Republic of the Philippines

Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF BATANGAS
BALAYAN SENIOR HIGH SCHOOL
CALOOCAN, BALAYAN, BATANGAS

BUSINESS ETHICS AND SOCIAL RESPONSIBILITY

MAJOR ETHICAL ISSUES IN ENTREPRENEURSHIP
Quarter 4, Week 3

INTRODUCTORY MESSAGE

This pandemic has brought us to a situation that neither one of us would like to happen. It
has given us a hard situation that gives all responsibility to you learners to learn for yourself. This
Learners’ Activity Sheet will provide you information and activities that will help you learn the
competencies indicated in the curriculum. For you learners, please browse the self-learning sheets
with diligence and patience for you to better understand the lesson.

WHAT WILL I EXPLORE?

The business community is confronted with a great deal of challenges and opportunities.
Being part of the social order and as society expects, businesses are prodded, asked or
encouraged to improve their business practices in ways that respect ethical values, people,
communities and the environment. In response to these challenges, businesses recognize that,
aside from making profit, they are morally obliged to become more innovative, competitive,
productive and responsible members of the society. It is morally obligatory even if not legally
required for businesses to protect and uphold the interest of their stockholders and meet the tests
of good corporate citizenship.

This lesson would provide you with information and activities that will help you understand
what social responsibility is all about with regards to issues and ethical principles in
entrepreneurship like basic fairness, personnel and customer relations distribution dilemmas,
fraud, unfair competition, unfair communication, non-respect of agreements, environmental
degradation, etc.

After going through this lesson, you are expected to formulate a morally defensible position
on ethical issues in entrepreneurship like basic fairness, personnel and customer relations
distribution dilemmas, fraud, unfair competition, unfair communication, non-respect of agreements,
environmental degradation, etc. (ABM_ESR12-IVi-l-3.2; ABM_ESR12-IVi-l-3.3)

WHAT I KNOW
Pre-Test:
Directions: Choose what issue is related to the statements. Write the letter of the correct answer
in your answer sheet.
1. A shampoo ad on the television claims to make your hair straight even if you have a curly hair.
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 A. Basic Fairness B. Morality of Advertising
C. Gift-giving and Bribery D. The Problem of Just Wage
2. An accountant receives a big amount of money in transacting faster the transaction of a client
who is at the last of the queuing line.
A. Basic Fairness B. Morality of Advertising
C. Gift-giving and Bribery D. The Problem of Just Wage

3. An insurance agent who does not disclose all the important matters on the policy that it sold to a
customer.
A. Fraud B. Basic Fairness
C. Unfair Communication D. Environmental Degradation

4. A competitor who bad mouths another competitor just to sell more of its services than the other.
A. Fraud B. Basic Fairness
C. Unfair Competition D. Unfair Communication

5. A Private hospital which does not segregate properly its waste and dumps it directly on the
rivers nearby.
A. Fraud B. Basic Fairness
C. Unfair Communication D. Environmental Degradation

6. An employee who has no SSS, Pag-ibig HMDF and Philhealth contribution?

A. Basic Fairness B. Morality of Advertising
C. Gift-giving and Bribery D. The Problem of Just Wage

7. A supplier was chosen by the Bids and Awards Committee because each member of the
committee will be receiving something in exchange of the favor.
A. Basic Fairness B. Morality of Advertising
C. Gift-giving and Bribery D. The Problem of Just Wage

8. A Hotel in Boracay has a septic tank which waste goes directly to the sea.
A. Fraud B. Basic Fairness
C. Unfair Communication D. Environmental Degradation

9. A newspaper report of a business owner accusing him to be dishonest and lacks integrity
without substantial evidence.
A. Fraud B. Basic Fairness
C. Unfair Competition D. Unfair Communication

10. Company C received a deposit from Client D as a payment of the goods bought online, but the
former didn’t deliver the said goods to the latter.
A. Fraud B. Basic Fairness
C. Unfair Communication D. Environmental Degradation

WHAT’S IN
Directions: Look at the picture below. On your answer sheet, write something about the
picture. Do you think this conform with the social responsibility that every company should
observe?

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 https://www.cartoonstock.com/directory/e/environmental_policy.asp

WHAT IS IT
Discussion

MAJOR ETHICAL ISSUES IN ENTREPRENEURSHIP

(as cited in Jerusalem, Palencia, & Palencia, 2017)

A. Basic Fairness – Ethical decision-making processes should center on protecting employee

and customer rights, making sure all business operations are fair and just, protecting the common
good and making sure individual values and beliefs of workers are protected.

1. Partners – Suppose you are a partner in a business and see a great deal of profitability
on the horizon. You don't believe that your partner deserves to profit from the business'
future success because you don't like his personality. You may wonder if you could simply
take his name off the bank accounts, change the locks, and continue without him. If you
proceed with this course of action, you would likely be in violation of your ethical and legal
obligation to act in good faith concerning your partner. The better course of action may be
to simply buyout his interest in the business.

2. Gross Negligence – Suppose you are on the board of directors for a publicly traded
corporation. You and your fellow board members, in hopes of heading off early for the

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 holidays, rush through the investigatory process involved in a much-anticipated merger. As
a board member, you have a duty to exercise the utmost care respecting decisions that
affect the corporation and its shareholders. Failing to properly investigate a matter that
affects their interests could be viewed as gross negligence supporting a breach of your
ethical and legal duty of care.

B. Personnel and Customer Relations

1. Mistreating Employees – Every year, lawsuits are filed against employers who are
accused of sexual harassment or discrimination against their employees. Some employers
have been sued for threatening or firing whistle-blowers, or employees who point out illegal
practices or safety violations in the workplace.

2. Discrimination and Harassment in the Workplace – Maintaining professional workplace

relationships between employees is a continuing challenge for employers regardless of the
industry. This challenge can become more difficult when the image companies choose to
project has a significant sexual charge. There’s never an excuse or a justifiable reason for
harassment of any kind in any workplace. If a supervisor discriminated against an employee
based on her gender, religion, or ethnicity when making recommendations for a promotion,
legal action could be sought.

3. Family-Run Businesses – In the area of small business, some major ethical result from
hiring, firing, and dealing with employees. For example, conflicts of interest may cause
ethical issues in small business, especially if they are family run. When personal family
issues interfere with business decisions, this is a conflict of interest and an ethical concern.

4. Employee Behavior – From large corporations to small business, individuals involved in

all types of business often face ethical issues stemming from employee behavior. For
example, whether an employee can spend work time checking personal email accounts,
how a manager deals with claims of harassment and to what extent manager can “groom” a
certain employee for a promotion are all examples of ethical issues regarding employee
behavior. There are legal consequences for some unethical employee behavior.

5. Employee Working Conditions – Employers must be aware of the safety of their work
environment and if they have compensated employees for all the time they have worked.
They must also consider if they have required an employee to work an unreasonably long
period of time or if they have him doing an unusually difficult task.

6. Side Deals and Sub-Standard Work – When dealing with customers or clients,
businesspeople must ensure that they use their information correctly, do not falsely
advertise a product or service and do not intentionally do sub-standard work.

C. Distribution dilemmas
– Ethics is a prime concern in marketing, and the areas of price, placement, and promotion
are no exception. Pricing refers to the way in which prices are set for consumers considering the
cost of inputs, distribution, and overhead. Placement involves the strategic positioning of products
within retail stores. Promotions involve short-term price discount or giveaways. Each of these
areas presents its own set of ethical dilemmas, challenges and legal guidelines to navigate.

1. Pricing Strategy Ethics – Price collisions can be a major source of ethical pressure in
many industries, and artificial price-fixing is illegal in a wide range of countries. Price
collusion exists when a number of competitors agree to set prices at a certain level,
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 bypassing the natural market forces of supply and demand and creating an unfair
advantage over consumers.

2. Product Placement Ethics – End-caps, point-of-sale displays, and demo kiosks are all
examples of positioning techniques that are inherently harmless, but which can be used
inarguably unethical ways

3. Ethics and Promotions – Promotions are designed to boost short-term sales by providing
irresistible value propositions to consumers. Coupons, holiday sales events, mail-in
rebates, and giveaways all fall under the promotions category. The “bail and switch” tactic is
widely considered unethical, yet many companies still practice this promotions technique

D. Fraud – in business takes up so many forms and sizes. It can be in the form of financial
misconduct or misrepresentation. Examples of financial misconduct include price-fixing, or an
illegal agreement between industry competitors to “fix” the price of a product at an artificially
inflated level; physicians who refuse to treat non-insured patients, or perform unnecessary
procedures to make more money; tax evasion; tax fraud; and “cooking the books” to make the
company look more profitable than it is. Corporate misrepresentation can take many forms. It can
be as simple as a salesman who lies about his company’s products, or it can be false or
misleading advertising. Misrepresentation can involve a cover-up of illegal workplace conditions or
transactions; falsified data in a shareholder report; lying to a union about corporate profits, or
hiding or denying safety problems with a product. An array of crimes fall under business fraud,
including the following:

▪ Charity fraud: Using deception to get money from individuals believing they are making
donations to legitimate charity organizations, especially charities representing victims of
natural disasters shortly after the incident occurs.
▪ Internet auction fraud: A fraudulent transaction or exchange that occurs in the context of
an online auction site.
▪ Non-delivery of merchandise: Fraud occurring when a payment is sent but the goods and
services ordered are never received.
▪ Non-payment of funds: Fraud occurring when goods and services are shipped or rendered
but payment for them is never received.
▪ Overpayment scheme: An individual is sent a payment significantly higher than an owed
amount and is instructed to deposit the money in their bank account and wire transfer the
excess funds back to the bank of the individual or company that sent it. The sender's bank
is usually located overseas, in Eastern Europe for example, and the initial payment is found
to be fraudulent, often after the wire transfer has occurred.
▪ Re-shipping scheme: An individual is recruited to receive merchandise at their place of
residence and subsequently repackage the items for shipment, usually abroad.
Unbeknownst to them, the merchandise was purchased with fraudulent credit cards, often
opened in their name.

E. Unfair Competition
– or distortion of completion is a situation in which competitors compete on unequal terms
because favorable or disadvantageous conditions are applied to some competitors but not to
others. The concept can also refer to situations in which the actions of some competitors actively
harm the positions of others with respect to their ability to compete on equal and fair terms

1. Antitrust Law or Competition Law – when one competitor attempts to force others out of the
market or prevent others from entering the market, through tactics such as predatory pricing
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 or obtaining exclusive purchase rights to raw materials needed to make a competing
product.
2. Trademark Infringement – when the maker of a product uses a name, logo, or other
identifying characteristics to deceive consumers into thinking that they are buying the
product of a competitor.
3. Misappropriation of Trade Secrets – when one competitor uses espionage, bribery, or
outright theft to obtain economically advantageous information in the possession of another.
4. Trade Libel – is the spreading of false information about the quality or characteristics of
competitor’s products.
5. Tortious Interference – when one competitor convinces a party having a relationship with
another competitor to breach a contract with, or duty to the other competitor.
6. Anti-competitive practices – prevent or reduce competition in a market.
7. Dumping – Foreign countries often use dumping as a competitive threat, selling products at
prices lower than their normal value. This can lead to problems in domestic markets. It
becomes difficult for these markets to compete with the pricing set by foreign markets,
leading to local producers and the local economy to suffer a result.
8. Exclusive dealing – A retailer or wholesaler is obliged by contract to only purchase from the
contracted supplier.
9. Price fixing – companies collude to set prices, effectively dismantling the free market.
10. Refusal to deal – two companies agree not to use a certain vendor.
11. Dividing territories – an agreement by two (2) companies to stay out of each other’s way
and reduce competition in the agreed-upon territories
12. Limit pricing – is set by a monopolist at a level intended to discourage entry into a
market.
13. Tying – products that aren’t naturally related must be purchased together
14. Resale price maintenance – resellers are not allowed to set prices independently.
15. Religious/minority group doctrine – business must apply tribute to a significant normally
religious part of the community in order to engage in trade with that community.

F. Unfair Communication
Communication is an important tool for a small business owner. Communications with employees,
customers and vendors may involve product promotions, job offers, contract negotiations and
discussions regarding the competition. Using such an important business tool requires a sense of
responsibility on the part of the communicator to adhere to ethical guidelines.

Legal Violations
While the concept of ethics generally relates to a person's responsibility to communicate fairly,
without bias and with respect to those affected by the communication, violations of ethics in
communications can become legal violations. Breaching confidentiality or purposely
communicating lies about a person or an organization, for example, can be considered a legal
issue as well as an ethical issue. Legal violations of communications, such as slander, can result
in sanctions by governing bodies or criminal ramifications.

Truthfulness
Sometimes, an untruthful piece of communication is just an oversight. However, not checking facts
is a violation of ethics, particularly when communicating information about a product, competitor,
customer or employee, into the piece of communication. A lack of fact-checking shows a lack of
responsibility to verify information that is being communicated. If the information might prove
detrimental to the subject, the communicator has an obligation to make certain the information is
accurate. For example, stating that a competitor uses a substandard material in his product
without verifying the information violates ethics and may result in legal consequences.

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Confidentiality
Relaying information that was provided in confidence or that was overheard in someone else's
conversations is a violation of communication ethics. The act of spreading rumors is degrading to
a small business owner who needs to earn the trust and respect of his employees and customers
to be successful. In addition, some breaches of confidentiality can also carry legal consequences.
Many contracts are written with confidentiality clauses. Business owners working in the medical
industry may be subject to HIPAA regulations that forbid them from disclosing any
information about medical providers or clients.

Offensive Messages
Communication that is offensive to the receiver or to anyone affected by the information contained
in the message violates ethical communication guidelines. The communication may offend others
because of references to race, gender, income level, background or education level. Stories and
jokes are prime examples of communication that have the potential to offend the recipients. Any
topic to which others may be sensitive should be avoided in business communication, including
religion and political issues, to avoid offending others and possibly committing a violation of
communications ethics. Communication is an extremely important part of every society. In this
lesson, we're going to talk about unethical communication and see what sort of behaviors harm
ethical interactions.

Communication Ethics
The communications revolution of the last decade has fundamentally changed the ways that
modern people interact, share information, and otherwise communicate. Communication is a big
part of our lives, and this means that it is powerful. Anything with that much power needs to be
examined, which is why a number of scholars spend their time examining issues of
communications ethics.

Ethical and Unethical Communication

Scholars of communications ethics, along with historians, sociologists, psychologists, and others,
have long noted that language has power. Our societies are built around shared systems of
communication; we develop culture through the ways we communicate our ideals with each other,
and even our personal identities and psychological well-being can be impacted by our ability to
communicate with others. Language can be used to support an ideology, emotionally wound, rally
the masses, or inspire devotion. Keep in mind that language is only a small portion of
communication, and that non-verbal forms of communication can be just as influential. So,
communication is powerful, and therefore has ethical boundaries. Communication used to improve
interpersonal relations or to bring moral changes to society is ethical communication.
Communication used to undermine relationships or encourage social immorality is unethical
communication. The exact definitions of these depend on the ethics system of your culture, but
most people agree that ethical communication builds positive relationships, while unethical
communication impairs them.

Interpersonal Communication
Unethical communication can be very damaging, but impacts people differently at different levels.
Let's start with interpersonal communication, or the systems of exchange between individuals.
Communication is the centerpiece of interpersonal relationships, through which people build trust,
express emotions, and establish connections. Ethical communication encourages this, while
unethical communication undermines interpersonal relationships. This can be extraordinarily
damaging, as much of or psychological and social well-being depends on healthy relationships.

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Institutional Communication
While unethical communication can hurt interpersonal relationships, it can also undermine healthy
social relationships. Institutions, from companies to entire governments, have moral and ethical
obligations to communicate transparently and without bias or prejudice. As groups of authority,
institutions have the power through their communication habits to influence the communication
systems within a large group of people. Unethical communication practices at the institutional level
tend to favor a few people over the majority, specifically those in power.

Unethical Behaviors
Now that we understand the ways that unethical communication can impact people on personal
and social levels, let's explore some behaviors commonly accepted to be unethical.

Plagiarism
Our first unethical communication behavior is plagiarism. Plagiarism describes the un-credited use
of someone else's ideas. We see it often in writing, when an author steals from other writers.
Plagiarism hurts trust and the credibility of publishing institutions, undermining a society's ability to
communicate openly and freely. However, plagiarism is about more than just writing. In the
colonial era, European empires had a strong habit of taking responsibility for any positive event or
development, while blaming negative events on the local populations. This created a structure of
power that was biased against local populations. It has only been with the on-going post-colonial
studies of the 20th and 21st centuries that many instances of cultural or social plagiarism are
being uncovered.

Ethics in Business Communication

As business practices become more transparent and the people behind those businesses become
more public, customers and patrons begin to expect more from these businesses. It’s no longer a
faceless corporation trudging along making a profit and paying their investors. Because of this, in
order to be successful in today’s environment, a company has to be socially conscious and to
behave ethically. That’s a trend whose thread is woven into every aspect of business, and that’s
not a bad thing. Communicators should absolutely be cultivating a level of trust and integrity in
each of their messages. They should be socially conscious and inclusive in their communications.
It’s what audiences expect and, frankly, what they should have.

Guidelines for Ethical Communication

It’s not enough for a communicator to craft a message that’s clearly understood by his audience,
leveraging the seven principles of business communication:
• Clear
• Concise
• Objective
• Consistent
• Complete
• Relevant
• Understanding of Audience Knowledge

In reality, if you adhere to the seven principles, you will communicate ethically. For
instance, if you craft a message that is not clear and concise, and you use tricky language that
manipulates your consideration for your audience’s knowledge, then you are not being ethical. If
you’re not being objective, and you are trying to communicate your opinion (or the opinion of
others) as fact, then you are not being ethical. If you purposely do not disclose complete
information, then you are not being ethical. You don’t have to look too far today to see examples of
unethical communication; they’re all over the media. “Fake news” media sites abound, even

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though social media outlets like Facebook and Twitter are making efforts to prevent them from
being posted and shared.

G. Non-respect of Agreements
The synonym of the word agreement is “contract” and “treaty”.

The Basics of Business Contracts and Agreements

Contracts and agreements are important for conducting business for all sizes of companies.
In earlier decades, there were few written business contracts, and many business and personal
deals were done with a handshake. If a problem arose, the two parties could take the issue to
court, and a judge would hear the case even if the contract was not put into writing. While a verbal
contract is still legal (except for in specific situations), most contracts are documented in written
form. Contracts have become increasingly detailed these days, and every effort is made to make
all possibilities and eventualities clear.

H. 7. Environmental Degradation
The Valdez Principles
The Coalition for Environmentally Responsible Economics (CERES) in Boston, USA drafted
in 1990a Guide to The Valdez Principles. This is a list of principles that explains how to deal with
environmental issues. From the business and management points of view, this list is like the ten
commandments of environmental protection. The Valdez Principles were formulated after a major
oil spill from an Exxon tanker – the Exxon Valdez which ran aground near Valdez, Alaska, on
March 24, 1989 and spilled 240,000 barrels – 11 million gallons of crude oil which eventually
covered 2,600 square miles of Prince William Sound and the Gulf of Alaska, Although the Exxon
spill was not the largest ever, it was one of the worst in terms of environmental damage and long-
term effects. The ten Valdez Principles that ask companies to agree which includes the following
actions:
A. Protection of the Biosphere
1. Minimize or eliminate the release of any pollutant.
2. Safeguard habitats in rivers, lakes, wetlands, coastal zones, and oceans.
3. Minimize contributions to the greenhouse effect, depletion of ozone layer, acid rain
and smog.
B. Sustainable Use of Natural Resources
1. Make sustainable use of natural resources.
2. Conserve non-renewable natural resources through efficient use and planning.
3. Protect wildlife habitat, open spaces, and wilderness while preserving biodiversity.
C. Reduction of Disposal Waste
1. Minimize creation of hazardous waste.
2. Recycle Materials.
3. Dispose waste through safe methods.
D. Wise use of energy
1. Use environmentally safe and sustainable energy source.
2. Invest in improved energy and conservation in our operation.
3. Minimize energy efficiency of products we produce and sell.
E. Risk Reduction
1. Minimize the environmental, health, and safety risks to our employees and the
communities where we operate.
F. Marketing of Safe Products and Services
1. Sell products and services which have minimum adverse environmental impact,
and safe for consumption.
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 2. Inform consumers of the environment impact of our products and services.
G. Damage Compensation
1. Take responsibility for any harm we cause to the environment while making every
effort to fully restore the environment.
2. Compensate those who are adversely affected.

H. Disclosure
1. Disclose to our employees and to the public incidents relating our operations that
cause environmental harm.
2. Take no action against employees who report any condition that creates a danger
to the environment.
I. Environmental Directors and Managers
1. Commit management resources to implement the Valdez Principle.
2. Establish a Committee of Board of Directors for Environmental Affairs
J. Assessment and Annual Audit
1. Conduct and make public an annual self-evaluation of our progress in
implementing the Valdez Principles
2. Work towards the timely creation of interdependent environmental audit
procedures to be completed every year and to be made available to the public.

I. The Problem of Just Wage

Work and Compensation

Work is said to be for the purpose of obtaining economic gain for laborer. Most Agree that work is
directed to the promotion of life. The duty to preserve one’s life implies the duty to work and that
each has a personal duty to take care of himself and not to be a burden to others. Being
compensated for a work done or for services rendered is part of the essence of work. One is
willing to work in exchange for remuneration of rewards he will receive from working. Such
remuneration may include both financial and nonfinancial compensation. It can be in the form of
wages, shares on profit, harvest or commercial goods, in-kind payments, and other remunerative
fringe benefits. The main objective of compensation is to create a system of reward that is
equitable to the employer and employee. Thus, the general concern is that justice should be a
substance of compensation.

The Question of Just Wage

The question of “What is a just wage?” or “How do you define a fair wage?” has a long history. A
number of people all over the world commented on its definition and have argued on the
appropriate criteria to consider in setting the so-called just wage. A just wage is defined as that
remuneration which is enough to support the wage-earner in reasonable and frugal comfort. The
Catholic Church teaches us that “a just wage is the legitimate fruit of labor.”

Philippine Constitution and Republic Act 6727

Spread in various parts of the 1987 Philippine Constitution are specific pronouncements and
mandates on the protection and promotion of the rights of workers in the public and private
sectors. The Wage Rationalization Act declared the policy of the state to rationalize the fixing of
minimum wages and to promote productivity-improvement and gain-sharing scheme to ensure a
decent standard of living for the workers and their families. The
minimum wage rates shall be adjusted in a fair and equitable manner, considering existing
regional disparities in the cost of living and other socioeconomics factors.

Government Agencies Involved

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In our country, determination of wages must also be equitable and just. The National Wage and
Productivity Commission (NWPC) and the Regional Tripartite Wages and Productivity Boards
(RTWPB) determine the minimum wage for Filipino workers. They handle the minimum wage rates
of the workers of each and every region of the country. It is their duty that wage shall be as nearly
adequate as is economically feasible to maintain the minimum standards of living necessary for
the health, efficiency and general well-being of the workers.

Factors to Consider in the Formulation of Fair Wages

Every employer faces the problem of setting wage rates and salaries.
a. External Market Factors
Refers to the supply and demand for labor and the so-called economic conditions and
underemployment. The Principle behind this is that wages are relatively high if there is
scarce supply of labor, and the same is low if there are more opportunities for labor.

b. Law and Regulation

Workers should be paid in accordance with laws and regulations issued by the government.
It requires that employers pay at least the minimum wage. The government usually
determines the minimum wage for its country. But still, the minimum wage is not always
acceptable as fair and just.

c. Cost of Living
The cost of living relates to basic maintenance needs and it must be seriously considered in
formulation of wages. A fair wage should be sufficient to meet the increase in cost of living.
Thus, if the cost of living goes up by 10%, the wage should also go up by 10%.
Unfortunately, it is a fact that majority of the employers cannot automatically adjust wages
with the increase of cost of living. However, it is certainly clear that ignoring the cost-of-
living means jeopardizing the welfare of workers.

d. Prevailing Industry Rate

Some claim that paying workers the average of what other companies are paying for the
same job results in a fair wage. However, such claim is not universally valid because not all
companies have a minimum wage high enough to maintain a decent standard of living.

e. Organizational Factors
Assessment on what type of industry the organization operates, the size of the company
and the organization’s profitability to justify its ability to provide fair wages to its workers
should be considered. Likewise, determining if the organization is unionized or not and if
the company is capital or labor-intensive could contribute to the establishment of fair wage.

f. Job Factors
The nature of the job itself entails the formulation of a just wage. Duties, responsibilities and
the skill requirements of the job are probably the most considerable determinants of fair
wage. An employee should be paid based on the complexity and difficulty of his job. This
concept, however, is not perfectly similar and true to all employees due to difference in
interpretation of skills and tasks.

g. Individual Performances
The trends suggests that individual performances or productivity ratings affect the
determination of wage/salary increases. One who performs well in his job deserves to
receive a proportionate increase in pay.

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J. Gift-Giving and Bribery
Gift-Giving
Gift-giving is merely an act of extending goodwill to an individual in an effort to share something
with them. Giving gifts to customers, clients, and business partners is a common practice in the
business community. It is normally observed during special occasions like Christmas, New Year,
and sometimes even during birthdays.

Business usually engages in gift-giving for the following reasons:

➢ To show appreciation for a favor received;
➢ To effectively establish goodwill with business partners;
➢ To advertise; and
➢ To compete effectively against competitors.

The following are the common forms of gift-giving:

➢ Samples
➢ Raffle Coupons/certificates
➢ Rebates/cash funds
➢ Padding
➢ Premiums
➢ Prizes
➢ Patronage awards (rewards)
➢ Tie-up promotions
➢ Allowance
➢ Free Goods
➢ Tips

Is Gift-Giving Ethical or Unethical?

Business gifts of clients and business associates can raise conflict-of-interest problems, and
knowing where to draw the line, between what is right and wrong, is not always easy. The clear
point is that those who cross that line, intentionally or not, end up in big trouble.
Factors in Determining the Morality of Gift-Giving
a. Value of the Gift
b. Purpose of the Gift
c. Circumstances under which the gift was given or received
d. Position between or relationship of the Giver and Receiver.
e. Acceptable Business Practice in the Industry
f. Company Policy
g. Laws and Regulations
Still, the ultimate moral judgement hinges on whether an objective partly could reasonably suspect
that the gift might lead the recipient to sacrifice the interest of the firm for his own personal gain.

Bribery
Bribery is defined as a practice of giving remuneration for performance of an act that is consistent
with the work contract or the nature of the work one has been hired to perform. It is intended to
induce people inside the business or other organization to make decisions that would not be
justifiable according to normal business or other criteria. It was then identified to be a form of
corruption and is generally immoral and for most is illegal. Remunerations, termed as bribes, can
be in the form of money, gifts, entertainment, or preferential treatment.

Examples of bribery:

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➢ A motorist offers a certain amount of money to a police officer in order not to be issued a ticket
for over speeding;
➢ A citizen seeking paperwork or utility line connections gives an expensive gift to a functionary in
exchange for a faster service;
➢ A construction company sharing percentage of its income to a civil servant in order to win a
contract; and
➢ A narcotics smuggler bribes a judge to lessen criminal penalties.
In some cases, the briber holds a powerful role and controls of the transaction; in other cases, a
bribe may be effectively extracted from the person paying it.

Bribery is obviously unethical because of the following reasons.

➢ It is generally used as an instrument to gain personal or corporate advantage;
➢ It corrupts the concept of justice and equality;
➢ Bribery produces cynicism and general distrust of institutions;
➢ It destroys people’s trust in the integrity of professional services, of government and the courts,
of law enforcements, religion, and anything it touches; and
➢ It treats people as commodities whose honor can be bought and sold. It thus tends to degrade
the respect we owe to other human beings.

K. Morality of Advertising
Advertising plays a very significant role in marketing goods and services. Without
advertising, the consumers would not be aware of the presence of diverse products and services
available in the market. Sometimes, even the mere presence of advertising can sell a product due
to consumer perception that a heavily advertised product is a product of good value.

Advertising has far reaching effects, sociology and economically, and it is important to note
that it does not only dominate our environment but it also becomes part of our culture.
Recognizing the effectiveness of advertising in generating sales, companies allocate an enormous
amount of their budget for advertising.

The primary purpose of advertising is to inform potential buyers of the availability of a

certain product by providing relevant information on its uses, benefits and how it might serve the
needs and wants of individuals. However, the use of advertising today has not been serving its
intended purpose since very little information is conveyed to consumers and more often the
information is not even useful. The economic system is characterized by high degrees of business
competition where every producer would want to have a piece of the consumer’s demand; as a
result, advertisements typically end making misrepresentations or false claims.

From the point of morality, advertising in itself is not bad or immoral since it helps achieve
the goals of both the seller and buyer. It only becomes immoral when, in the attempt to persuade
consumers, the advertisements become deceptive, misleading, and manipulative.

There is only one criterion in evaluating the morality of advertising, and that is, “to tell truth.”
An advertisement that conveys truthful information is morally permissible. If an advertisement
contains false statement and lies then it is said to be immoral.

Philippine Laws on Advertising

Consumer Act of the Philippines (R.A. 7394) Article 108 of the Act declares that “The State shall
protect the consumer from misleading advertisements and fraudulent sales promotion practices.”
The Department of Trade and Industry is responsible for enforcing the provisions of the Act. With
respect to food, drugs, cosmetics, devices and hazardous substances, the Department of Health is
the agency that oversees these products.
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WHAT I CAN DO
Directions: Draw or paste a caricature of a business ethical issue. Label with the issue related to
it. Write a short reflection.

ASSESSMENT:
Directions: Choose what issue is related to the statements. Write the letter of the correct answer
in your answer sheet.
1. A shampoo ad on the television claims to make your hair straight even if you have a curly hair.
A. Basic Fairness B. Morality of Advertising
C. Gift-giving and Bribery D. The Problem of Just Wage

2. An accountant receives a big amount of money in transacting faster the transaction of a client
who is at the last of the queuing line.
A. Basic Fairness B. Morality of Advertising
C. Gift-giving and Bribery D. The Problem of Just Wage

3. An insurance agent who does not disclose all the important matters on the policy that it sold to a
customer.
A. Fraud B. Basic Fairness
C. Unfair Communication D. Environmental Degradation

4. A competitor who bad mouths another competitor just to sell more of its services than the other.
A. Fraud B. Basic Fairness
C. Unfair Competition D. Unfair Communication

5. A Private hospital which does not segregate properly its waste and dumps it directly on the
rivers nearby.
A. Fraud B. Basic Fairness
C. Unfair Communication D. Environmental Degradation

6. An employee who has no SSS, Pag-ibig HMDF and Philhealth contribution?

A. Basic Fairness B. Morality of Advertising
C. Gift-giving and Bribery D. The Problem of Just Wage

7. A supplier was chosen by the Bids and Awards Committee because each member of the
committee will be receiving something in exchange of the favor.
A. Basic Fairness B. Morality of Advertising
C. Gift-giving and Bribery D. The Problem of Just Wage

8. A Hotel in Boracay has a septic tank which waste goes directly to the sea.
A. Fraud B. Basic Fairness
C. Unfair Communication D. Environmental Degradation

9. A newspaper report of a business owner accusing him to be dishonest and lacks integrity
without substantial evidence.
A. Fraud B. Basic Fairness
C. Unfair Competition D. Unfair Communication
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10. Company C received a deposit from Client D as a payment of the goods bought online, but the
former didn’t deliver the said goods to the latter.
A. Fraud B. Basic Fairness
C. Unfair Communication D. Environmental Degradation
Reflection
Learners will write on their answer sheet their insights about the lesson.
I understand
that_________________________________________________________________
______________________________________________________________________________
____________________________________________________________
I realized that ___________________________________________________________________
______________________________________________________________________________
____________________________________________________________

Answer Key:
Assessme
nt
1. B
2. C
3. C
4. C
5. D
6. D
7. C
8. D
9. D

Reference:

Self-Learning Module
Garcia, Maria Paz F., Business Ethics Grade 12 Module 9, First Edition, La Union School Division,
2021

Website:

https://www.academia.edu/36905141/Social_Responsibility_of_Entrepreneurs

Prepared by: Checked by:

LISIL V. DE GUIA JENNY V. SISON

Teacher II Teacher II

Evaluated by: APPROVED:

MYRA M. ABSIN ELEAZAR C. MAGSINO

Master Teacher II Principal II

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