Chapter 1

The Role of Business in Social and

Economic Development
Lesson 2 : The Social Function of Business
Learning Competency:
The learners show how these
organizations contribute to socioeconomic
development
Why Should Business be ethically Sensitive
Why Should Business be Ethically
Sensitive?

Ethics
-Is the moral principles that govern a person’s
or group’s behavior.

Business Ethics
-Refers to principles about how businesses and
the organizational members should behave.
Businesses Worldwide
- In 2002, produced more than 40 trillion
dollars worth of goods and services.
 
Businesses play a major role in
keeping any economy alive
-Necessary to ensure the proper and
ethical governance of businesses.
-Managers, employees and organizational
leaders must behave in an ethical manner
in managing and operating a business.
Business Activities
-Must be viewed and examined from the
perspective
  of morality
Fundamental reason for examining
the activities of business from the
social and ethical perspective
-For the promotion of the common good of
any individual
-Protection of the individual’s interest
-Preservation of the human society in general
Without This Ethical Consideration
-Business will be a chaotic human activity
because there will be no common
understanding and agreement about what is
the right and wrong human conduct.
Integrity
-Is the paramount for a successful managerial
career, one must grasp the norms of ethical
behavior if one wants to succeed in the field of
finance and business.
In the first few years in 21st century
-Corporate world has come under increasing
pressure to behave in an ethically responsible
manner.
-Accountability failures have led to
bankruptcies and restatements of financial
statements that have harmed countless
shareholders, employees, pensioners, and
other stakeholders
-This failures have created a crisis of investor
confidence and cause stock markets around
the world to decline by billions of dollars.
Ethics are moral principles that guide
the conduct of individual
-Business managers and employees sometimes
behave in an unethical manner.
-A number of managers of companies in the
last two decades engaged in accounting or
business fraud
-These ethical violations led to fines, firings,
and lawsuits. In some cases, managers were
criminally prosecuted, convicted and sent to
prison.
Four Main Reason that may persuade
a business to act ethically
1. Legal reasons, of which there are several
different sorts
2. Public image reasons, which again, might
encompass a number of different types
3. Pragmatic reasons, acknowledging that
sometimes, acting ethically might be the most
direct path to business success
4. Moral reasons, where it is affirmed that these
reasons are different from each of the other
three types
 Case Study
Amit was a young & dynamic manager at XYZ Pvt Ltd and
was recently married. Due to the nature of his job, he
had to do lot of travelling and therefore unable to
devote his time for his wife. At one time he was away
for 25 days tour only to return for a day and again go
for 10 days tour. This situation led to differences in his
married life, turning to serious note. Once he took his
wife along with him to tour and found that he and his
wife could stay in hotel within the permissible limits of
his lodging & boarding allowance with no extra burden on
his company. Thus he was away for work for a good part
of the day but could spend time with his wife in the
evenings. This situation worked out perfectly for himself
& his wife and their relations became good. Therefore
he started taking his wife along with him on his tours.

Is it ethical on the part of Amit? Why or Why not?

THANK YOU!!!
The articles of incorporation
formally create the corporation.
The corporate management and
board of directors then prepare a
set of bylaws, which are the rules
and procedures for conducting the
corporation’s affairs.  
Cost may be incurred in organizing
a corporation. These cost include
legal fees, taxes, state
incorporation fees, license fees,
and promotional cost. Such cost
are considered Organizational
Expenses
 Quiz
1. The Partnership form of business
organization__________

a. Is a separate legal entity

b. Is a common form of organization for service
type of business
c. enjoys an unlimited life
d. has limited liability
2. A business organized as a
corporation___________

a. is not a separate legal entity in most states

b. requires that the stockholders be personally
liable for debts of the business
c. is owned by its stockholders
d. terminates when one of the stockholders
dies
3. Which of the following is not an
advantage of the corporate form of
business organization?

a. limited liability of stockholders

b. transferability of ownership
c. unlimited personal liability for
stockholders
d. unlimited life
4. A small neighborhood barber shop
that is operated by its owner would
likely be organized as____________

a. joint venture
b. partnership
c. corporation
d. proprietorship
5. Joan and Sara met at law school and decide
to start a small law practice after graduation.
They agree to split revenues and expenses
evenly. The most common form of business
organization for a business such as this would
be a _______________

a. joint venture
b. partnership
c. corporation
d. proprietorship
THANK YOU!!!