CHAPTER 03

ETHICS AND SOCIAL

RESPONSIBILTY
Refers to the study of
morals and moral
choices of human
beings
The moral principles defining
right and wrong behavior of
businesspersons and their
agents.
AREAS OF CONCERN
FOR BUSINESS
ETHICS
1. Laws and regulations
promulgated by the government.

2. Specific ethical required but not

yet passed in to law
1. Product safety and quality
2. Fair employment and practices
3. Fair marketing and selling practices
4. The use of confidential information for personal
gain
5. Community involvement
6. Bribery
7. Illegal payments to foreign governments to obtain
business
CURRENT ISSUES
in ETHICS
Owners of food stalls serving spoiled food to
customers.
Business owners making fictitious insurance claims.
A schools awarding diplomas to undeserving persons
A contributor bribing a government official to
manipulate the bidding of contracts.
A drug manufacturer making false claims regarding
the efficacy of the product.
A television station copying format of a rival
station’s show
COVERAGE OF COMPANY
SPONSORED ETHICS
PROGRAM
Drug and alcohol abuse
Employee theft
Conflicts of interest
Quality control
Misuse of proprietary information
Abuse of expense accounts
Plant closing and layoffs
Misuse of company assets
Environmental pollution
Methods of gathering competitor’s information
Inaccuracy of books and records
Receiving excessive gifts and entertainment
False or misleading advertising
IMPROVEMENT OF
ETHICAL
PERFORMANCE
ETHICS TRAINING – it is when ethics training
courses are carefully designed and administered,
they make a positive contribution to the company.
ETHICAL ADVOCATES – a person who is
knowledgeable about business ethics, employed by
the company and acts as company’s conscience.
ETHICAL CODES – codes of ethics are document
that specify practices that are unethical and which
.the company expressly forbids.
WHISTLE BLOWING – it is an act that will
reveal private or classified information about an
organization. It is usually related to the
wrongdoing and miconduct.
WHAT IS SOCIAL RESPONSIBILITY?

Refers to the concern of business

for the welfare of the society
INTEREST GROUPS IN
BUSINESS FIRMS
OWNER – the interest of the owners are expected to
be of the highest priority.
CONSUMERS – constitute a very important group
which must be handled with some degree of
responsibility.
EMPLOYEES
 Health and safety – management should be concerned
with reducing incidents of work related sickness and
injury.
 Appropriate salaries and employee benefits –
employees must be paid with salaries commensurate
to their talents, skills, training and education.
 The right to speak out – must not be deprived of this
right by virtue of their employment.
 The right to privacy – employees have the right
to live their own private lives without
interference from their employers.

 The right to job security – employees must be

assured of security of tenure.
MINORITY GROUPS – such as Aetas, Igorots
Dumagats, Ibanags (2nd class citizens)
WOMEN – constitute a potential force to make
business progressive.
OLDER PEOPLE – they are regarded as “senior
citizen”
HANDICAPPED – group of people that may
contribute positively to the firm’s objectives.
COMMUNITY AT LARGE – responsible persons
have formed groups to monitor and recommend
appropriate actions to government agencies.
BENEFITS AND COSTS OF
SOCIAL ACTIONS
IMPROVED EMPLOYEE SATISFACTION AND
MOTIVATION

 A socially responsible company is

more likely to provide job
satisfaction to its employees.
BECOMING MORE AWARE OF CHANGING
CONSUMER TASTES AND PREFERENCES

when the firm’s research includes identifying

social needs that can be served, it will only be a
step away from knowing any changes in
consumers tastes and preferences.
GREATERDEMAND FOR THE COMPANY’S
PRODUCTS AND SERVICES

◦ Consumers has a better access to information

This access to information enables them to
identify companies that are socially
responsible.
ELIMINATIONOF LEGISLATIVE
CONTROLS ON BUSINESS ACTIVITY

When social issues become the concern of

legislative bodies, sanctions and other prohibitions
may result in more opportunities lost and lesser
chances of profit making for the firm.
MONEY SPENT in SUPPORT of SOCIAL
PROJECTS

REDUCTION of COMPETITIVE POWER

GOVERNMENT REGULATIONS may also be

IMPOSED

COSTS
SOCIAL
RESPONSIBILITIES
STRATEGIES
REACTION STRATEGY the company allows
the condition or potential problem to go
unresolved until the public finds out about it.
DEFENSE STRATEGY the company tries to
minimize or avoid additional obligations.
ACCOMNODATION STRATEGY when a
business assumes responsibility for its actions.
PROACTIVE STRATEGY the firm goes beyond
what is legally and ethically required.
Refers to the systematic examination of
all the activities comprising a firm’s
social program. It measures a company’s
progress toward achieving social goals.

SOCIAL AUDITS