Business Ethics and Social Responsibility ABM - 12 Lesson 1 2025 PDF

Business Ethics and Social Responsibility ABM - 12 PART 01 The Nature and Forms of Business Organization Part 1 Business Ethics The practice of what is morally and ethically right in the conduct of business in the workplace. It is essentially doing what is rig...

Business Ethics and Social Responsibility ABM - 12 PART 01 The Nature and Forms of Business Organization Part 1 Business Ethics The practice of what is morally and ethically right in the conduct of business in the workplace. It is essentially doing what is right in any business transaction. Part 1 Levels of Business Ethics Macro – the area that represents business operations bound by the virtues and norms of the different political and social systems of every society. Corporate – the corporate level of ethics represents how each company interprets the rules and standards of the industry. Individual – the individual level of ethics is the employee’s own principles that guide his or her life. Part 1 Businesses make the goods and services you use each day. That includes the products and services used by other businesses as well as those needed by individual consumers. In 2002, all businesses worldwide produced more than $40 trillion of goods and services. The U.S. is the largest producer of goods and services in the world. Americans consume more than any other country. US businesses are responsible for almost 29 percent of world production. Nearly 24 million full and part-time businesses produce those goods and services. Part 1 Business and Business Organization 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 and services or outputs to customers. Business are usually complex enterprises involving major activities like purchasing, manufacturing, marketing advertising, selling, and accounting. The objective of most businesses is to earn profit. (the difference between the amount earned and the amount spent in buying, operating, or producing something.) Part 1 Business and Business Organization Profit – the amount of money a business takes in after the expenses needed to operate the business have been deducted. Revenue – the total amount of money a business earns during a given period of time by offering products to the market Part 1 Business and Business Organization Profit Organizations – have the right to keep and use their profits as they choose – within legal limits – because profit is the reward for the risks they take in making and selling their products Nonprofit organizations – they are formed for a specific purpose to serve the common good of the public. These organizations do not have the fundamental purpose of earning profits, but they may initiate activities that can help them raise funds for their advocacy. Part 1 Various Forms of Business Organization Sole Proprietorship Partnership A business owned by 01 02 An Association of two one person or more people as. partners; it refers to an arrangement in which the individuals share the profits and liabilities of a business venture. Corporation An entity created by law that is 03 separate and distinct from its owners and its continued existence is dependent upon the corporate statutes of the state in which it is incorporated. Part 1 Various Forms of Business Organization Sole proprietorship Advantages Total undivided authority Low organizational cost and license fees Tax savings No restrictions on type of business (as long as it is legal) Part 1 Various Forms of Business Organization Partnership Chief characteristics Association of individuals Mutual agency (an act of any partner is binding on all other partners, so long as the act appears to be appropriate for the partnership.) Limited life Unlimited liability Co-ownership of property Part 1 Various Forms of Business Organization Corporation Characteristics that distinguish a corporation from a proprietorship and partnership are: The corporation has a separate legal existence from its owners. The stockholders have limited liability. Transferable ownership rights (ownership is in shares of stock) Ability to obtain capital (relative ease) The corporation can have a continuous life The corporation must pay an income tax on its earnings, and the stockholders are required to pay taxes on the dividends they receive: the result is double taxation of distributed earnings. An artificial/juridical “person” endowed with liability for self- management, that is, the management structure is at the discretion of the board of directors. Part 1 Comparison and Contrast Among the Various Forms of Business Sole proprietorship Has complete control over company’s finances and operations Not required to consult with anyone when it comes to making business decisions. Partnership All partners have input regarding how the company’s resources are used and other important business decisions. All partners are responsible for making decisions that will impact the business. Corporations It has the advantage when it comes to raising capital for the business – the ability to raise funds through sale of stock. Corporation file taxes separately from their owners. Part 1 Business Organization and the Economy Economics – the study of how resources used to produce goods and services are distributed for consumption within a social system. Economic system – it describes how a society distributes its resources to produce goods and services. Circular flow of economic activity Part 1 Overview of the Different Economic Systems Capitalism Communism Socialism Definition In capitalism, individuals own According to Karl Marx, In socialism, the government and operate the majority of communism is a society in which owns and operates basic businesses that provide the people, without regard to industries, but individuals goods and services. Also class, own all the nation’s own most businesses. known as a free enterprise, resources. In his ideal society, Socialism's core benefit is capitalism can be pure or everyone contributes according supposed to be social equality modified. In a pure to each person's ability, and Central planning determines capitalism, or a free-market people receive goods and the production and system, all economic services based on their needs. distribution of goods and decisions are made without The government determines the services while individual government intervention. In goods and services needed businesses provide other a modified capitalism, the businesses by the citizens, as goods and services based on government intervenes well as the production and consumer demand and regulates businesses to distribution of goods and and availability of some extent (e.g., laws, services. resources regulations, and policies) Part 1 Overview of the Different Economic Systems Capitalism Communism Socialism Business Business are owned and Business are owned and Major industries are Ownership operated by individuals operated by the government owned and operated by and corporations. the government; small businesses are owned by individuals Competition Competition is There is no competition as Competition is restricted in encouraged by market the government owns and major industries owned forces and government operates businesses and operated by the regulations government but is encouraged in small businesses. Part 1 Overview of the Different Economic Systems Capitalism Communism Socialism Profits Individuals keep profits Profits go to the government Profits from government- and decide on how to use owned enterprises go to them the government; small business owners reinvest profits Product Prices of the products are Prices of the products are Prices of products are Availability determined by supply high with limited choices of determined by supply and and Price and demand, and goods and services demand, while consumers consumers enjoy a wide have some choices of selection of products products. Part 1 Overview of the Different Economic Systems Capitalism Communism Socialism Employment There are unlimited Most people work in the Many people work in Options choices of careers for government, with little the government, with everyone option in choosing a some options in career choosing a career. Part 1 Free-enterprise System Free enterprise allows business organizations to succeed or fail based on the demand of the market. Consumers can freely choose to pay for goods and services that they want. Businesses that can efficiently produce, distribute, and market their products will most likely succeed, while those that do not offer what consumers seek may fail. Part 1 Free-enterprise System Right to own private property Individuals must have the right to own property and be able to pass it down to their heirs. Right to own a business and keep all profits Individuals and business organizations must have the right to earn profits and be able to use the profits as they wish, within the limits of the society’s laws, principles, and values. Part 1 Free-enterprise System Right to freedom of competition Individuals and business organizations must have the right to make decisions on how to operate business and compete with other businesses within the limits of the laws, principles, and values. Right to freedom of choice Individuals must have the right to choose the career to pursue, the place to live in, the goods and services to purchase or take advantage of, and other benefits necessary for their business. Business organizations must have the right to choose the location of their business, the goods and services to offer, and the resources to use in the production process, among others.