an ethics about how to manage your business properly

1. Morally, defensible
position on ethical
issues in business.

2. OBJECTIVES:
• K: Identify the different ethical issues in business;
• S: Make business policies and practices against
• ethical issue in an enterprise; and
• A: Apply business policies and practices against
• ethical issues as an entrepreneur in the future.

3. Major Ethical Issues in Entrepreneurship
1. BasicFairness
Ethical decision-making processes should center on protecting
employees’ and customer rights, making sure all business operations are
fair and just, protecting the common good, and making sure the
individual values and beliefs of workers are protected.

4. Example:
a. Partners – Suppose you are a partner in a business and see a great deal of profitability
on the horizon. You don't believe that your partner deserves to profit from the business’s
future success because you don't like his personality. You may wonder if you could simply
take his name off the bank accounts, change the locks, and continue without him. If you
proceed with this course of action, you would likely be in violation of your ethical and legal
obligation to act in good faith concerning your partner.
What to Do? : The better course of action may be to simply buy out his interest in the
business.
b. Gross Negligence – Suppose you are on the board of directors for a publicly traded
corporation. You and your fellow board members, in hopes of heading off early for the
holidays, rush through the investigatory process involved in a much-
anticipated merger. As a board member, you have a duty to exercise the utmost care
respecting decisions that affect the corporation and its shareholders. Failing to properly
investigate a matter that affects their interests could be viewed as gross
negligence supporting a breach of your ethical and legal duty.

5. 2. Personnel and Customer Relations
a. Mistreating Employees – Not meeting minimum wage requirements.
-Ignoring overtime pay laws.
- Misclassification of employees.
- Workplace discrimination.
- Workplace retaliation.
b. Discrimination and Harassment in the Workplace – Maintaining professional workplace
relationships between employees is a continuing challenge for employers regardless of the
industry. This challenge can become more difficult when the image companies choose to project
has a significant sexual charge. There’s never an excuse or a justifiable reason for harassment
of any kind in any workplace. If a supervisor discriminated against an employee based on her
gender, religion, or ethnicity when making recommendations for a promotion, legal action could
be sought.

6. c. Family-Run Businesses – In the area of small business, some major ethical results are from
hiring, firing, and dealing with employees. For example, conflicts of interest may cause ethical
issues in small businesses, especially if they are family run. When personal family issues interfere
with business decisions, this is a conflict of interest and an ethical concern.
d. Employee Behavior – From large corporations to small businesses, individuals involved in all
types of business often face ethical issues stemming from employee behavior. For example,
whether an employee can spend work time checking personal email accounts, how a manager
deals with claims of harassment, and to what extent a manager can “groom” a certain employee
for a promotion are all examples of ethical issues regarding employee behavior. There are legal
consequences for some unethical employee behavior.
e. Employee Working Conditions – Employers must be aware of the safety of their work
environment and if they have compensated employees for all the time they have worked. They
must also consider if they have required an employee to work an unreasonably long period of time
or if they have him doing an unusually difficult task.

7. f. Side Deals and Sub-Standard Work – When dealing with customers or clients, business people
must ensure that they use their information correctly, do not falsely advertise a product or service,
and do not intentionally do sub-standard work
3. Distribution Dilemmas
Ethics is a prime concern in marketing, and the areas of price, placement, and promotion are no
exception.
• Pricing refers to the way in which prices are set for consumers considering the cost of inputs,
distribution, and overhead.
• Placement involves the strategic positioning of products within retail stores.
• Promotions involve short-term price discounts or giveaways. Each of these areas presents its own
set of ethical dilemmas, challenges, and legal guidelines to navigate.

8. a. Pricing Strategy Ethics – Price collisions can be a major source of ethical pressure in many
industries, and artificial price-fixing is illegal in a wide range of countries. Price collusion exists
when a number of competitors agree to set prices at a certain level, bypassing the natural
market forces of supply and demand and creating an unfair advantage over consumers.
b. Product Placement Ethics – End-caps, point-of-sale displays, and demo kiosks are all examples
of positioning techniques that are inherently harmless, but can be used inarguably unethical
ways.
c. Ethics and Promotions – Promotions are designed to boost short-term sales by providing
irresistible value propositions to consumers. Coupons, holiday sales events, mail-in rebates, and
giveaways all fall under the promotions category. The “bail and switch” tactic is widely considered
unethical, yet many companies still practice this promotion technique.

9. 4. Fraud
Fraud in business takes up so many forms and sizes. It can be in the
form of financial misconduct or misrepresentation.
a. Charity Fraud – using deception to get money from individuals believing they are making
donations to a legitimate charity. organizations, especially charities representing victims of
natural disasters shortly after the incident occurs
b. Internet Auction fraud – A fraudulent transaction or exchange that occurs in the context of an
online auction site.
c. Non-delivery of merchandise – fraud occurs when payment is sent but the goods and services
ordered are never received.
d. Non-payments of funds – fraud occurring when goods and services are shipped or rendered but
payment for them is never received.

10. e. Overpayment scheme – an individual is sent a payment significantly higher than an owed
amount and is instructed to deposit the money in their bank account and wire transfer the excess
funds back to the bank of the individual or company that sent it. The sender’s bank is usually
located overseas, in Eastern Europe for example, and the initial payment is found to be
fraudulent, often after the wire transfer has occurred.
f. Re-shipping scheme – an individual is recruited to receive merchandise at their place of
residence and subsequently repackage the items for shipment, usually abroad. Unbeknownst to
them, the merchandise was purchased with fraudulent credit cards, often opened in their name.
5. Unfair Competition or Distortion of Completion
-Is a situation in which competitors compete on unequal terms because favorable or
disadvantageous conditions are applied to some competitors but not to others. The concept can
also refer to situations in which the actions of some competitors actively harm the positions of
others with respect to their ability to compete on equal and fair terms.

11. a. Anti-trust Law or Competition Law – when one competitor attempts to force others out of the
market or prevent others from entering the market, through tactics such as predatory pricing
or obtaining exclusive purchase rights to raw materials needed to make a competing product.
b. Trademark Infringement – when the maker of a product uses a
name, logo, or other identifying characteristics to deceive consumers into thinking that they are
buying the product of a competitor.
c. Misappropriation of Trade Secrets – when one competitor uses espionage, bribery, or outright
theft to obtain economically advantageous information in the possession of another.
d. Trade Libel – the spreading of false information about the
quality or characteristics of competitors’ products.
e. Tortious Interference – when one competitor convinces a party having a relationship with
another competitor to breach a contract with, or duty to the other competitor.

12. f. Anti-competitive practices – prevent or reduce competition in a market.
g. Dumping – Foreign countries often use dumping as a competitive threat, selling products at
prices lower than their normal value. This can lead to problems in domestic markets. It becomes
difficult for these markets to compete with the pricing set by foreign markets, leading to local
producers and the local economy suffering a result.
h. Exclusive dealing – A retailer or wholesaler is obliged by contract to only purchase from the
contracted supplier.
i. Price fixing – companies collude to set prices, effectively dismantling the free market.
j. Refusal to deal – two companies agree not to use a certain vendor.
k. Dividing territories – an agreement by two (2) companies to stay out of each other’s way and
reduce competition in the agreed- upon territories.

13. l. Limit pricing – is set by a monopolist at a level intended to discourage entry into a market.
m. Tying – products that aren’t naturally related must be purchased
together.
n. Resale price maintenance – resellers are not allowed to set prices independently.
o. Religious/minority group doctrine – businesses must apply tribute to a significant normally
religious part of the community in order to engage in trade with that community.
6. Unfair Communication
Communication used to undermine relationships or encourage social immorality is unethical
communication. The exact definitions of these depend on the ethics system of your culture, but
most people agree that ethical communication builds positive relationships, while unethical
communication impairs them.

14. 7. Non-respect of Agreements
• is a breach of contract. A breach of contract is a legal cause of action in which a binding
agreement or bargained for exchange is not honored by one or more of the parties to the contract
by non-performance or interference with the other party’s performance.
8. Environmental Degradation
• is the deterioration of the environment through depletion of resources such as air, water, and soil;
the destruction of ecosystems and the extinction of wild life.
• Environmental economics concludes that environmental
degradation results from the failure of markets, whereas the entrepreneurship literature argues that
opportunities are inherent in market failure.
9. Contractualization or Labor Contractualization

15. • is the replacement of regular workers with temporary workers who receive lower wages with no or
fewer benefits. These temporary workers are also known as sometimes called contractures,
trainees, apprentices, helpers, casuals, piece raters, agency-hired, and project employees among
others. They do the work of regular workers for a specified and limited period of time, usually less
than six months.
• contractualization is a form of underemployment. The right to adequate work and full employment
is essential to all men and women of legal age. This basic right springs from our intrinsic nature to
self-preservation and our innate obligation to support our family, both of which are in accordance
with the divine plan. Although underemployment (contractualization and part-time jobs) continues
to exist in many various ways, there are no reasons adequate enough to justify it. The key principle
is that full employment is a fundamental right of every citizen, which means the right to be
protected from unemployment and underemployment is basic. The harsh reality, however, appears
to contradict this idealism embodied in our constitution. In most cases, on the part of the job
seekers, who are almost always breadwinners, it is a choice between joblessness and
underemployment, a quick option between hunger and at least –there’s-hope-for-survival.