From the start of business in 1982, San Jose Kitchen Cabinets was already sharing profits with
employees. Although this practice is not common, Mr. Chan, founder and manager, had
always been of the belief that profit sharing can aid economic stability and decrease
unemployment. The profit share percentage of employees was arbitrary, until in 1987, Mr.
Chan realized that in any economic activity or business enterprise, there are always two
partners: labor and capital, and one cannot exist without the other. Thus, it followed that a
50/50 percent share would be logical. This profit share is over and above the salaries and
social security paid to the employees . In addition, there was a cap on executive compensation:
there is a policy that the compensation, both salary and profit share , of the highest ranking
employee should not exceed ten times that of the lowest ranking employee. All in all, a lot of
efficiencies have been gained; the average return on equity from 1987 to the present has been
30% and high levels of job satisfaction have been felt throughout the organization.
BUSINESS
ETHICS
• The course deals with the fundamental concepts, principles, and practices of ethical
standards in the business environment.
• It combines the theoretical foundations of setting up business enterprises with the conduct
of entrepreneurial activities in the context of one’s accountability and social
responsibility.
• Specifically, the course aims to:
provide students with a basic understanding of the mechanisms whereby companies
can be made to act in the best interest of shareholders, other stakeholders, and society
as a whole;
provide students with knowledge of general ethical principles as applied to the special
situations of business and the ability to make informed judgments through case
analyses; and
equip students with the ability to formulate basic strategies in relation to corporate
ethics and governance
Business – is an activity that is part and parcel of human society:
it is an entity in which economic resources or inputs, such as
materials and labor are put together and processed to provide
goods and services or output to customers.
WHAT IS THE MAIN OBJECTIVE TO MOST
BUSINESSES?
The difference between the amount earned and the amount spent in
PROFIT buying, operating or producing something
BUSINESS ORGANIZATIONS!
Service It provides services rather than products to customer
Merchandising
Sell products they purchase from other
businesses to customers
Change basic inputs into products that are sold to
customers
Manufacturing
BUSINESS ORGANIZATIONS!
Sole
A business owned by one person
Proprietorship
An association of two or more people as
Partnership partners
An entity created by law that is separate and distinct from its owners
Corporation
and its continued existence is dependent upon the corporate statutes
of the state in which it is incorporated
SOLE PROPRIETORSHIP
• Advantages: • Disadvantages:
• Total undivided authority • Unlimited liability
• Low organization cost and licenses • Limitation on size
• tax saving • Limited by managements ability to be
• No restriction on type of business as jack of all trades
long as it is legal
PARTNERSHIP
• Advantages: • Disadvantages:
• Association of individuals • Unlimited liability
• Mutual agency • Personally liable for all partnership
• Limited life liabilities
• Ownership of property
CORPORATION
• Advantages: • Disadvantages:
• Stock holders have limited liability • Numerous government regulations
• Has separate legal existence from its • Corporation must pay income tax on its
owners earnings
• Transferable ownership rights
ANSWER THE FOLLOWING !
[Link] is the importance of business organization to the
world economy?
[Link] are the major forms of business organization?
[Link] the role of each forms of business organization
in the economy?
[Link] is corporation?
ETHICAL PRINCIPLES
• Ethical principles guide and direct the performance and conduct of business leaders and their
organizations
• Ethics is based on the identification of rules that should direct
people’s behavior
• Ethics - moral principles that govern a person's behavior or the
conducting of an activity:
Understand all moral standards
Determine the economic
outcomes Propose
Define complete moral convincing moral
problems Consider the legal requirements solutions
Evaluate the ethical duties
Recognize all moral impacts
Ethical Decision-making process
ETHICAL SYSTEMS
• Universalism – states that all people should uphold certain values, such as honesty, and
other values that society needs to function.
• Egoism – defines satisfactory behavior as that which takes full advantage of
consequences for the individual
• Relativism – basis ethical behavior on the opinions and behaviors of relevant other
people.
• Utilitarianism - seeks the ‘greatest good for the greatest number of people.’
TYPES OF BUSINESS!
Trading Manufacturing
Services
Using Venn Diagram: List down 5 possible problems
and its possible solutions in every types of businesses!
Trading
Possible Problems Possible Solutions
LESSON 2: THE SOCIAL FUNCTION OF BUSINESS
Why should business be ethically sensitive?
• The fundamental concepts of what is wright and wrong in our human conduct and their implications for
business as an important human activity.
• The fundamental reason for examining the activities of business from the social and ethical perspectives
is for the promotion of the common good, protection of the individual’s interests, and the preservation
of the human society in general.
• Integrity is paramount for a successful managerial career; one must grasp the norms of ethical behavior
if one wants to succeed in the field of finance and business.
Ethics – are moral principles that guide the conduct of individuals.
Business
Employee Employer
The following are the four main reasons that may persuade a business to act
ethically:
• Legal reasons, of which there are several different sorts
• Public image reasons, which again, might encompass a number of different
types
• Pragmatic reasons, acknowledging that sometimes, acting ethically might be
there most direct path to business success ; and
• Moral reasons, where it is affirmed that these reasons are different from each of
the other three types .
FOUNDATIONS OF THE PRINCIPLES OF BUSINESS
ETHICS
HE WHO HAS NEVER LEARNED TO OBEY
CANNOT BE A GOOD COMMANDER. -
Aristotle
- The principles of conduct governing an individual
or a group
Ethics - The study of morality
-It is a kind of investigation, which includes both
the activity of investigating as well as the results of
that investigation, whereas morality is the subject
matter that ethics investigates.
Personal Ethics Referring to the rules by which an individual lives his/her personal life.
Referring to the code that guides the professional conduct of accountants.
Accounting Ethics
Philosophy The study of the fundamental nature of knowledge, reality, and
existence
Metaphysics Epistemology Axiology
What is the nature of
What is the nature of reality? What is the nature of values?
knowledge?
