UNIVERSITY OF MAKATI

J. P. Rizal Ext., West Rembo, Makati City

HIGHER SCHOOL NG UMAK
ABM AND LANGUAGES DEPARTMENT
Course Title Title
Module
1 Introduction: Building Business
No.
Business Ethics and Social Responsibility Ethics
Prepared by Prof. CARMELA M. MALABED
1. define ethics and business ethics;
Learning Objectives
2. explain the characteristics of business ethics; and
At the end of the lesson, the students should be able to:
3. discuss the principles of business ethics.

A business should aim to have fair dealing with everyone in it. Ethics should be fixed for everyone working in
the organization at any level. Business ethics should be based on broad guidelines of what should be done and what
should be avoided.
Module 1 discusses the concept of ethics and business ethics - its definition - the system of moral and ethical
beliefs that guides the values, behaviors, and decisions of a business organization and the individuals within that
organization; the characteristics of business ethics that have a close relationship among ethics, morals, and values,
that stick to laws with fairness, honesty, and openness; and the principles of business ethics that are related to social
groups that comprise of consumers, employees, investors, and the local community.
INTRODUCTION
 Ethics
Ethics is a subject of social science that is related with moral principles and social values. It is a system of
moral standards that distinguishes right and wrong. Its objective is to evaluate practices by calling upon principles
and giving advice on how to act morally in a given situation. To arrive at good judgments and recommendations,
people study both moral and immoral behaviors to reach an ethical choice.
Ethics according to Google are:
1. Moral principles that govern a person’s or group’s behavior.
2. Moral code, morals, morality, values, rights and wrongs, principles, ideals, standards of behavior, value system,
virtues, dictates of conscience.
3. The moral correctness of specified conduct especially ones relating to or affirming a specified group, field, or form
of conduct.

Business Ethics
There are many definitions of business ethics, but the ones given by Andrew Crane and Raymond C.
Baumhart are considered the most appropriate ones. According to Crane, "Business ethics is the study of business
situations, activities, and decisions where issues of right and wrong are addressed." Baumhart defines, "The ethics
CONTENT

of business is the ethics of responsibility. The businessman must promise that he will not harm knowingly."
“Business Ethics” can be termed as a study of proper business policies and practices regarding potentially
controversial issues, such as corporate governance, insider trading, bribery, discrimination, corporate social
responsibility, and fiduciary responsibilities.
A business must also perform other duties such as distributing fair wages, providing good working conditions,
not exploiting the workers, encouraging competition, etc.
Businesses must abide by some basic principles. It should provide quality goods and services at reasonable
prices to their consumers. It must also avoid adulteration, misleading advertisements, and other unfair malpractices.
Characteristics of Business Ethics
1. Code of conduct − Business ethics is actually a form of codes of conduct. It lets us know what to do and what not
to do. Businesses must follow this code of conduct.
2. Based on moral and social values − Business ethics is a subject that is based on moral and social values. It offers
some moral and social principles (rules) for conducting a business.
3. Protection to social groups − Business ethics protect various social groups including consumers, employees, small
businesspersons, government, shareholders, creditors, etc.
4. Offers a basic framework − Business ethics is the basic framework for doing business properly. It constructs the
social, cultural, legal, economic, and other limits in which a business must operate.
5. Voluntary − Business ethics is meant to be voluntary. It should be self-practiced and must not be enforced by
law.
6. Requires education & guidance − Businessmen should get proper education and guidance about business ethics.
Trade Associations and Chambers of Commerce should be active enough in this matter.
7. Relative term − Business ethics is a relative term. It changes from one business to another and from one country
to another.
8. New concept − Business ethics is a relatively newer concept. Developed countries have more exposure to
business ethics, while poor and developing countries are relatively backward in applying the principles of business
ethics.
Principles of Business Ethics
The principles of business ethics are related to social groups that comprise of consumers, employees,
investors, and the local community. The important rules or principles of business ethics are as follows −
1. Avoid exploitation of consumers − Do not cheat and exploit consumer with measures such as artificial price rise
and adulteration.
2. Avoid profiteering − Unscrupulous business activities such as hoarding, black-marketing, selling banned or
harmful goods to earn exorbitant profits must be avoided.
3. Encourage healthy competition − A healthy competitive atmosphere that offers certain benefits to the
consumers must be encouraged.
4. Ensure accuracy − Accuracy in weighing, packaging and quality of supplying goods to the consumers has to be
followed.
5. Pay taxes regularly − Taxes and other duties to the government must be honestly and regularly paid.
6. Get the accounts audited − Proper business records, accounts must be managed. All authorized persons and
authorities should have access to these details.
7. Fair treatment to employees − Fair wages or salaries, facilities and incentives must be provided to the
employees.
8. Keep the investors informed − The shareholders and investors must know about the financial and other
important decisions of the company.
9. Avoid injustice and discrimination − Avoid all types of injustice and partiality to employees. Discrimination based
on gender, race, religion, language, nationality, etc. should be avoided.
10. No bribe and corruption − Do not give expensive gifts, commissions and payoffs to people having influence.
11. Discourage secret agreement − Making secret agreements with other business people to influence production,
distribution, pricing etc. are unethical.
12. Keep service before profit − Accept the principle of "service first and profit next."
13. Practice fair business − Businesses should be fair, humane, efficient and dynamic to offer certain benefits to
consumers.
14. Avoid monopoly − No private monopolies and concentration of economic power should be practiced.
15. Fulfill customers’ expectations − Adjust your business activities as per the demands, needs and expectations
of the customers.
16. Respect consumers rights − Honor the basic rights of the consumers.
17. Accept social responsibilities − Honor responsibilities towards the society.
18. Satisfy consumers’ wants − Satisfy the wants of the consumers as the main objective of the business is to satisfy
the consumer’s wants. All business operations must have this aim.
19. Service motive − Service and consumer's satisfaction should get more attention than profit-maximization.
20. Protect group interests - Protect the interest of the group i.e give employees better wages and good working
conditions, dive shareholders better rate of dividend, give consumers good quality products and services at low
prices, etc.
21. Optimum utilization of resources − Ensure optimum utilization of resources to remove poverty and to increase
the standard of living of people.
22. Intentions of business − Use permitted legal and sacred means to do business. Avoid Illegal, unscrupulous and
evil means.
23. Follow Woodrow Wilson’s Rules - According to the late American President Sir Thomas Woodrow Wilson, there
are four important principles of business ethics. These four rules are as follows:
A. Rule of Publicity: According to this principle, the business must tell the people what is going to do. It must
not create doubts, misunderstandings, suspicions, secrets, etc.
B. Rule of Equivalent Price - According to this principle, the customer must be given value for their money. So
the business must not sell below standard, outdated and inferior (poor) goods for high prices.
C. Rule of Conscience in Business - If the business is conducted properly, then it is beneficial to the society.
Otherwise, it is harmful to the society. Therefore, the businessman must have a conscience, i.e., a moral sense
of judging what is right or wrong. He must be very careful while taking business decisions because these
decisions affect the entire business and the society as well.
D. Role of Spirit of Service - The business must give importance to the service motive. That is, priority must be
given to render service to human beings over profit.

Sir Thomas Woodrow Wilson

The 28th President of United States of America
Did you know that…
Starbucks spends more on healthcare insurance for its employees ($300
million) than on coffee beans?
 Name:____________________________________________________Score:_________
Gr./Sec: __________________________________________________Date: _________
Identify the correct answers in the given statements below:
_______________1. According to this principle, the business must tell the people clearly, what it tends to do.
_______________2. This principle should be not against the will of the owner and must not be enforced by law.
_______________3. Make profits by providing services to the consumers and not by making profits by exploiting
the consumers.
_______________4. Avoid indulging in unscrupulous activities like black-marketing, hoarding, sale and use of
ASSESSMENT

banned or harmful and expired goods, etc. For the sake of greed to earn exorbitant profits.
_______________5. It refers to contemporary standards or sets of values that govern the actions and behavior of
individuals in the business organization and the actions of the business itself.
_______________6. The business must give importance to the service motive.
_______________7. The businesspersons must have conscience while doing business, i.e. a morale sense of
judging what is right and what is wrong.
_______________8. At its simplest, it is a system of moral principles, affect how people make decisions and lead
their lives and is concerned with what is good for individuals and society and is also described as moral philosophy.
_______________9. Use permitted legal and sacred means to do business. Avoid Illegal, unscrupulous and doing
things against the law.
______________10. It is sometimes referred to as LOOP, an economic theory that states that the price of identical
goods in different markets must be the same after taking the currency exchange into consideration (i.e., if the
prices are expressed in the same currency).
ASSIGNMENT

1. Make a research and choose one business in the Philippines that has ethics issues and explain how these issues
affected the operational activities of the said company.
2. Give three examples in every Woodrow Wilson’s Rules.
3. Explain why ethics is important in business?

Choa, Valerie N. Essentials in Business Ethics

REFERENCES

Siguete, Cherille. Business Ethics and Social Responsibility

https://www.tutorialspoint.com/business_ethics/business_ethics_introduction.htm#:~:text=

CMM