BUSINESS ETHICS REVIEWER 3.

Corporation
- 5-10 persons, who are called incorporators hold
 Business Ethics – refers to principles about how
at least one share and are bound by articles of
businesses and the organizational members should
incorporation filed with SEC. It can be stock or
behave.
non-stock corporation.
 Ethics
- enables a person to discern right from wrong
 Industrial Revolution
- derived from the Greek word “ethos” which
- The Industrial Revolution was the transition to
means character.
new manufacturing processes in the period
- Involves systematizing, defending and
from about 1760 to sometimes between 1820
recommending concepts of right and wrong
and 1840.
conduct.
- This transition includes going from hand
- Using principles decision-making to choose
production methods to machines.
actions that do not hurt others.
 Stock
 Business Organization – an entity that aims to earn
- Also known as “shares” and “equity”
a profit by providing products or services to satisfy
- A type of security that signifies ownership in a
the needs of the market.
corporation and represents a claim on part of
 Business – an activity that is part and parcel of
the corporation’s assets and earnings. Common
human society it is an entity in which economic
stock usually entitles the owner to vote at
resources or inputs, such as materials and labor are
shareholder’s meeting and to receive dividends.
put together and processed to provide goods or
services or outputs to customers. Advantages of a Corporation

Three Types of Business Organization
1. Service
2. Merchandising
3. Manufacturing
 SEC
- The Securities and Exchange Commission
(Filipino: Komisyon sa mga Panagot at Palitan,
commonly known as SEC) is the agency of the
Government of the Philippines responsible for
regulating the Securities Industry in the
Philippines. In addition to its regulatory
functions, the SEC also maintain the country’s
company register.
Kinds or Forms of Business Organization
1. Sole Proprietorship
- Owned and prepared by one individual.
- The owner has full responsibility on the
business and owns all assets and profits but, is
personally liable for all obligations and losses.
2. Partnership
- Two or more persons bind themselves to
contribute money, property or industry to a
common fund with the intention of dividing the
profits and sharing the liabilities among
themselves.
1. Unlimited Life – it may exist well beyond the
lifespan of original owners.
2. Credibility – suppliers, investors, and financial
institution may see a business more credible if it is a
corporation.
3. Ease of Transferring Ownership – transferring the
company’s stock certificate to another shareholder.
4. Protecting Personal Assets – owners of a
corporation are liable for business losses and debt
up to the equivalent of their investment in the
corporations.
 Revenue – total amount of money a business earns
during a given period of time by offering products
to the market.
 Profit – amount of money a business takes in after
the expenses have been deducted from the
revenue.
 Non-Profit Organizations – are formed for a specific
purpose (assist victims of violence; promote animal
welfare, or care for the elderly). To serve the
common good of the public. They do not aim for
profits, but they can initiate funds or activities that
can help them in their advocacy.
 Accountability – What it is:
- To be liable to explanation or justify one’s
actions and decisions.
 - The process of requiring explanation and
justifications, but it also about testing, forming
a judgment, and taking action.
- Implies responsibility: it is reasonable only to
hold people to account for those things which
they are responsible.
 Accountability: What it is not
- It does not imply a management relationship
- It is not a “one off” annual event.
 Fairness
- Equality of making judgments that are free from
discrimination.
- Comes from old English “faeger” meaning
pleasing attractive.
- In business context, involves balancing the
interest involved in all decision-making
including decision related to hiring, firing,
compensation and rewards system.
Social Function of Business
Pope Francis has called in the world’s most powerful
business people to work towards a more inclusive and
equitable economic model, not just for the poor but
with the poor, putting a human face on those in need.
“I pray that you may involve in your efforts those whom
you seek to help; give them a voice, listen to their
stories, learn from their experiences and understand
their needs”, Pope Francis
Morality of Advertising
 Advertising presents several ethical issues, one of
them being Deceptive Advertisements. Deceptive
ads are those that make false statements about or
misrepresents the product.
Example: The picture presented in the advertisement is
different from the actual product
 Deceptive ads may occur not only through
sentences or propositions but also through pictures,
words, or through certain combinations of objects
which can deceive the eye and the mind.
 Article 108 of the Consumer Act of the Philippines
declares that “the state shall protect the consumer
from misleading advertisements and fraudulent
sales promotion practices”.
 Ethical Business Leadership
- Creates an environment where ethical behavior
is encouraged, good people are able to do good
and bad people are prevented from doing bad.
 Tangible Products
- Good or Commodities
 Intangible Products
- Services

 The fundamental reason for examining the activities

of business from the moral perspective is for the
promotion of the common good, protection of the
individual’s interests, and the preservation of
human society in general.
 It should embody the purpose of its leadership and
its leadership should embody the social purpose of
the business.
 Business speaks to the ends (social changes) rather
than the means (corporate social responsibility).
 The purpose of business is relevant to firms of all
sizes and industries.
 It is integrated with, and invisible from everything
the business does to make money.
 It is aligned with and supports social issues in a way
that is consistent with the unique culture and
character of business.