>>>>>>>> Chapter 1

ETHICS AND
BUSINESS
1 Explain the nature of business 4 Examine the morality of profit-
from an ethical perspective motive in business.

2 Justify the importance of Ethics in 5 Rationalize the need for ethical

business propriety in business and the
corporate world.

3 Appreciate the dynamics of moral

reasoning as a framework for
making ethical decisions and
business
•Business is an old as human civilization. For as long as
people have needs and wants, there will always be
business.

•Business is an activity that is part and parcel of human

society. Society will not exist without business.

•Its activities must be examined from the ethical

perspective, in the same way that society examines
politics, economics, government, culture and religion
from the moral point of view.
• It paves the way for common ground
in our understanding of the
fundamental idea of what is good
and what is bad in our human
conduct.
• Without ethics, people will set their
own moral standards, moral rules
and moral principles.
• Helps management to face and
confront ethical issues and problems
affecting the flow of business
activities.
There are some wrong perception of the role of
Ethics in Business that affect their decisions and
in some cases, forget to be ethical.
Myth # 1: Ethics is a Personal Affair and not a
Public Debatable Matter

Myth # 2: Ethics and Business do not Mix

Myth # 3: Ethics in Business is Relative

Myth # 4: Good Business Means Good Ethics

Myth # 5: Business is a War

• Ethics plays an important role in business.
Without morality, business will be chaotic
human activity.
• Ethics is to discover that there are unwritten
laws, written in the hearts of men that should
govern our human conduct where positive laws
may be absent and in some cases, not vey
clear.
• Business is an integral part of human society.
• In business, as in any other human endeavor,
“what is legal may not be necessarily be
moral.”
• Laws are insufficient. Ethics is the unwritten
law, written in the hearts of men.
• In today’s technocrat-oriented business
education, the trend is to train managers to
maximize profits and to quantify the operations
of business.
• Business corporation is not just created to
make profits but to consider its moral and
social obligations to the stakeholders.
• A good moral standard is one that looks at the
issue as something that is very serious.
• A good standard must be grounded on good
moral argument.
• A good standard should be objective and not
subjective.
• A good standard, when violated, brings about
feelings of guilt, shame, and remorse of
conscience.
• A good moral judgment must be logical.
• A good moral judgment must be based on facts
and solid evidence.
• A good moral judgment must be based on
sound and defensible moral principles.
The Assumptions of Profit-Motive
•Profit-motive in business is an ethical issue.
•Profit-motive as an ethical issue operates within
the two important aspects of human conduct-
freedom and the structure of business.
The Good Side of Profit-Motive
•Profit-motive motivates people to do something
meaningful.
•Profit-motive promotes ingenuity and cleverness
in running a business.
•Profit-motive makes people productive.
•Profit-motive generates potential capital for the
business.
The Bad Side of Profit-Motive
•Profit-motive promotes rivalry among competitors.
•Profit-motive makes people focus only on making
money, that is, to sell as many goods as possible
without considering whether or not these products
satisfy the needs and wants of consumers and end
users.
•Profit-motive turns the businessman from being a
reflective and a questioning person because it
focuses his attention on the practical activity of
making money.
• Profit-motive promotes self-interest rather than
the common good.
Ethical Considerations of Profit-Motive in Business
•Earning profit is a good and valid activity in business.
•Making excessive profits is totally wrong.
•Profit is not the “be-all and the end-all” of doing business.
•“The teachings of the Catholic Church do not totally
condemn profit as part of business activity. Pope Pius XI,
in Quadragesimo Anno (1931), does not prohibit the
producer from enriching himself provided,” one respects
the laws of God, does not prejudice the rights of others,
and works according to faith and right reason.”
• Business Ethics is the study of what is right and wrong
human behavior and conduct in business.
• Business Ethics is a study of the perceptions of people
about morality, moral norms, moral rules and ethical
principles as they apply to people and institutions in
business.
• Business Ethics is the study, evaluation, analysis and
questioning of ethical standards, policies, moral norms,
and ethical theories that managers and decision makers
use in resolving moral issues and ethical dilemmas
affecting business.