MODULE 1: ROLE OF BUSINESS IN SOCIAL AND ECONOMIC DEVELOPMENT

Unit 1 – Introduction to Business Ethics and Social Responsibility

I. Defining Terms
A. Ethics means the right thing.
1. It is the set of moral principles that people use to evaluate their own and other
people’s acts and activities.
B. Business
1. It is an integral part of the society which refers to organizations involve in activities
like production, marketing, promotion, and sale.
C. Business Ethics
1. It is “the application of a moral code of conduct to the strategic and operational
management of a business.” It brings moral standards into the workplace.
D. Social Responsibility
1. It refers to the obligation of the management to make decisions and act for the
benefit of the organization as well as the society at large.
2. Corporate Social Responsibility (CSR) is described as the business’ obligation to
ensure harmony amongst the economy and ecosystem.
E. Social Contract
1. Businesses are assumed to be responsible members of the economy that
encourages communal improvement and general welfare.
II. Different Business Purposes
A. To have money and have financial independence
B. To be your own boss
C. To self-actualize/fulfill own interest and enjoyment
D. To make dreams come true
E. To use skills and knowledge for yourself
F. To have second career
G. To have variety of work
H. To create opportunities
I. To employ relatives, friends and community members
J. To take up a challenge
K. To come up with better ways, to create, to innovate
L. To be efficient at work
M. To set and meet own deadlines
N. To avoid commuting
O. To create a customer
P. To offer value
Q. To have more life, more freedom
R. To solve problems
S. To move society, to change the world, to make the world better
T. To build our future.
III. Forms of Business Organization
A. Sole Proprietorship is owned and operated by one person.
1. Advantages: full control of operations, ease of formation and dissolution, all profits
go directly to the owner, less regulations, the government taxes the owner, not the
business
2. Disadvantages: limited in life, but has unlimited liability, difficulty in raising capital
B. Partnership is owned by two to five people who combined their resources (e.g. cash) to
fund the business. This type of business involves a legal agreement, Articles of
Partnership, between partners.
1. Advantages: increased potentials from two or more different strengths, easy to
form with proper agreement on its function, less regulations as compared to
corporations
2. Disadvantages: unlimited liability of one or all owners, limited life, high possibility of
dispute and conflicts between the partners
C. Corporation is a business organization owned by 5-15 people, who are called
incorporators or stockholders. This is where the Doctrine of Separate Corporate Identity
and Doctrine of Piercing the Veil of Corporate Fiction are observed.
1. Corporation can now be owned by one person or what we call the One Person
Corporation (OPC).
2. Advantages: more source of funds, easy to transfer ownership, liability of owners if
limited, unlimited commercial life
3. Disadvantages: more regulations to follow, profit is taxed at the corporate rate,
costly to incorporate, stockholders are taxed again when profits are distributed to
them
D. Cooperatives is a business owned by group of individuals and is operated for their
mutual benefit. This is an organization formed to provide its members goods and
services at reasonable rates.
1. Advantages: inexpensive to organize, owned and controlled by members, equal vote
regardless of level of investment, limited Liability, profit distribution based on
patronage to the business
2. Disadvantages: longer decision making process, less incentives, for service rather
than profit, limited distribution of profits to members, extensive recording is necessary
IV. Nature of Business Organization
A. Service Business provides intangible products.
1. Examples are transportation businesses and financial businesses.
B. Merchandising Business, also known as “buy-and-sell”, is a business that buys product
at a wholesale price and sells the same at retail price
1. Retailers and distributions are example of this.
C. Manufacturing Business buys goods and use them as raw materials to create a new
product.
1. Mining, agriculture, and real estate are some of its examples.
D. Hybrid Business is a combination of service, merchandising, and manufacturing
business.
1. Restaurant is a very good example of this.
V. Role of Business Organization in the Economy
A. Small Businesses
a. Vital factors in economic growth, job creation, and overall health and welfare of
economy.
B. Microenterprises
a. Dynamic part of market economy
b. Easier access to goods and services
c. A point of entry for millions into the social and economic mainstream of society
C. Corporations
a. Provides better jobs
b. Establish links to suppliers
c. Encourages increased consumer spending
d. Sharing of a resource pool and knowledge transfer between businesses
VI. Socio-Economic Impact of Businesses to the Society
A. Socio-economic Development is the society’s social and economic development which
is calculated through GDP, HDI, and such.
B. Social Functions of Business
1. Promotion of common good
a. Business’ role in poverty alleviation
b. Corporate Social Responsibility (CSR)
2. Protection of individuals’ interests
a. Morality of advertising
b. Corporate of Act of the Philippines (RA 7394)
c. Labour-related ethical issues
3. Preservation of human society
a. Sustainable development
b. Inside Trading
c. Whistle blowing
VII. Sustainable Development Goals (SDG)
A. No Poverty
B. Zero Hunger
C. Good Health
D. Education
E. Gender Equality
F. Clean Water
G. Clean Energy
H. Economic Growth
I. Industry and infrastructure
J. No inequality
K. Sustainability
L. Responsible Consumption
M. Climate Change
N. Life Underwater
O. Life on Land
 P. Peace and Justice
Q. Partnership

Unit 2 – Core Principles and Common Practices in Business

I. Core Principles in Business Operations

A. Fairness is the ability to judge equally without reference to one’s feelings or interests.
1. Justice means giving each person with what he/she deserves.
2. Philosophies reinforcing fairness
a. Aristotle - “equals should be treated equally & unequals unequally”
b. Rawls - “the members of a community depend on each other, and they retain
their social unity only to the extent that their institutions are just.”
c. Kant - “human beings are all equal in this respect: they have the same dignity
and in virtue of this dignity they deserve to be treated as equals.”
B. Accountability refers to the obligation of an individual or organization to account for its
activities.
1. Corporate Accountability - the act of being accountable to the stakeholders of an
organization.
C. Transparency is the lack of hidden agendas and conditions.
1. Corporate Transparency means corporation’s actions are observable by outsiders.
2. It promotes:
a. Respect
b. Positive Public Perception
c. Customer Service
d. Image Management
D. Stewardship embodies the responsible planning and management of resources.
1. Corporate Stewardship means passing the company in a better shape for your
inheritor than is was handed over to you by your ancestor.
E. Other Principles in Business
1. Honesty
2. Integrity
3. Keeping promises
4. Loyalty
5. Caring
6. Respect
7. Obeying the law
8. Excellence
9. Being a leader
10. Morale
F. Its effect in the Socioeconomic Development
1. Fairness
a. Promotes healthy competition
b. Favoritism, cronyism, and nepotism weaken the common good
c. Hampers more development in social and economic growth.
 2. Transparency and Accountability
a. Vital in resourceful and effective functioning of modern economy.
b. Absence; creates mistrust between the government and the people, and lead to
unsteady society.
II. Business practices - a strategy, process, or procedure that a business uses or adheres to in
order to achieve its objectives
A. Decorum
B. Protocol
C. Policies
D. Advertising
E. Marketing
F. Bookkeeping
G. Reportorial Requirements
H. Documentation
III. Code of Ethics (originally called as “creeds” or “credo”)
A. It is a document that seeks to outline the main philosophical tenets and define the
values that the organization upholds.
B. Its Importance
1. To achieve unified direction
2. Obtain satisfactory level of control over the conduct of business
3. Clearly lays out the rules for behaviour and gives the groundwork for a pre-emptive
warning
C. Components
1. Values
2. Principles
3. Management Support
4. Personal Responsibility
5. Compliance
D. Ways in Creating Code of Ethics
1. Review sample codes of ethics that companies in a similar business use.
2. Review other documents related to your business, including the firm’s mission
statement and any specific policies new hires receive as part of their orientation.
3. Think about the ethical dilemmas that may face not only your company, but also its
competitors.
4. Solicit input from employees when you create the code of ethics.
5. Address potential workplace issues, such as office romances and nepotism, in your
code of ethics.
6. Assign an individual in your company to be responsible for compiling the code of
ethics.
7. Ask your attorney to review the proposal code of ethics before putting it in force.