LESSON 1: NATURE AND FORMS OF BUSINESS 2.

Partnership - 2 or more business share

ORGANIZATIONS in the business

Business Ethics- the practice of what is morally ADVANTAGE DISADVANTAGE

and ethically right in the conduct of business in  Easy to put up and  Partners are jointly
the workplace easy to raise funds liable for all the
because of the debts and
 It is essentially doing what is right in any pooling of obligations of the
business transaction resources of partners
partners
 Any decision made
LEVEL OF BUSINESS ETHICS  Attractive to by a partner will be
potential partners considered a joint
(by Johnson and Scholes) because of the decision of the
profits shared and other partners
1. Macro- area/level that represents
the incentive of
business operations bound by virtues becoming a Partnerships have a
and norms of the different political and partner. limited life
social systems of every society
 clearly defines the crucial role of The death or
business and reinforces the role of the withdrawal of a
government in the delivery of benefits partner may
to its people. dissolve a
partnership
* Code of Conduct – specifies how a business is
carried out, guided by national and
international ethical standards 3. Corporation – has a DISTINCT PERSONALITY
separate from its owners. It enjoys certain
2. Corporate- represents how each rights and privileges just like an ordinary
company interprets rules & standards individual.
of the industry
 At this level, bus. Ethics helps the - it has a life of its own and does not dissolve
company respond to changing upon the death or withdrawal of a shareholder
pressures effectively *Shareholders- members of a corporation that
3. Individual – the employee’s own moral is a minimum of 5 members.
principles which guide his/her life
*Board of directors – elected by shareholders
to oversee the major policies and decisions of
FORMS OF BUSINESS ORGANIZATIONS the corporation

1. Sole Proprietorship – managed by just ADVANTAGE DISADVANTAGE

ONE person  Shareholders have Most tedious to
- Sole proprietor owns all assets limited liability. build up
including the profits of the company. They can only be closely monitored
held accountable by the government
They also are the responsible for the
for their and other agencies
liabilities of the company.
investment in the therefore requires
ADVANTAGE DISADVANTAGE form of STOCK in more paperwork to
 easy to organize there is an corporations. comply w/ permits
and inexpensive to unlimited liability and other legal
put up of the business w/c requirements.
may extend to the Subjected to tax
 sole proprietors personal assets of separate from the
have the freedom the proprietors individual taxes of
to make their own its shareholders
decisions and have small businesses
complete control may mean small
of the business profit.

BUSINESS ETHICS PRELIMENARY REVIEWER Ma. Edralin Louise G. Santos | ABM 12-10
THE ROLE/PURPOSE OF BUSINESS IN SOCIETY
 The main purpose of a business is to
create wealth
 Meet the needs of the people and the
society
 Business owners are responsible to
maintain a conducive and ideal place of
work
 Business owners should ensure a safe
and peaceful environment where their
business operate.
LESSON 2: ETHICAL AND UNETHICAL BEHAVIOR
Business Ethics- provide the ethical standards in
the workplace
CORE PRINCIPLES OF BUS. ETHICS
1. Honesty – truthfulness and sincerity
- Never holding back the truth
- Company sells products w/o any
misinterpretation or exaggeration of
features
2. Integrity – consistent in all of one’s
actions, decisions and character
- One has the courage to admit mistakes
- One has a code of ethics w/c he/she
believe in and are willing to fight for
what is right and true
3. Keeping promises – one must keep
their word and always ensure these
promises are not broken
4. Loyalty -one must not put their self-
interests above anything else that
will jeopardize the company’s
position
- one must keep company information
confidential once they leave the
company
5. Fairness – acting with impartiality in
all transactions.
- One should not exercise power for their
own self advantage
- One should never take advantage over
other people’s weaknesses
- One should be open- minded and value
the advice and suggestion of others
- One should observe what is right and
recognize the fact that they do not have
a monopoly of knowledge and skills
6. Caring- the exercise of compassion
and sincere concern for others
BUSINESS ETHICS PRELIMENARY REVIEWER
- Company should create a caring
environment and strive to reach the
company goals w/c will benefit the
greatest no. of people w/o inflicting
harm
7. Respect – being courteous at all
times of dealings, regardless of
ranks or gender
8. Obeying the Law -obeying the
rules.
9. Excellence – striving excellence in
all their tasks
- Company should deliver the highest
quality of products and services and
ensure efficient delivery of services.
- Continuous improvement in all
processes
10. Being a Leader – entails leadership
by example
- Managers should be role models
- Decisions should be firm yet flexible
based on the situation
11. Morale- giving the company a good
reputation and recognition and
enhance their image.
12. Accountable – being responsible for
one’s actions
- one should stand firm on their decisions
UNETHICAL BUSINESS PRACTICES
- these should be avoided because such
destroy the company’s reputation and
result in bad business.
1. Accounting Manipulations –
manipulating accounting books
and financial statements to
show more favorable results of
accounting transactions
2. Overbilling- charging more than
the actual price for the service
given
3. Misleading Advertisements-
advertisements w/c misleads
consumers by making promises
w/c the product cannot really
deliver
4. Making False Claims- taking
credit of something which one
is actually not a part of
5. Customer Service Failures-
giving poor customer service
Ma. Edralin Louise G. Santos | ABM 12-10
 6. Layoff and High Executive
Compensation – laying off
workers allegedly because they
are losing profit when in reality,
they are just giving higher
salaries to executives.
7. Poor Quality Materials-
creating poor products in result
from low-quality raw materials
used to lower the total cost of
production
GOOD POLICIES AND ETHICAL PRACTICES IN
BUSINESS ORGANIZATIONS
1. Business organizations should comply
w/ reportorial requirements as
mandated by gov’t agencies for ethical
practices
2. Practices proper office decorum
3. Be sensitive to smells and scents w/c
may be unpleasant to the employees
4. Company property or assets are for
business purposes and not for personal
use
5. Employees should use communication
infrastructure properly and
appropriately
6. Employees should always act in best
interest of their employer
7. Employees should exercise care in
discussing confidential information
8. All financial and accounting records
should be accurate, reliable and truthful
COMPONENTS OF A CODE OF ETHICS
1. Values – guides the organization’s
internal conduct and its relationship w/
stakeholders
- Emanate from its corporate culture as
displayed by its stakeholders
2. Principles – supports the values of the
organization such as credos that
employees should live with during their
stay in the company
3. Mgmt. support- mgmt. is serious in
considering the code as the bible of the
employees in terms of ethics
4. Personal responsibility- any member of
the org. should uphold and preserve the
code of ethics because any violation of
the code may involve legal and moral
consequences
BUSINESS ETHICS PRELIMENARY REVIEWER
5. Compliance – all legal requirements of
the code should be met
LESSON 3: CLASSICAL PHILOSOPHIES AND THE
EVOLUTION OF BUS. ETHICS
GREEK PHILOSPHERS
1. Socrates
 Devoted his time to read the works
of famous philosophers of his time
 Teacher of Plato who wrote a book
about him in his book Apology
Contributions:
 Socratic Method- technique focused on
giving students questions rather than
answers
 “one of the greatest achievements of
humanity” - Gregory Vistos, Princeton
University; this is because it
 Encourages a high degree of mental
alertness and at the same time upholds
the virtues of sincerity, humility and
courage
 Believed that self knowledge is
sufficient to achieve a good life
 Believed True happiness is gained by
doing what is right
 Believed that no one knowingly harms
himself
 Believed that knowledge is the
propagation of what is good, a virtue
or excellence where areas ignorance is
in the focus on what is bad, evil and
not useful
 Believed that we are responsible for
what we know and what we do not
know
2. PLATO
 Obtained a good education in Athens
and devoted much of his life to politics
and writing poetry
 One of Socrates’ most brilliant pupils
 Founded The Academy- a philosophical
school
 Contributions:
 the Laches- dealt w/ courage
 Charmides- about common
sense
 Euthyphro- about piety
 Lysis – about friendship
Ma. Edralin Louise G. Santos | ABM 12-10
  Protagoras- taught goodness
 The Apology and Crito- dealt
w/ historical events in relation
to Socrates
 The Republic- one of his most
famous work w/c deals w/
Socrates’ discussion on justice
and its meaning to individuals
and city-states.
3 Classes in a City State:
1. Rulers –emerge as the
most intelligent members of the state
2. Guardians- implements
peace and order
3. Workers – perform tasks to
ensure that the city state runs smoothly
3. ARISTOTLE
 Joined Plato’s The Academy
 Founded The Lyceum- a philosophical
school
 Earliest writings were in the form of
dialogues
 Contributions
a. Developed the Scientific Method
b. Writings include:
 Rhetoric
 Eudemus ( On the Soul)
 On Philosophy
 On Prayer
 On Education
 The Topics and Analytics- dealt w/
logic, a study of reasoning, and
dialectic, w/c is a method of argument
VIRTUE ETHICS
Virtue- equivalent to the Greek word arete
(meaning excellence)
Virtue ethics- a person based ethics w/c looks
at the moral character of the person carrying
out a particular action.
 It is necessary for this to focus on
helping people become good members
of the society
 Aristotle and Plato were considered
virtue ethicists
 Aristotle – came up w/ the first
description of virtue ethics on his book
Nichomachean Ethics
BUSINESS ETHICS PRELIMENARY REVIEWER
- Believed that when people have good
character traits, they can control and
manage their emotions
- Believed that an individual needs to
practice virtue to be righteous and he
was not contented w/ just knowing
what is good
- He was not in favor of the unity of
virtues
 Plato- discussed key virtues (wisdom,
courage, temperance & justice) in The
Republic
- Emphasized the necessity of virtue to
achieve happiness
- “To do what is good is to know the
good”
If one is wise, all the other virtues will
follow
- Believed that all virtues should be
united to achieve happiness
HISTORY OF BUSINESS ETHICS
1. Early Years
 Aristotle discussed economic activities
and emphasized the negative
consequences of greed w/c he
described as “the unnatural use of
one’s capabilities in pursuit of wealth
for its own sake”.
 Aristotle also had the first recorded
definition of the term fair treatment
 John Locke’s key philosophy on the
defense of property as a natural right
helped build the foundation of business
ethics
 Adam Smith explained that the
common good is associated w/ 6
psychological motives and that each
individual has to produce for the
common good
 John Stuart Mill, Immanuel Kant,
G.W.F. Higel were the contributors to
the emergence of bus. Ethics. They
wrote about disruptive justice and
fairness
*Disruptive Justice- can be equated to Adam
Smith’s Equity Theory. Employees believe that
whatever they contribute to the org. should be
commensurate to what they will as outcomes
 John Rawls propagated the Difference
Principle
Ma. Edralin Louise G. Santos | ABM 12-10
*Difference Principle- emphasizes equality in
society
- holds that each person has a set of equal basic
rights and they are all given equal opportunity
regardless of positions occupied
2. New Gen. Ethics
 Frank Chapman and Phillip D. Fox
wrote Business Ethics w/c is the 1st
managerial textbook in bus. Ethics. It
distinguishes between right and wrong
transactions common in business
organizations.
 In the 1960s, there was a wide interest
in bus. Ethics and it emerged as an
academic field in the 1970s
 Hunt and Videll developed one of the
ethical decision making models w/c
discusses how an individual is prompted
by a situation and eventually recognizes
its ethical content
 Ferrell & Gresham (1985), Trevino
(1986) and Jones (1991) contributed
ethical decision models w/c emphasizes
that co-employees and peers are most
influential in ethical decisions
 Ferrell and Fraedrich published a book
that defines the ethical standards to be
followed in bus. orgs.
 Katherine Nelson and Linda K. Trevino
wrote a book w/c addresses ethical
decision making, the ethical problems
encountered by managers and how
they can comply ethically and legally
from a managerial pov.
 Bus. ethics was taught in educational
institutions through the establishment
of centers of business ethics
 Bentley University’s Center for Bus.
Ethics pioneered on activities that
supported bus. ethics and research
 Publications were released consistently
in a span of 10 yrs. Some of the
publications were:
Business Ethics (1982)
Business Ethics Quarterly (1991)
Business Ethics: A European Review
(1992)
 The Defense Industry Initiative on Bus.
Ethics and Conduct of the U.S. Gov’t
was established in 1986 and acted as a
guide in the practice of ethical conduct
organizations
BUSINESS ETHICS PRELIMENARY REVIEWER
 The development of bus. ethics as an
academic discipline as well as a policy
in orgs. happened in the 1990s.
 Bus. ethics grew rapidly towards the
2000s , massive scandals became
widespread around the globe
 the Sarbanes-Oxley Act was passed in
2002 in the U.S. to address the loss of
confidence in financial reporting. This
act tightened accounting control for all
orgs. and transparency on all financial
reports was the key.
LESSON 4: BELIEF SYSTEM AND ETHICS
 Ethics CANNOT be separated from
religion and belief
 Religion is embedded in the culture of
every society and influences people’s
way of life.
 to act ethically is a two-way process:
1. Finding out what should be done (use
of theory)
2. The actual act of doing it (use of moral
character)
THE WORLD’S 8 MAJOR RELIGIONS
1. Judaism
 12-17M followers
 Divided into 3- Middle Eastern or
Oriental Jews, Sephardic Jews (Spain
and Portugal), Ashkenazi Jews (Europe)
 Traced its roots from the covenant
made between God and Abraham
 Ten Commandments- included in the
covenant w/c embody the core values
of Judaism
11 CORE JEWISH VALUES
i. Honesty - truthful
ii. Integrity – consistency in words
and actions
iii. Brit – always keeping one’s
words
iv. Loyalty – developing trusting
relationship
v. Tzedakah – refraining from
being judgmental and doing
acts of charity to the poor
vi. Chesed – kind and merciful
vii. Respect for Human Dignity –
respect for human life
Ma. Edralin Louise G. Santos | ABM 12-10
 viii. Respect for Law – practice of
good citizenship
ix. Accountability – being held
accountable for his/her actions
x. Taking responsibility
xi. Tikkun Olam- we can
contribute something to make
the world a better place
BELIEFS:
 Have a high regard for work
 A person should be concerned w/ the
welfare of others (similar to
Christianity)
 To acquire wealth through profit in
business is wrong because it leads to
envy or greed
 A person should have the things needed
for survival and happiness (similar to
Buddhism)
Rules/ Beliefs in Bus. Orgs:
 Employers and employees have
different set of rules to follow
 Employers should be aware of the
extent of their employees’ capacity and
are not allowed to insult or embarrass
them.
 Employers are not permitted to
withhold salaries because of debt
 Employees should be allowed to go
home before sun sets during Sabbath
and holidays
 Employers are required to pay
employees fairly and on time
 Employees should be given privileges
e.g. work breaks, freedom to organize
themselves
 Employees should be productive
2. Christianity
 2B followers
 Has 3 main branches: Catholic,
Orthodox, and Protestant
 Christian Bible- the main guide to
determine what is ethical and moral
 Traces its roots to Judaism w/c based its
principles on the Old Testament (the
covenant between God and Abraham).
The Old Testament laid the foundation
of the New Testament (w/c brought the
ministry of Jesus and the Apostles to
the world)
BUSINESS ETHICS PRELIMENARY REVIEWER
 Ethics in Christianity is trifold
i. The values propagated in
Christian beliefs are based on
Christian Scriptures
ii. Behavior is related to the
behavior of Christian prophets
iii. Ethics is based on the standards
of belief taught by Jesus
BELIEFS:
 Believe in a loving God who created the
universe
 To do good or evil is a choice
 The basic Christian tenets come from
the Ten Commandments
 Supreme norm for Christian ethics is
Jesus Christ
*Jesus Christ- the central figure in all Christian
teachings
3. Hinduism
 Centered in South Asia with 85%
followers living in India
 Worships Brahman- considered the
source of ultimate oneness in the
forms of gods and goddesses
 Vedanta- the ethics of Hindus for
practical life
BELIEFS:
 Present life is brought about whatever
actions or behaviors they have done in
the past
 there is a continuous cycle of
reincarnation and their end goal is
freedom from the law of karma
*Karma- act or deed, whether good or bad,
which may result in either happiness or
misfortune
- can be describes as a cause and effect: “what
you sow, you reap”
*Law of Karma- sufferings, diseases, poverty
and other hardships are brought about by evil
actions in their past lifetime
 how the work is done is more
important that what work is done
 wise men of India should possess the
highest standards of conduct for they
are considered to be the most
knowledgeable and intelligent
Ma. Edralin Louise G. Santos | ABM 12-10
Beliefs in Bus. Orgs:
 Workers value commitment to work
and they are held accountable for
results
 Workers protect the interest of the org.
they work at
4. Buddhism
 350 M followers w/ 1/3 residing in
China and w/ 90% of Thailand’s
population
 Siddhartha Gautama- known as the
Buddha or “Enlightened One” whose
teachings is the basis of beliefs
- NOT a god but is considered by
Buddhists as their end goal
BELIEFS:
 Believe in the cycle of rebirths and part
of this rebirth is suffering (just like
Hindus)
 End goal is to let go of all selfish
BELIEFS:
yearnings and hostility by purifying the
heart
 To reach end goal, they meditate until
they reach Nirvana
*Nirvana- point where all selfish attachments
to oneself are extinguished
 Do NOT be attached to worldly
possessions
Beliefs in Bus. Orgs:
 Do not acknowledge companies w/c do
not give importance to the environment
and animals
 People can engage in business activities
and may become wealthy but power,
status, and power should not hold them
5. Islam
 Started w/ the death of Muhammed
who is believed to be God’s last
prophet
 Allah is the Almighty God who is the
creator of the universe
- the source of good and evil and
whatever happens to humans is his will.
 Quran- holy book of Muslims w/c
provides basic principles on how to deal
w/ life
BUSINESS ETHICS PRELIMENARY REVIEWER
BELIEFS:
 Gambling is restricted
 They are NOT allowed to invest in stock
markets because it I considered
gambling
6. Confucianism
 Propagated by Confucius in China
whose teachings advocate stability by
organizing the society and place more
emphasis on the common good and
welfare of all through interdependence

 One of the 3 traditional religions in
China (2. Buddhism & 3. Taoism)
 Fundamental belief system of the
Chinese
 the most important core value in
Chinese business practice is
interpersonal relationships built on
trust and reciprocity
 Profit should be acquired w/
righteousness
 Bus orgs. should attend to the needs of
stake holders
7. Taoism
 30 M followers who are found in
Taiwan and other Chinese minorities
 Based on the Tao Te Ching or the Book
of Way and Virtue by Lao Tzu
 Promotes inner peace w/in an
individual and harmony w/ the
surroundings
 Tao- the path/ way
- considered as the cause of everything
- 3 Tenets of Tao:
i. Tao - refers to the universal law
of nature.
ii. Wu Wei- letting go
iii. Yin & yang – dualism or
interconnecting opposites
- Black dot in white area represents
that there may be opposing aspects of
the other w/in itself and vice versa
8. Shintoism
 Ethnic religion of Japan
 Shinto comes from the Chinese words
’Shen´- divine and ‘Tao’- way of spirits
Ma. Edralin Louise G. Santos | ABM 12-10
  A way of life rather than a belief occasions. People are always ready to
 Kami- sacred spirits worshipped by help in the best way possible
Shintos w/c can be found in nature 5. Hardworking- Filipinos value their work
even when they earn less
BELIEFS:
- Many Filipinos strive to earn a living for
 Ethical principles were inspired by their families
Confucianism: all human beings are 6. Loving and Caring – Filipinos are sweet
basically good, and the world is good as and expressive. They can easily show
well their affection to others through
 People and kami co-exist so one must gestures, facial expressions and the like
respect nature  NEGATIVE TRAITS
 Encourages group effort w/c recognizes 1. Fatalism
individuals in a group 2. Crab mentality
3. Complacency
4. Shame or Hiya
LESSON 5: THE FILIPINO VALUES SYSTEM 5. ‘Don’t be Caught’ Attitude
6. Rationalism
Values- principles or standards of behavior w/c
can be taken individually or as a group

- Held according to context: FILIPINO WORK VALUES

 It can be objective if it is a value that 1. Orderly Environment – physical
should be upheld by all conditions with which Filipinos are very
 It becomes subjective if it is a value for particular
a single individual 2. Strong Family Ties – attachment to the
family
THE ROOTS OF FILIPINOS VALUES 3. Interpersonal Relationship- values of
utang na loob by returning them in
- Filipino values can be explained in 4 ways some ways and amor papio
1. Filipino values take a universal stance
but have become distinctly Filipino. * utang na loob- acknowledging the favors
2. The aspects of our values can be found * amor papio or the sense of honor
in other cultures and value systems
3. Universal values have their own distinct 4. Material Well-being – the desire of
Filipino meanings Filipinos to acquire recognition,
4. Filipino values have evolved historically, security, and economic gains
and the consciousness emanates from a 5. Occupational Excellence – Filipinos
set of events exert best efforts to succeed in their
respective occupations
FILIPINO TRAITS 6. Religiosity- the exercise of ones faith
 POSITIVE TRAITS but not in the conflict w/ the Filipino
1. Hospitality- Filipinos are generally work life
warm and excellent hosts
2. Respectfulness- signs of respect
includes:
 Saying po and opo to elders
 Putting hands of the elders to their
foreheads (mano)
 taking a bow to those with high
positions
3. Strong Family Ties and Religion-
Filipinos are known for keeping their
families intact.
4. Generosity and Helpfulness – the spirit
of bayanihan is evident on many

BUSINESS ETHICS PRELIMENARY REVIEWER Ma. Edralin Louise G. Santos | ABM 12-10