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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/service/outputs to customers.
Profit � is the difference between amount earned and the amount spent.
3 Types of Business Organizations
1. Service Business � provide services
2. Merchandising Business � sell products they purchase from other businesses to
3. Manufacturing Business � change basic inputs into products that are sold to
3 Forms of Business Organizations
1.Sole Proprietorship � business owned by one person
a.) Total Undivided Authority
b.) Low Organizational Cost and license fee�s
c.) Tax Savings
d.) No restrictions on type of business
a.) Unlimited Liability
b.) Limitation on size
c.) Limited by management�s ability to be a jack of all trades

2.Partnership � an association of two or more people as partners. It can be limited

and general partnership
Chief Characteristics of Partnership
a.) Association of individuals
b.) Mutual Agency
c.) Limited Life
d.) Unlimited Liability
e.) Co-ownership of property
� Partnership is a legal entity for certain purposes
� Partnership is an accounting entity
� Net income of a partnership is NOT taxed as separate entity
Mutual Agency � means that an act of any partner is binding on all other partners,
so long as the act appears to be appropriate for the partnership
3.Corporation � an entity created by law that is separate and distinct from its
Characteristics of Corporation
a.) The corporation separate legal existence from its owners
b.) Stockholders have limited liability
c.) Transferable ownership rights
d.) Ability to obtain capital
e.) Have a continuous life
f.) Subject to numerous government regulations
g.) Must pay income tax on its earnings and stockholders must pay taxes on the
h.) Artificial/judicial �person� endowed with ability for self-management.
Steps in Forming a Corporation
1. File an application of incorporation
2. After the incorporation has been approved
3. The corporation is now granted a charter/articles
4. Articles of incorporation formally creates a corporation
5. Prepares a set of bylaws.
Limited Liability Company (LLC) � combines the attributes of a partnership and a

Small business owned by sole-proprietorship are well recognized as vital and
significant contributors to economic development.
Microbusinesses form a dynamic, integral part of the market economy.
Large businesses offer better jobs than small businesses in terms of both
compensation, stability and benefits.
Large corporations had brought with it a host of new ethical issues and can produce
massive damage to the environment.
Ethics � are moral principles that guide the conduct of individuals.
4 Main reasons that may persuade a business to act ethically
1. Legal Reasons
2. Public Image
3. Pragmatic Reasons
4. Moral Reasons
Poverty � is conceptualize as a deficiency or shortage of some sort.
� Relative poverty � living standards of others within the same society
� Absolute Poverty � Universal measure of adequate provision
Authentic and Sustainable Development � means working at the real solutions in
order to eradicate or at least alleviate poverty.
4 Levels of Responsibility
1.Earning a profit
2.Legal Responsibility
3.Ethical Responsibility
4.Discretional Responsibility
Advertising � presents ethical issues
Deceptive Ads � are those that make FALSE STATEMENTS about or misinterpret
Whistle Blowing � is the act on an employee of disclosing what he believes to be
unethical or illegal behavior to higher management or to external authority or
Integrity Capacity � individual or collective capability for repeated process
alignment of moral awareness, deliberation, character, and conduct that
demonstrates balanced judgement or etc.
Accountability � what it is
1. To be accountable is to be liable to explain
2. Process of explanation and justification
3. Holding to account it the process requiring explanation and justification
4. Implies Responsibility
Accountability � what it is not
1. It is not synonymous with responsibility
2. Does not imply a management relationship
3. It is not a �one off� annual event
4. It is not the same as appraisal
5. It is not about confrontation
Accountability � is the ability for your actions and performance to your
Fairness � it is the quality of making judgements that are free from discrimination
Transparency � has become an increasingly popular word in recent times; it is
misuse sometimes by scholars and practitioners.
Technical Skills � ability to apply specialized knowledge or expertise
Human Skills � ability to understand, communicate and etc.
Conceptual Skills � skills and mental ability that managers must have to analyze
and diagnose complex situations.
Code of ethics � codes that articulate parameters of organization � what is
acceptable and what is not. A statement of rules for guiding the behavior of
employees or member of an organization
� Kaptein and Wembe (2002) � describe them as policy documents defining
� Nijhof et al. (2003) � note codes contain open guidelines describing
desirable behaviors and closed guidelines prohibiting certain behaviors.
� Kaptein (2004) � codes that clarify the norms and values the organization
seeks to uphold.
� Basic operating principles
� The primacy of the person
� Shared Values
� The empowerment of people
Pastin (1986) Culture of Character
� They are at ease interacting with diverse and external stakeholder groups
� They are obsessed with fairness
� Responsibility is individual rather than collective
� They see their activities in terms of purpose.
Sims (2005) added to the list
� There exist a clear vision and picture of integrity throughout the
� The vision is owned and embodied by top management
� The reward system is aligned with the vision of integrity
� Policies and practices are aligned with vision
� It is understood that every significant leadership decision has ethical value
� Everyone is expected to work through conflicting stakeholder value
Business Ethics � Rules about how businesses and the organizational members should
Social Responsibility � The obligation of a business to contribute to the will
being of a community
Conflict of Interest � it occurs when a person takes advantage of the situation for
his/her gain rather than the employer�s interest.
Corruption � lack of honesty or integrity; using a position of trust/authority to
receive favors, often financial bribes
Trust � the willingness of one person or group to have faith or confidence in the
goodwill of another person, even though this puts them at risk
Philosophy � etymologically from two Greek words �philia� which means love and
�Sophia� which means wisdom. It is a study of the fundamental nature of knowledge,
reality and existence.
3 Branches of Philosophy
1.Metaphysics � what is the nature of reality. Concerned with reality and existence
� Ontology � nature of existence
� Cosmology � inspects the origin and organization of the universe

2.Epistemology � What is the nature of knowledge. Logic is a key dimension to

1. Deductive Logic (General-Specific)
2. Inductive Logic (Specific-General)
3.Axiology � explored the nature of values
1.Ethics � studies human conduct and examines moral values
2.Aesthetics � values beauty, nature and aesthetic experience
Strands of Philosophy
1.Idealism � Oldest philosophy of western culture. It refers to the world of mind
and ideas where reason is primary
2.Realism � antithesis of idealism, whereby the universe exists whether mind
perceives it or not.
3.Neo-theism � also known as theistic realism whereby God exists and can be known
through faith and reason
4.Contemporary Philosophies
� Pragmatism � also known as experimentalism
� Existentialism � appeared as a revolt against the mathematical, scientific
philosophies that preceded it.
� Analytic Philosophy � it sought out to clarify and define philosophies
Logical Positivism � there are logical and empirical types of scientific
- Held that moral values are objective in the sense that they exist in a spirit
like realm beyond subjective human conventions
- He held that they are absolute and eternal and it can never change
- Student of Socrates
- Teleological
- He is concerned with action not as being right in itself irrespective of any
other considerations but with action as conducive to man�s good.
- Argued that virtues are good habits that we acquire, which regulate our
- Emphasizes a single principle duty.
- We have moral duties to one-self and others, such as developing one�s talent
and keeping our promises to others.
- Categorical Imperative (mandates action)
Act-Utilitarianism � it would be morally wrong to waste time on leisure activities.
Rule-Utilitarianism � a behavioral code or rule is morally right if the
consequences of adopting that rule are more favorable than unfavorable to everyone.
- Eudaemonistic, which proposes an end for human conduct, namely happiness; but
this happiness is to be found only by God
- Primarily ethic of Love: It is by the will of that man reaches out toward God
and finally takes possession of and enjoys him.
- Aristotelian Eudaimonism and Christian Theology
- Happiness is understood in terms of completion, perfection or well-being.
- Prince of Scholastics
Ethics � derived from the greek word Ethos meaning Character or custom. Principle
that will tell us the right thing to do or what things are worth doing.
Virtue Ethics � which takes the concept of character to be central to the idea of
being a good person in business. It fills the void between institutional
behaviorism and overblown emphasis on free will and personal autonomy. It overcomes
MORAL SCHIZOPHRENIA or the need to step out of one�s role and wear.
Virtue Ethics: Historical Background
- Plato - There is an objective truth which is not simply relative to
individual�s beliefs � philosophized a great deal on important ethical concepts.
Charmides = temperance
Euthyphro = piety
Laches = courage
- Aristotle�s � Nicomachean Ethics is viewed as the most influential early work
on virtue ethics. First systematic treatment of ethics in Western Civilizations.
- David Hume � emphasizing the role of emotional aspect of human nature in
man�s moral life
Pride = Vice
Humility = Virtue
- Immanuel Kant � deontological branch of ethical theory, believed in taught
the existence of a Priori moral principles which are held by all rational beings as
necessary and universal
Priori � does not depend on men�s actual behavior
Duty ethics
Categorical Imperative � those actions are right that they conform to principles
one can consistently will to be principles for everyone, and those actions that are
wrong that are based maxims that a rational creature could not will that all
persons should follow. It is the unconditional directive for behavior