ETHICS
Lesson 1
3 basic types of business organizations:
Sole proprietorship - one owner of the business
- very small business-often home
office/sari-sari store-generally have few sales
-advantage and disadvantage of having
total control over a business and decisions made
-easiest to establish and close
-limited life
-small amount of capital is needed to start a
business
-also difficult to find start-up funds
-ownership of all profits/losses
-unlimited liability
-minimum legal requirements
-business secrecy
-personal interest in managing the business
-tax savings
Partnership - two or more owners and may have
equal responsibilities in the daily operations of the
business/one has more responsibilities than the
others.
-smallest number and market share
-easy to establish
-limited life
-large amount of capital
-share of profit/losses
-unlimited liability of the partners
-subject to minimum government regulation
-business secrecy
-each partner has a right to participate
-tax savings
-if one of the partners dies or left, the other
partner must figure out how to handle that (usually
finding new partner)
Corporation - formal, legal structure that takes its
own identity
-viewed similar to an individual
-corporation itself is held responsible for the
decisions made by employees, managers, and/or
board of directors
-hard to establish as it requires more money
and time because of the need for legal advice and
paperwork
-sell shares and are owned by shareholders
-shares might be sold publicly (using one of
the stocks of market exchange) or privately (often
to friends and family members)
-stock corporation=stockholders
-non-stock corporation=board members
-life is 50 yrs and can be extended
-large amount of capital
-proportion to each stockholders percentage
of ownership interest
-stockholders have limited liability
-subject to numerous government regulation
-lack of secrecy
-several taxes to pay as mandated by laws
and ordinances
Major Contributions of Forms of Business Orgs.
In Socio-Economic Development
● All businesses have a legal responsibility to
ensure they conduct themselves fairly in
relation to customer, community, and other
businesses
● Important to create shared value by playing
a role in advancing socio-economic devt. In
societies
● Creating economic value should be at the
heart of a company’s activities
● Businesses consider the major source for
economic growth, trading activity always
help buyers and sellers, dealing in
commodity, manufacturing activity, buying
and selling help money to flow from one
hand to another
● Businesses offers job opportunity,
self-reliance always help economy to grow
in size
Businesses are considered the engine of the
economy because businesses are mostly the
source of money in economy. It drives the economy
in any market-based system. This is because
businesses generate wealth for individuals and
funds the public sector of the economy through
taxation. In addition, they also provide jobs, as well
as goods and services. Lastly, businesses improve
the economy through investments.
Lesson 2:
Corporate governance - system designed to
improve internal company decision-making
procedures and address agency problems
-structures of decision-making and
guidelines for ethical behavior that help to improve
governance internally and the environment in which
companies operate
2 Structures of Corporate Governance:
1.)Division of roles between board of directors and
management:
a. Management is responsible for day-to-day
business operations
b. Board of directors oversees management
performance on behalf of the shareholders
who chose the directors
2.)The role and engagement of the shareholders
and stakeholders:
a. Shareholders delegate the conduct of
business to the management and elect
directors who represent them
b. Directors vote on key matters and are
accountable to the shareholders
c. The company adapts accounting standards
and follows legal requirements that
generate the information necessary for
directors, investors, and other shareholders
to make decisions
Key Principles of Corporate Governance:
Transparency - timely and proactive disclosure of
financial and other relevant information
Accountability - owners entrust the managers w/
running the company and holding them
accountable
-readiness or preparedness to give an
explanation or justification to shareholders for one’s
judgments, intentions, and actions.
Fairness - equitable treatment of minority
shareholders, employees, managers
Responsibility – the integrity of the business
operations engendering the trust of markets
and citizens
-an ethical concept that refers to the fact
that individuals and groups have morally based
obligations and duties to others
Internal responsibility - owners-managers-
employees
External responsibility - business-society-
environment
Stewardship - responsibility that companies have
to understand and manage their impacts on
the environment
Difference between Responsibility &
Accountability:
Main difference: Responsibility can be shared
while accountability cannot
-accountable means being responsible for
something but also ultimately being answerable for
ur actions
Task: Accountability is something you hold a
person to only after a task is done or not done.
While responsibility can be before or after a task.
Lesson 3: Code of Ethics
Dilemma - situations that challenges an agreeable
solution
-common dilemmas include ethical and
moral
Morals - body of standards or principles derived
from a code of conduct
Ethical - systemizing, defending, and
recommending concepts of right and wrong
conduct
Ethical Dilemma - often involves an apparent
mental conflict between moral imperatives, in which
to obey one would result in transgressing another
Ethics or Moral Philosophy - branch of
philosophy that involves systemizing, defending,
and recommending concepts of right and wrong
conduct
-field of ethics and aesthetics concerns
matter of value, and thus comprises the branch of
philosophy called axiology
Axiology - moral principles that govern a person’s
behavior or the conducting of an activity
Business Ethics - form of applied ethics/
professional ethics that examines ethical principles
and moral or ethical problems that arise in business
Decorum - requirement of correct behavior in polite
society
-stiffness or formality in rules of conduct or
behavior established as suitable to the
circumstances.
-maintains dignifies behavior and observing
decorum opens path to morality
Protocol - guidelines typically defined for each
employee upon being hired.
-standard of guiding principles that drive the
company’s mission forward and a code of conduct
which states how employees should act
-system of rules that explain the correct
conduct and procedures to be followed in formal
situations
-unwritten rule that are peculiar to every
culture or organization, and are supposed to be
observe by all parties
Business Protocol - general term that may define
several aspects of the business-everything from
behavior and dress to task execution
Policy - statement of intent, and implemented as a
procedure or protocol
-generally adopted by the board of directors
or senior governance body within an organization
and designed to influence and determine all major
decisions and actions
Procedures - methods which is to be implemented,
developed, and adopted by senior executive
officers.
-specific methods employed to express
policies in action to day-to-day operations
Code of Ethics - adopted by organizations to
assist members in understanding the difference
between right and wrong
-How an employee behaves toward customers can
have a major impact on whether or not those
customers ever come back; how an employee
behaves towards other employees can result in
lawsuits; and how they behave with suppliers could
result in criminal prosecution
-Policies and procedures ensure that a point of
view held by governing body of an organization is
translated into steps that result in an outcome
compatible with that view
ETHICS:
derived from the Greek word ethos which means
“characteristic way of thinking”
-it is a moral principle that guides the conduct of the
individual.
-rules of behavior based on ideas bout what is
morally good and bad
Examples of Ethical Issues in Business:
1.)Ethical issues in Finance
-fairness in trading practices, trading conditions,
financial contracting, sales practices, consultancy
services, tax payments, internal audits, external
audits, and executive compensation
- ethical/legal abuse includes insider trading,
bribery/kickbacks, misleading financial analysis,
and fraud o securities
2.)Ethical issues on Human Resource(HRM)
-HRM’s tasks include hiring and orientation,
performance evaluation, training and development,
labor relations, and health and safety concerns.
-Ethical issues are discrimination by age, gender
preference, sexual orientation, race, ethnicity,
disability, and physical appearance
3.)Ethical issues in Sales and Marketing
- Marketing ethics deals with the belief,
standards, and morals that advertisers and
marketing organizations will operate upon
-Ethical issues: promotion of obsolete or harmful
products/services; openness about environmental
threats; food ingredients, possible health hazards
or financial risks; protection for the privacy and
autonomy of consumers; truthfulness in advertising;
and honesty in price and delivery
-Advertisements can affect the views of
individuals and their relationships with others,
suggesting an ethical obligation to avoid distorting
expectations and relationships
CODE OF ETHICS:
-set of rules about good and bad behavior
-guide of principles designed to help professionals
conduct business honestly and with integrity
-document that may outline the mission and values
of the business
Vision - something that you imagine; a picture that
you see in your mind
Values - help to ensure that all of the employees
work towards the company goals
Mission - specific task with which a person or a
group is charges
Principles - moral rules or beliefs that help you
know what is right and wrong and that influence
your actions
Saucer and Sims recommendations for
developing Code of Ethics in 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 values.
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 surveys of
employees once in a while.
7. Cover all whistleblowers. These people detect
illegal activities within organizations and disclose
their actions to the authority or managers. A
whistleblower who works sincerely, and 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.
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.
Lesson 4: Philosophies
Plato: identifies the better satisfaction of human
needs as the root cause of association
-pleads for division of labor and gives 3
reasons:
(1) Natural productive differences between the
individuals, which make 1 person a better
tailor, while another is a better farmer
(2) The daily exercise resulting from
specialization improves the workmanship
(3) Many jobs need to be done at the right
moment in time and therefore require
permanent availability of some person
charges with this task
Socrates: one of the 1st philosopher
-insisted on our right to think for ourselves
-too often, people simply go along with the
crowd
-our characters are our responsibility (Ex:
people do corruption because others are doing it
too)
 -Sophistic doctrine (virtue can be thought)
argues that successful fathers do not necessarily
produce successful sons and moral excellence was
more a matter of divine bequest than parental
upbringing
-introduced the concept of teaching
ethics and acceptable standards of conduct in
400 B.C. and had a profound and lasting impact on
Western philosophy
-believed virtue was found primarily in
human relationships, love, and friendship, not
through material gains
Aristotle: great biologist as well as philosopher
-based his ethics on a psychological theory
of human nature; we are naturally virtuous, rational,
social, and happiness-seeking
-govt. and organizations need to build the
best systems to let humans fulfill their natural drives
-his philosophy was influenced on Edward
Deci and Richard Ryan’s Self-Determination
Theory, which suggests that employees will work
harder for you, and perform better if you give them
tasks they find meaningful and morally worthwhile
-humans want to believe in something then
serve it. Appeal to your employees’ best nature
then they will answer that call. They will also be
motivated if you give them the opportunity to feed
their natural curiosity through learning opportunities
Plutarch: ancient Greek historian and educator
-humans are incredibly social creatures who
constantly observe the people around them and
imitate them
-what you say to your employees is less
important than what you do
Epictetus: grew up as a slave in Romand then
became a Stoic Philosopher
-people can control their thoughts, beliefs,
and attitudes, but everything else to some extent is
out of their control (other’s perceptions and
behaviors, economy, weather, future and the past)
-people should focus on what they can
control, and they will feel a measure of autonomy
even in chaotic situations
Musonius Rufus: Socrates of Rome
-philosophy cannot just be theoretical
-if you want to be an ethical
individual/company, you have to practice ethics,
every day, to get into good habits.
-you also need to keep track of progress to
see how you’re doing
-one cannot just rely on intuitions because
they are often wrong
Epicurus:4th century Greek philosopher
-the aim of life was simply to be as happy as
possible here on Earth before we die and dissolve
back into the atomic universe.
-humans are very bad at being happy, and
very good at inventing reasons to be miserable
A person’s philosophy of business could be an
unwritten attitude or a specifically written
philosophy that defines how people will act and
interact w/ each other and the general public
Codified policy - written policy
Philosophy - basic or core belief that starts with an
individual and then expands to a group that is
working together.
Business philosophies should be well-defined and
genuine
To help achieve “the good life” companies apply
philosophies
Every business leader knows to make certain that
companies mission and vision statement are clear
and well-defined. It is the business philosophy that
defines why people are doing things the way they
are doing them
The worker’s core values as a company are what
set them apart.
As a business leader, business core values start w/
the core values. When a person integrates their
values into the business, their own values become
part of the company culture. A company that has a
positive culture tends to be more efficient and
productive.
Lesson 5: Belief Systems
Cogitations poenam nemo patitur - lat, law –
nobody is responsible for thoughts
-Various religious views influence business ethics in
our modern world
Christianity: Old and New Testament.
-Christians in commerce should not desire
“to get another’s goods or labor for less than it is
worth”
Judaism: relies on Torah (teaching, direction,
guidance, and law) for its written law, has had a
great impact on marketing and business ideology
-honesty on the market, fair pricing, and
business relations
Islam: basis of these laws is Qur’an
-Islamic teachings strongly stress on
observance of ethical and moral codes in human
behavior.
-avoidance of people’s exploitation through
lending them money at interest and prohibitions
against false advertising
Buddhist: business code and professional ethics
are closely tied with respect for environment
-some Buddhist texts emphasize the role of
enlightenment – one of the elements which prohibit
occupations with violence such as arms dealing
-teachings are to help organizations
improve their communication, to build effective
ways of working, to help employees deal with
change, and to manage stress
Religion - systematic set of beliefs that influences
human behavior
-for some, it is about how to live. People
adopt its system as a way of life
Religious beliefs are associated with “good”
economic attitudes, where “good” is defined as
conducive to higher per capita income and growth
Lesson 6: Filipino Value System
Values - things that have an intrinsic worth in
usefulness or importance to the possessor
-principles, standards, or qualities
considered worthwhile or desirable
Filipino value system - the way people live their
life as an influence of one’s culture
-set of value systems that most Filipino
have historically held important in their lives
Bahala Na - trust in God or a person does not
know what to accomplish or is too slothful to do
anything at all.
-show that Filipinos are free-spirited and
that they put their life in fate’s hand
Gratitude or Utang na Loob - one does not fail to
remember the fine actions that others may have
done particularly at times of great need
-this debt of gratitude is at times abused by
those who have done well to others
-people are forced to do something in
exchange for what others do in favor
Ningas Cogon - Ningas which means flame, blaze,
or combustion, while cogon is a grass that can be
easily burned which means the fast burning of
cogon
-Filipinos’ way of eagerness only at the
beginning but then quickly losing enthusiasm soon
after to continue it, or the lack of follow-up
Padrino System - patronage in our culture and
politics
-one gets support, endorsement, or political
appointment through family affiliation (nepotism) or
friendship (cronyism), as against one’s worth
-root cause of corruption
Amor Propio/Self-Respect - spanish word which
means self-love
-sense of self-esteem or self-respect that
stops a person from swallowing his pride. It
includes sensitivity to personal insults or offends
Mañana Habit - mañana means tomorrow or
specified future time.
-procrastination and “mamaya na”
-putting something off until another time
 -this habit made Filipino become lazy and Excessive parting - value system of straining his
less efficient in doing a task own finances just to impress his guests
Filipino time - value system that refers to the
Family Orientation - the Philippines is known to be Filipinos’ own unique brand of time
a family-centered nation CSR or Corporate Social Responsibility - good
-Filipinos recognize their family as an stewardship of the environment while doing
important social structure that one must take care business
of Trusteeship (CSR) - management that became
-family is always of vital importance in the responsible to all contributors of the corporation
Philippines -pluralistic society that reinforces
-most business organizations have the trusteeship concept which defines one that has
Filipino family as their model many semi-autonomous….
-(not trusteeship)management that is the
ADDITIONAL INFO: most sensitive to the needs of the community wil
Socrates - known as the Gad-fly of the result to have a better community in which to
marketplace conduct his business.
Plato - known as the Philosopher King
Aristotle - known for his Nicomachean Ethics
Betham and Mill - known for his utilitarianism
concept of ethics
Belief system is a powerful force that affect lives of
people; shaped and influenced by a number of
different factors; and formed through experiences,
inferences, and accepting what others tell us to be
true
Buddhism - belief system that encourages all
things in moderation and teachers that the desire
for worldly things leads to evil
Islam - belief system that identifies a central deity,
Allah, whose instructions guide behavior
Christianity - belief system that focuses on the life
and teachings of Jesus Christ
Hinduism - belief system that believes in the
unifying concept of karma and worships different
Gods
Crab mentality - behavior of preventing someone
from achieving something due to jealousy or envy
Grapevine - overheard conversation or anonymous
sources of information
Mañana Habit - filipino value system that
encourages procrastination
Ningas Cogon - exerts half-hearted effort in
undertaking
Bahala Na - Filipinos’ own version of fatalism, the
belief of leaving everything to the hands of fate
Penchant of Law breaking - value system that
refers to “self-righteous disobedience” or blatant
disregard of the rules