ETHICS AND BUSINESS CHAPTER 1 PRESENTATION

ETHICS AND BUSINESS NOTES

1. ETHICS AND BUSINESSS CHAPTER 1

2. Our Team Johari C. Sibayan Reymar S. Bellosillo Akmad Arzie Ayao Hajnir K. Sedik

3. Topic Topic 1: Nature of Business Topic 2: The Importance of Ethics in Business Topic 3: The Relationship Between Ethics and Business Topic 4: The Morality of Profit Topic 5: Ethics and Morality in Business

4. According to Urwick and Hunt, "Business is any enterprise which makes, distributes or provides any service which other members of the community need and are willing to pay for it”. By its nature, man has unappeasable and innumerous wants. In order to satisfy his unquenchable needs he works hard maximize the use of limited resources around him. Making full meager resources to the best satisfaction of human wants is known economic activity. Economic activities are those undertaken by me to earn income , money , and wealth for his life and to secure create satisfaction of wants with inadequate and limited means . For this intention, each person may pursue an activity based on his interest capacity, knowledge and training. Topic 1: Nature of Business

5. Profession is an occupation carried on by professional people like doctors , lawyers , engineers, teachers and others. They provide specialized services in return for fees. In order to become a professional, a man requires specialized knowledge and professional qualification. For instance, a doctor needs specialized knowledge in medicine; while a lawyer needs a degree in law, and so on. 1. Economic activities are classified therefore into three categories, namely Employment is a type of occupation under which one person provides his services , physical or mental to someone else in return for whom he gets salary or wage. The person who employs is called employer and the person who is employed is called employee or worker. 2. Business is an economic activity concerned with production and distribution of goods and services with the air of earning profit. It includes all those activities which are directly or indirectly concerned with production, purchase and sale goods and services. So, the production, marketing, advertise warehousing, insurance, banking, and others are all business activities. 3.

6. Production or A cquisition of Goods - Business is an economic activity of production and distribution of goods and services. Every business whether small or large scale deals with goods and services. The goods may be produced, manufactured or procured and then to supply for a cost to those who are in need of them. The goods may either be consumers' goods (cloth, books, electronics appliances, medicine and others) or producer goods (machinery, tools and so on) or services (courier or transport services). 1. Business as an economic activity has very important features and characteristics, which are the following: Generates employment - Business generates employment in various sectors of the society. It is also an activity that creates utilities to satisfy human needs and wants. The society gets income from businesses that bring industrial and economic growth and development of the country. 2.

7. Profit is the basic motive - Profit is essential for survival, growth and expansion of the business. Behind any business, the stimulus and assurance to continue survival of the business is profit. Profit is a sign of success and failure of business. The principal aim of a business is generally to gain the highest possible level of profit from the manufacture and sale of goods and services. It is a return on investment or the compensation of all those individuals engaged in a particular business. An efficient businessman tries to double and redouble his effort and creates plans to serve the business community to gain more profit. 4 . Business as an economic activity has very important features and characteristics, which are the following: Continuous P rocess - Business is not a single time operation. It is a recurring process of production and distribution of goods and services. Recurrence of dealing is a must to be termed as a business. A business must be done regularly in order to grow and achieve expected returns. A business should also constantly engage in research and developmental activities to achieve competitive advantage. A constant improvement strategy helps to boost profitability of the business organization. 3.

8. Business as an economic activity has very important features and characteristics, which are the following: Risk or uncertainty of future - It is a reality that future is risky and uncertain. A business focuses on the future, hence there is always risk and uncertainty while carrying on its operations. Risk and uncertainty is always related with every business. The estimate and management of the risk is essential to the success of a business organization. It is risk and uncertainty which every businessman considers when he gets involve business activity. 5 . Creative and dynamic - Modern business organizations have to produce creative ideas, methods and ideas for the production distribution of goods and services. These organizations should come out with bright, latest and ingenious things and ways. W the dynamic and changing economic, social and technologies environment a businessman should be innovative. In order satisfy the increasing and ever shifting needs of customers business must always come out with new products and services. 6 .

9. Customer satisfaction - The phase of business has changed and now adopts a consumer- oriented approach. Today, the vital aim of all economic activities is customer satisfaction. Through providing quality product at a reasonable price, a modern business is able to satisfy its customers. Profit is just secondary to customer satisfaction for a good businessman. When they get real value for their purchase, customers are satisfied. Hence, customers keep on coming back and make a lot of purchases. 7 . Business as an economic activity has very important features and characteristics, which are the following: Social Activity - Business is also socio-economic activity. Business and society are mutually interdependent. Contemporary businesses operate with social responsibility in mind towards the society. In turn, to properly function they need the assistance of different social groups such investors, employees, customers creditors and others by making goods and services accessible to different segments of the society. Indeed, businesses perform vital social role and satisfy social needs. 8 .

10. Optimum utilization of resources - The inadequate resources are brought into optimum use by businesses. This is for the intention of satisfying the needs and wants of the consumers. Both the material and non-material resources are utilized fully to attain economic progress of a country. 10. Business as an economic activity has very important features and characteristics, which are the following: Government control - The government has some control over the operations of business organizations. Rules and regulations passed by the government are required to be followed by businesses. The government makes certain that businesses operate for social good. Through strict control and effective supervision of the laws and rules, the government is able to direct business to provide satisfying good products and services to consumers 9 .

11. Ethics tries to form logic of right and wrong in the organizations. Often when the law does not succeed, it is the ethics that may discontinue organizations from destructing the society or environment. Ethics needs to be practiced to make sense for a business organization. Everyone wants businesses that are fair, clean and beneficial to the society. Certainly, for this intention to happen, business organizations should be ethical and follow rules while they are engaging in competition for the benefit of the consumer, the society and the organization itself. Topic 2: The Importance of Ethics in Business

12. Building credibility - An ethical business organization that is propelled by moral values is highly respected in the society. Although with less or without information about the organization still this perception remains for a business having good corporate governance and social responsibility programs. This view is held everywhere even by those who are not yet familiar with what business the organization is into. 2 . Ethics is very important for these reasons, namely: Satisfying basic needs - One the basic human needs is being fair, honest and ethical. Each employee wants to remain himself and to work hard for an organization that is fair and ethical in all its practices. 1. Connecting leaders and employees - An organization driven by moral values is well- regarded by its employees too. They are the common string that binds the employees and the decision makers together on a general stand. Although, to align behaviors would take time and big effort to do before the realization of one common goal or mission. 3 .

13. Continuing gains - Ethical businesses guided by moral values are profitable for a long period of time. Possibly it may see lose money but that would only be on a short-term basis were numerous businesses that have been observed on threshold of decline, yet still operate ethically and were later able to overcome. Some companies failed to do well at some point are now doing good because they remained to be ethical despite some failures. 5 . Ethics is very important for these reasons, namely: Enhancing decision-making - The future of an organization is the total amount of all its decisions throughout its lifetime. Hence, decisions must be driven by moral values. It is competition is always present in the world of business from a stiff competition through wiping out competitors creating a monopoly in the market is not a good decision of an ethical business organization. 4. Protecting the society - Often ethics succeeds law in safeguarding the society. Law as a machinery is often found acting as a mute witness, incapable to save the society and the environment Technology, for example is growing at such a fast pace that by the time law comes up with a regulation there is a newer technology with new threats in substitute of the older one. Lawyers and public interest litigations may not help a great deal but ethics can 6.

14. Ethics play a crucial role in business operations, influencing both success and reputation. Unethical practices can lead to negative consequences such as poor business performance, while ethical practices can foster effective business operations and profitability. Ethical considerations should start early in a business's development, becoming integral to its internal structure and management. This includes ethical treatment of employees, fair business practices with partners, and honest interactions with customers. Businesses should not only aim for profit but also consider social responsibilities and ethical obligations. However, the pressure to remain profitable in competitive environments sometimes leads to unethical decisions, which can embed into organizational culture and perpetuate unethical behavior. This can harm business reputation, leading to long-term financial losses despite short-term gains. Topic 3: The Relationship Between Ethics and Business

15. Creating an ethical business environment enhances trust among stakeholders, including customers, employees, and investors. A company known for ethical behavior gains a positive reputation, attracting more customers and contributing to economic success. Thus, integrating ethics into business practices is essential for sustainable growth and maintaining a positive corporate image in today's competitive market. Indeed a positive image of a company would mean higher profits and a lot of better services intended to its customers. In order to be an effective company, ethics and business should not be separated. In the long run it will be a win-win situation for everyone if a strong ethical policy is truly implemented. These days of highly competitive business environment, the best way to promote success on all levels is integrating ethics within the business operations.

16. In order to understand if gaining profit is really advantageous and desirable, one must know the goals of a life well-lived. Every individual lives with double-purpose intentions, which are survival and flourishing . The goal of perpetuating ones biological being and averting to experience poverty, downfall, and death is known as survival. While flourishing is being able to control and manage material reality and take advantage of more elements for the sense of self-love so as to un- stick one's self from a present situation and make a start to grow as a human being. For a person to act in the ways he desires there will be expenses that he needs to spend. When a man's gains are equal to his expenses, that means a break-even for him. Simply, this means he is no worse off than he was when he started. When a man wants to flourish, his gains should be greater than his expenses . Hence, it necessitates for him to produce a profit. Topic 4: The Morality of Profit

17. Profits come in a lot of different shapes. One may grow material reality from intellectual profits or gains of knowledge. A person may also obtain profits from technical means or gains of skill, and material profits or gains of property. A gain in health and fitness is also known as physiological profits. A gain in valuable relationships is called social profits. A gain of money is termed as monetary profits. Ironically, however the type of profit that draws the greatest criticism is monetary profit. This criticism is completely unjustifiable. When a person possesses monetary profit he can easily control everything in the quest of the greatest diversity of ends. Certainly, money cannot buy absolutely everything, yet it can help in fulfilling one's life objectives.

18. Money being a medium of exchange is always use in trading a broad variety of goods and services very conveniently. In order for an individual to gain knowledge and skills, he needs money to purchase books or pay for his tuition fee in school. Money is also use to procure gym stuff if a person desires to enhance his physical health and vigor. In revitalizing one's energy, relax and reduce stress, a person may buy leisure goods with money. Most people purchase gift items especially during special occasions to preserve positive social relations. Obviously, some people invest their money into obtaining valuable assets to make more money. Money indeed performs a big role in attaining the flourishing goal in life. Profit that is used to flourish and elevate one's life from poverty is moral. By its very nature money cannot destroy a man's life.

19. A man may basically generate profits in two ways. First he can take an action beneficial to himself but is immaterial to the rest of people. Possibly, he may pursue an action towards his individual's self-improvement or a direct change of nonliving things without the involvement of anyone. In this situation, no person is placed in danger and there will be a lot of indirect advantages to other people coming from the results of the person's self-improvement and his direct change of nonliving things. Secondly, he may secure the participation and team with other people to attain an objective that is helpful to everyone. An individual may connect with a charitable trade with someone or work in partnership with others on a project or just bond in a mutually cherished friendship. Here, in this condition, there would be direct advantages to other people, which earning a profit might be one of them.

20. Profit for Christians The Bible is the base ethics of all Christians. Profit is a very difficult issue, considering most Christians have the viewpoint that the Word of God says any point of it is unethical. Using the principle of good stewardship, the idea of profit is indispensable. The evidence that a businessman was able to generate more benefits than cost is the resulting profit. In the present time, profit is actually a reward for doing something that is helpful to other people. Obviously, one must not take advantage of one's suffering by taking the situation as an opportunity for profit. The presence of difficulties, offers everyone the chance to practice charity. It is the duty of everyone to be a Good Samaritan by extending assistance to other people who are in need. Basically, meeting severe human needs prompts business people to provide answers to those needs with profit as the vital motivation. In the normal business operation, it is those profit- seeking business people who are able to relieved people from hunger and not those charitable institutions. Most of the times, food is able to reach places where it is needed through profit motivation.

21. Businesses are able to relieve people in some way, but they must practice of course honesty. For instance, a drug company generates profit from reducing pain or curing certain illnesses. The housing problem could be answered by a construction business through building shelters for a profit. Schools make profits by offering courses that would increase the knowledge of students. The wages of employees are their profit in exchange for using their time and abilities by their employers. In reality, there are a lot of human needs but inadequate resources in this world; however with profit these needs are answered. When utilizing resources for a much pressing need, higher profit is estimated. While lower profit is expected when filling a need that is not much vital and not much urgent. Humans are not “all-knowing, hence profit serves as an important signal to good stewardship.

22. Deciding on various opposing needs is also critical. Say for instance that a person has a million pesos for his disposal with the requirement of spending them for a much critical needs, so how will he use such amount of money? The answer for numerous Christians would primarily be donating the money to the ministry of the gospel. However, such quantity of money could also be spent into other advantageous uses such as food and clothing. While in this world, Christians as humans also need to consider materials things as necessary like food, clothing, shelter, medical care and education among others. To some scope, even in the operational efforts of charitable organizations, profit also serves as a guide. Charitable assistance requires the idea of profit. Donors need the information about prices and profits in order to know which goods and services are in the shortest supply. Thus, said information would be of help in deciding which goods and services would be highly useful when provided. Making profit is not a sin. Earning profit through dishonest means makes it immoral.

23. What Makes Profits Unethical

24. Employees Reducing or even not providing the required benefits due to employees to minimize costs is one of the most common unethical practices in companies. In almost all industries, the largest percentage of expense concerns payroll. This bad practice of getting rid of benefits has become an ethical issue that results to poor morale among employees in the workplace. In small businesses that have only few employees, this could lead to destructive outcomes. This strategy is fast, established and useful for many companies though very unethical in the eyes of the public. Cutting costs at the expense of employees may move a business down to a risky route toward bankruptcy.

25. Marketing A company' marketing may contribute a lot to its generating of profits. A strong marketing strategy may increase brand awareness, pull customers towards the company and eventually produce profits. In the field of marketing, the intention of maximizing profits often times leads companies into an ethical dilemma of choosing the right from wrong decision. Some ethical issues in marketing includes sexy advertisement to attract male customers particularly in liquor and wine products, advertisements targeting young people even if they may look cute and innocent enough and making use of violence in presenting advertisements for a product or service.

26. Environmental The process of producing some goods and the delivery of some services are sometimes done using unethical environmental practices. Often, companies wanted to generate profits to the detriment of the environment. Some of these unethical environmental practices include increasing pollutants, water supply contamination, and deforestation. The common reason for these unethical practices is cost. It is highly costly for companies to positively impact the environment, especially for small businesses. There is a need for a lot of extra cash to continuously operate a much safer factory or plant. Producing pollutants may seem to be an advantage and less costly although it may bring a negative impact to the environment.

27. Environmental pollution could be in the form of: Air Pollution - It is any alteration of the physical, chemical and biological properties of the atmospheric air. Water Pollution - It is any alteration of the physical, chemical, biological or radiological properties of a body of water resulting in the impairment of its purity or quality. Soil Pollution - It is chiefly caused by chemicals in pesticides, such as poisons that are used to kill agricultural pests like insects and herbicides that are used to get rid of weeds. Noise Pollution - It is the excessive sound that causes hearing loss, stress, fatigue, irritability, tension, headaches, and high blood pressure.

28. Quality Producing goods and providing services especially premium ones are costly. This is possibly the rationale of companies in trimming down the quality of goods by using substandard materials but still selling at the same price to gain more profits. However, this kind of practice crosses the boundary towards an unethical business practice. The practice of maximizing profit at the cost of quality may stain the company's brand name and reputation. Thus, this unethical practice leads to the loss of the respect, trust and loyalty of customers. It will be also have vital consequences on the slow growth and reduced revenue of both small and big businesses.  

29. Ethics and morality in business encompass principles that determine whether actions and behaviors are considered right or wrong, moral or immoral, and just or unjust. Ethics establish rules and standards that guide individual and collective behavior, emphasizing honesty, potential harm, and conformity to societal norms. Morality, meanwhile, sets societal standards for right conduct, offering guidance on acceptable behavior rooted in fundamental values. Business leaders can leverage their understanding of ethics, morals, and values to make informed decisions and develop effective strategies. Integrating ethical principles into decision-making demonstrates a commitment to fairness, equality, and preempting ethical dilemmas. Topic 5: Ethics and Morality in Business

30. Features of Business Ethics Business ethics is a form of applied ethics, which studies ethical principles, morals and problems that happen in the business environment. It is nothing but the integration of day to day morals and ethical norms to business and applies to all types of business. Here are the features of business ethics, namely:

31. Code of Conduct Business ethics is a code of conduct. It tells what to do and what not to do for the welfare of the society. It is the code of conduct which businessmen should follow while conducting their normal business activities.

32. Based on Moral and Social Values Business ethics is based on well-accepted moral and social values. It contains moral and social principles of conduct for businessmen. This includes self-control, consumer protection and welfare, service to society, fair treatment to social groups, and not to exploit others.

33. Gives Protection to Social Groups Business ethics give protection to different social groups such as consumers, employees, small businessmen, government, shareholders, creditors, and other stakeholders.

34. Provides Basic Framework Business ethics provide a basic framework for conducting business. It suggests legal, social, moral, economic and cultural limits within which business has to be operated. Business must be conducted within these limits. It suggests what is good and what is bad in business.

35. Voluntary Acceptance for Enforcement Business ethics must be voluntary. The businessmen must accept business ethics on their own. Business ethics must be like self- discipline. It must not be enforced by law. It should come from within the businessmen.

36. Requires Education and Guidance Businessmen must be given proper education and guidance before introducing business ethics. The businessmen must be motivated to follow ethical business practices. They must be informed about the advantages of using business ethics. Trade Associations and Chambers of Commerce must also play an active role in this matter.

37. Relative Term Business ethics is a relative term. That is, it changes from one business to another. It also changes from one country to another. What is considered as good in one country may be taboo in another country.

38. Not Against Profit Making Business Ethics is not against fair profit-making. However, it is against profiteering by cheating and exploiting consumers, employees or investors. It supports expansion of business activities but by fair means and not through illegal activities or corrupt practices.

39. Basically, ethics in business is affected by three important sources which are culture, religion and laws of the state. Thus, there are no uniform or totally the same standards across the globe. These three factors places influence on humans in different degrees that eventually mirrors the ethics of the organization. These sources are as follows: Sources of Business Ethics

40. Religion encompasses beliefs about what is ultimately real and meaningful, such as God, Allah, the Tao, or Brahman. It offers paths to overcoming wrongdoing, vice, disillusionment, and illusion through grace, prayer, and practices, aiming to live in harmony with these beliefs. For example, Christianity emphasizes teachings like loving one's neighbor and enemies. Ethical standards are deeply rooted in religion, with diverse expressions worldwide guiding right and wrong in various aspects of life, including business. Ethics are seen as divine, distinguishing good from bad in society. All major religions advocate reciprocity and emphasize social responsibility to foster orderly social systems and contribute to general welfare, each establishing its own ethical guidelines based on these principles. Religion

41. Culture encompasses shared understandings within a community, passed down through generations, shaping knowledge, values, laws, norms, and rituals unique to each society. It defines ethical boundaries, marking behaviors as acceptable or unacceptable. Culture fosters commitment to collective goals beyond individual interests within organizations. It also acts as a mechanism for sense-making and control, influencing attitudes and behaviors. Managing a business amidst cultural diversity adds complexity to ethical considerations, as actions may intersect and challenge cultural norms. Culture

42. Laws are established codes of conduct by the state's legal system to regulate human behavior within society. They aim to address ethical expectations, yet they often lag behind changing societal norms and environments. In business, compliance with the law is generally seen as ethical behavior, but organizations may still break laws through actions like tax evasion, compromising on quality or service standards. While society expects businesses to adhere to legal standards, many engage in unlawful practices such as tax evasion, hoarding, adulteration, selling poor quality products at high prices, and causing environmental pollution. Law

43. Question Time