BUSINESS ETHICS AND

SOCIAL
RESPONSIBILITY
 BUSINESS???
- an activity that is part and parcel of human society: it is an entity in
which economic resources or inputs, such as materials and labor, are put
together and processed to provide goods or services or outputs to
customers.
Business ethics is the study of proper business
policies and practices regarding potentially
controversial issues, such as:
corporate governance, insider trading, bribery,
discrimination, corporate social
responsibility and fiduciary responsibilities.

Law often guides business ethics, while other

times business ethics provide a basic
framework that businesses may choose to
follow to gain public acceptance.
Social Responsibility
is the idea that businesses should balance
profit-making activities with activities that
benefit society; it involves developing
businesses with a positive relationship to the
society in which they operate.
The International Organization for
Standardization (ISO), emphasizes that the
relationship to the society and environment in
which businesses operate is "a critical factor in
their ability to continue to operate effectively. It
is also increasingly being used as a measure of
their overall performance.
Forms of Business
Organization
 Service Business
A service type of business provides intangible
products (products with no physical form).
Service type firms offer professional
skills, expertise, advice, and other
similar products.
The primary source of revenue is the performance
of services often referred a Service Revenues.
School Bank
s
Repair Accounting Firms
Shops

Hair Salons Law

Firms
Call Centers Hospitals

Construction Firms Spa

 Merchandising Business
This type of business buys
products at wholesale price and sells the
same at retail price. They are known as "buy
and sell" businesses. They make profit by
selling the products at prices higher than
their purchase costs.
A merchandising business sells a product
without changing its form.
Grocery Stores Convenience Stores

Distributors Other Resellers

Hardware

Bookstore
 Manufacturing Business
A manufacturing business buys materials
in making a new product. Thus, there is a
transformation of the products purchased.

It combines raw materials, labor, and

factory overhead in its production process.
The manufactured goods or finished
products will then be sold to customers.
 ADVANTAGES
SERVICE MERCHANDISING MANUFACTURING

Good merchandising There is a continuous

No need for inventory attracts more demand on
customers manufactured goods

Skills can be improved Job satisfaction can be

and can produce better It is flexible to change ensured through output
service or the produced item
 DISADVANTAGES
SERVICE MERCHANDISING MANUFACTURING

Owners of the manufacturing

It demands more work and
Services are harder to value business need to keep up
workers
with the high overhead costs

The cost of the manufactured

Less demand during It needs to manage products highly depends on
economic downturns customers’ expectations the price and availability of
the raw materials

It needs to budget expenses

for occasional improvements
within the store
 FORMS OF BUSINESS
ORGANIZATION ACCORDING TO
OWNERSHIP
1. SOLE PROPRIETORSHIP
ADVANTAGES
a. Total undivided authority
b. Low organizational cost
and license fees
c. Tax savings
d. No restrictions on type of
business (as long as it is
legal)
owned by one person
DISADVANTAGES
a. Unlimited liability
b. Limitation on size (fund
raising power)
c. Limited by management’s
ability to be jack-of-all-
trades
2. PARTNERSHIP
Association of 2 or more people as partners;
It refers to an arrangement in which the
individuals share profits and liabilities of a
-the association of individuals in a partnership
business venture
may be based on as simple act as a handshake,
however, it is preferable to state the agreement
Chief characteristics:
in writing
a. Association of individuals d. Unlimited liability
b. Mutual agency e. Co-ownership of property
c. Limited life
3. CORPORATION

An entity created by law that is separate

and distinct from it owners and its
continued existence is dependent upon
the corporate statutes of the state in
which it is incorporated.
Characteristics:
Separate legal existence from its owners
Stockholders have limited liability
Transferable ownership rights
Ability to obtain capital
Can have a continuous life
Subject to numerous government regulations
Double taxation of distributed earnings
An artificial/juridical “person” managed by BOD’s
 Steps in forming a corporation
1. File an application of incorporation through SEC.
2. Once approved, a charter or articles of
incorporation is granted that formally creates the
corporation.
3. Corporate management and BOD’s then prepare
a set of by-laws, which are rules and procedures for
conducting the corporation’s affairs.
4. LIMITED LIABILITY COMPANY (LLC)
Combines the attributes of a partnership
and a corporation.
10% of bus. org. in the USA
Often used as alternative to partnership
Has tax and legal liability advantages for
owners
The role of business
organization in the
economy
 The role of business organization in the economy

Governments, trade groups, colleges and

businesses often cooperate to promote
development in a targeted geographic area.
The belief that a rising economic tide lifts all
boats encourages this kind of teamwork.
SMALL BUSINESSES
Providing goods and services
Job creation
General health and welfare of
economies
 MICROBUSINESSES

Firms that employ fewer than 10 people

Form a dynamic, integral part of the market economy
Gateway by which millions enter the economic and social mainstream of
society
MICROBUSINESSES

•Trading, merchandising and retail

1. Sari-sari store
2. Mini grocery store
3. RTW (ready to wear) and apparel store
4. Cellphone loading business
5. School supplies store
 MICROBUSINESSES
• Food business
6. Canteen or carinderia business
7. Meat shop business
8. Catering business
9. Fruit stand business
10. Vegetable stand
11. Tocino and Longganisa making
12. Salted duck egg production
 MICROBUSINESSES
• Food business
13. Local delicacies business
14. Lechon and roasted chicken business
15. Barbecue stand
16. Buko juice, gulaman and sago business
17. Balut, taho, fishball, Kwek-kwek, chicharon and other street foods
business
18. Chocolate, cakes, candy and pastries making
19. Sorbetes or ice cream making business
LARGE BUSINESSES
Massive quantities of goods to ship
and sell in national markets
Offer better jobs
Provide Links with suppliers
LARGE BUSINESSES
Increase consumers spending
Transfer of knowledge from one firm
to another, and
Share of pools of workers
Some failures of BUSINESSES
They act in a socially harmful manner –
They pollute neighborhood with substance
Exploiting the workers
Manipulating the new financial market
Produce massive damage to the
environment.
Discussion Question
1. What is the importance of business
organizations to the economy?
2. What are the major forms of business
organization? Compare and contrast.
3. Explain the role of each form of business
organization in the economy.
4. What is a Corporation? What are the
benefits and drawbacks of corporation?