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business ethics

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Nika Eking

on 14 August 2014

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Transcript of business ethics

Why Does Sexual
Anti-Sexual Act of 1995 or RA 7877
declaring sexual harassment unlawful in the employment, education or training environment, and other purposes.
At the end of this chapter, the students are expected to:
Unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature constitutes sexual harassment when submission to or rejection of this conduct explicitly or implicitly affects an individual's employment, unreasonably interferes with an individual's work performance or creates an intimidating, hostile or offensive work environment.
1. “Quid Pro Quo” Harassment
means “this for that” (something for something) and is manifested by requiring a sexual favor as a condition of employment or in exchange for an employment benefit (such as promotion)
2. Harassment that creates hostile environment
abuses include verbal, physical and visual conducts that create an intimidating, offensive or hostile environment in the workplace that interferes with the work performance.
Sexual harassment occurs due to the power Strule between men and women as a response to a real or imagined loss of power or as an expression of retaliation or a flexing of the new power.


1. examine the different issues and problems in business and the business enterprise from the moral perspective
Professor Dave David
2. develop a framework for analysis and resolution of ethical dilemmas and problems affecting business
3. acquire basic information about questionable business practices and their impact to stakeholders
4. develop problem solving skills using the philosophical-qualitative approach to resolve ethical problems in the business and corporate world
Harassment Occur?
Types of Sexual Harassment
The Profiles of the Victim and the Harasser

1. The victim or the harasser can either be a woman or a man.
2. The harasser can be the victim’s supervisor, any coworker, or even a non-employee.
3. The victim could be anyone affected by the offensive conduct.
4. The harasser’s conduct must be unwelcomed.
How to prevent Sexual Harassment in the Workplace
• A broad anti-harassment/positive environment policy.

• A separate sexual harassment policy that covers all organizational members.

• Separate sexual harassment policy: one that addresses non-management employees; and one that addresses management.

Communicating the Sexual Harassment Policy
Expose regularly on bulletin boards, memos, articles in the organization’s newsletters, meetings and trainings.

Training programs may come up with various topics to assure each employee of a safe and harassment-free workplace environment.
Imprisonment of not less than one (1) month but not more than six (6) months

Fine of not less than Ten Thousand Pesos (10,000) but not more than Twenty Thousand Pesos (20,000)
Legal Penalties of R.A 7877
Work and Compensation
Work is the purpose of obtaining economic gain for the laborer. Being compensated for a work or services done is part of the essence of work.
The main objective of compensation is to create a system of reward that is equitable to the employer and employee.
the amount of money that the worker needs to provide for the needs of the family
minimum hourly wage necessary for a person to achieve some specific standard of living
minimum rate a worker can legally be paid as set by the statute or government
measured in terms of money paid, not in purchasing power
measured in terms of actual purchasing power (inflation)
remuneration which is enough to support the wage-earner in reasonable and frugal comfort
The Question of Just Wage
A just wage is the remuneration which is enough to support the wage earner in reasonable and frugal comfort.
The Teachings of the Catholic Church on Wages

Rerum Novarum
– (also known as the Capital and Labor) Pope Leo XIII did not attempt to calculate just wage only decried that the market place alone should set wage structures.

Quadragesimo Anno
– Pope Pius XI advocated the minimum wage and introduced profit-sharing and giving workers a say in a company’s management. He developed the concept of “family wage” s one sufficient wage for a single wage-earner to support his family.

Mater et Magistra
– Pope John XXII and Paul VI called on governments to stop business abuses and to press for full employment policies. It focused the world’s attention to the widening gap between the rich and the poor, the arms race, and the plight of the farmers.

Laborem Exercens
– Discussed the modern problems of human work and the duties of the church toward it. Pope John Paul II offered an assessment of what is just compensation; declaring that workers have “fundamental rights’ to health care insurance, suitable working conditions, and rest periods.

Centesimus Annus
– [Pope John Paul II stated that “Society and State must ensure wage levels adequate for the maintenance of the worker and his family, including a certain amount for savings.”

Catholic Bishops’ Conference of the Philippines (CBCP)
On Social Justice
– The CBCP in a pastoral letter on “Social Justice,” referred to a just wage as “family wage” that should guarantee man the opportunity to provide a dignified livelihood for himself and his family on the material, social, cultural, and spiritual levels.
The Issue of Just Wage has also been discussed by other agencies
 1948 Universal Declaration of Human Rights
“The right to work, to free choice of employment, to just and favorable conditions of work, and to protection against unemployment (Art. 23 [1]) and the right to equal pay for equal work (Art. 23 [2]).”
 1966 International Convention on Economic, Social and Cultural Rights
“The right to fair wages and equal remuneration for work of equal value.” Article7
“Equal pay for men and women workers.” -ILO Convention No. 100
Philippine Constitution and Republic Act 6727
 Sec. 3 of Art. XIII.
- “That the workers are entitled to a living wage.”
 Republic Act No. 6727
- The wage Rationalization Act declared the policy of the Sate to rationalize the fixing of minimum wages considering existing regional disparities in the cost of living and other socioeconomic factors.
Factors to consider in the formulation of fair wages
1. External Market factors
2. Laws and regulation
3. Cost of Living
4. Prevailing Industry Rate
5. Organizational Factors
6. Job Factors
7. Individual Performances
Some Issues on Just Wage
The minimum wage mandated by the government is not a guarantee of a just wage.
Mutual agreements regarding wages may not be advantageous to the workers.
Geographic differences hinder the formulation of a common definition of fair wage.
Wage indexation to cost of living is not usually met by majority of the employers.
Companies have different interpretations of the unjustifiable pay for certain job positions, skills and tasks.
Inflation rate also dictates the formulation of just wages as it affects the prices of commodities.

extending goodwill to an individual in an effort to share something with them.
Reasons for gift-giving in business:
To show appreciation for a favor received
To effectively establish goodwill
To advertise
To compete effectively against competitors
Common forms of
raffle coupons/certificates
rebates/cash refunds
patronage awards (rewards)
tie-up promotions
free goods
a relationship between two people who are employed by the same organization.
It is characterized by mutual attraction between the parties and a desire for a personal, romantic relationship.
Benefits of Workplace Romance
Friendship, mutual support to each other at work and other personal experiences.
Overcome rough times at work because of mutual support and inspiration.
Tend to view work as fun even when pressures begin to pile up.
Reasons to keep their jobs.
Ethical Issues of Workplace Romances
Want to restrict their employees from engaging in workplace romances.
Legal/Ethical Considerations
this could raise some legal issues such as discrimination. When one or both involved parties are required to leave the company, this risks legal encounters.
Sexual Harassment
one of the persons involved in a failed romance may seek vengeance, may try to revive, or would want to remove the other person involved.
Disadvantages of Workplace Romance
Damaged Proffessional Reputations
Disturbed Co-Workers
Changes in Produtivity
Dating the Boss
Extramarital Affairs
is a measure of value in exchange and may be expressed in monetary terms (a sale) or in non-monetary terms, barter.
What is PRICE?
The Cost Theory of Prices
Value is a function of the cost production and profit.
Fair price of a good/service will depend on how much it costs for the seller to make the product and a reasonable profit.
 Market Theory of Prices
Value is a function of utility and scarcity.
If something is perceived by the buyer to have great usefulness, its value in exchange will be higher.
Price Theories
What makes a Price Fair?
The word “fair” has two separate meanings:

implies that a fair price is satisfactory.

Just Price
is a judgment that the price has been justified.
Ethical Issues in Fair Price
Ethical Issues in Fair Price
Market Structures
The market presupposes the setting of a fair price depending on its structure.
Sellers would ask for a higher price and buyers offer less than they expect.
Perfect Competition
Imperfect Competition
-Monopoly or Oligopoly.

Is the legal term for confidential business information that allows the company to compete effectively.
Trade Secrets Act prevents wrongful taking of confidential or secret information.
Trade Secrets
1. The information must not be “generally known or readily ascertainable” through proper means.
2. The information must have “independent economic value due to its secrecy.”
3. The trade secret holder must use “reasonable measures under the circumstances to protect” the secrecy of the information.
Arguments in keeping Trade Secrets
Factors In Determining The Morality of Gift-Giving
Value of the Gift
– Is the gift of nominal value, or is it substantial enough to influence a business decision?
Purpose of the Gift
– As long as the gift is not intended or received as a bribe and remains nominal.
Circumstance under which the Gift was Given and Received
– A gift given during holiday season, for a store opening, or one attached to a special event is circumstantially different from one unattached to any special event or occasion.
Position between or Relationship of the Giver and the Receiver
– Could the recipient’s decision result in preferential treatment in favor of the donor?
Acceptable Business Practice In the Industry
– Could the act be acceptable in this kind of business?
Company Policy
– If firms explicitly forbid the practice of giving and receiving, then gift-giving would normally be wrong.
Laws and Regulation
– When gift transactions violate the law, they are clearly unacceptable.
Dela Cruz
is giving remuneration for an act that is inconsistent with the work contract or the nature of the work.
intended to induce people to make decisions that would not be justifiable according to normal business criteria.
identified to be a form of corruption and is generally immoral and for most is illegal.
Reasons Why Bribery Is Unethical
“any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor.” -Philip Kotler
Misleading Advertisements
• do not make false claims but make claims in a way that a normal person looking at it comes up with the wrong conclusion.
Deceptive Advertisements
• make a false statement or misrepresent the product.
Manipulative or Coercive Advertisements
• use trickery or by devious or insidious means
• involve the use of force either physical or psychological

Deceptive advertising
• makes a false statement or misrepresent the product.
Use of “weasel words”
• uses ambiguity
• weasel words are used to avoid or recoil from a direct or straightforward statement.
• occurs when ads tend to make false claims of the benefits of the goods or services which are unsupported by valid evidence
Psychological Appeals
• influence by implying that doing what is suggested will satisfy a subconscious desire.
• The use of sex in advertising is a two-edged sword.
Ads directed at Children
• For children to pester their parents to buy things for them.
• Children are naive and gullible and are particularly vulnerable to enticements made by advertisers.

Article 108 declares “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.

-The Department of Health is responsible with respect to food, drugs, cosmetics, devices and hazardous substances.
Consumer Act of the Philippines (R.A. 7394)

Article 110 states that “It shall be unlawful for any person to disseminate or to cause the dissemination of any false, deceptive, or misleading advertisement.
False, Deceptive and Misleading Advertisement
Philippine Association of National Advertisers (PANA)

Regulates abuses committed by untruthful advertisers
PANA code of ethics:
Good advertising:
• recognizes both its economic and social responsibility to help reduce distribution costs and to serve the public interest;
• depends for its success on public confidence;
• cannot permit practices that tend to impair this confidence;
• aims to inform the consumer and help him buy intelligently;
• tells the truth. It is accurate, honest and trustworthy;
• avoids exaggerations, misstatement of facts, as well as possible deceptions through implication or omission;
• conforms not only to the laws but also to the generally accepted standards of good taste and decency, and to moral and aesthetic sentiments of the country.
• avoids any practice or statement which may be offensive to the public as a whole or to any particular group, class or race.
Corporate Disclosure
- Information that a corporation is morally obliged to disclose.

Moral basis of Corporate Disclosure

1. Each person has the right to the information he needs to enter into a transaction fairly.
2. Each person has the right to those actions of others that will seriously and adversely affect him or her.
Guide questions to explain the ideas of corporate disclosure:

1) To whom must disclosures be made available?
2) What must be morally disclosed?
3) In what form should disclosures have to take?
observed when there is a transformation of information to misinformation.

Intentional misrepresentation
– a scenario whereby the person is fully aware or deliberately misrepresents things, commonly known as lying.
Unintentional misrepresentation
– none deliberate act of misrepresenting things.
Definitions of Lying
The act of making others believe untrue statements
"A speech that is contrary to what the person is thinking with the intention to deceive."
Types of Lying
Use of ambiguous terms
Use of false statements
Lying through action
Suppression of correct information
According to Catholic moral theology, lying becomes sinful only when:

1. It leads the neighbor to error;
2. It breaches a promise; and
3. It violates the nature of speech.
Lying can be morally justified when it is:

1. used to protect innocent people;
2. used to protect national security/important secrets;
3. used in the name of self defense; and
4. used in the protection of bodily integrity.

Direct misrepresentation
-actively misrepresenting something about the product or service.

Indirect misrepresentation
-omitting adverse information about the product or service.
Business Practices Involving Misreprentation and Lying
Types of Direct Misrepresentation
Types of Indirect Misrepresentation
Strike action
(or simply
) describes collective action undertaken by groups of workers in the form of a refusal to perform work.
For higher compensation
To improve the workplace
For shorter working days
To stop their wages from going down
For more benefits
Because they think their company has been unfair
Reasons for Going to Strike
Types of Strikes
All employees employed in institutions whether operating for profit or not
Government employees in the civil service
Supervisory personnel
Security personnel
Aliens with valid working permits
Who Can Join Labor Organizations or Workers Association
Managerial employees
Members of cooperatives
Members of the Armed Forces of the Philippines
Philippine National Police and Firemen
Who Are Prohibited from Joining Legitimate Labor Organizations
1. There is a sufficient and just reason for it.
2. The intended good results must be proportionate to the evil effects.
3. The means employed are lawful.
Conditions for a strike to be moral (Ethics and the Filipino Agapay):
the disclosure by an employee of confidential information which relates to some fraud or other illegal conduct connected with the workplace.
– someone in an organization who witnesses illegal behavior and who decides to speak out publicly about it.
1. The disclosure of information must be made in good faith.
2. The disclosure must be made by a current, former, or prospective employee.
3. The information must be linked to misconduct on the part of the employer.
4. Evidence of the misconduct should exist.
Four Elements That Encompass Whistleblowing
1. Internal whistleblowing
2. External whistleblowing
3. Current
4. Alumni
5. Open
6. Anonymous
Types of Whistleblowing
Severe depression or anxiety
Feelings of isolation or powerlessness
Distrust of others
Declining physical health
Severe financial decline
Problems with family relations
Severe emotional effects of whistleblowing:
1. Talk to your family or close friends about your decision.
2. Be alert.
3. Think carefully about whether you want to go public with your concerns or remain an anonymous source.
4. Develop a plan.
5. Maintain good relations with the administration and support staff.
6. Keep a careful record of events as they unfold.
7. Identify and copy all necessary supporting records before drawing any suspicion to your concerns.
8. Break the cycle of isolation.
9. Invest on funds to obtain legal opinion from a competent lawyer.
10. Always be on guard not to embellish your charges.
11. Engage in whistleblowing initiatives in your own time.
12. Trust working with the authorities.
How To Blow The Whistle
The company must be engaged in illegal or immoral practice.
The more serious the harm, the more serious the obligation.
The employee should report his concern or complaint to his immediate superior.
If no appropriate action is taken, the employee should take the matter up the managerial line before going public.
The employee must have a good reason to believe that by going public, he will be able to bring about the necessary changes.
Is Whistle Blowing Morally Permissible
- Is a system of selling in which one signs up other people to assist him, and they, in turn, recruit others to help them.

-It is a system of selling through many levels of distributors, thus the word “multilevel marketing.”
Multilevel Marketing
In the classic “pyramid” scheme, participants make money solely by recruiting new participants into the program.
The hallmark of these schemes is the promise of sky high returns in a short period of time.
Difference between an MLM and Pyramiding
1. Are there legitimate products?
2. Is there an intent to sell the products?
3. Do the products have fair market value?
4. Is there a compelling reason to buy the products being offered?
5. Is there a product return policy?
6. Will you receive commission on the joining fees of your prospects?
7. Is there a correlation between recruiting and distributor’s commissions?
8. If recruitment is to be stopped today, will participants still make money?
8-point test to determine pyramiding:
 Too much materialism and greed.
 They con the public, making them believe that they are a legitimate MLM.
 The intentions are bad.
Moral Issues in Pyramiding
Art. 53 of RA 7394 (the Consumer Act of the Philippines)
- States that “chain distribution plans or pyramid sales shall not be employed in the sales of consumer products”
RA 3883 or Business Name Law
- Empowers DTI to cancel license of any business which does not conform to the registered business name or style.
Legal Issues in Pyramiding
1. Consult the 8-point test.
2. Beware of plans that claim to sell miracle products or promise enormous earnings.
3. Do not pay or sign any contract in any high pressure situation.
4. Remember that pyramiding does not create new wealth.
Tips to Consider When You Make Your Decision Before Joining a Plan
Competition is healthy and can be a motivation for firms to produce better products or offer better services.

Competition becomes bad when it eliminates a competitor.
1. A
is a market situation where there is only one provider of a kind of product or service.
2. An
denotes a situation where there are few sellers for a product or service.
Perfect Competition
is a situation in which no firm or consumer is large enough to dictate prices.
Different Kinds of Competition
Fair Competition is doing business under ethical rules of conduct, behavior and judgment.

Unfair Competition consists of:
- Deceptive trade practices
- Business interference
- Anti-competitive market practices
- Defamation of a competitor or badmouthing a competitor to a customer
- Caveat emptor or indirect misrepresentation
- Violation of intellectual property rights.
Difference between Fair and Unfair competitions
Article 168 states that a person who has identified in the mind of the [public the good he manufactures has a property right in the goodwill of the said goods identified, and will be protected as any other property rights.
The Intellectual Property Code of the Philippines
a. Any person who gives the general appearance of the goods of another
b. Any person who induces the false belief that such person is offering the services of another.
c. Any person who shall make false statements to discredit the goods, services, or business of another.
The following shall be deemed guilty of unfair competition:

The term “money laundering” originated from Mafia ownership of Laundromats in the US.
Gangsters who were earning huge sums in cash from illegal means needed to show a legitimate source for these monies.
A way to do this was by purchasing legitimate businesses and combining their illicit earnings with the legitimate earnings.
Laundromats were chosen because they were cash businesses.
Money laundering
is the process of disguising illegally obtained money so that the funds appear to come from legitimate sources or activities.
1. Placement
Physically placing bulk cash proceeds. When illicit monies are deposited at a financial institution, placement has occurred.
2. Layering
Separating the proceeds from criminal activity from their origins through layers of complex financial transaction.
3. Integration
Providing legitimate explanation for the illicit proceeds.
Illicit funds are integrated with monies from legitimate commercial activities as they enter the mainsteam economy.
Money Laundering Process
involve any number of intermediaries and utilize both traditional and non-traditional payment systems
Money Laundering Methods
Impact of Money Laundering on Society
The social and political costs of money laundering are serious.
Organized crimes infiltrate financial institutions or acquire control of large sectors of the economy.
Social consequences of laundered funds provide financial support for drug dealers or terrorists.
The FATF is a multidisciplinary body that brings together the policy-making.
The FATF monitors members’ progress, reviews and reports on laundering trends and counter-measures, and promotes the adoption of FATF anti-money laudering standards globally.
What Role the Financial Action Task Force (FATF) Play
Conflict of interest
in the business context occurs when a person acts in a way that is to his/her advantage at the expense of the employing organization.
The common factors that create conflict of interest are commercial bribes and gifts.
A commercial bribe can be in the form of money, tangible goods or services.
Commercial extortion
occurs when an employee demands consideration from a person outside the firm as a condition to intervene in favor of that person.
Accepting a gift
is unethical if it acts as a bribe or extortion in that it influences the impartial judgment of the employee.
Types of Conflict of Interest
1. There is a private or personal interest, often financial.

2. Conflict of interest interferes with professional responsibilities such as interfering with objective judgment.
Key Elements
refers to the significant facts that have not yet made public and are likely to affect stock prices.
SEC defines insider as anyone who has pertinent information that is not publicly available, and that gives that trader an advantage over the public.

1. Someone within the form using information for his or her own private gain, at the expense if the firm (conflict of interest)

2. Use of the information by someone within the firm to secure personal advantage over those not in the firm (breach of loyalty)
Moral Arguments
It violates fiduciary relationships between insiders and outside clients.
Insiders and outside clients.
It promotes reed and personal gain at the expense of others.
It renders the transaction between two contracting parties as unfair.
Ethical Issues Related to Insider Trading

Financial duty or levy contributed to the entity.
A heavy burden.
-is the system by which the government raises funds with which to finance governance, and to promote the general welfare of its citizens.
-is an “intentional negligence” of the obligation to pay correct taxes to the government; also known as “Tax Dodging”. It reduces payment of tax by fraudulent means.
Tax Evasion
1. The intention to cheat.
2. Knowledge the tax evasion is wrong.
3. By fraudulent means.
Three (3) Elements of Tax Evasion:
-when tax payers exploit legally permissible alternative methods of assessing taxable property or income in order to avoid or reduce tax liability; also known as “Tax Minimization.”
Tax Avoidance
The duty to pay taxes is pronounced by Christ Himself in the scriptures: “Render to Caesar the things that are Caesar’s, and to God the things that are God’s.”
According to Peschke: “Payment of just taxes is considered an obligation in conscience, and violation of this duty is regarded as an offense against justice.”
Maximiano (2003) argued that the main justification of taxation rests on the principle of justice, particularly, distributive justice.
According to this principle, there should be a fair distribution of the society’s benefits and burdens.
The Duty to Pay Taxes
REPORTER: Honey Grace Estares
REPORTER: Heidi Dela Cruz
REPORTER: Maricris Padilla
REPORTER: Mharie Danica Eking
REPORTER: Sheinna Mae Correa
REPORTER: Honey Grace Estares
REPORTER: Heidi Dela Cruz
REPORTER: Maricris Padilla
REPORTER: Mharie Danica Eking
REPORTER: Sheinna Mae Correa
REPORTER: Honey Grace Estares
REPORTER: Heidi Dela Cruz
REPORTER: Maricris Padilla
REPORTER: Mharie Danica Eking
REPORTER: Sheinna Mae Correa
REPORTER: Honey Grace Estares
Full transcript