The document discusses business ethics and social responsibility. It defines business ethics as the moral principles governing the behavior of business people and their agents. It discusses the need for ethical behavior in business and areas of concern like product safety and fair employment practices. It also covers social responsibility, the different interest groups affected by business, benefits and costs of social actions, and strategies and audits for ensuring social responsibility.

1. What is Business Ethics?
• Ethics refers to the study of morals and moral choices
of human beings. The subjects covered by ethics
include the behavior of individuals and groups, which
are governed by standards, rules and codes of conduct.
The moral principles defining right and wrong behavior
of business persons and their agents are called
BUSINESS ETHICS.

2. THE NEED FOR ETHICAL BEHAVIOR
• People in highly developed economies were the first
to experience and to be aware of unethical behavior
of business firms. Many of them pushed for changes
in the way businesspersons pursue their trade. Some
of their ideas found their way in the legistative bodies,
which later accommodated them by passing laws in
support of their agenda on business ethics.

3. PUBLIC OPINION
Issues on Business Ethics
Some Issues are Considered
by Congress
Some Issues are Left to the
Businesspersons to Considered
A few issues are
passed into law
Some issues
are
disregarded
A few issues
are considered
Some
issues are
disregarde
d

4. • As many less developed countries like the Philippines look up to
the highly developed ones as some sort of model, the concerned
about business ethics will be replicated. The disclosure of certain
facts of business transactions, which became a requirement in the
Philippines some years later. An example “Truth is Lending Act”
requiring financial institutions to take some ethical actions “to
protect citizens from a lack of awareness of the true cost of credit
to theuser by assuring a full disclosure of such cost with a view of
preventing the uninformed use of credit to the national economy.

5. AREAS OF CONCERN FOR BUSINESS
ETHICS
• Business ethics covers all areas encompassed by business transaction. The ethical conduct of businesspersons may be measured againts how
the ff. are adhered to:
• 1.laws and regulations promulgated by the government ; and
• 2.specific ethical required but not yet passed into law.
• The following are concerns relating to laws and regulations requiring ethical behavior :
• 1.product safety and quality;
• 2.fair employment practices:
• 3.fair marketing and selling practices
• 4.the use of confidential information for personal gain;
• 5.community involvement
• 6.bribery;and
• 7.illegal payments to foreign governments to obtain business.

6. Currents issues in Ethics
• It is not surprising for the mrdia to provide information on any of the ff. concerns among
others:
• 1.owners of food stails serving spoiled foof to customers;
• 2.business owners making fictitious insurance claims;
• 3.school awarding diplomas to undeservings persons;
• 4.a contributor bribing a government official to manipulate the bidding of contracts:
• 5.a drug manufacturer making false claims regarding the efficacy of his product; and
• 6.a television station copying format of a rival station’s show.

7. Coverage of Company Ethics Program
A very important listing of the problem areas, which may be used as basis for formulating company policies on ethical are as follow:
• 1.drug and alcohol abuse
• 2.employee theft:
• 3.conflicts of interest;
• 4.quality control;
• 5.misuse of proprietary information
• 6.abuse of expense accounts;
• 7.plant closings and layoffs;
• 8.misuse of company assets
• 9.environmental pollution;
• 10.methds of gathering competitors information
• 11.inaccuracy of books
• 12.receiving excessive gift and entertainment; and
• 13.false or misleading advertsing.

8. THE IMPROVEMENT OF ETHICAL PERFOMANCE
• 1. ETHICS TRAINING. If ethics in really an important aspect of managing a
business, then its practice should be expected from he firms management and rank-
and-file employees.
2.ETHICAL ADVOCATES. An ethical advocate is a person who is knowledgeable
about business ethics, employed by the company, and acts as the company’s
conscience.
3.ETHICAL CODES. Codes of ethics are documents that specify practices that are
unethical and which the company expressly forbids.
4.WHISTLE-BLOWING. There are instances when employees are helpless that they
cannot implement the right ethical conduct required in specific situations.

9. WHAT IS SOCIAL RESPONSIBILITY?
•Social responsibility refers to the concern of
business for the welfare of the society. This
definition indicates that the firm must
perform is function without harming the
community. It must improve the quality of
life.

10. INTEREST GROUPS
• There are various groups with interests that are different from one another.These interests must be properly considered by
the business firm for it to be successful.
• BUSINESS
• -Owners
• -The community at large
• -The handicapped
• -Older People
• -Women
• -Minority Groups
• -Employees
• -Consumers

11. 1.Owners. The interest of the owners (the sole proprietor, the partners, or stockholder) are expected
to be of the highest priority. For some reason, this does not always happen.The biggest
incongruence lies in the corporate form.
2.Consumers. They constitute a very important group, which must be handled with some degree of
responsibility. Consumers, like any other groups, have rights.The basic right of consumers include
those concerning presentation ,information, a healthy environment, safety, basic good and services,
choice, consumer education, and redress.
3.Employees. Business firms should regard employees as among its greatest concerns. Employee
welfare is of utmost importance. Among the specific points of interest in caring about employees
are;
a.)Health and safety. Management should be concerned with reducing incidents of work-related
sickness and injury. Workers in a factory, for instance, must be informed or properly trained in the
use of certain equipment and materials as some of these pose great risk of harm to the workers.
b.)Appropriate salaries and employee benefits. Employees must be paid with salaries
commensurate to their talents, skills, training, and education. Managers are advised not to play games
with compensation. If they do not live to every written and oral agreement, they risk losing respect.

12. C.)The right to speak out. The right to speak out is everyone’s
right in a democracy. Employees must not be deprived of this right
by virtue of their employment.
D.)The right to privacy. Employees have to right to live their
own private lives without interference from their employers. Data
on personal finances, health, travels abroad, and affliation with
organization and other persons must not be the concern of
employers regarding their employees.
E.)The right to job security. Employees must be assured of
security of tenure. They must not be threatened with dismissals
unless there are valid reason.

13. 4.Minority Groups. Various minority groups are found all over
the Philippine archipelago; The Aetas, the Igorots, the Dumagats,
and the ibanags are examples. The denigration of these groups as
second-class citizens or funny looking people including their
inclusion in demeaning scenes in the media happen every now
and then.While this wrong attitude toward minority groups has
spilled over into the business community, management must treat
them as equals as far as their employment and promotion are
concerned.
5.Woman. They constitute a potential force to make business
progressive. In spite of findings that woman are no less ambitious
than men, no less motivated to do a good job, and no less
qualified, there are still undertapped as a business resource.

14. 6.)Older People. The government is slowly recognizing older
people,as a group.They are are regarded as “senior citizen” with
privileges like discounts in many business establishments.
7.)The Handicapped. Since handicapped person may contribute
positively to the firm’s objectives,they must not be discriminated
against in any activity like hiring and promotion.
8.)The Community at Large. People living in communities have
problems in common. Some of these are related to pollution,
traffic, substandard, products, unfair business practices, and so on.

15. BENEFITS AND COSTS OF SOCIAL ACTIONS
If business firms are socially responsible, will it be good for business? To
properly answer this question, the beefit and cost approach may be useful.
BENEFITS
Companies that are socially responsible reap benefits, which may be direct or
indirect.Among the possible benefits are follow:
1.)Improved Employee Satisfaction and Motivation. A socially responsible company
is more likely to provide job satisfaction to its employees.
2.)Becoming More Aware of Changing Consumer Tastes and Preferences. When the
firms research includes identifying social needs thtat can be served, it will only be a
step away from knowing any changes in consumers taste and preferences.

16. 3.) Greater Demand for the Company’s Product and Services. Consumers currently have better access to
information.They get these from the broadcast and print media.
4.)Preference for Socially Responsible Companies by Investors. Companies that are socially concerned may find their
stocks sold in the market price at a higher market price.
5.)Elimination of Legislative Controls on Business Activity. When social issues become the concern of legislative
bodies, sanctions and other prohibitions may result in more opportunities lost and lesser chances of profit-
making for the firm.
COSTS
Even if socially responsible actions have benefits, they “cannot be undertaken ”without the attendant costs.
The costs refer to the following:
1.)Money Spent in Support of Social Projects. To support social projects, fund have to be taken from whatever
sources is available with the firm.
2.)Reduction of Competitive Power. When the company to finance social projects uses part of available funds,
this will reduce the funds that could be used for competitive purposes.
3.)Government Regulations May Also be Imposed. Even if the company is acting in socially responsible way, there is
still a chance that the government will step in and impose regulations even a long areas covered by the
company ’social actions.

17. COMPARING COSTS AND BENEFITS
Awareness of the costs and benefits of social actions, the company can compare one with the other. The management can
then decide whether or not to push through with their social projects.
SOCIAL REPONSIBILITY STRATEGIES
If the company has already decided on becoming socially responsible, it can do so by adapting a systematic approach. The
approaches are expressed in four basic social responsibility strategies as follows;
1.REACTION STRATEGY-the company allows a condition or potential problem to go unresolved until the public finds
out about it.
2.DEFENSE STRATEGY-the company tries to minimize or avoid additional obligations. Among the tactics used are legal
maneuvering and seeking the support of groups that back up the company’s way of doing business.
3.ACCOMODATION STRATEGY-when a business assumes responsibility for it’s action, it uses the accommodation
strategy. This is done by when special interest groups are taking the side of the opposition, or when the business perceives
that if it does not react, a law will passed by congress to the compliance.
4.PROACTIVE STRATEGY-the firm goes beyond what is legally and ethically required .This is undertaken through
sponsorship of cultural shows offered free to the public , scholarships for financially-handicapped but deserving students,
financial support for the upkeep of endangered animal species, and many other similar concerns.

18. SOCIAL AUDITS
A social audit refers to the systematic
examination of all the activities comprising a
firm’s social programs.
A social audit may be done through the preparation of the ff.
1.A summary of programs areas such as consumers affairs, as well as the
reason for undertaking certain social activities and not others.
2.A report of specific progress and the priorities for each set of activities.
3.A listing of objectives for each priority activity and a description of how
the organization is striving to reach these objectives.

19. 4.A summary report of the costs of each program area and
activity to the company.
5.A summary using quantitative measures of the extent of
achievement of each social objective whenever possible.

20. SUMMARY
To make a positive contribution in an orderly and peaceful
society, businesses must maintain an ethical and socially
responsible behavior. Business ethics refers to the moral
principles defining right and wrong behavior of
businessperson and their agents. It embodies a company’s
attitude and conduct toward its employees, customers,
community, and stockholders.
Because of extreme necessity, many laws addressing
ethical concerns for business were passed in spite of
the long process involved.

21. There are various concerns requiring ethical behavior. One
of these refers to product safety and quality.
Violations of the code of morals, evenly businessmen, have
become daily occurences.
The coverage of a company sponsored ethics program may
include drug and alcohol abuse, employee theft, conflict of
interest , quality control, and so on.
There are four ways of improving ethical conduct: ethics
training, ethical advocates, ethical codes, and whistle
blowing.

22. The concern of the corporation regarding the welfare of
the society is referred to as social responsibility. Various
interest groups affect the company’s concern for social
responsibility.
Social actions are both beneficial and costly to the
company.
Social responsibility strategies consist of reaction strategy,
defense strategy, accommodation strategy, and pro-action
strategy.
The social audit is a tool used to measure the effectiveness
of the company’s social actions.