Common Unethical

Practices of Business
Establishments
2025
Learning Objectives:

05 Describe some unthical

corporate practices

To familiarize yourself of

01 04
Describe how over-
the common unethical
persuasion becomes
practicess of business
unethical
establishments

Describe how direct

02 03
Describe how indirect
misrepresentation is
misrepresentation is done
committed by business
by business firms
firms
Common Unethical Practices
of Business Establishments

Misrepresentation

Over-persuasion
 Direct Misrepresentation

Deceptive 02 Misbranding 03 False or Misleading

01 Advertising
Packaging or Mislabeling

Weight Measurement
04 Adulteration 05 understatement 06 understatement of
or Short weighing Short measurement

Quantity understatement or
07 Short numbering
Deceptive Packaging

● Takes many forms and of many types

● The practice of placing the product in containers of

exaggerated sizes and misleading shapes to give a
false impression of its actual contents.
Misbranding or Mislabeling

● The practice of making false statements on the

label of a product or making its containers similar
to well-known product for the purpose of
deceiving the customer as to the quality and/or
quantity of a product being sold.
False or Misleading
Advertising

● Advertising does not always tell the “whole truth

and nothing but the truth” if it greatly exaggerates
the virtues of a product and tells only half of the
truth or else sings praises to its non-existent
virtues.

● If advertising does not provide a useful service

anymore to the customers, it can become the
agent of misrepresentation.
Adulteration

● Unethical practice of debasing a pure or genuine

commodity by imitating or counterfeiting it, by
adding something to increase its bulk or volume, or
by substituting an inferior product for a superior
one for the purpose of profit or gain.
Weight understatement or
Short weighing

● The mechanism of the weighing scale is tampered

with or something is unobtrusively attached to it so
that the scale registers more than the actual
weight.

● Practiced in selling products where prices depend

on the wight such as sugar, meat, fish, vegetables,
fruits, etc.
Measurement
understatement or Short
measurement

● The measuring stick or standard is shorter than the

real length or smaller in volume than the standard.

● Found in selling situations where the price of the

product depends on its length such as cloth or
textiles, electric cords or wires.
Quantity understatement or
Short numbering

● The seller gives the customer less than the number

asked for or paid for.

● Often practiced is selling situations where the

product being sold is in such a shape or is packed in
a manner that would make counting the product
difficult or inconvenient.
 Indirect Misrepresentation
By omitting adverse or unfavorable information about the product or service.

Deliberate
01 Caveat emptor 02 Withholding of 03 Passive deception
Information
 Caveat Emptor

● Very common among salesperson

● “let the buyer beware”

● The seller is not obliged to reveal any defect in the

product or service they are selling. It is the
responsible of the customer to determine for
themselves the defect of the product

● The willingness of the seller to generate profit by

taking advantage of the buyer’s lack of
information.
Deliberate Witholding of
Information
● No business transaction is fair where one of the
parties does not exactly know what they are giving
away or receiving in return.

● Example: A store advertises a “Buy One, Get One

Free” promotion, but the fine print (barely visible)
states that the free item only applies to purchases
over a certain amount. Customers realize this only
at checkout.
Passive Deception

● The business person is unable to provide customer

with the complete information that the latter
needs to make fair decision.

● Example: A hotel advertises “Free Breakfast” but

does not mention that it is only available for
premium rooms. Budget travelers who booked
standard rooms assume they get free breakfast,
only to be charged extra upon arrival.
 Caveat Emptor Deliberate
Aspect (Let the Buyer Withholding of Passive Deception
Beware) Information
Nature of Deception Indirect, relies on Active concealment Information is
buyer's lack of of critical details. incomplete, but not
knowledge. necessarily hidden
on purpose.
Over-Persuation
Urging a customer to satisfy a low priority
need for merchandise

Playing upon intense emotional agitation

to convince a person to buy

Convincing a person to buy what he does not need

The process of appealing to the emotions of a just because he has the capacity or money to do so.
prospective customer and urging them to buy an
item of merchandise they need.

Persuasion used for the sole benefit of selling a

product without considering the interest of the
buyer is not ethical.
#BusinessManagement

Unethical
Practices of
Corporate
Management

2025
CORPORATE ETHICS
Practices of the Board of
Directors

Practices Of Executive
Officers
 Practices of the Board of Directors
01 03
Insider
Plain Graft
Trading

02 04
Interlocking Negligence
Directorship of Duty
 Some of the Board of Directors help themselves to the earnings that
otherwise would go other stockholders. This is done by voting for
themselves and the executive officers huge per diems, large salaries,
big bonuses that do not commensurate to the value of their services.
They can also reduce the earnings going to the other shareholders by
authorizing purchases of goods and services for the company's use at

Plain Graft
a price higher than normal, in consideration of a certain percentage
of the purchase value or commission accruing them.
 Often practiced by a person who holds directorial positions in two or
more corporation that do business with each other. This practice may
involve conflict of interest and can result to disloyal selling.

Disloyal selling happens when this person is compelled to decide

Interlocking
which of the two corporation's interest should be protected or
upheld. Thus, whatever decisions the person makes, he betrays the

Directorship
trust reposed on him by the shareholders of either of the two
companies.
 Occurs when a broker or another person with access to confidential
information uses that information to trade in shares and securities of
a corporation, thus giving him an unfair advantage over the other
Insider purchasers of these securities.

Trading
 When they fail to attend board meetings regularly. It is only in regular
attendance that they can protect the rights and interests of the
shareholders and their non-attendance of board meetings could
result to betrayal of trust of the parties who elected them to their

Negligence of positions.

Duty
Some Unethical Practices of Executive
Officers and Lower Level Managers

01 Claiming a vacation trip to be a business trip

02 Having employees do work unrelated to the business

03 Loose or ineffective controls

04 Unfair labor practices

05 Making false claims about losses to free themselves from paying the
compensation and benefits provided by the law
Making employees sign documents showing that they are receiving fully
06 what they are entitled to under law when in fact they are only receiving a
fraction of what they are supposed to get
07 Sexual Harassment
Claiming a
vacation trip to
be a business
trip

The President or A Vise President reports his personal vacation in Europe or

in the United States as a business trip so he can get reimbursement for his
expenses including those of his family's.
Having
employees do
work unrelated
to the business

Executive officers and the lower managers ask company employees to do

personal things for them on company time such as having the company
janitors water and mow their lawns, having the maintenance men do house
or appliance repairs for them, and having subordinate employees secure a
license or type letters pertaining to their other businesses.
Loose or
ineffective
controls

Managers do not provide adequate controls to remove temptation and to prevent or

discourage employees from engaging in unethical practices.
A manager has the moral obligation to provide proper control atmosphere so that
his subordinates will not be tempted to commit dishonest acts.
A manager indirectly betrays the trust placed on him by higher executive officers if
the administrative and accounting controls in his office are so weak or effective that
employees are given the opportunity to misappropriate funds or engage in petty
thievery.
Unfair labor
practices
 Not to do

● a. To interfere with, restrain or coerce employees in the exercise of their right to self-organization
● b. To require as a condition of employment that a person or an employee shall not join a labor organization
or shall withdraw from one to which they belong
● c. To contract out services or functions being performed by union members when such will interfere with,
restrain or coerce employees in the exercise of their rights to self-organization
● d. To initiate, dominate, assist or otherwise in with the formation or administration of any labor
organization, including the giving of financial or other support to it
● e. To discriminate with regard to wages, hours of work, and other terms or conditions of employment in
order to encourage or discourage membership in any labor organization
Not to do

● f. To dismiss, discharge, or otherwise prejudice or discriminate, against an employee for having given or
being about to give testimony under the Labor Code
● g. To violate the duty to bargain collectively a prescribed by the Labor Code
● h. To pay negotiation or attorneys fees to the union or its officers or agents as part of the settlement of
any issue in collective bargaining or any other dispute
● h. To pay negotiation or attorneys fees to the union or its officers or agents as part of the settlement of
any issue in collective bargaining or any other dispute
● i. To violate or refuse to comply with voluntary arbitration awards or decisions relating to the
implementation or interpretation of a collective bargaining agreement
● j. To violate a collective bargaining agreement
Making false claims
about losses to free
themselves from paying
the compensation and
benefits provided by the
law

There are employers who claim non-existent losses so they can be exempted from
paying the minimum wage and emergency-cost-of-living allowances required by law.
Making employees sign
documents showing
that they are receiving
fully what they are
entitled to under law
when in fact they are
only receiving a fraction
of what they are
supposed to get
 Sexual Harassment

Work, education or training-related sexual harassment is committed by an

employer, employee, manager, supervisor, agent of the employer, teacher,
instructor, professor, coach, trainer or any other person who, having authority,
influence or moral ascendency over another in a work or training or education
environment, demands, requests or otherwise requires sexual favor from the other,
regardless of whether the demand, request or requirement for submission is
accepted or not by the object.
 #BusinessManagement
Some Unethical
Practices of
Employees

2022

www.slidesgo.com
Conflict of Interest

Arises when an employee who is duty bound to

protect and promote the interests of his employer
violates this obligation by getting themselves in
situation where his decision or actuation is
influenced by what he can gain personally from it
rather that what his employer can gain from it.
a. An employee who holds a significant interest or shares of stock of a competitor,
supplier, customer or dealer favors this party to the prejudice of the employer

b. The employee accepts cash, a gift or a lavish entertainment or a loan from a supplier,
customer, competitor or contractor. In this situation, the decision or action of the
employee is influenced by his being indebted for a favor or a loan from a party with whom
the company is doing business. Therefore, cannot act impartially.

c. The employee uses or discloses confidential company information for his or someone
else's personal gain. An example is revealing the employer's formula menu for a well-liked
food to a competitor.

d. The employee engages in the same type of business as the employer. The employee may
attend to the business only after office hours because he has somebody to mind it for the
employee but it is still unethical. An example is an auditor employed full-time in a public
accounting firm but maintains his own auditing office where he works after office hours.

e. The employee uses for his own benefit a business opportunity in which his employer has
or might be expected to have an interest.
Dishonesty

a. Taking office supplies home for personal use

b. Padding an expense amount through the use of

fake receipts when claiming reimbursement

c. Taking credit for another employee's idea

Business ethics is not just limited to business

transactions with outside parties. It also covers
employee-employer relationship, especially with
respect to an employee's honesty as he carries out
his assigned duties in the office.
you!
Thank

#BusinessManagement