• Business ethics and social responsibility

• ABM 12
• Course content
• I. THE ROLE OF BUSINESS IN SOCIAL AND ECONOMIC
DEVELOPMENT
1. the nature of business organizations
2. the forms of business organizations
3. the purposes of establishing business
enterprises
•
4. the core principles underlying fairness, accountability,
and transparency in business operations
5. common practices in business organizations
• II. Foundations of the Principles of business ethics
1. classical philosophies
2. the impact of belief systems
3. the Filipino Value System ( utang na loob, padrino/suki,
bahala na, amor propio, Filipino family values
• III. SOCIAL RESPONSIBILITY OF ENTREPRENEURS
1. the responsibilities and accountabilities of
entrepreneurs toward:
1.1 the employees
1.2 government
 1.3 creditors
1.4 suppliers
1.5 consumers
1.6 general public, and
1.7 other stakeholders
2. ethical issues in entrepreneurship
2.1 personnel and customer relations
2.2 unfair competition

2.3 nonrespect of agreements

2.4 environmental degradation
2.5 other issues on basic fairness
3. models and frameworks of social responsibility in the
Philippines
• iv. Business beyond profit motivation
1. the importance of doing business beyond profit
motivation
2. introduction to social enterprise or social
entrepreneurship
• Business ethics defined
According to Fr. Floriano C. Roa
1. Business ethics is the study of what is the right and wrong
human behavior and conduct in business.
 2. Business ethics is a study of the perceptions of people
about morality, moral norms, moral rules and ethical
principles as they apply to people and institutions in
business
• Definition cont’d
3. Business ethics is the study, evaluation, analysis and
questioning of ethical standards, policies, moral norms and
ethical theories that managers and decision makers use in
resolving moral issues and ethical dilemmas affecting business
• Importance of ethics in business
-Without ethics, people, especially businessmen, will set
their own moral standards, rules and principles. This would
result into a kind of subjective morality, in which case, what is
good for one may be bad for another and vice versa.
-Business ethics opens a novel way of resolving moral
problems and ethical dilemmas such as, sexual harassment,
bribery, misrepresentation, theft, insider trading, conflict of
interest, which could not be resolved by quantitative approach
but by moral reasoning.
• The role of business in ethics
There are good business reasons for strong commitment
to ethical values:
1. Ethical companies have been shown to be more profitable.
2. Making ethical choices results in lower stress for corporate
managers and employees
3. Ethical behavior enhances leadership
4. The alternative to voluntary ethical behavior is demanding
and costly.
• SOCIAL RESPONSIBILITY EXPLAINED
The concept of social responsibility has various meanings
to different individuals:
- Banker, his social responsibility is to lend money
even to the poor producers, and not only to the rich ones
- Manufacturers, their social responsibility is to create
quality products and not to pollute the environment
• I. THE ROLE OF BUSINESS IN SOCIAL AND ECONOMIC
DEVELOPMENT
1. The Nature of Business Organizations
Business is a complex enterprise that involves major
activities:
1.1 Service Business – one which renders services to its
customers or clients.

1.2 Merchandising Business – a business entity

that is engaged in buying and selling or trading
1.3 Manufacturing Business - a business that
converts raw materials into finished products.

• 2. Forms of business organizations

2.1 Sole/Single Proprietorship – a business which is
organized, owned and managed by only one person. It is
registered in the name of the owner.
 2.2 Partnership – a business which is owned by two or
more individuals who contribute money, property or industry
to a common fund with the intention of dividing the profits
among themselves.
A partnership is usually formed by professionals.
e.g. lawyers, accountants, management analysts, and
doctors who render professional services
The partnership is said to be a general professional
partnership
2.3 Corporation – an artificial being created by operation
of law, having the right of succession and the powers, attributes
and properties expressly authorized by law or incident to its
existence.
The capital of a corporation is divided into shares of
stocks.
e.g. San Miguel Corp., ABS-CBN, Rang-ay Rural Bank Inc.
2.4 Cooperative. An association of individuals who
voluntarily joined together to achieve a common purpose for
the benefit of the members. Cooperatives are registered with
the Cooperative Development Authority. They are exempt from
income taxes and sales taxes.
• 3. Purposes of establishing business enterprises
People go into business for several reasons:
a. For personal satisfaction
b. To earn a living
 c. To serve the society through the goods and services they
offer to customers.
d. To improve the quality of life of the community
e. Most dominant reason, to make profit.
• Business organizations’ contributions to socioeconomic
development
1. Serving the most important needs of its customers
2. Providing gainful employment for its employees, so that they
can provide for their families and be responsible citizens.
3. Purchasing goods and services from its suppliers and service
providers
• Contributions continued
4. Competing intensely, but fairly
5. Forming strategic partnerships and alliances to create new
business opportunities
6. Supporting community infrastructure through taxes and fees.
7. Participating in the political process to improve market
conditions
8. Respecting the environment
• Core principles in business operations and stewardship
1. Fairness - policies rules and regulations should be
implemented and enforced impartially.
2. Transparency- means that decisions taken and their
enforcement are done in a manner that follows rules and
regulations. It also means that information is freely
 available and diaarectly accessible to those who will be
affected by such decisions. It also means that enough
information is provided in easily understandable forms
and media.
3. Accountability – it is imperative to make officers answerable
for their behavior, action, and decision and responsive to the
entity from which they derive their authority.
4. Respect for others’ property
• Common practices in business organizations
1. Sexual Harassment is an issue in the corporate world that
must be looked into because it can create a hostile and
unhealthy workplace for the employees. For this reason, the
Congress of the Philippines enacted the Anti-Sexual Act of 1995
or R.A. 7877 declaring sexual harassment unlawful in the
employment, education or training environment, and other
purposes.
• Types of sexual harassment
a. Quid Pro Quo harassment. Quid pro quo means “this for
that” (something for something). It means requiring a sexual
favor or interaction as a condition for employment or in
exchange for an employment benefit (such as promotion, pay
raise, and the like)
e.g. A manager uses his authority to extort sexual favor
from an employee, “Go to bed with me and you will get the
promotion you want”
b. Harassment that creates a hostile environment
 - unwanted touching, patting, pinching or brushing up
against a person
- comments about your body, wolf-whistling, catcalls,
insults of a sexual nature, persistently pestering for a date
- displaying or circulation of pornographic pictures with
the intention of harassing somebody/posting of explicitly sexual
material
- workplace blackmails e.g. suggestions that sexual favors
may further your career ( or refusal may hinder it)
- green jokes
-obscene letters, and suggestive looks
2. Work and Compensation (the problem of just wage)
- A just wage is defined as that remuneration which is
enough to support the wage-earner in reasonable and frugal
comfort. The Catholic Church teaches us that “a just wage is the
legitimate fruit of labor”
• Factors in the formulation of fair wages
a. External Market Factors. Refers to the supply and demand
of labor and the so-called economic conditions and
underemployment. Wages are relatively high if there is
scarce supply of labor and the same is low if there are
more opportunities for labor.
b. Laws and Regulations. Workers should be paid in
accordance with laws and regulations issued by the
government.
c. Cost of Living. The cost of living relates to basic maintenance
needs and it must be seriously considered in the formulation of
wages.
d. Prevailing Industry Rate. Some claim that paying workers
the average of what other companies are paying for the same
jobs results in a fair wage. However, not all companies have a
minimum wage high enough to maintain a decent standard of
living.
e. Organizational Factors. Assessment on what type of
industry the organization operates, the size of the company and
the organization’s profitability to justify its ability to provide fair
wages to its workers.
f. Job Factors. The nature of the job itself entails the
formulation of a just wage
e.g. duties, responsibilities, skill requirement, difficulty of
the job
3. Gift-giving and bribery
Gift-giving is merely an act of extending goodwill to
an individual in an effort to share something with them. Giving
gifts to customers, clients and business partners is a common
practice in the business community. It is normally observed
during special occasions like Christmas, and even during
birthdays.
• reasons
• To show appreciation for a favor received
• To effectively establish goodwill with business partners
• To advertise; and
 • To compete effectively against competitors
• Common forms of gift-giving
• Samples, raffle coupons/gift certificates
• Rebates/cash refunds, premiums
• Prizes, patronage awards/rewards
• Tie-up promotions
• Allowances, free goods; and
• Tips
• Is gift-giving ethical or unethical?
It is indeed difficult to determine the morality of giving
gifts. Most agree that accepting and receiving BRIBE is a
violation of professional ethics, but we may not always find it
easy to determine what is and is not a bribe. Certainly not all
examples of giving and accepting gifts and amenities qualify as
bribery
• Factors in determining the morality of gift-giving
a. Value of the Gift. Is it substantial enough to influence a
business decision? Again the term substantial is relative.
b. Purpose of the Gift. As long as the gift is not intended or
received as bribe and remains to be nominal, there
doesn’t appear to be any serious problem. e.g. gifts like
appointment books, calendars or pens with the donor’s
name imprinted on them may be perceived as a form of
advertisement
c. Circumstances Under Which the gift was Given or Received. A
gift given during holiday season, for a store opening, or one
attached to a special event is circumstantially different from
one unattached to any special event or occasion. Another
question is whether the gift was given openly or secretly.
Openly given gifts raise fewer questions than those gifts known
only to the donors and recipients.
d. Position Between or Relationship of the Giver and Receiver.
Could the recipient’s opinion, influence or decision result in
preferential treatment in favor of the donor? In a superior and
subordinate relationship for instance, the donor or the
recipient have to make it clear that they don’t allow the gift to
influence their actions and decisions
e. Acceptable Business Practice in the Industry
Could the act be considered acceptable in this kind of
business. When gratuities are an integral part of customary
business practice, they are far less prone to pose moral
questions.
f. Company Policy. If the firm explicitly forbid the practice of
giving and receiving gifts to its customers, vendors or suppliers,
associates, or corporate directors, then gift-giving would
normally be wrong.
g. Laws and Regulations. Certain federal, state or local
government institutions may impose laws that forbid accepting
gifts from firms with which they do business. When these gift
transactions violate the law, they are clearly unacceptable
BRIBERY
A practice of giving remuneration for performance of
an act that is inconsistent with the work contract or the nature
of the work one has been hired to perform.
 • Examples of bribery
• A motorist offers a certain amount of money to a police
officer in order not to be issued a ticket for traffic
violation.
• A construction company sharing percentage of its income
to a civil servant to win a contract
• A narcotics smuggler bribes 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.
• It corrupts the concept of justice and equality
• Bribery produces general distrust of institutions
• It destroys people’s trust in the integrity of professional
services, of government and the courts, of law
enforcement, religion and anything it touches.
• It treats people as commodities whose honor can be
bought and sold.
• 4. The morality of advertising
ADVERTISING. Any paid form of non-personal presentation and
promotion of ideas, goods, or services by an identified sponsor
(Philip Kotler)
Advertising plays a very significant role in marketing
goods and services. Without advertising, the consumers would
not be aware of the presence of diverse products and services
available in the market
The primary purpose of advertising is to inform potential
buyers of the availability of a certain product by providing
relevant information on its uses, benefits and how it might
serve the needs and wants of individuals.
From the point of view of morality, advertising in
itself is not bad or immoral since it helps achieve the goals of
both the seller and buyer.
There is only one criterion in evaluating the morality
of advertising, and that is, “to tell the truth”. An advertisement
that conveys truthful information is morally permissible. If an
advertisement contains false statements and lies, then it is said
to be immoral.
Advertising is not totally immoral. It becomes
unethical when the advertisement becomes
1) misleading, 2) deceptive, and 3) manipulative or
coercive
• Some Issues in advertising
a. Deceptive Advertising. Deceptive ads are those which
either make false statement and therefore, lie, or which
represent the product without making any statement
e.g. picture from the box of the product do not look the
same as the contents of the product
b. Use of “Weasel Words”. The use of weasel words is often
complementary to ambiguity in advertising.
 Weasel words are used to avoid or recoil from a
direct or straight forward statement.
e.g. the word “help”, helps prevent cavities, helps fight
hair fall
other weasel words: like, virtual or virtually, can be, as
much as, etc
d. Exaggeration. Consumers may also be misled through
exaggeration. Exaggeration occurs when advertisements tend
to make false claims of the benefits of the goods or services
which is actually unsupported by valid evidence.
e. g. 60% stronger than other pain relievers in the market
d. Psychological Appeals
Richard F. Taflinger defines psychological appeal as a
visual or aural influence on the subconscious mind and
emotions. It influences by implying that doing what is
suggested (buying the product or service) will satisfy a
subconscious desire.
Some of the psychological appeals that advertisers
use are: power, prestige, personal enjoyment, masculinity,
femininity, self-esteem
Consumer Act of the Philippines (R.A. 7394).
A law that regulates advertising in the Philippines
• 5. Workplace romance
Workplace Romance is defined as a relationship
between two people who are employed by the same
organization.
Disadvantages of workplace romance
a. Damaged professional reputation
b. Disturbed co-workers
c. Changes in productivity
d. Dating the boss
e. Extramarital affairs
• 6. Fair pricing
Price is a measure of value in exchange. It may be
expressed in monetary terms (a sale) or in non-monetary terms
(barter)
What makes a price fair?
A price is fair when its value is determined in an
exchange in which three conditions are met:
a. The buyer and seller must negotiate the terms of the
exchange voluntarily
b. Both buyer and seller must agree to the exchange without
unusual constraints
c. Both buyer and seller must have adequate information about
the things to be exchanged
• Ethical issues in fair price
a. The true cost of the product is concealed. Some
companies don’t show the real cost of the product with a
closed book policy under the clout of confidentiality.
b. Suggested retail price. The impact on the consumers of a
suggested retail price is one that is open to a lot of
 interpretations, making price determination subject to
doubt and suspicion
c. Use of electronic scanners. The use of electronic
scanners in grocery or department stores is not a tool proof
method of fair pricing. It is subject to manipulation and system
failure.
d. Promotional pricing. Promo prices such as on sale items
manipulate consumers in buying products that are thought to
be cheaper.
Odd Price Policy – uses odd numbers such as 49.99 instead
of 50. Odd price has a psychological impact on consumers
making them believe that they are paying a lesser price.
e. Follow the leader pricing. Follow the leader pricing is
done to purposely make the buyers believe that what is being
sold is the same as the well-known brands
f. Price gouging. Price gouging takes advantage of an
economic situation. Example, pricing goods higher during
typhoons
g. Price fixing. Price fixing uses the power of the retailer
among the producers correspondingly in controlling product
price
• 7. Trade secrets and corporate disclosure
-Trade secret is the legal term for confidential business
information. That piece of information allows the company to
compete effectively.
 Examples: customer identities and preferences, vendors,
marketing strategies, company finances, manufacturing
processes
• 8. Product misrepresentation
-Misrepresentation is observed when there is
transformation of information to misinformation( Alejandro
Gorospe)
Example...\..\Downloads\misrepresentation.jpg
-2 types of misrepresentation
a. Intentional misrepresentation – the person is fully
aware or deliberately misrepresents things commonly known as
lying
b. Unintentional misrepresentation – a scenario whereby
the person is not aware and does not deliberately act on
misrepresenting things.
9. WHISTLEBLOWING
Whistleblowing is the disclosure by an employee of
confidential information which relates to some danger, fraud or
other illegal or unethical conduct connected with the
workplace, be it of the employer or his fellow employees.
• 10. Pyramiding
- In pyramid scheme, participants attempt to make money
solely by recruiting new participants into the program. The
hallmark of these schemes is the promise of high returns in a
short period of time.
11. UNFAIR COMPETITION
 -Competition is healthy and can be a motivation for firms
to produce better products or offer better services.
- Competition becomes bad only when it eliminates a
competitor like in cutthroat competition. Some practices
include under cost selling or selling their products below cost
just to get rid of their competitors.
* Intellectual Property Code of the Phils. (R.A. 8293 is
specifically about unfair competition on the use of trademarks
and trade names
• 12. Conflict of interest
-Conflict of interest in the business context occurs when a
person acts in a way that is to his advantage at the expense of
the employing organization.
-Types of conflict of interest
a. self-dealing. Using position to secure gainful contracts
b. accepting benefits
c. influence peddling. Solicits benefits using his influence
to advance the interest of a party
d. Using your employer’s property for private advantage
e. Outside employment or moonlighting
f. Post-employment
13. TAX EVASION AND TAX AVOIDANCE
• ii. Foundations of the principles of business ethics
Virtue Ethics. It focuses on the character of the person
and the virtue he manifests.
 In this view, the person must reflect moral virtues and
integrity in making decisions
The main proponents of virtue ethics are Socrates, Plato
and Aristotle.
• Example of virtues
• honesty, trustworthiness, respect and empathy.
• Virtue ethics in business
• Displaying Trustworthiness
• Being Respectful
• Taking Responsibility
• Socrates ( 470-399 B.C.)
Socrates posited three special tenets in his moral
philosophy:
1. Virtue (moral excellence) is identical with knowledge
2. Vice (moral evil) is identical with ignorance (lack of
moral knowledge)
3. No one commits an evil act knowingly. Doing wrong
arises out of ignorance
• Business applications
In the business world, employers make critical
decisions that have impacts on the operations of the company.
The results might lead to uncertainty. Example, when a private
company is contemplating giving an increase in salaries to its
employees.
 The moral issue lies on the impact of the increase on
the families of the employees rather than on the continued
operations due to the diversion of funds.
• Plato (428-348 b.c.)
Ethical Philosophy
Knowing the Forms. For Plato, these are eternal or universal
principles and perfect ideas. Plato maintained that all things in
the physical world are symbols of these perfect Forms in the
World of Ideas. And since these Forms are symbols, the world is
not the true reality.
Plato also believed that people are born to be
intrinsically good. However, they make judgments through the
irrational part of the soul. This then results to a moral conflict.
People do not choose an evil act to harm themselves. They are
only doing evil acts because they are acting due to ignorance.
Morality means waking up the reason to its true
purpose. In the virtuous soul, reason must control the
appetites. Also, reason must direct the will away from the
sensuous pleasures to move toward eternal ideas. If the
appetite and the will dominate, then we act irrationally out of
ignorance, which then results in doing evil acts.
• Business application
Plato’s ethical philosophy can be applied in business.
For example, in business decision making, an outcome is
acceptable only if it done in the light of reasonable process
according to Plato’s concept of virtuous act. For Plato, the right
action, and thus, a moral action is one that is guided by reason.
In addition, Plato believes that a reasonable and a virtuous
action is one that is not dominated by the will or appetite of the
person.
• Aristotle (384-322 B.C.)
Ethical Philosophy
According to Aristotle, we must take the “middle
way” or the mean between two extremes. Aristotle also
rejected all forms of imbalance. We must not only develop our
mind, but also our body. Virtue comes from the ability to
govern excessive or lack of feelings. Any extremes would lead
to vice. Thus, virtue comes from the mean between these
extremes.
The Golden Mean Principle simply states that “ This
means in everything that we do, we must avoid doing the
extremes. For Aristotle, any excess or lack of it is a form of evil.
For example in taking food, we must eat accordingly with
the proper amount of food proportional to our bodies’ needs.
Any excess or deficit in the food intake would cause problems
to our health.
• The Mean
• Business application
a. In production planning and control-finished goods and raw
materials must be carefully controlled so that the
company will not incur too much cost.
b. The Principle of Moderation can also be used in
determining and planning for profit in business e. g. too
much profit results to greed, no profit results to
bankruptcy
 c. Virtuous conduct is important not just in decision
making but also in maintaining moral ascendancy and personal
integrity
d. Success in business is not only measured in terms of
profit but also the company’s moral integrity and credibility
• Belief systems
Christianity (Christian Ethics)
1. Ethical Teaching of Jesus Christ
a. the ethics of the Lord shows more preference to the
poor and the oppressed.
b. the ethics of Jesus is an ethics of love
c. the ethics of Jesus demands honesty and authenticity
d. the ethics of Jesus is an ethics which teaches faith in
God the Father
e. the ethics of Jesus demands sacrifice and suffering
f. the ethics of Jesus is an ethics of peace and
reconciliation
2. Ethical Teaching of St. Augustine
The focal point of St. Augustine’s moral imperative is
God; and because love is the highest attribute of God, love
eventually is considered as the basis and central point of his
moral teaching.
Augustine’s understanding of God as love drove him to
take love as the basis and central point of his ethics.
Furthermore, Augustine suggests that man should practice the
cardinal virtues in the name of charity or love because for him
love is the foundation of all virtues.
3. Ethical teaching of Thomas Aquinas
Thomistic ethics is centered on the concept of the
Natural Law and the Eternal law. For Aquinas, God in His divine
providence, plans for all things and directs all things to their
proper order proper purpose and proper ends.
According to him, the Natural Law and Natural Moral Law
are copies and reflections of the Eternal Law. Since the Natural
Law is the reflection of Eternal Law, Aquinas says that the
Natural Law and the Eternal Law are one.
In sum, the Eternal Law of God rules all things in their
order and purpose (end) and man, in his rational nature cannot
be exempted from the governance of Eternal Law.
• Business applications
a. Ideally, Christian Ethics, which is based on the teachings of
Jesus Christ, should provide the ultimate standard when
benchmarking business decisions. However, for some reasons,
business men do not at all times promote and uphold Christian
virtues.
b. The Principle of Stewardship should remind business decision
makers that the earth’s resources are not constant and
therefore, being responsible in its usage is a way of respecting
the natural order of things as planned by God Himself.
• 4. The ethical teachings of Buddhism
-Buddhism was founded by Siddhartha Gautama, the
Buddha.
 -Ethics in Buddhism is an ethics born out of the realities of
the pain of human life. It is an ethics which is intended to
relieve all forms of human suffering, e.g. suffering from old age,
disease, death and the like.
- The therapy for human suffering must be a spiritual
recourse. This spiritual cure lies in one’s acceptance of the real
life, e.g., that life (human existence) cannot be freed from
suffering.
-That is why, if man wants to do away with suffering, man
should cut off the radix of suffering which is craving.
- in effect, Buddha is convinced that, “the world is bad,
that it is the source of evil and of suffering for man”.
-To annihilate suffering, Buddha teaches his celebrated
Four Noble Truths which are also construed as Buddha’s
doctrine of the Middle Way which is intended for
understanding, peace of mind, wisdom and enlightenment.

-The Four Noble Truths are:

1. Life is permeated by suffering (dukkha)
2. The origin of suffering is craving (tanha)
3. Suffering can be eliminated through the elimination of
craving
4. The elimination of suffering is possible through the
Eightfold Path
- The Eightfold Path is the continuum of the Four Noble
Truths. They are as follows:
a. Right understanding (Samma-ditthi)
 b. Right Thought (Samma sankapa)
c. Right Speech (Samma-vaca)
d. Right Action (Samma-kammata)
e. Right Livelihood (Samma-ajiva)
f. Right Effort (Samma-vayama)
g. Right Mindfulness (Samma-sati)
h. Right Concentration (Samma-samadhi)
• Business applications
a. Buddhism as a philosophy can offer a novel mindset of
discipline among managers as well as employees within
the organization.
b. Self-discipline, which is primary tenet of Buddhism can
also be applied to the person’s relationship with other
beings including the entities of the environment.
c. Buddhism as a philosophy enjoins people to develop their
sense of wisdom. For according to Buddha, “Whenever there is
morality, there is wisdom and whenever there is wisdom, there
is morality”
• Definition of values
Accdg to Prof. Babor
1. Values are the objects of human desire and striving.
2. Values are our beliefs, those beliefs which we hold to be
true and therefore affects our thoughts, decisions and
actions
 3. Values also refer to things, persons, ideas or goals which
are important to life.
• The filipino value system
-Filipino values are those given emphasis in the culture
and tradition of the Filipinos. They shape character, or ugaling
Pilipino.
-Some of the Filipino values include
1. Respect for elders
2. Trust in Divine Providence
3. Respect for womanhood
4. Utang na loob. The Filipino is beholden to anyone who
did him good or helped him in an hour of need.
5. Pakikisama. Harmonious interpersonal relationship.
6. Bahala na. They throw everything in the lap of God
7. Gulong ng Palad. If one believes that there is a wheel of
fortune in life, then one has the tendency to be complacent in
life and wait for the better times
8. Bayanihan. Mutual help or the availability to others or
solidarity. This is manifested at EDSA In Feb., 1986
9. on worth as a person, dangal, amor propio, delicadeza,
and palabra de honor
• Describe how the Filipino value System affects the
attitudes of business constituents
• Ningas-cogon
• Mañana or Bukas na
 • Pakikisama
• Bahala na
• Utang na Loob
• iii. Social responsibility of entrepreneurs
a. Social Responsibility of Entrepreneurs Toward the
Employees (accdg. to Fr. Roa)
• Respect the dignity of the workers
• Appreciate their work
• Never treat them as slaves for making money
• Never assign them tasks beyond their strength, nor
employ them in work not suited to their age or gender
• Give them commensurate and fair wages
• Provide for their health and social recreation
• Provide them time for the practice of their religion
• Instruct them on how to use their money wisely
• Instruct them to love their family
• Provide them with opportunities for promotion
• Social responsibilities of entrepreneurs toward
consumers/general public
Consumer Rights
• Right to safety
• The right to be informed. Availability of complete and
correct information about the product.
 • The right to choose. Competition is encouraged so the
consumers can choose the best product.
• The right to be heard. Based on the concept “the customer
is always right”
• Social responsibilities of entrepreneurs towards the
Community
The business organization is very much a part of the
community. Thus, it is its responsibility to help the
development of the community.
• social responsibility towards the environment
Businesses benefit so much from the environment in
order to produce the products, goods and services they need in
order for their business to prosper.
In turn businesses have the responsibility of
preserving and maintaining the balance of nature because if
natural resources are depleted , these can never be replaced.
• Social responsibility of entrepreneurs toward the
government
• Employment generation
• Payment of the right amount of taxes and licenses
• To participate in the discussion of proposed legislation
and/or implementation affecting sectoral, regional,
national and international interests
• To propose sound policies in the use of human and
material resources
• Social responsibilities of business towards the suppliers
 • That the terms of all contracts be clearly stated and
unambiguous, and honored in full unless terminated or
modified by mutual consent.
• That abuse of economic power in dealing with smaller
concern be avoided, and that in all cases terms of payment
be strictly and fully observed
• That no supplier be encouraged to commit his resources
for apparently long-term purposes unless terminated
arbitrarily.
• Social responsibility issues of entrepreneurs
1. Relations with owners and stakeholders
- Business must be first responsible to their owners who
are primarily concerned with earning profit or a return on
investment in a company
- In a small business, this responsibility is fairly easy to
fulfill because the owners personally manages the business or
knows the managers well.
• The Stakeholders
• Those groups without whose support the organization
would cease to exist
• Any group or individual who can or is affected by the
achievement of the organization’s objectives
• Common Groups
• Managers
• Employees
• Customers
 • Investors
• Suppliers
• Shareholders
• Government
• Society at large
• The local community
• The classification of stakeholders
• Internal and External
internal stakeholders are those within the organization
whereas external stakeholders are those who are not generally
part of the of the organization
• Voluntary and Involuntary
Voluntary stakeholders can choose whether or not be a
stakeholder whereas involuntary stakeholder cannot
2. Employee Relations
- Employees expect businesses to provide a safe
workplace, pay them adequately for their work, and tell them
what is happening in their company.
- They want employers to listen to their grievances and
treat them fairly.
- Providing equal opportunities for all employees
regardless of sex, race, religion or nationality.
3. Consumer Relations
- A critical issue in business today is businesses’
responsibility to customers who look to business to provide
them with satisfying, safe product and to respect their rights as
consumers.
CONSUMERISM- the activities that independent individuals,
group and organizations undertake to protect their rights as
consumers.
4. Environmental Issues
- Environmental responsibility has become a leading issue
in the last decade and up to now as both business and the
public acknowledge the damage done to the environment
• Animal rights
• Pollution
• Response to environmental issues
5.Community Relations
- Many businesses simply want to make their communities
better place for everyone to live and work.
6. Communication
-Communication is another area in which ethical concerns
may arise. False and misleading advertising, as well as
deceptive personal-selling tactics, anger consumers and can
lead to the failure of the business
•

7. Business Relations
- Ethical behavior within a business involves keeping
company’s secrets, meeting obligations on agreements and
contracts, and avoiding undue pressure that may force others
to act unethically.
• CSR refers to the responsibilities that a business has to the
society in which it operates.
• Models and frameworks of social responsibility
Models on Social Responsibility
1. Economic Model. This is based on the traditional concept of
business. That is, the primary objective of business is to earn a
reasonable profit, as well as to offer quality goods and services,
and to provide employment
• It hold that business’ sole duty is to fulfill the economic
functions businesses were designed to serve.
• According to this model, the social responsibility of
business managers is simply to pursue profit within the
law.
• Profit is a direct measure of how well a business firm is
meeting society’s expectations
• Profit is an indication that business is efficiently and
successfully producing the goods and services that society
demands.
• This model denies that business has any social
responsibilities beyond the economic and legal ends for
which it was created.
2.Socio-economic model. It believes that businessmen have
their responsibility to stockholders as well as to their
employees, customers, suppliers, and the general public It
stresses not only profit, but also the implications of business
decisions on society.
3. Classical model. Milton Friedman, a monetary economist said
that, there is only one social responsibility of business – to use
its resources and engage in business designed for profit so long
as it stays within the rules of the game.
Viewpoints on Social responsibility
• The four corporate responsibilities
Taking it from the PYRAMID OF
SOCIALRESPONSIBILITY developed by Archie Carroll, the
corporate social responsibilities of a business can be classified
into four:
1. Philanthropic responsibilities-DESIRED of business by
society (good corporate citizenship)
2. Ethical responsibilities- EXPECTED of business by society
(obligation to be ethical, do what is right and avoid harm)
3. Legal responsibilities- REQUIRED of business by society
(compliance with laws and regulations)
4. Economic responsibilities- REQUIRED of business by
society (being profitable)
• Economic Responsibility
• Legal Responsibilities
A company's legal responsibilities are the requirements that are
placed on it by the law. Next to ensuring that company is
profitable, ensuring that it obeys all laws is the most important
responsibility, according to the theory of corporate social
responsibility. Legal responsibilities can range from securities
regulations to labour law, environmental law and even criminal
law.
• Ethical Responsibilities
Ethical responsibilities are responsibilities that a company puts
on itself because its owners believe it's the right thing to do --
not because they have an obligation to do so. Ethical
responsibilities could include being environmentally friendly,
paying fair wages or refusing to do business with oppressive
countries, for example.
• Philanthropic Responsibilities
Philanthropic Responsibilities refer to actions a company taken
to meet or exceed the expectations of stakeholders beyond
such measures as revenue, profit and legal obligations. It covers
community investment, donations to charity, employee
relations, environmental practice and ethical conduct.
• Carrol model
• Philanthropic requirements: Donation, gifts, helping the
poor. It ensure goodwill & social welfare.
• Ethical responsibility: Follow moral & ethical values to deal
with all the stakeholders.
• Economic responsibility: Maximize the shareholders value
by paying good return.
• Legal responsibility: Abiding the laws of the land
• Importance of CSR – Business Perspective
• CSR is an important way to increase a business’
competitive advantage, protect and raise brand awareness
and build trust with customers and employees.
 • CSR encourages companies to think long term changes not
only in technology or the needs of the customers, but also
in social, environmental and governance issues.
• CSR can help businesses to attract more investors, their
risks and addressed stakeholder concerns
• Benefits of CSR for Businesses
• Stronger performance and profitability
• Improved relations with the investment community and
access to capital
• Enhanced employee relations and company culture
• Risk management and access to social opportunities
• Stronger relationships with communities and legal regulators
• 10 Most Significant Risks and Costs from Unethical
Behavior
1. Increased risk of doing business and the possibility of
bankruptcy and severely damaged company brand and image.
2. Decreased productivity.
3. Increased misconduct and conflict internally.
4. Decreased performance levels of employees.
5. Increased employee turnover and more challenging
employee recruitment.
6. Decreased success of retention and recruitment of
employees.
7. Increased absenteeism and “presenteeism”
8. Decreased probability of reporting misconduct and unethical
behavior of others.

• 9. Increased dysfunctional behaviors such as not paying

attention to details, withholding information, under
delivering and overpromising, not giving credit to others,
lowering goals, misrepresenting results, etc.
• 10. Decreased value of the company.

Business research
It is a type of scientific research that tries to address the
concerns of the firm and/or the industry. It offers
(recommends)solution/s to the affected functional
area(marketing, management, human resource, finance,
entrepreneurship, etc.) or an analysis of the perception,
preference, and behavior of the customers, employees and
other stakeholders.
If the result of the business research is intended only for a
particular company use, then it is a contracted business
research. If the result is intended for general application and
appreciation of the business, the industry, and the academic
community, then it is an institutional research.

CHAPTER 1: INTRODUCTION TO APPLIED ECONOMICS

Learning Objectives
At the end of the chapter, the students should be able to:
1. differentiate between economics as a social science and as
an applied science;
2. apply the concept of opportunity cost when evaluating
options and making economic decisions;
3. make decisions based on how man can satisfy most of his
wants given limited resources;
4. differentiate macroeconomics and microeconomics;
5. describe and state the importance of economic resources;
6. differentiate positive and normative economics;
7. differentiate gross national product and gross domestic
product;
8. distinguish the different approaches used in solving for the
gross national product;
9. identify the basic problems of the Philippine economy;
10. analyze basic economic problems and propose solutions to
the problems using the principles of applied economics; and
11. describe the various economics systems.
Lesson 1.1. Introduction to Economics
Economics
- as a study, is the social science that involves the use of
scarce resources to satisfy unlimited wants.
Alfred Marshall
- well-known economist who described economics as a
study of mankind in the ordinary business of life.
- it examines part of the individual and social action that is
most closely connected with the attainment and use of material
requisites of well-being.
Scarcity
- is a condition where there are insufficient resources to
satisfy all the needs and wants of a population.
1. Relative Scarcity
- is when a good is scarce compared to its demand.
Example: Coconuts are abundant in the Philippines since the
plant easily grows in our soil and climate. However, coconuts
become scarce when the supply is not sufficient to meet the
needs of the people.
Relative scarcity occurs not because the good is scarce per se
and is difficult to obtain but because of the circumstances that
surround the availability of the good.
Absolute scarcity
- is when supply is limited.
Examples: oil, cherries
Choices and Decision-Making
Opportunity Cost
- refers to the value of the best foregone alternative.
Examples:
1. When land is devoted exclusively to the cultivation of rice,
we give up an output of bananas and mangoes that we could
have planted on that land area.
2. A producer who decides to transform all his leather into
shoes, gives up the chance to produce bags with that leather.
3. A manager who quits his job in order to take up a master’s
degree, gives up his salary as a manager.
The concept of opportunity cost holds true for individuals,
businesses, and even a society. In making a choice, trade-offs
are involved.
Example: The opportunity cost of watching a movie in a cinema
is the value of other things that you could have bought with
that money such as a pint of ice cream, a combo meal in a fast
food restaurant, or a simple t-shirt to be used in a PE class.
Economic Resources
 - also known as factors of production, are the resources
used to produce goods and services. These resources are, by
nature, limited and therefore, command a payment that
becomes the income of the resource owner.
1. Land – soil and natural resources that are found in nature
and are not man-made.
- owners of lands receive a payment known as rent.
2. Labor – physical and human effort exerted in production.
- it covers manual workers like construction workers,
machine operators, and, production workers, as well as
professionals like nurses, lawyers, and doctors.
- the term also includes jeepney drivers, farmers, and
fishermen.
- the income received by labors is referred to as wage.
3. Capital - man-made resources used in the production of
goods and services, which include machineries and equipment.
- the owner of capital earns an income called interest.
Economics as a Social Science
- Economics is a social science because it studies human
behavior just like psychology and sociology.
Social Science
- is the study of society and how people behave and
influence the world around them.
As a social science, economics studies how individuals
make choices in allocating scarce resources to satisfy their
unlimited wants.
 Macroeconomics and Microeconomics
2 branches of economics:
1. Macroeconomics
- is a division of economics that is concerned with the overall
performance of the entire economy.
- it studies the economic system as a whole rather than the
individual economic units that make up the economy.
- it focuses on the overall flow of goods and resources and
studies the causes of change in the aggregate flow of money,
the aggregate movement of goods and services, and the
general employment resources.
- is about the nature of economic growth, the expansion of
productive capacity, and the growth of national income.
2. Microeconomics
- is concerned with the behavior of individual entities such
as the consumer, the producer, and the resource owner.
- it is more concerned on how goods flow from the
business firm to the consumer and how resources move from
the resource owner to the business firm.
- it is also concerned with the process of setting prices of
goods that is also known as the Price Theory.
- studies the decisions and choices of the individual units
and how these decisions affect the prices of goods in the
market.
- it examines alternative methods of using resources in order to
alleviate scarcity.
- it does not focus on aggregate levels of production,
employment, and income.
Basic Economic Problems of Society
1. What to produce and how much?
- society must decide what goods and services should be
produced in the economy.
- having decided on the nature of goods to be produced,
the quantity of these goods should also be decided on.
2. How to produce?
- is a question on the production method that will be used
to produce the goods and services.
- this refers to the resource mix and technology that will
be applied in production.
3. For whom to produce?
- is about the market for the goods.
- for whom will the goods and services be produced?
- the young or old, male or female market, the low-income
or the high-income groups?
Economic Systems
- is the means through which society determines the
answers to the basic economic problems mentioned.
1. Traditional economy
 - decisions are based on traditions and practices upheld
over years and passed on from generation to generation.
- methods are stagnant and therefore not progressive.
- traditional societies exist in primitive and backward
civilization.
2. Command economy
- this is the authoritative system wherein decision-making
is centralized in the government or a planning committee.
- decisions are imposed on the people who do not have a
say in what goods are to be produced.
- this economy holds true in dictatorial, socialist, and
communist nations.
3. Market economy
- this is the most democratic form of economic system.
- based on the workings of demand and supply, decisions
are made on what goods and services to produce.
- people’s preferences are reflected in the prices they are
willing to pay in the market and are therefore the basis of the
producers’ decision on what goods to produce.
Why Economics is Important?
1. Economics will help the students understand why there is a
need for everybody, including the government, to budget and
properly allocate the use of whatever resources are available.
2. It will help one understand how to make more rational
decisions in spending money, saving part of it, and even
investing some of it.
3. On the national level, economics will enable the students to
take a look on how the economy operates and to decide for
themselves if the government officials and leaders are effective
in trying to shape up the economy and formulate policies for
the good of the nation.
Scientific Approach in the Empirical Testing of an
Economic Theory
1. State the propositions or conditions that are taken as given
and do not need further investigation, as the basic starting
point of investigation.
2. Observe facts in connection with the activity that we want to
theorize.
3. Apply the rules of logic to the observed facts to determine
causal relationships between observed factors and to eliminate
facts that are unnecessary and irrelevant.

4. Establish a set of principles such that formulated hypotheses

may be tested as to whether they are valid or not.
5. Use statistics and econometrics as empirical proof in testing
the hypotheses.
Positive Economics Versus Normative Economics
Positive Economics
- deals with what is - things that are actually happening
such as the current inflation rate, the number of employed
labor, and the level of the Gross National Product.
- is an overview of what is happening in the economy that
is possibly far from what is ideal.
 Normative Economics
- refers to what should be – that which embodies the ideal
such as the ideal rate of population growth or the most
effective tax system.
- focuses on policy formulation that will help to attain the
ideal situation.
Measuring the Economy
- The government plans for a better economy from a
perspective of what the economy has been.
- Shaping the economy’s future is changing past and
present perspectives extended to the future.
- In particular, looking ahead is grounded on past and
present performance and health of the economy.
Production - the heart of the economy whose value
measures both resource input and output of people.
- The interplay of resources and outputs tells how well the
economy has performed.
Counting All Through GNP
Gross National Product (GNP)
- as the mirror of all products, is the market value of final
products, both sold and unsold, produced by the resources of
the economy in a given period.
Market Value
- is determined by supply and demand.
Economy’s Resources
 - are those belonging to Filipino citizens and corporations.
The value of final products already includes the values of
its components from the lower production stages.
Example: The price of your leather wallet already includes the
value of leather that it turn includes the value of animal hide.
In other words, counting the values of products from the
raw material to the intermediate and on to the final production
stages, double counts and overstates the value of the
economy’s production.
Likewise, the value of any product in a certain period
should no longer be counted in succeeding periods to avoid
double counting and overstatement that can mislead decision-
making.
1. GNP/GDP: Expenditure Approach
End-use expenditure – one way to account GNP and classify its
component.
- products are final when they have reached the highest
levels of processing in the economy for different uses in the
given period.
- they are household and individual consumption (C), and
government expenditure on goods and services including
labor (G) and exports (X).
- products, regardless of production stages, are also
considered final when basically stocked (unused) as capital
goods and inventories of raw materials and intermediate
products.
 - classified as investments (I), they are stock of values for
future use and therefore, have reached the highest possible
production stages for the given period.
- their import components (M) are excluded since imports
are produced in other economies.
To restate the GNP equation:
GNP = C + I + G + (X - M)
Gross Domestic Product (GDP)
- is defined as the market value of final products produced
within the country.
- the resources in the economy include capital and
entrepreneurship belonging to other countries brought to the
domestic economy by foreign businesses.
Net Inflow = Inflow – Outflow to – Net Inflow = - Inflow +
Outflow
2. GNP/GDP: Income Approach
Resource uses and contributions – another way to account GNP
and classify its components that make up the productions
stages.
- as basic factors of production, resources (land, labor,
capital, and entrepreneurship) add value to products (e.g.,
shoes).
- if all payments for resource contributions (rent, wage,
interest, and profit) went to resource owners, GNP would
simply be the sum of all factor payments from the raw material
to the final product stage.
 +
+
Figure 1.1. Value-Added Flow
In conclusion, all products and their values are the
contributions of these essential (basic) factors of production.
Lesson 1.2. Economics as an Applied Science
Applied Economics
- is the application of economic theory and econometrics
in specific settings with goal of analyzing potential outcomes.
- as one of the two sets of fields of economics (the other
set being the core), it is typically characterized by the
application of the core, referring to economic theory and
econometrics, as a means of dealing with practical issues in
fields that include demographic economics, labor economics,
business economics, agricultural economics, development
economics, education economics, health economics, monetary
economics, economic history, and many others.
John Neville Keynes
- is attributed to be the first to use the phrase “applied
economics” to designate the application of economic theory to
the interpretation and explanation of particular economic
phenomena.
Applied Economics in Relation to Philippine Economic
Problems
The Philippines’ Basic Economic Problems
President Benigno Simeon Aquino’s administration
 – GDP 6.8% (2012)
- 7.2% (2013)
- 6.1% (2014)
Unemployment – is still the main problem of the Philippine
economy despite improvements reported by the National
Statistics Office.
- 6.4% (second quarter of 2015) from 7.0% in the previous
year.
- 8.85% (from 1994-2015)
- 13.90% (first quarter of 2000)
- 6.0% (fourth quarter of 2014)
In July 2015, the Labor Force Survey (LFS) released by the
Philippine Statistics Authority (PSA) showed the country’s
unemployment rate at 6.4% or an estimated 2.68 million
individuals.
Poverty
- another significant socio-economic problem in the
country.
- as reported by the National Statistics Coordination Board,
in 2006, poverty incidence of the population registered at
26.4%, 26.5% in 2009, 25.2%, and 28.8% in the first semester of
2014.
Booming population growth
- another basic economic problem that can be connected
to the issue of scarcity.
 - according to 2010 census, the Philippine population
stood at 92. 3 million.
- as of 2014, it has reached more than 100 million –
growing by 2% from the previous year and one of the highest in
Asia.
- the population of the Philippines represents 1. 37% of the
world’s total population.
ASEAN ICON
Lee Kuan Yew (1923-2015)
- is an economic icon and an example of how a leader of a
previously undeveloped country can lead to overcome its
country’s basic economic problems and move toward economic
growth.
- was the prime minister of Singapore from 1959 to 1990,
making him the longest-serving prime minister in history.
- born in Singapore on September 16, 1923, became the
longest-serving prime minister in world history.

- he introduced a five-year plan calling for urban renewal

and construction of new public housing, greater rights for
women, educational reform, and industrialization.
- in 1962, he led Singapore into a merger with Malaysia
but three years later, Singapore left the union for good.
- he resigned as prime minister in 1990 and his son
became the prime minister in 2004.
- he died on March 23, 2015.
 - he has left behind a legacy of an efficiently run country
and as a leader who brought prosperity unheard of before his
tenure, at the cost of a mildly authoritarian style of government
and by imposing discipline among his people.
- by the 1980s, Singapore, under his guidance, had a per
capita income second only to Japan’s in East Asia and the
country had become a chief financial center of Southeast Asia
envied by many Asian countries including the Philippines.
 Chapter 2: Application of demand and supply
Learning Objectives
At the end of this chapter, the students should be able to:
1. explain the law of supply and demand and illustrate how
equilibrium price and quantity are determined;
2. discuss and explain the factors that affect demand and
supply;
3. Reason effectively how a change in demand or supply or in
both can affect equilibrium price and equilibrium quantity;
4. apply the principles of demand and supply to illustrate how
prices of commodities are determined;
5. distinguish between elastic and inelastic demand and supply;
6. describe the characteristics and distinguish the features of
the market structures (perfect competition, monopoly,
monopolistic competition, and oligopoly);
7. relate population growth with the country’s labor supply and
the law of demand and supply in the determination of wages of
labor;
8. deduce how the excess supply of labor has led to the
phenomenon of the Overseas Filipino Worker;
9. analyze how demand and supply forces can affect the value
of the Philippine peso in relation to foreign currencies;
10. apply the law of demand and supply to Philippine housing
shortage and show how this has led to the real estate boom in
the country;
11. understand how savings channeled into investments can
affect the economy;
12. explain the concept of minimum wage; and
13. discuss why it is necessary for the government to impose
taxes.
Lesson 2.1 Basic Principles of Demand and Supply
The Market
Market - is an interaction between buyers and sellers of
trading or exchange.
- it is where the consumer buys and the seller sells.
Types of market:
1. goods market – is the most common type of market because
it is where we buy consumer goods.
2. labor market – is where workers offer services and look for
jobs, and where employers look for workers to hire.
3. financial market – includes the stock market where
securities of corporations are traded.
Demand
 - is the willingness of a consumer to buy a commodity at a
given price.
Demand schedule – shows the various quantities the consumer
is willing to buy at various prices.
Demand function – shows how the quantity demanded of a
good depends on its determinants, the most important of
which is the price of the good itself, thus the equation:
Qd = f (P)
This signifies that the quantity demanded for a good is
dependent on the price of that good.
The quantity demanded is determined at each price with the
following demand function:
Qd = 6 – P/2
Table 2.1 Hypothetical Demand Schedule of Martha for
Vinegar (in bottles)
Demand curve
- is a graphical illustration of the demand schedule, with
the price measured on the vertical axis (Y) and the quantity
demanded measured on the horizontal axis (X).
- the values are plotted on the graph and are represented
as connected dots to derive the demand curve (Figure 2.1).
Income effect
- is felt when a change in the price of a good changes
consumer’s real income or purchasing power, which is the
capacity to buy with a given time.
Purchasing power – is the volume of goods and services one
can buy his/her income.
Substitution effect
- is felt when a change in the price of a good changes
demand due to alternative consumption of substitute goods.
Example: Lower price encourages consumption away form
higher-price substitutes on top of buying more with budget
(income effect).
The Law of Demand
Ceteris paribus – means all other related variables except those
that are being studied at the moment and are held constant,
there is an inverse relationship between the price of a good and
the quantity demanded for that good.
- as price increases, the quantity demanded for that
product decreases.
- the low price of the good motivates the consumer to buy
more.
- when price increases, the quantity demanded for the
good decreases.

Non-Price Determinants of Demand

Non-price variables – affect demand are now allowed to
influence demand.
- these non-price factors include income, taste,
expectations, prices of related goods, and population.
 - these non-price determinants can cause upward or
downward change in the entire demand for the product and
this change is referred to as a shift of the demand curve.
The demand function will now read:
D = f (P, T, Y, E, PR, NC),
which states that demand for a good is a function of Price (P),
Taste (T), Income (Y), Expectations (E), Price of Related Goods
(PR), and Number of Consumers (NC).
- If consumer income decreases, the capacity to buy
decreases and the demand will also decrease even when price
does remain the same.
The opposite will happen when income increases.
- Improved taste for a product will cause a consumer to
buy more of that good even if its price does not change.
- Consumer’s expectations of future price and income –
consumer’s tend to anticipate changes in the price of a good.
- Prices of related goods as substitutes or complements
also determined demand.
Substitute goods are those that are used in place of each
other, like butter and margarine and sugar and artificial
sweeteners.
Complements are goods that are used together, a
cellphone and a sim card, a car and car tires, and coffee and
creamer.
- The number of consumers will affect market demand for
good.
 The population makes up the group of consumers who will
buy the product.
Shifts of the Demand Curve
When a change in the price of a good causes the quantity
demanded for that good to change, this is illustrated on the
same demand curve and is simply a movement from one point
to another on that curve.
Example: If price goes down from Php5 to Php4, quantity
demanded will increase from 10 to 15 pieces, this is illustrated
on the same demand curve.
But if the change in demand is caused by a non-price
determinant, this will involve a change in the entire demand
curve.
Example: The demand curve will shift to the right to reflect an
increase in demand due to higher income and to the left to
show a decrease in demand due to less income.
SUPPLY
- refers to the quantity of goods that a seller is willing to
offer for sale.
Supply schedule – shows the different quantities the seller is
willing to sell at various prices.
Supply function – shows the dependence of supply on the
various determinants that affect it.
Assuming that the supply function is given as: Qs = 100 + 5P
and is used to determine the quantities supplied at the given
prices.
Table 2.2: Supply Schedule of Pedro for Fish in One Week
The Law of Supply
Ceteris paribus (other things constant) – there is a direct
relationship between the price of a good and the quantity
supplied of that good.
- as the price increases, the quantity supplied of that
product also increases.
Non-Price Determinants of Supply
Non-price factors:
1. cost of production
2. technology
3. availability of raw materials and resources
- these non-price determinants can cause an upward and
downward change in the entire supply of the product, and this
change is refereed to as a shift of the supply curve.
Shifts of the Supply Curve
Movement along the supply curve
- changes reflected on a single supply curve and changes
from one point to another point on the same curve.
The supply function will now read: S = f (P, C, T, AR), where the
Supply (S) of a good is a function of the price of that good (P),
the cost of production (C), technology (T), and the availability or
raw materials and resources (AR).
As non-price determinant, the cost of production refers to
the expenses incurred to produce the good.
 The use of improved technology in the production of a
good will result in the increased supply of that good.
Improved availability of raw materials and resources can be
used to produce a bigger output of that good, then supply
increases.
Lesson 2.2. Demand and Supply in Relation to the Prices of
Basic Commodities
Market Equilibrium
Alfred Marshall – a British economist, defined the Law of
Demand and Supply.
Equilibrium – is a state of balance when demand is equal to
supply.
- the equality means that the quantity that sellers are
willing to sell is also the quantity that buyers are willing to buy
for a price.
- as a market experience, equilibrium, it is an implicit
agreement between how much buyers and sellers are willing to
transact.
- the price at which demand and supply are equal is the
equilibrium price.
  
  
  
Application of Demand and Supply in Relation to Housing
Shortage
Housing in the country is a problem evident because of the
rapid growth of Philippine population.
- the supply of houses is less than the existing demand for
them since more and more Filipinos are added to the
population annually.
Lesson 2.3. Elasticities of Demand and Supply
Elasticity – refers to the degree of their response to a change.
- is a measure of how much buyers and sellers respond to
changes in market conditions.
Coefficient of elasticity – is the number obtained when the
percentage change in demand is divided by the percentage
change in the determinant.
Degrees of Elasticity
1. Elastic – a change in a determinant will lead to a
proportionately greater change in demand and supply.
- the absolute value of the coefficient of elasticity is
greater than 1.
2. Inelastic – a change in a determinant will lead to a
proportionately lesser change in demand and supply.
- the absolute value of the coefficient of elasticity is less
than 1.
3. Unitary Elastic - a change in a determinant will lead to a
proportionately equal change in demand and supply.
- the absolute value of the coefficient of elasticity is equal
to 1.
Elasticity of Demand
1. Price Elasticity of Demand
- this measures the responsiveness of demand to a change
in the price of the good.
- the concept of elasticity is measured in percentage
changes.
The value of price elasticity may be measured in two ways:
A. Arc Elasticity – the value of elasticity is computed by
choosing two points on the demand curve and comparing the
percentage changes in the quantity and the price on those two
points.
  
- normally, coefficient of the price elasticity of demand
has a negative sign because it reflects the inverse relationship
between price and quantity demanded.
- the size of the coefficient, regardless of the negative sign,
will signify the nature of the good involved.
  
- price elasticity is important to the seller since it gauges
how far demand can change relative to price.
- the price elasticity of demand measures how far
consumers are willing to buy a good especially when its price
rises reflective of the economic, social, and psychological forces
shaping consumer preference.
B. Income Elasticity of Demand
 - this measures how the quantity demanded changes as
consumer income changes.
- it is equal to (% change in quantity demanded)/(%
change in income).
- a positive (+) sign for IE signifies that the good
demanded is a normal good, which is what a consumer tends to
buy more when his income increases.
- a negative (-) sign for IE indicates the demand for
inferior goods, which are goods that are bought when incomes
are low because low incomes prevent the consumers from
buying high priced goods.
C. Cross Price Elasticity of Demand
- this measures how quantity demanded changes as the
price of a related good changes.
- this measures the responsiveness of the demand for a
good to the change in the price of a substitute or a
complement.
- a positive (+) sign for CE signifies that the two goods
involved are substitute goods which means that as the price of
the substitute good increases, the demand for the other good
will increase.
- the negative (-) sign for CE indicates that the two goods
are complements, which means that the demand for a good
will increase when the price of a complement decreases.
Price Elasticity of Supply
- determines whether the supply curve is steep or flat.
Steep curve – signifies a high degree of elasticity or ability to
change.
Flat curve – indicates an inability to change in response to a
change in the price of the good.
Lesson 2.4. Market Structures
Market structure – refers to the competitive environment in
which buyers and sellers operate.
Competition – is rivalry among various sellers in the market.
Market – is a situation of diffused, impersonal competition
among sellers who compete to sell their goods and among
buyers who use their purchasing power to acquire the available
goods in the market.
There are varying degrees of competition in the market
depending on the following factors:
 Number and size of buyers and sellers
 Similarity or type of product bought and sold
 Degree of mobility of resources
 Entry and exit of firms and input owners
 Degree of knowledge of economic agents regarding
prices, costs, demand, and supply conditions
PERFECT COMPETITION
- implies an ideal situation for the buyers and sellers.
The following are characteristics of a perfectly competitive
market:
  There are so many buyers and sellers that each has a
negligible impact on market price.
 A homogeneous product is sold by sellers, which means
the products are highly similar in such a way consumers
will have no preference in buying from one seller over
another.
 Perfect mobility of resources refers to the easy transfer of
resources in terms of use or in terms of geographical
mobility.
 There is perfect knowledge of economic agents of market
conditions such as present and future prices, costs, and
economic opportunities.
 Market price and quantity of output are determined
exclusively by forces of demand and supply.
- in this market, there are large numbers of buyers and
sellers.
- sellers offer a standardized product, a homogeneous
good that is not different from the others in the market.
- the sellers can easily enter into or exit from the market as
there are no barriers to entry and exit from the industry.
- the buyers and sellers are well-informed about prices
and sources of the goods.
IMPERFECT COMPETITION
- in other markets, one or more of the assumptions of
perfect competition will not be met; thus, the market becomes
imperfectly competitive.
Types of imperfectly competitive market:
1. Monopoly – exists when a single firm that sells in that
market has no close substitutes.
- its existence depends on how easy it is for consumers to
substitute the products for those of other sellers.
Monopoly can exist for the following reasons:
o A single seller has control of entire supply of raw
materials.
o Ownership of patent or copyright is invested in a single
seller.
o The producer will enjoy economies of scale, which are
savings from a large range of outputs.
o Grant of a government franchise to single firm.

- monopolist’s quantity of output will be lower to enable

him to set the price higher.
- a monopoly can easily exist when there are barriers to
entry that may cause other firms to stay out the market instead
of entering and competing with firms already there.
- because it is the only supplier in the market, the firm is
free to determine its output level and its price.
- the monopolist faces a downward-sloping demand curve;
meaning the lower the price, the higher the quantity that will
be bought by the consumer.
2. Monopolistic Competition
- where products are differentiated and entry and exit are
easy.
 - since many firms exist in the market, consumers also
have the freedom to choose from whom to buy the good.
Characteristics of perfect competition and monopoly:
 a blend of competition and monopoly;
 firms sell differentiated products, which are highly
substitutable;
 many sellers offer heterogeneous or differentiated
products, similar but not identical and satisfy the same
basic need;
 changes in product characteristics to increase appeal
using brand, flavor, consistency, and packaging as means
to attract customers;
 there is free entry and exit in the market that enables the
existence of many sellers; and
 it is similar to a monopoly in that firm can determine
characteristics of product and has some control over price
and quantity.
- the firm under monopolistic competition faces a
downward-sloping demand curve.
- the firms in this market are given room to set different
prices by their product differences.
Non-price competition
- refers to any action a firm takes to shift the demand
curve for its output to the right without having to sacrifices its
prices.
 - these may include better service, product guarantees,
free home delivery, more attractive packaging, better
locations, and advertising.
3. Oligopoly
- is a market dominated by a small number of strategically
interacting firms.
- few sellers account for most of or total production since
barriers to free entry make it difficult for new firms to enter.
Its characteristics are:
• action of each firm affects other firms; and
• interdependence among firms.
- these strategically interacting firms try to raise their
profits by colluding with each other to raise prices to the
detriment of consumers.
- oligopolies may exist due to the existence of barriers,
which may include economies of scale, reputation of the
sellers, and strategic and legal barriers such as the grant of
patents/franchises, loyal following of customers, huge capital
investments and specialized input, and control of supply of
raw materials by a few producers.
- cooperative behavior in oligopoly usually takes the form
of price-fixing or output-setting agreements such as the one
maintained by the OPEC (Organization of Petroleum Exporting
Countries).
Significance of the Market Structure
 - the type of market structure in which the business
operates will determine the amount of market power or control
the business owner will enjoy.
- greater market power means a greater ability to control
prices, differentiate the products one offers for sale, thus
leading to opportunities for more profits.
Lesson 2.5 Supply-Demand and the Philippine Labor Market
Labor Supply, Population Growth, and Wages
Population – is the source of labor supply although not all
country’s population are part of the labor supply.
Labor Supply – also known as the labor force, refers to the
portion of the population, 15 years old and over who are willing
and able to work, including those who are actively seeking work
but have not found work and those who are employed.
Philippine Population
Philippine Census – is an official count of the population of a
certain local administrative unit in the Philippines.
- the population of the Republic of the Philippines reached
more than 100 million people in 2014, registering an increase of
2.0% versus the previous year.
The Philippine Wage Situation
Table 2.7. Current Minimum Wage
National Capital Region (NCR)
As of April 4, 2015
(in Pesos)
Contemporary arts
What is ARTS?
ARTS
ARTS
Arts is creating
Creating something new, something original or something
different
Art is life
It is creating life on a material and making inanimate objects
to have life. To create art is to give life. ( KAMON ORLINA-
Glass Sculpture)
Contemporary
Current, now, the present
Arts through the ages
Philippine art history
Arts (ethnic arts)
In pre-colonial Philippine art are for ritual purposes or for
everyday use
Islamic arts
Characterized by geometric designs and patterns eliciting
focus from the believers
Spanish era
Art become a handmaiden of religion , serving to propagate
the Catholic faith and thus support the Colonial order at the
same time
American era
In the American regime, commercial and advertising arts were
integrated into the fine arts curriculum. Moreover, Americans
favored idyllic sceneries and secular forms of arts
Japanese era
Since the Japanese advocated for the culture of East Asia,
preference was given to the indigenous art and traditions of
the Philippine s. This emphasized their propaganda of Asia
belonging to Asians
Modern era
Modern Era in the Philippine Art began after World War 2 and
the granting of Independence. Writers and artists posed the
question of National identity as the main theme of various art
forms.
Contemporary art
Philippine Contemporary Art was an offshort of social realism
brought about by Martial Law Arts become expression of
people’s aspiration for a just, free and sovereign society
Historical overview: Philippine art
Visual Arts Pre-Conquest Spanish American Japanese Post-War

(1521-1898) (1898-1940) (1941-1945) (1946-1969)

Painting Pottery Body Adornment Religious Portaiture Landscape portrait, still Wartime Scenes Modern Con
and Ornament life experimenta

Sculpture Pottery, Religious Portraiture Free Standing, relief,

public
Wood and Metal carving

Historical overview
Ethnic arts
Islamic arts
Spanish arts
arTS
WHAT IS ART?
WHY PEOPLE ENGAGE IN ART?
To earn money
To express their emotions and thoughts, real or imaginary
To produce things of beauty and masterpieces
To self-actualize
To immortalize themselves
To inform
To persuade
To entertain people
Functions of arts
Personal or individual Function
Social Function
Economic Function
Political Function
Historical Function
Cultural Function
Religious Function
Physical Function
Aesthetic Function
Art styles and factors affecting style
Geographical Factors
Historical Factors
Social Factors
Ideational Factors
Psychological Factors
Technical Factors
Principles of arts
Harmony
Balance
-Formal Balance
-Informal Balance
Rhythm
Proportion
Emphasis
Harmony
Most essential factor in a composition
Also called UNITY
Achieved when all the elements of a thing are put together to
come up with a coherent whole
harmony
balance
Known as physical equillibrium
Stability produced by even distribution of weight on each side
of the thing
Classified as FORMAL and INFORMAL BALANCE
balance
Formal balance
Exists if the weights at equal distance from the center are
equal
Also called symmetrical balance
Formal balance
Bilateral balance
Bilateral symmetry is present when the left and right sides
appear the same
Bilateral balance
Radial balance
Radial symmetry exists when the same measure occurs from
the central point to the end of every radius
This symmetry applies to round objects or those with radii like
stars and starfishes
Radial balance
Informal balance
Informal balance is present when the left and the right sides
of the thing, though not identical in appearnce, still display an
even distribution of weight.
Also known as assymetrical or occult balance
Informal balance
Informal balance
Rhythm
Rhythm is the continuous use of a motif or repetitive pattern
of succession of similar or identical items
It can be achieved by alternation use of two patterns
alternately, radiation (repeatition of motif from the center or
toward it), progression use of motifs of varying sizes, that is,
from the smallest to the largest, or vice versa), or parallelism
use of a pattern with an equal distance from each other
rhythm
Rhythm is exemplified by concentric circles, by an aleration of
black and white stripes, by checkered blue and orange squares
It is characterized by repetitive, continuous, or flowing
rhythm
Rhythm progression
proportion
Comparative relationship of different parts in relation to the
whole
Proper and pleasing relationship of one object with the others
in a design
proportion
emphasis
Giving proper importance on one or more parts of the thing
itself
Achieved by means of size or proportion, shape, color, line,
position, and variety
emphasis
More often than not, the artiist emphasizes the one with the
bigger size or proportion, the one with a different shape or
color, the one with striking lines, the one positioned at the
center and the one that is unique
emphasis

CONTEMPORARY PHILIPPINE ARTS FROM THE REGIONS

Integrative art as applied to contemporary art
Definition of INTEGRATIVE
verb (used with object), integrated, integrating.1.to bring
together or incorporate (parts) into a whole.
2.to make up, combine, or complete to produce a whole or a
larger unit, as parts do.
3.to unite or combine.
(http://www.dictionary.com/browse/integrative)
Integrative Music Arrangements
Bumala
Bumala arranged
Paru-parong bukid
UST
Korean Children
 Sumayaw, Sumunod
  UB Voices Chorale
Integrative Dance Interpretation
UB Voices Chorale
Awitin mo, Isasayaw ko
Collage
from the French: coller, "to glue";[1] French pronunciation: 
[kɔ.laʒ]) is a technique of an art production, primarily used in
the visual arts, where the artwork is made from
an assemblage of different forms, thus creating a new whole.
(https://en.wikipedia.org/wiki/Collage)
The origin of collage is attributed to both Georges Braque and
Pablo Picasso.
(http://www.sunnyday.org/art_lesson_plans/collage_history.ht
m)
Contemporary Arts in the Philippines
(A Video presentation on the Philippine Arts)
National Artists
Music
Levi Celério
Ernani Joson Cuenco
Felipe Padilla de León
Francisco Feliciano
Lucrecia R. Kasilag
José Maceda
Antonio J. Molina
Lucio D. San Pedro
Ramón Santos
Andrea O. Veneración
Antonio R. Buenaventura
Jovita Fuentes
Dance a
Francisca Reyes Aquino
Leonor Orosa-Goquingco
Ramón Obusan
Alice Reyes
Lucrecia Reyes Úrtula
Theater
Daisy Avellana
Honorata "Atang" de la Rama
Rolando S. Tínio
Salvador F. Bernál (Set Design)
Lamberto V. Avellana
Wilfrido Ma. Guerrero
Severino Montano
Architecture
Pablo Antonio
Juan Nakpíl
Leandro V. Locsín
I. P. Santos
José María Zaragoza
Architecture, Design and Allied Arts - Fashion Design
- Ramón Valera
Historical Literature
Carlos Quirino
Visual Arts
Napoleón V. Abueva (Sculpture)
Fernando C. Amorsolo (Painting)
BenCab (Painting)
Francisco Coching
Victorio C. Edades (Painting)
Carlos "Botong" V. Francisco (Painting)
Abdulmari Asia Imao (Sculpture)
José T. Joya (Painting)
Ang Kiukok (Painting)
César Legaspi (Painting)
Arturo R. Luz (Painting)
Vicente S. Manansala (Painting)
J. Elizalde Navarro (Painting)
Hernándo R. Ocampo (Painting)
Guillermo E. Tolentino (Sculpture)
Federico Aguilar Alcuáz (Painting, Sculpture, and Mixed Media)
Literature
Francisco Baltazar
Virgilio S. Almario
Cirilo F. Bautista
N. V. M. Gonzalez
Amado V. Hernández
Nick Joaquín
F. Sioníl José
Bienvenido Lumbera
Alejándro R. Roces
Carlos P. Rómulo
Edith L. Tiempo
José García Villa
Lázaro Francisco
Cinema
Lino Brocka
Ishmael Bernál
Gerardo de León
Eddie S. Romero
Fernando Poe, Jr.
Manuel Conde
GAMABA: Gawad sa Manlilkhang Pilipino
 National Living Treasures Award
 Republic Act No. 7355
 April 1992
 National Commission for Culture and the Arts (NCCA)
 The highest policy-making and coordinating body
for culture and the arts of the State
Elements of Arts
Elements of Music
Different Contemporary Art Techniques and Performance
Practices
What are the local Materials used as applied to contemporary
art
Pine Needle Mosaic
Traditional techniques applied to contemporary creation
Contemporary Arts Production
Create art production of your own interest
(Output)
a. Visual Art
b. Music
c. Dance
 d. Theater

MARKET RESEARCH AND

IDENTIFYING CUSTOMER NEEDS
K.BALAJI
Market Research
• The planning, collection and analysis of data
relevant to marketing decision making and the
communication of the results of this analysis
to management.

Why it should be done

• To improve the quality of the decision making
• Trace problems
• Focus on keeping existing customers
• Understand changes in marketplace
Market research process
• Define the research problem
• Develop the research plan
• Collect data
• Analyze the data
• Report findings
Identifying customer needs
• However your product or the service is good,
no one will buy it if they don’t need it
• Knowing and understanding customer needs is
at the center of every successful business
10 methods for identifying customer
needs
• Analyzing with existing data
• Interviewing stakeholders
• Mapping the customer process
• Mapping customer journey
• Conducting follow me research
• Interviewing customers
• Conducting voice of customer surveys
• Analyzing the competition
• Analyzing the cause and effects
• Recoding feedback from customers
Analyzing with existing datas
• It is easier to collect and analysis the existing
datas
• Review past surveys, customer interviews and
customer call logs.
• This process does not need more funding if
the data is already collected.
Interviewing stakeholders
Interviewing stakeholders
• When you don’t have the existing data start
with the sales and support teams
• They know the product and the customers.
• They also have a list f feature requests, bug
reports and enhancements – straight from the
customer mouth.
• Combine this to generate list of requirements.
Mapping the customer process
Mapping the customer process
• Let us ride in a normal taxi company where
you have to wait to reach the dispatcher and
also waited for a car to be dispatched and also
hope that the driver would find you.
• But if you ride in uber call taxi you can open
your
Mapping customer journey
Mapping customer journey
• A customer journey is a visualization of the
process a customer goes through when
engaging with a product or service.
• It’s a document meant to unify fragmented
efforts and identify points of friction and
opportunities for improvement.
• It is about the innovation that comes from
fixing the pain.
Conducting ‘follow me home” research
• It literally means following a customer from
home to work.
• You follow a customer to her workplace,
spending the day watching her do her job.
• You observe process pain points ad then look
for opportunities for improvement.
• This step took time and sometimes led to
failure and frustration.
Interviewing customers
Interviewing customers
• Go directly to the source and ask customers
about what problems they have and what
features they want.
• Even when customers cant articulate their
needs clearly, you can often gain insights that
lead to successful innovations.
Conducting voice of customer surveys
Conducting voice of customer surveys
• This survey collect data from email or from a
pop-up on a website, about the attitudes and
expectations of existing or prospective
customers.
• Use a mix of open and closed ended questions
to produce the most useful data.
• This survey yields to identify customer goals,
challenges, problems and attitudes and
recommend for improvement.
Analyzing your competition
Analyzing your competition
• Consider using firms that might present a
more objective face to customers who engage
with your organization and its competition.
• Consider using SWOT rule : Identify your
competitor's strengths, weakness,
opportunities and threats.
• Don’t just look at your competition in the
same industry, but other industries as well.
Analyzing cause and effect
Analyzing cause and effect
• Not only positive thinking, negative thinking
can also solve problems more effectively.
• Through observations, surveys and other data
sources you can find the symptoms for the
root cause problems.
• Task failures, errors and long task times are
the usual symptoms of problems.
Recording experiences thorough diary
studies
• Ask participants to record problems,
frustrations, positive experiences or thoughts
at intervals throughout a day, week or even a
year.
• This can be low tech, with customers writing
their experiences and thoughts down on
paper and mailing it in, or high tech in which
you can send text messages or emailed
surveys to customers at particular intervals
References :
http://www.dummies.com/business/customers/10-methods-
for-identifying-customer-needs/