over offensive advertisements, objectification, and school
marketing.

4. Ethical Issues in Production

Business ethics typically deals with company's duties to ensure its goods and
industrial procedures do not inflict unnecessary harm. Many products and services
can be generated and used at zero risk and it can be difficult to assess the ethical path.
However, there are consumers who patronize products that damage them, for example,
tobacco products. Output can have adverse effects on the environment like air
pollution, destruction of habitats, and urban sprawl.

A secret to success lies in recognizing the value of ethics in industry. The customers,
management, and staff value honest and ethical practices. Hence, business ethics is vital
because it helps maintain a great reputation, helps to avoid significant financial and legal
issues, and ultimately benefits all involved. Therefore, it is highly suggested that each
company formulates its own Code of Ethics to be used as a guide in its business operation.

What is Code of Ethics?

Code of Ethics is a set of rules about good and bad behavior. It is a guide of
principles designed to help professionals conduct business honestly and with integrity.
A code of ethics document may outline the mission and values of the business or
organization, how professionals are supposed to approach problems, the ethical
principles based on the organization's core values, and the standards to which the
professional is held. Saucer and Sims (2013) offer recommendations for developing Code
of Ethics in business organizations:

1. Adopt code of ethics (use the Code of Ethics of other companies as a reference and
modify according to the needs of the company).
2. Offer training on ethics (for management and employees).
3. Hire and foster individuals with ethical value.
4. Deal with immoral activities. Employees must know the implications and effects of
making unethical actions, and should be ready to accept consequences.
5. Take constructive measures. For example, give rewards to employees who admit their
mistakes. If the company is conscientious and smart, it can encourage warehouse
workers to take responsibility for their mistakes and even praise them for coming
forward, apologizing and ensuring that a faulty product is not purchased by the
customer. At first it seems counter-intuitive to reward an employee for a mistake but
in the end, it provides everyone with the best result.
6. Carry out a social audit. Conduct survey to employees once in a while.
7. Cover all whistleblowers. These people detect illegal activities within organizations
and disclose the actions to the authority or managers. A whistleblower who works
sincerely, correctly reporting an issue, should be praised for his/her courage and
integrity, as opposed to being disciplined and ostracized. If an individual blasts the
whistle, it is possible that the company itself has failed internally to motivate and
improve fair and ethical conversations.
8. Empower the defenders of integrity. Support those who work with honesty and
integrity.
9. Ensure executive commitment. The anonymity of those who report the problems
should be practiced.
10.Communicate the principles of conduct within the company and across the industry.
3
11.Assign an officer who is clearly responsible for the enforcement of ethical standards.
He/she can be consulted for advice.
12.Establish a procedure for violations of ethical standards, and fully review any
offenses reported.
13.Ensure high perseverance by the company's board of trustees.
14.Lead by example, above everything else. It should be remembered that when faced
with an ethical situation, the outcome of the decision-making process should be
considered. One way to tackle ethical situations is by using the four-way test to
evaluate decisions.

This four-way test consists of asking four questions:

1. Is my decision truthful?
2. Is my decision fair to all who are affected by it?
3. Will this build the organization's goodwill?
4. Will the decision benefit all parties with vested interest in the outcome?

Code of Ethics contains the following:

1. Vision means something that you imagine; a picture that you see in your mind
(Merriam-Webster Dictionary). The vision statement helps to ensure the alignment of
the decisions to the company goals.
Example: To make innovations that everyone could access and adapt depending on their
needs

2. Values (value means something thought of as important or useful) Values in business

help to ensure that all of the employees work towards the company goals.
Example: We commit ourselves to serve our customers with quality service and utmost
respect.

3. Mission- a specific task with which a person or a group is charged (Merriam-Webster

Dictionary). The mission statement clearly and effectively guides the business or the
organization in its decision-making.
Example: To inspire all the young athletes of the country… tell them to dream and go
for it!

4. Principles- moral rules or beliefs that help you know what is right and
wrong and that influence your actions (Merriam-Webster Dictionary).
Examples: Customers have to be respected. Make sure to deliver quality product.

Simplified Sample of Code of Ethics: XYZ Company

Our Core Values

Our Vision: To lead the car industry by giving our customers quality cars worthy of
their money and unmatched customer services
Our Values:
We act with the highest standards of integrity.
We respect individuals and treat them fairly.

Our Mission:
To work efficiently and enthusiastically to make XYZ Company the
country’s top car dealer while serving our customers punctually and
courteously

4
 Our Principles:
1st: XYZ Company shall adopt a zero-tolerance policy towards bribery and
corruption in whatever form;
2nd: All company officers and employees shall conduct business in
accordance with Philippine laws and regulations; and
3rd: We shall act in good faith and observe sense of professionalism at all
times.

For actual/specific example of Code of Ethics, please visit:

http://www.ayala.com.ph/governance/page/business-conduct-and-ethics

Code of Ethics aims to lessen conflicting issues as it explains to what degree such
conflicts can be avoided and what parties can do if these conflicts happened.
Professionals therefore cannot say that they were ignorant of the immoral nature of their
improper behavior. Often relevant is the possibility of disciplinary action (e.g.
disbarment of a lawyer) which helps minimize unnecessary disagreements or offensive
behavior where a confrontation is imminent or is likely to happen.

V. Activities

Activity A.
Direction: Classify each phrase below to the corresponding column of ethical
issues where it belongs. Write your answers on a separate sheet of paper.

1. destruction of habitats
2. encountered misleading financial reports
3. overweight applicants are not allowed
4. hiring limited to religious affiliations
5. honesty in prices
6. truthfulness in advertising
7. fraud on securities
8. harm to environment
9. manipulation in prices
10. exaggerated advertisements

Ethical Issues:

5
 Activity B.
Directions: What would you do under the following situations below. Write your
answers on a separate sheet of paper.
1. Being an advertising artist, you were instructed by the manager to make two
layouts, but you will only receive the price for one.
2. Your company would have to donate P 1,000,000 to charity, but you witnessed that
the accountant only gave P 700,000 instead of P 1,000,000.

3. Being one of the food processors in a manufacturing company, you know that the
ingredients listed on the label of your product are not completely true.

Activity C.
Directions: Write True if the statement is correct and False if it is not.
1. The executives of the company should show perseverance.
2. Whether your decision is fair to all or not, it doesn’t matter.
3. Big businesses should conduct social surveys.
4. The Human Resource Department may not fully review the offenses reported.
5. Each employee should be fully aware of the company’s principles.
6. The proprietor’s decision should be based on truth.
7. Never mind immoral activities in the company.
8. The management should protect the whistleblowers because they show concern
to the company.
9. Every decision should build goodwill of the organization.
10. Ethics are social principles that guide the conduct of the individuals.

VI. Assessment

A. Directions: Choose which action below is more acceptable. Write the letter of your
choice on a separate piece of paper.
1. As an office employee, you need to _____.
a. wear the prescribed office uniform
b. wear something you are comfortable with
2. With the “No Smoking” policy of the company, Elvis, being a smoker, _____.
a. will not follow because it makes him uncomfortable
b. will follow because it could irritate the people around him
3. In observing the office hour, I _____.
a. will report to my workplace before the time
b. will report any time I want, anyway there is salary deduction
4. In advertising our business, we _____.
a. will do anything, even to the point of inventing story, just to convince the
consumers
b. will only tell the truth, so as not to affect our company’s credibility
5. In bookkeeping, Elsa _____.
a. will maintain two books of sales: one with the actual amount of sales, and
one which has the adjusted amount for income tax purposes
b. will maintain only one book of sales with actual amount

6
 B. Directions: Read each statement below and classify it according to its ethical issue.
Write only the letter of your answer on a separate sheet of paper.

A. Ethical Issues in Production

B. Ethical Issues in Sales and Marketing
C. Ethical Issues in Finance
D. Ethical Issues in Human Resource Management

1. XYZ Company does not accept members of LGBTQIA+ community.

2. Reggie’s hotdogs are made under strict processing standards.
3. The company supervisor orders office supplies from her husband’s store.
4. Wyn Mobile, a new brand of computer, launched its new laptops at an
overpriced amount.
5. Marigold Enterprise rejects differently abled applicants.
6. Energybest Milk does not put on the can’s label the ingredients they used.
7. The food products of XYZ Corporation are well-sealed.
8. The administrative manager joins the contract bidding of their proposed new
building.
9. Mr. Reyes, the accountant, bribed the personnel to reduce their company’s tax
payable.
10. Cherry Beverages hired a famous commercial model for its product
promotion.
11. Chocmuch Manufacturing Corporation delivers its products on time.

VII. References
Bagtas G. R., Business Ethics and Social Responsibility – SHS Quarter 3 – Module 3:
Code of Ethics in Business. Edition, 2020., Printed in the Philippines by Department
of Education -Schools Division of Bataan

Prepared By:

MICHELLE M. MARCELO
Teacher I – Maruhat National High School - MNHS

Practice Personal Hygiene Protocols at all times.