Name :

Module No. : 3
Subject : Business Ethics and Social Responsibility
Module Title : Code of Ethics in Business

Introduction

Fig.1: Right or wrong

“If ethics are poor at the top, that behavior is copied down through the organization.”
– Robert Noyce

When you join an organization, whether it is a school club, a hobby group, a social media
group, a church organization, your class section, or even just a group of friends hanging out
together, you will notice that in the group, there are certain accepted behaviors and unwritten
rules that need to be followed. If you fail to follow them, you will either be frowned upon or be
kicked out of the group.

A certain culture exists in every organization. A person who wants to fit in, you try to follow
the norms in the group – the way the other members act, dress up, behave, speak, and other
actions that may affect your decisions.
Objectives
In this lesson you should be able to:

● Understand the common practices in business organizations

● Appreciate the importance of Code of Ethics in business organizations

● Craft a simple “Codes of Ethics” or “Codes of Right Conduct”

Exploratory Activity
Activity 1: Let this picture talk!
Analyze the picture and answer the following questions.

Fig. 2. Ethical Issue

Questions:
1. What ethical issue is conveyed in this picture?
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________

2. What feelings and thoughts came to your mind when you saw this picture?
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________

3. Think of concrete ways on how to combat this kind of unethical business practices.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
Learn About It
Business and Ethics are always interrelated. Ethics guides us that we are doing the right
thing. In the conduct of our business, we need to follow ethical standards of the company.

But first, let us define what is Ethics? Ethics is derived from the Greek word “ethikos” which
means “having to do with character. The Latin word for ethos is “mos” (or “mores”). That is why
we known Ethics as the Moral Science or Moral Philosophy. It refers to the theory of morality of
right conduct.

Definitions of Business Ethics

1. Business Ethics is the study of what is right and wrong on human behavior and conduct
in business.
2. Business Ethics is the study of perceptions of people about morality, moral norms, moral
rules, and ethical principles as they apply to peoples and institutions in business.
3. Business Ethics is the study, evaluation, analysis and questioning of ethical standards,
policies, moral norms, and ethical theories that managers and decision makers use in
resolving moral issues and ethical dilemmas affecting business.

To ensure that all those principles are practiced by all employees in the organization, Code
of Ethics, or Code of Conduct are crafted to be the guiding light of the business in ensuring good
ethical practice.

What is Code of Ethics?

ETHICAL CODE OR CODE OF ETHICS are principles adopted by an organization to assist those
in the organization called upon to decide; it is about understanding the difference between “right”
and “wrong” and to apply this understanding to their decision. In addition, Code of ethics is a
written set of guidelines issued by an organization to its workers and management to help them
conduct their actions in accordance with its primary values and ethical standards.

o CODE OF CONDUCT: it is a document designed to influence the behavior of employees. They

set out the procedures to be used in specific ethical situations and delineate whether a violation
of the code of ethics occurred and, if so, remedies should be imposed.

o CODE OF PRACTICE: it is adopted by a profession or by a governmental or non-governmental

organization to regulate that profession. It may be styled as a code of professional responsibility,
which will discuss difficult issues, difficult decisions that will often need to be made, and provide
a clear account of what behavior is considered “ethical” or “correct” or “right” in the circumstances.

o CODE OF ETHICS is not written solely for the purpose of doing ethical business practice. It can
also be applied and practiced in school, government, and even professional groups.
Activity 2: How ethical are you?

1. After finding a diamond ring in a hotel room. You:

a. Keep it because you believe in the finder’s keeper philosophy
b. Turn it over to the lost and found department of a hotel
c. Consider it yours unless the previous occupant looks for it and the front desk calls your
attention to turn over it.
d. None of the above.
2. After lunch, the waiter brings the check. Upon checking it, no dessert, and drinks to the
bill. You:
a. Pay the bill. It was their mistake.
b. Call the waiter and ask him to recompute the check and add the dessert and drinks.
c. Pay the bill and give him the bigger tip since you saved money because of the dessert
and drinks that were not included in the bill.
d. None of the above.
3. In a team meeting, your boss congratulates you for a project that was done by someone
else from the team. You:
a. Stay silent in the meeting and later approach your co-worker you are sorry the boss did
that
b. Explain to boss immediately that it was not your work and give credit where credit is
due.
c. Never say anything about it.
d. None of the above.
4. Your company has a policy that prevents employees from accepting gifts. The policy also
requires that you inform your manager about the gift. A supplier you have known for
several years offers you a hotel gift certificate. You:
a. Accept the gift and tell your manager afterward.
b. Accept the gift and do not tell your manager about it.
c. Inform your boss and hope for approval.
d. None of the above.
5. You are with some friends at the park. There are three different bins in the area. A friend
threw an empty soda can in the paper bin. You:
a. Better not say anything.
b. Move the can into the correct bin.
c. Give him stick to take the can out and advise him to put it in the correct bin.
d. None of the above
Components of Code of Ethics
❖ Values
A company’s values guide the organization’s internal conduct and its relationship
with stakeholders. The values sum up the company’s reputation wherein all
interactions are treated with respect regardless of position and circumstances.
❖ Principle
To support the values of the organization, there are credos that employees should
live with during their stay in the company. Business principles such as business
profitability, and continuous improvement are just some of the principles that
stakeholders live by.
❖ Management Support
This means that management is serious in considering the code as the bible of the
employees in terms of ethics. To show support, management allows the display
od this code of ethics in prominent and strategic places in the work area.
❖ Personal Responsibility
Any member of the organization should uphold and preserve the code of ethics
because any violation of the code may involve legal and moral consequences.
Each employee should be guided by the code and must report any who violates it.
❖ Compliance
All legal requirements of the code should be met. Any licensing requirements,
including but not limited to reporting of financial statements, should be met.

Examples of Contents of Code of Ethics

Ayala Corporation’s Code of Ethics All directors, officers, and employees shall

1. Conduct business in accordance with Philippine laws and regulations;

2. Personally and firmly adhere to the standards and restrictions imposed
by laws and regulations as well as the corporation’s policies, rules, and
procedures; and
3. Ensure compliance with all disclosure requirements, making sure that all
Fig. 3. Ayala Logo disclosure of material information is full, fair, accurate, clear and timely.

Unilever Code of Ethics

Unilever employees must

1. Conduct business in accordance with Philippine laws and regulations;

2. Treat everyone fairly and equally, without discrimination on the grounds
of race, age, role, gender identity, color, religion, country of origin, sexual
orientation, marital status, dependents, disability, social class or political
views. This includes consideration for recruitment, redundancy,
promotion, reward and benefits, training or retirement which must be
based on merit.
Fig. 4. Uniliver Logo

The Nestle Corporation Business

Some of the basic Nestle values and principles are:
Principles
1. Favoring long-term development over short-term profit;
2. Long term commitments and relationships;
3. Respect for and integration with diverse cultures;
4. Proper conduct and ethical values as basic requirements for our
management and employees;
5. Recognition that consumers deserve information about the product
they buy and the company behind the brand.

Fig. 5. Nestle Logo

Let’s Review!

Directions: Choose the letter of the correct answer.

What is Ethics all about?

__________1.
A. Morally correct behavior C. Making lots of money
B. An ethnic minority D. A foolish person
__________2.
A set of criminal laws C. A set of classrooms
B. A set of moral principles rules D. Telling half-truth
__________3.
A. It’s a code of conduct for a particular profession and not related to personal life.
B. It is a field of study that focuses on faith and religion
C. It is a branch of philosophy that deals with morality
D. It is what we do when others are watching

Directions: Write LIE if the statement is FALSE; TRUTH if the statement is TRUE.
__________1. Ethics is a set of principles of conduct governing an individual or group.
__________2. Code of Ethics is a written statement of policies and principles that guides the
behavior of all employees or members of an organization.
__________3. Employees should obey only written work rules.
__________4. Ethical character traits include integrity, honesty, and justice.
__________5. To enhance the profits of the business continuously is the objective of the Code
of Ethics.

Wrapping up
• Ethics refers to the theory of morality of right conduct.
• Business Ethics is the study of what is right and wrong on human behavior and conduct
in business.
• Code of ethics is a written set of guidelines issued by an organization to its workers and
management to help them conduct their actions in accordance with its primary values and
ethical standards.
• The components of code of ethics are values, principles, management support,
personal responsibility, and compliance.
Let’s Practice
Part A. Finding the ETHICAL or UNETHICAL.
Directions: Write ETH if the statement is ETHICAL; UNETH if the statement is UNETHICAL.
________1. Obeying company’s rules and regulations.
________2. Developing professional relationships with co-workers.
________3. Taking credit for others hard work.
________4. Using or taking company’s supplies for personal purposes.
________5. Conducting personal business during working hour.
________6. Engaging in negative gossip about someone you work with.
________7. Extending lunch/ snack breaks.
________8. Showing initiative without being told.
________9. Lying inside and outside the workplace.
________10. Using foul language on co-workers in and out of the workplace.
Part B. Multiple Choice.

Directions: Read carefully the given statements after each question. Encircle the letter of the
correct answer.

1. Which of the following are the functions of a Code of Ethics?

a. It can express a shared commitment on the part of a professional society’s members
to strive and to satisfy certain ethical standards and principles.
b. It can help foster an environment in which ethical behavior is the norm.
c. It can serve as a guide or reminder in specific situations.
d. All of the above.
2. Which of the following is a practice of fair treatment of workers at workplace?
a. Recreation facilities at the workplace.
b. Rights of workers to fairness and dignity.
c. Right of workers to have a share in company’s profit.
d. None of the above.
3. Ethical issues do not exist in accounting because the field involves primarily objective data.
a. True b. False
4. 4. Which of the following is the study and practice of decisions about what is good or right?
a. Law c. Ethics b. Morals d. Business
5. A businessman who owns a medical store in a small town is the only outlet that sells face
mask. There is a great necessity and high demand for the use of the item due to COVID-19
pandemic, so he charges irrational amount of doubling the price. The community gets mad of
the situation. This business practice is most likely:
a. Ethical because it is not illegal for the owner to set its prices based on maximizing profits.
b. Ethical because the owner focuses only on the impact of decisions on his business.
c. Unethical because business operates in a community and communities have expectations
for behavior of individuals, groups, and businesses.
d. None of the above.
Part C. Case Study

Direction: Read the following case study and then answer the given questions.

GoodMed Drug Company produce an

antibiotic that is supposed to treat number of
bacterial infections. However, its main objective
is to capture the market of Goodwill Pharma
Company’s antibiotic, which has become the
household antibiotic in the Philippines with a
whopping 50% market share. Based on
GoodMed Drug Company’s research,
customers want a cheaper alternative for
antibiotics. Thus, the company reduced the Fig. 6. Antibiotics
price to half of Goodwill Pharma. The catch is that the efficacy of the antibiotics is inferior to that
of Goodwill Pharma.

Mary Ann Ocampo, a seasoned medical representative, was appointed by GoodMed Drug
Company to do a sales pitch of the antibiotics to its network of doctors. The company promised
her bonuses and other perks if she will be able to hit her target. Mary Ann is currently in deep
financial crisis as her daughter was just recently diagnosed with leukemia and, therefore, this is
a timely opportunity from her to recover from her finances. However, at the back of her mind, she
knows that the product is still inferior but she must sell it to the doctors as if it is as effective as
the competitors antibiotics.

Questions:

1. What would you do if you were in Mary Ann’s position? Explain your answer.
_______________________________________________________________________
_______________________________________________________________________

2. Do you think personal integrity is more important than social responsibility or vice versa, or they
should go hand-in-hand? Why?
_______________________________________________________________________
_______________________________________________________________________

3. Identify personal integrity issue & the social responsibility issue in this case study. Explain each.
________________________________________________________________________
________________________________________________________________________

Part D. Application
Direction: Using the Components of Code of Ethics, get a partner. Formulate the Code of Ethics
for your online class. Share your outputs and integrate the best outputs into one main code that
will be adopted by the class.
References

E-Sites
https://pinoystory.com/scribd.com

The Core Principles Of Good Corporate Governance (pearse-trust.ie)

Photo Credits
Fig. 1. Right or wrong

https://securityintelligence.com/wp-
content/uploads/2016/10/workerfacingtwochoiceson_348351-630x330.jpg

Fig. 2. Ethical Issue

https://www.corporatecomplianceinsights.com/wp-content/uploads/2018/08/bribery.jpg

Fig. 3 Ayala Corp Logo

https://upload.wikimedia.org/wikipedia/en/thumb/b/b2/Ayala_Logo.svg/1200px-
Ayala_Logo.svg.png

Fig. 4 Uniliver Corp Logo

https://upload.wikimedia.org/wikipedia/en/thumb/e/e4/Unilever.svg/1200px-Unilever.svg.png

Fig. 5. Nestle Logo

https://i.pinimg.com/originals/da/20/75/da2075601a03cf082b1e5025d41c23dc.png

https://www.irishtimes.com/polopoly_fs/1.2668986.1464884964!/image/image.jpg_gen/derivativ
es/landscape_620/image.jpg

Fig. 6. Antibiotics

https://images.theconversation.com/files/61137/original/rw63cq29-1412745846.jpg?ixlib=rb-
1.1.0&q=45&auto=format&w=1200&h=900.0&fit=crop

Bibliography

Zarate. Business Ethics and Social Responsibility. C&E Publishing, Inc. 2018a

Baquillas. Business Ethics and Social Responsibility. Diwa Learning System, Inc. 2017

Cortez. Business Ethics and Social Responsibility. Vibal Group, Inc. 2016