Module GED 4 Ethics Module 1 3

MODULE 1
Introduction to Business
Ethics
MODULE OVERVIEW
In this Module
 Why Ethics Matter

 Forms of Business in Social and Economic Development
 Fairness, Accountability and Transparency
 Codes of Right Conduct
Hello! How are you today? Let’s begin your lessons by discussing Ethics!
Ethics deals with what does or does not matter. Business ethics discusses and
presents the way one decides what kind of career to pursue, the choices made on the
job, which company one chooses to work for and what kind of economy one wants to
live in or even what one wants to leave behind. To these queries, there is no perfect of
simple answer. However, there is a difference between actually thinking it through
and analyzing the outcome rather than just guessing.
At the completion of this module, you should be able to:
 define the components of business ethics;
 differentiate the forms of business organizations;
 demonstrate how fairness, accountability and transparency are practiced in

business and non-profit organizations; and
 distinguish between good policies or practices and morally unacceptable

policies or practices.
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Are you ready? Then start the lessons now!
LESSON 1
Why Ethics Matter
Objectives:
 Discuss business ethics; and

 Outline how business ethics works.
Introduction:
When you are met with an ethical dilemma, knowing the right and wrongs in
decision-making is essential to have a fair and fruitful business. So what is business
ethics and how can this help? You will find the answers to these questions in this
lesson.
Activity: Reflect on the photo below and answer the questions found in the
“Analysis”.
During this pandemic, there have been

news regarding business owners that
somehow paint a negative picture.
Some issues include overpricing of
face masks, face shields, and alcohol,
low quality products such as fake face
masks, and even hoarding of essential
products which lead to shortage.
(dti.gov.ph, 2020)
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Analysis
1. If you were the business owner, how would you have resolved these issues?
_______________________________________________________________
_______________________________________________________________
2. If you were the customer, how would you have approached these issues?
_______________________________________________________________
_______________________________________________________________
3. Why are these issues painting a negative picture?

_______________________________________________________________
_______________________________________________________________
Abstraction
Business Ethics means providing reasons for how things out to be in the
economic world. There should be clear and justified priorities regarding
what is worth seeking and protecting and what are things allowed to be compromised
or given up. Applying values to any situation must also be carefully thought of in
order to avoid or resolve conflict. During arguments or consultations, one must give
facts, action and values that will not allow further conflict and misunderstanding.
These arguments must be coming from sound mind and comprehensible by everyone.
Finally, ethics is a determination of right and wrong. Conclusions are taken seriously
if based on clear values, recognized facts and solid arguments.
In a nutshell, business ethics is…
 You must have a clear grasp of proper values in order to guide you in making
decisions.
 You must understand the facts to effectively apply your set of values to any
situation.
 You must use concrete facts to construct your arguments.
Being a Professional of Integrity
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(Copyright Rice University, OpenStax, under CC BY 4.0 license)
Clients, customers, suppliers, investors, retailers, employees, the media, the

government, members of the surrounding community, competitors, and even the
environment are stakeholders in a business; that is, they are individuals and entities
affected by the business’s decisions. Stakeholders typically value a leadership team
that chooses the ethical way to accomplish the company’s legitimate for-profit goals.
For example, Patagonia expresses its commitment to environmentalism via its “1%
for the Planet” program, which donates 1 percent of all sales to help save the planet.
In part because of this program, Patagonia has become a market leader in outdoor
gear.
Stakeholders are the individuals and entities affected by a business’s decisions,

including clients, customers, suppliers, investors, retailers, employees, the media, the
government, members of the surrounding community, the environment, and even
competitors.
Being successful at work may therefore consist of much more than simply
earning money and promotions. It may also mean treating our employees, customers,
and clients with honesty and respect. It may come from the sense of pride we feel
about engaging in honest transactions, not just because the law demands it but
because we demand it of ourselves. It may lie in knowing the profit we make does not
come from shortchanging others. Thus, business ethics guides the conduct by which
companies and their agents abide by the law and respect the rights of their
stakeholders, particularly their customers, clients, employees, and the surrounding
community and environment. Ethical business conduct permits us to sleep well at
night.
Integrity—that is, unity between what we say and what we do—is a highly
valued trait. But it is more than just consistency of character. Acting
with integrity means we adhere strongly to a code of ethics, so it implies
trustworthiness and incorruptibility. Being a professional of integrity means
consistently striving to be the best person you can be in all your interactions with
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others. It means you practice what you preach, walk the talk, and do what you believe
is right based upon reason. Integrity in business brings many advantages, not the least
of which is that it is a critical factor in allowing business and society to function
properly.
Successful corporate leaders and the companies they represent will take pride
in their enterprise if they engage in business with honesty and fair play. To treat
customers, clients, employees, and all those affected by a firm with dignity and
respect is ethical. In addition, laudable business practices serve the long-term interests
of corporations. Why? Because customers, clients, employees, and society at large
will much more willingly patronize a business and work hard on its behalf if that
business is perceived as caring about the community it serves. And what type of firm
has long-term customers and employees? One whose track record gives evidence of
honest business practice.
Is Business Ethics Necessary?
At the boundaries of the question about whether business ethics is necessary,

there are conflicting and extreme perceptions of the business world. In graphic terms,
these are the views:
 Business needs policing because it’s a dirty enterprise featuring people who
get ahead by being selfish liars.
 Successful businesses work well to enrich society, and business ethicists are
interfering and annoying scolds threatening to ruin our economic welfare.
Business ethics is not about scolding, moralizing, or telling people to be nice.
Ethics doesn’t have to be annoying or intrusive. On the other hand, it can’t just
be dismissed altogether because ethics in business is unavoidable. The values guiding
our desires and aspirations are there whether they’re revealed or not. They must be
because no one can do anything without first wanting something. If you don’t have a
goal, something you’re trying to achieve or get, then you won’t have anything to do
when you get out of bed in the morning. Getting up in the morning and going,
consequently, mean that you’ve already selected something as desirable, valuable, and
worth pursuing. And that’s doing ethics; it’s establishing values. The only real and
durable difference, therefore, between those who understand ethics and those who
don’t is that the former achieve a level of self-understanding about what they want:
they’ve compared their values with other possibilities and molded their actions to
their decisions. The latter are doing the same thing, just without fully realizing it. The
question about whether ethics is necessary, finally, becomes a false one.
Application
Answer the question below.
An an Entrepreneurship student, how can you start applying Business Ethics?
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Refer to Appendix A for the rubric of this application.
Well done! You have just finished Lesson 1 of this module. Should there be
some parts of the lesson which you need clarification, please ask your instructor
during your face-to-face interactions.
Now if you are ready, please proceed to Lesson 2 of this module which will
discuss about forms of business in social and economic development.
LESSON 2
Forms of Business in
Social
and Economic
Objectives:
 Give examples of the forms of business organizations; and

 Show how these organizations contribute to socioeconomic
development.
Introduction:
A business is an organization that uses economic resources or inputs to

provide goods or services to customers in exchange for money or other goods and
services. One of the initial decisions a business owner has to make is how the business
should be structured. All businesses must assume some legal design that describes the
rights and liabilities of participant sin the business’s ownership, control, personal
liability, life span and financial configuration. Any decision made about how business
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shall be structured will have long-term consequences to the business. Business
organizations come in different forms. All these forms of business organizations
contribute to the socioeconomic growth and development of a country.
Activity: Write down at least five ideas that come to your mind when you see the
world cloud below.
Analysis
 Why do these ideas come to your mind?

 How do these words relate to each other?
Abstraction
There are four forms of business ownership in social and economic

development: 1) sole proprietorship, 2) partnership, 3) corporation and 4)
cooperative. These are discussed in details below.
Sole Proprietorship: A sole proprietorship, also known as single proprietorship, is a

business owned by only one person who has complete control and authority of its
own. It owns all the assets and personally answers all liabilities or losses. This implies
that the creditors of the business may go after the personal assets of the owner should
the business fail to pay them. The fact that it is managed by the individual means that
it is very flexible and the owner retains supreme power over it. It is the simplest, easy
to set-up and register through the Bureau of Trade Regulation and Consumer
Protection (BTRCP) of the Department of Trade and Industry (DTI). It is the least
costly among all forms of ownership. The sole proprietorship form is usually adopted
by small business entities.
Advantages Disadvantages
1. Ease of formation and dissolution. 1. Unlimited liability.
2. Low startup costs and low operational 2. Limited life.
overhead. 3. Difficult for an individual to raise
3. Typical subject to fewer regulations. money for capital.
4. No corporate income taxes.
(Garrison, 2020)
Partnership: A partnership is a business owned by two or more persons who bind

themselves to contribute money or industry to a common fund with the intention of
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dividing the profits between themselves. Similar to a corporation, a partnership is a
juridical entity and registered with the Security and Exchange Commission (SEC).
Being a juridical entity means that it has a personality distinct and separate from that
of its members. A partnership could be general or limited with the basic differences
coming from the extent of personal liability and management control. In general
partnership, all partners have unrestricted liability for the debts and obligation of the
partnership, practically resembling a sole proprietorship. In a limited partnership, one
or more general partners have unlimited liability so creditors cannot target their
personal assets.
1. Synergy resulting from two or more 1. Unlimited liability where general
individuals combining strengths. partners are individually responsible for
2. Easy to form but requires developing the obligations of the business.
a partnership. 2. Limited life with the withdrawal or
3. Subject to fewer regulations death of a partner as reasons to end
compared to corporations. partnership.
4. Stronger potential of access to greater 3. Real possibility of disputes or
amounts of capital. conflicts between partners that may lead
5. No corporate income taxes. to dissolve the partnership.
(Garrison, 2020)
Corporation: A corporation is a business organization that has separate legal

personality from its owners. It is a juridical entity created under the Corporation Code
and registered with the SEC. It should be established by or composed of at least 5
natural persons not exceeding 15 persons, technically called “incorporators”.
Juridical persons, like other corporations or partnerships, cannot be incorporators,
although they may subsequently purchase shares and become corporate
shareholders/stockholders. Ownership in stock corporation is signified by shares of
stock. The owners or stockholders have the benefit of limited liability but have limited
participation in the company’s operations. The board of directors, who controls the
activities of the corporation, is elected from the stockholders. The liability of the
shareholders of a corporation is restricted to the amount of capital they contributed.
This means, personal assets of stockholders are not attached to pay the corporation’s
liabilities, though the responsible members may be held personally liable in some
instances. For example, the incorporators may be held responsible when the doctrine
or piercing the corporate veil is applied. The doctrine of piercing the corporate veil is
a situation in which courts put aside limited liability and hold a corporation’s
shareholders or directors personally liable for the corporation’s actions or debts. The
responsible officers may also be liable with the corporation in some labor cases,
mostly in cases of illegal dismissal. The largest businesses take the form of
corporations, a demonstration to the effectiveness of this business organization. A
corporation, however, is comparatively more difficult to form, organize and supervise.
There are several reportorial requirements with the Securities and Exchange
Commission. Unless stockholder owns sufficient number of shares to control the
corporation, he will most likely be left with no participation in the management. The
blow of these concerns, however, is made lighter by the army of lawyers, accountants
and consultants that help the corporation’s management.
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1. Unlimited commercial life because 1. Regulatory restrictions which can be
corporation is an entity of its own and costly.
does not dissolve when ownership 2. Higher organizational and operational
changes. costs.
2. Greater flexibility in raising capital 3. Double taxation referring to income
through the sale of stock. taxes that are paid twice on the same
3. Ease of transferring ownership by source of earned income.
selling stock.
4. Limited liability.
(Garrison, 2020)
Cooperative: A cooperative is a duly registered business organization owned by a

group of individual and is operated for their mutual benefit. The persons making up
the ground are called members who have voluntarily joined together to achieve a
lawful common social or economic end. They made equitable contributions to the
capital required and accept a faire share of the risks and benefits of the undertaking in
accordance with universally accepted cooperative principle. Cooperatives may be
incorporated or unincorporated. Some examples of cooperatives are: water and
electricity (utility) cooperatives, cooperative banking, credit unions, and housing
cooperatives.
1. Formation and registration is very 1. Financial strength depend on the
simple with only 10 adults needed. capital contributed by its members.
2. The membership of cooperative 2. managed by the members only who
society is open to everybody regardless most of the time do not possess any
of religion, sex or color. managerial and special skills.
3. Liabilities of the members of the 3. Maintain no secrecy in business
society is limited to the extend of capital because the affairs of the society is
contributed by them. openly discussed in the meeting.
4. Members are provided with better 4. Sell their products to outsiders only in
good and services at reasonable prices. cash.
5. Managed by the elected members 5. Excessive state regulation interference
from and among themselves. with the flexibility of its operation.
6. Cannot be dissolved by the death 6. Members may not feel enthusiastic
insolvency, lunacy, permanent because the law governing the
incapability of the members. cooperatives put some restriction.
7. The operation is economical due to 7. Different opinions and disputes may
the eliminations of middlemen. paralyze the effectiveness of the
8. Portion of the surplus is spent for the management.
welfare of the members.
9. Government extends many subsidies
to strengthen their financial stability and
sustainable growth in future.
(Garrison, 2020)
Purposes of Establishing a Business
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1. Money – There is a big opportunity to earn far more money for successful
business people if they are working under their own businesses. Determined
individuals frequently become discouraged with the restrictions that are forced on
them in the boundaries of somebody else’s business. A business means that a
person can earn without depending on his own ability to succeed and excel in the
marketplace although income is based on market conditions and the manner of
management.
2. Control – Business allows for more personal control of an owner’s financial

future. Being an employee a person could be subjected to layoff though no fault of
his own. Confident people are often happier when running their own business,
even with the enlarged risks, responsibilities and stress.
3. Adventure – A person who enjoys adventure many discover some jobs quite
boring even well-paid. Some adventurous people may find the excitement of the
marketplace irresistible. These people will pursue their own business basically for
the adventure, regardless of how much profit they will likely gain. They wanted to
be in charge of their success or failure when running things. They find it very
exciting to value innovation over security.
4. Service – Some businesses are founded chiefly with the aim of serving the local
community or the world in general. Non-profit businesses are committed to
working with the poor, the underprivileged and those stricken by calamity.
Likewise, many
for-profit businesses also grant helpful and necessary services to the public. A
local store for instance can make available locally good food to surrounding
residents.
Business Organization and Socio-Economic Development
Socio-economic development is the process of social and economic

development in a society. Socio-economic development is calculated with indicators,
such as Gross Domestic Product (GDP), life expectancy, literacy and employment
rates.
GDP is the sum of gross value added by all resident producers in the economy
plus product taxes and minus any subsidizes not included in the value of the products.
It is calculated without making deductions for depreciation of fabricated assets or for
depletion and degradation of natural resources.
Life expectancy is a statistical measure of how long an organism may live,

based on the year of the birth, the current age and other demographic factors including
sex. Literacy rate is simply the total percentage of the population aged 15 and above
who can, with understanding, read and write a short, simple statement on their
everyday life while employment rate is a measure of the number of people who are
both jobless and looking for a job.
All business organizations create wealth for shareholders, employees,

customers and society at large. No other human activity matches business
organization in their ability to marshal people, capital and innovation under controlled
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risk-taking, in order to create meaning jobs and produce goods and services profitably.
Profit is an essential element to long-term business survival and job creation. If
majority of business organization in a country are profitable then there will be
assurance of both social and economic growth and development.
Business organizations not only create jobs but also contribute to improving
their local economies, and they contribute to their communities with their charitable
donations.
Application
Read the case below and answer the case questions after it.
Child Labor and Slavery in the Chocolate Industry

(Food Empowerment Project, 2020)
Chocolate is a product of the cacao bean, which grows primarily in the tropical
climates of Western Africa, Asia, and Latin America. The cacao bean is more
commonly referred to as cocoa, so that is the term that will be used throughout this
article. Western African countries, mostly Ghana and the Ivory Coast, supply more
than 70% of the world’s cocoa. The cocoa they grow and harvest is sold to a majority
of chocolate companies, including the largest in the world.
In recent years, a handful of organizations and journalists have exposed the
widespread use of child labor, and in some cases slavery, on cocoa farms in Western
Africa. Since then, the industry has become increasingly secretive, making it difficult
for reporters to not only access farms where human rights violations still occur, but to
then disseminate this information to the public. In 2004, the Ivorian First Lady’s
entourage allegedly kidnapped and killed a journalist reporting on government
corruption in its profitable cocoa industry. In 2010, Ivorian government authorities
detained three newspaper journalists after they published an article exposing
government corruption in the cocoa sector. The farms of Western Africa supply cocoa
to international giants such as Hershey’s, Mars, and Nestlé—revealing the industry’s
direct connection to the worst forms of child labor, human trafficking, and slavery.
(Food Empowerment Project, 2020)
The Worst Forms of Child Labor
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In Western Africa, cocoa is a commodity crop grown primarily for export;
60% of the Ivory Coast’s export revenue comes from its cocoa. As the chocolate
industry has grown over the years, so has the demand for cheap cocoa. On average,
cocoa farmers earn less than $2 per day, an income below the poverty line. As a
result, they often resort to the use of child labor to keep their prices competitive.
The children of Western Africa are surrounded by intense poverty, and most
begin working at a young age to help support their families. Some children end up on
the cocoa farms because they need work and traffickers tell them that the job pays
well. Other children are “sold” to traffickers or farm owners by their own relatives,
who are unaware of the dangerous work environment and the lack of any provisions
for an education. Often, traffickers abduct the young children from small villages in
neighboring African countries, such as Burkina Faso and Mali, two of the poorest
countries in the world. Once they have been taken to the cocoa farms, the children
may not see their families for years, if ever.
Most of the children laboring on cocoa farms are between the ages of 12 and
16, but reporters have found children as young as 5. In addition, 40% of these children
are girls, and some stay for a few months, while others end up working on the cocoa
farms through adulthood.
A child’s workday typically begins at six in the morning and ends in the
evening. Some of the children use chainsaws to clear the forests. Other children climb
the cocoa trees to cut bean pods using a machete. These large, heavy, dangerous
knives are the standard tools for children on the cocoa farms, which violates
international labor
laws and a UN convention on eliminating the worst forms of child labor. Once they
cut the bean pods from the trees, the children pack the pods into sacks that weigh
more than 100 pounds when full and drag them through the forest Aly Diabate, a
former cocoa slave, said, “Some of the bags were taller than me. It took two people to
put the bag on my head. And when you didn’t hurry, you were beaten.”
Holding a single large pod in one hand, each child has to strike the pod with a
machete and pry it open with the tip of the blade to expose the cocoa beans. Every
strike of the machete has the potential to slice a child’s flesh. The majority of children
have scars on their hands, arms, legs or shoulders from the machetes.
In addition to the hazards of using machetes, children are also exposed to
agricultural chemicals on cocoa farms in Western Africa. Tropical regions such as
Ghana and the Ivory Coast consistently deal with prolific insect populations and
choose to spray the pods with large amounts of industrial chemicals. In Ghana,
children as young as 10 spray the pods with these toxins without wearing protective
clothing.
The farm owners using child labor usually provide the children with the
cheapest food available, such as corn paste and bananas. In some cases, the children
sleep on wooden planks in small windowless buildings with no access to clean water
or sanitary bathrooms.
On cocoa farms, 10% of child laborers in Ghana and 40% in the Ivory Coast
do not attend school, which violates the International Labour Organization’s (ILO)
Child Labour Standards. Depriving these children of an education has many short-
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term and long-term effects. Without an education, the children of the cocoa farms
have little hope of ever breaking the cycle of poverty.
To date, relatively little progress has been made to reduce or eliminate child
labor and slavery in the cocoa industry of Western Africa. At the very least, the
industry has agreed to work to eliminate what the ILO calls “the worst forms of child
labor.” These are defined as practices “likely to harm the health, safety, or morals of
children” and include the use of “hazardous tools” and any work that “interferes with
schooling.” Approximately1.8 million children in the Ivory Coast and Ghana may be
exposed to the worst forms of child labor on cocoa farms.
Slavery
Recently, investigators have discovered children trafficked into Western
African cocoa farms and coerced to work without pay. Abby Mills, campaigns
director of the International Labor Rights Forum, adds, “Every research study ever
conducted in shows that there is human trafficking going on, particularly in the Ivory
Coast.” While the term “slavery” has a variety of historical contexts, slavery in the
cocoa industry involves the same core human rights violations as other forms of
slavery throughout the world.
Cases often involve acts of physical violence, such as being whipped for
working slowly or trying to escape. Reporters have also documented cases where
children and adults were locked in at night to prevent them from escaping. Former
cocoa slave Aly Diabate told reporters, “The beatings were a part of my life. I had
seen
others who tried to escape. When they tried, they were severely beaten.” Drissa, a
recently freed slave who had never even tasted chocolate, experienced similar
circumstances. When asked what he would tell people who eat chocolate made from
slave labor, he replied that they enjoyed something that he suffered to make, adding,
“When people eat chocolate, they are eating my flesh.”
Is Slave-free Chocolate Possible?
Despite their role in contributing to child labor, slavery, and human trafficking,
the chocolate industry has not taken significant steps to remedy the problem. Within
their $60-billion industry, chocolate companies have the power to end the use of child
labor and slave labor by paying cocoa farmers a living wage for their product.
The chocolate industry is also being called upon to develop and financially
support programs to rescue and rehabilitate children who have been sold to cocoa
farms. To date, the industry has done little to remove child labor, let alone aid
survivors of child labor. Hershey’s, the largest chocolate manufacturer in North
America, has not thoroughly addressed accusations of child labor in its supply chain
and refuses to release any information about where it sources its cocoa. This lack of
transparency is characteristic of the chocolate industry, which has the resources to
address and eliminate child labor but consistently fails to take action.
Are the Labels on Chocolate Meaningful?
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Aside from large-scale production in Western Africa, a significant amount of
cocoa is also grown in Latin America. This is where the majority of organic cocoa
originates. At this time, neither slavery nor child labor have been documented on
these cocoa farms. While it remains possible that some Latin American farms may
employ these practices, it is not widely documented as it is in Western Africa.
The truth is that consumers today have no sure way of knowing if the
chocolate they are buying involved the use of slavery or child labor. There are many
different labels on chocolate bars today, such as various fair trade certifications and
the Rainforest Alliance Certification; however, no single label can guarantee that the
chocolate was made without the use of exploitive labor. In 2009, the founders of the
fair trade certification process had to suspend several of their Western African
suppliers due to evidence that they were using child labor. Chocolate companies,
however, continue to certify their products to tell consumers that they source their
cocoa ethically. But in 2011, a Danish journalist investigated farms in Western Africa
where major chocolate companies buy cocoa. He filmed illegal child labor on these
farms, including those certified by UTZ and Rainforest Alliance. Despite the
industry’s claims, child labor still plagues cocoa farms in Western Africa.
Multiple government and NGO programs have been developed, attempting to

address the root causes of “the worst forms of child labor” and slavery in West Africa.
However, the success of these efforts will depend greatly on the genuine support or
lack thereof from the chocolate industry over the coming years.
Case Questions:
1. The principal purpose of opening a business is money. Do you think this is also
the main reason for practices of child labor and slavery in the chocolate industry?
Defend your stand.
2. What are the ways in which the chocolate industry can help in the socioeconomic
development of West Africa? Enumerate them.
3. As consumers, you and I have essential roles in diminishing the food industry’s
injustices. Child slavery on cocoa farms is a serious and worldwide issues, what
will you recommended as part of the solution? Explain.
Refer to Appendix B for the rubric regarding case analysis.
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Congratulations! You have finished Lesson 2.
In this lesson, you learned the four forms of Business and how businesses help
socio-economic development. In the next lesson, you will learn about fairness,
accountability and transparency.
LESSON 3
Fairness, Accountability
and Transparency
Objectives:
 Understand how fairness, accountability and transparency is essential

in business; and
 Share observations on business policies and practices.
Introduction:
A company that applies the principles of fairness, accountability and

transparency, will usually outperform other companies. Strong application of these
principles maintains investors’ confidence, whose support can help to finance further
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growth. Companies who implement these principles into working environment life
will ensure corporate success and economic growth. They are the basis on which
companies can grow.
Activity: Analyze the picture and answer the questions.
Analysis
1. What do you notice?

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https://miro.medium.com/max/700/0*-mkL_9FCjSgkW4rI.png
2. What are the people doing?

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3. What may have happened before this scene? What may have happened after?
_____________________________________________________________________
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Abstraction
Fairness, accountability and transparency are the pillars of corporate

governance. Good governance practices aid the protection of shareholders’
rights, improve effectivity and enhance transparency of the company’s
business and performance. These three principles will be discussed further
below.
Fairness
Fairness is perhaps one of the hardest, yet most important, to practice on a

consistent basis. Fairness refers to equal treatment. For instance, all shareholders
should receive equivalent consideration for whatever shareholdings they hold. In
addition to shareholders, there should also be fairness in the treatment of all
stakeholders including employees, communities and public officials. The fairer the
entity appears to stakeholders, the more likely it is that it can survive the pressure of
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interested parties. Fairness in business refers to the value of treating people with a
standard of performance that is consistent and equal based on comments. It means
giving customers a reasonable value for their money. It also means providing an
unbiased work environment where employees have identical opportunities to good
benefits and working conditions. Caring for community members and business
partners with similar level of fairness expected from them is also vital.
When unfairness happens, what is or is not fair is much more complicated and
ambiguous than it seems from the viewpoint of the person who feels victimized.
Although the underlying concept of fairness is simple, almost instinctive, its
application in real life proves extremely complex. In recent years differentiating real
injustice from self-serving justifications has become harder. It appears that whenever
someone is starved of something he wants such as a job, a promotion or a contract,
fairness is deprived.
Fairness is concerned with actions, processes, and consequences that are

morally right, honorable, and equitable. In essence, the virtue of fairness establishes
moral standards for decisions that affect others. Fair decisions are made in an
appropriate manner passed on appropriate criteria.
Accountability
Accountability refers to the obligation and responsibility to give an

explanation or reason or the company’s actions and conduct. Accountability also has a
strong connection to expectations. Employees who do not meet the expectations of
their supervisor are held accountable for their actions and must answer for the
inability to do so. Accountability is crucial in ensuring high performance within an
organization.
However, managers must clearly communicate their expectations to the person who is
responsible for the specified action or task. Clear communication if expectations and
well defined goals is a very effective tool in enhancing performance at every level of
organization.
Cultivating accountability across organization requires managers to take

specific actions. Employees need to clearly understand their role in the company and
what they are responsible for accomplishing. Managers need to define expectations
upfront and reinforce them periodically within the context of the business and ensure
their employees are empowered to do what is expected. Arming employees with that
understanding, combined with monitoring their progress and fostering transparency
across the organization, will reinforce the culture of accountability and enable it to
thrive.
Accountability is applicable not just for profit-oriented company, but also to

non-profit organizations. All non-profit organizations have the obligation to provide
some community benefit. Accountability for non-profit organizations include ensuring
that they are effectively providing this benefit service such as feeding the homeless,
protecting the environment, preventing domestic violence, offering cultural endeavor,
and so on. These organizations have to evaluate their services objectively and execute
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a needs assessment of their client or constituency population, making changes if
needed. This is the critical part of being an accountable organization.
Transparency
Transparency means openness, a willingness by the company to provide clear

information to shareholders and other stakeholders. Transparency ensures that stake
holders can have confidence in the decision-making and management processes of a
company. For instance, a company to be called transparent has to open and willing to
disclose financial performance figures which are truthful and accurate. Disclosure of
material topics about the organization’s performance and activities should be timely
and precise to make certain that all investors have access to understandable, realistic
information which exactly mirrors the financial, social and environmental situation of
the organization. Organizations ought to give details and make publicly known the
roles and responsibilities of the board and management to present shareholders with a
level of accountability.
Across all industries, transparency has never been more important to a

successful business model. Withholding or shrewdly restructuring information is no
longer a practical option for this new generation of consumers. Consumers today are
more knowledgeable than any generation before them and for whom doubt seems to
be a default setting. In order to create brand loyalty among customers, companies
need to first build trust.
Transparency is not just about consumers. Employees too place a high value
on transparency in their relations with different levels of management. Transparency
is even one of the top factors in shaping their happiness and satisfaction in the
workplace. No employee wishes to work for a company with blurry stands and no
distinct long-term plans. Employees should know about every aspect that affects their
lives.
Fairness, Accountability and Transparency for Socio-economic Development
On a broader perspective, a nation is larger and more difficult to manage and

to lead than an organization. One of the requirements for a sustainable socio-
economic development ins fairness. This is so that the best will be acknowledged
fairness has to be practiced for healthy competition. Corruption and cronyism in
business must be removed to move forward towards development.
Transparency and accountability are very vital for the resourceful and effective
functioning of a modern economy and for nurturing social well-being. Transparency
guarantees that information is accessible to assess the authorities’ performance and to
protect against any potential abuse of powers. The absence of transparency and
accountability will create mistrust between a government and those whom it rules.
The outcome would be an unsteady society and an environment that is less than
contributing of economic growth.
Practices of Fairness, Accountability and Transparency in Philippine Businesses
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In 2015, the Philippines had ranked second best among countries belonging to
the Association of Southeast Asian Nations (ASEAN) when it comes to the practice of
fairness, accountability and transparency or simply corporate governance.
There are eleven (11) Philippine corporation that made it to the top 50 list.
Four (4) are owned by the Ayala group which are Ayala Corp., Ayala Land Inc., Globe
Telecom Inc., and Manila Water Co. The Manuel Pangilinan-led group had three,
namely Manila Electric Co., Philex Mining Corp., and Philippine Long Distance
Telephone Co. The other firms that were part of the lists were Aboitiz Equity Ventures
of the Aboitiz clan, George Ty’s GT Capital Holdings, Inc. and the Sy family’s SM
Prime Holdings and BDO Unibank Inc. Below are examples as to how companies in
the Philippines practice the principles of fairness, accountability, and transparency.
 Globe practices regular disclosure of financial results.

 Philippine Long Distance Telephone Co. (PLDT) has a policy that provides
safeguards so that the tradition of giving gifts is handled based on the values
of fairness, accountability and transparency.
 Atty. Wiliam S. Paminutan of Meralco shared policies on conflict of interest,
gifts and management control have been implemented, to facilitate
transparency and clarify accountability, and are already being practiced by the
company’s directors, officers and employees in al their dealings and
performance of duties.
Application
You have an employee who doesn’t practice fairness, accountability and

transparency, as the CEO, how will you solve this problem? Explain your
answer. Refer to Appendix A for the rubric of this application.
Now that you have already known the principles of fairness, accountability
and transparency in business, you can now proceed to the next lesson which will
discuss codes of right conduct.
LESSON 4
Codes of Right Conduct
Objectives:
 Demonstrate how the Code of Right Conduct is applied in business;

and
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 Show the implication of the topics into real life scenario by citing real
life problems.
Introduction:
Operating with integrity and with reference to codes of right conduct is

playing an increasingly significant role for sustainable business today. This means
businesses must operate using good and morally acceptable policies and practices.
Keeping away from expensive crises and scandals is of importance to business.
Reputation punches can be difficult to recover from without a foundation of trust.
Furthermore, having clearly articulated values and an ethics is seen to be one of the
hallmarks of well-run business.
Activity
Analyze the comic below and answer the questions following it.
Jon was getting coffee when he came across Mr. Snow, the company owner.
(Ahmed, 2017)
Analysis
1. What is happening in the comic?

_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
2. What is the problem in this situation? Why is it a problem?

_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
3. How would you resolve this issue if you were Jon?

_____________________________________________________________________
_____________________________________________________________________
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_____________________________________________________________________
_____________________________________________________________________
Abstraction
A code of right conduct reflects the organization’s daily operations, core

values and company culture. It defines how a company’s employees should
act daily. Below is a further discussion of this topic.
Common vs. Greatest Good
The common good is that principle that whatever serves the most number of
members in a community is considered. The common good is usually whatever rules
or actions are required to reduce the disharmony in the community while the greatest
good is the principle that there is a standard that people must cooperatively strive for
to maximize the harmony in the community. The common good, being about peaceful
co-existence, is normally good under every system of objective or subjective measure.
Paying taxes in exchange for services, or following laws and social norms in order not
to break other people’s enjoyment are examples of common good. Provided that the
common good is mostly good, people are contented and engaged in society and
committed to stay the same. The greatest good is the higher order of good. It can be
used for good purposes to address areas where the common good is not inclusive of
groups of people.
Individually, people contribute on a daily bass to the common good like when
people wait for their turns, when they don’t take more than they need and leave some
for others, when they work cooperatively on common or group goals, when they treat
other as they treat themselves. People do not contribute to the common god when they
put themselves or put others above or ahead of the group, so it’s a fine balancing act
of not shorting someone else or shorting oneself.
Serving the common and greatest good requires individuals to think beyond
themselves. Serving the common good is to think of other individual people as well as
oneself and the greatest good to think of other groups of people to whom the
individual
is not a member and creating balance, a harmony, between and within. To no serve the
common or greatest good, is to serve oneself or one groups’ narrow interest, usually at
the expense of other people and groups. This gives the greatest dangers and threats to
the whole society.
Codes of Right Conduct
Every organization must have code of right conduct. A code has value just
like an internal guidelines and an external statement of corporate values and
commitments. A well-written code of conduct spells out an organization’s mission,
values and principles, connecting them with standards of professional conduct. The
code expresses the values the organization desires to promote in leaders and
employees. Simply speaking, the code defines preferred behavior. As a consequence,
written codes of conduct or ethics can turn out as yardsticks against which individual
and organizational performance can be measured. In addition, a code s a fundamental
guide and reference for employees to support everyday decision making. A code
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pushes discussions of ethics and obedience, authorizing employees to manage ethical
problems they come across in daily work. It can also provide, as a helpful reference,
assisting employees trace pertinent documents, services and other resources connected
to ethics in the organization.
Utilitarianism
Utilitarianism attempts to answer the questions about what a man must

do. The answer to this is that he ought to act to create the best consequences.
These consequences include all of the good and bad produced by the act,
whether after the act has been performed or during its performance. If the
discrepancy in the consequences of alternative acts is not big, the choice
between them is less considered as a moral issue. According to Mill, acts to be
considered right or wrong only if the consequences are of such significance.
Utilitarianism calls to produce the best consequences which appears to be
simple. However, utilitarianism is complex because this single principle has to
reflect on three things namely what is good, whose well being it is intended
and the actual consequences.
Deontology
Deontology is an approach that focuses on the rightness or wrongness

of actions themselves. Thus, to a deontologist, whether a situation is good or
bad depends on whether the action that brought it about was right or wrong.
What makes a choice “right” is its conformity with a moral norm. Right is
more significant than good. In the case of a big parcel of land with squatters, if
someone proposed to kill everyone so that the land could be used for
agriculture to end starvation, a deontologist would disagree that ending
starvation is wrong because it was brought about by killing people. A
consequentialist would argue that the final result gave justice to the drastic
action. A virtue ethicist would concern himself with neither, but would look at
whether the perpetrator acted in accordance with worthy virtues.
Immanuel Kant concluded that to be truly good, the act must be chosen
and done out of feeling moral duty. He also believed that if an action is not
done with the motive of duty, then it is without moral value and therefore,
worthless. Kant developed his moral philosophy in three works: “Groundwork
of the Metaphysic of Morals” (1785), “Critique of Practical Reason” (1788)
and “Metaphysics of Morals” (1797), and he formulated it in three different
ways:
1. Act only in such a way that one would want his actions to become a
universal law, applicable to everyone in a similar situation.
2. Act in such a way that one always treats humanity (whether oneself or
other), as both the means of an action, but also as an end.
3. Act as though one has a law-making member (and also the king) of a
hypothetical “kingdom ends”, and therefore only in such a way that would
harmonize with such a kingdom if those laws were binding on all others.
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Virtue Theory
Virtue ethic dates back to the ancient Greek thinkers and is therefore
the oldest type of ethical theory in Western philosophy, Plato discussed four
key virtues which are wisdom, courage, temperance and justice. The first
systematic explanation of virtue ethics was written down by Aristotle in his
famous work “Nichomachean Ethics”.
According to Aristotle, when people acquire good habits of character,

the are better able to control their emotions and their reason. This helps people
reach morally correct decisions when they are faced with difficult choices.
Virtue ethics is person based. It looks at the virtue or moral characters of the
person carrying out an action. This means it deals with the rightness or
wrongness of individual actions and provides guidance as to the kind of
characters and behaviors a good person will seek to attain. In this manner,
virtue ethics is focused on the whole person’s life, rather than at ethical duties
and rules, or the consequences of particular actions. A good person s someone
who lives virtuously; he possesses and lives the virtues.
Care Ethics
Ethics of care is centered on the independence of all individuals. It

considers the reality that certain communities and people are weaker than
others, and that strong ones should give more concern to the weaker
community depending on how they are affected by their choices. Care ethics
does not endorse a dependency among people but promotes maintaining
interdependence and shared efforts and benefits. However, the implications of
the decision to maintain a relationship of mutual opportunity and benefits
should consider the implications as well as if they have the potential to be
harmful to the community. Ethics of care also claims that there is no universal
truth. It considers the background details of a moral situation to support the
particular needs and interests of the weak communities. It also considers the
contextual details of each place such as the local customs and traditions,
culture, economy, history and so forth.
On Writing Codes of Right Conduct
Organizations, both businesses and non-profit ones, have definite expectations

of how their staff should behave. A written code of conduct is essential since it
provides instructions about what staff can and cannot do. Externally, a code serves
several important purposes namely compliance, marketing and risk mitigation.
Guidelines for writing an ethics code:
1. Be plain about the objectives that the code is planned to achieve.

2. Obtain support and ideas for the code from all levels of the organization.
3. Be conscious of the most recent developments in the laws and regulations
that concern the industry where the organization belongs.
4. Write plainly and undoubtedly as possible. Keep away from legal
terminology and clear generalities.
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5. Act in response to real-life questions and situations.
6. Supply resources for additional information and guidance.
7. In all its forms, make it user-friendly since ultimately, a code is a failure if
it is not applied.
The most common sections to include in a code of right conduct are:
1. Ethical principles – workplace behavior and respect for all people

2. Values – an honest, unbiased and unprejudiced work environment
3. Accountability – taking responsibility for own actions, ensuring
appropriate use of information, exercising diligence and duty of care
obligations and avoiding conflicts of interest
4. Standard of Conduct – complying with the job description, commitment to
the organization and proper computer, internet and email usage
5. Standard of Practice – current policies and procedures and business
operational manual
6. Disciplinary Actions – complaints handling and specific penalties for any
violation of the code
Provisions of the Code
Code provisions are the exact standards of behavior and performance

expectations that an organization selects to emphasize selects to emphasize
and tackle in the code. Code provisions can be short or comprehensive based
on the objective. They deal with a broad range of issues, varying from legal
and regulatory concerns, to relations with the organization’s stakeholders and
the application of the organization’s values. Significantly, code provisions
inform employee which behaviors are not acceptable in the organization, so
they can stick to standards and are allowed to speak their mind if wrongdoing
happens.
Organizations are likely to label and categorize their code provisions in

many different approaches based on their unique characteristics, their goals for
the code and so forth. Code content or provisions can also vary largely across
organizations depending on their industry, regulations/requirements and goals
for the code. Below are some common provisions found in organizational
codes which are not comprehensive, nor are the category headings definitive:
1. Compliance, Integrity and Anti-corruption

a. Accuracy of corporate finances and financial reporting
b. Employee records and expense reports
c. Bribes
d. Political contribution
2. Conflicts of Interest
a. Gifts and gratuities
b. Political activity
c. Outside employment
d. Family members
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e. Disclosure of financial interests
3. Employee, Client and Vendor Information

a. Maintaining records and information
b. Privacy and confidentiality
c. Disclosure of information
4. Employment Practices
a. Workplace harassment
b. Equal opportunity
c. Diversity
d. Fair treatment of staff
e. Work-family balance
f. Discrimination
g. Fair labor practices
h. Illegal drugs and alcohol
i. Use of organization property and resources
j. Proper exercise of authority
k. Employee volunteer activities
l. Romantic relationships with coworkers
m. Incentives and recognition systems
5. Environmental Issues
a. Commitment to the sustainability
b. Employee health and safety
6. Ethics and Compliance Resources

a. Ethics advice helpline
b. Reporting procedures
c. Anonymous/confidential reporting hotline
d. Summary of investigation process
e. Anti-retaliation policy and protections for reporters
f. Accountability and discipline for violators
g. Ombuds program
7. Internet, social networking and social media

a. Internet and social network use at work
b. Prohibited sites and content

c. Policies regarding posts about company, work products or
coworkers
d. Online relationships between managers and their reports
8. Relationships with third parties

a. Procurement
b. Negotiating contracts
Application
Read the article below and write a brief essay about it as per the lesson
discussed.
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Being Fair in an Unfair World
by Eric Eastern
Source: https://www.furnituretoday.com/business-news/being-fair-in-an-unfair-world/
Look under. Look over. Look up. Look down. Look around. What do you see?
All around us, we find unfairness. We live with it at home, work, play, school…
everywhere. Life is never fair. Regardless of who we are or what we do, unfairness
finds us-it does not discriminate. Here’s why. The free choices that we make affect not
just us but others. Their choices do the same. Then add randomness and uncertainty
into the system, and the world becomes very unpredictable. That’s simply how our
universe works. However, while this presents immeasurable difficulties it also creates
an interesting and challenging place to live.
Doing all the right things, only to have an unforeseen event affect the outcome
is frustrating. Having to abide by leaders who have no business leading is
demoralizing. Being born to lousy parents is a cruel twist of fate. Never seeming to
find the “right” person to spend one’s life with is tragic. Being betrayed by someone
you trusted can make your blood boil. All of these situations are examples of life’s
unfairness. It’s true that we can never completely eliminate unfairness, but we
certainly can do our part to minimize its impact.
Counseling others to accept that life is unfair is a role all leaders need to play.
Much of the frustration at work has unfairness at its core. When we begin to take
these things personally, we lose objectivity and risk making poor decisions. Wasting
time brooding about untenable situations adds no value. Let the competition do that,
to their own detriment. We must instead learn from the experience and forge ahead.
Helping others to accept that life is unfair, and moving forward anyway, is one of the
most important gifts a leader can give.
There are many examples of unfairness in the workplace. Some are more obvious than
others. One all too common example is friendships between a supervisor and a
subordinate. If the supervisor has many reports but socializes with one or two, he or
she has created a scenario ripe for unfairness. Yes, we make friends with people we
work with. However, it is up to the supervisor to take extraordinary steps to be sure all
other
associates know there is no favoritism. Ideally this situation doesn’t arise but if it does
it takes very special handling. Taking vacations together or coming in late to work
after playing a tennis match are actual examples I’ve witnessed of inappropriate
behavior. I use this example because the participants had no ill intentions but were
simply guilty of not paying attention to the impact of their actions. We must always be
on guard against creating situations that could be perceived as being unfair.
Each of us must do our part to add a dose of fairness to the world. Treating
others with respect, being generous with our time and counsel, respecting diversity,
recognizing achievements-small and large, being consistent, not playing favorites, not
abusing our power and privilege, being calm and reasonable, and focusing on the facts
all serve to make the world a bit more fair. These are learned behaviors that we
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control. Practicing and teaching these values is good for us on a personal level but
also makes the organization and the world a better place.
The world is by nature unfair. This doesn’t mean we have to be.
Well done! You have finished this module with flying colors!
MODULE
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Answer the questions thoroughly.
1. With COVID-19 causing big and small businesses to close down, how do you
think the pandemic affected Business Ethics? How about the social and
economic development of businesses in the country?
2. Is it still essential for businesses to show fairness, accountability and

transparency during this pandemic? Why or Why not?
Refer to Appendix A for the rubric of this module assessment.
MODULE SUMMARY
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You have completed the first module of Ethics covering Introduction to Business
Ethics. Key points covered in the module include:
 Business Ethics means providing reasons for how things out to be in the
economic world.
 You must have a clear grasp of proper values in order to guide you in making
decisions.
 You must understand the facts to effectively apply your set of values to any
situation.
 You must use concrete facts to construct your arguments.
 Acting with integrity means we adhere strongly to a code of ethics, so it
implies trustworthiness and incorruptibility.
 Business needs policing because it’s a dirty enterprise featuring people who
get ahead by being selfish liars.
 Successful businesses work well to enrich society, and business ethicists are
interfering and annoying scolds threatening to ruin our economic welfare.
 A sole proprietorship, also known as single proprietorship, is a business owned
by only one person who has complete control and authority of its own.
 A partnership is a business owned by two or more persons who bind
themselves to contribute money or industry to a common fund with the
intention of dividing the profits between themselves.
 A corporation is a business organization that has separate legal personality
from its owners.
 A cooperative is a duly registered business organization owned by a group of
individual and is operated for their mutual benefit.
 Purposes of establishing a business are money, control, adventure and service.
 Fairness in business refers to the value of treating people with a standard of
performance that is consistent and equal based on comments.
 Accountability refers to the obligation and responsibility to give an
explanation or reason or the company’s actions and conduct.
 Transparency means openness, a willingness by the company to provide clear
information to shareholders and other stakeholders.
 The common good is usually whatever rules or actions are required to reduce
the disharmony in the community while the greatest good is the principle that
there is a standard that people must cooperatively strive for to maximize the
harmony in the community.
 A code has value just like an internal guidelines and an external statement of
corporate values and commitments.
 A well-written code of conduct spells out an organization’s mission, values
and principles, connecting them with standards of professional conduct.
 Utilitarianism attempts to answer the questions about what a man must do.
 Deontology is an approach that focuses on the rightness or wrongness of
actions themselves.
 Virtue ethic dates back to the ancient Greek thinkers and is therefore the oldest
type of ethical theory in Western philosophy, Plato discussed four key virtues
which are wisdom, courage, temperance and justice.
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 Care ethics considers the reality that certain communities and people are
weaker than others, and that strong ones should give more concern to the
weaker community depending on how they are affected by their choices.
 Code provisions are the exact standards of behavior and performance
expectations that an organization selects to emphasize selects to emphasize
and tackle in the code.
 Organizations are likely to label and categorize their code provisions in many
different approaches based on their unique characteristics, their goals for the
code and so forth.
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MODULE 1 REFERENCES
LESSON 1
Brusseau, James. (2012). Business Ethics.

Byars, S. & Stanberry, K. (2018). Business Ethics. OpenStax, Houston, Texas.
Department of Trade and Industry, 2020. DTI warns filing of criminal charges against
overpricing and hoarding of medical devices and products. Retrieved from
https://www.dti.gov.ph/archives/news-archives/dti-warns-filing-of-criminal-
charges-against-overpricing-and-hoarding-of-medical-devices-and-products/?
fbclid=IwAR0idcu2ViqrRj_eIR703ueEgn-
tuX2zBvcKRUGqJ8Sj3NalwmJwjfA6RfY.
LESSON 2
Garrison, S. (2020). Types of Business Organization. Study Finance. Retrieved from

https://studyfinance.com/types-of-business-organization/.
Food Empowerment Project, 2020. Child Labor and Slavery in the Food Industry.
Retrieved from https://foodispower.org/human-labor-slavery/slavery-
chocolate/.
Serrano, A. (2016). Business Ethics and Social Responsibility. ISBN 978-971-9654-
31-5. Unlimited Books Library Services & Publishing Inc., Intramuros,
Manila.
LESSON 3

Manila.
LESSON 4
Ahmed, N. (2017). Conflict of interest, for example…. The Daily Star. Retrieved
from https://www.thedailystar.net/opinion/chintito-1995/conflict-interest-
example-1486714.
Manila.
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MODULE 2
Philosophies and Beliefs
MODULE OVERVIEW
In this Module
 Classical Philosophy Used in Business

 Foundations of the Principles of Business Ethics
 Filipino Values System in Business
Greetings, learner! How are you so far? Well then, welcome to the second
module of this course pack!
The world of business is oftentimes seen as an amoral world. It is viewed as a

world solely driven by the profit- motive and business people are often portrayed as
ruthless, self- interested individuals. The world of business is replete with examples of
behavior that attempt to circumvent society’s ethical standards because it does not
recognize the good and bad.
 identify the different classical philosophies in business;
 compare and contrast classical philosophies as they relate to business

settings;
 give examples of how beliefs systems affect business practices; and
 distinguish what is good versus what is morally acceptable among the

given Filipino values.
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LESSON 1
Classical Philosophies
Used in Business
Objectives:
 Compare and contrast classical philosophies related to business

settings.
Introduction:
Classical philosophers arose from the ideas of trade, statecraft and politics and
become the cornerstone of Western Civilization. The struggles of well-known
philosophers are still relevant today. Sadly, the technology and sophistication present
these days seem do not contribute to moral sophistication. Perhaps a lot of ethical
problems facing modern business could be easily solved if latter- day managers based
their conduct using classical philosophies.
Activity: Read the quote and answer the questions after it.
“Without moral perception, man is only an animal. Without morality,

man as a rational being is a failure”
-Ramon Agapay
Analysis
1. What is the message of this quote?

__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
2. Why is morality useful in business?

__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
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3. How does moral ethical issue affect business?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
Abstraction
SOCRATES: HAVE THE COURAGE TO DISAGREE
Socrates was the first person to give a practical and political focus to
philosophy and ethics. He believed, to the contrary of many around him, that the most
applicable questions that philosophy had to deal with are related to how people should
live their lives, what kinds of actions were righteous, and how people should live
mutually in communities and states.
Socrates equated knowledge with virtue, which eventually leads to ethical

conduct. He believed that the only live worth living was one that was carefully
examined. Socrates definitely believed that knowledge and understanding of virtue, or
“the good”, was enough for someone to be happy. To him, knowledge of the good was
almost similar to an enlightened state that no person could willingly decide to do
something damaging or harmful if they were completely aware of the value of life.
Application to business
In the business world, managers should not sleepwalk or simply go along with
the crowd. In order to live a virtuous life, morally unacceptable policies and practices
must be prevented even though “everyone else was doing it”. Managers should be
responsible in their actions and must be prepared to fired or demoted rather than go
against their conscience. A good manager is someone with a functionally relevant set
of virtues with a view to personal success and moral excellence. An organization must
encourage independent thinkers and their employees to follow their conscience.
Employees too must provide critical feedback to managers. This is to create
opportunities for good people to “blow the whistle” in cases of bad behaviors.
PLATO: THE POWER TO RULE
Beginning his early youth he had been fascinated in political affairs. Starting
from his associations with Socrates and as of his own observations, he had arrived at
certain belief about the suitable credentials for those whose duty was to rule the
government. He believed that only those persons who possessed scholarly as well as
ethical qualities should be trusted with the control to rule above others.
Plato was famous for his discussions on the subject of reality. He believed that
everything was founded in perception and the physical world is the lesser world in
every way. He believed that most of the greater world was not clear. He hated people
who place all their faith in their physical senses and not their intellectual senses for
the intention of collecting insight. The weight Plato put on the intellectual abilities
indeed makes him one of the original personal development authorities.
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"More will be accomplished, and better, and with more ease, if every man
does what he is best fitted to do and nothing else". According to Plato each social
class must happily perform the function for which it is suited like the philosopher
rules, the warrior fights, and the worker enjoys the fruits of his labor.
In business it is always important to know the strengths and weaknesses of

everyone in the organization, whether a top executive or an ordinary employee. This
can only be achieved by constant acts of examination and analysis. Any firm must be
aware of the path it is taking and make regular checks to be sure that things are going
well.
There should be continues communication among the members of the

organization. In addition the company should solicit inputs from everyone in the
company on the direction of tasks and how well they think they are going. Having
more accurate and updated information available to the firm will allow management
to make better decisions. It is also best to hire the right people. Selection should be
done carefully.
Companies must fit the exact natural talents of qualified applicants with the
job requirements and expectations. The person's instincts and habits will prompt them
to do what management wants them to do even without actual supervision. Each job
has a set of behaviors that let the right person to stand out because that person is so
perfectly matched.
ARISTOTLE: LET PEOPLE SEEK FULFILLMENT
Aristotle was the most practical and business-oriented of all philosophers,

although there was never any mention of a large business or corporation during his
time, It is also amazing that the idea that a person who's been dead for nearly 2,400
years has a lot of sensible things to say about modern organizations.
Aristotle remains relevant because he is chiefly interested in ethical principles

of leadership. Contained in his Nicomachean Ethics, Aristotle established that the role
of the leader as someone who must construct the environment in which all members
of an organization have the chance to recognize their own potential. He says that the
ethical role of the leader is the establishment of the conditions under which followers
can attain their full potential and to enhance his own power.
Aristotle was a great biologist as well as a great philosopher. He based his

ethics on a psychological theory of human nature, claiming that people are by nature
virtuous, rational, social and happiness-seeking. Governments and organizations have
to build the best systems to allow humans carry out their natural drives.
Aristotle's philosophy was an influence on Edward Deci and Richard Ryan's

Self-Determination Theory, which suggests that employees will work harder for a
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company, and perform better, if given tasks they find meaningful and morally
worthwhile.
In business, the organization must provide an environment that is conducive to

human growth and fulfillment. Employees will be inspired to work if they know that
their contributions to the company are significant and morally valuable. They will be
more motivated also if they are given the opportunity to nourish their innate curiosity
through learning opportunities. Management could offer vocational trainings and
lecture. They can also be provided with time and even money for evening classes and
give credits to their accomplishment. In terms of distribution of rewards, based on
ethical principle, employees must be rewarded proportionate to their contribution.
CONFUCIUS: LIVE A CONTENTED, MORAL AND HAPPY LIFE
Confucius championed important principles of ethics and politics, in a time

when the Greeks were advocating identical things. His idea of democracy as written
in his Analects is that the best government is one that rules through rites and the
people's natural morality, rather than by using bribery and coercion. This is the same
principle people are obviously familiar with today. In democracy, the state is ruled by
the people.
Virtue and morality are Confucius primary focus. He is concerned with

teaching people about benevolence, generosity, love, compassion, and sincerity in a
straightforward manner. He concentrated on developing morality and a sense of
shame so people will conduct themselves in harmonious ways. He also emphasized
that in order to govern, one must govern themselves. In addition, loyalty to family and
family ancestry are central to uphold honor.
Confucius teaches his students how to live a contented, moral' and happy life.
He wants people to associate with others who can act as their teachers. He encourages
people to live by their principles and continue to build upon them. He tells others to
love their work, because they will realize that they are not really working at all. In this
natural state of mind, all six of the essential ethical principles of xi, zhi, li, yi, wen, and
ren are automatically being assimilated into the person's being.
Application to Business
Confucian values can aid in the creation of business leaders who are true
leaders of society, and who hold a sense of righteousness and moral power. Confucius
believed that leaders were expected to rule in a just and moral manner. This view of
practice can potentially create business leaders who perform ethical business practice.
Using Confucian values, if businesses are managed virtuously, they will succeed.
If righteousness and profitableness are balanced equally, moral values can be

achieved and may contribute positive role in shaping and maintaining ethical business
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practice. In this line there will be more profitable business that could be created. Most
importantly, ethical obligations to family and society can also be realized.
Likewise, Confucius believes on the concept of self-discipline. He assumed

that a leader is required to practice self-discipline in order to stay humble and care for
his followers with compassion. In the case of employees, they must always take pride
and honor with their job.
Application
Rajat Gupta and Insider Trading

Pratik Patel (2013)
Rajat Gupta is an Indian American businessman who was the managing

director of management consultancy McKinsey & Company and a business leader in
India and the United States. Rajat Gupta also served as corporate chairman, board
director or strategic advisor to Goldman Sachs, Procter and Gamble and American
Airlines, and non-profits organizations, The Gates Foundation, The Global Fund and
the International Chamber of Commerce.
Rajat Gupta was convicted in June 2012 on insider trading charges. He was
sentenced in October 2012 to two years in prison, an additional year on supervised
release and ordered to pay $5 million in fines. His trial began on May 22, 2012. On
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June 15, 2012, Gupta was found guilty on three counts of securities fraud and one
count of conspiracy.
The primary parties are affected are Rajat Gupta, McKinsley & Company,
Goldman Sachs, Raj Rajaratnam, Galleon Group, Warren Buffet, and the U.S. equity
markets. Other parties indirectly affected are family and friends of Rajat Gupta,
employees at McKinsley & Company and Galleon Group, investors in Goldman
Sachs and its creditors, and government and officials involved with the case.
In September 2008 Warren Buffet agrees to pay $5 billion to Goldman Sachs

in exchange for preferred shares in the company. This news is likely to raise the share
price of Goldman Sachs. The news is not supposed to be announced and made public
until the end of day. Less than a minute after the board approved the Buffet purchase,
Rajat Gupta calls his longtime friend Raj Rajaratnam, a hedge fund manager and
billionaire founder of Galleon Group. Once Rajaratnam gets this information, he
immediately buys shares of Goldman Sachs. Next day when the stock market opens,
Raj Rajaratnam makes nearly $1.2 million in profits as Goldman Sachs shares rose.
The SEC estimates the tip leaked by Rajat Gupta generates profits and avoids losses
of more than $23 million.
Gupta was commended by people who knew him as a person who helped
others. He was very active in providing medical and humanitarian relief to the
developing countries. Born to humble circumstances, he became a pillar of the
consulting community and a trusted advisor to the world’s leading companies and
organizations. A word that was used repeatedly in media coverage for Rajat Gupta
during his trial was “respected.” In the past, much less so now, we assume people in
leadership positions are virtuous. However, instances like the Rajat Gupta insider
trading case and other financial scandals remind us that the assumption is not well-
founded
Case Questions:
1. Is the case of Rajat Gupta showed a failure of character? Explain your answer.
2. According to Aristotle “The virtue of man also will be the state of character which
makes a man good and which makes him do his own work well”. How will you relate
this to the story of Rajat Gupta? Discuss.
3. Do you agree that business schools must provide future financing managers with a
proper ethical education for moral decision making? Defend your answer.
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Well done! You have just finished Lesson 1 of this module. Should there be
some parts of the lesson which you need clarification, please ask your instructor
during your face-to-face interactions.
discuss about Foundation of the Principle of Business Ethics.
LESSON 2
Foundation of the
Principle
Objectives:
 Give examples of how belief systems affect business practices.
Introduction:
Humans have always expressed a need to understand natural phenomenon and

to answer questions regarding their way of life and what happens once they die. These
needs resulted in the development of a variety of religions and philosophies that can
be found throughout the world today. Humans developed belief systems that were
localized to the area in which they lived.
Activity:
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https://mrebbers.weebly.com/uploads/6/9/6/3/6963302/blank-world-map14_2_orig.png
Instruction: Label the countries by its dominant religion in different colors.
Hinduism Judaism Buddhism Christianity Islam
Analysis
1. Why do people have different belief systems?

__________________________________________________________________
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2. How does belief affect business?

__________________________________________________________________
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3. How can you show respect for other people’s beliefs?

__________________________________________________________________
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Abstraction
A belief system is an ideology or set of principles that helps interpret

everyday reality. This could be a form of religion, political affiliation,
philosophy or spiritually among many other things. These beliefs are
formed and influenced by many different factors. The knowledge on a certain topic,
the people were raised, and even peer pressure from others can help to make and even
modify beliefs system. The beliefs that came from these systems are a manner for
people to make sense of the world around them and to define their role within it.
Beliefs systems are something that affects everyday lives of people. They are
commonly related within religions. A religious system is usually controlled around a
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moral code, the belief of one or more deities and the ability for supernatural
occurrences to affect inhabitants and the universe that they exist in. A spiritual belief
system is closely related to this, but is not as structured. Some prefer to believe in an
eternal life and pursue a moral code of conduct but do not join with a particular
church or domination. Since it influences the manner a person views the world and
describes how they treat others, it still counts as a belief system.
ANIMISM
Animism includes the beliefs that there is no disconnection between the

spiritual and physical (or material) world. It is the oldest recognized type of belief
system in the world and still practiced in a variety of forms in many traditional
societies. Animists perform nature worship. They suppose that all in the universe has
a spirit. Although animism has the belief that non-human entities like animals, plants,
geographical features, and other inanimate objects, or phenomenon possess some
form of spiritual prowess, there is something deeper beyond that.
Animism has a complicated moral ecology and human-environment relations

concepts that most other philosophies and religions miss a chance to reflect on. The
world of animism is shaped as a result of the dealing with material, natural, and
spiritual worlds. All entities jointly exist and with common origin. Thus the individual
cannot
be separated from the rest of the world, both in the material and spiritual sense. As a
result, past and present are linked through social and natural actions, and cosmic
phenomenon.
Animism is demonstrated by the rituals of the Plains Indians in North America

who would praise the spirit of the buffalo that they killed for giving its life to them so
that they may stay alive. In the Philippines, among the Kankanai Igorots, the dog was
nearly worshipped, in a way comparable to other tribes throughout the Malay
Archipelago. Some of them even gave their dogs amulets to put on against sickness
and danger. However, among some neighboring lgorot tribes, the dog, while believed
sacred, is killed and eaten during sacrifices.
Business Practices of Animism
Feng Shui is an animist and an old age practice based upon cosmic and
geographic dimensions is widely practiced. Its principles have a long track record of
successful outcomes both one's personal life and in business. As a result, Feng Shui is
a normal fixture, both in homes and in business, in many Asian countries.
Many Feng Shui tools are used to assess business including but not limited to:
1. space allocation - proper use ot space

2. layout - best arrangement of furniture
3. orientation - direction and location of a person within a space
4. decor- best color schemes and elements to implement
5. remedies- proper use and placement to balance the space
harmoniously
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SHINTO
Shinto, which means “way of the gods”, is the customary religion of Japan
that centers on natural world. A lot of people consider Shinto to be a form of animism
since there are many similarities found between them. Shinto teaches that there is a
holiness of the whole universe and that humans can be in tune with this holiness.
Shinto teaches that certain deeds create a kind of ritual impurity that one should want
cleansed for one's own peace of mind and good fortune rather than because impurity
is wrong. Wrong deeds are called impurity (kegare), which is opposed to purity called
(kiyome). Purification rites called Harae are a vital part of Shinto. They are done on a
daily, weekly, seasonal, lunar, and annual basis. These rituals are the lifeblood of the
practice of Shinto.
Business Practices of Shinto’s
Shinto is the largest religion in Japan, practiced by nearly 80% of the

population. This is the reason why most of the practices of Japanese people are
influenced by Shinto including business. New buildings made in Japan are normally
blessed by a Shinto priest called kannushi during the groundbreaking ceremony. Many
cars made in Japan have been blessed as part of the assembly process. Moreover,
many Japanese businesses built outside Japan have had ceremonies performed by a
Shinto pries with occasionally an annual visitation by the priest to repurify.
In the workplace, a Shinto priest is often called in to cleanse and bless the new
space before work begins. Gift-giving is an important both in and out of the
workplace and is a good way to make sure business deals stay friendly. However,
according to Shinto tradition, the number four is unlucky and symbolizes death. Gifts
featuring this number are improper.
HINDUISM
Hinduism is a polytheistic religion that was formed from a variety of different

religious practices. One of Hindu's religious practices that are well known is the
Namaste greetings. The gesture of Namaste is a simple act made by bringing together
both palms of the hands before the heart, and lightly bowing the head. In the simplest
of terms it is accepted as a humble greeting straight from the heart and reciprocated
accordingly.
Business Practices of Hinduism
Hinduism is the major religion of India, practiced by more than 80% of the
population. This is the rationale behind most of Hinduism practices including business
could be found in India. Here are some of those practices:
1. Doing business meeting requires a handshake called Namaste as part of

etiquette.
2. Names speak volumes about an Indian's background.
3. Always use the appropriate formal title when addressing a person if the
person is personally known like Professor, Doctor, Mr or Mrs.
4. Business cards should be exchanged at the first meeting
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5. Doing business involves building relationships because they only deal
favorably with those they know and trust even in lucrative deals.
6. Meetings should be arranged well in advance.
7. Punctuality is expected, although being 10 minutes late will not have
ruinous consequences.
8. When entering a meeting room a person must always approach and greet the
most elder figure first.
9. Business dealings involve negotiations and can be slow.
10. Business decisions are not solely based on statistics, empirical and exciting
PowerPoint presentations.
11. When negotiating avoid high pressure tactics and do not be forceful.
12. Once terms have been agreed there will be a celebration dinner for a
successful negotiation and the continuous process of relationship building
process.
JUDAISM
Judaism is the oldest known monotheistic religion still practiced in the world
today. Its primary teachings have been powerful and are the foundation for more
newly developed religions such as Christianity and Islam. The scriptures tell the story
of the development of these relationships, from the time of creation, through the
creation of the relationship between God and Abraham, to the creation of the
relationship between God and the Jewish people, and forward. The scriptures also
specify the shared
obligations created by these relationships, although various movements of Judaism

disagree about the nature of these obligations. Some say they are absolute,
unchanging laws from God (Orthodox); some say they are laws from God that change
and evolve over time (Conservative); some say that there are guidelines to choose
from whether or not to follow (Reform).
Business Practices of Judaism
Judaism sees nothing immoral with business and making a profit as long as the
firm realizes that it has other responsibilities too. Any organization must practice
loving, kindness, justice, and righteousness as stressed and demanded by God.
Certainly, business ethics occupies such an important place in Jewish law, culture, and
tradition. The Jews believed that the very first question an individual is asked in the
next world at the final judgment: "Were you honest in your business dealings?
Relations between employees and employers, as well, are regulated by Jewish

law. The law recognizes the legality of regulations promulgated by the residents of the
town" about wages and working conditions. The definition of that body is later
stretched to include guilds of tradesmen or craftsmen who were permitted to agree to
binding regulations. The rights and interests of workers and management are to be
taken into account by someone to whom a labor disagreement is brought for
arbitration or adjudication.
Jewish ethics pushes the individual to go further than what the law says in
determining one's obligations to others in the monetary sphere. No one is likely to
agree to being taken advantage of, but one is to take even greater care not to get from
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any advantage one has over others. In this manner, one brings to one’s own life and
one's community a measure of the holiness with which Jewish spiritual practice seeks
to instill even to the most ordinary affairs.
BUDDHISM
Buddhism developed in India, and is based on many of the foundation

concepts of Hinduism.
Siddhartha's philosophy of the nature of human suffering and its relation to

desire called Four Noble Truths is articulated by these four statements:
1. Life is full of pain and suffering.

2. Human desire causes this suffering
3. By putting an end to desire, humans can end suffering.
4. Humans can end desire by following the Eightfold Path.
The Wheel of Life is one of the most important symbols of Buddhism, as it

stands for the endless cycle of lite through reincarnation and because each of its eight
spokes represents one of the teachings of the Eightfold Path.
1. Know that suffering is caused by desire.

2. Be selfless and love all life.
3. Do not lie, or speak without cause.
4. Do not kill, steal, or commit other unrighteous acts.

5. Do not do things which promote evil.
6. Take effort to promote righteousness.
7. Be aware of one’s physical actions, state of mind, and emotions.
8. Learn to meditate.
Business Practices of Buddhism
Buddhist business practices and maxims can be beneficial to the decision-

making process in the workplace. The following are some Buddhist principles for
business in order to achieve workplace nirvana in no time.
1. "Too cold, too hot, too late can always be the excuses to those who do
not want to work. They let their opportunity pass by.
2. None can live without toil, and an ability that provides ones needs is a
blessing.
3. Develop the mind of equilibrium.
4. The Eightfold Path- These eight signposts could prove helpful for one’s
business dealings.
5. Work means, to discover the world and then give oneself
wholeheartedly to it.
6. The most valuable service is one rendered to ones fellow humans.
7. Every individual has a responsibility to help guide the global family in
the right direction.
8. Do not dwell in the past, do not dream of the future, concentrate the
mind on the present moment.
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9. One can only lose what he clings to.
10. A jug fills drop by drop.
CONFUCIANISM
Confucianism teaches that there is a natural social order to society which can
best be explained through the Five Relationships, which are:
1. Ruler to ruled.
2. Father to son.
3. Older brother to younger brother.
4. Husband to wife.
5. Friend to friend.
In these relationships, the second role is considered secondary to the first. It

was taught that if everyone recognized their place in society, then order would reign.
There are several concepts which needed to be practiced in order to reach an ordered
society:
1. Jen-Human kindness should be shown towards one another.

2. Li-Proper etiquette should always be used, and one should strive to
achieve perfect virtue.
3. Filial Piety-One should respect their elders.
Business Practices of Confucianism
In the business world, the Confucian emphasis on respect is reflected in

workplace decorum. Workers use a completely different set of words when addressing
superiors. When doing business the preservation of face is important. Simply "face”
means good reputation. It is critical that a businessman gives face, saves face and
shows face when doing business.
Here are some characteristics of Confucianism business ideology that would

be useful for imitation:
1. The way to perceive a crisis- Crisis translates to a combination of

danger and opportunity.
2. The importance of relationship (Guanxi)- Interpersonal relationships in
business is extremely valuable.
3. Strategy and preparation- The significance of strategy in business is
something worth considering.
4. Re-evaluating what success really means- The Confucian discipline,
Mencius, made it very clear that it was immoral of rulers to think on
profits for their respective states.
5. What Confucius said- According to Confucius "When it is obvious that
the goals cannot be reached, don't adjust the goals, adjust the action
steps.
TAOISM
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The Chinese term Tao can be translated into English, meaning "the way." It is
a philosophy which teaches that Yin-Yang Symbol nature has a "way" in which it
moves. The belief is that there is a natural and proper way of doing everything. The
belief is that there is a natural and proper way of doing everything. Done properly, the
Taoist will receive peace and prosperity. Done incorrectly, there will be chaos.
Tao is the force that flows through nature. The manner that it flows brings
peace, happiness, health and harmony. The Yin and Yang symbol has also been used
to illustrate the natural harmony that exists in the world. The yin-yang symbol is now
a common place in the western world.
http://www. 1000ventures.com/business_guide/tao_business.htlm
Business Practices of Taoism
The Tao teaches people the art of living and doing business. Business success
is the sum of preparation and opportunity. It applies equally well to the management
of large corporations or the running of a small business, to the governing of a nation
or the leading a small team, to one’s personal development or to the coaching of
others. For instance for a balanced growth, the yin must consider the business from
the outside-in. This means knowing and understanding the customers and their
perceptions. It also requires the yin to know, understand and satisfy the needs of all
stakeholders. On the other hand, the yang must concentrate on creating new market
niches and looking for new customers through inventing and producing novel
products in order to be different and competitive.
CHRISTIANITY
Christianity is currently the most popular religion in the world based on the
number of worshippers found throughout the world. Christians are expected to attend
church services regularly, usually on Sundays and holy days such as Christmas and
Easter. On these occasions Christians take part in sacraments, which are religious
practices such as baptism, and receiving the Eucharist.
Business Practices of Christianity
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There are three biblical principles that stand out that define a Christian
business worthy of that name.
1. Integrity -Integrity is about Christ-centered living.

2. Commitment to excellence-If an organization is to be recognized as
an exemplary one, one whose goal is to glorify God through its
commitment to excellence in its service and product, it must always
honor God and be thoroughly cognizant of its role and mission in a
pagan world.
3. Commitment to its people-This includes the area of fair
compensation performance recognition, and providing growth
opportunities, both professionally and personally.
ISLAM
Islam, which when translated from Arabic, means "to submit to the will of
Allah, is the youngest of the world's major religions. Mohammed received the word of
God, or Allah, through the angel Gabriel while living in the city of Mecca. The flight
of Mohammed from Mecca to Median was instrumental to the founding of the
religion of Islam, and is known as the Hegira. Thus, in 622 CE Islam was founded and
this date became the starting point for the Islamic calendar.
Mohammed and his followers later returned to Mecca and declared a jihad or
holy war, after which he captured the city. Under Mohammed's leadership, the basic
teachings of Islam were established, which are known as the Five Pillars of Islam.
Every Muslim is expected to follow these rules in order to lead an ethical life:
1. Confession of Faith - The belief that "there is no God but Allah, and
Mohammed is His prophet."
2. Prayer - Muslims must pray five times per day, facing towards
Mecca.
3. Charity- Muslims must give alms to the poor, and support the local
Mosque by donating a portion of their income.
4. Fasting- during the Ramadan, the ninth month of the Muslim
calendar, all Muslims must fast during daylight hours, except the
very young or sick.
5. Pilgrimage - If possible financially, each Muslim must make a hajj,
or holy pilgrimage, to the city of Mecca.
Business Practices of Islam
Executives who understand the basic doctrine of the Islamic religion as it

relates to commerce will have an easier time trading with Muslims, they said. The
following principles of behavior are expected among business people:
1. Contracts should be fair to all parties- Partnership is preferred over

hierarchical claims.
2. Speculation is prohibited- People do not like gambling.
3. Interest is prohibited- Part of the religious belief is that you do not
charge interest or accept interest.
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4. Compassion is required when a business is in trouble-In any country
that has Islamic influences in its legal structure, bankruptcy or if
somebody is experiencing financial reversals, no pressure can be
placed on them, because that is not an appropriate thing to do when
somebody is down.
5. Cultural differences can present straightforward logistical issues.
Here are a few tips on broad cultural differences that business people may
have to navigate:
1. Power- In Muslim world, power is largely ascribed, meaning that

people can often reach high places by virtue of their birth and social
position.
2. Community- There is an obligation to the community.
3. Rules- The written rules governing any scenario are the final
authority
4. Communication- Verbal communication is not direct.
5. Islamic Finance -Muslim finance takes the concept of fairness very
sincerely, and charging interest is regarded unfair, although in
practice this rule is not absolute.
Application
The McDonald’s ‘Beef Fries’ Controversy

A. Mukund, (2002)
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In May 2001, a class action lawsuit was filed against the world's largest fast-
food chain McDonald's, in Seattle, US. The lawsuit alleged that the company had, for
over a decade, duped vegetarian customers into eating French fries that contained beef
extracts.
The lawsuit followed a spate of media reports detailing how the French fries
served at McDonald's were falsely promoted as being '100% vegetarian. Although
McDonald's initially declined to comment on the issue, the company issued a
‘conditional apology’, admitting to using beef flavoring in the fries. The furor over
the matter seemed to be settling down, when to McDonald's horror, some of its
restaurants in India were vandalized. Activists of Hindu fundamentalist groups - the
Shiv Sena, the Vishwa Hindu Parishad (VHP) and the Bajrang Dal, staged a
demonstration in front of the McDonald's head office in Delhi protesting the alleged
use of beef flavoring. They submitted a memorandum to the Prime Minister,
demanding the closure of all McDonald’s outlets in the country.
Activists also staged protests in front of McDonald's restaurants in south

Mumbai and Thane. Mobs ransacked the outlet at Thane, broke the glass panes and
smeared the McDonald's mascot Ronald with cow dung.
About 30 people were arrested and later let oftf on bail. Company officials
estimated the loss to the outlet at Rs 2 million. Officials at McDonald's India quickly
announced that the vegetarian products served in India did not have any non-
vegetarian content.
However, despite this reassurance, the anti-McDonald's wave refused to die

down. Meanwhile, more cases were being filed against McDonald's -this time in
California, US and Canada. It seemed certain that the company would have to shell
out
millions of dollars to settle the class action lawsuit representing the 1 million US
based Hindus and 15 million other vegetarians.
McDonald's was started as a drive-in restaurant by two brothers, Richard and

Maurice McDonald in California, US in the year 1937, The business, which was
generating $ 200,000 per annum in the 1940s, got a further boost with the emergence
of a revolutionary new concept called “self-service”. The brothers designed their
kitchen for mass production with assembly line procedures. Prices were kept low,
Speed, service and cleanliness became the critical success factors of the
business. By mid-1950s, the restaurant's revenues reached $ 350,000. As word of their
success spread, franchisees started showing interest. However, the franchising system
failed because the McDonald brothers observed very transparent business practices.
As a consequence, they encouraged imitators who copied their business practices and
emerged as competitors. The franchisees also did not maintain the same standards for
cleanliness, customer service and product uniformity. At this point, Ray Kroc (Kroc),
an exclusive distributor for milkshake machines expressed interest in the McDonald
brothers business. Kroc finalized a deal with the McDonald brothers in 1954.
COMPOSTELA VALLEY
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He established a franchising company, the McDonald System Inc. and
appointed franchisees. In 1961, he bought out the McDonald brothers' share for $2.7
million, and changed the name of the company to McDonald's Corporation. In 1965,
McDonald's went public.
By the end of the 1960s, Kroc had established over 4U0 franchising outlets.
McDonald's began leasing/buying potential store sites and then subleased them to
franchisees initially at a 20% markup and later at a 40% markup. To execute this,
Kroc set up the Franchise Realty Corporation. The real estate operations improved
McDonald's profitability. By the end of the 1970s, McDonald's had over 5000
restaurants with sales exceeding $3 billion. However, in the early 1990s, McDonald's
was facing problems due to changing customer preferences and increasing
competition. Customers were becoming increasingly health conscious and they
wanted to avoid red meat and fried food. They also preferred to eat at other fast food
joints that offered discounts.
The courtroom battle had entered the 1ith month when McDonald's announced
that it would issue a new apology and pay $ 10 million to vegetarians and religious
groups in a proposed settlement of all the lawsuits in March 2002.
Case Questions:
1. What particular conflict in the belief system did McDonald violate?

Explain your answer.
2. How did the Hindu fundamentalist groups react? Enumerate them.
3. Do you agree with the actions taken by McDonald just to win the battle over the
Hindu belief?
Good job! You have just finished Lesson 2 of this module.
discuss about Filipino values system in business.
COMPOSTELA VALLEY
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LESSON 3
Filipino Values System
in Business
Objectives:
 Analyze simple business situation as they are affected by the Filipino

values system; and
 Distinguish what is good versus what is morally acceptable among the
given Filipino values.
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Introduction:
Filipino value system is defined by the way of people live their life as an
influence of one’s culture. Philippines, having been an archipelago, have not become
a hindrance towards having a single values system throughout the country. In
whatever part of the country, one may find the same hospitality that the Filipinos are
known for as well as many other values that have originated from our forefathers.
Activity: Give at least two Filipino traits that you possess.
https://www.jing.fm/iclip/ixhoxR_businessman-clipart-computer-man-and-woman-animated/
Analysis
1. Explain at the two Filipino traits that you wrote in the Activity.
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
2. How did the two traits develop?

_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
3. As an entrepreneurship student, how would these traits help your future

business endeavor?
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
Abstraction
THE FILIPINO VALUE SYSTEM

STATE COLLEGE | 56
The Filipino value system refers to the set of values or the value system that a
majority of a Filipino have historically held important in their lives. The Filipino
value system includes their own unique collection of ideologies, moral codes, ethical
principles, etiquette, and cultural and personal values that are encouraged by their
society. Although with any society, the values that an individual holds sacred can vary
on the basis of religion, upbringing and other factors.
BAHALA NA
Trust in God or the concept of Bahala na is a principle used when a person

does not know what to accomplish or is too slothful to do anything at all. This belief
to put fate in God's hands may be a sign of how religious Filipinos may be. Further, it
may show that the Filipinos are free-spirited and that they put their life in fate's hands.
For most Filipinos everything is already fixed or destined. Negatively, bahala

na could bring about a false sense of security with God as insurance or a security
blanket. For example, if God wants Filipino families to have plenty of children (anak
ay kayamanan), so God will take care of everything and the family has nothing to
worry about. Bahala na could be the cause of the lack of national resourcefulness and
of that discipline necessary for national growth.
By nature, Filipinos are malakas ang loob (strong-hearted), and not timid and
fearful. The fact is that many Filipinos pursue their plans and projects even if they are
not sure of future developments or events that may affect their accomplishment. They
undertake projects which should perhaps have frightened them if they were only less
courageous to take the risk involved. In situations where they are not sure of their
ability to accomplish things, they say bahala na (let fate decide the outcome) and do
the best they can believing that Nasa Diyos ang awa, nasa tao ang gawa (Look to God
for compassion and to man for action).
UTANG NA LOOB
Gratitude or utang na loob is a very fashionable Filipino characteristic. 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. They may request favors or things that may either be difficult to deal
with or beyond the means of the one in debt.
With this system people are forced to do something in exchange for what
others do in favor. A man who, in spite of having been helped by a friend, declines to
help the latter when his need crops up is called walang utang na loob or ingrate.
People scorn this man and is hated for his lack of utang na loob. This value has been
taken advantage by others especially the politicians. This utang na loob may result to
faithfulness and a source for graft and corruption.
NINGAS COGON
Ningas is a noun which means flame, blaze or combustion, while cogon is a

grass which can be easily burned with its representation. Ningas cogon means the fast
burning of cogon, which signifies Filipinos way of eagerness only at the beginning
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but then quickly losing enthusiasm soon after to continue it, or the lack of a follow-
up. It is usually observed as a negative value.
The phrase refers to a rather regrettable tendency to start projects and never
finish them. Many business meetings seem optimistic and fruitful, fueled by the
adrenaline rush of money to be made, and confident to lead to grand and wonderful
things. All too often, the projects under discussion tail to get off the ground as the
parties involved move on to other projects. This is typically for the reason that some
participants were hesitant to demonstrate their doubts in the first place. They desired
to go along with the group compromise and share their fervor. While this has the
short-term advantage of everyone leaving the meeting with a pleasant buzz, the
longer- term results consist of contusion, disappointment, and bitterness.
PADRINO SYSTEM
Padrino System, or patronage in the Filipino culture and politics is the value
system where one gets support, endorsement, or political appointment through family
affiliation (nepotism) or friendship (cronyism), as against to one's worth. The Padrino
system in the Philippines has been the root cause of many controversies and
corruption.
It is identical to Compadre system whereby an enterprising subordinate will

convince his superior to be the godfather of is son to get promotion or salary increase.
These crooked practices often lead to the ballooning of the bureaucracy such that a
department secretary may have four undersecretaries and countless assistant
secretaries. In the disguise of reorganization to restructure the bureaucracy, a new
administration can fire or retire early, thousands of civil servants and replace them
with their own people.
Using the Padrino system can get a businessman easily started if the Padrino
would stand as go-between for introducing and vouching his character in order to get
the business deal. Surely using the Padrino system can guarantee a good business
deal. However, the Padrino would anticipate that there would a thing of value in
exchange
for the favor. For example, a person or group who wants to transact business with
government on average would look for support from hard-faced and thick-witted
officials and are only too happy to force to their demands. In most instances the
expenses acquired in the dealings could be justified by both parties as grease money
or padulas. It is also within lawful limits since there is no evident and express transfer
of cash or gifts.
MAÑANA HABIT
The mañana habit is something that Filipinos have learned from the
Spaniards. The word mañana means tomorrow or specified future time. It is also
known as procrastination in plain English and mamaya na in Filipino. It could also
means putting something off until another time. This trait was instilled to the Filipinos
during the Spanish era in which they use this habit in work and serious business as a
silent objection to the invaders.
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In business setting, people work as a team in any corporate set-up. No one
works alone. Each one is part of a team or a group, and the success or failure of each
team is based on the other teams in the organization. So it one team member delays a
task and falls behind schedule, there is a domino effect of postponements that go
through the whole organization.
AMOR PROPIO/ SELF- RESPECT
Amor Propio is Spanish word which means self-love. Although coming from
the Spanish, it is actually a concept that predated the Spanish occupation. It is a sense
of self-esteem or sells respect that stops a person from swallowing his pride. It
includes sensitivity to personal insult or offends. A minor remark or offensive gesture,
though insulting, would not prompt a sense of amor propio. The stimulus that sets it
off is only that which hits at the Filipino's most highly valued attributes.
In Western terms it can loosely be connected to the cultivation and

maintenance of ego. Failing to present appropriate hospitality, passionlessly admitting
criticism or accepting wrong are all considered violations of amor propio which are
violations of self. This level of amor propio can even be seen in modern libel and
slander laws in the Philippines. Someone can be held civilly guilty for "defamation of
character" even if the allegations are absolutely and objectively true.
For example, a person may feel reluctant to collect a long unpaid financial
debt or item borrowed. This is for the reason that to raise the matter face to face may
place a person's amor-propio at risk and can be the root for the latter to break out.
This situation is not only true to individuals but to business as well.
DELICADEZA
Delicadeza is a Spanish term which means daintiness when translated in

English. It is defined as an act of being refined or delicate in tastes or manners. But in
Simple terms, it's a sense of good manners or how to behave rightly in all situations. It
is an etiquette that was passed on to Filipinos as a legacy of the Spanish culture.
In various business organizations, big or small, there are leaders or managers

who preferred to save himself from the liability of erroneous decisions by pointing
fingers to his staff when the truth is, he is part of the mess. However, there are also
who give up one’s position of authority when becoming involves in a matter of
impropriety and resign out of delicadeza.
HIYA
Shame or hiya is a very common Filipino value. It is a sense or social

propriety and conforming to societal norms of behavior. Filipinos believe they must
live up to the accepted standards of behavior and if they fail to do so they bring
dishonor not only upon themselves, but also upon their family. It someone is publicly
embarrassed, criticized, or does not live up to expectations, they feel shame and lose
self-esteem.
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It is said that Filipinos would go to enormous extents in order not to be placed
in shame. Filipinos feel pressure to meet the status quo of the society when it comes
to economic standing. One sign of this might be a readiness to squander more than
they can afford on a party rather than be embarrassed by their economic status. For
example a Filipino although he has neither money nor property, will borrow money
from relatives, neighbors or friends in order to have a feast for the baptism of his son
or daughter. In another instance, an employee would abstain from asking questions
from his supervisor even if he is not quite certain what to do because of hiya.
PAKIKISAMA/ PAKIKIPAGKAPWA- TAO
Loyalty or pakikisama is another Filipino value. This is the shared sense of

identity and consciousness of the other person. It is treating others with the respect
and dignity as an equal and not someone below the individual. Filipinos are said to be
loyal to their friends and fellowmen in order to guarantee the peace in the group. This
is evident in their fundamental sense or justice and fairness and concern for other's
wellbeing. Filipinos recognize the indispensable humanity of all people and regard
others with respect and empathy. With this orientation, Filipinos develop sympathy to
the nature and quality of interpersonal relationships, which are their main cause of
security and happiness.
Basically, in business it is a practical translation of one's pakikipagkapwa- tao

because the intention is to offer things and services of value to others to get better
their standards of living. The businessman that has pakikipagkapwa- tao does not
cheat his customers through overpriced or under weighed goods. He does not
destabilize his competitors by underpricing or damaging them. He does not also
mistreat his workers by underpaying or overworking them. Likewise he does not
cheat the government by avoiding or evading taxes. At the same time, other Filipinos
who benefit from fruits of the businessman will give him back his share. Customers
pay, competitors play fair, and workers demonstrate malasakit over the business. It
pakikipagkapwa-tao developed well, it should promote and uphold the vision of
Filipino enterprise.
FAMILY ORIENTATION
The Philippines is known to be a family centered nation. The Filipinos

recognize their family as an important social structure that one must take care of.
They give importance to the safety and unity of one's family. The Filipino family is so
intact that it is common for members of the same family work for the same company.
It is also common to find the whole clan living in the same area as that the Filipinos
are afraid to be too far from their own family. Family lunches with the whole clan
with up to 50 people, that extend until the line of second cousins are not strange. The
Filipino puts a being close to one's family members.
The family is always of vital importance in the Philippines. Not surprisingly,

most business organizations have the Filipino family as their model. The superior and
subordinate often exist in a bata relationship. Bata system is basically similar to that
of between parent and child (bata literaly meaning child). As a result, paternalistic
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management styles are the standard. As expected, a paternalistic and hierarchical
management structure means that decision making in most organizations is prepared
by the top officials and unless one has some excellent inside connections or referrals,
his initial contacts are not likely to be with the decision-maker.
In addition, most business settings have dense networks of godparents and

other quasi-relatives. The Filipino family is classified rather largely, and consists of
many people who are called Tito (uncle), Tita (auntie), and Pinsan (cousin), even if
they are not related by blood. In many companies, a good fraction of employees fall
into this category. This means they are not likely to be fired for incompetence except
if they really make a chaos of things. In bigger firms, the nepotism may occur in the
departmental level and may be less prominent, but it possibly still exists.
HOSPITALITY
The Filipinos are very hospitable when it comes to their fellowmen. They will
invite their visitors to come into their homes and offer them treats such as snacks and
drinks after a long journey. There are also instances when the Filipinos will serve only
the best to their visitors even if at times they may not be able to afford it. They also go
the extremes as to give up the comfort of their own bedrooms for their guests and to
the point of sleeping on floor just to ensure that their guests are comfortable. Even the
humblest home along the road can serve as a shelter for a stranger who has lost his
way.
Keeping the growth of the tourism industry in the country largely depends on
its people's hospitality which essentially impacts how tourists perceive the place in
general. Filipino people are direct players in the industry because their hospitality is
being seen and experienced by travelers and it speaks of the nation as a whole.
JOY AND HUMOR
This famous trait is the ability of Filipinos to find joy and humor in
everything. It sheds light on the optimism and positivity of Filipinos in whatever
situation they are in so as to remain determined in going through struggles or
challenges. Filipinos have a cheerful, optimistic and fun-loving approach to life and
its ups and downs. They have a pleasant disposition, a sense of humor, and a
propensity for happiness that contribute not only the Filipino charm but also to the
indomitability of the Filipino spirit. Laughing is an important coping mechanism.
Businessmen always think positive towards their life, their business and
themselves. They are not controlled by failure and misgivings and always look
forward. A person with positive mental attitude sees hindrances as opportunities and
does not hold their mind from negative forces and frustration so that it has liberty to
visualize, expand, dream and grow.
FLEXIBILITY, ADAPTABILITY, CREATIVITY
These are manifested in the ability to adjust to often complicated situations

and prevailing physical and social environments. Filipinos have a high patience for
uncertainty that enables them to respond coolly to ambiguity or lack of information.
Filipinos often improvise and make productive and innovative use of whatever is
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obtainable. These qualities have been repeatedly demonstrated in their capacity to
adapt to living in any part of the world and in their ability to allow change.
No one knows the future and nothing is ever constant or without deviation or
change. This situation means that flexibility, adaptability and creativity are the most
important business values which are basically vital to success. When obstacles appear,
when goal posts are moved and when tested business people have to persist with their
ideas, continue with their hard work and think of success .
FAITH AND RELIGIOSITY
The Philippines is approximately 85% Christian (mostly Roman Catholic),

10% Muslim, and 5 % other religions, including the Taoist-Buddhist religious beliefs
of Chinese and the 'indigenous' animistic beliefs of some peoples in upland areas that
resisted 300 years of Spanish colonial rule. This is a reflection of the Filipinos' strong
faith in God as seen in their various practices. This includes the numerous church
holidays they observe, the customary and obligatory Sunday Mass, the individual's
basis of their moral standpoints, the influence of the church on the minds, actions, and
opinions of the majority, importance of the sacraments, praying at almost any possible
time of the day, the extreme practices during Holy Week, and so on.
Filipino businessmen placed God as the center of their businesses. A business

man with faith and religious for instance serves not just his customers, but all of
humanity and the planet. Every business transaction entered into is founded on
honesty and integrity. Managers also demonstrate servant-leadership which is an
attitude and set of practices that deepens the lives of individuals, creates better
organizations and eventually builds a more just and caring humanity.
ABILITY TO SURVIVE
Filipinos have an ability to survive, which is manifested in their capacity for

endurance despite difficult times in their ability to get by on so very little. Filipinos
make do with what is available in the environment. Garbage scavengers in the poor
Manila areas are not looking just for reusable goods among the garbage but,
increasingly, .also for food to feed their families. This survival instinct is related to the
Filipinos other strengths. It is noticeable in the millions of Filipinos who bravely live
through the harshest economic and social situations.
Filipino businessmen do not only aim to survive the competition and the
current economic atmosphere but they are also competent to manage growth and stay
relevant.
HARDWORK AND INDUSTRY
With resourcefulness comes hard work, Filipinos are very determined and
persevering in accomplishing whatever they set their minds to. The related capacity
for hard work and industry among Filipinos is widely acknowledged. Filipinos are
universally regarded as excellent workers who perform well whether the job involves
physical labor and tasks or highly sophisticated technical functions. This propensity
for hard work, which often includes a highly competitive spirit, is driven by the need
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for economic security and advancement for oneself and one's family. This
achievement direction is further accompanied by typically high ambitions and great
personal sacrifices.
This is the main reason why there are a lot of entrepreneurs in the Philippines.
Coupled with high ambition and personal sacrifices, Filipinos put up their own
businesses and place hardwork and industry to make their companies great success.
FILIPINO TIME
Filipino time is a coined phrase for the embarrassing affliction of tardiness

among Filipinos. It has become a phenomenon and impression for Filipino schedule,
making it a characteristic of Filipinos to be generally late. Obviously, this trait was
also an influence from the Spanish occupiers for people would rather give more
attention to their amor propio (hiya), in some events than going there as early as
possible. This trait is also a root of the "manana habit".
Being late is no longer true in Philippine business setting. Business people

have little by little come to value the importance of punctuality. Therefore, it's best to
arrive on time. Today, businessmen generally allow additional time for traffic
jamming and unexpected delays. When caught in traffic they kill some time in a
coffee shop than to be an hour late for a key meeting. It's always a good idea to call
ahead to confirm a business appointment. Confirmation could be done either earlier
the same day or the afternoon before the meeting.
Application
Nestle Philippines and Forefront IT Trading Corp

http://www.equalizerpost.com/2010/03/nestle-philippinesbusiness-case-study.html
Nestlé Philippines, Inc. (NP) today is a robust and stable organization, proud
of its role in bringing the best food throughout the stages of the Filipino consumers’
lives. The Company employs about 3,400 men and women all over the country. It is
now among the top companies in the entire Nestlé world, and is among the country's
Top 10 Corporations. Its products are No. 1 or strong No. 2 brands in their various
categories.
Apart from its commitment to safety and quality and its respect for diversity,
Nestlé is committed to a number of cultural values. These values come partly from its
Swiss roots and have been developed during its history. They are also evolving so as
to support the permanent reshaping of the Company.
They can be described as follows:
1. Commitment to a strong work ethic, integrity, honesty and quality.
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2. Personal relations based on trust and mutual respect, This implies a
sociable attitude towards others, combined with an ability to
communicate openly and frankly.
3. A personalized and direct way of dealing with each other. This implies
a high level of tolerance for other ideas and opinions, as well as a
relentless commitment to co-operate proactively with others.
4. A more pragmatic than dogmatic approach to business. This implies
being realistic and basing decisions on facts.
5. Openness and curiosity for dynamic and future trends in technology,
changes in consumer habits, new business ideas and opportunities,
while maintaining respect for basic human values, attitudes and
behavior
6. Pride in contributing to the reputation and the performance of the
Company. This calls especially for nurturing a sense of quality and
long-term achievement in the daily work beyond fashion and
shortsighted gain.
7. Loyalty to and identification with the Company.
Consider this case involving the Company and a distributor, Forefront IT

Trading Corp., owned by Filipino investors who are now complaining of unfair and
unethical business practices by their foreign partners. In a disgusting display of
corporate bullying, the multinational refused to pay Forefront's more than P12 million
in collectibles unless it signed a Release and Quit Claim dropping all other legitimate
claims. This is when a ranking official of the foreign firm had promised, verbally, the
settlement of all just and reasonable claims.
The amount consisted of close to P1 million in withheld expanded value-

added tax (EVAT) for 2007 that the multinational should refund to Forefront, plus
P11.07 million representing performance incentives, advances made by Forefront for
the company's promotional activities and cost of products taken back by the
multinational.
The multinational allegedly took back the products in Forefront's possession

after terminating the, distributorship agreement when the latter protested the meddling
and unprofessional conduct of the multinational's sales official assigned to it. The
distributor had wanted a replacement.
It turned out that the multinational's sales official was carrying on an extramarital
relationship with a Forefront executive, a married man. She exploited this relationship
to secure unusually large orders other employer’s products and even slow-moving
items that Forefront had to dispose of even at cost, even to the extent of forgoing
profits. Santa Banana, she even succeeded in passing on to Forefront some
poorly paying accounts not included in the original agreement. All these eventually
resulted in huge losses to the distributor.
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This came to a point where Forefront experienced difficulties in meeting its
payroll, the 13th month pay for December 2007, and separation benefits for some 80
employees who had to go as a result of severe financial stress.
When advised of the affair and the resulting conflict of interest situation, the latter
simply dismissed the matter as "a purely personal affair between two consenting
adults," and ignored the request that their sales official be replaced. Yet, the
multinational's own Corporate Business Principles and Code of Conduct states,
among other things, that the company "requires its management and employees to
avoid even the appearance of impropriety in its business relationships on behalf of the
company."
Case Questions:
1. What are the unacceptable Filipino values demonstrated by Nestle and Forefront IT
Trading Corp in their transactions? Explain them.
2. What acceptable Filipino values should have been applied by Nestle and Forefront
IT Trading Corp in their dealings in order to have avoided the problem? Explain them.
3. What are the problems that these unacceptable Filipino values have created?
Discuss.
Great work! You have splendidly finished the second module of this
course pack!
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MODULE
1. Businesses all over the world are practicing the new normal in terms of
business transactions. Are the classical philosophies previously discussed in
this module still used today? How about the principles? Explain your answers.
2. Out of all the Filipino beliefs listed, which one is the most detrimental to
business during these times? Which one is the most beneficial? Explain your
answers.
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MODULE
You have completed the second module of Ethics covering Philosophies and
Beliefs. Key points covered in the module include:
 Socrates believed that the only live worth living was one that was carefully
examined.
 Managers should be responsible in their actions and must be prepared to fired
or demoted rather than go against their conscience.
 Plato’s prime belief was that a person must study themselves in order to find
out their level of character.
 “More will be accomplished, and better, and with more ease, if every man
does what he is best fitted to do and nothing else”.
 Aristotle was the most practical and business- oriented of all philosophers.
 The organization must provide an environment that is conducive to human
growth and fulfillment.
 Confucius’ idea of democracy is written on his Analects.
 Virtue and morality are Confucius’ primary focus.
 A belief system is an ideology or set of principles that helps interpret everyday
reality.
 Feng Shui is an animist and an old age practice based upon cosmic and
geographic dimensions is widely practiced.
 New buildings made in Japan are normally blessed by a Shinto priest called
kannushi during the groundbreaking ceremony.
 One of the Hindu’s religious practices that are well known is the Namaste
greetings.
 Judaism sees nothing immoral with business and making a profit as long as the
firm realizes that it has other responsibilities too.
 Buddhist business practices and maxims can be beneficial to the decision-
making process in the workplace.
 The Confucian emphasis on respect is reflected in workplace decorum.
 The Tao teaches people the art of living and doing business.
 There are 3 biblical principles that defines a Christian business; Integrity,
Commitment to excellence and Commitment to its people.
 Executives who understand the basic doctrine of the Islamic religion as it
relates to commerce will have an easier time trading with Muslims.
 The Filipino value system refers to the set of values or the value system that a
majority of a Filipino have historically held important in their lives.
COMPOSTELA VALLEY
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 Trust in God or the concept of Bahala na is a principle used when a person
does not know what to accomplish or is too slothful to do anything at all.
 Gratitude or utang na loob is a very fashionable Filipino characteristic.
 Ningas cogon means the fast burning of cogon, which signifies Filipinos way
of eagerness only at the beginning but then quickly losing enthusiasm soon
after to continue it, or the lack of a follow-up. It is usually observed as a
negative value.
 The Padrino system in the Philippines has been the root cause of many
controversies and corruption.
 In business setting, mañana habit is where people work as a team in any
corporate set-up.
 Amor Propio is Spanish word which means self-love.
 Delicadeza is defined as an act of being refined or delicate in tastes or
manners.
 Hiya means a sense or social propriety and conforming to societal norms of
behavior.
 Pakikisama/ Pakikipagkapwa-tao is the shared sense of identity and
consciousness of the other person.
 The Filipinos recognize their family as an important social structure that one
must take care of.
 Filipino people are direct players in the industry because their hospitality is
being seen and experienced by travelers and it speaks of the nation as a whole.
 One of the famous traits of Filipinos is the ability to find joy and humor in
everything.
 Filipinos have a high patience for uncertainty that enables them to respond
coolly to ambiguity or lack of information.
 Filipinos have an ability to survive, which is manifested in their capacity for
endurance despite difficult times in their ability to get by on so very little.
 Filipinos put up their own businesses and place hardwork and industry to
make their companies great success.
 Filipino time is a coined phrase for the embarrassing affliction of tardiness
among Filipinos.
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MODULE 2
LESSON 1

Manila.
Patel, P. (2013). Rajat Gupta and insider trading. Seven Pillars Institute for Global
Finace and Ethics. Retrieved from http://sevenpillarsinstitute.org/case-
studies/applying-virtue-ethics-the-rajat-gupta-case.
LESSON 2
Mukund, A. (2002). The McDonald’s ‘Beef Fries’ Controversy. Case Centre. IBS
Center for Management Research. Retrieved from
https://www.thecasecentre.org/programmeAdmin/products/view?id=21707.

Manila.
LESSON 3

Manila.
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MODULE 3
Application of Business
Ethics
MODULE OVERVIEW
In this Module
 Ethical Issues in Business and Corporate Environment

 Business Ethics and the Natural Environment
 Corporate Social Responsibility
 The Idea of a Sustainable Social Enterprise
 What Employers Owe Employees and What Employees Owe
Employers
Hi there! Keep up the good work! You are almost done with this course
pack! With all that you have learned from Module 1 and 2, now comes the
application. Let’s being!
Business Ethics is expected to foster and maintain a positive image.

Company ethics also extend to internal treatment of employees. Ethical companies
should hire fairly and without discrimination. The company also honestly informs
their employees and provides a workplace that abides with the ethical standards.
Fair and honest interactions are also important with regards to the transactions.
Furthermore, business ethics also applies to the environment in terms of green
standards in the marketplace. Clients tend to prefer companies what use practices
and processes that use natural resources and minimize harm to the people and
nature.
 define and discuss ethical issues in business and corporate environment;
 enumerate causes of environmental problems and formulate possible

solutions;
 cite examples of companies that practice social responsibility in their

conduct of business;
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 explain the importance of establishing and sustaining a business enterprise
as source of job opportunities and financial freedom; and
 identify specific ethical duties managers owe employees and vice versa.
LESSON 1
Ethical Issues in
Business and
Objectives:
 Suggest ways to enhance employer-employee relationship and

encourage just and fair business policies and practices such
as recruitment, promotion, retention, marketing and
advertising, intellectual property rights, sources ad use of
funds and the like; and
 Advocate honest policies and practices in all aspects of business
operations.
Introduction:
In the multi-faceted global business environment of the 21 st century,

companies both big and small face a huge number of ethical issues. Ethical issues
include workplace sexual harassment, just wage, gifts and bribery, conflict of interest,
abuse of power, labor strikes and whistle blowing. In addition, recruitment,
promotion, termination of employees raises ethics concerns also. Further, marketing
and advertising, fair ricing, trade secrets, product misrepresentation, multi-level
marketing and pyramiding as well as money laundering, inside trading and tax
evasion could pose problems for any company in terms of morals and ethics.
Activity: Read the quote and answer the questions after it.
"Integrity has no need of rules.”

– Albert Camus
Analysis:
1. What is the message of this quote?
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__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
2. How can people demonstrate integrity?

__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
3. How is integrity different from honest?

__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
4. Which is more important business, integrity or loyalty? Why?

__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
Abstraction
Ethical issues in business include many topics in an organization’s

standards. Fundamental ethical issues encompass promoting actions and
conduct based on integrity and trust. However, there are also complex situations
which include accommodating diversity, empathic decision-making, and compliance
and governance that stays true to the organization’s values.
Workplace Sexual Harassment
Sexual harassment includes unwanted sexual advances, requests for sexual

favors, direct or indirect threats or bribes for sexual activity, sexual innuendos and
comments, sexually suggestive jokes, unwelcome touching or brushing against a
person, pervasive displays of materials with sexually illicit or graphic content, and
attempted or completed sexual assault. It varies depending on the situation and people
involved. Sexual harassment is not restricted by gender. Anybody, male or female, can
be a victim of sexual harassment. Simply, a man might harass another man, and a
woman might harass another woman.
Usually, there are two forms of sexual harassment:
1. Quid pro quo (an employment decision) – like a promotion, an assignment,

or even keeping one’s job and is based on submission to the sexual
harassment.
2. Hostile work environment – the sexual harassment makes the workplace
environment frightening, intimidating, or offensive. All verbal or physical
conduct of a sexual nature constitutes hostile environment. Sexual
harassment in this form has the intention of unfairly meddling with an
employee’s work performance.
Strategies for Prevention
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There are several steps that a company can do to trim down the danger
of sexual harassment happening in the workplace. Here are some of them:
1. Implement a clear sexual harassment policy

2. Train employees
3. Train supervisors and managers
Just Wage
Wages are the price that workers receive for their labor in the form of salaries,
bonuses, royalties, commissions, and fringe benefits, like paid vacations, health
insurance, and pensions. Wages differ among nations, regions, occupations, and
individuals.
The Church identifies three principles that are necessary for implementation of
the just wage: the principle of nee, the principle of equity, and the principle of
economic order.
1. Needs relate to the wage rate necessary to keep going the individual worker
and his family. Workers who reside in more classy cities require a higher
wage.
2. Equity defines what is appropriate to a person because of the worth of the
particular skills, effort and talent that person is capable to bring to the job. So,
somebody with the skills needed to create new products must be paid more
than the person who just tosses burgers.
3. Economic order refers to the reality that the individual’s work and the firm
itself must produce adequate values to give the wages. Simply, fair wages
must be sustainable. This means that for similar work, it is just that a
successful enterprise like Apple may pay a higher wage than a struggling start-
up business or not-for-profit organization.
Just Wage Determination
The policy in setting minimum wage rates take into account the needs
of workers, employers’ capacity to pay, and the requirements for socio-
economic development. The following factors should be taken into
consideration in determining wage and salary structure of workers:
1. External market factors – this refers to the supply and demand for
labor and so called economic conditions and underemployment.
2. Laws and regulation – Workers must be paid with reference to the
laws and regulations of the government. It obliges that employers
pay no less than the minimum wage.
3. Cost of living – The cost of living relates to essential maintenance
needs and it must be fatally considered in the preparation of wages.
4. Existing industry rate – Some alleged that paying workers the
average of what other companies are paying for an identical job
results in a fair wage.
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5. Organizational factors – evaluation on what nature of industry the
organization operates, the size of the company and the
organization’s profitability to justify its ability to grant fair wages
to its workers should be considered.
6. Individual performances – the trend implies that individual
performances or productivity ratings influence the determination of
wage/salary increases.
The Issue of Minimum Wage versus the Living Wage
A minimum wage is a national floor level set by the government.

Various countries have lay down lawful national minimum wage for workers.
It is usually decided in the course of negotiations between government,
industry and sometimes trade unions. On the other hand, this method does not
constantly work as proposed. There is at times no genuine representation of
workers, or the method is used only once in a while, or overlooked in the
actuality of the workplace.
A living wage is what workers need to give their families decent

standards of living. The national minimum wage in many countries is often
not adequate to allow a worker to supply his family with decent living
standard. A living wage is sufficient to meet primary needs and to provide
nutrition any discretionary income. The primary needs comprise a standard
level of nutrition, housing, transportation, energy, healthcare, childcare,
education and savings within regulated working hours without overtime hours.
Some living wage supporters wanted to make the minimum wage equivalent
to the living wage which they describe as a “living minimum wage”.
Gifts and Bribery
A gift is something of worth given with no anticipation of return. Gifts can be

monetary, actual items or they can be tickets to a sporting event, entertainment, travel,
rounds of golf or restaurant meals. The premise of giving gifts is an ancient way to
express gratitude, appreciation and love.
A bribe is the same thing given in the expectation to influence the recipient’s
conduct. It may be money, goods, rights in action, property, preferment, privilege,
emolument, objects of value, advantage, or merely a promise to induce or influence
the action, vote, or influence of a person in an official or public capacity.
The Morality of Accepting Gifts
According to William Shaw and Vincent Barry from their book “Moral
Issues in Business”, there are certain factors that must e thought of in making
decisions about whether a gift may be accepted. These factors can provide
support and clarity but will not tell anyone what to do. There is actually no
magic guide but they can help one to see things more clearly. More or less,
here is the list.
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1. Conflict of interest
2. Gift’s value
3. Gift’s purpose
4. Gift or entertainment
5. A circumstance when the gift is given
6. Power to bestow favors in return for gift
7. Industry accepte practice
8. Organization’s policy
9. Laws
Conflict of Interest
Conflict of interest is the organizational context happens when someone acts

in a way that is advantageous to himself at the expense of his employer. When hired
by the employing company, an employee has implicitly agreed that the interest of the
company is above his personal interest. Conflict of interest could be non-financial or
financial in nature.
Here are some examples of conflicts of interest:
1. A key donor whose business is challenging for an institutional contract

implies that he will not complete his multi-year pledge if he is not given
the contract.
2. A local tobacco firm promises funds to secure naming rights of a new
stadium on a smoke-free campus.
3. An alumnus calls to inquire how he can post a job for a new engineering
graduate, and the alumni officer recommends that his son might be just
right for the position.
Most conflicts of interest lead to bad outcomes. The key implication is that
managers and policy-makers must continuously assess incentives being given to
professionals and employees who at the times may act counter to their responsibility.
Eliminating conflicts of interest is one of the simplest and most effective ways to
lessen unethical behavior.
Abuse of Power
The application of one’s official position for personal benefit is often an abuse
of power. This can take many types, like taking advantage of someone, obtaining
access to information that must not be available to the public, or just controlling
somebody with the capacity to penalize them if they do not conform. Abuse of power
or authority may be the price source and true essence of moral evil. Evil is the abuse
of power. Moral evil commences to be present when someone rejects to acknowledge
responsibility for the welfare of others, especially those obviously under his direct
concern. It can be said that someone has power, if that someone can with certainty
manipulate the reality of others.
Ways to Prevent Abuse of Power
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Leaders who abuse their position are often not in power for long. Some
leaders start off well, but waste the chance. They let power go to their heads,
or they take advantage of their position and choose to advance their own
interests. They change direction and in the end, fail to conduct themselves
with dignity ad respect.
1. Make the tough calls

2. Steer clear of the power trip
3. Back up words with action
4. Take the job seriously
5. Willingly share he power
Labor Strikes
In the employee-employee relationship, the employer has much more power.

This makes any negotiations, such as about wages or working conditions, favor the
employer before negotiations even begin. By joining together, employees can
combine their influence of level the conditions for negotiation. Trade unions are
entitled to conduct a strike against employers. A strike is usually the last resort of a
trade union, but when negotiations have reached an impasse, a strike may be the only
bargaining tool left for employees. Workers go on strike because of the following
reasons:
1. Higher compensation 4. Stop their wages from going

down
2. Improve the workplace 5. More benefits
3. Shorten working days 6. Unfairness by the company
Unions can refuse to work unless an employer meets their demants. Strikes are
a powerful tool, but can be harmful to a company and should not be used unless
certain criteria are met.
1. There must be a just cause, a legitimate reason to strike, such as

inadequate pay or unsafe working conditions.
2. There should be proper authorization. Workers should:
a. Agree to strike on their own without being coerced and
b. Strikers must attempt to attain union backing
3. Strikes should be a last resort. Workers should try to negotiate and
communicate their grievances before having a strike because “we should
always use the least injurious means available to accomplish the good we
desire.”
4. Strikes should be nonviolent non-coercive, and nondestructive.
Whistleblowing
Whistleblowing is the act of going public with what one has reason to believe
to be significantly immoral or illegal acts of an organization one is a member of.
Someone is not a whistle blower for telling the public about awkward or bad-
mannered behavior. Being a whistle blower doesn’t involve sabotage or violence.
Whistle blowers must often have courage to be prepared to endanger their own safety.
However, it’s not at all times the precise thing to do. Whistle blowing can be careless
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and imperil the welfare of an innocent company when it’s done from a “feeling” of
wrongdoing rather than from a dependable method. Whistle blowing isn’t justified
unless the following criteria are me:
1. The intention must be appropriate.

2. The employee should usually seek less harmful ways to resolve the issues
first.
3. The whistle blower needs forceful proof of wrongdoing.
4. The organization’s wrongdoing must be precise and significantly wrong.
5. The whistle blowing has a chance to being successful.
Recruitment of Candidates
Recruitment is the process of looking for and hiring qualified candidate either
within or outside of an organization for a job opening, in a timely, effective and
efficient manner. Recruiting has a quite bad reputation. Ethics play a very important
role during the recruiting process. Some common ethical dilemmas in recruitment can
include:
1. Placing misleading advertisements for jobs.

2. Misrepresenting the requirements of a particular position.
3. Responding to a hiring manager who has asked to find a way “around” not
hiring a qualified candidate for discriminatory purposes.
4. Not reviewing candidates based on their merits.
It is vital for human resource professionals to be honest, consistent and

objective through the recruiting process to avoid ethical dilemmas. Job ads for
positions that in fact disagree from what is being publicized should not be placed.
Normally, employers should concentrate on a candidate’s ability to perform the job
and not on irrelevant factors.
Employee Promotion
A promotion is a move up the organizational ladder. There are two major

promotion tracks: one based on accomplishment, the other on competition.
Accomplishment promotions are those scheduled fro workers attaining specific,
predetermined goals. For example, in an office of stockbrokers those who achieve a
certain number of clients or reach a level of total investment money under their
direction may automatically be elevated. An account executive could become a vice
president of accounts after he’s gathered more than ninety-nine clients or has garnered
accounts valued at more than a million pesos. Along with the new title, there will be
pay raise and additional benefits. Competitive promotions on the other hand are those
situations where workers within a group are not only teammates working to attain the
organization’s goals but also competitors contending for that one slot that comes open
on the hierarchy’s next level up. In this situation, the ethics of trying to get the
promotion comes to play. There are three considerations for promotion which are
work performance, seniority and projected work performance.
Employee Termination
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Terminating employees is one of the most feared tasks for human resources
managers. Unless there is a definite cause to terminate the employee from the
company, the decision to stop the employment relationship is a hard one. In ordinary
situation, when a human resources manager removes an employee, the lives of not
just the employee but the employee’s family as well are affected. Employee
terminations also gave an effect in existing employees. It is for these reasons that a
human resources manager charged with terminating an employee will struggle with
the ethical dilemmas about termination.
There are several common reasons to terminate an employee, which are:
1. Unable to perform some of all of the necessary aspects of the job,
2. Unfavorable business conditions of economic reasons,

3. Unacceptable behavior such as disclosure of confidential information,
stealing company property, engaging in sexual harassment or verbally or
physically threatening another employee, and
4. Chronic absenteeism which could be a sign that the employee is dealing
with substance abuse, mental illness or job dissatisfaction.
Ethics factor comes in whether an employee should rightfully be terminated

for grounds connected to employee performance. When an employee’s performance is
mediocre, the instruction given to human resources may be to terminate the employee.
In contrast, a human resources manager may consider mediocre performance could be
enhanced through a structured improvement program. The choice to spend in an
employee’s performance or just terminate an employee is a foremost ethical dilemma
for numerous human resources professionals.
Marketing and Advertising Morality
A marketer’s goal must be to please and bring delight to its possible and
current customers in an ethical way. In terms of direct marketing, there are some
instances where certain ethical issue arise which are:
1. Irritation and frustration

2. Being unfair to customers
3. Deception, fraud and misleading information
4. Privacy issues
Advertising on the other hand, is non-personal practice of calling public

attention to one’s product, service, need, and the like especially by paid
announcements in newspapers and magazines over radio or television, on billboards,
and other similar ideas. The three general advertising objectives are to inform, to
persuade and to remind customers. Advertising has become an essential element of
the corporate world and hence the companies allot a considerable amount of revenues
as their advertising budget. Companies advertise for the following reasons:
1. Increasing the sales of the product/service,

2. Creating and maintaining a brand identity or brand image,
3. Communicating a change in the existing product line,
4. Introduction of a new product or service, and
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5. Increasing the buzz-value of the brand or the company.
However, advertising becomes unethical in situations when it:
1. Has degraded or underestimated the substitute or rival’s product,

2. Gives false or misleading information on the value of the product,
3. Fails to give useful information on the possible reaction or side effects of
the product, and
4. Is immoral.
There are several ways of unethical advertisement:
1. Surrogate advertising
2. Puffery
3. Exaggeration
4. Unverified claims
Fair Pricing
A fair and reasonable price is the price point for a good or service that is fair to
both parties involved in the transaction. This amount is based upon the greed-upon
conditions, promised quality and timeliness of contract performance. There is a
common consensus that marketing strategies must not violate on values like honesty,
transparency, and autonomy. As such, the main root of pricing ethics concerns the
establishment of a balance of power between the producer and the consumer. In a
completely free market, producers frequently have the upper hand because they are in
power of their products and processes. This potentially leads to unethical practices
which could be in the form of using cheap or harmful materials or lying about
benefits, which are believed harmful for society as a whole.
Here are some unethical practices when it comes to pricing:
1. Price fixing 4. Bid rigging

2. Price skimming 5. Price war
3. Price discrimination
Trade Secrets
Companies often have secret information called trade secrets that they do not
want to be disclosed outside the organization. Employees would be disloyal to make
use of such information to advance the interests of competing organizations.
Companies have trade secrets to guarantee that the information is not used by
competitors, but it is likely for others to find out the trade secret on their own and
exploit it. There are at least three arguments given for why some people think trade
secrets should be protected by the law:
1. They are intellectual property.

2. The theft of trade secrets is wrong.
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3. Employees can steal trade secrets from their companies, but that would
violate the confidentiality owed to the company.
There are several ways by which trade secrets could be revealed:
1. Hacking
2. Social Engineering
3. Dumpster Diving
4. Whacking
5. Phone Eavesdropping
Product Misrepresentation
Misrepresentation means a transformation of information to misinformation. It

could be directed or indirect in nature.
1. Direct – This is done through actively misrepresenting about a product or

service which creates a bad name due to deception and lying.
a. Deceptive packaging
b. Adulteration
c. Misbranding/Mislabeling
d. Short weighing
e. Shortchanging
f. Short measuring
g. Short numbering
h. Misleading advertising
2. Indirect – This is done through omitting unfavorable information about the
product or service.
a. Caveat emptor
b. Business ignorance
Multilevel Marketing and Pyramiding
Multi-level marketing is a system of selling wherein one signs up other people

or assist him and they in turn recruit others to help them. It is a selling system using
many levels of distributors, the reason why it is so-called multi-level marketing. Each
obtains a percentage on the price of the product sold. Avon Cosmetics, Herbalife,
Amway, Mary Kay and Tupperware are example of direct selling companies engaged
in multi-level distributorship. Most successful companies concentrate on product sales
as their main activity.
Pyramiding on the other hand, is about merely making money out of recruiting
new participants in the program. The concentration of these schemes is the guarantee
of high returns in a short span of time by doing nothing but handing over money and
letting other to do the same things. Pyramid schemes are bogus money-making scams
in which new participants at the bottom of the pyramid pay money to people at the
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top. They pay for the chance to move up and profit from payments of others who
might join later. The “investment” to join may range from a small free to thousands of
pesos. Only after the few at the top have collected from everyone do members at the
bottom finally move up to have a chance at profiting themselves. Until then, new
members are simply poorer by the amount of their out-of pocket expense as the search
for new participants continues and new levels are added. The entire pyramid may
collapse before new participants “advance” the top. In order for everyone in this
illegal activity to profit, there would have to be unending supply of new members.
This is not possible, so each new level becomes more likely to lose money.
Pyramiding must be avoided because:
1. They committed fraud – Participants in a pyramiding scheme are,

consciously or unconsciously, deceiving those they recruit.
2. Money will be lost – The scheme is based on simple mathematics: many

losers pay a few winners.
3. They are illegal – Besides losing investment, the operation could be closed
down by legal authorities and the participants subject to fines or arrest.
Money Laundering
Money laundering is the process of creating the appearance that large amounts
of money obtained from serious crimes, such as drug trafficking or terrorist activity,
originated from a legitimate source.
There are three steps involved in the process of laundering money:
1. Placement
2. Layering
3. Integration
In 2013 amendments to the Anti-Money Laundering Act (AMLA) of 2001 or

Republic Act 9160 has been made. The amendments expanded the definition of
money laundering to cover more businesses subject to monitoring. Under the
“strengthened” anti-money laundering law of the Philippines, the more exhaustive list
of predicate crimes for money laundering includes:
1. Kidnapping for ransom

2. Drug trafficking and related offenses
3. Graft and corrupt practices
4. Plunder
5. Robbery and extortion
6. Jueteng and masaio
7. Piracy
8. Qualified theft
9. Swindling
10. Smuggling
11. Violation under the Electronic Commerce Act of 2000
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12. Hijacking; destructive arson; and murder, including those perpetrated by
terrorists against non-combatant persons and similar targets
13. Fraudulent practices and other violations under the Securities Regulation
Code of 2000
14. Felonies or offenses of a similar nature that are punishable under the penal
laws of other countries
15. Terrorism financing and organizing or directing others to commit terrorism
financing
(RA 10168)
16. Attempt/conspiracy to commit terrorism financing and organizing or
directing others to commit terrorism financing (RA 10168)
17. Attempt/conspiracy to commit dealing with property or funds of
designated person
18. Accomplice to terrorism financing or conspiracy to commit terrorism
financing
19. Accessory to terrorism financing
Insider Trading
Insider trading is when one person who by virtue of his work has access to
information that is not presented to the public and will probably has an impact for
making investment decisions. For instance, employees might have earlier information
that their company is going bankrupt before the general public and sell all their stocks
before it becomes valueless. People who buy the stocks will be misled into thinking
its worth more than it really is. In reality, it is also insider trading for the employees to
push family and friends to sell their stock using such “material information.”
Material information refers to the information for which there is a substantial

likelihood than an investor would consider is important in making his investment
decision, or information that is certain to have a substantial effect on the price of the
company’s security whether positively or negatively. Material information may
include, but not limited to:
1. Financial result
2. Projections of future earnings or losses
3. News of pending or proposed merger
4. Change in the corporate structure (e.g. reorganization)
5. Acquisition / Divestiture / Joint Venture
6. Dividend declaration and changes in dividend policy
7. Stock splits
8. New significant equity investment or debt offering
9. Significant litigation exposure
10. Major change in key senior management position
Examples of insider trading cases that have been brought by the SEC are cases
against:
1. Corporate officers, directors, and employees who traded the corporation’s

securities after learning of significant, confidential corporate development;
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2. Friends, business, associates family members, and other “tippees” of such
officers, directors, and employees who traded the securities after receiving
such information;
3. Employees of law, banking, brokerage and printing firm who were given
such information to provide services to the corporation whose securities
they traded;
4. Government employees who learned of such information because of their
employment by the government; and
5. Other persons who misappropriated, and took advantage of, confidential
information from their employers.
Tax Evasion
Tax evasion refers to the elimination or reduction of one’s correct and proper
tax by fraudulent means which is criminally punishable. Tax avoidance on the other
hand is an attempt to minimize the payment or altogether eliminate tax liability by
lawful means, which is not criminally punishable while the latter.
A person who is convicted is subject to a prison sentence, a fine, or both. A

person who has evaded taxes over the course of several years maybe charged with
multiple counts for each year taxes were allegedly evaded.
These are three elements to a tax evasion case:
1. The existence of a tax deficiency,

2. Willfulness in an attempted evasion of tax, and
3. An affirmative act constituting an evasion or attempted evasion of the tax.
An affirmative act is anything done to mislead the government or conceal funds

to avoid payment of an admitted and accurate deficiency. Affirmative behavior can
take two forms:
1. The evasion of assessment and

2. The evasion of payment
Affirmative acts of evasion include evading taxes by placing assets in another’s
name, dealing in cash, and having receipts or debts paid through an in the name of
another person. Merely failing to pay assessed tax, without more, does not constitute
tax evasion. The keeping of a double set of books or the making of false invoices or
documents can be proof of tax evasion.
There are several ways to avoid tax evasion which are:
1. Reduce tax rates,

2. Create more simply laws and system,
3. Draw a well-organized tax administration structure,
4. Be tough with anti-corruption policies,
5. Enhance information on tax paying through seminars, conferences and
media,
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6. Draw a permanent tax structure,
7. Make certain political changes does not affect tax structure,
8. Have strong and updated manner of audit, collection, deposit, and filling
provisions,
9. Design stronger penalties and make strict implementation,
10. Design friendly schemes of tax collection,
11. Give assistance terms to big tax payers.
Application
The Ford Pinto

Shaw & Barry, (n.d.)
There was a time when the “made in Japan” label brought a predictable smirk of
superiority to the face of most Americans. The quality of most Japanese products
usually was as low as their price. In fact, few imports could match their domestic
counterparts, the proud products of Yankee know-how. But by the late 1960s, an
invasion of foreign-made goods chiseled a few worry lines into the countenance of the
U.S. industry. In Detroit, worry was fast fading to panic as the Japanese, not to
mention the Germans, began to gobble up more and more of the subcompact auto
market.
Never one to take a back seat to the competition, Ford Motor Company
decided to meet the threat from abroad head-on. In 1968, Ford executives decided to
produce the Pinto. Known inside the company as “Lee’s car,” after Ford president Lee
Iacocca, the Pinto was to weigh no more than 2,000 pounds and cost no more than
$2,000.
Eager to have its subcompact ready for the 1971 model year, Ford decided to
compress the normal drafting-board-to-showroom time of about three-and-a-half
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years into two. The compressed schedule meant that any design changes typically
made before production-line tooling would have to be made during it.
Before producing the Pinto, Ford crash-tested various prototypes, in part to

learn whether they met a safety standard proposed by the National Highway Traffic
Safety Administration (NHTSA) to reduce fires from traffic collisions. This standard
would have required that by 1972 all new autos be able to withstand a rear-end impact
of 20mph without fuel loss, and that by 1973 they be able to withstand an impact of
30 mph. The prototypes all failed the 20-mph test. In 1970 Ford crash-tested the Pinto
itself, and the result was the same: ruptured gas tanks and dangerous leaks. The only
Pintos to pass the test had been modified in some way–for example, with a rubber
bladder in the gas tank or a piece of steel between the tank and the rear bumper.
Thus, Ford knew that the Pinto represented a serious fire hazard when struck
from the rear, even in low-speed collisions. Ford officials faced a decision. Should
they go ahead with the existing design, thereby meeting the production timetable but
possibly jeopardizing consumer safety? Or should they delay production of the Pinto
by redesigning the gas tank to make it safer and thus concede another year of
subcompact dominance to foreign companies? Ford not only pushed ahead with the
original design but stuck to it for the next six years.
What explains Ford’s decision? The evidence suggests that Ford relied, at least
in part, on cost-benefit reasoning, which is an analysis in monetary terms of the
expected costs and benefits of doing something. There were various ways of making
the Pinto’s gas tank safer. Although the estimated price of these safety improvements
ranged from only $5 to $8 per vehicle, Ford evidently reasoned that the increased cost
outweighed the benefits of a new tank design.
How exactly did Ford reach that conclusion? We don’t know for sure, but an
internal report, “Fatalities Associated with Crash-Induced Fuel Leakage and Fires,”
reveals the cost-benefit reasoning that the company used in cases like this. This report
was not written with the pinto in mind; rather, it concerns fuel leakage in rollover
accidents (not rear-end collisions), and its computations applied to all Ford vehicles,
not just the Pinto. Nevertheless, it illustrates the type of reasoning that was probably
used in the Pinto case.
In the “Fatalities” report, Ford engineers estimated the cost of technical

improvements that would prevent gas tanks from leaking in rollover accidents to be
$11 per vehicle. The authors go on to discuss various estimates of the number of
people killed by fires from car rollovers before settling on the relatively low figure of
180 deaths per year. But given that number, how can the value of those individuals’
lives be gauged? Can a dollars-and-cents figure be assigned to a human being?
NHTSA thought so. In 1972, it estimated that society loses $200,725 every time a
person is killed in an auto accident (adjusted for inflation, today’s figure would, of
course, be considerably higher). It broke down the costs as follows:
Future productivity losses
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Direct $132,000
Indirect $41,300
Medical costs
Hospital $700
Other $425
Property damage $1,500
Insurance administration $4,700
Legal and court expenses $3,000
Employer losses $1,000
Victim’s pain and suffering $10,000
Funeral $900
Assets (lost consumption) $5,000
Miscellaneous accident costs $200
Total per fatality $200,725
Putting the NHTSA figures together with other statistical studies, the Ford report
arrives at the following overall assessment of costs and benefits:
Benefits
Savings: 180 burn deaths, 180 serious burn injuries, 2,100 burned vehicles
Unit cost: $200,000 per death, $67,000 per injury, $700 per vehicle
Total benefit: (180 X $200,000) + (180 X $67,000) + (2,100 X $700) = $49.5 million
Costs
Sales: 11 million cars, 1.5 million light trucks
Unit cost: $11 per car, $11 per truck
Total cost: 12.5 million X $11 = $137.5 million
Thus, the costs of the suggested safety improvements outweigh their benefits,
and the “Fatalities” report accordingly recommends against any improvements–a
recommendation that Ford followed.
Likewise in the Pinto case, Ford’s management whatever its exact reasoning,
decided to stick with the original design and not upgrade the Pinto’s fuel tank, despite
the test results reported by its engineers. Here is the aftermath of Ford’s decision:
 Between 1971 and 1978, the Pinto was responsible for a number of fire-
related deaths. Ford puts the figure at 23; its critics say the figure is closer
to 500. According to the sworn testimony of Ford engineers, 95 percent of
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the fatalities would have survived if Ford had located the fuel tank over the
axle (as it had done on its Capri automobiles).
 NHTSA finally adopted a 30-mph collision standard in 1976. The pinto

then acquired a rupture-proof fuel tank. In 1978 Ford was obliged to recall
all 1971-76 Pintos for fuel-tank modifications.
 Between 1971 and 1978, approximately fifty lawsuits were brought against
Ford in connection with rear-end accidents in the Pinto. In the Richard
Grimshaw case, in addition to awarding over $3 million in compensatory
damages to the victims of a Pinto crash, the jury awarded a landmark $125
million in punitive damages against Ford. The judge reduced punitive
damages to 3.5 million.
On August 10, 1978, eighteen-year-old Judy Ulrich, her sixteen-year-old sister

Lynn, and their eighteen-year-old cousin Donna, in their 1973 Ford Pinto, were struck
from the rear by a van near Elkhart, Indiana. The gas tank of the Pinto exploded on
impact. In the fire that resulted, the three teenagers were burned to death. Ford was
charged with criminal homicide. The judge in the case advised jurors that Ford should
be convicted if it had clearly disregarded the harm that might result from its actions,
and that disregard represented a substantial deviation from acceptable standards of
conduct. On March 13, 1980, the jury found Ford not guilty of criminal homicide.
For its part, Ford has always denied that the Pinto is unsafe compared with
other cars of its type and era. The company also points out that in every model year
the Pinto met or surpassed the government’s own standards. But what the company
doesn’t say is that successful lobbying by it and its industry associates was
responsible for delaying for seven years the adoption of any NHTSA crash standard.
Furthermore, Ford’s critics claim that there were more than forty European and
Japanese models in the Pinto price and weight range with safer gas-tank position.
“Ford made an extremely irresponsible decision,” concludes auto safety expert Byron
Bloch, “when they placed such a weak tank in such a ridiculous location in such a soft
rear end.”
Has the automobile industry learned a lesson from Ford’s experience with the
Pinto? Some observers thought not when, in February 1993, an Atlanta jury held the
General Motors Corporation responsible for the death of a Georgia teenager in the
fiery crash of one of its pickup trucks. At the trial, General Motors contended in its
defense that when a drunk driver struck seventeen-year-old Shannon Moseley’s truck
in the side, it was the impact of the high-speed crash that killed Moseley. However,
the jury was persuaded that Moseley survived the collision only to be consumed by a
fire caused by his truck’s defective fuel-tank design. Finding that the company had
known that its “side-saddle” gas tanks which are mounted outside the rails of the
truck’s frame, are dangerously prone to rupture, the jury awarded $4.2 million in
actual damages and $101 million in punitive damages to Moseley’s parents.
What undoubtedly swayed the jury was the testimony of former GM safety
engineer Ronald E. Elwell. Although Elwell had testified in more than fifteen
previous cases that the pickups were safe, this time he switched sides and told the jury
that the company had known for years that the side-saddle design was defective but
had intentionally hidden its knowledge and had not attempted to correct the problem.
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At the trial, company officials attempted to paint Elwell as a disgruntled employee,
but his testimony was supported by videotapes of General Motors’ own crash tests.
After the verdict, General Motors said that it still stood behind the safety of its trucks
and contended “that a full examination by the National Highway Traffic Safety
Administration of the technical issues in this matter will bear out our contention that
the 1973-1987 full size pickup trucks do not have a safety related defect.”
Since then, however, the Department of Transportation has determined that

GM pickups do pose a fire hazard and that they are more prone than competitors’
pickups to catch fire when struck from the side. Still, GM has rejected requests to
recall the pickups and repair them. Meanwhile, the Georgia Court of Appeals has
thrown out the jury’s verdict in the Shannon Moseley case on a legal technicality–
despite ruling that the evidence submitted in the case showed that GM was aware that
the gas tanks were hazardous but did not try to make them safer to save the expenses
involved.
Case Questions:
1. What ethical issues did the product Ford Pinto violate? Explain.
2. Do you think Ford Could have prevented the deaths and damages?
3. Is it safe to say that Ford and General Motor are unethical companies with these
cases of deaths and damages? Why? Why not?
Refer to Appendix B for the rubric regarding case analysis
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Congratulations! You have finished Lesson 1!
You may now proceed to Lesson 2 which will discuss the business ethics and
the natural environment.
LESSON 2
Business Ethics and the
Natural Environment
Objectives:
 Observe and promote policies and practices in

environmental management; and
 Understand the importance of taking care of the
environment in terms of putting up a business.
Introduction:
Businesses must always be concerned with a company’s responsibility to

protect the environment in which it operates. Acceptance of responsibility for
protecting the natural environmental must be understood and acted upon because of
the direct and indirect environmental impacts that being irresponsible may bring to
business operations. Companies operating everywhere, regardless of size, must make
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ethics of the environment part of their business model in order to protect of the natural
resources they used to make profit.
Activity: Use the terms below to create a concept map of your current understanding
of business ethics and the natural environment. You can add and delete terms from the
list in creating your map.
Business Deforestation Understanding Overfishing

Recycle Transportation Cooperation Coastal Zone
Reduce Pollution Client Change
Reuse Waste Company Investors
Sustainability Construction Regulations Participation
Compassion Development Compliance Sufficiency
Solidarity Progress Permit Justice
Mining Responsibility Green Energy Environment
Analysis
1. Briefly explain your concept map.

_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
2. Why did you organize the words in such a way?

_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
3. How do the words in your concept map connect with each other?
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
Abstraction
Moral Reasoning about the Natural Environment
There are many different principles on which to draw in moral reasoning about
specific environmental problems. The three basic pairs of principles:
Justice and Sustainability
The principle of justice says that equals should be treated equally

unless there is an enough basis to treat anyone (or anything) unfairly. It is
clearly relevant in the field of ethics called environmental justice.
Environmental justice is concerned with the fair access to environmental
resources like clean food, air and water and the injustice of greater pollution
that often typify lower-income communities. Sustainability extends justice
into the future. Sustainability is meeting the needs of the current generation
without sacrificing the ability of future generation to meet their own needs.
Today, people are consuming or degrading many resources like fossil fuel
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energy, topsoil and water faster than they can be replenished by nature. This
means they will not be accessible to people in the future.
Sufficiency and Compassion
The principle of sufficiency consents that all forms of life are free to
have sufficient goods to live on and grow. It also means no one must squander
or hoard resources intended for the adequacy for all. Keeping the standard of
sufficiency obliges upon individuals to share, to live more simply and to think
creatively. On human communities people ought to guarantee that everyone
has access to the goods that they need to live a life of dignity. Compassion
stretches the view of sufficiency to the Earth. Ethics on environment claims
that other animals, plants, and the elements like water, soil or air morally
significant. Therefore, humans have responsibilities to take steps so that their
needs are met too.
Solidarity and Participation
The principle of solidarity considers how people relate to each other in

community. It assumes that they are aware of their being a part of at least one
family which could be their biological family, the local community, or their
national community. However, the challenge is to consider the full range of
relationships with others. In a globalized economy, people participate in a vast,

international economic community, one in which good ands services are
provided for by those on the other side of the world. Solidarity requires people
to think of this kind of extended community, and to act n such a way that
reveals concern for well-being of others. Participation extends idea of
solidarity to make it useful. The demands of solidarity lead people to the
principle of participation, so that those involved in an environmental decision
can figure out how it is made. A lot of environmental problems can be traced
from decisions being organized by private individuals or companies that have
extensive implications. In some instances, in this country and others,
governments make environmental decisions without completely soliciting the
approval of he public. Time and time again, those most affected are ignorant
of the decisions or the long-term effects on their health and the welfare of their
environment. The principle of participation obliges people to recognize all of
the parties both human and non-human that are likely to be affected by a
decision. It also tells that all parties should have a say in how the decision is
prepared. Genuine participation necessities transparency, implying that each
individual has admittance to the identical information that everyone else has.
Causes of Environmental Problems
Environmental problems include the pollution of air and water sources,

erosion of soils, increase of world temperature, and the rise of ocean levels by global
warming, as well as the loss of biodiversity. Among the main causes of environmental
problems are the following:
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1. High quantity of exhaust gases
2. Deforestation
3. High number of industries such as mining
4. Chemical influents
5. Transport
6. Unprecedented construction
7. Secondary pollutants
8. Ruinous agricultural policies
9. The population explosion
10. Unplanned land-use policies
11. Increasing waste generation
Environmental Problems in the Philippines
The Philippines is known for its gigantic rainforests that take care of a wide
variety of flora and fauna. The country can be considered as one of the richest
biodiversity place in the world. Though, now there are a few signs of the extensive
rainforests because of the growing development of environmental problem that cause
its damage. Consequently, the biodiversity is constant decreasing, mostly those that
are endemic to the country.
Here are some of the problems the environment confronts continually:
1. Overfishing
2. Coastal infrastructure development

3. Deforestation
4. Pollution
Responsibility of Business in Protecting the Environment
Today, business has a responsibility towards its stakeholders such as the

customers and society at large who are more conscious of the harmful impacts of
business as usual. They want cleaner and more ethnical product and services.
Business today also has a responsibility towards the environment. Business cannot
stay continuously extracting resources without consequence.
Resources like air, water, biodiversity, fossil fuels are the very building blocks
upon which a successful business is created. With the speeding reduction of these
essentials, business needs to learn to deal with the threatening constraint of
environmental degradation.
Companies in the industrial or manufacturing industry often work with

different kinds of equipment machinery and chemical-producing agents. In effect, a
business’ day-to-day operations can cause an ongoing threat to the natural
environment. In order to reduce the possibility of harm to the environment,
government regulation necessitates business reflect on certain natural environmental
aspects in their overall operation plans.
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1. Environmental regulations
2. Permit requirements
3. Compliance requirements
4. Environment contaminants
5. Green energy
6. Preventing waste
7. Promotions
Application
The Chernobyl Disaster: What Happened, and the Long-term

Impacts
Erin Blakemore (2019)
On April 25 and 26, 1986, the worst nuclear accident in history unfolded in
what is now northern Ukraine as a reactor at a nuclear power plant exploded and
burned. Shrouded in secrecy, the incident was a watershed moment in both the Cold
War and the history of nuclear power. More than 30 years on, scientists estimate the
zone around the former plant will not be habitable for up to 20,000 years.
The disaster took place near the city of Chernobyl in the former USSR,
which invested heavily in nuclear power after World War II. Starting in 1977, Soviet
scientists installed four RBMK nuclear reactors at the power plant, which is located
just south of what is now Ukraine’s border with Belarus.
On April 25, 1986, routine maintenance was scheduled at V.I. Lenin Nuclear
Power Station’s fourth reactor, and workers planned to use the downtime to test
whether the reactor could still be cooled if the plant lost power. During the test,
however, workers violated safety protocols and power surged inside the plant. Despite
attempts to shut down the reactor entirely, another power surge caused a chain
reaction of explosions inside. Finally, the nuclear core itself was exposed, spewing
radioactive material into the atmosphere.
Firefighters attempted to put out a series of blazes at the plant, and eventually
helicopters dumped sand and other materials in an attempt to squelch the fires and
contain the contamination. Despite the death of two people in the explosions, the
hospitalization of workers and firefighters, and the danger from fallout and fire, no
one in the surrounding areas—including the nearby city of Pripyat, which was built in
the 1970s to house workers at the plant—was evacuated until about 36 hours after the
disaster began.
Publicizing a nuclear accident was considered a significant political risk, but

by then it was too late: The meltdown had already spread radiation as far as Sweden,
where officials at another nuclear plant began to ask about what was happening in the
USSR. After first denying any accident, the Soviets finally made a brief
announcement on April 28.
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Historic Disaster
Soon, the world realized that it was witnessing a historic event. Up to 30

percent of Chernobyl’s 190 metric tons of uranium was now in the atmosphere, and
the Soviet Union eventually evacuated 335,000 people, establishing a 19-mile-wide
“exclusion zone” around the reactor.
At least 28 people initially died as a result of the accident, while more than
100 were injured. The United Nations Scientific Committee on the Effects of Atomic
Radiation has reported that more than 6,000 children and adolescents developed
thyroid cancer after being exposed to radiation from the incident, although some
experts have challenged that claim.
International researchers have predicted that ultimately, around 4,000 people

exposed to high levels of radiation could succumb to radiation-related cancer, while
about 5,000 people exposed to lower levels of radiation may suffer the same fate. Yet
the full consequences of the accident, including impacts on mental health and even
subsequent generations, remain highly debated and under study.
What remains of the reactor is now inside a massive steel structure deployed
in late 2016. Containment efforts and monitoring continue and cleanup is expected to
last until at least 2065.
Impacts
The impact of the disaster on the surrounding forest and wildlife also remains
an area of active research. In the immediate aftermath of the accident, an area of about
four square miles became known as the “Red Forest” because so many trees turned
reddish-brown and died after absorbing high levels of radiation.
Today, the exclusion zone is eerily quiet, yet full of life. Though many trees
have regrown, scientists have found evidence of elevated levels of cataracts and
albinism, and lower rates of beneficial bacteria, among some wildlife species in the
area in recent years. Yet, due to the exclusion of human activity around the shuttered
power plant, the numbers of some wildlife, from lynxes to elk, have increased. In
2015, scientists estimated there were seven times more wolves in the exclusion zone
than in nearby comparable reserves, thanks to humans’ absence.
The Chernobyl disaster had other fallout: The economic and political
toll hastened the end of the USSR and fueled a global anti-nuclear movement. The
disaster has been estimated to cost some $235 billion in damages. What is now
Belarus, which saw 23 percent of its territory contaminated by the accident, lost about
a fifth of its agricultural land. At the height of disaster response efforts, in 1991,
Belarus spent 22 percent of its total budget dealing with Chernobyl.
Today, Chernobyl beckons to tourists who are intrigued by its history and its
danger. But though Chernobyl symbolizes the potential devastation of nuclear power,
Russia never quite moved beyond its legacy—or its technology. As of 2019, there are
still 11 operational RBMK reactors in Russia.
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Case Questions:
1. What are the short-term effects of the Chernobyl nuclear power plant explosion?
Discuss.
2. What are the long-term effects of the Chernobyl nuclear power plant explosion?
Discuss.
3. What pair/s of principles in moral reasoning had not been used in Chernobyl
nuclear power plant case to have prevented the explosion? Explain.
4. If you are asked to help the Chernobyl nuclear power plant to prevent explosion in
the future, what will you suggest? Detail your suggestions.
Refer to Appendix B for the rubric regarding case analysis
discuss about corporate social responsibility.
LESSON 3
Corporate Social
Objectives: Responsibility
 Cite examples of companies that practice social
responsibility in their conduct of business; and
 Provide evidence that ethical/ social responsibility is
profitable, in other words makes good business sense.
Introduction:
Organizations are expected to be efficient, profitable and to keep stakeholder

interests in mind. This means that organizations have moral, ethical and philanthropic
responsibilities in addition to their responsibilities to earn a fair return for investors
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and comply with the law. In short, businesses must operate as sociable responsible
organizations.
Activity: Reflect on the quote below and create a drawing reflecting the quote. You
are free to be creative as much as you can.
“The business of business should not be about money. It should be about

responsibility. It should be about public good, not private greed.”
- Anita Roddick
Analysis:
1. What did you draw?

_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
2. Why did you choose to represent the quote in that way?

_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
Abstraction
Social Responsibility is an ethical framework which suggests that an entity,

be it an organization or individual, has an obligation to act for the benefit of society at
large. Social Responsibility is a duty every individual has to perform so as to maintain
a balance between the economy and the ecosystems. Corporate Social Responsibility
refers to a business practice that involves participating in initiatives that benefits
society.
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CSR can encompass a wide variety of tactics, from giving non-profit
organizations a portion of a company’s proceeds, to giving away a product on service
to a worthy recipient for every sale made. Here are few of the broad categories of
social responsibility that businesses are practicing:
1. Environment- Businesses, both large and small, have a large carbon

footprint.
2. Philanthropy- Businesses also practice social responsibility by
donating to national and local charities.
3. Ethical labor practices- Treating employees fairly and ethically,
companies can also demonstrate their corporate social responsibility.
Type of CSR activity Descriptions

Cause promotions Resources spent by companies to promote a
specific cause that benefits society in many
levels such as eliminating poverty or fighting
against child abuse.
Cause- related marketing A marketing campaign initiated by a business
that highlights positive correlation between the
amount of sales for the business and the amount
of contribution to support a specific cause.
Corporate social marketing Businesses promoting social causes such as
healthy eating, caring about parents, quit
smoking etc.
Corporate philanthropy This form of CSR involves businesses donating

money or products of the company in substantial
amounts in order to support specific causes.
Community volunteering Businesses engaging employees to work in the
community sector for a specific number of hours
on a voluntary basis.
Socially responsible business Engaging in fair trade when dealing with
practices suppliers and sustaining ethical business norms
and practices.
Source: http://research-methodology.net/classification-of-csr-activities/
CORPORATE SOCIAL RESPONSIBILITY PRACTICES IN THE

PHILIPPINES
While many companies now practice some form of social responsibility, some
are making it a core of their operations. There are not a lot of companies in the
Philippines that were founded with social responsibility in mind and this is something
that definitely should multiply in numbers.
Here are some model Filipino companies that use CSR in their businesses:
FIGARO COFFEE: Saving Local Farmers
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The Philippines was historically one of the world's top producers of coffee,
with export earnings of at least US$150 million before 1986. However, the situation
started to decline in the 1990s until only 500kg per hectare can only be produced. This
change affected 60,000-80,000 coffee families, the majority of which are small
farmers. Demand had fallen because of imported Arabica and large- scale domestic
production of Robusta by large corporations. In 1998, the Figaro Coffee Foundation
was formed to boost Filipino coffee production, particularly Barako, the indigenous
liberica coffee species grown in the southern regions of Luzon Island. The company's
view of its community has subsequently expanded from its consumers to the farmers
that produce its products. While the task of rehabilitating the local coffee industry and
saving the Barako remain challenging, Figaro and its various partners have developed
the right channels and networks to solidify and integrate their efforts as a collective
unit making longer- term success achievable.
The Save the Barako cause has somehow given the coffee added value as portion
of the bean sales is channeled back to into a project to promote the revival of the
Barako. The project encompasses awareness programs, new plantings, research,
and targeted marketing, and is coordinated with the Figaro Coffee Foundation.
The waning supply of Barako beans prompted the company to be more aggressive
in securing supplies. The 'Save the Barako’ campaign is its show piece effort, and
has earned the company a reputation as a company that cares for the coffee farmer.
More than just to sustain its core product or core business, Figaro has become the
trailblazer on how out of the box ideas can be used to encourage farmers to plant
the barako again, motivate local government to do their part and get cooperatives
working toward one goal.
FOOD WRAPPED IN A LEAF: The Story of Binalot
The Philippines is a culture of tradition. Its colorful and vibrant traditions are a
product of many influences. Three hundred years of Spanish colonization inspired the
local food and fiesta culture. The most popular form of public transportation is the
Jeepney, an adapted military jeep left behind by the Americans after World War II. It
was from this idea that the business of Binalot was created-a company that is both
socially responsible and culturally sensitive. Binalot wanted to recreate and
reintroduce a lost piece of Filipino culture to modern urban dwellers. The company
also wanted to make Binalot the number one fast-food chain in the Philippines by
promoting Filipino humor, values, and culture. Binalot started serving food to its
customers the traditional way-wrapped in banana leaves.
As the business grew, its founders realized that there was another, equally
important purpose behind the business. What is uniquely Pinoy slang for Filipino) is
the practice of hospitality that sense of community, and the strong belief that each is
responsible for one another. In most villages, banana farmers’ earnings barely afford
them the necessities of life. This led to creation of the Binalot Foundation to help
farmers find diverse uses for the banana, such as making flavored banana chips or
finding a bigger market for the banana flower as a vegetarian delight. The result was
the Binalot DAHON community. DAHON is an acronym for Dangal at Hanapbuhay
para sa Nayon, which means "Livelihood and Dignity for the Rural Community."
Under its CSR program, the company has helped the farming community by getting
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banana leaves direct from the farmers to eliminate the middlemen, and teaching the
village women to cut and pack the leaves, which provides jobs. Soon, the women
became more skilled and could finish the job in ninety minutes, and their rate of pay
rose significantly. They also trained villagers to make banana chips, which were sold
in Binalot stores, giving them another source of income. Binalot buys all the harvests
from these communities, ensuring their market and income, and in turn, building a
happy supply chain partner,
BAG 943: A Gift Set In Motion
Growing up in Zamboanga as the youngest of nine children in a poor mining

family, Josh Mahinay recalls vividly the struggles of his childhood. Due to the nature
of his parent's work, most of Josh's growing up years was spent apart from them. He
and his brothers and sisters raised themselves with the exception of occasional
intervention from extended family. Absent of parental figures and ensnared by
poverty, it would be easy to dismiss young Josh's future as just another casualty of
circumstance but then, there was God.
It was July 2012 when best friends Josh and RJ resigned from their jobs and
decided to make helping poor school kids their full time job by launching the
B.A.G.943 (Be A Giver) social enterprise. Josh co-founder RJ Garcia was a long time
community volunteer working alongside different organizations in different projects
before stepping to a new calling for greater service. The company supports
educational opportunities for impoverished Filipino children through their buy one-
give one school backpack business model. To date B.A.G. 943 is working in
partnership with 12 schools and has given away over 1,300 bags through the generous
support of their patrons.
Reflecting back on his personal experience and now the mission of B.A.G. 943, Josh
offers this consideration.
"To succeed is one thing but to go back where you came from and be able to
empower, inspire and encourage underprivileged kids with your own story is to me
happiness and real service, Josh said in an interview. RJ and Josh said they felt
equally blessed and inspired to have the privilege of helping poor school kids in this
country through BAG943 and are encouraging all Filipinos here and abroad to rally
with them in creating an impact to the lives of our children, in starting a change we
want to see in the future.
HABI FOOTWEAR: Weaves for a Brighter Future
As consumers grow more conscious of how enterprises do business, socially

responsible practices are becoming a requirement when making purchases. Habi
Footwear is tapping into that trend by turning garment scraps into comfortable and
stylish footwear and with its pro-poor business model.
Habi is a social enterprise under Sosyal Revolution, Inc. that has been around since
July 2011. Its goal is to maximize profits while creating positive social impact at the
same time. In the fashion retail industry, Habi promotes 100% Filipino-made and
cutting-edge footwear that caters to both women and children.
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As a social enterprise, Habi Footwear aims to make positive change in the
following ways:
1. By giving the mothers in Kawan ni Sto. livelihood opportunities and

trainings;
2. By reducing solid waste and turning scrap cloth into actual footwear;
3. By promoting lifestyle changes in a responsible and comfortable way.
Starting as a senior business thesis requirement in July 2011, Habi was

founded by Janine Mikaella Chiong, Bernadee Uy, Maria Paulina Savillo, Albert
Jonathan Go, Kathleen Kose Kho, and Rona Francia Palines. The group
conceptualized a way on how to turn the rag-weaving skills of the urban poor
community into a profitable endeavor.
"Habi is social development and profit working hand in hand," says Chiong,
now president of Habi Footwear, adding that the team particularly wanted to empower
women. We wanted to make them realize that they can also contribute effectively to
their households through simple, yet, impacting ways.
The hand-woven cloth for shoes is the trademark of Habi Footwear. These clothes are
similar to the materials used tor floor mats but they're being redefined and improved
to produce high-quality products. These are sourced from their partner communities to
support resident’s livelihood as well. "We want the Product to standout and the story
to support it. We don’t want to let the story sell then the product would just be a
novelty. It's not just because we wanted to help. It’s also because we wanted to make a
competitive brand, shares Chiong.
Now, Habi employs 30 weavers (mostly mothers) from partner communities in

Quezon City particularly within Bistekville, Fairview, and Sloc in Payatas to weave
the cloths for use in making espadrilles and sandals. Chiong and her partners buy the
upcycled hand-woven clothes from their partner communities and then bring it to the
factory in Marikina to make the shoes.
Currently, Habi Footwear is already accessible through its website

(habitootwear.com). It already has three consignments in Metro Manila, one in
Boracay, and two distributors in the U.S. and the U.K. They also started training the
Persons with Disability (PWD) planned partnership with them soon.
Despite the success they're experiencing at present, Chiong and the rest or her
partners want to keep themselves grounded. "We don’t want to let success go inside
our heads. We just want to stay true to what our business really is-solving problems in
a creative way”, says Chiong. She also added that as entrepreneurs, "we should have a
good working relationship with our partners. Whatever small or big successes we get,
make sure to share it with them."
THE SMART KABALIKAT: Community Partnerships
Efforts of Smart Communications, Inc. (Smart) to practice corporate social

responsibility (CSR) dates back to its early years when employees, singly or in
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groups, conducted community service activities. But it was in 2003 that Smart,
through the Public Affairs Group, made commitment to create a cohesive,
consolidated CSR and community service (CS) program. Thus, Smart Communities
was born.
Since then, partnerships have evolved with various stakeholders in the

communities that Smart has been working with, particularly in the areas of education,
community building, disaster preparedness, environment and health. By creating
partnerships, Smart has transformed Smart Communities into a stronger, more
established CSR and Cs program: Smart Kabalikat. Renaming Smart's CSR and s
program Kabalikat emphasizes that initiatives are crafted hand in hand with the
communities, often involving their participation in various stages, from development
to implementation, to evaluation and monitoring.
What marks Kabalikat and makes it sustainable is that all its programs and
projects are embedded, relevant and aligned to business units and interest. Almost all
areas of Kabalikat demonstrate the application of ICT for development, in alignment
with a company-wide advocacy to promote ‘Internet for All’.
Kabalikat is relevant not only to social investors, shareholders and the general public,
but also to employees who keep the spirit of volunteerism alive by participating in
CSR and CS initiatives.
With Kabalikat, Smart establishes itself as a long-term partner in a

community's development-sa Edukasyon, Kabuhayan, Kaligtasan, Kalikasan at
Kalusugan.
1. Edukasyon - Recognizing the key role that education plays in nation- building,
SMART has lined up several major community partnership
initiatives in the field of education by harnessing technology to

complement the formal classroom learning across all levels.
a. The Smart Wireless Engineering Education Program (SWEEP)- Is

the first of its kind partnership between the academe and the
industry that seeks to utilize wireless communications technology in
improving the level of engineering and information technology
education in the country.
b. TechX- It is an exchange program where individuals or groups who

do social good swap their accomplishments for technology, which
can further enable their work and at the same time, provide much-
needed technology support for a public school in their community.
c. CommuniTeach- lt started out as an employee-initiated summer

tutorial and feeding program in 2004 for public elementary pupils to
help improve their skills and love for reading before it was
expanded in scale and partnerships to benefit more students in the
country in 2010.
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d. Smart Schools- This is an initiative that aims to expand learning
opportunities for public schools by applying Information and
communications Technology (ICT) tools in basic education.
e. Doon Po Sa Amin- Launched in 2008, Doon Po Sa Amin, literally

translated as In Our Place", is a content generation project where
teachers and students of Smart Schools Program partner- schools are
encouraged to use Information and Communications Technology
(ICT) tools to generate and share web-based information and
educational materials about their respective communities.
f. Central Visayan Institute Foundation Dynamic Learning Program-

The Central Visayan Institute Foundation Dynamic Learning
Program (CVIF-DLP) is an innovative framework of teaching
developed by Ramon Magsaysay Awardees Dr. Christopher Bernido
and Dr. M. Victoria Carpio-Bernido. It develops a child to become
an independent learner to significantly improve his or her academic
performance.
g. Online Campus Journalism- The idea of providing schools with an

online alternative to the traditional printed school paper was seen
addressing the perennial problem on lack of funds.
2. Kabuhayan- Smart is making a difference in the lives of its subscribers, not

only in terms of convenient and reliable communications, but also in terms
of livelihood opportunities.
a. Project Zero- Discarded tarpaulins from smart's promotional materials are

shipped to Iloilo for upcycling, converting these into high-quality,
environmentally-friendly fashionable bags. Its main
goal is to create livelihood projects through innovative design and

product development.
b. Marikina Watershed- The bid to save and protect the Marikina

Watershed does not end with planting trees. Addressing the poverty
of the upland communities residing within the watershed is also as
important for the initiative to be sustainable. Training the residents
in alternative livelihood such as organic farming and bamboo design
and construction is seen to help improve their means. It will also
enable them to shift from their traditional livelihood of charcoal-
making using the trees in the watershed.
3. Kaligtasan- Smart has established its leadership in disaster preparedness

and response, ensuring not only that its network is immediately restored on
the wake of disasters but also that it is able to respond to the needs of
affected communities and responding agencies by way of relief operations
and tree voice call and data services.
a. Capacity Building-This is anchored on strong partnerships forged

with agencies such as the National Disaster Risk Reduction
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Management Council, Department of Health, Corporate Network
for Disaster Response, Philippine Disaster Recovery Foundation
and the Philippine Red Cross in conducting disaster preparedness
advocacy initiatives.
b. Weather Monitoring- Smart has collaborated with the Department of

Science and Technology to launch the mobile application of the on-
time weather information on DOST’s Project NOAH or Nationwide
Operational Assessment of Hazards website for Android mobile
devices. "NOAH" or the Nationwide
c. Libreng Tawag- Smart sets up Libreng Tawag (tree call) centers at

evacuation centers of disaster-affected communities to enable those
affected to avail of free calls or free Internet access to contact loved
ones. It also provides free charging of cellphone batteries at the site.
4. Kalikasan- Smart has taken initiatives that not only make excellent business
sense but also enables it to take a lead role in addressing what is perhaps
society's most profound challenge today-climate change.
a. SmarTrees- Smart has been planting trees since 2005 in an effort to offset its
greenhouse gas emissions in its operations. In partnership with Japanese telco
NTT-Docomo, the PLDT-Smart Foundation, community stakeholders and
volunteers from Smart, sister-companies and partner-schoolS, Smart has planted
over one million seedlings and propagules since 2005 in adopted planting sites
including, the IPO Dam and Marikina watersheds, Calatagan, Subic, Mt.
Banahaw, Puerto Princesa and Cagsao in Camarines Sur for Luzon; Cebu, Lapu-
Lapu, Negros Oriental and Ocidental, loilo, Guimaras and Bohol for
Visayas; and Misamis Oriental, Surigao, Zamboanga, Sarangani,

Digos, Davao City, and Tawi-Tawi in Mindanao.
b. Green Cellsites- By using alternative energy to power some 124 cell

sites in off-grid areas nationwide, Smart has been able to reduce its
carbon emission. Using less fuel has also translated to lower
operating costs. Smart installed the country's first wind-powered cell
site in 2006 on Malapascua, an island off northern Cebu, in an effort
to make operations viable in off-grid or remote areas where a great
part of the cost goes to diesel consumption and hauling costs. Smart
has since successfully used wind and solar energy to power some 124
cell sites nationwide, with 12 more targeted for completion by end-
March 2012.
C. Green Merchandising- Merchandising campaign involves the use of

eco-friendly materials from instead of the traditional plastic-based
solutions for its packaging and outdoor advertising materials such as
awnings, tarpaulins and bags for its mobile phone kits.
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5. Kalusugan- SMART is currently the only Philippine telco that has ventured
and invested in mHealth - the practice of medicine and public health
supported by wireless communication devices such as mobile phones and
tablet computers.
a. SHINE -The award-winning SHINE, or Secured Health Information

Network and Exchange, is the flagship mHealth project of Smart that
aims to raise the efficiency and effectiveness of healthcare facilities
through the innovative use of mobile and ICT technologies.
2. ASCENT- Smart, in partnership with the Physicians for Peace-

Philippines, also deployed the award-winning ASCENT or the
Amputee Screening via Cellphone Networking, a mobile and web
application allowing real-time evaluation and advice on prosthesis
use to amputees in far-flung communities.
C. Wireless Access for Health & Teleconsultation- In four rural health
centers in Tarlac, patient-handling is now paperless. Personal and
medical data is directly keyed into the clinic database using netbooks
and PCs thanks to Wireless Access for Health (WAH).
Application
Imagine having your own business. As an entrepreneur, draw out a concept

map to show how you will apply CSR to your business and explain why
you have chosen this method?
LESSON 4
The Idea of a
Sustainable
Objectives:
 Explain the importance of establishing and sustaining a

business enterprise as source of job opportunities and
financial freedom; and
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 Suggest innovative ways of developing new products and introducing.
Introduction:
One of the paradoxes of business is that the most profitable companies are not
those that are not most profit- focused. A business must have reason to exist beyond
that of making money and maximizing shareholder value. Profit cannot be solve goal,
vision, or the purpose of an organization. Businesses with a strong sense of purpose
are more successful.
Activity: Analyze the Venn diagram below and answer the questions indicated in the
“Analysis”.
http://redlabexperience.com/wp-content/uploads/2019/10/The-triple-ps-e1572515340982.png
Analysis:
1. What do you understand from the diagram?

_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
2. How do the sections relate to each other?

_______________________________________________________________
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_______________________________________________________________
_______________________________________________________________
3. Given the change to change one component in the diagram, what would you
change? Explain your answer.
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_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
Abstraction
SOCIAL ENTERPRISE (SE): DOING BUSINESS BEYOND PROFIT
Around the world, more and more companies are choosing to use business to
create social good. Businesses that are changing the world for the better are called
social enterprises. Social enterprises are in every community and on every high street
-from coffee shops and cinemas, to pubs and leisure centers, banks and bus
companies.
Social enterprises do business to tackle social problems, improves

communities, people's lite chances, or the environment. They make their money from
selling goods and services in the open market, but they reinvest their profits back into
the business or the local community. So when they generate profit, its society profits.
In other words, a social enterprise is a proper business that makes its money in a
socially responsible way. These ventures are not necessarily formed to reinvest all
profits into the communities. Social entrepreneurs can make good profit themselves.
However, their business model is also designed to benefit others. In general,

an SE is a business to achieve specific social objectives such as providing the services
or products needed by the community, creating employment and training
opportunities for the socially disadvantaged, protecting the environment, funding
other social services through the profits earned, and the like. Social enterprises could
be quite different in some ways but the end goal is similar which is helping create new
sustainable businesses and raise the income of families in extreme poverty.
Social enterprises compete alongside other businesses in the same

marketplace, but use business principles to achieve social aims. A social enterprise is
a business that
exists to make a direct positive social and/or environmental impact on the world. It is
innovative and unique because:
1. A social enterprise aims to make a profit, and then use these profits to
support its charitable, social and/or environmental goals.
2. A social enterprise also provides products and provides services that further
these charitable, social and/or environmental goals.
3. When a consumer purchases a product or a service from a social enterprise,
he or she makes a tangible, positive impact.
4. A social enterprise has social aims and ethical values.
Social enterprises differ from for-profit businesses that merely promote social
responsibility. While these businesses often support social change through their
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policies of corporate social responsibility, the company's first goal remains to make a
profit. A social enterprise, on the other hand, takes social change as its primary
objective, and uses its profits to reach it. Social enterprises also differ from traditional
charities that ask one to make a donation of money and/or time. People have only a
finite amount of both. A social enterprise unlocks other ways to make a difference
through consumer choices and actions.
Sustainability Issue
The issue of sustainability is vital to any business, and social enterprise is not
an exception. Basically, it means the business can sell its product/ service for more
and the demand can grow in the medium to long term basis. In the social enterprise
setting, revenue may also be increased by grants and other sources, depending on the
nature of the organization and so sustainability considerations will require taking into
account all sources of income.
Another point of view in social enterprise is that some social projects and
social enterprises may have a limited life. In this case similar considerations of
sustainability apply, but within a distinct timeframe. This needs a lot of thinking and
analysis which ultimately lead to financial planning and management. There are many
good ideas that have been brought to market in the past but have failed because,
eventually, the economics of the business were not sustainable. This is true for the
social enterprise as well as for the commercial venture. As one begins developing his
idea and concept, it is a requirement to include cost and revenue implications as part
of analysis and start recording this data. It will be needed later on when considering
financial planning.
SOCIAL ENTERPRISE ADVANTAGES
Social enterprises tend to operate with a purpose of creating value for the
society and also generate income (if not wealth). As a rule of thumb, the solutions
they offer are supposed to be innovative, unique, people and environment friendly.
Cost effectiveness is also a huge consideration. All of these are challenges to the
sustainability of social enterprises, but the ones that are able to scale them are the ones
that can create a huge impact. They are the enterprises that are advantageous to the
society, people and the environment.
Here are some of its advantages:
1. Financial freedom- The most understandable of social enterprise's potential

benefits is the opportunity to get financial sustainability and freedom.
2. Growth of scope and size of services to community- Under traditional
models of funding through grants and donations, organizations have a hard
time growing the size or scope of their services.
3. Business can contribute to the mission- Beyond providing entirely financial
resources; social enterprise also gives organizations opportunities to
discover noble ways of achieving their mission.
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4. Perceptions of the organization by staff and donors- Undertaking social
enterprise may also have an impact on how an organization is perceived.
5. Marketing and promotion for these organizations is also very easy- Since a
social problem is being tackled with a solution, it is easier to draw attention
of the people and media.
6. Services can be customized - Services in whichever section they may be
offered are customized better to go with the needs of the individual or the
problem.
7. Cost effectiveness is another advantage of a social enterprise- The solutions
offered by these organizations in the form of either products or services are
realistic compared to the same service provided by a profit making
organization.
8. Job creation-Small social enterprises are often managed by people with
passion tor their locality and the issues that surround it.
Here are some essential truths about social enterprise and job creation:
a. Social enterprises have huge potential - Not only can social

enterprises offer more employment, they can act as campaigners and
advocates for employing people from outside the usual suspects.
b. Recycling is excellent for creating jobs- There are potentially lots of
opportunities in home care, green industries and in manufacturing as
well.
C. Find a way to combine a grassroots approach with leveling the
playing field- Progress can be made by combining the support and
nurture of talent with encouraging public and private organizations to
consider contracting locally.
d. Social enterprises must connect with further education- A major part
of any local social enterprise strategy must be working with the local
further education college.
NEW PRODUCT DEVELOPMENT MODEL IN ASOCIAL ENTERPRISE
There are several ways you can go-about searching for social enterprise
business ideas. Creating a social business has many similarities to building a
traditional business, but inspiration is usually drawn from a different place. Social
enterprise ideas, unlike conventional business ideas, typically result from a desire to
solve a social need; similar to how many non-profit and charity organizations find
their beginning.
Traditional business ideas can also come from identifying a social need. But,
the difference between a social enterprise idea and a traditional business idea is the
motivation of the entrepreneur. The primary motivation for a traditional entrepreneur
is more-often-than-not a desire to make money; a social entrepreneur is driven more
by a passion to solve a social problem, and only chooses to use business as a
mechanism to solve these problems.
Here are some of the most common frameworks being used by successful
social enterprises they are:
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1. Cross-compensation - One group of customers pays for the service.
2. Fee for service- Beneficiaries pay directly for the good or services provided
by the social enterprise.
3. Employment and skills training -The core purpose is to provide living
wages, skills development, and job training to the beneficiaries: the
employees.
4. Market intermediary- The social enterprise acts as an intermediary or
distributor, to an expanded market.
5. Market connector- The social enterprise facilitates trade relationships
between beneficiaries and new markets.
6. Independent support- The social enterprise delivers a product or service to
an external market that is separate from the beneficiary and social impact
generated.
7. Cooperative- A for profit or non-profit business that is owned by its
members who also use its services, providing virtually any type of goods or
services.
Here are some splendid social enterprise ideas that entrepreneurs may work on
to establish and create a social enterprise business:
Social Supermarket- It is a food market that sells food to low income

communities at a discounted price. Discounted food is donated or purchased very
cheaply from food suppliers and other supermarkets, who cannot sell the food
themselves for a variety of reasons such as approaching expiry dates, dented cans, and
product mislabeling.
Business Model: Cross-compensation and Independent Support
Example: Textbooks for Change

(Source: http://www.textbooksforchange.ca/)
In 2012, Chris Jansen was trying to figure out an easy way to raise money for
the Terry-Fox/Shinerama campaign at the University of Western Ontario. He came up
with a model of collecting used post-secondary textbook from previous students, in
order to sell them back to other students looking for affordable alternatives to existing
purchasing platforms. After this small trial run, about $500 was raised for the two
causes. Janssen then began to brainstorm ways to increase the impact an initiative like
this one could create.
In 2013, Chris Janssen traveled to East Africa to teach at the University of Finance
and Banking in Kigali, Rwanda. Upon his arrival, Janssen noticed a deficit in the
educational material that was available to these institutions, as large groups of
students were often sharing a single photocopied textbook. Knowing that there were
thousands of used textbooks back in Canada that remained unused, Janssen saw an
opportunity to collect these textbooks and sustainably redistribute them to students in
need. This became the driving force that helped Chris Janssen and business partner
Tom Hartford cultivate Textbooks for Change into the sustainable social venture it is
today.
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Online Socially Conscious Marketplace- This is to help underserved artisans
sell their products to the world by building a platform that makes it easy for them.
Artisans can either manage their online store directly, or the platform can act merely
as a listing service that connects the artisans face-to- face with buyers. Revenue is
created by either charging listing fees directly to the artisan, via a commission on
goods sold, or built-in as a premium fee to the buyer. Profit generated can be used to
fund social services that directly affect the artisan communities.
Business Model: Fee for Service
Example: Community Shop

(Source: http://community-shop.co.uk/ and
http://www.theguardian.comn/society/2013/deci09/goldthorpe-socinl-supermarket-
community-shop-food-poverty)
Company Shop stops good food from going to waste. Founded by John
Marren over 40 years ago, it's now the UK s largest redistributor of surplus products.
Surplus stock is inevitable in the food supply chain and the company works with
Britain's biggest retailers, manufacturers and brands, to ensure that wholesome,
surplus food reaches people's plates.
It redistributes surplus through a national network of staff shops, standalone

stores and "click and collect services, providing great offers to members that work in
the food manufacturing industry and emergency services. Its stopping over 30,000
tons of food going to waste every year and delivering great value to customers,
colleagues and food industry clients. In December 2013, Company Shop also
launched Community Shop to ensure even more people, in disadvantaged
communities, can benefit from the model.
Community Shop is a subsidiary of Company Shop, Britain's largest

commercial re-distributor of surplus food and goods, which works with retailers and
manufacturers to tackle their surpluses sustainably and securely. It sells on residual
products, such as those with damaged packaging or incorrect labeling to membership-
only staff shops in factories. The new project goes one step further, located in the
community for the first time and also matching surplus food with social need.
Membership of the pilot store - in Goldthorpe, an area of social deprivation-

will be restricted to people living in a specific local postcode area that also get welfare
support. Individuals who shop at Community Shop will not only get access to cheaper
food, but will also be offered programmes of wider social and financial support, such
as debt advice, cookery skills and home budgeting.
Used Textbooks for Social Change - This is a partnership with student

groups/clubs to collect used textbooks at the end of each semester. Students donate
their used textbooks. Some of the textbooks are re-sold to students at the
college/university
of their collection source. Some of the textbooks are donated to students in need at
underserved universities in the developing world.
Business Model: Employment and Skills Training
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Example: Edgar and Joe's
(Source: http://www.lfpress.com/2014/03/05/around-the-town-edgar--joes-cafe-grand-
opening and http://www.ourlondon.ca/news-story/3883777-goodwill-serves-up-a-
helping-of-community
revitalization/)
The name Edgar + Joe's Café is taken from Edgar which is the name of the
founder while Joe's identity is in part the reason for the cafes existence. Joe is anyone,
whose life has been touched in anyway by mental illness. The Cafe aims to offer jobs
and skills training in the food and hospitality industry while providing nutritious food,
while at the same time attempting to break down the stigma of mental illness.
The goal is to hire people who have faced numerous barriers in the past and
are, for the first time in their lives, getting their chance at having a dream job. In
addition, the cafe is hiring people who may just need a paycheque or are looking for
entry into the soon-to-be-developed hospitality training or food security and nutrition
programs.
Efficient Wood Stoves for Developing World - Millions of women in

developing countries suffer from cardiopulmonary disease as a direct result of
breathing in wood smoke on a daily basis. This is building a more efficient stove to
solve this problem. Sell the stoves at or above market rate to those who can afford it,
and use the money from the sale of the stoves to partly subsidize the cost for those
who cannot afford it.
Business Model: Fee for Service and Market Intermediary
Example: Fairphone
(Source: https://en.wikipedia.org/wiki/Fairphone)
Fairphone is a social enterprise, company which aims to develop smartphones

that are designed and produced with minimal harm to people and the planet. The
company is based in Amsterdam, Netherlands and is supported by the Waag Society, a
foundation which aims to foster experimentation with new technologies, art and
culture. The main motivation for founding Fairphone was to develop a mobile device
that does not contain conflict minerals (which in smartphones are typically gold, tin,
tantalum and tungsten) and has fair labor conditions for the workforce along the
supply chain producing it. The second version of the company's handset is one of the
first modular smartphones available for purchase, with the product being designed to
be easily repaired and upgraded.
Education Books on a Social Topic- This is about creating a book or other educational
publication, whose benefit is easily understood and salable. Learning about the topic
of the social education book should benefit the reader, such as a recipe book that
focuses on recipes that promote sustainable food culture. The proceeds from the book
are used to support education initiatives along the same topic and to group who will
have the
most impact and benefit. In the case of sustainable food preparation practices, the
target education group would be chefs.
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Business Model: Market Connector
Example: eBatuta in Brief

(Source: http://www.thesedge.org/whats-new ebatuta-the-adventures-of-a-moroccan-
traveler)
Faiza Hajji is a global citizen providing a global solution to a global problem

through her startup eBatuta (www.ebatuta.com). eBatuta connects artisans with the
world market by reducing financial and logistic trade barriers so that these artisans
can sell their goods directly to tourists and foreign importers. This means that
individual artisans and small groups can connect with buyers in markets they
normally would not be able to reach.
Faiza has been to 36 countries, speaks 7 languages (4 of them fluently), has

founded and worked in multiple organizations ranging from finance to non-profit to
engineering, he has been featured in CNN documentary about one of these
organizations, won multiple awards, has a master’s degree in engineering, and is using
her superhero powers to change the world through social enterprise.
So where did Faiza get the idea for eButata? Well, it turns out that this new
business was born through the pains and struggles of another organization, IFASSEN,
that she started 5 years prior in Berkane, Morocco. The work that IFASSEN is doing
is greatly benefiting the community it serves. But through her international travels,
Faiza has also realized that artisans in other parts of the world are struggling to
understand how to get their products in the hands of international buyers. This is how
the idea behind eBatuta was born. eBatuta allows artisans to reach international
audiences through two distinct channels. First, tourists use the site to find local
artisans in the country which they are traveling. This direct contact gives tourists
peace of mind in knowing that their souvenir is authentic, while keeping middle-man
costs at a minimum. Second, enterprising social entrepreneurs can sign up to be
"Ambassadors and import artisan products for sale in their local markets. eBatuta then
acts as a gateway to facilitate the relationship between buyer and artisan.
The goal of eBatuta is to keep more of the money from the sale of artisan
products in the hands of the artisans. A United Nations special report on tourism
details how tourism spending can greatly reduce poverty in a region, with part of that
spending coming from the sale of artisan products. Unfortunately, cheap mass-
manufactured replicas of hand-made artisan goods are flooding many traditional
tourist areas around the world. This is diverting the traditional revenue streams which
prop-up local economies.
Sustainable Water- This is about building small water purification stations in

communities of developing countries using off-the-shelf products. Initial funds to
build it can come from traditional charitable methods, or through debt/ equity
financing; the communities can be partial owners (or full owners, if using cooperative
business model). Ongoing costs to maintain and staff the water station come from sale
of purified water to its beneficiaries, but at near break-even levels, costing almost
nothing for the beneficiaries.
Business Model: Independent Support
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Example: Bottle 4 Bottle
(Source: http://www. Bottle4bottle.com.au/blog/about-us/)
High School sweet hearts Sam and Brooke O'Brien are the founders of the
Bottle 4 Bottle journey. It all started with a surprise 30th birthday trip to Africa in
2012 where they also took the time to meet up with friends whom had recently
adopted children from a local Baby home in Mwanza, Tanzania. Passionate travelers
who are inspired by people, culture and travel, Sam and Brooke created a vision for
their emerging business to submit to the power of giving.
Sam and Brooke's first business was created in 2007 where they started their
own unique glamour based salon concept which was designed to give every woman a
dream location to get glam’d up for that special occasion. It was the success of this
business which then allowed them to continue chasing their passions, and this time it
led to the creation of the Bottle 4 Bottle journey.
Bottle 4 Bottle is a unique take on the ever growing "shop for a cause”
revolution which allows consumers predominately in the western world the power to
break down international divides and give to those less fortunate by the power of their
everyday purchases. By ensuring new born babies the guarantee of proper
nourishment malnutrition can cured and hunger at the earliest stage of life when a
child can very quickly be deprived of a normal life or life at all.
When travelling, Sam and Brooke attempt to live like locals as much as
possible. It makes their journey's more interesting and stories much more rewarding.
Their aim is to keep Bottle 4 Bottle as grass roots as they can and to ensure that both
consumers and suppliers can be as involved as they are, and feel as much of the
journey as they do. Stories from their travels, one on one accounts and unique ways to
get involved are and will be the undying8 and evolving journey of Bottle 4 Bottle.
A Virtual Factory of Computer Workers- This is about building art online

community of computer workers who are hired from underemployed communities.
Train each of them to do one computer-related thing well. Combination of dozens of
them can be used to complete a product, such as a website, for a client that would
normally only require 1 or 2 people. Since each person is highly micro-specialızed,
the larger team forms as a virtual "assembly line” to finish the project faster, cheaper,
and with a higher quality standard than the traditional method of locally hiring or
outsourcing a broad-range knowledge worker. Virtual assembly line workers enjoy
employment with higher wages than they would normally receive doing menial work.
Business Model: Fee for Service and Cooperative
Example: O-Net
(Sources: http://o-net.ca/about-us/)
O-Net is the community-owned internet service provider that runs the fiber
optic network being built by the non-profit Olds Institute for Community and
Regional Development in Olds, Alta., about 90 kilometers north of Calgary.O-NET
was born out
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of á passion to create a connected community in Olds where residents and businesses
have access to the kinds of technology services and experiences you'd find in larger
cities.
In 2004, the Technology Committee of the Olds Institute for Community and
Regional Development began focusing on laying the foundation for this connected
community with the development of an Open Access Telecommunication Network. In
2011, the construction of a state-of-the-art fiber-optic network began. With this
network now in place throughout the entire community, every resident and business in
town has access to technology that’s making people in other towns and cities jealous.
As Canada's first community-owned and operated Fiber-to-the-Premises

network, O-NET brings together and delivers unique broadcasting phone and Internet
services to residential and business customers, creating advantages such as the fastest
Internet speeds in the country, the latest high- definition television features, fully
customizable telephone systems, mass storage and virtual private networks.
Beauty Products to Support a Social Mission - This is about partnering with

major beauty brands to sell their products as an online retailer. The retailer must
convince them to provide their products at a favorable wholesale rate, and divert the
profits to purchasing milk and baby bottles for distribution in the developing world.
Application
Read the essay then answer the questions.
I Want to Start a Social Business Enterprise!
I am a graduate of a Business Management course in a prestigious university.

When I was young my dream is to put up my own business using my passion which is
baking. I grew up in a household with a father who is an ex-convict. I had experienced
the damage it caused the family.
I really have a heart for ex-prisoners. Now, thought have just a moderate
amount of savings tor my capital I wanted to pursue my dream. In my bakery business
I would like to provide employment and training to people who have recently left
prison in an attempt to break the common cycle of reoffending. I desire to help ex-
offenders through training them in bread making to help bring out some of the social
skills and motivation skills they need to go on to further work. I believe I will remain
competitive in the food industry because it will be seen as a charitable cause and it
doesn't sound competitive with any other for-profit business. Will you help me answer
some questions before I get started?
1. What particular business name is most appropriate for my business? Provide

me with three choices.
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
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2. What are the advantages I may obtain out of my social enterprise venture?
Present me at least five of them.
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
3. What particular framework or combination of frameworks will I use for my

bakery business? Explain it to me.
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
Now if you are ready, please proceed to the last lesson of this module which
will discuss about what employers owe employees and what employees owe
employers.
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LESSON 5
What Employers Owe
Employees
and What Employees
Owe Employers
Objectives:
 Identify specific ethical duties managers owe employees;

 Identify Equal Employment Opportunity Commission
protections, including those against sexual harassment at
work;
 Identify possible ways to achieve equal pay for equal
work;
 Define codetermination; and
 Explain what constitutes a reasonable right to privacy on the job.
Introduction:
A demographic disconnects between leadership and workforce influences

working conditions in many ways. When 70 percent of boardroom seats are occupied
by white men, who make up only 30 percent of the population, many people’s views,
ideas, and opinions will go unheard in decisions that affect their lives and livelihoods.
We have seen progress, but much remains to be accomplished. Does management
have an ethical duty to try to diversify top leadership? Whatever individual responses
we might offer to each of these questions, a significant theme in this chapter is that
ethical behavior in the workplace is most effectively instituted when it is modeled by
senior leadership.
Activity: Assume you are a CEO of your

very own company. You want to put up a
branch in Compostela, Davao de Oro so
you decided welcome job applicants.
Enumerate three questions you would like
to ask the applicants.
1. ____________________________
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
https://www.toonpool.com/user/589/files/job_interview_2
781399.jpg
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2. ___________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
3. ___________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
Analysis
1. Why did you choose to ask such questions?

_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
2. Assume you are the applicant. How would you answer the questions?
1._____________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
2._____________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
3._____________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
Abstraction
All employees want and deserve a workplace that is physically and

emotionally safe, where they can focus on their job responsibilities and obtain some
fulfillment, rather than worrying about dangerous conditions, harassment, or
discrimination. Workers also expect fair pay and respect for their privacy. This section
will explore the ethical and legal duties of employers to provide a workplace in which
employees want to work.
ETHICAL DECISION-MAKING AND LEADERSHIP IN THE WORKPLACE
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A contemporary corporation always owes an ethical, and in some cases legal,
duty to employees to be a responsible employer. In a business context, the definition
of this responsibility includes providing a safe workplace, compensating workers
fairly, and treating them with a sense of dignity and equality while respecting at least
a
minimum of their privacy. Managers should be ethical leaders who serve as role
models and mentors for all employees. A manager’s job, perhaps the most important
one, is to give people a reason to come back to work tomorrow.
Good managers model ethical behavior. If a corporation expects its employees

to act ethically, that behavior must start at the top, where managers hold themselves to
a high standard of conduct and can rightly say, “Follow my lead, do as I do.” At a
minimum, leaders model ethical behavior by not violating the law or company policy.
One who says, “Get this deal done, I don’t care what it takes,” may very well be
sending a message that unethical tactics and violating the spirit, if not the letter, of the
law are acceptable. A manager who abuses company property by taking home office
supplies or using the company’s computers for personal business but then disciplines
any employee who does the same is not modeling ethical behavior. Likewise, a
manager who consistently leaves early but expects all other employees to stay until
the last minute is not demonstrating fairness.
Another responsibility business owes the workforce is transparency. This duty

begins during the hiring process, when the company communicates to potential
employees exactly what is expected of them. Once hired, employees should receive
training on the company rules and expectations. Management should explain how an
employee’s work contributes to the achievement of company-wide goals. In other
words, a company owes it to its employees to keep them in the loop about significant
matters that affect them and their job, whether good or bad, formal or informal. A
more complete understanding of all relevant information usually results in a better
working relationship.
That said, some occasions do arise when full transparency may not be
warranted. If a company is in the midst of confidential negotiations to acquire, or be
acquired by, another firm, this information must be kept secret until a deal has been
completed (or abandoned). Regulatory statutes and criminal law may require this.
Similarly, any internal personnel performance issues or employee criminal
investigations should normally be kept confidential within the ranks of management.
Transparency can be especially important to workers in circumstances that

involve major changes, such as layoffs, reductions in the workforce, plant closings,
and other consequential events. These kinds of events typically have a psychological
and financial impact on the entire workforce. However, some businesses fail to show
leadership at the most crucial times. A leader who is honest and open with the
employees should be able to say, “This is a very difficult decision, but one that I made
and will stand behind and accept responsibility for it.” To workers, euphemisms such
as “right sizing” to describe layoffs and job loss only sounds like corporate
doublespeak designed to help managers justify, and thereby feel better (and minimize
guilt), about their (or the company’s) decisions. An ethical company will give workers
advance notice, a severance package, and assistance with the employment search,
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without being forced to do so by law. Proactive rather than reactive behavior is the
ethical and just thing to do.
A Workplace Free of Harassment
Employers have an ethical and a legal duty to provide a workplace free of

harassment of all types. This includes harassment based on sex, race, religion,
national origin, and any other protected status, including disability. Employees should
not be expected to work in an atmosphere where they feel harassed, prejudiced
against, or disadvantaged.
A Satisfied Workforce
Although the workplace should be free of harassment and intimidation of

every sort, and management should provide a setting where all employees are treated
with dignity and respect, ideally, employers should go much further.
Most people spend at least one-third and possibly as much as one-half of their
waking hours at work. Management, therefore, should make work a place where
people can thrive, that fosters an atmosphere in which they can be engaged and
productive. Workers are happier when they like where they work and when they do
not have to worry about childcare, health insurance, or being able to leave early on
occasion to attend a child’s school play, for example. For our grandparents’
generation, a good job was dependably steady, and employees tended to stay with the
same employer for years. There were not many extras other than a secure job, health
insurance, and a pension plan. However, today’s workers expect these traditional
benefits and more. They may even be willing to set aside some salary demands in
exchange for an environment featuring perquisites (or “perks”; nonmonetary benefits)
such as a park-like campus, an on-the-premises gym or recreational center, flextime
schedules, on-site day care and dry cleaning, a gourmet coffee house or café, and
more time off. This section will explore how savvy managers establish a harmonious,
compassionate workplace while still setting expectations of top performance.
ETHICS ACROSS TIME AND CULTURES
European Approaches to the Gender Pay Gap
The policies of other nations can offer some insight into how to address pay
inequality. Iceland, for example, has consistently been at the top of the world rankings
for workplace gender equality in the World Economic Forum survey. A new Icelandic
law went into effect on January 1, 2018, that makes it illegal to pay men more than
women, gauged not by specific job category, but rather in all jobs collectively at any
employer with twenty-five or more employees, a concept known as an aggregate
salary data approach. The burden of proof is on employers to show that men and
women are paid equally or they face a fine. The ultimate goal is to eliminate all pay
inequities in Iceland by the year 2022. The United Kingdom has taken a first step
toward addressing this issue by mandating pay transparency, which requires
employers with 250 workers or more to publish details on the gaps in average pay
between their male and female employees.
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Policies not directly linked to salary can help as well. German children have a legal
right to a place in kindergarten from the age of three years, which has allowed one-
third of mothers who could not otherwise afford nursery school or kindergarten to join
the workforce. In the United Kingdom, the government offers up to thirty hours
weekly of
free care for three- and four-year-old children to help mothers get back in the
workforce. Laws such as these allow women, who are often the primary caregivers in
a household, to experience fewer interruptions in their careers, a factor often blamed
for the wage gap in the United States.
Is Management Compensation Fair?
We gain yet another perspective on labor by looking at management

compensation relative to that of employees. Between 1978 and 2014, inflation-
adjusted CEO pay increased by almost 1,000 percent in the United States, while
worker pay rose 11 percent. A popular way to compare the fairness of a company’s
compensation system with that in other countries is the widely reported pay ratio,
which measures how many times greater CEO pay is than the wages for the average
employee.
The average multiplier effect in the United States is in the range of three
hundred. This means that CEO pay is, on average, three hundred times as high as the
pay of the average worker in the same company. In the United Kingdom, the
multiplier is twenty-two; in France, it is fifteen; and in Germany, it is twelve.48 The
1965 U.S. ratio was only twenty to one, which raises the question, why and how did
CEO pay rise so dramatically high in the United States compared with the rest of the
world? Are CEOs in the United States that much better than CEOs in Germany or
Japan? Do American companies perform that much better? Is this ratio fair to
investors and employees? A large part of executive compensation is in the form of
stock options, which frequently are included in the calculation of an executive’s salary
and benefits, rather than direct salary. However, this, in turn, raises the question of
whether all or a portion of the general workforce should also share in some form of
stock options.
What Constitutes a Reasonable Monitoring Policy?
Many employees generally are not familiar with the specific details of the law.
They may feel offended by monitoring, especially of their own equipment.
Companies must also consider the effect on workplace morale if everyone feels spied
upon, and the risk that some high-performing employees may decide to look
elsewhere for career opportunities. Employers should develop a clear, specific, and
reasonable monitoring policy. The policy should limit monitoring to that which is
directly work related. For example, if a company is concerned about productivity and
the goal of monitoring is to keep tabs on employee performance, then neither
keystroke logging nor screenshot recording is necessary; software designed to show
idle time or personal Internet use would be more helpful in identifying wasted time,
which is the ultimate goal.
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Employers should always remember their business goals when monitoring
employees. It is not only a matter of treating employees ethically; it also makes good
business sense to ensure that monitoring pertains only to business matters and does
not unnecessarily intrude into the privacy of employees. Perhaps most importantly, in
the interest of fairness, the monitoring policy must be communicated to the
employees. When, if ever, is it acceptable to monitor without notice to the employee
and without his or her knowledge?
Security versus Privacy
You manage a large, high-end jewelry store with an international clientele.

Your workforce of 150 is demographically diverse, and your employees are
trustworthy as a rule. However, you have experienced some unexplained loss of
inventory and suspect a couple of employees are stealing valuable pieces, removing
them from backroom storage safes and handing them off to another person
somewhere in the store who leaves with them or to a third person pretending to be a
customer. To prevent this, your assistant managers are urging you to place discreet
cameras in the restrooms and break rooms, where these exchanges are likely
occurring. Some managers might be concerned about using cameras at all due to
privacy issues; others might want to use them without notifying employees or putting
up signs because they do not want to tip off the suspects or deal with the negative
reaction of the workforce (although that brings up invasion of privacy issues). You are
weighing the pros of catching the thieves against the possible loss of other employees’
trust.
Drug Testing in the Workplace
Testing of job applicants is the most common form of drug testing. State laws
typically allow it, but the employer must follow state rules, if they exist, about
providing notice and following standard procedures intended to prevent inaccurate
samples. Testing current employees is much less common, primarily due to cost;
however, companies that do use drug testing include some in the pharmaceutical and
financial services industries. Some states put legal constraints on drug testing of
private-sector employees. For example in a few states, the job must include the
possibility of property damage or injury to others, or the employer must believe the
employee is using drugs.
Challenging a drug test is difficult because tests are considered highly

accurate. An applicant or employee can refuse to take the test, but that often means
not being hired or losing the job, assuming the worker is an employee at will. The
concept of employment at will affirms that either the employee or the employer may
dissolve an employment arrangement at will (i.e., without cause and at any time
unless an employment contract is in effect that stipulates differently). Most workers
are considered employees at will because neither the employer nor employee is
obligated to the other; the worker can quit or be fired at any time for any reason
because there is no contractual obligation. In some states, the employee risks not only
job loss but also the denial of unemployment benefits if fired for refusing to take a
drug test. Thus, the key concept that makes drug testing possible is employment at
will, which covers approximately 85 percent of the employees in the private sector
COMPOSTELA VALLEY
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(unionized workers and top executives have contracts and thus are not at will, nor are
government employees who have due process rights). The only legal limitation is that,
in some states, the drug testing procedure must be fair, accurate, and designed to
minimize errors and false-positive results.
Application
Assume you are a former employee of ABS-CBN. Since the company has
shut down, how can you convince people to still be loyal to ABS-CBN? Write a
persuasive speech. Refer to Appendix A for the rubric of this application.
Congratulations! You have finished this module!
MODULE
1. With many workers and entrepreneurs working from home, do you think
ethical issues in business can still arise? Why or why not? Explain your
answer and cite examples.
2. With the new normal, how can entrepreneurs selling online still protect the
environment, and promote corporate social responsibility and sustainable
social enterprise?
3. Do you think it is ethical to conduct interviews for job openings using online
platforms like Zoom or Google Meet? What are the pros and cons of this
practice? Explain your answer.
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MODULE SUMMARY
You have completed the third module of Ethics covering Application of Business
Ethics. Key points covered in the module include:
 Fundamental ethical issues encompass promoting actions and conduct based

on integrity and trust.
 Anybody, male or female, can be a victim of sexual harassment. Simply, a man
might harass another man, and a woman might harass another woman.
 Wages are the price that workers receive for their labor in the form of salaries,
bonuses, royalties, commissions, and fringe benefits, like paid vacations,
health insurance, and pensions.
 A gift is something of worth given with no anticipation of return while a bribe
is the same thing given in the expectation to influence the recipient’s conduct.
 Conflict of interest is the organizational context happens when someone acts
in a way that is advantageous to himself at the expense of his employer.
 The application of one’s official position for personal benefit is often an abuse
of power.
 A strike is usually the last resort of a trade union, but when negotiations have
reached an impasse, a strike may be the only bargaining tool left for
employees.
 Whistleblowing is the act of going public with what one has reason to believe
to be significantly immoral or illegal acts of an organization one is a member
of.
 Recruitment is the process of looking for and hiring qualified candidate either
within or outside of an organization for a job opening, in a timely, effective
and efficient manner.
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 There are two major promotion tracks: one based on accomplishment, the
other on competition.
 Unless there is a definite cause to terminate the employee from the company,
the decision to stop the employment relationship is a hard one.
 A marketer’s goal must be to please and bring delight to its possible and
current customers in an ethical way.
 Advertising on the other hand, is non-personal practice of calling public
attention to one’s product, service, need, and the like especially by paid
announcements in newspapers and magazines over radio or television, on
billboards, and other similar ideas.
 A fair and reasonable price is the price point for a good or service that is fair to
both parties involved in the transaction.
 Companies have trade secrets to guarantee that the information is not used by
competitors, but it is likely for others to find out the trade secret on their own
and exploit it.
 Misrepresentation means a transformation of information to misinformation.
 Multi-level marketing is a system of selling wherein one signs up other people
or assist him and they in turn recruit others to help them. It is a selling system
using many levels of distributors, the reason why it is so-called multi-level
marketing.
 Money laundering is the process of creating the appearance that large amounts
of money obtained from serious crimes, such as drug trafficking or terrorist
activity, originated from a legitimate source.
 Insider trading is when one person who by virtue of his work has access to
information that is not presented to the public and will probably has an impact
for making investment decisions.
 Tax evasion refers to the elimination or reduction of one’s correct and proper
tax by fraudulent means which is criminally punishable.
 The principle of justice says that equals should be treated equally unless there
is an enough basis to treat anyone (or anything) unfairly.
 Sustainability is meeting the needs of the current generation without
sacrificing the ability of future generation to meet their own needs.
 The principle of sufficiency consents that all forms of life are free to have
sufficient goods to live on and grow. Compassion stretches the view of
sufficiency to the Earth.
 The principle of solidarity considers how people relate to each other in
community.
 The principle of participation obliges people to recognize all of the parties
both human and non-human that are likely to be affected by a decision.
 Today, business has a responsibility towards its stakeholders such as the
customers and society at large who are more conscious of the harmful impacts
of business as usual.
 Corporate Social Responsibility refers to a business practice that involves
participating in initiatives that benefits society.
 Social enterprises do business to tackle social problems, improves
communities, people's lite chances, or the environment. They make their
money from selling goods and services in the open market, but they reinvest
their profits back into the business or the local community.
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 In the social enterprise setting, revenue may also be increased by grants and
other sources, depending on the nature of the organization and so
sustainability considerations will require taking into account all sources of
income.
 Social enterprises tend to operate with a purpose of creating value for the
society and also generate income (if not wealth). As a rule of thumb, the
solutions they offer are supposed to be innovative, unique, people and
environment friendly.
 In a business context, the definition of this responsibility includes providing a
safe workplace, compensating workers fairly, and treating them with a sense
of dignity and equality while respecting at least a minimum of their privacy.
MODULE 3 REFERENCES
LESSON 1

Manila.
Shaw & Barry. (n.d.). The Ford Pinto. Business Ethics. Moral Issues in Business 8th
ed. (pp. 83-86).
LESSON 2
Blakemore, E. (2019). The Chernobyl disaster: What happened, and the long-term
impacts. National Geographic. Retrieved from
https://www.nationalgeographic.com/culture/topics/reference/chernobyl-
disaster/.

Manila.
LESSON 3
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Manila.
LESSON 4

Manila.
LESSON 5
Byars, S. & Stanberry, K. (2018). Business Ethics. OpenStax, Houston, Texas.
APPENDICES
APPENDIX A
ESSAY RUBRIC
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APPENDIX B
CASE ANALYSIS RUBRIC
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REFERENCES (Icons)
Daksina, D. (2018). School icon set. Dribble. Retrieved from
https://dribbble.com/shots/4560589-School-Icon-Set?
utm_source=Clipboard_Shot&utm_campaign=deemakdaksina&utm_content=
School%20Icon%20Set&utm_medium=Social_Share.
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MODULE 1

 Why Ethics Matter

At the completion of this module, you should be able to:

 define the components of business ethics;

 differentiate the forms of business organizations;

 demonstrate how fairness, accountability and transparency are practiced in

 distinguish between good policies or practices and morally unacceptable

 Discuss business ethics; and

During this pandemic, there have been

ETHICS (GED 4) COMPOSTELA VALLEY

3. Why are these issues painting a negative picture?

In a nutshell, business ethics is…

Being a Professional of Integrity

Clients, customers, suppliers, investors, retailers, employees, the media, the

Stakeholders are the individuals and entities affected by a business’s decisions,

Is Business Ethics Necessary?

At the boundaries of the question about whether business ethics is necessary,

Answer the question below.

An an Entrepreneurship student, how can you start applying Business Ethics?

 Give examples of the forms of business organizations; and

A business is an organization that uses economic resources or inputs to

 Why do these ideas come to your mind?

There are four forms of business ownership in social and economic

Sole Proprietorship: A sole proprietorship, also known as single proprietorship, is a

Partnership: A partnership is a business owned by two or more persons who bind

Corporation: A corporation is a business organization that has separate legal

Cooperative: A cooperative is a duly registered business organization owned by a

Purposes of Establishing a Business

2. Control – Business allows for more personal control of an owner’s financial

Business Organization and Socio-Economic Development

Socio-economic development is the process of social and economic

Life expectancy is a statistical measure of how long an organism may live,

All business organizations create wealth for shareholders, employees,

Child Labor and Slavery in the Chocolate Industry

(Food Empowerment Project, 2020)

The Worst Forms of Child Labor

Is Slave-free Chocolate Possible?

Are the Labels on Chocolate Meaningful?

Multiple government and NGO programs have been developed, attempting to

Refer to Appendix B for the rubric regarding case analysis.

 Understand how fairness, accountability and transparency is essential

A company that applies the principles of fairness, accountability and

Activity: Analyze the picture and answer the questions.

1. What do you notice?

2. What are the people doing?

Fairness, accountability and transparency are the pillars of corporate

Fairness is perhaps one of the hardest, yet most important, to practice on a

Fairness is concerned with actions, processes, and consequences that are

Accountability refers to the obligation and responsibility to give an

Cultivating accountability across organization requires managers to take

Accountability is applicable not just for profit-oriented company, but also to

Transparency means openness, a willingness by the company to provide clear

Across all industries, transparency has never been more important to a

Fairness, Accountability and Transparency for Socio-economic Development

On a broader perspective, a nation is larger and more difficult to manage and

Practices of Fairness, Accountability and Transparency in Philippine Businesses

 Globe practices regular disclosure of financial results.

You have an employee who doesn’t practice fairness, accountability and

 Demonstrate how the Code of Right Conduct is applied in business;