CH6 – BUSINESS ETHICS

Business ethics refers to standards of moral conduct, behavior and judgment in

business. It involves making the moral and right decisions while
engaging in such business activities as manufacturing and selling a
product and providing a service to customers.

Business ethics is an area of corporate responsibility where businesses are legally

bound and socially obligated to conduct business in an ethical manner.

The main purpose of business to help business and would-be business to determine what business
ethics practices are right and what are wrong. Hopefully, they are going to use
this knowledge to guide them in making the right business decisions.

Special Purpose of business 1. To make businessmen realize that they cannot employ double
ethics standards to the actions of other people and to their own actions.
2. To show businessmen that common practices which they have thought
to be right because they see other businessmen doing it, are really
wrong.
3. To serve as a standard or ideal upon which business conduct should
be based.

Fair business competition means achieving success solely by offering better products, services
and terms than the competitor.

Fair business competition It is a form of business competition where success is gained by the
merits of one's goods or services

1. Economic Impact Impact of BE [4] – E S E I

2. Social Impact
3. Environmental Impact
4. Impact on Bus. Managers

Economic Impact It would have a positive social impact on its employees if they are paid
fair living wages and benefits. It will have a positive effect on its
suppliers that they paid fairly and on time for their supplies. The effect
on its customers is positive if the business gives them good value for
the price they pay for the products and services.

Social Impact contributes to the ethical climate of society.

If businesses offer bribes to secure work or other benefits, engage in
accounting fraud or breach regulatory and legal limitations on their
operations, the ethics of society suffer.

Environmental Impact
Environmental protection ____ is a key area of business influence on society. Businesses that
implement good environmental policies to use energy more efficiently,
reduce waste and in general lighten their environmental footprint can
reduce their internal costs and promote a positive image of their
company. The environmental initiatives of a business leader often force
competitors to take similar action for an increased beneficial effect on
the environment.
Impact on Business Managers The concepts and principles for the ethical conduct in business are
relegated to the managers of the business enterprise. Thus, although
the manager is expected to act in the best interest of the business, he
cannot be expected to act in a manner that is contrary to the law or to
his conscience.

ETHICAL CHALLENGES IN the author expressed her insights on "Business Ethics" where an
TODAY'S WORLD inherent conflict between ethics and the pursuit of profit is more
pronounced.
Cited in this article is the message of Pope Francis in his Ecumenical,
Evangeli Gaudium

Ms. Mercedes B. Suleik written by _______ published in the Business Mirror on February 13,
2018

Pope Benedict XVI's Encyclical "Humanity has a mission and the means transform the world in justice
Caritas in Veritate and love in human relations, even in the social and economic field.
Market economics must be underpinned by commitments to particular
moral goods and a certain version of the human person if it is to serve
rather than undermine humanity's common good.

CH7 – COMMON UNETHICAL PRACTICES OF BUSINESS

ESTABLISHMENTS
COMMON UNETHICAL PRACTICES Unethical problems in business ethics occur in many forms and types.
OF BUSINESS ESTABLISHMENTS

1. Misrepresentation The most common of these unethical practices of business

2. Over-persuasion. establishments
[2] – M O

1. direct misrepresentation Misrepresentation may be classified into two types:

2. indirect misrepresentation. [2] – D I

Direct Misrepresentation is characterized by actively misrepresenting about the product or

customers.

1. Deceptive Packaging Direct Misrepresentations

2. Misbranding or Mislabeling [7] – D M F A W M N
3. False or Misleading
Advertising
4. Adulteration
5. Weight understatement or
Short weighing
6. Measurement
understatement or Short
measurement
7. Quantity understatement
or Short Numbering
Indirect Misrepresentation is characterized by omitting adverse or unfavorable information about
the product or service.

1. caveat emptor Indirect misrepresentations

2. deliberate withholding of [3] – C D P
information
3. business ignorance
(Passive Deception)

Deceptive packaging takes many forms and is of many types. One type is the practice of
placing the product in containers of exaggerated sizes and misleading
shapes to give a false impression of its actual contents.

Misbranding is the practice of making false statements on the label of a product or

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

Advertising It is the principal means by which people are informed about the
availability, nature and uses of old and new products.

Advertising serves a useful purpose if it conveys the right information.

Adulteration is the 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.

short weighing In __ , 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.

Short weighing is practiced in selling products where prices depend on the weight such
as sugar, meat, fish, vegetables, fruits, nails, etc.

short measurement In __, the measuring stick or standard is shorter than the real length or
smaller in volume than the standard. This unethical practice is found in
selling situations where the price of the product depends on its length
such as selling cloth or textiles, electric cords or wires or on its volume
such as selling rice by the sack.

Short numbering In this unethical practice, the seller gives the customer less than the
number asked for or paid for.

Caveat emptor; is a practice very common among salesmen. Translated, __ means

"let the buyer beware" ___.

Caveat emptor Under this concept, the seller is not obligated to reveal any defect in the
product or service he is selling. It is responsibility of the customer to
determine for himself the defects of the product.
Deliberate Withholding of No business transaction is fair where one of the parties does not exactly
Information know what he is giving away or receiving in return.

Passive deception Direct misrepresentation gives business a bad name while indirect
misrepresentation or ___ is not as obvious, it nonetheless contributes to
the impression that businessmen are liars and are out to make a fast
buck.

Business ignorance is passive deception because the businessman is unable to provide the
customer with the complete information that the latter needs to make a
fair decision.

Persuasion is the process of appealing to the emotions of a prospective customer

and urging him to buy an item of merchandise he needs.

CORPORATE ETHICS Unethical Practices of Corporate Management

1. practices of the Board of
Directors Practices of corporate management that involve ethical considerations
2. practices of executive may be classified into two: [2] – B E
officers

1. Plain Graft Some Unethical Practices of the Board of Directors

2. Interlocking Directorship [4] – P I N I
3. Negligence of Duty
4. Insider Trading

1. Claiming a vacation trip to Some Unethical Practices of Executive Officers and Lower Level
be a business trip Managers
2. Having employees do work
unrelated to the business
3. Loose or ineffective
controls
4. Unfair labor practices
5. Making false claims about
losses to free themselves
from paying the
compensation and benefits
provided by law.
6. Making employees sign
documents showing that
they are receiving fully
what they are entitled to
under the law when in fact
they are only receiving a
fraction of what they are
supposed to get
7. Sexual Harassment
 1. Conflicts of Interest Some Unethical Practices of Employees
2. Dishonesty [2] – C D

Plain Graft 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.

Interlocking Directorship is often practiced by a person who holds directorial positions in two or
more corporation that do business with each other.

Disloyal selling happens when this person is compelled to decide which of the two
corporation's interest should be protected or upheld. Thus, whatever
decisions the person makes, he betrays the trust reposed on him by the
shareholders of either of the two companies.

Insider Trading involves trading in a public company's stock by someone who has non-
public material information about that stock for any reason.
can be either illegal or legal depending on when the insider makes the
trade.

Illegal IT when the material information is still non-public, and this sort of insider
trading comes with harsh consequences.

Material non-public information is any information that could substantially impact on investor's decision
to buy or sell the security that has not been made available to the
public.

Legal IT happens when directors of the company purchase or sell shares, but
they disclose their transactions legally.

Sexual Harassment Work, education or training-related __ 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.

Conflicts of Interest arises when an employee who is duty bound to protect and promote the
interests of his employer violates this obligation by getting himself into a
situation where his decision or actuation is influenced by what he can
gain personally from it rather than what his employer can gain from it.

Dishonesty 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.
 CH8 – ETHICAL DILEMMA
ETHICAL DILEMMA a situation a person faces in which a decision must be made about the
appropriate behavior. A simple example of an ethical dilemma is finding
a diamond ring, which necessitates deciding whether to attempt to find
the owner or to keep it.

RESOLVING ETHICAL 1. Obtain the relevant facts.

DILEMMAS 2. Identify the ethical issues from the facts.
six-step approach 3. Determine who is affected by the outcome of the dilemma and
how each person or group is affected.
4. Identify the alternatives available to the person who must
resolve the dilemma.
5. Identify the likely consequences of each alternative.
6. Decide the appropriate action