12

Subject Area
Quarter 4 – Module 2:
Major Ethical Issues
in Entrepreneurship

SELF-LEARNING MODULE

DIVISION OF GENERAL SANTOS CITY

Business Ethics and Social Responsibility for Grade 12
Self-Learning Module (SLM)
Quarter 4 – Module 2: Major Ethical Issues in Entrepreneurship
First Edition, 2020

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 12

Business Ethics
and Social
Responsibility
Quarter 4 – Module 2:

Major Ethical Issues

in Entrepreneurship
SELF-LEARNING MODULE

DIVISION OF GENERAL SANTOS CITY

Introductory Message
For the facilitator:

Welcome to the Business Ethics and Social Responsibility for Grade 12 Self-
Learning Module (SLM) on the Major Ethical Issues in Entrepreneurship!

This module was collaboratively designed, developed and reviewed by educators

both from public and private institutions to assist you, the teacher or facilitator in
helping the learners meet the standards set by the K to 12 Curriculum while
overcoming their personal, social, and economic constraints in schooling.

This learning resource hopes to engage the learners into guided and independent
learning activities at their own pace and time. Furthermore, this also aims to help
learners acquire the needed 21st century skills while taking into consideration
their needs and circumstances.

In addition to the material in the main text, you will also see this box in the body of
the module:

Notes to the Teacher

This contains helpful tips or strategies
that will help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this module.
You also need to keep track of the learners' progress while allowing them to
manage their own learning. Furthermore, you are expected to encourage and assist
the learners as they do the tasks included in the module.

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For the learner:

Welcome to the Business Ethics and Social Responsibility for Grade 12 Self-
Learning Module (SLM) on the Major Ethical Issues in Entrepreneurship!

The hand is one of the most symbolized part of the human body. It is often used to
depict skill, action and purpose. Through our hands we may learn, create and
accomplish. Hence, the hand in this learning resource signifies that you as a
learner is capable and empowered to successfully achieve the relevant
competencies and skills at your own pace and time. Your academic success lies in
your own hands!

This module was designed to provide you with fun and meaningful opportunities
for guided and independent learning at your own pace and time. You will be
enabled to process the contents of the learning resource while being an active
learner.

This module has the following parts and corresponding icons:

What I Need to Know This will give you an idea of the skills or
competencies you are expected to learn in
the module.

What I Know This part includes an activity that aims to

check what you already know about the
lesson to take. If you get all the answers
correct (100%), you may decide to skip this
module.

What’s In This is a brief drill or review to help you link

the current lesson with the previous one.

What’s New In this portion, the new lesson will be

introduced to you in various ways such as a
story, a song, a poem, a problem opener, an
activity or a situation.

What is It This section provides a brief discussion of

the lesson. This aims to help you discover
and understand new concepts and skills.

What’s More This comprises activities for independent

practice to solidify your understanding and
skills of the topic. You may check the
answers to the exercises using the Answer
Key at the end of the module.

What I Have Learned This includes questions or blank

sentence/paragraph to be filled in to process

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 what you learned from the lesson.

What I Can Do This section provides an activity which will

help you transfer your new knowledge or
skill into real life situations or concerns.

Assessment This is a task which aims to evaluate your

level of mastery in achieving the learning
competency.

Additional Activities In this portion, another activity will be given

to you to enrich your knowledge or skill of
the lesson learned. This also tends retention
of learned concepts.

Answer Key This contains answers to all activities in the

module.

At the end of this module you will also find:

References This is a list of all sources used in

developing this module.

The following are some reminders in using this module:

1. Use the module with care. Do not put unnecessary mark/s on any part of
the module. Use a separate sheet of paper in answering the exercises.
2. Don’t forget to answer What I Know before moving on to the other activities
included in the module.
3. Read the instruction carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through with it.
If you encounter any difficulty in answering the tasks in this module, do not
hesitate to consult your teacher or facilitator. Always bear in mind that you are
not alone.

We hope that through this material, you will experience meaningful learning
and gain deep understanding of the relevant competencies. You can do it!

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 What I Need to Know

Hello! Welcome to Module 2! Your learning in Module 1 will help you enjoy
your journey of learning on this lesson which is on the major ethical issues in
entrepreneurship.

In this module, you are expected to: Formulate a morally defensible

position on ethical issues on entrepreneurship like basic fairness, personnel
and customer relations distribution dilemmas, fraud, unfair competition,
unfair communication, non-respect of agreements, environmental
degradation, etc. ABM_ESR12-IVi-l-3.2; ABM_ESR12-IVi-l-3.3
At the end of this lesson, you are expected to:

1. know the different ethical issues in entrepreneurship

2. identify companies or business organizations with
unethical policies and practices in some aspects of
business operations.

This module is self-instructional. You can read, analyze concepts and ideas
presented and reflect on them. The activities will help you assess your progress as
you go through in this module

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 What I Know

Let’s get started. But before we proceed, let us first assess your prior
knowledge regarding our new lesson. Read each question carefully and try to
answer as best as you can.

REMINDER: DO NOT WRITE ANYTHING ON THIS MODULE. WRITE ALL YOUR

ANSWERS ON A SEPARATE SHEET/S OF PAPER.

A. Choose the best answer. Write only the letter of choice on the answer
sheet.

1. A problem or situation that requires a person organization to choose

between alternatives that must be evaluated as right (ethical) or wrong
(unethical).
a. business ethics c. ethical issue
b. ethical dilemma d. social responsibility

2. It centers on protecting employee and customer rights, to make sure

all business operations are fair and just.
a. accountability c. gross negligence
b. basic fairness d. personnel and customer relations
3. It refers to the way price is set for consumers, considering the cost of inputs,
distribution, and overhead.
a. placement c. product
b. price d. promotion
4. It involves the strategic positioning of product within retail stores.
a. advertisement c. placement
b. marketing d. promotion
5. A situation in which competitors compete on unequal terms because
favorable or disadvantageous conditions are applied to some competitors but
not to others.
a. basic fairness c. fraud
b. fair market d. unfair competition
6. This occurs when the maker of the product uses a name, logo, or other
identifying characteristics to deceive consumers into thinking that they are
buying the product of a competitor.
a. branding c. trade secrets
b. promotion d. trademark infringement

7. The spreading of false information about the quality or characteristics of a

competitor’s product.
a. advertisement c. price fixing
b. dumping d. trade libel

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 8. A company sells a product in a competitive market at a loss.
a. dumping c. refusal to deal
b. price fixing d. tying
9. Companies collude to set prices, effectively dismantling the free market.
a. exclusive dealing c. price fixing
b. dividing territories d. refusal to deal

10. A legal cause of action in which a binding agreement or bargained for

exchange is not honored by one or more of the parties to the contract.
a. breach of contract c. unfair communication
b. patent misuse d. unfair competition

B. Instruction: Write True if the statement is correct and False if it is incorrect.

__________ 11. Ethics is a prime concern in marketing, and the areas of price,
placement, and promotion are no exception.
__________ 12. Promotions are designed to boost long- term sales by providing
irresistible value propositions to consumers.
__________ 13. Misappropriation of trade secrets occurs when one competitor
uses espionage, bribery, or outright theft to obtain economically
advantageous information in the possession of another.
__________ 14. Non- respect of agreements is a breach of contract.
__________ 15. Price collusion exists when a number of competitors agree to set
prices at a certain level, bypassing the natural market forces of
supply and demand.

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Lesson
Major Ethical Issues in
2 Entrepreneurship

In this challenging and competitive business world, most companies or

business organizations are facing a number of ethical issues. Any business
organization, profit or non-profit, must develop a code of conduct and ethics that
every member of the organization must follow or abide by and put into practice.

What’s In

In Module 1, you have learned the different responsibilities and

accountabilities of entrepreneurs to employees, government, creditors, suppliers,
consumers, general public, and stakeholders.
Let us now review what you have learned in Lesson 1. Please do Activity 1
and Activity 2. 

Activity 1: Remember Me

Instruction: Answer each question concisely.

1.
What is ethics?
__________________________
__________________________
__________________________
________________

2. What is
entrepreneurship?
___________________________
___________________________
___________________________
_________________________

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 Activity 2: Be Responsible

Instruction: Cite one responsibility or accountability of an entrepreneur.

1. to government 2. to customers

_________________________
_________________________ _________________________
_________________________

3. to employees 4.  to suppliers

_________________________ _________________________
_________________________ _________________________

What’s New

Good job! It is important that you remembered very well and understood the
basic concepts in the previous lesson. You are now ready to proceed to our next
topic.
To start, please do Activity 3.

Activity 3: Show Me Your Thumb

Instruction: Give a thumbs up if the phrase or statement shows an ethical

practice, and thumbs down if it’s an unethical one.

______ 1. Employees act in the best interest of the company.

______ 2. Making false claims

______ 3. Misleading advertisements

______ 4. Practice proper office decorum.

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______ 5. Accurate, reliable, and truthful financial and accounting records.

What is It
Let us now begin our journey in understanding Lesson 2 on the
major ethical issues of entrepreneurship.

 What is an ethical issue?

 Ethical Issue is a situation or problem that may occur when there is

a conflict with a society’s moral principles. These conflicts might be
complicated since some of the alternatives might be contrary to a
particular law.

 What is an ethical dilemma?

 Ethical dilemma arises when there is a conflict or situation and a

difficult choice has to be made between what is morally right or wrong.

 What are the major ethical issues in entrepreneurship?

A. Basic Fairness

 The decision process should be ethical, it must focus on the

protection of employees, customers’ rights. The business operation
must be fair and just, and considers the welfare of the common good.

B. Personnel and Customer Relations

 This describes the ways and means how a company relate with its
customers and with its workers to maintain a healthy customer
service and an employer- employee relationship.

 Common Issues:
a. Mistreating employees
b. Discrimination and harassment in the workplace
c. Family-run businesses
d. Employee behavior
e. Employee working conditions
f. Side deals and sub-standard work

 Some business organizations indulge in unethical business practices

to gain more profit. But this can be self- defeating and may lead to
losing valuable customers.

C. Distribution Dilemmas

 Ethics in dealing with customers is a major concern in Marketing.

And it is important to understand the significant role of ethics in
product, pricing, placement, and promotion; for this will help the

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 company stay on the right side of the law while establishing a good
reputation for setting high ethical standards.

 pricing refers to the amount set for a particular good or service

for consumers considering the cost of inputs, distribution, and
overhead.
 placement refers to the strategic positioning of products within
the retail stores.
 promotion is a business scheme or strategy to increase sales
which may involve short term discounts or giveaways.

 Each of these areas presents its own set of ethical dilemma:

a. Pricing Strategy Ethics

Price collusion can be a major source of ethical dilemmas in

many companies or industries, and artificial price-fixing is illegal.
Price collusion exist when a number of competitors agree to set
prices at a certain level, bypassing the natural market forces of
supply and demand and creating an unfair advantage on the
consumers.

b. Product Placement Ethics

Demo kiosk or small display counters are examples of

positioning which could harmless but be used in unethical ways.
Like for example, a candy distributor would usually display at
children’s eye level right before checkout counters in grocery
stores knowing parents cannot refuse the annoying cries and
pleas of their children. There is nothing illegal with this, but some
consumers consider such emotional manipulation to be highly
unethical, especially when it involves children.

c. Ethics and Promotions

Promotions are designed to boost sales by offering an

irresistible value propositions to consumers. A company may
advertise a good and tempting discount, but stocks only a small
number of that item the stores. Customers are attracted to the
great deal, only to find out that a completely different and inferior
product is sold.

d. Other Ethical Considerations

Advertising ethics are highly regulated by law when it comes to

honesty, discrimination, and young audiences, but advertisers
need to go extra mile to avoid offending viewers even within the
boundaries of the law.
D. Fraud

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  a deceit committed by a person, group, or organization. It can be in
the form of financial misconduct or misinterpretation.
 Price- fixing is an example of financial misconduct, which is an illegal
agreement between industry competitors to “fix” the price of a product
or service at an artificially inflated level.
 Corporate misrepresentation has many forms; it can be a misleading
advertisement, falsification of data , illegal workplace conditions or
transactions, salesman lying or denying safety
problems with a product.
E. Unfair Competition

 A situation that usually occurs through false information about a

company, advertising, or where competitors compete on equal
unequal terms.
 The principles of fair competition in business are defined by law, and
therefore unfair competition may be unlawful.

 The Most Common Actions falling under the banner of unfair competition:

a. Antitrust Law or Competition Law

- when one competitor attempts to force others out of the market, or

prevent others from entering the market by manipulating the market
price or obtaining exclusive purchase rights to raw materials used in
making a competitive product.

b. Trademark Infringement

- This occurs when the producer of a good or product uses a name, logo,
or other identifying characteristics to deceive consumers into believing
that they are buying the product of a known competitor.

c. Misappropriation of Trade Secrets

- When one competitor do some spying, bribery, or outright theft to

obtain economically advantageous information in the possession of
another.

d. Trade Libel

- The act of spreading false information about the quality or

characteristics of a competitor’s product or service.

e. Tortious Interference

- Occurs when one competitor convinces a party having, a relationship

with another competitor to breach a contract with, or duty to the
other competitor.

f. Anti- competitive Practices

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 - This prevents or reduce competition in the market.

g. Dumping

- Selling a product at a loss to force other competitors out of the market,

and after which the company will be free to raise prices for a greater
profit.

h. Exclusive dealing
- When a buyer is obliged by virtue of the contract to purchase only
from the contracted supplier.

i. Price Fixing

- When companies or industries agree or collude to set prices to

dismantle the free market.

j. Refusal to deal

- Two or more companies agreed to not to buy from a certain vendor.

k. Dividing Territories

- Happens when two companies agreed to stay out of each other’s way
and reduce competition in the agreed-upon territories.

l. Limit Pricing

- The monopolist sets the price at a level purposely to discourage entry

of competitors in the market.

m. Tying

- Purchasing together products that aren’t naturally related.

n. Resale Price Maintenance

- Resellers are not allowed to set prices independently.

o. Religious/ minority group doctrine

- Giving tribute to a significant group of religious community in order to

engage in trade with that community.

p. Subsidies from Government

- Some companies receiving government subsidies may have an

advantage over competition or totally barred competition to be
profitable.

q. Protectionism, tariffs and quotas

- Protectionism, tariffs, and quotas which give firms insulation from
competitive forces.

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 r. Patent misuse and copyright misuse

- Fraudulently obtaining a patent, copyright, or other forms of

intellectual property; or using such legal devices to gain an advantage
in an unrelated market.

F. Unfair Communication

 Used to undermine relationships like spreading rumors, discussing a

customer’s financial or personal information with someone outside
the company, or relaying information that was given in confidence.

G. Non-respect of Agreements

 a breach of contract- a legal cause of action in which a binding

agreement is violated by any one or more of the parties in the contract
by non-performance or interference with the other’s performance.
H. Environmental Degradation

 the deterioration of the environment through depletion of resources

and the destruction of ecosystem and extinction of wildlife.

What’s More
How are you doing? I hope you that you had fun as you learn on the
different ethical issues in entrepreneurship. Let’s learn more as we read
some interesting case stories related to these.

Activity 4: What’s the Issue

Instruction: Read each case story below then answer the questions that
follow.

1. Case Story: Toyota (Hastley, 2013)

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 A. What ethical violation/s was committed by Toyota?
B. What do you think would be the consequence/s of such violation?

2. Case Story: Apple (Hastley, 2013; www.enkivillage.com)

A. What is the ethical issue in this case story? Explain.

B. Would you still want to use Iphone? Why?

3. Case Story: “Endo” in the Philippines

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 A. Do you think this case story show non- respect of Agreements? Why?
B. Are you in favor of having “Endo” in our country? Explain your answer.

Rubrics for rating:

Exceeds Fully Meets Minimally

Did Not Meet
Criteria Expectation Expectations Meets
Expectation (1)
s (4) (3) Expectation (2)
The Most of the Some of the Answers are unclear
answers are answers are answers are and incorrect.
C-ontent correct, correct and correct and
clear, and clear. clear.
on point.
The Most of the Some of the Answers are
answers are answers are answers are incoherent and
written in written in written in disorganized.
O-rganization coherent coherent and coherent and
and organized organized
organized manner. manner.
manner.
There are Includes 2-3 Includes 4-5 Includes more than
no errors in grammatical grammatical 5 grammatical
grammar, errors, errors, errors,
M-echanics spelling and misspellings, misspellings, misspellings,
punctuatio punctuation and punctuation
n. errors. punctuation errors.
errors.

What I Have Learned

Good Job! Now it’s time for us to check what you have learned. Please do
the next activity without going back to the previous pages of this module.

Activity 5: Complete Me

Instruction: Fill in the blank with the correct word/term.

_________________________ 1.This is a problem or situation that requires person or
organization to evaluate what is ethical or unethical.
_________________________ 2. This involves ethical decision-making processes that is
centered on protecting employee and customer rights,
making sure all business operations are fair and just.
_________________________ 3. This involves the strategic positioning of products
within retail stores.

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_________________________ 4. This exists when a number of competitors agree to set
prices at a certain level, bypassing the natural market
forces of supply and demand.
_________________________ 5. This concept refers to situations in which the actions
of some competitors actively harm the position of others
with respect to their ability to compete on equal and fair
terms.
_________________________ 6. This occurs when the producer of the product uses a
name, logo, or other identifying characteristics to
deceive consumers into thinking that they are buying
the product of a competitor.
_________________________ 7. A retailer or wholesaler is obliged by contract to only
purchase from the contracted supplier.
_________________________ 8. Companies collude to set prices, effectively
dismantling the free market.
_________________________ 9. This is a legal cause of action in which a binding
agreement or bargained for exchange is not honored by
one or more of the parties to the contract.
________________________ 10. This is the deterioration of the environment through
depletion of resources such as air, water, and so

What I Can Do

GOOD JOB! Now let’s see how you will apply in real life situation what you
have learned in our discussion of this lesson. Answer the question below briefly but
smartly.

Activity 6: Entrepreneur Be Like

If you are an entrepreneur, how would you handle the different ethical issues
in your organization?

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 Assessment

Congratulations for doing well in understanding and working on the

different activities of our lesson. Now let’s find out how well you understood this
topic. Please answer this posttest honestly.

Instruction: Read each statement carefully and encircle the letter of your answer.

1. A situation in which competitors compete on unequal terms because favorable

or disadvantageous conditions are applied to some competitors but not to
others.

a. basic fairness c. fraud

b. fair market d. unfair competition
2. It involves the strategic positioning of product within retail stores.

a. advertisement c. placement
b. marketing d. promotion
3. It refers to the way price is set for consumers, considering the cost of inputs,
distribution, and overhead.

a. placement c. product
b. price d. promotion

4. It centers on protecting employee and customer rights, to make sure

all business operations are fair and just.
a. accountability c. gross negligence
b. basic fairness d. personnel and customer relations
5. A problem or situation that requires a person or organization to choose
between alternatives that must be evaluated as right (ethical) or wrong
(unethical).

a. business ethics c. ethical issue

b. ethical dilemma d. social responsibility
6. A legal cause of action in which a binding agreement or bargained for
exchange is not honored by one or more of the parties to the contract.
a. breach of contract c. unfair communication
b. patent misuse d. unfair competition
7. Companies collude to set prices, effectively dismantling the free
market.
a. exclusive dealing c. price fixing
b. dividing territories d. refusal to deal

14
 8. A company sells a product in a competitive market at a loss.
a. dumping c. refusal to deal
b. price fixing d. tying
9. The spreading of false information about the quality or characteristics
of a competitor’s product.
a. advertisement c. price fixing
b. dumping d. trade libel

10.This occurs when the maker of the product uses a name, logo, or other
identifying characteristics to deceive consumers into thinking that they are
buying the product of a competitor.

a. branding c. trade secrets

b. promotion d. trademark infringement

Instruction: Write True if the statement is correct and False if it is incorrect.

__________ 11. Ethics is a prime concern in marketing, and the areas of price,
placement, and promotion are no exception.
__________ 12. Misappropriation of trade secrets occurs when one competitor
uses espionage, bribery, or outright theft to obtain economically
advantageous information in the possession of another.

__________ 13. Promotions are designed to boost long- term sales by providing
irresistible value propositions to consumers.
__________ 14. Price collusion exists when a number of competitors agree to set
prices at a certain level, bypassing the natural market forces of
supply and demand.
__________ 15. Non- respect of agreements is a breach of contract.

15
 Additional Activities

Activity 7: Tell a Story

Instruction: Identify a small business or company in your locality with an
unethical practice/s. Write down a short case story on a particular
unethical practice/s that you have observed or experienced.

Company’s Name

___________________________________________

CASE STORY:

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Answer Key

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References

Books:

Jerusalem, Violeta L.,et al. (2017).Business Ethics & Social

Responsibility: Concepts,Principles, & Practices of Ethical
Standards. Fastbooks Educaional Supply, Inc.

Orjalo, Victoria G.,et al. (2016) Business Ethics and Social

Responsibity: Principles, Policies, Programs, and Practices.
Phoenix Publishing House.

Zarate, Cynthia A., (2018).Business Ethics and Social Responsibility

for Senior High School. C & E Publishing, Inc.

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 DISCLAIMER
This Self-learning Module (SLM) was developed by DepEd – Division of
General Santos City with the primary objective of preparing for and
addressing the new normal. Contents of this module were based on DepEd’s
Most Essential Learning Competencies (MELC). This is a supplementary
material to be used by all learners in General Santos City in all public
schools beginning SY 2020-2021. The process of LR development was
observed in the production of this module. This is version 1.0. We highly
encourage feedback, comments, and recommendations.

For inquiries or feedback, please write or call:

Department of Education – Division of General Santos City

Learning Resource Management System (LRMS)

Tiongson Street, Brgy. Lagao, General Santos City

Telefax No.: (083) 552-8909

Email Address: depedgensan@deped.gov.ph

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