MORALLY DEFENSIBLE POSITION

ON ETHICAL ISSUES IN
BUSINESS

Reporters:Christen V.Delula
Angeline T. Bacquial
 OBJECTIVES:

K: Identify the different ethical A: Apply business policies and

issues in business; practices against
ethical issues as an
Make a business policies and
S: entrepreneur in the future.
practices against
ethical issue in an enterprise; and
Major Ethical Issues in
Entrepreneurship
1. 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.

Example of a basic fairness:

 Partners
 Gross Negligence
2. Personnel and Customer Relations

a. Mistreating Employees – Every year, lawsuits are filed against

employers who are accused of sexual harassment or
discrimination against their employees.

b. Discrimination and Harassment in the Workplace – Maintaining

professional workplace relationships between employees is a
continuing challenge for employers regardless of the industry.

c. 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.
d. Employee Behavior – From large corporations to small business,
individuals involved in all types of business often face ethical
issues stemming from employee behavior.

e. Employee Working Conditions – Employers must be aware of the

safety of their work environment and if they havecompensated
employees for all the time they have worked.

f. Side Deals and Sub-Standard Work – When dealingwith

customers or clients, business people must ensure that they use
their information correctly, do not falsely advertise a product or
service and do not intentionally do sub-standard work.
3. 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 discounts or giveaways.

Each of these areas presents its own set of ethical dilemmas,
challenges, and legal guidelines to navigate.

a. 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.

b. 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.

c. Ethics and Promotions – Promotions are designed to boost short

term sales by providing irresistible value propositions to
consumers.
4. Fraud
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.

Business Fraud consists of dishonest and illegal activities perpetrated by individuals or companies
in order to provide an advantageous financial outcome to those persons or establishments.
An array of crimes falls under business
fraud, including the following:
a. 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.

b. Internet Auction fraud – A fraudulent transaction or exchange

that occurs in the context of an online auction site.

c. Non-delivery of merchandise – fraud occurring when

payment is sent but the goods and services ordered are
never received.
d. Non-payments of funds – fraud occurring when goods and
services are shipped or rendered but payment for them is
never received.

e. 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.

f. 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.
 5. 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.
a. 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 or obtaining exclusive purchase rights to raw materials needed
to make a competing product.

b. 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.

c. Misappropriation of Trade Secrets – when one competitor uses espionage,

bribery, or outright theft to obtain economically advantageous
information in the possession of another.
d. Trade Libel – is the spreading of false information about the quality or
characteristics of competitor’s products.

e. 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.

f. Anti-competitive practices – prevent or reduce competition in a

market.

g. Dumping – Foreign countries often use dumping as a

competitive threat, selling products at prices lower than their normal
value.
h. Exclusive dealing – A retailer or wholesaler is obliged by contract
to only purchase from the contracted supplier.

i. Price fixing – companies collude to set prices, effectively

dismantling the free market.

j. Refusal to deal – two companies agree not to use a certain

vendor.

k. Dividing territories – an agreement by two (2) companies to stay

out of each other’s way and reduce competition in the agreed
upon territories.
l. Limit pricing – is set by a monopolist at a level intended to discourage
entry into a market.

m. Tying – products that aren’t naturally related must be purchased

together.

n. Resale price maintenance – resellers are not allowed to set prices

independently.

o. 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.
6. Unfair Communication

Communication used to undermine relationships or encourage social

immorality is unethical communication. The exactdefinitions 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.
Here are some examples of unfair communication in business practices.

a. One firm had a book of business so large that they were running about a
month behind in deliveries. Unfortunately, they never let their customers know
about these delays, so many of them just shifted suppliers. In the end, this
situation cost the company almost 20 percent in sales the next year. They could
have avoided losing that business simply by informing their customers about the
delay and offering them the option to replace their order with alternative products
that were in inventory.
7. Non-respect of Agreements
 is a breach of contract. A breach of contract is a legal cause of action in which a
binding agreement or bargained for exchange is not honored by one or more of
the parties to the contract by non-performance or interference with the other
party’s performance.

8. Environmental Degradation
 is the deterioration of the environment through depletion of resources such as
air, water, and soil; the destruction of ecosystems and the extinction of wild life.

 Environmental economics concludes that environmental degradation results

from the failure of markets, whereas the entrepreneurship literature argues that
opportunities are inherent in market failure.
9. Contractualization or Labor Contractualization

• is the replacing of regular workers with temporary workers who receive lower
wages with no or fewer benefits. These temporary workers are also known as
sometimes called contractures, trainees, apprentices, helpers, casuals, piece
raters, agency hired, and project employees among others. They do the work of
regular workers for a specified and limited period of time, usually less than six
months.

• Contractualization is a form of underemployment. The right to adequate work and

full employment is essential to all men and women of legal age. This basic right
springs from our intrinsic nature to self-preservation and our innate obligation to
support our family, both of which are in accordance with the divine plan.
A Proactive Approach to Addressing
Unethical Behavior in the Workplace
While it may not arise to the level of being illegal, unethical behavior in
the workplace can have serious consequences if unaddressed. And it can
create a toxic work environment in which your employees and business
ultimately suffer.

At large business, a human resources department or manager can

provide a way for employees to voice their concerns about unethical
behavior of colleagues and provide policies, procedures and training. At
smaller businesses with few resources and little or no HR support, creating an
avenue for reporting or disclosing unethical behavior is challenging, as is
putting in place the proper guidance for addressing such behavior.

If your business lacks HR support, it’s critical for employees to have an

easy way to report their concerns and for your company to put in place
policies, protocol and training related to unethical behavior.
Entrepreneurs can take the following steps to proactively address unethical behavior
at work:

1. Create a Code of Ethics

A code of ethics establishes the values that are important to
a business and creates a common framework for
understanding the boundaries within the organization. Code of
ethics should be written in broad, idealistic terms to
communicate the company’s ethical vision, yet be succinct
enough to be contained in a values statement.

2. Establish Protocols
Include in your code of ethics instructions about how to report
unethical behavior.
3. Empower employees.
Grant staff the know-how to appropriately identify and handle
ethics violations.

4. Continuously review the code.

Keeping the code updated is an important step in keeping a
company’s ethics top of mind.
THANK YOU!!!
POSTTEST
Instruction. True or False. In your activity notebook answer the following
statements. Write the word True if the statement is correct and write the word
False if the statement is wrong.

______1. Code of ethics should be written in broad, idealistic terms to communicate

the company’s ethical vision, yet be succinct enough to be contained in a values
statement.
_____2. Keeping the code updated is an important step in keeping a company’s
ethics top of mind.
_____3. Business Fraud consists of dishonest and illegal activities perpetrated
by individuals or companies in order to provide an advantageous financial
outcome to those persons or establishments.
_
_____4. Ethics is a prime concern in marketing, and the areas of
price,placement, and promotion are no exception.
_____5. 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.
_____.6 Fairness is just and reasonable treatment in accordance with accepted
rules or principles.
_____7. Unfair competition is a situation in which competitors compete on
unequal terms because favorable or disadvantageous conditions are
applied to some competitors but not to others.
_____8. Unfair communication is the spreading of false information about the
quality or characteristics of competitor’s products.
_____9. A marketing manager can provide a way for employees to voice
their concerns about unethical behavior of colleagues and provide policies,
procedures and training.
_____10. Ethical Issues are behavior in the workplace that has a serious
consequence if unaddressed