ASIAN INSTITUTE OF E-COMMERCE COLLEGE

URDANETA CAMPUS
3rd Floor Doña Marilou Building, Alexander Street, Urdaneta City

ETHICS 01

Professional Ethics
in
Hotel and Restaurant Management

MIDTERM
 CHAPTER 3

BASIC PROFESSIONAL ETHICS

APPLIED ETHICS

 is the philosophical examination, from a moral standpoint, of particular issues in

private and public life that are matters of moral judgment.

 a term used to describe attempts to use philosophical methods to identify the morally
correct course of action in various fields of human life.

 it is a study which is supposed to involve practitioners as much as professional

philosophers.

Typologies for Applied Ethics

 being used to help improve organizations and social issues at the national and global
level.

1. Decision Ethics – ethical theories and ethical decision processes

2. Professional Ethics – ethics to improve professionalism
3. Clinical Ethics – ethics to improve our basic health needs
4. Business Ethics – individual based morals to improve ethics in an
organization
5. Organizational Ethics – ethics among organizations
6. Social Ethics – ethics among nations and as one global unit

Modern Approach for Applied Ethics (Theories)

1. Utilitarianism – where the practical consequences of various policies are evaluated

on the assumption that the right policy will be the one which results in the greatest
happiness

2. Deontological Ethics – notions based on 'rules' i.e. that there is an obligation to

perform the 'right' action, regardless of actual consequences.

3. Virtue Ethics – derived from Aristotle's and Confucius's notions, which asserts that
the right action will be that chosen by a suitably 'virtuous' agent.

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Subfields of Applied Ethics

1. Animal rights issues

2. Bioethics (e.g. biotechnology, cloning, transplant, inseminations, bioengineering)
3. Business Ethics
4. Computer Ethics
5. Education Ethics
6. Environmental Ethics (e.g. global warming)
7. Government Ethics
8. Hospitality Ethics
9. Human rights issues (e.g. gender ethics / sexism, classism, racism, Capital
punishment)
10. International Ethics (e.g. world hunger)
11. Legal Ethics
12. Marketing Ethics
13. Media Ethics / Journalism Ethics
14. Medical Ethics
15. Military Ethics (e.g. just war theory)
16. Neuroethics (e.g. neuroscience, psychopharmaceutical, brain surgery, brainwashing)
17. Public Administration Ethics
18. Research Ethics
19. Sexual Ethics
20. Social Work Ethics or Ethics in Social Work
21. Sports Ethics

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 ASIAN INSTITUTE OF E-COMMERCE COLLEGE
URDANETA CAMPUS

Name: _____________________________ Date : _____________________

Course/Section : _____________________ Score : ____________________

ETHICS 01
Professional Ethics in Hotel & Restaurant Management

SUMMING UP EXERCISE # 1

1. Why is it that the Hotel and Restaurant Industry falls under Applied Ethics?

2. Using the Six Typologies of Applied Ethics, determine on which domain each
Subfields of Ethics would fall under.

3. What would be the best applied ethics modern approach for the Hotel and
Restaurant Industry? Explain.

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BUSINESS ETHICS
 also known as Corporate Ethics

 is a form of Applied Ethics or Professional Ethics that examines ethical principles

and moral or ethical problems that arise in a business environment.

 it applies to all aspects of business conduct and is relevant to the conduct of

individuals and business organizations as a whole.

 can be both a normative and a descriptive discipline.

 as a corporate practice and a career specialization, the field is primarily normative.

 historically, interest in business ethics accelerated dramatically during the 1980s and
1990s, both within major corporations and within academia.

Why Business Ethics? (The Need for Business Ethics)

1. To promote ethical professionalism – because the business can be unethical

anytime, anywhere in any way.

2. In order to raise accountability and responsibility – because the business has a

direct influence and impact in the social and natural environment

3. To set an example regardless of loss or profit/income – because the love money

is root of all evil in any profession and any form of business.

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 ASIAN INSTITUTE OF E-COMMERCE COLLEGE
URDANETA CAMPUS

Name: _____________________________ Date : _____________________

Course/Section : _____________________ Score : ____________________

ETHICS 01
Professional Ethics in Hotel & Restaurant Management

SUMMING UP EXERCISE # 2

1. Give at least 5 examples whether where to promote ethical professionalism in

the Hotel and Restaurant Industry.

2. Give at least 5 examples whether where to raise up accountability and

responsibility in the Hotel and Restaurant Industry.

3. If you were a restaurateur or hotelier, would you rather be successful in the

Hotel and Restaurant Industry yet be unethical or be virtuous however gain
financial loss? Explain and support your answer.

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Professional Ethics

 Concerns the moral issues that arise because of the specialist knowledge that
professionals attains and how the use of this knowledge should be governed when
providing service to the public.

 Professionals carry additional moral responsibilities to those held by the population in

general because they are capable of making and acting on an informed decisions in
situations that the public cannot because they have not received the relevant
training.

Why Professional Ethics? (Benefits of Professional Ethics)

1. To set guidelines, disciplines and standards to follow.

2. To prevent exploitation of the client.

3. To preserve the integrity of the profession.

Negative Setback of Professional Ethics

1. The possibility that a code of ethics may be self-serving

2. The possibility of a complete monopoly over a particular area of knowledge or

profession.

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 ASIAN INSTITUTE OF E-COMMERCE COLLEGE
URDANETA CAMPUS

Name: _____________________________ Date : _____________________

Course/Section : _____________________ Score : ____________________

ETHICS 01
Professional Ethics in Hotel & Restaurant Management

SUMMING UP EXERCISE # 3

1. Would you be in favor if the Philippine Professional and Regulatory

Commission (PRC) will impose a Board Examination for Hotel and Restaurant
Industry Careers specifically the course Hotel and Restaurant Management?
Why?

2. Do you think the integrity and professionalism under the Hotel and Restaurant
Industry is being tainted or lessened due to hiring of B.S. H.R.M. graduates
for waiters, housekeepers, or kitchen stewards?

3. Are you in favor in the idea that only those who finished a decent culinary arts
course from a high-tuition fee or elite schools/universities be the ones to be
called professional chefs? Why?

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ISSUES IN BUSINESS ETHICS

1. Ethics of Finance

 Issues regarding economic meltdowns that cannot be explained by business cycle.

 Conflict of ethics with existing laws where issues of finance are often addressed as
matters of law instead of ethics.

Common Issues

a. The willful declaration of bankruptcy or net income loss to abstain from taxes.
b. The use of collaterals in financial loans.
c. The imposition of service charges and tips, specially in hotels and restaurants.

2. Ethics of Human Resource Management

 Issues regarding hiring, managing and terminating employees.

 The main aim or objective is to promote equal work opportunity.

Common Issues

a. Discrimination Issues – discrimination with regards to age,

gender, race, religion, disabilities, weight, and attractiveness. (e.g. sexual
harassment)

b. Issues arising from traditional views of relationships between

employers and employees (e.g. at-will employment)

c. Issues surrounding the representation of employees and the

democratization of workplace (e.g. union busting, strike breaking)

d. Issues affecting the privacy of employees (e.g. work

surveillance, drug testing)

e. Issues affecting the privacy of employers (e.g. whistle blowing

employees)

f. Issues relating to fairness of employment contract and balance

of powers between employee and employer (e.g. slavery)

g. Occupational safety and health (e.g. working on unsafe and

unhealthy workplace, non-payment of health insurance and social security
premiums)

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3. Ethics of Sales and Marketing

 Marketing Ethics is a subset/subfield of Business Ethics

 Deals with the principles, values and/or ideals by which marketers ought to act.

 All about transparency issues, advertising and truthfulness and honesty.

 Focused on two major concerns:

1. concerns from political philosophy – only ethics in marketing is

maximizing profit for stakeholders.

2. concerns from transaction-focused business practice – the market is

responsible to the consumers and other proximate as well as remote
stakeholders as much as, if not less, it is responsible to its shareholders.

Common Issues

a. Difficulty of pointing out the agency responsible for the practice

of ethics.
b. Competition
c. Lack of autonomy of marketing agents
d. Nature of products marketed
e. Nature of persons to whom products are marketed
f. Profit margin

Issues in Visual Communication as a Tool for Marketing & Sales

a. Pricing – price fixing, price discrimination and price skimming (e.g. SRP or
the suggested retail price and the contra-price schemes)

b. Anti-Competitive Practices – manipulation of loyalty (e.g. supply chain)

c. Specific Marketing Strategies

• Greenwashing – (a portmanteau of green and whitewash) is the

practice of companies disingenuously spinning their products and
policies as environmentally friendly, such as by presenting cost cuts
as reductions in use of resources. It is a deceptive use of green PR
or green marketing. The term green sheen has similarly been used to
describe organizations that attempt to show that they are adopting
practices beneficial to the environment.

• Bait and Switch – In retail sales, a bait and switch is a form of fraud
in which the party putting forth the fraud lures in customers by
advertising a product or service at a low price or with many features,
then reveals to potential customers that the advertised good is not
available at the original price or list of assumed features, but

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 something different is. This use of this term has extended to similar
situations outside of the marketing sense.

• Shill – A shill is a person who is paid to help another person or

organization to sell goods or services. The shill pretends to have no
association with the seller/group and gives onlookers the impression
that he or she is an enthusiastic customer. The person or group that
hires the shill is using crowd psychology, to encourage other
onlookers or audience members (who are unaware of the set-up) to
purchase said goods or services. Shills are often employed by
confidence artists.

The term plant is also used. The term is also used to describe a
person who is paid to help a political party or other advocacy
organization to gain adherents; as with the situation of selling goods
or services, the shill gives the impression of being unrelated to the
group in question, and gives the impression that he or she finds merit
in the ideological claims of the political party.

• Viral Marketing – refer to marketing techniques that use pre-existing

social networks to produce increases in brand awareness or to
achieve other marketing objectives (such as product sales) through
self-replicating viral processes, analogous to the spread of
pathological and computer viruses. It can be word-of-mouth delivered
or enhanced by the network effects of the Internet. Viral promotions
may take the form of video clips, interactive Flash games,
advergames, ebooks, brandable software, images, or even text
messages.

The term "viral marketing" has also been used pejoratively to refer
to stealth marketing campaigns—the unscrupulous use of astroturfing
on-line combined with undermarket advertising in shopping centers to
create the impression of spontaneous word of mouth enthusiasm.

• Electronic Spam – Spam is the use of electronic messaging systems

(including most broadcast media, digital delivery systems) to send
unsolicited bulk messages indiscriminately. People who create
electronic spam are called spammers.

While the most widely recognized form of spam is e-mail spam, the
term is applied to similar abuses in other media: (1) instant messaging
spam, (2) Usenet newsgroup spam, (3) Web search engine spam, (4)
spam in blogs, (5) wiki spam, (6) online classified ads spam, (7)
mobile phone messaging spam, (8) Internet forum spam, (9) junk fax
transmissions, (10) social networking spam, (11) television advertising
and (12) file sharing network spam.

Spamming remains economically viable because advertisers have no

operating costs beyond the management of their mailing lists, and it is
difficult to hold senders accountable for their mass mailings. Because
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 the barrier to entry is so low, spammers are numerous, and the
volume of unsolicited mail has become very high. The costs, such as
lost productivity and fraud, are borne by the public and by Internet
service providers, which have been forced to add extra capacity to
cope with the deluge. Spamming is universally reviled, and has been
the subject of legislation in many jurisdictions.

• Pyramid Scheme – (also called as pyramiding). A pyramid scheme

is a non-sustainable business model that involves the exchange of
money primarily for enrolling other people into the scheme, without
any product or service being delivered. The FBI of USA considers
pyramid schemes a form of fraud.

• Planned Obsolescence – also known as built-in obsolescence, in

industrial design, is a policy of deliberately planning or designing a
product with a limited useful life, so it will become obsolete or
nonfunctional after a certain period. Planned obsolescence has
potential benefits for a producer because to obtain continuing use of
the product the consumer is under pressure to purchase again,
whether from the same manufacturer (a replacement part or a newer
model), or from a competitor which might also rely on planned
obsolescence. The purpose of planned obsolescence is to hide the
real cost per use from the consumer, who will be willing to pay a
higher price for the product than if he had been aware of its limited
useful life.

d. Content Ads – refers to the implicit and explicit content of advertisements

• Attack Ads – it is an advertisement whose message is meant as an

attack against another product, service or company. Attack ads often
form part of negative campaigning or smear campaigns, and in large
or well-financed campaigns, may be disseminated via mass media.

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 • Subliminal stimuli – (subliminal=literally means "below threshold"),
contrary to supraliminal stimuli or "above threshold", are any
sensory stimuli below an individual's absolute threshold for conscious
perception. Visual stimuli may be quickly flashed before an individual
may process them, or flashed and then masked, thereby interrupting
the processing.

• Sex in advertising – is the use of sexual or erotic imagery (also

called "sex appeal") in advertising to draw interest to a particular
product, for purpose of sale. A feature of sex in advertising is that the
imagery used, such as that of a pretty woman, typically has no
connection to the product being advertised. The purpose of the
imagery is to attract the attention of the potential customer or user.
The type of imagery that may be used is very broad, and would
include nudity, cheesecake (nude or semi-nude female
model/actress), and beefcake (nude or semi-nude male model/actor),
even if it is often only suggestively sexual.

• Products regarded as immoral or harmful – e.g. liquors, cigarettes,

condoms, contraceptives, casinos, gay and strip bars.

4. Ethics of Production

 Deals with the duties of a company to ensure that products and production
processes do not cause harm.

Dilemma

a. Degree of danger in a product or production process –

whether what to prioritize, the manufacturing or creation of a product or
service or the safety or workers and/or the surrounding community and
environment.
b. Difficulty to define permissibility – due to change of preventive
technologies or social perceptions of acceptable risks.

Common Issues

a. Defective, addictive and inherently dangerous products and services

Examples:
• tobacco, alcohol, weapons, motor vehicles, chemical products
• In HRM, bungee jumping, zipline ride, casinos, sexual relations

b. Ethical relations between the company and the environment

Examples:
• Pollution, environmental ethics, carbon emission, oil spills
• In HRM, garbage and waste disposal on islands

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 c. Ethical problems arising out of new technologies
Examples:
• Genetically-modified food and farm products, mobile phones, CRT
radiaton, cell phone antenna and tower radiation
• In HRM, use of hi-tech devices in heritage hotels.

d. Product testing ethics

Examples:
• Animal rights, animal testing, use of economically disadvantaged
groups such as students as test objects
• In HRM, the free-employment of HRM students on restaurants and
hotels as on-the-job trainees in exchange of certificate and experience

5. Ethics of Property, Property Rights, and Intellectual Property Rights

 Deals with the ethical use of tangible and intangible investments related to any
industry in the form of real properties and rights.

Property – ownership of anything which can be controlled, used, or transferred to

gain benefit.

Property Rights – refers to all inherent rights from the acquisition of a property.

Intellectual Property Rights – refers to all rights to all the result of property control,
processing and usage.

Common Issues

a. Patent, copyright and trademark infringements.

b. Patent, copyright and trademark misuse.
c. Employee raiding – practice of attracting key employees or
all talented people regardless of the need to keep them away from
competitors.
d. Biopiracy and Bioprospecting
e. Business intelligence and espionage

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 ASIAN INSTITUTE OF E-COMMERCE COLLEGE
URDANETA CAMPUS

Name: _____________________________ Date : _____________________

Course/Section : _____________________ Score : ____________________

ETHICS 01
Professional Ethics in Hotel & Restaurant Management

SUMMING UP EXERCISE # 4

1. What are common unethical specific marketing strategies that most hotels
and restaurants implement here in the Philippines in order to gain profit?

2. Do you think the employment of HRM students for free under the OJT or on-
the-job training program is ethical or unethical Explain when it becomes
ethical and when it becomes unethical?

3. Cite at least 5 most common problems encountered by the Philippine Hotel

and Restaurant Industry under the human resource management ethics?

4. Can we consider some Philippine TV ads to be partly or maximal fallacy?

Explain and support your answer. Give also examples.

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 CHAPTER 4

BUSINESS ETHICS – THEORY AND PRACTICE

ETHICAL PROBLEMS IN BUSINESS

Unethical practices are committed most often during the process of marketing
the product, in the process of persuading a prospective customer to buy the product.
Ethical considerations are always at hand in every type of business activities and
that therefore there is a need for business ethics.

It is in the process of providing services to the customers where many

unethical practices occur. Misrepresentation and overpersuasion is the most
common of such practices.

Three Major Areas Where Ethical Problems

In Business Ethics Occur

1. In providing service to the customers

Customer service is the provision of service to customers before, during

and after a purchase. According to Jamier L. Scott (2002), customer service is
a series of activities designed to enhance the level of customer satisfaction – that
is, the feeling that a product or service has met the customer expectation. Its
importance varies by product, industry and customer.

Top Hotel Complaints

• bed bugs
• dirty hotel
• no booking on arrival
• unhelpful staff
• incomplete details of amenities and facilities
• noisy room
• overcharging room rates and services
• poor room service
• overpriced phone charges
• minicab scam
• sub-standard restaurant
• inaccurate star rating

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2. In the treatment of competitors

Competition is a contest between individuals, groups, nations, animals, etc.

for territory, a niche, or a location of resources. It arises whenever two or more
parties strive for a goal which cannot be shared. Business is often associated
with competition as most companies are in competition with at least one other
firm over the same group of customers.

Competition may also exist at different sizes. In an example in economics, a

competition between two small stores would be considered small compared to
competition between several mega-giants. As a result, the consequences of the
competition would also vary- the larger the competition, the larger the effect.

Two Types of Competition

a. Destructive Competition

- seeks to benefit an individual/group/organism by damaging and/or

eliminating competing individuals, groups and/or organisms

- it opposes the desire for mutual survival. It is “winner takes all”, the
rationale being that the challenge is a zero-sum game

- the success of one group is dependent on the failure of the other

competing groups

- tends to promote fear, a "strike-first" mentality and embraces certain

forms of trespass.

b. Cooperative Competition

- is based upon promoting mutual survival - “everyone wins”.

- is a process where individuals compete to improve their level of

happiness but compete in a cooperative manner through peaceful
exchange and without violating other people.

- Cooperative competition focuses individuals/groups/organisms

against the environment.

3. In setting price and wage

Price controls are governmental impositions on the prices charged for

goods and services in a market, usually intended to maintain the affordability

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of staple foods and goods, and to prevent price gouging during shortages, or,
alternately, to insure an income for providers of certain goods.

Two Primary Forms Of Price Control

a. price ceiling – the maximum price that can be charged

b. price floor – the minimum price that can be charged

Historically, price controls have often been imposed as part of a larger

income policy package also employing wage controls and other regulatory
elements.

Price/Wage Spiral (also called the Wage/Price Spiral) represents a

vicious circle process in which different sides of the wage bargain try to keep
up with inflation to protect real incomes. This process is one possible result of
inflation. It can start either due to:

a. high aggregate demand combined with near full employment

b. supply shocks, such as an oil price hike.

Two Elements Price/Wage Spiral

a. Business owners raise prices to protect profit margins from rising

costs, including nominal wage costs, and to keep the real value of
profit margins from falling.

b. Wage-earners try to push their nominal after-tax wages upward to

catch up with rising prices, to prevent real wages from falling. To
maintain purchasing power equal to the rising costs reflected by a
consumer price index (CPI), a taxable salary must increase faster than
the CPI itself to result in an after-tax wage increase comparable to the
increased cost of goods and services - unless tax brackets are
indexed.

So "wages chase prices and prices chase wages," persisting even in

the face of a (mild) recession. This price/wage spiral interacts with inflationary
expectations to produce long-lived inflationary process. Some argue that
incomes policies or a severe recession is needed to stop the spiral.

The first element of the price/wage spiral does not apply if markets are
relatively competitive.

The spiral is also weakened if labor productivity rises at a quick rate.

Rising labor productivity (the amount workers produce per hour) compensates
employers for higher wages costs while allowing employees to receive rising
real wages, while allowing the company's margin to stay the same.
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FOUR ASPECTS OF BUSINESS ETHICS

There are four aspects where business ethics should be observed. These are
discussed below:

1. Religious Aspect

Business ethics is valuable in converting religious idealism to more practical

actions in the business world. It provides an outlet for the religious to practice the
teaching of their religion through their dealings with fellow human beings in the
business world.

2. Professional Aspect

Business ethics is a direct link to the service-oriented tenets of

professionalism. Through the process of providing service to his fellowmen, a
professional man exhibits the competence, honesty, and fair dealing that
professionalism requires him to do.

3. Moral Aspect

Business ethics needs to be considered also in the moral aspect because it

provides opportunity for man to practice his morality, to apply his own standards of
right or wrong in business transactions and to test them against the generally
accepted norms of conduct in a civilized society. This cloaks pretext business ethics
with a definitely moral orientation.

4. Profit Aspect

The last aspect where business ethics should be observed is in the making of
profit. Man needs to be reminded that he is in business not just for today but for all
the tomorrows that are yet to come. Engaging fair business practices to both
(businessmen and customers) is the best way to ensure continued customer
goodwill and patronage. The profit making maybe always present in the business but
service to the public should come first.

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 ASIAN INSTITUTE OF E-COMMERCE COLLEGE
URDANETA CAMPUS

Name: _____________________________ Date : _____________________

Course/Section : _____________________ Score : ____________________

ETHICS 01
Professional Ethics in Hotel & Restaurant Management

SUMMING UP EXERCISE # 5

Using the Internet or related available books, research on:

1. Guidelines, ways or systems to develop an excellent customer service.

2. Guidelines, ways or systems to develop a fair and ethical business

competition.

3. Guidelines, ways or systems in setting price and wage ethically.

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