Business Ethics and

Social Responsibility

Major Ethical Issues Entrepreneurship

 Learning Objectives
K - Identify and describe the major ethical issues and dilemmas
commonly faced by entrepreneurs.
S - Apply ethical reasoning and critical thinking skills to analyze
and evaluate ethical issues in entrepreneurship.
A - Develop empathy and a sense of ethical purpose in
contributing to the betterment of society through
entrepreneurship.
 The ethical foundation of a company is
important to the way a company is perceived by
customers and peers alike. It is also a source of
pride and self-respect for the company itself.
While appropriate business ethics may be
subjective, depending upon the context of your
business, some basic principles of ethics will
apply regardless of the type of business you
operate.
 Ethical business relationships are
less often a matter of legal
compliance as they are of conscious
self-governance by individuals and
businesses.
RECOGNIZING AN ETHICAL ISSUE
(ETHICAL AWARENESS)
Understanding business ethics is to develop ethical issue awareness.

Awareness arises because of conflicts among

individuals’ personal moral philosophies and
values, the values and culture of the organizations
in which they work, and those of the society in
which they live.
 RECOGNIZING AN ETHICAL ISSUE
(ETHICAL AWARENESS)
What will happen if businesses fail to
acknowledge ethical issues?
Failure to acknowledge ethical issues puts
corporations at great risk, particularly in industries
where business is perceived as a game that must be
won at all costs.
Understanding
foundational values can
help identify and develop
discussions and a
constructive dialogue on
appropriate conduct.
Honesty, fairness, and
integrity are the glue that
holds businesses together.
 What is Honesty?
Honesty refers to truthfulness or
trustworthiness. Issues related to honesty
also arise because business is sometimes
regarded as a “game,” governed by its own
rules rather than by those of society.
What is Dishonesty?
Dishonesty is a lack of integrity, incomplete
disclosure, and an unwillingness to tell the
truth. Lying, cheating, and stealing are actions
usually associated with dishonest conduct.
 What is Integrity?
Integrity refers to being whole, sound, and in
an unimpaired condition. In an organization,
it means uncompromising adherence to
ethical values.
 What is Fairness?
Fairness is the quality of being just, equitable,
and impartial..
ETHICAL ISSUES AND DILEMMAS IN

An ethical issue is a problem,

BUSINESS situation,
or opportunity that requires an
individual, group, or organization to
choose among several actions that must
be evaluated as right or wrong, ethical, or
unethical.
ETHICAL ISSUES AND DILEMMAS IN

An ethical dilemma is
BUSINESS a problem,
situation, or opportunity that requires an
individual, group, or organization to
choose among several actions that have
negative outcomes.
UNETHICAL BUSINESS PRACTICES
These are business actions which usually don’t meet the
standards of acceptable business operations.

A. Basic Fairness
Gross negligence
Failing to properly investigate a matter
that affects the corporation and its
shareholders.
UNETHICAL BUSINESS PRACTICES
B. Personnel and Consumer Relations
Mistreating employees / Abusive or intimidating behavior
This can mean anything from physical threats,
false accusations, annoying behavior, profanity,
insults, yelling, harshness, ignoring someone,
or even unreasonableness.
UNETHICAL BUSINESS PRACTICES
B. Personnel and Consumer Relations
Mistreating employees / Abusive or intimidating behavior
Bullying - associated with a hostile workplace
where a person or group is threatened,
harassed, or overly criticized.
UNETHICAL BUSINESS PRACTICES
B. Personnel and Consumer Relations
Mistreating employees / Abusive or intimidating behavior
Workplace Discrimination – different treatment
to an individual, group or an organization based
on the employee having a different personal
characteristics or circumstances. (Age, Race,
Disability, Religion Gender, and others)
UNETHICAL BUSINESS PRACTICES
B. Personnel and Consumer Relations
Mistreating employees / Abusive or intimidating behavior
Workplace Harassment – an ethical issue that
involves the social and personal treatment of
people within a small business. This can include
teasing, sexual comments, verbal and physical
sexual advances, visual displays, and in-appropriate
body language.
UNETHICAL BUSINESS PRACTICES
B. Personnel and Consumer Relations
Unethical employee behavior/working conditions and side
deals and substandard work
Example: Misuse of company time and resources
UNETHICAL BUSINESS PRACTICES
B. Personnel and Consumer Relations
Unethical employee behavior/working conditions and side
deals and substandard work
• Taking advantages of company’s possession such
as office supplies, company vehicle, equipment,
and internet.
UNETHICAL BUSINESS PRACTICES
B. Personnel and Consumer Relations
Unethical employee behavior/working conditions and side
deals and substandard work
• CYBERLOAFING – the use of technology that is not
related, like email, social media, and internet
shopping.
• MOONLIGHTING – the use of organization’s time
and resources to complete non-work-related task.
UNETHICAL BUSINESS PRACTICES
C. Fraud –
Any purposeful communication that
deceives, manipulates, or conceals facts in
order to harm others.
Fraud is a crime that can result in fines
and/or imprisonment.
UNETHICAL BUSINESS PRACTICES
C. Fraud –
Types of fraud:
1. Accounting fraud - usually involves falsifying
information about a corporation’s financial
reports, which would otherwise provide
important information about the financial
health of the company to investors and other
stakeholder groups.
UNETHICAL BUSINESS PRACTICES
C. Fraud –
Types of fraud:
2. Marketing fraud - is the process of
dishonestly creating, distributing, promoting,
and pricing products. False or misleading
marketing communications can destroy
stakeholder trust in a corporation.
UNETHICAL BUSINESS PRACTICES
C. Fraud –
Types of fraud:
3. Consumer fraud - occurs when consumers
attempt to deceive businesses for their own
gain. There are many different ways of engaging
in consumer fraud, from stealing from stores to
price tag switching, to lying to obtain discounts.
UNETHICAL BUSINESS PRACTICES
D. Distribution Dilemmas –
Product Placement Ethics –
• Slotting Allowances – cash payments paid by
large and financially strong brands to secure
the best shelf space in retail stores.
UNETHICAL BUSINESS PRACTICES
E. Unfair Competition –
1. Trademark Infringement –
Unauthorized use of a trademark or service
mark on or in connection with goods and/or
services in a manner that is likely to cause
confusion, deception, or mistake about the
source of the goods and/or services.
UNETHICAL BUSINESS PRACTICES
E. Unfair Competition –
2. Misappropriation of trade secrets –
One competitor uses espionage, bribery, or
outright theft to obtain economically
advantageous information in the possession
of another.
UNETHICAL BUSINESS PRACTICES
E. Unfair Competition –
2. Misappropriation of trade secrets –
Bribery - The practice of offering something
(usually money) in order to gain an illicit
advantage.
UNETHICAL BUSINESS PRACTICES
E. Unfair Competition –
Two kinds of Bribery:
• Active bribery means that the person who
promises or gives the bribe commits the
offense.
• Passive bribery is an offense committed by
the receiver of the bribe.
UNETHICAL BUSINESS PRACTICES
E. Unfair Competition –
3. Trade Libel –
Defamation and falsehood that purposely
tries to damage the name and quality of a
company's goods or services.
UNETHICAL BUSINESS PRACTICES
E. Unfair Competition –
4. Tortious interference –
Competitor convinces a party having a
relationship with another competitor to
breach a contract with, or duty to the other
competitor.
UNETHICAL BUSINESS PRACTICES
E. Unfair Competition –
5. Dumping –
Selling a product in a competitive market at a
loss for the hope of forcing other competitors
out of the market after which the company
would be free to raise prices for a greater
profit.
UNETHICAL BUSINESS PRACTICES
E. Unfair Competition –
6. Exclusive Dealing –
Retailer or wholesaler is obliged to only
purchase from the contracted supplier.
UNETHICAL BUSINESS PRACTICES
E. Unfair Competition –
7. Price Fixing –
It is an agreement (written, verbal, or inferred
from conduct) among competitors that raises,
lowers, or stabilizes prices or competitive
terms.
UNETHICAL BUSINESS PRACTICES
E. Unfair Competition –
8. Refusal to Deal –
Practice of refusing or denying supply of a
product to a purchaser, usually a retailer or
wholesaler.
UNETHICAL BUSINESS PRACTICES
E. Unfair Competition –
9. Dividing Territories –
Agreement of two companies to stay out of
each other’s way and reduce the competition
in the agreed upon territories.
UNETHICAL BUSINESS PRACTICES
E. Unfair Competition –
10. Limit Pricing –
Practice of setting a product or service price
at a level, employed by a dominant firm in a
market, just low enough to deter potential
market entrants from competing in a market.
UNETHICAL BUSINESS PRACTICES
E. Unfair Competition –
11. Tying –
Products that aren't naturally related must be
purchased together.
UNETHICAL BUSINESS PRACTICES
E. Unfair Competition –
12. Resale price maintenance –
Resellers are not allowed to set prices
independently.
UNETHICAL BUSINESS PRACTICES
E. Unfair Competition –
13. Absorption of a competitor or competing
technology –
The powerful firm effectively co-opts or
swallows.
UNETHICAL BUSINESS PRACTICES
E. Unfair Competition –
14. Patent misuse and copyright misuse –
Obtaining a patent, copyright or other forms
of intellectual property or using such legal
devices to gain an advantage in an unrelated
market.
THE PHILIPPINE COMPETITION ACT (PCA)
R.A. 10667
• The primary competition policy of the Philippines for
promoting and protecting the competitive market.
• Protect the well-being of consumers and preserve the
efficiency of competition in the marketplace.
• Ensure that markets are open and free, challenging
anticompetitive business practices while maintaining an
environment where business can compete based on the
quality of their work.
UNETHICAL BUSINESS PRACTICES
F. Unfair Communication –
LYING - Relates in distorting the truth

Commission Lying – is creating a perception

or belief by words that intentionally deceive
the receiver of the message, for example,
lying about at work
UNETHICAL BUSINESS PRACTICES
F. Unfair Communication –
LYING - Relates in distorting the truth
Omission Lying – is intentionally not informing the
channel members of any differences, problems,
safe warnings, or negative issues relating to the
product, service, or company that significantly
affects awareness, intention, or behavior.
UNETHICAL BUSINESS PRACTICES
G. Non-Respect of Agreements –
BREACH OF CONTRACTS
A legal cause of action in which the binding
agreement or bargained for change is not
honored by one or more of the parties to the
contract by non-performance or interference
with the other party’s performance.
UNETHICAL BUSINESS PRACTICES
H. Environmental Degradation –
Business enterprises overuse available natural
resources, and emit hazardous pollutants; thus,
they contribute to the advancing degradation of
existing ecosystems, deterioration of environment
through depletion of resources such as air, water
and soil and extinction of wildlife causing serious
threats to the biological diversity of our planet.
UNETHICAL BUSINESS PRACTICES
I. Contractualization –
Replacing of regular workers with temporary
workers who receive lower wages with no or
less benefits; they do the work of regular
workers for a specified and limited period of
time.
Thank You
for
listening!