Ethical Issues and Problems in Business and the Corporate World

Lesson 4

Introduction
  Business

is a productive human activity that brings beneficial contribution to both people and society. produces employment, fair deals, creativity, advancement of technology, customer satisfaction, among others. is also an activity that provides an opportunity for some unscrupulous people to take advantage of others:
 

  Business

  Ironically, however, business

e.g. the abuse of fiduciary relationship between employers and employees and between the buyers and the sellers

1. Sexual Harassment

What is Sexual Harassment?   This is an issue in the corporate world that must be looked into because it can create a hostile and unhealthy workplace for the employees. . education or training environment. the Congress of the Philippines enacted the Anti-Sexual Act of 1995     For Declaring sexual harassment unlawful in the employment. this reason. and other purposes.

all forms of sexual harassment in the employment.”   Towards . students or those undergoing training. employees. education or training environment are hereby declared unlawful. this end. and uphold the dignity of workers. instruction or education. enhance the development of its human resources. applicants for employment.Anti-Sexual Act of 1995   “The State shall value the dignity of every individual. guarantee full respect for human rights.

hostile or offensive work environment. requests for sexual favors.The Civil Right Act of 1964 of United States of America   This is where our law was patterned defines sexual harassment as:   ”Unwelcome sexual advances. unreasonably interferes with an individual’s work performance or creates an intimidating.” . and other verbal or physical conduct of a sexual nature constitutes sexual harassment when submission to or rejection of this conduct explicitly or implicitly affects an individual’s employment.

” . coach. professor. having authority.Republic Act No. agent of the employer. 7877   Defines   sexual harassment as: Employer. supervisor. teacher. requests or otherwise requires any sexual favor from the other. regardless of whether the demand. influence or moral ascendancy over another in a work or training or education environment demands. trainor or any other person who. request or requirement for submission is accepted by the object of said act. employee. manager. instructor.

Why Sexual Harassment Occurs?   Sexual harassment occurs due to power struggle between men and women as a response to a real or imagined loss of power or as an expression of retaliation or a flexing of the new power. also happens because some organizations and managers allow it to happen. sexual .   This   Historically. harassment has always occurred but there used to be no label for such behavior.

things continue to change. More and more women joined the workforce. responsibility of men and women became more specialized.  The industrial revolution brought about changes in the traditional function of men and women which greatly increased gender specialization and formed a new kind of workplace in the western world. They moved into jobs that were traditionally held by men.   The   In . the past decades.

it may be a response to real or imagined loss of power. harassment is committed by a male against a female. it may be an expression of retaliation or flexing of the new power.   When   When . the balance is shifting.  As a result of these changes. Sexual harassment is one of the effect of this shift. committed by a woman towards a man.

Two Types of Sexual Harassment 1.  .  Quid Pro Quo harassment Harassment that creates a hostile environment 2.

      e.. Quid Pro Quo harassment   This means “this for that” (something for something) This is defined as requiring a sexual favor or interaction as a condition of employment or in exchange for an employment benefit (such as promotion.1.” . transfer. pay raise). A manager uses his authority to grant pay increases and promotions as a means to extort sexual favors from an employee.g. “go to bed with me and you will get that promotion you want.

or hostile environment in the workplace that interferes with work performance. religion. sex. type of harassment may be based on race. national origin. veteran status.2. marital status. or disability. offensive.   This . age. sexual orientation. abuses include verbal. Harassment that creates a hostile environment   In the hostile environment type of harassment. physical and visual conduct that creates an intimidating.

Some examples of a hostile environment
1.  2. 

3. 

4. 

Unwanted touching, patting, and pinching against a person Comments about your body, leering, wolf whistling, insults of a sexual nature, persistently pestering for a date. Displaying or circulating pornographic pictures with the intention of harassing someone / Posting of explicitly sexual materials Workplace blackmail- i.e. suggestion that sexual favors may further your career (or refusal may hinder it)

5. Green jokes 6. Obscene letters 7. Sexual propositions 8. Suggestive looks

The profiles of the Victim and the Harasser:
1. 

The victim as well as the harasser may be a woman or a man. The victim does not have to be of the opposite sex. The harasser can be the victim’s supervisor, an agent of the employer, a supervisor in another area, a co-worker, or a non-employee. The victim does not have to be the person harassed but could be anyone affected by the offensive conduct. The harasser’s conduct must be unwelcome.

2. 

3. 

4. 

more frequently the victim is in a position of lesser power than the accused. The most common example is the boss-subordinate situation. The victim should use any employer complaint mechanism or grievance system available.  It is helpful for the victim to directly inform the harasser that the conduct is unwelcome and must stop. Although the victim of sexual harassment and the person accused of sexual harassment may be peers. Harassment also occurs between customer/client and providers.       .

How Sexual Harassment Affects the Workplace   In   the study made by Rexbook Magazine in 1981: 140. The result revealed that 80%of the persons interviewed believed they have been sexually harassed. and gestures were the type of harassment which created a hostile environment or offensive work environment. jokes. The study also showed that used of words.     .000 men and women were interviewed pertaining to sexual harassment.

managers and co-workers.  It affected the individuals harassed and the person accused. It can also affect the bottom line of the employer. unfavorable publicity or the invasion of privacy. who may be innocent. such case can generate costly lawsuits.   . and affect the entire life of an organization and its members.

How to Prevent Sexual Harassment in the Workplace   A significant step an organization can take in preventing sexual harassment in the workplace is through creating a safe. secure. positive work environment by putting into practice a strong sexual harassment policy. example for policy development are:   Some .

  A broad anti-harassment/positive environment policy that includes a statement that specifically addresses sexual harassment A separate sexual harassment policy that covers all organizational members Separate sexual harassment policy.  3. one that addresses non-management employees and one that addresses management 2.1.  .

dreadful publicity.  Sexual harassment is very costly and causes low morale among employees and decrease in productivity. people are incompetent of   Annoyed. . scared. and ruin of an organization image that took years to establish. sexual harassment may result in costly lawsuits.   If not dealt with. disgraced performing well.

person. male and female.   Most . want a secure office. free from threats and apprehension.  Riddance of sexual harassment will come through the commitment of the organization and employees.

it is important to expose it regularly through:         Permanent posting on bulletin board Memos Articles in the organization’s newsletter Meeting and trainings   Training program may come up with various topics to support the anti-harassment programs and to assure each employee of a safe and harassment-free workplace environment . Even if the company already has a well-written policy.Communicating the Sexual Harassment Policy   The best policy is ineffective if it is not communicated well.

The Problem of Just Wage .2.

  The duty to preserve one’s life implies the duty to work and that each has a personal duty to take care of himself and not to be a burden to other.     Being compensated for a work done or for services rendered is the very essence of ‘work’. .Work and Compensation   Work is said to be for the purpose of obtaining economic gain for the laborer.   Most agreed that work is directed to the promotion of life.

harvest or commercial goods.  Compensation One is willing to work in exchange for remuneration or rewards he will receive from working. shares on profits. in-kind payments and other remunerative fringe benefits.     The main objective of compensation is to create a system of rewards that is equitable to the employer and employee.   It can be in the form of wages. . the general concern is that justice should be a substance of compensation. Thus.   Such remuneration may include both financial and non-financial compensation.

just wage is defined as the remuneration which is enough to support the wage-earner is reasonable and frugal comfort.”   A   The . “a just wage is the legitimate fruit of labor.The Question of Just Wage   A number of people all over the world commented on its definition and have argued on the appropriate criteria to consider in setting the so-called ‘Just Wage’. Catholic Church tells us.

00 P 367.00 P 367.00   Manufacturing   Establishments regularly employing less than 10 workers P 345.00 P22.00 P 367.00 P22.00 P22.00 P 345.00 P 404.DAILY MINIMUM WAGE RATES National Capital Region (NCR) Effective 01 July 2010   Non-Agriculture   P 382.00 P 367.00   Retail/Service less   P 345.00 P22.00   Agriculture (Plantation and Non Plantation)     Private   Hospitals with bed capacity of 100 or less Establishments employing 15 workers or P 345.00 .00 P22.

XIII.Philippine Constitution   Spread in various parts of the 1987 Philippine Constitution are specific pronouncements and mandates on the protection and promotion of the rights of workers in the public and private sectors. as indicated in letter “g” Sec 3 of Art. the workers are entitled to a living wage”   “That .

6727   The Wage Rationalization Act declared the policy of the State to rationalize the fixing of minimum wages and to promote productivity-improvement and gain-sharing scheme to ensure a decent standard of living for the workers and their families.Republic Act No. The minimum wage rates shall be adjusted in a fair and equitable manner. . considering existing regional disparities in the cost of living and other socio-economic factors.

  National Wage and Productivity Commission (NWPC)   Regional Tripartite Wages and Productivity Boards (RTWPB) These determine the minimum wage for Filipino workers   They handle the minimum wage rates of the workers of each and every region of the country. determination of wages must also be adequate and just.   .Government Agencies Involved   In our country.

Factors to consider in Formulation of Fair Wages 1. Laws and Regulations   Workers refers to the supply and demand for labor and the so-called economic conditions and underemployment. . should be paid in accordance with laws and regulations issued by the government. It requires that employers pay at least the minimum wage. External Market Factor   These 2.

cost of living relates to basic maintenance needs and it must be seriously considered in formulation of wages. A fair wage should be sufficient to meet the increase in cost of living. Prevailing Industry Rate Some claim that paying workers the average of what other companies are paying for the same job result in a fair wage. Cost of Living   The 4. However not all companies have a minimum wage high enough to maintain a decent standard of living.Factors to consider in Formulation of Fair Wages 3.   .

Duties.Factors to consider in Formulation of Fair Wages 5. . responsibilities. the size of the company. Organizational Factors   Assessment 6. nature of the job itself entails the formulation of a just wage. Job Factor   The of what type of industry the organization operates. and the organization’s profitability to justify its ability to provide fair wages to its workers should be considered. and the skills requirements of the job are probably the most considerable determinants of fair wage.

Factors to consider in Formulation of Fair Wages 7. . Individual Performance   The trend is that individual performance or productivity ratings affects the determination of wage/salary increases.

difference hinder the formulation of a perfectly common definition of fair wage. and businesses usually conclude that they are legally and morally right when they fulfill their mutual agreement with the employees. Some communities have a higher cost of living than others.Some Issues on Just Wage   The minimum wage mandated by the government is not a guarantee of a just and fair wage.   Organizations   Geographical .

have different interpretations of the justifiable pay for certain job position. skills. Thus. where wage is automatically adjusted with the increases of cost of living. is not usually met by majority of the employers.  Wage indexation to cost of living. the prevailing rate in industry alone could not perfectly establish a just wage. and tasks.   Companies .

3. Gift Giving and Bribery .

GIFT-GIVING   Is merely an act of extending goodwill to an individual in an effort to share something with particular others. gift to customers. and sometimes even during birthdays. New Year. is normally observed during special occasions like Christmas.   Giving   It . clients and business partners is a common practice in the business community.

To advertise To compete effectively against competitors 2.  3.  .Reasons why business usually engage in gift-giving 1.  4.  To show appreciation for a favor received To effectively establish goodwill with business partners.

The following are the common forms of Gift-Giving   Samples   Raffle   Patronage awards coupons / certificates   Rebates / cash refund   Padding expense accounts   Premiums   Prizes (rewards)   Tie-up promotions   Allowance   Free goods   Tips .

Is Gift-Giving Ethical or Unethical?   Business gift of clients and business associates can raise conflict of interest problems. is indeed difficult to determine the morality of giving gift. intentionally or not. is not always easy. end up in big trouble.   The   It . and knowing where to draw the line. clear point is that those who cross that line. between what is right and wrong.

all examples of giving and accepting gift and amenities qualify as bribery.   Not .  Most agree that accepting and receiving bribe is a violation of professional ethics. just as not all cases of taking another’s property should be considered theft. but we may not always find it easy to determine what is and is not a bribe.

  3.  Value of the gift Purpose of the gift Circumstances under which the gift was given or received Position between or relationship of the giver and receiver Acceptable business practice in the industry Company policy Laws and Regulations .  6.Factors in Determining the Morality of Gift-Giving 1.  5.  4.  7.  2.

was the identified to be a form of corruption and is generally immoral and for most is illegal. is intended to induce people inside the business or other organizations to make decisions that would be justifiable according to normal business or other criteria.   It   It .BRIBERY   It is defined as a practice of giving renumeration for performance of an act that is inconsistent with the work contract or the nature of the work one has been hired to perform.

  Renumerations, termed

as bribes, can be in a form of money, gift, entertainment, or preferential treatment. of bribery:

  Example
 

A motorist offered a certain amount of money to a police officer in order not to be issued a ticket for speeding.   A construction company shared percentage of its income to a civil servant in order to win a contract.   A narcotics smuggler bribed a judge to lessen criminal penalties.

Bribery is obviously unethical because of the following reasons:
  It

is generally used as an instrument to gain personal or corporate advantage. corrupts the concept of justice and equality

  It

  Bribery

produces cynicism and a general distrust of institution

  It

destroys people’s trust in the integrity of professional services, of government and the courts, of law enforcement, religion, and anything it touches. treats people as commodities whose honor can be bought and sold. It thus tends to degrade the respect we owe to other human beings.

  It

4. The Morality of Advertising

  Without   Sometimes. even . advertising. the mere presence of advertising can sell a product due to consumer perception that a heavily advertised product is a product of “good value”.  Advertising plays a very significant role in marketing goods and services. the consumers would not be aware of the presence of diverse products and services available in the market.

defines advertising as:   “any paid form of non-personal presentation and promotion of ideas. .famous marketing guru . goods. benefits and how it might serve the needs and wants of individuals. or services by an identified sponsor”   Wells and Burnett likewise defined advertising as:   “paid non-personal communication from an identified sponsor using mass media to persuade or influence and audience”   The primary purpose of advertising is to inform potential buyers of the availability of a certain product by providing relevant information on its uses.  Philip Kotler .

only becomes immoral when. the advertisements become deceptive.   From   It . misleading. in the attempt to persuade consumers. the use of advertising today has not been serving its intended purpose since very little information is conveyed to consumers and more often the information is not even useful. advertising in itself is not bad or immoral since it helps achieve the goals of both the seller and buyer. and manipulative.  However. the point of morality.

If an advertisement contains false statement and “lies”.   An   There .  There is only one criterion in evaluating the morality of advertising. and that is “truth”. then it is said to be immoral. Lying is immoral while falsehood is not necessarily immoral. are also shortcomings to this approach since the truth in advertising can be contrasted with either falsehood or lying. advertisement that conveys truthful information is morally permissible.

individual words. lie.   This may not occur not only through sentences but also through pictures. the picture is said to be deceptive.     An example of this is one where pictures from the box of the product do not look the same as the contents of the product. . in this case.Some Issues in Advertising Deceptive Advertising These are those which either make a false statement and therefore. or which represents the product without making any statement. or objects that can deceive our eye and mind.

  We are usually accustomed to ads that contain phases like: help. can be. help prevent. up to.   One example of a commonly used weasel word is “Help”   Help means to aid or assist. are used to imply what cannot be said.   Weasel words are used to avoid from a direct or straightforward statement.Use of Weasel Words   The use of weasel words is often complementary to ambiguity in advertising. fight. . as much as. help stop   Like.

claims that a pain reliever provides “extra pain relief” or is “50 percent stronger than aspirin.Exaggeration   Consumers might also be misled through exaggeration.” that it “upsets the stomach less frequently” or is “superior to any other nonprescription painkiller on the market” contradict evidence that all analgesics are effective to the same degree.   For example. . This occurs when advertisements tend to make false claims of the benefits of the goods or services which is actually unsupported by valid evidences.

femininity. curiosity.   Richard F. Some psychological appeals that advisers use to motivate people to buy products are: power. imitation. personal enjoyment. . acceptance. approval. It influences by implying that doing what is suggested will satisfy a subconscious desire. masculinity.Psychological Appeals There are some advertisements that are directed at arousing human emotional needs rather than reason. and often should not have to be effective. prestige. Taflinger defines psychological appeal as a visual or aural influence on subconscious mind and emotions. self-esteem and the most pervasive of all are sexual pitches.       Psychological appeal does not have to make sense.

  The average child is exposed to more than 40. Children generally remember what they see. movies and television shows are being linked to the selling of toys and other items featured in commercials with character stamped on various products. Kids are the most pure consumers in that they tend to interpret ads literally.   Children are special group of consumers who do not regard reason. .000 TV commercials every year.         The aim of advertisers is for the children to pester their parents to buy things for them.Ads Directed at Children Most advertisers have recognized that advertising to children is effective and eventually became a big business recently. Moreover.

devices and hazardous substance.Philippine Law on Advertising CONSUMER ACT OF THE PHILIPPINES   Article 108 of the act declares that “The State shall protect the consumer from misleading advertisements and fraudulent sale promotion practices. drugs.”   The Department of Trade and Industry is responsible for enforcing the provisions of the act. the Department of Health is the agency that oversees these products   With . respect to food. cosmetics.

False. Deceptive and Misleading Advertisement   Article 108 states that : it shall be unlawful for any person to disseminate or to cause the dissemination of any false. or other medium for the purpose of inducing or which is likely to induce directly or indirectly the purchase of consumer product and services. radio. deceptive or misleading advertisement by Philippine mail or in commerce by print. outdoor advertisement.” . television.

composition. drugs.  No claim in the advertisement should be made that is not contained in the label or approved by DOH It is unlawful to advertise any food. or is likely to create an erroneous impression regarding its character. Drugs. no person shall advertise any article or substance in a manner that is likely to be mistaken for such product. or device. cosmetic. device or hazardous substance that is false. drugs.  3. Cosmetics. cosmetic. value. Device or Hazardous Substance 1. unless the product actually complies with the prescribed standard. Where a standard has been prescribed for a food. quantity.Special Requirements for Food. or deceptive. 2. or safety. misleading.  . merit.

device. Drugs. or hazardous substance may be allowed unless such product is duly registered and approved by DOH. cosmetic. Device or Hazardous Substance 4. . or hazardous substance may not make use of any reference to any laboratory report of analysis required to be submitted to the Department of Health. Advertisement of any food. No advertisements for any food.Special Requirements for Food. Cosmetics. drugs. 5. drugs. cosmetic. unless such laboratory report is duly approved by DOH. device.

advertisers formed the Philippine Association of National Advertisers (PANA). Since then.Philippine Association of National Advertisers (PANA)   In 1958. the PANA has been engaged in a continuing campaign to regulate abuses committed by untruthful advertisers. PANA issued a Code of Ethics which includes the following statement of general principles:   The .

it cannot permit those practices that tend to impair this confidence. advertising aims to inform the consumer and help him buy intelligently. advertising depends for its success on public confidence.  Good  Good . Hence. Good advertising recognizes both its economic and social responsibility to help reduce distribution costs and to serve the public interest.

made on the merits of the product or service advertised. and trustworthy.  Good  Good . It is accurate. Good advertising tells the truth. advertising conforms not only to the laws but also to the generally accepted standards of good taste and decency and to moral and aesthetic sentiments of the country. advertising seeks public acceptance on the basis of positive and constructive statements. honest. rather than by the disparagement of competition.

 Good

advertisement does not allow any activity that involves the exploitation of the goodwill, attached to any other firm, product or service. It does not imitate or stimulate trademarks, firm names, packages, labels and such advertising devices as illustration, copy, layouts, or slogan. advertising helps to dignify the individual and contribute to the building of a civilized society.

 Good

5. Office Romance

  Surveys

says that somewhere from 25-33 percent of the employees at a given company have had office romances once in their careers. three-fourths of the people in the survey believe that a romance at the office is acceptable. believe that it is uncalled for and unprofessional to mingle romance with business purposes.

  About

  However, other

romance is likely to happen as long as men and women work together. romantic relationship.What is Office Romance?   It is defined as a relationship between two people who are employed by the same organization. is characterized by mutual attraction between the parties and a desire for a personal.   It   Office .

  Top   Conversely. they   This . is why a lot of companies come up with a policy that covers office romances and educate all employees or the guidelines and effects through trainings and seminars.The Company’s Stand   The company is trapped in the middle of office romances present in the organization. do not want a workplace where employees are uncomfortable to work. management does not want to interfere unduly with their employee’s personal life and their right for privacy.

mutual support to each other at work. Employees involved in a love relationship overcome rough times at work because of mutual support and inspiration. and other personal experiences. Romance becomes the reason to keep their jobs.         . Love and companionship in the office give the employees the relief and reason to overcome problems that come along their way.Benefits of Office Romance   These benefits include friendship. Employees tend to view work as fun even when pressures begin to pile up.

Disadvantages of Office Romance   Damaged   Disturb professional reputations co-workers in productivity   Changes   Dating the boss affairs   Extramarital .

  Policies regarding office romance need to be decided with vigilant thought and prudence. but may want to lessen the bad effects.Ethical Issues in Office Romance   Interventions Some companies want to restrict their employees to engage in office romance.   For example: some companies may allow relations between coworkers with the same rank. in order to respect the rights of all members of the organization.     Legal   / Ethical Considerations When one or both involved parties are required to leave the company. this risks legal encounters. . Others are in favor of the positive effects of office romance.

or would want to remove the other person involved.   One of the persons involve in a failed romance may seek vengeance.   There are few reasons why this issue may exist. . One may consider flirting acceptable which may eventually lead to a romance.   There may be misinterpretation on the part of each party. may try to revive. while another may consider it offensive and therefore. a harassment.  Sexual   Harassment Sexual harassment may sometimes arise when a bad workplace romance is terminated.

The Problem of Fair Pricing .6.

though some factors are considered such as: a)  The cost of material b)  Operating and marketing expenses c)  A reasonable profit margin     These factors constitute to set price fairly though it is not enough to provide a precise answer on what a fair price is. . a fair price is one that man has not yet resolved.  In general. One should assess the factors on which the price is based and the processes that determine it.

  D.Ethical Issues in Fair Price A. .  F.  B.    True cost of the product is concealed Suggested retail price Use of electronic scanners Promotional pricing Follow the leader pricing Price gouging Price fixing The “Suki” system of the Filipino business compromises the fair price of a regular customer from the new ones.  E.  C.  G.

Trade Secrets and Corporate Disclosure .7.

and other competitively valuable information.TRADE SECRET   A trade secret is the legal term for confidential business information. Examples of trade secret include customers identities and preferences. company finances. manufacturing processes. financial information. vendors. marketing strategies. employee data. That piece of information allows the company to compete effectively. production cost or sales data. and documents memorializing important negotiations     . These includes essentially any confidential business information such as customer lists. product pricing.

theft. of trade secret information. and other illegal matters. example.   Trade   For . wrongful taking.Trade Secret Act   The Trade Secret Act prevents wrongful taking of confidential or secret information. A wrongful taking can occur in a variety of manners. breach of fiduciary obligation. the taking of information would be wrongful when the taking is a breach of contract. secret law prevents misappropriation.

CORPORATE DISCLOSURE   According   to De George: The moral basis for corporate disclosure rests primarily on the following arguments: 1.     The first basis speaks of information required for a fair transaction. A transaction is considered fair if the person has the appropriate information needed for the transaction . Each person has the right to the information he needs to enter into a transaction fairly.

it is clear that a person is not morally permitted to harm others.2.   As stated in the law.   . But a person is permitted to do something that “might” cause others harm. The second basis speaks of the moral responsibility of the person. Each person has the right to those actions of others that will seriously and adversely affect him or her.

8. Product Misrepresentation .

  Unintentional misrepresentation – a scenario whereby the person is not aware and does not deliberately act on misrepresenting things.Misrepresentation   Misrepresentation is observed when there is a transformation of information to misinformation. . It is a situation where the person involved believes that it is the right and acceptable things to do. 2. There are two types of misrepresentation: 1. It is commonly called as white lie.  Intentional Misrepresentation – a scenario whereby the person is fully aware or deliberately misrepresents things. commonly known as lying.

takes place when the person’s action are not in congruence with his thoughts with the intention to deceive others.   It happens when somebody tries to convince others with untrue statements.   A lie therefore.   St.Definition of Lying   Lying can be defined as the act of making others believe something that they. themselves. Augustine   defines lying as: A speech that is contrary to what the person is thinking with the intention to deceive. do not believe in. .

is the act of making a statement from which false conclusions may be drawn eventually misleading others. .   Statement like: I was at the office around 8:00 a.m.Types of Lying Use of ambiguous terms   It Use of false statements   It is the act of deliberately using vague terms or open-ended statements that can have several meanings to mislead people that one is telling the truth.   This is often observed in advertising a product to be the “best-seller” brand.

  Example: when someone is caught red-handed of stealing and still denies the accusation is an intentional or unintentional act of hiding the correct information which eventually mislead others. .Type of Lying Through action   It Suppression of correct information   It is a type of lying where the person gets caught in the act of wrongdoing.   This act is sometimes observed in some crime scenes wherein a witness conceals he truth for the sake of his own security.

Direct misrepresentation   It is characterized by actively misrepresenting something about the product or service. It is passive deception and not as obvious compared to direct misrepresentation. 2. But it still contributes to the impression that businessmen are liars and are out to make quick moey. Indirect misrepresentation   . It gives the business a bad name because deception and lying are used in the process of selling the product to the customers. It is characterized by omitting adverse information about the product or service.Business Practices Involving Misrepresentation and Lying Other Type of Misrepresentation 1.

Some examples of misrepresentation Direct Misrepresentation   Deceptive Indirect Misrepresentation   Caveat packaging   Adulteration   Misbranding or mislabeling   Short weighing   Short-changing   Short measuring   Short numbering   Misleading advertisement Emptor (let the buyer beware)   Deliberately withholding information   Business ignorance .

9. The Morality of Labor Strike .

is a tactic often employed by labor unions during collective bargaining with an employer. regardless of the origin of the dispute.Strike Action or Strike   It describe collective action undertaken by groups of workers in the form of a refusal to perform work. an ordinary usage. the term strike is often used to describe all work stoppages.   This   In .

. and safety. hours.Workers go on strike for different reasons:   For higher compensation   To improve the workplace   For shorter working days   To stop their wages from going down   For more benefits   Because they think their company has been unfair  Conditions for employment include wages. and several other circumstances that affect the work of the workers. sanitation.

What are the Basic Rights of Employees?   LABOR   This CODE OF THE PHILIPPINES is an act to strengthen the constitutional rights of workers to self-organization and free collective bargaining and to penalize unfair labor practices. .

but refuse to work. .TYPES OF STRIKE Sit-down Strike   This General Strike   This is a strike in which workers show up to work. is a strike affecting all areas of a labor force across many industries. typically throughout an entire country or a large section thereof.   It may include preventing transports from entering or living in an institution or a company.

.TYPES OF STRIKE Sympathy Strike   This Jurisdictional Strike   This is a strike initiated by workers in one industry and supported by workers in a separate but related industry. refers to a concerted refusal to work undertaken by a union to assert its members’ right to particular job assignments and to protest the assignment of disputed work to members of another union or to unorganized workers.

is against the will of the leadership of the union. .TYPES OF STRIKE Economic Strike   This Wildcat Strike   This is based on a demand for better wages or benefits than the employer wants to provide. or without a unon.

is a kind of strike forcing employers to recognize and deal with them.TYPES OF STRIKE Slow down Strike   This Recognition Strike   This is a form of work stoppage in which employees deliberately reduce their individual production. .

Is There a Right to Strike?   The right to strike is integral to the process of wage bargaining in an industrial economy. who are willing to work for a strike and the employer who wishes to hire them have a legitimate right to do so. employee has a right to withhold his labor services from an employer if he does not like the pay and benefits the employer offers.   Any   Workers .

Whistle-Blowing .10.

or other illegal or unethical conduct connected with the workplace. fraud. and who decides to speak out publicly about it. .Whistle-Blowing   This is the disclosure by an employee of confidential information which relates to some danger.   Whistle-blower   This is someone in an organization who witnesses behavior by members that is either contrary to the mission of the organization. or threatening to the public interest. be it of the employer or his fellow employees.

Are in violation of human rights. employee. . or officer of any institution who believes that he has been ordered to perform some act or he obtained knowledge that the institution is engaged in activities which: a)  b)  c)  d)  Are believed to cause unnecessary harm to third parties.Whistle-blower   He is a person. and Informs the public of this facts. Run counter to the defined purpose of the institution or organization.

Types of Whistle-Blowing Internal Whistle-Blowing   This External Whistle-Blowing   This occurs within the organization. regulatory body. public interest groups. . It is revealing illegal and immoral activities within the organization to outside individuals or groups such as media men.” occurs outside the organization. It is going “over the head of immediate supervisors to inform higher management of the wrongdoing. or non-government organization.

Alumni – those who blow the whistle on former employers.  D.  Current – those who blow the whistle on present employers.  C.Kinds of External Whistle-blowing A. B.  . Open – whistle-blower discloses his identity Anonymous – whistle-blower who does not disclose his identity.

External Whistle-Blower  External whistle-blowers experience each of the following forms of retaliation:  Lost their job or were forced to retire  Received negative job performance evaluations  Had work more closely monitored by supervisors  Were criticized or avoided by co-workers  Were blacklisted from getting another job in their field .

Internal Whistle-Blower  Internal whistle-blowing produces less retaliation but also experience severe emotional effects of their whistle blowing activity:  Severe depression on anxiety  Feeling of isolation or powerless  Distrust of others  Declining physical health  Severe financial decline  Problems with family relations .

11. Multi-level Marketing (MLM) and Pyramiding .

is a system of selling through many levels of distributors. thus the word “multi-level Marketing” gets a percentage on the price of the product being sold.Multi-Level Marketing   Multi-level marketing is a system of selling in which one signs up other people to assist him.   It   Each . and they in turn. recruit others to help them. This is also known as direct selling companies.

  Common         companies of this type are: Avon Cosmetics Triumph International Sara Lee Direct Selling Tupperware Phils. .   Most became successful because the main focus of their activities is the product sale.

Pyramiding   In the classic “pyramid” scheme. hallmark of these schemes is the promise of skyhigh returns in a short period of time for doing nothing other than handling over your money and getting others to do the same. participants attempt to make money solely by recruiting new participants into the program.   The .

  Pyramid schemes focus on the exchange of money and recruitment.   At   Each . the heart of each pyramid is typically a representation that new participants can recoup their original investments by inducing others to make the same investments. person you bring to your pyramid is promised future monetary rewards or bonuses based on your advancement up the structure.

But eventually the pyramid will collapse. Many losers pay for a new winners. At some point the schemes get too big.  The fraudsters behind the pyramid scheme may go to great lengths to make the program look like a legitimate Multi-level marketing program. But despite their claims to have legitimate products or services to sell. lose their money. these fraudsters simply use money coming in from new recruits to pay off early stage investors. the promoter cannot raise enough money from new investors to pay earlier investors. and many people except those at the very top of the pyramid.     .

  Pyramid   It operates on recruitment. starts with one person that encourages six participants to join.   At . The pyramid will collapse when no new participants can be recruited. The 6 recruits will again get six to join making the number involved 36 and will recruit and recruit till they reach 1296 participants in the pyramid. the 13th level they need to have 13 billion new recruits which is impossible to sustain the pyramid.

The Difference between Multi-Level Marketing and Pyramid .

3.  Consumable.  Legal 2.  Income generated only on product sales. No legitimate economic function such as no economic benefits.  Illegal Income is generated solely on the process of recruiting others into the pyramid.  4. 5.MULTI-LEVEL MARKETING (MLM) PYRAMID 1. 4. . Few retail sales and high cost. 1. but a mere transfer of money from one person to another without legitimate business.  2. slower moving products. No training program.  Services legitimate economic function such as a channel of distribution for relatively small or new companies with excellent products.  3. reasonably priced quality products.  5.  Provides training program.

. Recruitment is optional. Little effort or no effort is being made to sell to the public. Earnings are ultimately tied to product consumption of end users. 10. 10. 7. 7. Recruiting participants get benefits from recruitment. 9. Earning are tied to the act of recruitment. 9.Bonus entitlements are based on goods absorbed by members within the structure. Enormous efforts to sell are exerted. 8. 8. Sponsoring participants earn nothing by mere sponsoring. Bonuses are based on sales to final users who are not members of the scheme. Largely.MULTI-LEVEL MARKETING (MLM) PYRAMID 6. Products are consumed internally within the organization. products are sold to the consuming public. 6.

to them.   According .You might just be a victim of a pyramiding scam. if the answer to any of these statements is no. then beware.  The Direct Selling Association of the Philippines or DSAP presented the final 8-point test to determine a pyramiding company.

  Are there legitimate products? 2.  Is there a correlation between recruiting and distributor’s commissions? 8.1.  Is there and intent to sell the products? 3.  If recruitment is to be stopped today.  Is there a product return policy? 6.  Is there a compelling reason to buy the products being offered? 5.  Will you receive commission on the joining fees of your prospects? 7.  Do the products have fair market value? 4. will participants still make money? .

its gears will grind up the money. the only money that may be made isn’t from the product or service but from the losses of people down the organization . Out of control by design. time and entrepreneurial energy of the wellmeaning who joined to supplement their income. It is unstoppable. and so on until the market is saturated.Market saturation: An inherent problem in a pyramid. When the inevitable destiny occurs. It is designed to recruit so many salespeople. a human “churning” machine with no “off button”. who in turn will attempt to recruit more salespeople.   Pyramid’s design can saturate the market with no one noticing.

 The . 3. They con the public.Moral issues in pyramiding 1. intentions are bad. 2. making them believe that they are a legitimate MLM. Too much materialism and greed.

. 53   states of RA 7394 (the Consumer Act of the Philippines) that chain distribution plans or plans or pyramid sales shall not be employed in the sale of consumer products.Legal Issues of Pyramiding  The Department of Trade and Industry or DTI can take action under two existing laws.   RA 3883 or Business Name Law   which empowers DTI to cancel license of any business which does not conform with the registered business name or style.   Art.

  Beware the 8 point test presented in this chapter.Tips to consider when you make your decision before joining a plan: 1.  Consult 2. Just because a promoter of a plan makes a claim doesn’t mean it is true. . of plan that claim to sell miracle products or promise enormous earnings. Ask the promoter of the plan to substantiate claims with hard evidence especially when the claims abut the product or your potential earnings seem to good to be true.

doesn’t create new wealth. Remember that no amount of personal testimonial and affirmation that there is money to gain in pyramiding will dispute the fact that pyramiding. Do not pay or sign any contract in an “opportunity meeting” or any other high-pressure situation. 4. The only wealth gained by any participant is a loss by another participant.3. . Insist on taking your time to think over a decision to join.

Unfair Competition .12.

competition. competition becomes bad only when it eliminates a competitor like in cutthroat competition. practices include under cost selling or selling their products below cost just to get rid of their competitors.   Thus.   Some . firm can just relax and quality will   Without suffer.Is competition good or bad?   Competition is healthy and can be a motivation for firms to produce better products or offer better services.

.   It is and extreme type of imperfect competition characterized by an lack of competition and a lack of viable substitute goods.   as a market situation where there is only one provider of a kind of product or service. since it is in all the members interest to maintain a stable market and profitable prices.   It is a type of imperfect competition where they can not dictate price like a monopoly can but the members of an oligopoly often turn into friendly competitors.Different Kinds of Competition Monopoly   Defined Oligopoly A situation where there are few sellers for a product or service.

the prices will go the same way   .   The prices are dictated by the law of supply and demand which states that when the supply is scare.Different Kinds of Competition Perfect Competition It is a situation in which no firm or consumer is large enough to dictate prices. the prices go up and when the demand goes down.

competition is a rivalry to serve the customer .   In a business competition.Difference Between a War and Competition   In a war.  In short. two or more parties are vying for the opportunity to provide the customer’s needs whether it’s a product or service. two contenders fighting hurl directly at each other.

Doing business with the goal of profit without regard to others. behavior and judgment. Attaining success in business through the merits of its products or services. .Difference between Fair and Unfair Competition   Fair competition is doing business under ethical rules of conduct.   Unfair competition is unethical business practice.

.  Violation of intellectual property right such as copyrights.  Defamation of a competitor or badmouthing a competitor to a consumer. trademarks and service marks.In general. unfair competition consists of:  Deceptive trade practices such as misinterpretation and false advertising.  Anti-competitive market practices such as under cost selling to kill the competitor. patents.  Caveat emptor or indirect misinterpretation by withholding information from the buyer.  Business interference to prevent competitor from continuing with it’s business process or business contract.

Government Measures: The Intellectual Property Code of the Philippines (R. facilitate transfer of technology. and ensure market access for our products. 8293)   It aims to provide an intellectual property and industrial property system which will enhance the development of domestic and creative activity. .A. attract foreign investments.

  Article   168 of R. and will protected as any other property rights. his business from those of others. 8293 is specifically about unfair competition on the use of trademarks. This article states that a person who has identified in the mind of the public the good he manufacturers or deals in. . service marks. and trade names.A. has property right in the goodwill of the said goods identified. whether or not a registered mark is employed.

The following shall be deemed guilty of unfair competition: A. either in the goods themselves or in the wrapping of the packages. which would likely influence buyers to believe that the products being offered are those of a manufacturer or dealer other than the actual manufacturer.  Any person who is selling his goods and gives the general appearance of the goods of another. .

  .B. or business of another. by any artifice. services. or device. C. Any person who shall make false statement in the course of trade or shall commit any other act in bad faith to discredit the goods. induces the false belief that such person is offering the services of another who has identified such services in the mind of the public.  Any person who.

Money Laundering .13.

drug trafficking.     .What is Money Laundering?   Money Laundering is the process of disguising illegally obtained money so that the funds appear to come from legitimate sources or activities. including illegal arms sales. robbery. and terrorism. Money laundering occurs in connection with a wide variety of crimes. racketeering. The principal objective of money laundering is to convert cash to some other form of asset to conceal the illegal sources or origin of cash income. fraud.

needed to show a legitimate source for these monies.  The Term "money laundering” is said to originate from Mafia ownership of Laundromats in the United States. and bootleg liquor. there were earning huge sums in cash from extortion. prostitution.   Gangsters   They . gambling.

It is also clear that money laundering extends far beyond hiding drug profits. size of the money laundering problem totals more than $500 billion annually worldwide. This is a staggering amount and detrimental by any calculation to the financial systems involved.   Estimated   Clearly .  One of the ways in which they were able to do this was by purchasing outwardly legitimate business and by combining their illicit earnings with the legitimate earnings they received from these businesses. the problem is enormous.

Money Laundering Process   Money laundering is a diverse and often complex process. It is during the placement stage that physical currency enters the financial system and illegal proceeds are most vulnerable to detection.physically placing bulk cash proceeds. Placement . . It basically involves three independent steps that often occur simultaneously: 1.

illicit funds are integrated with monies from legitimate commercial activities as they enter the mainstream economy. 3. During the final stage in the laundering process. Layering – separating the proceeds from criminal activity from their origins through layers of complex financial transaction. Integration – providing an apparently legitimate explanation for the illicit proceeds. Layering describes an activity intended to obscure the trail which is left by “dirty” money. .2.

if left unchecked or dealt with effectively.   Organized   The .Impact of Money Laundering in Society   The possible social and political costs of money laundering. and ultimately the democratic institutions of society. crime can infiltrate financial institutions. or bribes to public officials. collective ethical standards. are serious. acquire control of large sectors of the economy through investments. economic and political influence of criminal organizations can weaken the social fabric.

Laundering enables criminal activity to continue. Laundered funds provide financial support for drug dealers.   Organized . money laundering is inextricably linked to the underlying criminal activity that generated it.  Most fundamentally. and arms dealers and other criminals to operate and expand their criminal empires. terrorism. money laundering has devastating social consequences.

  3.  Transfer to and from the financial system Cross-border flows of cash . The Choke points identified are: 1.    Entry of cash into the financial system 2.How can the Government prevent it?   The Financial Action Task Force (FATF) on Money Laundering has identified certain “choke” points in money laundering process that the launderer finds difficult to avoid and where he is vulnerable to detection.

and counter-measures and promotes the adoption and implementation of FATF anti-money laundering standards globally.Financial Action Task Force (FATF)   The   role of Financial Action Task Force (FATF) is a multiple disciplinary body that brings together the policy-making power of legal. The FATF monitors members progress in implementing anti-money laundering measures. techniques.   . financial. reviews and reports on laundering trends. And law enforcement experts from its members.

14. Conflict of Interest .

ordinarily financial. that could be directly affected by the work of the committee. Does not apply to past and future interests. Applies not only to the personal financial interest of the individual but also to the interest of others with whom the individual has substantial common financial interest if these interests are relevant to the functions to be performed. It means something more than individual bias.Conflict of Interest   This occurs when a person act in a way that is to his advantage at the expense of the employing organization. There must be an interest. Applies only to current interests.       .

Another instance is using your government position to get a summer job for your daughter is one example. Self. you are the purchasing agent of your department and you accept a case of liquor from a major supplier. . you work for the government and use your official position to secure a contract for a private consulting company you own. For example.Dealing   For 2.Types of Typical Conflict of Interest 1. substantial gifts are another. Accepting Benefits   Bribery example.

In the first case. Influence Peddling   Here. This could be as obvious as stealing office supplies for home use.Types of Typical Conflict of Interest 3. the 4. say. while in the second. Using your employer’s property for private advantage   professional solicits benefits in exchange for using her influence to unfairly advance the interest of a particular party. it does not . using software which is licensed to your employer for private consulting work of your own. the employer’s permission eliminates the conflict. Or it might be a bit more subtle.

Types of Typical Conflict of Interest 5. is a risky situation can be one in which a person who resigns from a public or private employment and goes into business in the same area. Post-employment   Here example would be setting up a business on the side that is in direct competition with your employer. Outside employment or Moonlighting   An 6. .

namely. Conflict of interest interferes with professional responsibilities in a special way. but it could also be another sort of interest. say. to provide a special advantage to a spouse or child. Often this is a financial interest.Key Elements: 1.  There is a private or personal interest. 2.  . by interfering with objective professional judgment.

15. Inside Trading .

is being prohibited by the rules and regulations of the Security and Exchange Commission (SEC)   It .Inside Trading   This refers to the significant facts that have not yet made public and are likely to affect stock prices.

. officer of an exchange.  4.  3. or a person controlling the issuer.  2.SEC defines insider as: 1.  the issuer a director or officer of. A person who learns such information by a communication from any of the foregoing insiders. clearing agency and/or self-regulatory organization who has access to material information about an issuer or a security that is not generally available in public. gives or gave him access to material information about the issuer or the security that is not generally available to the public A government employee.

at the expense of the firm. (conflict of interest) use of information by someone within the firm to secure personal advantage over those not in the firm.Moral Arguments   De George cites 2 aspects of this particular problem: 1. (breach of loyalty) 2.  The .  One is that of someone within the firm using information for his own private gain.

renders the transaction b/w two contracting parties as unfair.   It   It . promotes greed and personal gain at the expense of others.Ethical Issues Relating to Insider Trading   It violates fiduciary relationships b/w insiders and outside clients.

but many ways of profiting from insider information do not benefit the company at all. Indeed.   . She contends by saying that employees have a duty to act in the interests of the firm and its shareholders.  Professor   Jennifer Moore argues that insider trading is wrong because it undermines the fiduciary relationship. they may seriously damage its interests. which is central to business management.

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