San Francisco De Sales School

National Highway, San Pedro, Laguna

SY2021-2022

Business Ethics and

Social Responsibility
Quarter 3 – Module 3:

Code of Ethics in Business

Name: ________________________________
Grade & Section: ______________________
Subject Teacher: ______________________
What I Need to Know
Few years from now, you will be employed whether in a public
office or in a private enterprise. As an employee, it is very
important that you display good ethics, especially in your
workplace. This module was prepared for you so that you will have
a good interpersonal relationship with all the people around you,
specifically with the ones you will work with.

Additionally, you are expected to:

1. define ethics;
2. explain why ethics is important in business;
3. classify the given ethical issues; and
4. create a good situation from the choices given.

What I Know
Directions: Match the items in Column A to its description in
Column B. Write your answers on a separate sheet of paper.

1. Ethical Issues in Production A. Tasks include hiring and

performance evaluation
2. Ethical Issues in
Sales and B. Tasks involve trading practices
Marketing and conditions, and tax
payments
3. Ethical Issues in Finance
C. Tasks involve protection of
4. Ethical Issues in Human consumers and honesty in
Resource Management delivery

D. Task includes that its products

do not inflict unnecessary harm

Directions: Read each statement below and classify it according to

its ethical issue. Write only the letter of your answer on a separate
sheet of paper.

a. Ethical Issues in Production

b. Ethical Issues in Sales and Marketing
c. Ethical Issues in Finance
d. Ethical Issues in Human Resource Management

5. XYZ Company does not accept members of LGBTQIA+ community.

6. Reggie’s hotdogs are made under strict processing standards.
7. The company supervisor orders office supplies from her husband’s
store.
8. Wyn Mobile, a new brand of computer, launched its new
laptops at an overpriced amount.
2
9. Marigold Enterprise rejects differently abled applicants.
10. Energybest Milk does not put on the can’s label the ingredients they
used.
11. The food products of XYZ Corporation are well-sealed.
12. The administrative manager joins the contract bidding of
their proposed new building.
13. Mr. Reyes, the accountant, bribed the personnel to reduce their
company’s tax payable.
14.Cherry Beverages hired a famous commercial model for its product
promotion.
15. Chocmuch Manufacturing Corporation delivers its products on time.

3
Lesso
n Ethics in Business
1
What’s In
Your knowledge of the core principles underlying fairness,
accountability, and transparency will be very helpful in this next
lesson.

Directions: Analyze each situation below and identify what core

principle is applied. Write the letter of your answer on a separate
sheet of paper.

Your choices:

A. Fairness B. Accountability C.
Transparency

1. The treasurer of a cooperative withdrew P20,000 cash from a

bank. On her way to the office, she passed by the public market
and since it was market day, there were a lot of people in the area.
A man suddenly snatched her bag where the money was placed.
Although shocked and sad, she promised to pay the P20,000
through salary deduction.

2. The manager of the company ordered materials for their office

extension. He/she declared the actual amount and attached the
official receipt for future reference.

3. The boss noticed that his/her two clerks were not talking to each
other. He/she ordered the two to come to his/her office one at a
time to listen to both sides before he/she decides.

What’s New
Directions: Read and understand the situation. Write your answers
on a separate sheet of paper.

Chona opened an online food service for an additional income.

She hired one female helper in the kitchen and two delivery boys.
The business was doing very good for a month. But one day, she got
a call from an online client complaining
4 that the food delivered to her
was already spoiled and could not be eaten. He/she was demanding
for a refund.

If you were Chona, how would you handle the situation?

5
What is It
Definition of Ethics
The term Ethics is derived from the Greek word ethos which
means “characteristic way of thinking”. Ethics, as a science, does not
only evaluate the morality of our human conduct but also provides us
with a common understanding of the universal, objective, and
irreversible moral principles that should govern our human behavior
and guide our moral decisions (Roa, 2011).
Ethics are moral principles that guide the conduct of the individual
(Racelis, 2017). These are rules of behavior based on ideas about what
is morally good and bad (Merriam-Webster Dictionary).

Why is ethics important in business?

Ethical conduct, whether at the corporate, professional, or
personal level, is a direct reflection of the principles and values
which regulate the person and the institution he/she represents.
Organizations establish their own culture that is socially expressed
as their ideals. Such principles or ideals have an impact on the
relationships within the company, efficiency, prestige, performance
and retention of employees, legalities, and the wider community they
work in.

As a result, most organizations generate a list of organizational

values and codes of conduct to be recognized and adhered by all
workers. Motivating and enhancing constructive actions, and at the
same time building an atmosphere that prevents unethical behavior
are vital obligations on the part of both administrators and workers.

How to Apply Ethics

At the individual level, organizations ought to concentrate on
improving and encouraging every employee to respect and adhere to
ethical principles. Certain aspects of individual ethics have their
roots in the individual. Achieving a strong sense of professionalism
and recognizing certain professional decisions' ethical implications
are the key components of education, individual reflection, and
experience.
Examples of Ethical Issues in Business
1. Ethical Issues in Finance
Under the umbrella of finance and accounting, fairness in
trading practices, trading conditions, financial contracting, sales
practices, consultancy services, tax payments, internal audits,
external audits, and executive compensation are included,
6
whereas specific corporate ethical/legal abuse includes insider
trading, bribery/kickbacks, misleading financial analysis, and
fraud on securities.
2. Ethical Issues in Human Resource (HR) Management
Human Resource Management 's tasks include hiring and
orientation, performance evaluation, training and development,
labor relations, and health and safety concerns. Among the ethical
issues are discrimination by age (the young ones are preferred
over the older ones), gender preference, sexual orientation, race,
ethnicity, disability, and physical appearance are all ethical issues
that the HR oversees.

3. Ethical Issues in Sales and Marketing

Marketing ethics deals with the beliefs, standards and/or
morals that advertisers and marketing organizations will operate
upon. Ethical marketing issues include promotion of obsolete or
harmful products/services; openness about environmental threats;
food ingredients (Genetically Modified Organisms); possible health
hazards or financial risks; protection for the privacy and autonomy of
consumers; truthfulness in advertising; and honesty in price and
delivery. Some claim that advertisements can affect the views of
individuals and their relationships with others, suggesting an ethical
obligation to avoid distorting those expectations and relationships.
Ethics in marketing includes practices in pricing, which
involves unlawful acts such as price manipulation and price
skimming. According to Hayes (2020), price skimming is a product
pricing strategy by which a firm charges the highest initial price that
customers will pay and then lowers it over time. On the other hand,
advertising has raised concerns over offensive advertisements,
objectification, and school marketing.
4. Ethical Issues in Production
Business ethics typically deals with company's duties to ensure
its goods and industrial procedures do not inflict unnecessary harm.
Many products and services can be generated and used at zero risk
and it can be difficult to assess the ethical path. However, there are
consumers who patronize products that damage them, for example,
tobacco products. Output can have adverse effects on the
environment like air pollution, destruction of habitats, and urban
sprawl.

What’s More
A. Directions: Classify each phrase below to the corresponding column of
ethical issues where it belongs. Write your answers on a separate sheet
of paper.

1. destruction of habitats 6. Truthfulness in

advertising
2. encountered misleading financial reports 7. Fraud on
securities 7
3. overweight applicants are not allowed 8. Harm to
environment
4. hiring limited to religious affiliations 9. Manipulation in prices
5. honesty in prices 10. Exaggerated
advertisements

Ethical Issues:

in Human in Sales
in Finance
Resource and
Marketin in Production
Management
g

8
What I Have Learned

Directions: Complete the given phrases below for at least three to

five sentences. Write your answers on a separate sheet of paper.

1. Ethics means

____

2. Ethics is important in business because

What I Can Do
Directions: What would you do under the following situations below.
Write your answers on a separate sheet of paper.

a. Being an advertising artist, you were instructed by the manager to

make two layouts, but you will only receive the price for one.

b. Your company would have to donate P 1,000,000 to charity, but

you witnessed that the accountant only gave P 700,000 instead of
P 1,000,000.

c. Being one of the food processors in a manufacturing company, you

know that the ingredients listed on the label of your product are
not completely true.

9
Assessment
Directions: Read each sentence below and classify each
according to the ethical issue where it belongs. Write the
letter of your answers on a separate sheet of paper.

A. Ethical Issues in Finance

B. Ethical Issues in Human Resource Management
C. Ethical Issues in Marketing
D. Ethical Issues in Production

1. XYZ Company does not accept members of LGBTQIA+ community.

2. Diggie’s hotdogs are made under strict processing standards.
3. The company accountant orders office supplies from her
husband’s store.
4. Strawberry, a new brand of computer, launched its new laptops at
an overpriced amount.
5. Lobo Enterprise rejects all differently abled persons.
6. Super Milk does not put on the can’s label the ingredients they
used.
7. The food products of XYZ Corporation are well-sealed.
8. The manager joins the contract bidding of their proposed new
building.
9. Lotlot, the accountant, bribed the personnel to reduce their
company’s tax payable.
10. Robot Beverages hired a famous commercial model for its
product promotion.
11. Chocolatey Much Manufacturing Corporation delivers its products on
time.
12. RB Corporation’s employable age limit is 55 years old.

Directions: Fill in the blanks with the appropriate word/s to make each
sentence correct. Write your answers on a separate sheet of paper.

13-14. The term ethics is derived from the Greek word _____ which means
characteristic way of _ _ _ _ .
15.Ethics are rules of _ _ _ _ _ based on ideas about what is morally good and
bad.

Additional Activities
Directions: Give a situation where ethics could be applied. Choose
only one from the following places. Write your answers in three to
five sentences on a separate sheet of paper.
10
1. At the airport
2. In the marketplace
3. In a public office
Lesso
n Code of Ethics in Business
2
What I Need to Know
You have learned that ethics is the interpretation of what is
proper or not, what is right or wrong, what is just or unjust, and
what is good or bad in human behavior. It allows you to establish the
standards (norms) on which rational decision- making is guided and
measured.

In this next lesson, you will get to know about the Code of
Ethics, and you are expected to:

1. explain what code of ethics is;

2. identify which of the common practices in the business
organizations are acceptable or not;
3. suggest ways on how some common practices could be
improved;
4. write a good script that reflects good decision; and
5. formulate a “code of ethics” that reflects core principles
derived from analyses.

What I Know
Directions: Choose which action below is more acceptable. Write the
letter of your choice on a separate piece of paper.

1. As an office employee, you need to .

a. wear the prescribed office uniform
b. wear something you are comfortable with
2. With the “No Smoking” policy of the company, Elvis, being a
smoker, _.
a. will not follow because it makes him uncomfortable
b. will follow because it could irritate the people around him
3. In observing the office hour, I .
a. will report to my workplace before the time
b. will report any time I want, anyway there is salary deduction
4. In advertising our business, we _.
a. will do anything, even to the point of inventing story, just to
convince the consumers
b. will only tell the truth, so as not to affect our company’s
credibility
11
5. In bookkeeping, Elsa .
a. will maintain two books of sales: one with the actual amount of
sales, and one which has the adjusted amount for income tax
purposes
b. will maintain only one book of sales with actual amount

Directions: Write True if the statement is correct and False if it is

not.
6. The executives of the company should show perseverance.
7. Whether your decision is fair to all or not, it doesn’t matter.
8. Big businesses should conduct social surveys.
9. The Human Resource Department may not fully review the
offenses reported.
10. Each employee should be fully aware of the company’s
principles.
11. The proprietor’s decision should be based on truth.
12. Never mind immoral activities in the company.
13. The management should protect the whistleblowers because they
show concern to the company.
14. Every decision should build goodwill of the organization.
15. Ethics are social principles that guide the conduct of the
individuals.

What’s In
Directions: Answer the following questions on a separate sheet of
paper.

1. What do we mean when we say ethics? Explain your answer in

two to three sentences.

2. What are the four ethical issues that you have learned? Discuss
each in two sentences.

What’s New
The new Chief Operating Officer (COO) of Lee Ching Chemical
Company, Max Ching, has found that the firm has been dumping its
toxic waste into the local river for the last four years and falsifying
12
information to officials about the amounts of alleged cancer-causing
materials in the waste. The plant overseer claims there is no
evidence that the waste will cause cancer. Besides, within a hundred
kilometers downriver, there are only a few fishing villages. If the
company had to treat the substance to neutralize its potentially
harmful effects and transport it to a legal dumpsite, the operating
costs of the company would rise to a level that could render the
company uncompetitive. When the organization loses its competitive
advantage, five thousand local workers can become unemployed and
the economy of that town could collapse.

Question: If you were the COO, what would you do? Why?

13
What Is It
A secret to success lies in recognizing the value of ethics in industry.
The customers, management, and staff value honest and ethical practices.
Hence, business ethics is vital because it helps maintain a great reputation,
helps to avoid significant financial and legal issues, and ultimately benefits
all involved. Therefore, it is highly suggested that each company formulates
its own Code of Ethics to be used as a guide in its business operation.

What is Code of Ethics?

Code of Ethics is a set of rules about good and bad behavior. It

is a guide of principles designed to help professionals conduct
business honestly and with integrity. A code of ethics document may
outline the mission and values of the business or organization, how
professionals are supposed to approach problems, the ethical
principles based on the organization's core values, and the
standards to which the professional is held.

Saucer and Sims (2013) offer recommendations for developing

Code of Ethics in business organizations:
1. Adopt code of ethics (use the Code of Ethics of other companies as
a reference and modify according to the needs of the company).
2. Offer training on ethics (for management and employees).
3. Hire and foster individuals with ethical value.
4. Deal with immoral activities. Employees must know the
implications and effects of making unethical actions, and should
be ready to accept consequences.
5. Take constructive measures. For example, give rewards to
employees who admit their mistakes. If the company is
conscientious and smart, it can encourage warehouse workers to
take responsibility for their mistakes and even praise them for
coming forward, apologizing and ensuring that a faulty product is
not purchased by the customer. At first it seems counter-intuitive
to reward an employee for a mistake, but in the end, it provides
everyone with the best result.
6. Carry out a social audit. Conduct survey to employees once in a
while.
7. Cover all whistleblowers. These people detect illegal activities
within organizations and disclose the actions to the authority or
managers. A whistleblower who works sincerely, correctly
reporting an issue, should be praised for his/her courage and
integrity, as opposed to being disciplined and ostracized. If an
individual blasts the whistle, it is possible that the company itself
has failed internally to motivate and improve fair and ethical
conversations.
8. Empower the defenders of integrity. Support those who work with
honesty and integrity.
9. Ensure executive commitment. 14The anonymity of those who report
the problems should be practiced.
10. Communicate the principles of conduct within the company and
across the industry.
11. Assign an officer who is clearly responsible for the enforcement of
ethical standards. He/she can be consulted for advice.
12. Establish a procedure for violations of ethical standards, and fully
review any offenses reported.
13. Ensure high perseverance by the company's board of trustees.
14. Lead by example, above everything else.
It should be remembered that when faced with an ethical
situation, the outcome of the decision-making process should be
considered. One way to tackle ethical situations is by using the four-
way test to evaluate decisions.

This four-way test consists of asking four questions:

1. Is my decision truthful?
2. Is my decision fair to all who are affected by it?
3. Will this build the organization's goodwill?
4. Will the decision benefit all parties with vested interest in the
outcome?

Code of Ethics contains the following:

1. Vision means something that you imagine; a picture that you see in
your mind (Merriam-Webster Dictionary). The vision statement helps
to ensure the alignment of the decisions to the company goals.
Example: To make innovations that everyone could access and
adapt depending on their needs
2. Values (value means something thought of as important or useful)
Values in business help to ensure that all of the employees work
towards the company goals.
Example: We commit ourselves to serve our customers
with quality service and utmost respect.
3. Mission- a specific task with which a person or a group is
charged (Merriam-Webster Dictionary). The mission statement
clearly and effectively guides the business or the organization in
its decision-making.
Example: To inspire all the young athletes of the country… tell
them to dream and go for it!
4. Principles- moral rules or beliefs that help you know what is right
and wrong and that influence your actions (Merriam-Webster
Dictionary).
Examples: Customers have to be respected. Make sure to deliver
quality product.

Simplified Sample of Code of Ethics: XYZ Company

Our Core Values

Our Vision: To lead the car industry by giving our customers quality
cars worthy of their money and unmatched customer
services

Our Values: We act with the highest

15 standards of integrity. We
respect individuals and treat them fairly.

Our Mission: To work efficiently and enthusiastically to make XYZ

Company the country’s top car dealer while serving our
customers punctually and courteously

Our Principles:
1st: XYZ Company shall adopt a zero-tolerance policy towards
bribery and corruption in whatever form;
2nd: All company officers and employees shall conduct
business in accordance with Philippine laws and
regulations; and
3rd: We shall act in good faith and observe sense of
professionalism at all times.

For actual/specific example of Code of Ethics, please visit:

http://www.ayala.com.ph/governance/page/business-conduct-and-ethics

Code of Ethics aims to lessen conflicting issues as it explains to

what degree such conflicts can be avoided and what parties can do if
these conflicts happened. Professionals therefore cannot say that
they were ignorant of the immoral nature of their improper behavior.
Often relevant is the possibility of disciplinary action (e.g.
disbarment of a lawyer) which helps minimize unnecessary
disagreements or offensive behavior where a confrontation is
imminent or is likely to happen.

What I Have Learned

Directions: Answer the following questions and write your answers in
two to three sentences on a separate sheet of paper.

How do you understand Code of Ethics?

Why is Code of Ethics important in business?

What I Can Do
Directions: Read the situation and formulate a Code of Ethics
for the business. Write your answers on a separate sheet of
paper.
Situation:
16
You just started an online business selling bags and shoes made
in Laguna. You employed one bookkeeper, one clerk, two utilitymen,
and four (4) delivery personnel. Follow the format given below:
Our Core Values
Our Vision
Our Values
Our Mission Our Principles:
1st:

2nd:
3rd:

Rubrics:
Relevance to the business 6
pts.
(one point for each - vision, values, mission, and three principles)
Mechanics
4 pts.
(one point for each – vision, values, mission, and principles)
Total
10 points

17
Assessment
Directions: Read each sentence below and write the words thumbs up if it
is true or thumbs down if it is not. Write your answers on a separate sheet
of paper.

1. The company’s Board of Trustees should show perseverance.

2. It does not matter whether the decision is fair to all or not.
3. Social surveys should be carried out by the company.
4. The company may not fully review the offenses reported.
5. Each member of the organization should be fully aware of the company’s
principles.
6. The owner’s decision should be based on truth.
7. Do not mind immoral activities in the company.
8. The management should protect the whistleblowers.
9. The decision should build goodwill of the organization.
10.Ethics are social principles that guide the conduct of the individuals.

Directions: Complete each statement by filling the appropriate word

in the blank. Write your answers on a separate sheet of paper.

11-12 Code of Ethics is a set of rules about _____ and _____

behavior.
13. The possibility of giving _____ action often minimize doing offensive
behavior.
14. The people who detect illegal activities and report the same
to proper authorities are called _____.
15. It is highly suggested that administrators should lead by _.

Additional Activities
Directions: Write a short script that shows how a General Manager
should respond to an employee-whistleblower who had witnessed a
bribing incident of a big client to the new Sales Manager. Write your
answers on a separate sheet of paper.

Rubrics:
Content 4 pts.
Mechanics 3 pts.
Ethical implication of decision 3 pts.
Total 10 pts.