12

BUSINESS ETHICS AND SOCIAL RESPONSIBILITY

Self-Learning Home Task
2nd Semester, Quarter 2 – Week 2

1
 GENERAL INSTRUCTIONS:

 Write your NAME and your Grade and Section on the space provided on the upper part of the
answer sheet. DON’T FORGET.
(Isulat ang imong NGALAN og Grade og Section sa mga blanko nga makita sa taas
nga bahin sa answer sheet. AYAW KALIMOT.)

 Answer all the exercises in Exercise 1, Exercise 2, and Assessment found in this Self-Learning
Home Task.
(Tubaga ang tanang exercises nga naa sa Exercise 1, Exercise 2, og Assessment niining
maong Self-Learning Home Task.)

 Use the answer sheet provided for your answers. Write your answers on the space provided
for the different exercises.
(Gamita ang gitagana nga Answer Sheet para sa inyong mga tubag. Isulat ang inyong tubag sa
lugar nga sulatanan sa kada exercise og assessment.)

2
School: SANTANDER NATIONAL HIGH SCHOOL Date:
Grade/Section: ABM12-Athena Subject Area: Business Ethics and Social
Responsibility

Week 2

I. MELC/s: 1. 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. (ABM_ESR12-IVi-l-3.2, ABM_ESR12-IVi-
I-3.3 )

II. Subject Matter: Morally Defensible Position on Ethical Issues in Business

III. References:

3
IV. Procedure
A. Readings
The fundamental reason for examining the activities of business from the moral perspective is
for the promotion of the common good, protection of the individual’s interests and the preservation of
the human society in general. Without ethics, business will be chaotic because there will be no
understanding and agreement about what is wrong and right in the human conduct. Ethics in any field
must be rooted in a sense of morality and justice that is associated with human action. Social
responsibility is a moral obligation of each and every individual, institution, business and organization
since they all compose the society.
Looking back in our objective on the previous pages, “formulate 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.”
Let us first try to understand the issues buy discussing them one by one.
1. Basic Fairness
Let’s try to review back about the terminology “fairness.”
Fairness in the context of a business organization involves balancing the interests involved in
decision making including any decisions related to hiring, firing (including the investigatory process),
and the compensation and rewards system. Recent research has expanded the meaning of equity or
fairness. Historically, equity theory focused on distributive justice, the employee’s perceived fairness
4
of the number of rewards and who received them. However, organizational justice draws a bigger
picture. Employees perceived their organizations as just when they believe rewards and the way they
are distributed are fair. In other words, fairness or equity can be subjective; what one person sees as
unfair may be perfectly appropriate for another. In general, people see allocations or procedures
favoring themselves as fair.
Overall, fairness has to do with justice, which is to give to another that which is due him or her.
More concretely, justice: (1) looks at the balance of benefits and burdens distributed among members
of a group; and/or (2) can result from the application of rules, policies, or laws that apply to a society
or a group. In general, the results of actions override utilitarian results.
2. Personnel and Customer Relations
There are two subjects here, the first is about personnel relations and the second is on
customer relations. Let us first discuss the former, then the next will be the latter.
What is Personnel Relations?
Personnel is synonymous to the word “employee” and also to “human resource.”
So, we can use the word employee relations in replace of the word personnel relations. It’s just
the same and when we search topics on personnel relations, employee relations will be the one to
appear.
The term employee relations refer to a company's efforts to manage relationships between
employers and employees. An organization with a good employee relations program provides fair and
consistent treatment to all employees so they will be committed to their jobs and loyal to the company.
Such programs also aim to prevent and resolve problems arising from situations at work.
What is Customer Relations?
The way a business relates to its customers, clientele and patrons is known as customer
relations. Also called customer service, some companies hire people specifically to manage how the
company interacts and communicates with people. The goal is to retain existing customers and to
gain new ones by providing the best customer relations they can, and – hopefully, to find better
customer services than those their competitors provide. There are several components that go into
superb customer relations.
Customer relations is the process and manner by which a business develops, establishes, and
maintains relationships with its customers. Businesses rise and fall through the support of their
customer bases. Consequently, it is absolutely essential that you develop effective customer relations.
On a practical level, customer relations is effectively communicating with your customers and
promptly addressing complaints and treating them as opportunities for improvement. In other words,
listen to your customers!
3. Fraud
Let’s take a look what is the meaning of fraud in the dictionary.
It means intentional perversion of truth in order to induce another to part with something of
value or to surrender a legal right. It also means an act of deceiving or misrepresenting.
Fraud is synonymous to deception, deceit, treachery, and swindling. simple terms in Filipino, it
is translated as “Pandaraya” and “Panloloko.”

5
Business Fraud

Business fraud consists of dishonest and illegal activities perpetrated by individuals or

companies in order to provide an advantageous financial outcome to those persons or establishments.
Also known as corporate fraud, these schemes often appear under the guise of legitimate business
practices. An array of crimes fall under business fraud, including the following:
 Charity fraud: Using deception to get money from individuals believing they are making donations
to legitimate charity organizations, especially charities representing victims of natural disasters
shortly after the incident occurs.
 Internet auction fraud: A fraudulent transaction or exchange that occurs in the context of an online
auction site.
 Non-delivery of merchandise: Fraud occurring when a payment is sent but the goods and
services ordered are never received.
 Non-payment of funds: Fraud occurring when goods and services are shipped or rendered but
payment for them is never received.
 Overpayment scheme: An individual is sent a payment significantly higher than an owed amount
and is instructed to deposit the money in their bank account and wire transfer the excess funds
back to the bank of the individual or company that sent it. The sender's bank is usually located
overseas, in Eastern Europe for example, and the initial payment is found to be fraudulent, often
after the wire transfer has occurred.
 Re-shipping scheme: An individual is recruited to receive merchandise at their place of residence
and subsequently repackage the items for shipment, usually abroad. Unbeknownst to them, the
merchandise was purchased with fraudulent credit cards, often opened in their name.

4. Unfair Competition
Is competition good or bad? Competition is healthy and can be a motivation for firms to
produce better products or offer better services. Without competition, firms can just relax and quality
will suffer. Thus, competition becomes bad only when it eliminates a competitor in a cutthroat
competition. Some practices include under cost selling or selling their products below cost just to get
rid of their competitors.
Difference between Fair and Unfair Competition
Fair competition is doing business under ethical rules of conduct, behavior and judgement. It is
attaining success in business through the merits of its products or services while unfair competition is
unethical business practice. It is doing business with the goal of profit without regard to others. In
general, unfair competition consists of:
➢ Deceptive trade practices such as misrepresentation and false advertising;
➢ Business interference to prevent a competitor from continuing with its business process or
business contract;
➢ Anti-competitive market practices such as under cost selling to kill the competitor;
➢ Defamation of a competitor or badmouthing a competitor to a customer;
➢ Caveat emptor or indirect misrepresentation by withholding information from the buyer; and
➢ Violation of Intellectual property right such as copyrights, patents, trademarks and service marks.

6
 Article 168 of R.A. 8293 (Intellectual Property Code of the Philippines) is specifically about
unfair competition on the use of trademarks, service marks and trade names. Under this R.A. and
article. The following shall be deemed guilty of unfair competition:
a. Any person who is selling his goods and gives the general appearance of the goods of
another, either in the goods of themselves or in wrapping of the packages, which would likely
influence buyers to believe that the products being offered are those of the manufacturer
or dealer other than the actual manufacturer.
b. Any person who, by any artifice, or device, induces the false belief that such person is
offering the services of another who has identified such services in the mind of the public.
c. Any person who shall make false statements in the course of trade or shall commit any other
act in bad faith to discredit the goods, services or business of another.
5. Unfair Communication
Communication is an important tool for a small business owner. Communications with
employees, customers and vendors may involve product promotions, job offers, contract negotiations
and discussions regarding the competition. Using such an important business tool requires a sense of
responsibility on the part of the communicator to adhere to ethical guidelines.
Legal Violations
While the concept of ethics generally relates to a person's responsibility to communicate fairly,
without bias and with respect to those affected by the communication, violations of ethics in
communications can become legal violations. Breaching confidentiality or purposely communicating
lies about a person or an organization, for example, can be considered a legal issue as well as an
ethical issue. Legal violations of communications, such as slander, can result in sanctions by
governing bodies or criminal ramifications.
Truthfulness
Sometimes, an untruthful piece of communication is just an oversight. However, not checking
facts is a violation of ethics, particularly when communicating information about a product, competitor,
customer or employee, into the piece of communication. A lack of fact-checking shows a lack of
responsibility to verify information that is being communicated. If the information might prove
detrimental to the subject, the communicator has an obligation to make certain the information is
accurate. For example, stating that a competitor uses a substandard material in his product without
verifying the information violates ethics and may result in legal consequences.
Confidentiality
Relaying information that was provided in confidence or that was overheard in someone else's
conversations is a violation of communication ethics. The act of spreading rumors is degrading to a
small business owner who needs to earn the trust and respect of his employees and customers to be
successful. In addition, some breaches of confidentiality can also carry legal consequences. Many
contracts are written with confidentiality clauses. Business owners working in the medical industry
may be subject to HIPAA regulations that forbid them from disclosing any information about medical
providers or clients.

7
Offensive Messages
Communication that is offensive to the receiver or to anyone affected by the information
contained in the message violates ethical communication guidelines. The communication may offend
others because of references to race, gender, income level, background or education level. Stories
and jokes are prime examples of communication that have the potential to offend the recipients. Any
topic to which others may be sensitive should be avoided in business communication, including
religion and political issues, to avoid offending others and possibly committing a violation of
communications ethics.
Communication is an extremely important part of every society. In this lesson, we're going to
talk about unethical communication and see what sort of behaviors harm ethical interactions.
Communication Ethics
The communications revolution of the last decade has fundamentally changed the ways that
modern people interact, share information, and otherwise communicate. Communication is a big part
of our lives, and this means that it is powerful. Anything with that much power needs to be examined,
which is why a number of scholars spend their time examining issues of communications ethics.
Ethical and Unethical Communication
Scholars of communications ethics, along with historians, sociologists, psychologists, and
others, have long noted that language has power. Our societies are built around shared systems of
communication; we develop culture through the ways we communicate our ideals with each other,
and even our personal identities and psychological well-being can be impacted by our ability to
communicate with others. Language can be used to support an ideology, emotionally wound, rally the
masses, or inspire devotion. Keep in mind that language is only a small portion of communication,
and that non-verbal forms of communication can be just as influential.
So, communication is powerful, and therefore has ethical boundaries. Communication used to
improve interpersonal relations or to bring moral changes to society is ethical communication.
Communication used to undermine relationships or encourage social immorality is unethical
communication. The exact definitions of these depend on the ethics system of your culture, but most
people agree that ethical communication builds positive relationships, while unethical communication
impairs them.
Interpersonal Communication
Unethical communication can be very damaging, but impacts people differently at different
levels. Let's start with interpersonal communication, or the systems of exchange between individuals.
Communication is the centerpiece of interpersonal relationships, through which people build
trust,express emotions, and establish connections. Ethical communication encourages this, while
unethical communication undermines interpersonal relationships. This can be extraordinarily
damaging, as much of or psychological and social well-being depends on healthy relationships.
Institutional Communication
While unethical communication can hurt interpersonal relationships, it can also undermine
healthy social relationships. Institutions, from companies to entire governments, have moral and
ethical obligations to communicate transparently and without bias or prejudice. As groups of authority,

8
institutions have the power through their communication habits to influence the communication
systems within a large group of people. Unethical communication practices at the institutional level
tend to favor a few people over the majority, specifically those in power.
Unethical Behaviors
Now that we understand the ways that unethical communication can impact people on
personal and social levels, let's explore some behaviors commonly accepted to be unethical.
Plagiarism
Our first unethical communication behavior is plagiarism. Plagiarism describes the un-credited
use of someone else's ideas. We see it often in writing, when an author steals from other writers.
Plagiarism hurts trust and the credibility of publishing institutions, undermining a society's ability to
communicate openly and freely. However, plagiarism is about more than just writing. In the colonial
era, European empires had a strong habit of taking responsibility for any positive event or
development, while b laming negative events on the local populations. This created a structure of
power that was biased against local populations. It has only been with the on-going post-colonial
studies of the 20th and 21st centuries that many instances of cultural or social plagiarism are being
uncovered.
Ethics in Business Communication
As business practices become more transparent and the people behind those businesses
become more public, customers and patrons begin to expect more from these businesses. It’s no
longer a faceless corporation trudging along making a profit and paying their investors. Because of
this, in order to be successful in today’s environment, a company has to be socially conscious and to
behave ethically.
That’s a trend whose thread is woven into every aspect of business, and that’s not a bad thing.
Communicators should absolutely be cultivating a level of trust and integrity in each of their
messages. They should be socially conscious and inclusive in their communications. It’s what
audiences expect and, frankly, what they should have.
Guidelines for Ethical Communication
It’s not enough for a communicator to craft a message that’s clearly understood by his
audience, leveraging the seven principles of business communication:

In reality, if you adhere to the seven principles, you will communicate ethically. For instance, if
you craft a message that is not clear and concise, and you use tricky language that manipulates your

9
are not being ethical. If you purposely do not disclose complete information, then you are not being
ethical.
You don’t have to look too far today to see examples of unethical communication; they’re all
over the media. “Fake news” media sites abound, even though social media outlets like Facebook
and Twitter are making efforts to prevent them from being posted and shared.
6. N on-respect of Agreements
The synonym of the word agreement is “contract” and “treaty”.
The Basics of Business Contracts and Agreements
Contracts and agreements are important for conducting business for all sizes of companies. In
earlier decades, there were few written business contracts, and many business and personal deals
were done with a handshake. If a problem arose, the two parties could take the issue to court, and a
judge would hear the case even if the contract was not put into writing.
While a verbal contract is still legal (except for in specific situations), most contracts are
documented in written form. Contracts have become increasingly detailed these days, and every
effort is made to make all possibilities and eventualities clear.
Enforceable Contracts
In addition to being clear and specific, a contract must meet certain criteria to make it legally
enforceable. A legally enforceable contract can be used in court to support a decision on a disputed
item. If a contract does not have certain essential ingredients, it is not legally enforceable.
Most contracts never see a courtroom and they could easily be verbal unless there is a specific
reason for the contract to be in writing. When something goes wrong, a written contract protects both
parties. If one party to a valid (enforceable) contract believes the other party has broken the contract
(the legal term is breached) the party being harmed can bring a lawsuit against the party who it
believes has breached the contract.
The legal process, or litigation, determines whether the contract has been breached or whether
there are circumstances that negate the breach. The court, however, will only hear a contract dispute
if the contract is valid.
Contracts vs. Agreements
Many people use the terms contract and agreement interchangeably, but they are not precisely
the same thing. Black's Law Dictionary defines an agreement as "a mutual understanding
between...parties about their relative rights and responsibilities." It defines a contract as "An
agreement between...parties creating obligations that are enforceable."
Essentials of Business Contracts
There are six required, essential elements for a contract to be valid (enforceable by a court).
The first three, considered here together, relate to the agreement itself, and the other three relate to
the parties making the contract.
Offer, Acceptance, and Mutual Consent

10
Consideration
There must be something of value exchanged between the parties. The thing of value may be
money or services, but both parties must give something (otherwise, it is a gift, not a contract).
Competence
Both parties must be of "sound mind" to comprehend the seriousness of the situation and
understand what is required. This definition requires that neither party be minors, both must be sober
(not under the influence of drugs or alcohol when signing the contract), and neither can be mentally
deficient. If one party is not competentthecontractisnotvalidandthenon-competent party can disavow
(ignore) the contract.
Legal Purpose
The contract must be for a legal purpose. It cannot be for something illegal, like selling drugs
or prostitution. Remember that it is not illegal to enter into a contract that doesn't have all of these
essential items; it just means that if an essential is missing the contract cannot be enforced by a court.
When a Contract Must Be in Writing
As noted above, verbal contracts can have the force of law, but some types of contracts must
be in writing, like long-term contracts and contracts for marriage (pre-nuptials). There is also such a
thing as an implied contract. You can unknowingly enter into a contract with someone and be forced
to abide by its terms.Nevertheless, agreements may not be the same as contracts. The first may not
be enforceable, and the latter is enforceable. But not doing or following what’s in the agreement
creates not good relationship among those parties contracted or agreed.
Business Contracts & Ethics
While business contracts are legally binding documents, they are only effective within an
ethical framework that assumes most parties observe and fulfil their contractual obligations.
Competing for, obtaining and satisfying contracts ethically is the basis for an efficiently functioning
economy. If your company engages in unethical behavior, you may lose contracts, especially those
with governments,andwastevaluableresourcesinlegalentanglementswithcontractual partners seeking
damages.
Determining Prices Ethically
You have to have some basis for determining your prices, such as cost-plus profit or market
levels. Setting the prices for your contracts in this way is ethical, while basing your prices on
manipulation or hidden factors is not. Once you have calculated the contract price, you have to
ensure that you present it in a transparent fashion, without hidden costs. An ethically negotiated
contract strikes a balance between the benefits to the supplier and purchaser. The successful
execution of such a contract delivers advantages to both parties, and both parties have a stake in
avoiding problems.
Avoiding Conflicts of Interest
Some conflicts of interest are ethically unacceptable, such as bidding on work for which you
decide who is awarded the contract, but you can avoid other types of conflict of interest with

11
Competing Fairly
A competitive market gives you feedback on the value you are offering to customers as
compared with your competitors. When you obtain a contract through fair competition, you know that
you have been successful in presenting exceptional value. When a competitor receives the contract,
you have to work on reducing prices or increasing quality. Unfair competition through collusion or
price fixing, when you secretly agree on elevated bid prices with your competitors, is not only
unethical but hurts the effectiveness of the market. Companies that don't present good value receive
orders at the expense of those with the best prices and highest quality. Market signals are distorted
and all market participants lose out in the long term.
Observing Laws and Regulations
Laws and regulations protect the consumer, employees and other market participants. When
you develop an offer and sign a contract, you have to keep legal and regulatory constraints in mind.
Even if your adherence to laws is not likely to be verified, an ethical company prepares and executes
contracts within such constraints. When you are in doubt as to the legality of contract provisions, it is
good ethical practice to err on the safe side and avoid legal problems that come with trying to define
the exact legal limits and coming too close to borderline practices.
Breach of Contract and Lawsuits
In a perfect world, business contracts would be entered into, both sides would benefit and be
pleased with the outcome, and no disputes would arise. But in the real world of business, delays
happen, financial problems can crop up, and other unexpected events can occur to hinder or even
prevent a written contract from being carried out and one party ends up suing the other. The following
is a discussion of the legal concept of "breach of contract" and an overview of your legal options
should such a breach occur.
What Is a Breach of Contract?
A business contract creates certain obligations that are to be fulfilled by the parties who
entered into the agreement. Legally, one party's failure to fulfil any of its contractual obligations is
known as a "breach" of the contract. Depending on the specifics, a breach can occur when a party
fails to perform on time, does not perform in accordance with the terms of the agreement, or does not
perform at all. Accordingly, a breach of contract will usually be categorized as either a "material
breach" or an "immaterial breach" for purposes of determining the appropriate legal solution or
"remedy" for the breach.
Remedies for a Breach of Contract
When an individual or business breaches a contract, the other party to the agreement is
entitled to relief (or a "remedy") under the law. The main remedies for a breach of contract are:

Damages
The payment of damages — payment in one form or another — is the most common remedy
for a breach of contract. There are many kinds of damages, including the following:
12
 A. Compensatory damages aim to put the non-breaching party in the position that they would
have been in if the breach had not occurred.
B. Punitive damages are payments that the breaching party must make, above and beyond the
point that would fully compensate the non-breaching party. Punitive damages are meant to
punish a wrongful party for particularly wrongful acts, and are rarely awarded in the business
contracts setting.
C. Nominal damages are token damages (small amount of damages) awarded when a breach
occurred, but no actual money loss to the non-breaching party was proven.
D. Liquidated damages are specific damages that were previously identified by the parties in
the contract itself, in the event that the contract is breached. Liquidated damages should be
a reasonable estimate of actual damages that might result from a breach.
Specific Performance
If damages are inadequate as a legal remedy, the non-breaching party may seek an
alternative remedy called specific performance. Specific performance is best described as the
breaching party's court-ordered performance of duty under the contract.
Specific performance may be used as a remedy for breach of contract if the subject matter of
the agreement is rare or unique, and damages would not suffice to place the non-breaching party in
as good a position as they would have been in had the breach not occurred.
Cancellation and Restitution
A non-breaching party may cancel the contract and decide to sue for restitution if the non-
breaching party has given a benefit to the breaching party.
"Restitution" as a contract remedy means that the non-breaching party is put back in the
position it was in prior to the breach, while "cancellation" of the contract voids the contract and
relieves all parties of any obligation under the agreement.

7. Environmental Degradation
The Valdez Principles
The Coalition for Environmentally Responsible Economics(CERES) in Boston, USA drafted in
1990a Guide to The Valdez Principles. This is a list of principles that explains how to deal with
environmental issues. From the business and management points of view, this list is like the ten

commandments of environmental protection.

The Valdez Principles were formulated after a major oil spill from an Exxon tanker – the Exxon
Valdez which ran aground near Valdez, Alaska, on March 24, 1989 and spilled 240,000 barrels – 11
million gallons of crude oil which eventually covered 2,600 square miles of Prince William Sound and
the Gulf of Alaska, Although the Exxon spill was not the largest ever, it was one of the worst in terms
of environmental damage and long-term effects.
The ten Valdez Principles that ask companies to agree which includes the following actions:
A. Protection of the Biosphere
1. Minimize or eliminate the release of any pollutant.
13
 B. Sustainable Use of Natural Resources
1. Make sustainable use of natural resources.
2. Conserve non-renewable natural resources through efficient use and planning.
3. Protect wildlife habitat, open spaces, and wilderness while preserving biodiversity.
C. Reduction of Disposal Waste
1. Minimize creation of hazardous waste.
2. Recycle Materials.
3. Dispose waste through safe methods.
D. Wise use of energy
1. Use environmentally safe and sustainable energy source.
2. Invest in improved energy and conservation in our operation.
3. Minimize energy efficiency of products we produce and sell.
E. Risk Reduction
1. Minimize the environmental, health, and safety risks to our employees and the communities
where we operate.
F. Marketing of Safe Products and Services
1. Sell products and services which have minimum adverse environmental impact, and safe for
consumption.
2. Inform consumers of the environment impact of our products and services.
G. Damage Compensation
1. Take responsibility for any harm we cause to the environment while making every effort to
fully restore the environment.
2. Compensate those who are adversely affected.
H. Disclosure
1. Disclose to our employees and to the public incidents relating our operations that cause
environmental harm.
2. Take no action against employees who report any condition that creates a danger to the
environment.
I. Environmental Directors and Managers
1. Commit management resources to implement the Valdez Principle.
2. Establish a Committee of Board of Directors for Environmental Affairs
J. Assessment and Annual Audit
1. Conduct and make public an annual self-evaluation of our progress in implementing the
Valdez Principles
2. Work towards the timely creation of interdependent environmental audit procedures to be
completed every year and to be made available to the public.

8. T he Problem of Just Wage

Work and Compensation
14
each has a personal duty to take care of himself and not to be a burden to others.
Being compensated for a work done or for services rendered is part of the essence of work.
One is willing to work in exchange for remuneration of rewards he will receive from working. Such
remuneration may include both financial and non-financial compensation. It can be in the form of
wages, shares on profit, harvest or commercial goods, in-kind payments, and other remunerative
fringe benefits.
The main objective of compensation is to create a system of reward that is equitable to the
employer and employee. Thus, the general concern is that justice should be a substance of
compensation.
The Question of Just Wage
The question of “What is a just wage?” or “How do you define a fair wage?” has a long history.
A number of people all over the world commented on its definition and have argued on the
appropriate criteria to consider in setting the so-called just wage. A just wage is defined as that
remuneration which is enough to support the wage-earner in reasonable and frugal comfort. The
Catholic Church teaches us that “a just wage is the legitimate fruit of labor.”
Philippine Constitution and Republic Act 6727
Spread in various parts of the 1987 Philippine Constitution are specific pronouncements and
mandates on the protection and promotion of the rights of workers in the public and private sectors.
The Wage Rationalization Act declared the policy of the state to rationalize the
fixingofminimumwagesandtopromoteproductivity-improvementandgain-sharing scheme to ensure a
decent standard of living for the workers and their families. The minimum wage rates shall be
adjusted in a fair and equitable manner, considering existing regional disparities in the cost of living
and other socioeconomics factors.
Government Agencies Involved
In our country, determination of wages must also be equitable and just. The National Wage

and Productivity Commission (NWPC) and the Regional Tripartite Wages and Productivity Boards
(RTWPB) determine the minimum wage for Filipino workers. They handle the minimum wage rates of
the workers of each and every region of the country. It is their duty that wage shall be as nearly
adequate as is economically feasible to maintain the minimum standards of living necessary for the
health, efficiency and general well-being of the workers.
Factors to Consider in the Formulation of Fair Wages
Every employer faces the problem of setting wage rates and salaries.
a. External Market Factors
Refers to the supply and demand for labor and the so-called economic conditions and
underemployment. The Principle behind this is that wages are relatively high if there is scarce supply
of labor, and the same is low if there are more opportunities for labor.
b. Law and Regulation

15
c. Cost of Living
The cost of living relates to basic maintenance needs and it must be seriously considered in
formulation of wages. A fair wage should be sufficient to meet the increase in cost of living. Thus, if
the cost of living goes up by 10%, the wage should also go up by 10%. Unfortunately, it is a fact that
majority of the employers cannot automatically adjust wages with the increase of cost of living.
However, it is certainly clear that ignoring the cost-of-living means jeopardizing the welfare of workers.
d. Prevailing Industry Rate
Some claim that paying workers the average of what other companies are paying for the same
job results in a fair wage. However, such claim is not universally valid because not all companies
have a minimum wage high enough to maintain a decent standard of living.
e. Organizational Factors
Assessment on what type of industry the organization operates, the size of the company and
the organization’s profitability to justify its ability to provide fair wages to its workers should be
considered. Likewise, determining if the organization is unionized or not and if the company is capital
or labor-intensive could contribute to the establishment of fair wage.
f. Job Factors
The nature of the job itself entails the formulation of a just wage. Duties, responsibilities and
the skill requirements of the job are probably the most considerable determinants of fair wage. An
employee should be paid based on the complexity and difficulty of his job. This concept, however, is
not perfectly similar and true to all employees due to difference in interpretation of skills and tasks.
g. Individual Performances
The trends suggests that individual performances or productivity ratings affect the
determination of wage/salary increases. One who performs well in his job deserves to receive a
proportionate increase in pay.

9. Gift-Giving and Bribery

Gift-Giving
Gift-giving is merely an act of extending goodwill to an individual in an effort to share
something with them. Giving gifts to customers, clients, and business partners is a common practice
in the business community. It is normally observed during special occasions like Christmas, New
Year, and sometimes even during birthdays.
Business usually engages in gift-giving for the following reasons:
➢ To show appreciation for a favor received;
➢ To effectively establish goodwill with business partners;
➢ To advertise; and
➢ To compete effectively against competitors.
The following are the common forms of gift-giving:
➢ Samples
➢ Raffle Coupons/certificates
16
 ➢ Rebates/cash funds
➢ Padding
➢ Premiums
➢ Prizes
➢ Patronage awards (rewards)
➢ Tie-up promotions
➢ Allowance
➢ Free Goods
➢ Tips
Is Gift-Giving Ethical or Unethical?
Business gifts of clients and business associates can raise conflict-of-interest problems, and
knowing where to draw the line, between what is right and wrong, is not always easy. The clear point
is that those who cross that line, intentionally or not, end up in big trouble.
Factors in Determining the Morality of Gift-Giving
a. Value of the Gift
b. Purpose of the Gift
c. Circumstances under which the gift was given or received
d. Position between or relationship of the Giver and Receiver.
e. Acceptable Business Practice in the Industry
f. Company Policy
g. Laws and Regulations
Still, the ultimate moral judgement hinges on whether an objective partly could reasonably
suspect thatthegiftmightleadtherecipienttosacrificetheinterest of the firm for his own personal gain.

Bribery
Bribery is defined as a practice of giving remuneration for performance of an act that is
consistent with the work contract or the nature of the work one has been hired to perform. It is
intended to induce people inside the business or other organization to make decisions that would not
be justifiable according to normal business or other criteria. It was then identified to be a form of
corruption and is generally immoral and for most is illegal. Remunerations, termed as bribes, can be
in the form of money, gifts, entertainment, or preferential treatment.
Examples of bribery:
➢ A motorist offers a certain amount of money to a police officer in order not to be issued a
ticket for over speeding;
➢ A citizen seeking paperwork or utility line connections gives an expensive gift to a
functionary in exchange for a faster service;
➢ A construction company sharing percentage of its income to a civil servant in order to win a
contract; and
➢ A narcotics smuggler bribes a judge to lessen criminal penalties.

17
 In some cases, the briber holds a powerful role and controls of the transaction; in other cases,
a bribe may be effectively extracted from the person paying it.
Bribery is obviously unethical because of the following reasons.
➢ It is generally used as an instrument to gain personal or corporate advantage;
➢ It corrupts the concept of justice and equality;
➢ Bribery produces cynicism and general distrust of institutions;
➢ It destroys people’s trust in the integrity of professional services, of government and the
courts, of law enforcements, religion, and anything it touches; and
➢ It treats people as commodities whose honor can be bought and sold. It thus tends to
degrade the respect we owe to other human beings.
10. Morality of Advertising
Advertising plays a very significant role in marketing goods and services. Without advertising,
the consumers would not be aware of the presence of diverse products and services available in the
market. Sometimes, even the mere presence of advertising can s ell a product due to consumer
perception that a heavily advertised product is a product of good value.
Advertising has far reaching effects, sociology and economically, and it is important to note
that it does not only dominate our environment but it also becomes part of our culture. Recognizing
the effectiveness of advertising in generating sales, companies allocate an enormous amount of their
budget for advertising.
The primary purpose of advertising is to inform potential buyers of the availability of
acertainproductbyprovidingrelevantinformationonitsuses,benefits and how it might serve the needs
and wants of individuals. However, the use of advertising today has not been serving its intended
purpose since very little information is conveyed to consumers and more often the information is not
even useful. The economic system is characterized by high degrees of business competition where
every producer would want to have a piece of the consumer’s demand; as a result, advertisements
typically end making misrepresentations or false claims.
From the point of morality, advertising in itself is not bad or immoral since it helps achieve the
goals of both the seller and buyer. It only becomes immoral when, in the attempt to persuade
consumers, the advertisements become deceptive, misleading, and manipulative.
There is only one criterion in evaluating the morality of advertising, and that is, “to tell truth.” An
advertisement that conveys truthful information is morally permissible. If an advertisement contains
false statement and lies then it is said to be immoral.
Philippine Laws on Advertising
Consumer Act of the Philippines (R.A. 7394)
Article 108 of the Act declares that “The State shall protect the consumer from misleading
advertisements and fraudulent sales promotion practices.” The Department of Trade and Industry is
responsible for enforcing the provisions of the Act. With respect to food, drugs, cosmetics, devices
and hazardous substances, the Department of Health is the agency that oversees these products.

18
B. Exercises
Exercise 1
Direction: Tell something about the picture below in one paragraph consisting of 5 sentences. Write
your answer on your answer sheet.

Exercise 2
Direction: From the following ethical issues in entrepreneurship, pick two (2) which you think are the
most prevalent issues. Explain. Write your answer on your answer sheet.

19
C. Assessment
Directions: Choose what issue is related to the statements. Write the letter of the correct answer on your
answer sheet.

20