Good Governance and Social Responsibility NATURE and FUNCTIONS OF BUSINESS:

Midterm Reviewer BASIC CONCEPT

Lesson 1 OVERVIEW OF GOOD GOVERNANCE BUSINESS

and SOCIAL RESPONSIBILITY ✓ is any institution or group that engages in
GOOD GOVERNANCE professional, commercial, industrial, or
charitable activity. Businesses can be for-
✓ refers to all processes of governing, the profit or non-profit.
institutions, processes, and practices
through which issues of common concern BUSINESS ORGANIZATION
are decided upon and regulated. ✓ generates revenue by satisfying the
✓ AUTHORITY = POWER demands of its customers through the
KEY ATTRIBUTES manufacture of goods, the resale of
products, the delivery of services.
✓ TRANSPARENCY - legitimacy of a
business TYPES OF BUSINESSES
✓ RESPONSIBILITY - to provide & ensure 1. Services
goods and services 2. Merchandising
✓ ACCOUNTABILITY – being accountable 3. Manufacturing
with the things they do 4. Hybrid
✓ PARTICIPATION – contributing to the
economy/society TYPES OF OWNERSHIP
✓ RESPONSIVENESS – to the needs of
1. Sole-proprietorship - owned and run by a
people
single individual.
SOCIAL RESPONSIBILITY 2. Partnership - a business arrangement
formed by two or more people who
✓ the duty of business to do no harm to conduct business together.
society. 3. Corporation - a firm in which a group of
✓ concerned about the welfare of society people acts as a single entity.
and mindful of how its actions could affect 4. Limited Liability Companies – a new
society as a whole. corporate structure that was introduced in
Wyoming in 1977
FOUR AREAS OF SOCIAL RESPONSIBILITY
1) ECONOMIC ASPECTS – maintain strong BUSINESS CONCEPT
economic interests. Being profitable and ✓ a statement that represents a business
providing value to shareholders. idea.
2) LEGAL ASPECTS - follow the law and
have a legal obligation to do so. NATURE OF BUSINESS
3) ETHICAL ASPECTS - going above and
✓ specifies what kind of firm it is and what its
beyond the legal requirements and
overarching goals are.
meeting the expectations of society.
4) PHILANTHROPIC ASPECTS – giving back ASPECTS DETERMINE THE NATURE OF
to society in form of charitable donations BUSINESS:
of time, money, and goods.
▪ REGULAR PROCESS – the profit-
INDIVIDUAL SOCIAL RESPONSIBILITY generating processes that are regularly
✓ is defined as an individual being aware of repeated.
how personal actions have an effect on the ▪ ECONOMIC ACTIVITY – activities that
community. maximize profit.
▪ UTILITY CREATION – a kind of utility the
goods or services create for the consumer
▪ CAPITAL REQUIREMENT – the amount of
funding required for the business.
 ▪ GOODS OR SERVICES – types of goods Business ethics
(tangible or intangible) offered by the
business. - is the study of what constitutes right
▪ RISK – the risk factor related to the and wrong or good and bad human
business. conduct in the business context.
▪ PROFIT EARNING MOTIVE – the Importance of Business Ethics
businesses’ profit-earning motive.
▪ SATISFACTION OF CONSUMERS’ NEEDS a. It improves the standard of behavior
– based on the consumers’ satisfaction. b. It leads to more effective business practices
▪ BUYERS AND SELLERS – the type of c. It leads to long-term gain for the business
buyers and sellers involved in the business. d. It improves moral values of employees
▪ SOCIAL OBLIGATIONS – all businesses e. It regulates ethical behavior of the
have corporate social responsibilities to industry as a whole
undertake. f. It helps in to regulate IT Security and
protect confidentiality
3 FORCES SHAPING THE FUTURE OF
BUSINESS Types of Business Ethics

1. The Evolution of the Customer ✓ Moral Management

2. The Evolution of Technology - It attempts to follow ethical principles
3. The Evolution of Value Creation and guidelines
- seek to succeed only within the scope
BUSINESS and its VARIOUS PUBLICS of fairness and justice
✓ Amoral Management
PUBLICS - neither immoral nor moral, and it
✓ a group of people who influence a firm's overlooks ethical considerations
commercial activities - categorized as intentional and
unintentional
TYPES OF PUBLICS ✓ Immoral Management
1) Financial Publics - identical to unethical practices in
- Funding/Lending business
- actively opposed to ethical behavior
2) Media Publics
- Promotion/Connection with other Advantages of Business Ethics
people. It attracts investors
3) Government Publics 1) Enhancement of society
- Permits of business 2) Maintaining the moral course during
4) Citizen-action Publics turbulent periods
- Target market 3) Employee development
5) Local Publics 4) Regulators consider companies functioning
- Resources in the locality ethically to be responsible
6) General Publics 5) Ethics management program are useful in
- Target market awareness managing diversity
7) Internal Publics 6) Compliance with law
- Linkages – connection outside the 7) Ethics help in strengthening the business
business 8) Investor’s loyalty

Lesson 2 BUSINESS ETHICS ETHICS

Business Ethics ✓ deals with human well-being

✓ The nature of “individual”, “social” good
- refers to the application of everyday ✓ The freedom of the will
moral and ethical norms to business. ✓ The relation between “pleasure” and
“good”
ETHICAL THEORIES Understanding Business Ethics in
Three Parts
1) UTILITARIAN ETHICS
1) History.
- concept of “the greatest good for the
2) Scandals.
greatest number.”
3) Integration.
- making decision based on what will
benefit the majority Lesson 3 ETHICAL and LEGAL STANDARDS
2) DEONTOLOGICAL ETHICS
- associated with the father of modern COMPARING ETHICAL AND LEGAL
deontology, Immanuel Kant. STANDARDS
- Idea that people should be treated
with dignity and respect Ethical Standards
3) VIRTUE ETHICS - sets what actions are ethical and
- considering what virtues make a good unethical. This are largely unwritten
public relations professional and the basis for observance is mostly
- making decisions in light of those tacit or implied.
favored virtues - are not laid down by authoritative
bodies
BUSINESS ETHICAL PRINCIPLES
- override self-interests.
BUSINESS ETHICS - are usually associated with emotions
like guilt and shame
✓ the study of how a business should act in
the face of ethical dilemmas and Legal Standards
controversial situations.
- sets what are legal and illegal. This are
TYPES OF BUSINESS ETHICS? rights that are generally written, clear
and definite.
✓ TRUSTWORTHINESS - being transparent
and honest in all actions and THREE TYPES OF ETHICAL STANDARDS
communications.
1) Ethical Standards Based on Utility
✓ RESPECT - showing respect for employees
- Evaluates policies, institutions and
and customers
behaviors in terms of the net social
✓ FAIRNESS - treating customers and
benefits and costs they produce .
employees with a sense of fairness and
- proceeds from the Principle of Utility
justice
2) Ethical Standards Based on Moral Rights
✓ CARING - show empathy
- Evaluate institutions, policies, acts, or
EXAMPLES OF ETHICAL BEHAVIOR IN THE behavior in terms of the protection
WORKPLACE they provide for the rights and
freedom of individuals.
✓ Putting Customer Needs First Legal Rights – are rights which are
✓ Being Transparent limited to the particular jurisdiction of
✓ Prioritizing Workplace Diversity a legal system from which such rights
✓ Respecting Customer Information are derived.
✓ Providing Resources for Reporting Moral Rights - are rights possessed by
Unethical Behavior all human beings by virtue of their
being human.
EXAMPLES OF UNETHICAL BEHAVIOR IN
CLASSES OF RIGHTS
THE WORKPLACE
Moral-Natural Rights – are rights afforded
✓ Taking Sides in an Employee Argument by God, like the right to life, etc.
✓ Lying Constitution Rights – are rights conferred
✓ Misusing Company Time and protected by the fundamental
✓ Cultivating a Hostile Workplace law of the land.
✓ Ignoring Conflicts of Interest Statutory Rights – are rights derived from
the law-giving body of the state.
 3) Ethical Standards Based on Justice Role & Importance of Ethical Leadership
- Justice means is giving what is due a
person or giving what a person ✓ Be a Role Model. A major aspect of ethical
deserves. leadership is being a role model.
✓ Importance of Standards. Setting ethical
KINDS OF JUSTICE standards for your business is the first step
in creating an ethical organization.
Retributive Justice -This refers to the just
✓ Compliance. After your policies are clear,
imposition of punishments such as fines,
your next role as ethical leader is to
imprisonment and even death, upon those monitor your employees to ensure
who do wrong.
compliance with your standards.
Distributive Justice - This concerns the fair ✓ Expert Insight. An ethical leader recognizes
distribution of society’s benefit and when she is out of her depth and needs
burdens among its members. moral guidance.
✓ Ethics Committee. In a larger organization,
THEORIES OF DISTRIBUTIVE JUSTICE an ethics steering committee might be
✓ Egalitarian Theory of Justice - This necessary to handle difficult cases for
theory claims that everyone should be which there is no set policy.
given equal share of society’s benefits Lesson 4 THE GOVERNMENT AND LAWS
and burdens.
✓ The Capitalist Theory of Justice - This Republic Act 7581
theory claims that any benefit should - An act providing protection to
be distributed according to the consumers by stabilizing the prices of
contribution each individual makes to basic necessities and prime
achieve the aims of his/her group. commodities and by prescribing
✓ Social Theory of Justice - This theory measures against undue price
claims that work burdens should be increases during emergency situations
distributed according to people’s and like occasions.
abilities, while benefits should be
distributed according to people. TYPES OF PRICE CONTROLS
THE IMPORTANCE OF ETHICAL BEHAVIOR ✓ Automatic Price Control (APC) - Prices of
basic necessities are automatically placed
The Advantages of Being Ethical under price control
✓ Goodwill and Publicity - opportunity to ✓ Mandated Price Ceiling (MPC) - calamity
foster a sense of goodwill among the or emergency or any event that causes
general public toward your business. artificial or unreasonable increase in prices
✓ Shareholders and Investors Benefit - it will Price Ceiling
be important to shareholders that your
business is managed in an ethical fashion. - A price ceiling is a type of price control,
✓ Gives the Business a Competitive Edge - usually government-mandated, that
they can also benefit a company's bottom sets the maximum amount a seller can
line. charge for a good or service.
✓ Moral Obligations to the Community - a
powerful argument in favor of running ILLEGAL ACTS OF PRICE MANIPULATION
your business in an ethical manner are the ✓ Hoarding - is the undue accumulation by
moral obligations your business has a person or combination of persons of any
toward the community. basic commodity beyond his or their
✓ Positive Knock-On Effects - the knock-on normal inventory levels or the
effects of adopting a strong ethical ethos unreasonable limitation or refusal to
will benefit a business. dispose
 ✓ Profiteering - is the sale or offering for sale
of any basic necessity or prime commodity
at a price grossly in excess of its true worth.
✓ Cartel - is any combination of or
agreement between two (2) or more
persons engaged in the production,
manufacture, processing, storage, supply,
distribution, marketing, sale or disposition
of any basic necessity or prime commodity
Republic Act 71
- An act requiring price tags or labels to
be affixed on all articles of commerce
offered for sale at retail and penalizing
violation of such requirement
Republic Act 4109
- An Act to convert the division of
standards under the Bureau of
commerce into a Bureau of Standards
to provide for the standardization
and/or inspection of products and
imports of the Philippines and for other
purposes”.

CORPORATE GOVERNANCE
✓ the combination of rules, processes or laws
by which businesses are operated,
regulated or controlled.

The Benefits of Good Corporate

Governance
✓ Efficient Processes – due to the
repeatability and consistency of tasks
performed.
✓ Visibility of Errors – this repeatability and
consistently helps to quickly identify the
nonconformities in processes.
✓ Reduced Costs – when tasks are
streamlined, companies can eliminate the
waste from scrap, rework, and any other
costly inefficiencies.
✓ Smoother–Running Operations – regular
disruptions from inconsistent processes are
eliminated, as operation specifics become
either ‘conform’ or ‘non-conform’.
✓ Compliance – a culture that supports
corporate governance allows for its
product to reach the market