BUSINESS ETHICS &

SOCIAL RESPONSIBILITY
ABM SPECIALIZED SUBJECT

The course deals with the fundamental concepts,

principles, and practices of ethical standards in the
business environment. It combines the theoretical
foundations of setting up business enterprises with
the conduct of entrepreneurial activities in the
context of one’s accountability and social
responsibility.

Specifically, the course aims to: (1) provide students

with a basic understanding of the mechanisms
whereby companies can be made to act in the best
interest of shareholders, other stakeholders, and
society as a whole; (2) provide students with
knowledge of general ethical principles as applied to
the special situations of business and the ability to
make informed judgments through case analyses;
and (3) equip students with the ability to formulate
basic strategies in relation to corporate ethics and
governance.
Chapter 1
The Role of Business in Social
and Economic Development

Lesson 1 The Nature and Forms

of Business Organization

At the end of the session the learners will

be able to:
a. Differentiate the forms of business
organizations
b. Give examples of forms of business
organizations
c. Explain the roles of business in social
and development.
BUSINESS
Is an activity that is part and parcel of
human society: It is an entity in which
economic resources or inputs, such as
materials and labor, are put together and
processed to provide goods or services or
outputs to customers.

Complex enterprises involving major Business from a Moral

activities like purchasing, manufacturing,
marketing, advertising, selling, and Perspective
accounting. Business is organizations should help in
the promotion of the common good and
in the protection of persons’ rights and
Profit interests.
Objective of most businesses.
Thus, businesses make the goods and
It is the difference between the amount services you use each day.
earned and the amount spent in buying,
operating, or producing something.
 TYPES OF BUSINESS ORGANIZATIONS
There are generally three types of business organizations operated for profit:

Service Business
Provides services rather than products to customers.

Merchandising Business
Sells products from other businesses to customers.

Manufacturing Business
Change basic inputs into products that are sold to customers.
 Sole Proprietorship
A sole proprietorship or sometimes called a "single proprietorship"
is a business owned by only one person.
A sole Proprietor business is owned by an individual who has full
control or authority of its own and owns all the assets, as well as
personally answers all liabilities or losses.
The sole proprietorship form is usually adopted by small business
entities and may work as an independent contractor.
 FORMS OF BUSINESS ORGANIZATIONS
The three types of businesses – service, merchandising and manufacturing – may be
organized to the following, given the large size and huge amount of resources required
to operate a manufacturing business, most manufacturing businesses are corporation.

SERVICE MERCHANDISING
MANUFACTURING

Sole Proprietorship Partnership Corporation

A business owned by one An association of two or An entity created by law that is
person more people as partners separate and distinct from its
owners and its continued
It refers to an agreement in which the existence is dependent upon the
individuals share the profits and corporate structures of the state
liabilities of a business venture. in which it is incorporated.
 Sole Proprietorship
Examples of Businesses that may be functional as sole-proprietor
➢ Home-based Healthcare Services
➢ Landscaper/Landscaping Services
➢ Bookkeeper / Bookkeeping
➢ Financial Planners
➢ Computer Repair Services
➢ Tutoring Services
➢ Catering Services
➢ House Cleaning Service
➢ Freelance Writer
➢ Virtual Assistant
 PARTNERSHIP
A general partnership is a legal entity binding two or more business
partners in responsibility and liability for their business. There are
two types of general partnerships: unlimited and limited.
In an unlimited general partnership; all partners in the business are
equally responsible for the debts and other liabilities incurred by the
business, and they all participate in operations.
In limited partnerships; individuals invest in the company and
share in its profits, but are not responsible for daily business
activities and do not share in the business’s liabilities.
 PARTNERSHIP
Examples of Businesses that may be functional as Partnership
➢ Medical Services
➢ Legal Services
➢ Real Estate
➢ Creative Concepts
 CORPORATION
A corporation is a business organization that has a separate legal
personality from its owners. Ownership in a stock corporation is
represented only by its shares of stock. The owners or stockholders
enjoy limited liability but have limited involvement in the company's
operations. The board of directors, an elected group from the
stockholders, are the one's that controls the activities of the
corporation.
 CORPORATION
Examples of Top Corporations in the Philippines
 FORMS OF BUSINESS ORGANIZATIONS cont.
Sole Proprietorship Partnership Corporation
NUMBER OF 1 2 or more At least 5
POSSIBLE
OWNERS
WHO MANAGES Owner Partners Board of Directors and
THE (but he may hire somebody) (or they may hire managers) operating management
BUSINESS
TERMINATION Death of the owner Death of any partner or As stated in the Articles of
OF BUSINESS withdrawal of a partner Incorporation, not to exceed
50 years.
GOVERNMENT Department of Trade and Department of Trade and Securities and Exchange
AGENCY Industry - DTI Industry - DTI Commission - SEC
ASSIGNED TO
REGULATE
TRANSFER OF Sell the business (it’s a new Sell the business or interest Sell Stocks
OWNERSHIP entity under a new owner) of a partner (consent of other
partners is necessary)
LIABILITY Unlimited ; other properties not used in Generally unlimited; There are types Limited to the stock
OF the business may be held liable for the of partnerships that limit the liability of investment of the
OWNERS obligations of the business the partners shareholder
ROLE OF BUSINESS IN THE ECONOMY
Small Businesses
Vital and significant contributors to economic development, job creation, and the
general health and welfare of economies.

Microbusinesses
Firms that employ fewer than ten people.

Form a dynamic, integral part of the market economy, providing goods and
services and a gateway by which millions enter the economic and social
mainstream of society.

Corporations
Large businesses offer better jobs than small businesses, in terms of both
compensation and stability. Also provide such benefits as:
Links with suppliers, increased consumer spending, the transfer of knowledge
from one firm to another, and the sharing of pool of workers.

Competitive Forces
Competitive forces sometimes fail to steer companies in a socially beneficial way
and instead, lead them to act in a socially harmful manner.
ETHICAL ISSUES

The wave of large corporations has brought with it a host of new ethical
issues, including:

Possibilities of exploiting the workers who labor at the new

machines

Manipulating the new financial markets that finance

those large enterprises

Producing massive damage to the environment.

Class Activity:
Case Problem Analysis Guide Instruction:
Abakada Company began a small enterprise buying and selling various food Based on the situation above, give the owner
products. After a few years of successful operations, it added apparel and of Abakada Company appropriate advice
footwear to its wares. During this initial stage, Abakada managed to work on the regarding whether or not to incorporate his
basis of its proprietor’ capital, borrowing from its bank from time to time when business. You might wish to categorize the
needed. pros and cons into the following issues:

After more years of operation, Abakada found that it needed to draw larger
amounts of funds through bank borrowing, as well as to hire more personnel for
the growing marketing needs and services, apart from administrative functions • BUSINESS SIZE
like accounting, among others. The proprietor carefully weighed his options:
• MISSION AND OBJECTIVES
• Shall I incorporate my business so that I can have greater and easier access
to funds, especially larger loans from banks? • PROCEDURES FOR
• If I hire more people as my company goes bigger, will I be able to manage and INCORPORATION
control well the personnel working for me?
• If I begin offering ownership shares to other people outside my family, will • PERSONNEL
serious disagreements arise among us in terms of products and services to
offer in the future as well as managerial style? • CONTROL

• FUNDING SOURCES

• LEGAL AND TAXATION

12 CORE PRINCIPLES OF BUSINESS ETHICS
1. Honesty 7. Respect
2. Integrity 8. Obeying the Law
3. Keeping Promises 9. Excellence
4. Loyalty 10.Being a Leader
5. Fairness 11.Morale
6. Caring 12.Accountable
UNETHICAL BUSINESS PRACTICES
1. Accounting Manipulation
2. Overbilling
3. Misleading Advertisements
4. Making False Claims
5. Customer Service Failures
6. Layoff and High Executive Compensation
7. Poor-quality Materials
Purposes of Establishing a Business

Money Adventure

Control Service
 Good Policies & Ethical Practices
in Business Education
• Business organizations should comply with reportorial requirements as mandated
by government agencies for ethical practices
• Practice proper office decorum
• Be sensitive to smells and scents which may be unpleasant to the employees
• Company property or assets are for business purposes and not for personal use
• Employees should use communication infrastructure properly and appropriately
• Employees should always act in the best interest of their employer
• There are confidential information that are protected and which should not be
divulged to anyone outside the company without proper authorization
• All financial and accounting records should be accurate, reliable, and truthful
 COMMON PRACTICES IN BUSINESS
• Legislative Requirements – requirement in employment-related laws for a
policy to be in place and that policy fulfills certain specifications.
• Codes of Conduct – standards that are set by the employer in an effort to
ensure a high standard behavior in the workplace.
• Conditions Included in Policies
1. Attendance 8. Performance Review
2. Absenteeism 9. Discipline
3. Punctuality 10. Abandonment of Employment
4. Transfer 11. Exit Interviews
5. Training 12. Notice
6. Promotion 13. Termination of Employment
7. Probation
 COMMON PRACTICES IN BUSINESS
• Employee Entitlements
1. Redundancy Pay 6. Personal/Career Leave
2. Annual Leave 7. Jury Service
3. Long Service Leave 8. Special Leave
4. Compassionate Leave 9. Overtime
5. Parental Leave 10. Shift Work; etc
• Employee Benefits
• Breach of Company Policies
• Policies in a Term of Contract of Employment
• Office Protocol Specialist
• Preventing Conflict
 COMMON PRACTICES IN BUSINESS
• Pleasant, Productive Workplace
• Decorum
• Marketing Management
– the organizational discipline which focuses on the practical application of
marketing orientation, techniques and methods inside enterprises and organizations
and on the management of a firm’s marketing resources and activities.
• Bookkeeping
• Reportorial Requirement and Documentation
 Thank You!

Reference(s):
Racelis 2017. Business Ethics and Social Responsibility. Rex
Bookstore First Edition. Pages 2 -10

Commission on Higher Education (CHED) 2016. Fundamentals

of Accountancy Business and Management 1 (FABM1) Teaching
Guide. Page 27

For suggestions, email your message to: Presentation made by:

hyperion.helios22@gmail.com GIAN PAULO M. RABANAL, LPT,

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