CHAPTER 6:

BUSINESS ETHICS

Prepared by:
Rozen G. Alfonso, MBA and
Dennis T. Fajarito, MBA
BUSINESS ETHICS
After studying the chapter, you should be
able to:
1. Explain what business ethics is.
2. Discuss the purposes of business ethics.
3. Describe the scope and impact of business ethics on
a. the economy
b. society
c. environment
d. business managers
4. Explain the ethical challenges in today’s world.

BUSINESS ETHICS
➢Refers to standards of moral conduct, behavior and
judgment in business.
➢Manners ethics is an area of corporate responsibility
where businesses are legally bound and socially
obligated to conduct business in an ethical manner.
 ➢Based on the personal values and standards of
each person engaged in business.
PURPOSES OF BUSINESS
ETHICS
• Main Purpose
✓To help business and would-be business to
determine what business practices are right
and what are wrong.
• Special Purpose
✓To make businessmen realize that they
cannot employ double standards
✓To show businessmen that common practices
are really wrong.
 ✓To serve as a standard or ideal upon which
business conduct should be based
PURPOSES OF BUSINESS
ETHICS
Double standards - A double standard is a principle or policy
that is applied in a different manner to similar things, without
proper justification. Essentially, this means that a double
standard occurs when two or more things, such as individuals
or groups, are treated differently, when they should be treated
the same way.
SCOPE AND IMPACT OF BUSINESS ETHICS

Business ethics covers all conduct, behavior and judgment in

business. This includes the slightest deviation from what is right
to illegal and dishonest acts that are punishable by law. It
involves making the right choices while engaging in such
business activities as manufacturing and selling a product or
selling and rendering a service.
SCOPE AND IMPACT OF BUSINESS ETHICS

• Economic Impact
A business has an economic impact on society through
the wages it pays to its employees, the materials that it
buys from their suppliers and the prices it charges its
customers.
• Social Impact
The social impact of corporate governance contributes
to the ethical climate of society. Corruption may unfairly
raise the price of goods for consumers, or the quality of
the product or service compromised.

Chapter 6 – Urban Bank

 SCOPE AND IMPACT OF BUSINESS

ETHICS
• Environmental Impact
Businesses that implement good environmental policies
to use energy more efficiently, reduce waste and in
general lighten their environmental footprint can reduce
their internal costs and promote a positive image of their
company.

Chapter 6 - Honda Facility Earns Environmental Award for Innovative

Wastewater Process
ETHICS
• Impact on Business Managers
 SCOPE AND IMPACT OF BUSINESS
A manager should:
✓ Acknowledge that his role is to serve the business enterprise and
the community.
✓ Avoid all abuses of executive power for personal gain, advantage or
prestige.
✓ Reveal the fact to his superior whenever his personal business or
financial interests’ conflicts with those of the company.
✓ Be actively concerned with the difficulties and problems of
subordinates treat them fairly and by example, lead them
effectively, assuring all the right of reasonable access and appeal to
superiors.
ETHICS
• Impact on Business Managers
 SCOPE AND IMPACT OF BUSINESS
A manager should:
✓ Recognize that his subordinates have a right to information on
matters affecting them and make provision for its prompt
communication unless such communication is likely to undermine
the security and efficiency of the business.
✓ Fully evaluate the likely effects on employees and the community of
the business plans for the future before taking a final decision and
✓ Cooperate with his colleagues and not attempt to secure personal
advantage at their expense.
ETHICS
• Impact on Business Managers:
In particular, a manager should:
✓ Recognize that his subordinates have a right to
information;
 SCOPE AND IMPACT OF BUSINESS
✓ Fully evaluate the likely effects on employees and the
community of the business plans for the future before
taking a final decision and;
✓ Cooperate with his colleagues and not attempt to secure
personal advantage at their expense.
QUOTABLE QUOTE OF THE DAY