The Social

Function of
Business
Lesson II
 Why should Business be Ethically Sensitive?
 Examining the activities of business from the
social and ethical perspective is for the
promotion of the common good, protection of
the individual’s interest and the preservation of
the human society in general.
 Managerial career: one must grasps the norms
of ethical behavior if one wants to succeed in the
field of finance and business
 ETHICS
• It is the moral principle that guide the conduct of individual

• MAIN REASONS THAT MAY PURSUADE A BUSINESS TO ACT

ETHICALLY
1. Legal reason
2. Public image reason
3. Pragmatic reason
4. Moral reason
 Business role in Poverty Alleviation
• Poverty - is about not having enough money to meet basic
needs including food, clothing and shelter or beyond the
poverty threshold

• 2 classification of poverty
1. absolute poverty – not having the capability to
provide for their basic needs
2. relative poverty – poverty in comparison with the
living standards of the others
Continuing the Extreme poverty in the Midst of
Economic growth

1. Economic growth is rarely uniformly distributed

across the country
2. Failure of the government
3. Cultural discrimination
Bussiness’ Role In overcoming Poverty trap

1. SMEs – small and medium enterprises

2. Microfinance – providing financial assistance to
unemployed and entrepreneur with lack of finance for
their business

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 Areas of business Most in Need of ethical attention
1. To Social Responsibilities of Capitalist Business Practices
 Milton Friedman – increase its profit
 William Sauser – earnig a profit, legal responsibility,
ethical responsibilityand discretionary responsibility
 CSR / Corporate Social Responsibility – the
responsibility of the business beyond profit and a
continuing commitment by business to behave
ethically and contribute to economic development
while improving the quality of life of the workfore
and their families, the local community and the
society at large
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 Areas of business Most in Need of ethical attention
2. The morality of advertisement
RA 7394 / Consumer Act of the Philippines
“The state shall protect the consumer from misleading
advertisements and fraudulent sales promotion practices.
Art. 110
“It shall be unlawful for any person to disseminate or to
cause the dissemination of any false deceptive or
misleading advertisement by Philippine mail or in
commerce by print, radio, television or outdoor
advertisement or other medium for the purpose of
inducing or which is likely to induce directly or indirectly
the purchase of consumer products or services……” 8
 Areas of business Most in Need of ethical attention
3. Basic Employee Rights, job discrimination, other labor – related
to ethical issues
The Labor Code of the Phils / Presidential Decree No. 442 –
lays down the rights of workers in relation to wages, rights to
self-organization, collective bargaining, security of tenure and
just and humane conditions of work
RA 6727 / Wage Rationalization Act – it mandates the fixing
the minimum wages applicable to different industrial sectors
Book Four of the Labor Code of the Philippines – lays down
the “health, safety and social welfare benefits” accorded to
workers
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 Areas of business Most in Need of ethical attention
Book Five of the Labor Code of the Philippines – lays down the
policies of the state with regard to labor such as:
1. To promote and emphasize the primacy of free collective
bargaining and negotiations including voluntary arbitration,
mediation and conciliation as modes of setting labor or
industrial disputes.
2. To promote free trade unionism as an instrument for the
enhancement of democracy and the promotion of social
justice and development
3. To foster the free and voluntary organization of a strong and
united labor movement
4. To promote the enlightenment of workers concerning their
rights and obligations as union members and as employees
5. To provide an adequate administrative machinery for the
expeditious settlement of labor or industrial disputes
6. To ensure a stable but dynamic and just industrial peace
7. To ensure the participation of workers in decision and policy 10
making processes affecting their rights duties and welfare
 Areas of business Most in Need of ethical attention
4. Insider trading – buying or selling of shares of stock on
the basis of information known only to the trader
5. Pollution and Resource depletion
6. Whistle Blowing

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 Group activity
• deceptive advertising
• Basic employee rights
• Job discrimination
• Insider trading
• Drug testing
• Pollution and resource depletion
• Whistle blowing
• Healthcare business