Group 4 Good Governance Project

GROUP 4
EBALANG, HARLYN
ENAYA, ASHLIE
ENTIA, JULIETO JR.
ETHICAL ISSUES AND PROBLEMS IN BUSINESS AND CORPORATE

WORLD
• The problem of fair pricing

• Trade secrets and corporate disclosure
• Product misrepresentation and caveat emptor
• The morality of labor strikes
• Whistleblowing
• Multilevel marketing (MLM) and pyramiding
Determining a Fair Price

Man is entitled to enjoy the fruits of his labor and as an effect
sets a price, he deems reasonable for his produce.
The Problem of Fair Pricing

Bargaining
Takes place in an open market where price is fair when it tends

to reach the lowest point possible due to strict competition.
Factors to be considered in Fair Pricing
 the cost of materials
 the cost of materials
 reasonable profit margin
Ethical Issues in Fair Price

• The true cost of the product is concealed.
• Suggested retail price.
• Use of electronic scanners
• Promotional Pricing
• Follow the leader pricing
• Price gouging
• Price fixing
Tarde Secrets and Corporate Disclosure
Trade secret
Is the legal for confidential business information. Examples of trade
secrets include customer identities and preferences, vendors, product
pricing. Trade secret protection is a must for any business. Reverse
engineering is the determination of someone else’s trade secret
information via examination and testing of publicly available information.
Example of Potential Trade Secrets
 A formula for a sports drink

 Survey methods used by professional pollster.
 Recipes
 An invention for which a patent application has not yet been
filed.
 Marketing strategies
 Manufacturing techniques
What is required to maintain a trade secret?

• Restrict access to the information.
• Limit the number of people who know the information.
• Have the people who know the trade secret agree in writing not
to disclose the information.
• Have anyone that comes in contact with the trade secret,
directly or indirectly, sign non-disclosure agreements.
• Mark any written material pertaining to the trade secret as
proprietary.
Advantages of Trade Secret Protection
 Unlimited duration -trade secrets could potentially last longer

than patents (20 years) and copyrights
 Your protection is theoretically worldwide.
 No application required.
 No registration costs.
 No public disclosure or registration with government agency
 Effective immediately
Famous Trade Secrets
 Formula for Coca-cola

 The Big Mac special sauce
 KFC Chicken Recipe
Corporate Disclosure
According to De George, the moral basis for corporate disclosure rests
primarily on the following arguments:
 Each person has the right to the information he needs to enter a

transaction fairly.
 Each person has the right to those action of others that will
seriously and adverse affect him or her.
PRODUCT MISREPRESENTATION, CAVEAT EMPTOR, AND THE

MORALITY OF LABOR STRIKES
PRODUCT MISREPRESENTATION
Misrepresentation of product features is what happens when a
manufacturer, seller, or dealer of a product intentionally makes false
or untrue statements regarding a product's capabilities or
characteristics. Features are often the main selling point of some
products. Misrepresentation of product features is what happens

when a manufacturer, seller, or dealer of a product intentionally
makes false or untrue statements regarding a product's capabilities or
characteristics. Features are often the main selling point of some
products.
What 3 things must be present for it to be a misrepresentation?

1. The defendant made a false representation of a past or existing
material fact susceptible of knowledge.
2. The defendant did so know the representation was false, or
without knowing whether it was true or false.
3. The defendant intended to induce the plaintiff to act in reliance
on that representation.
CAVEAT EMPTOR
Caveat emptor is Latin for "Let the buyer beware".
- The assumption is that buyerswill inspect and otherwise
ensure that they are confident with the integrity of the product
(or land, to which it often refers) before completing a
transaction.
- The phrase provides notice to a buyer that the property being
purchased may have unforeseen defects, and it puts the
responsibility on the buyer to perform due diligence before
closing the sale.
THE MORALITY OF LABOR STRIKE

LABOR STRIKE
- Is a work stoppage, caused by the mass refusal of employees to
work. A strike usually takes place in response to employee
grievances.
- Most strikes are about pay and better working conditions.
Without the threat of strike action, corporations will be able to
make bigger profits, while working conditions will get worse.
Strike is part of their bargaining tool.
What happens when workers go on strike?

Workers may choose to protest unfair wages or other issues
with their employer by going on strike. During a strike, workers do not
provide any services to the company that employs them. However,
there are rules against firing or otherwise retaliating against those
who decide to go on a strike.
WHISTLE BLOWING AND MULTILEVEL MARKETING

The term whistleblowing originated from the practice of British
policeman who blow whistles whenever observed commission of a
crime.
Whistleblowing is the act of an employee (or former employee)
disclosing what he believes to be unethical or illegal behavior to higher
management, to an external authority, or to the public.
Whistle-blower is a person who opens up, complains and report
the concealed misconduct, illegal and unethical activities happening
in the organization.
Laws are enacted to protect whistle-blower from retaliation by
the parties those are generally in power.
Whistle-blower Protection Act provide provisions put in place in
order to protect someone who express alleged wrongdoing. The
misconduct may take form of fraud or corruption which is against law,
thus it became necessary to safeguard one who works in good of
country.
Types of Whistle-blower
 External Whistle-blower
 Internal Whistle-blower
 Government Whistle-blower
 Corporate Whistle-blower
Multilevel Marketing (MLM)

The term marketing (MLM) refers to a strategy used by some
direct sales companies to sell products and services. MLM encourages
existing members to promote and sell their offerings to other
individuals and bring on new recruits into the business. Distributors
are paid a percentage of their recruits' sales. New recruits become the
distributor's network or downline and are, in turn, encouraged to
make sales to earn money.
Many MLM schemes are legal, but there are also illegal
operations that are run as pyramid schemes. This has cast some
negative light on legitimate MLM businesses.
A pyramid scheme is a fraudulent and unsustainable
investment pitch that relies on promising unrealistic returns from
imaginary investments. The early investors actually get paid those big
returns, which leads them to recommend the scheme to others.
Investors' returns are paid out of the new money flowing in.
Eventually, no new investors can be found and the pyramid collapses.
How Pyramid Schemes Work

Pyramid schemes are so named because their compensation
structures resemble a pyramid. The scheme starts with a single point
on top where the original members exist and becomes progressively
wider toward the bottom as people are recruited by every level of
recruits.

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GROUP 4

ETHICAL ISSUES AND PROBLEMS IN BUSINESS AND CORPORATE

• The problem of fair pricing

Determining a Fair Price

The Problem of Fair Pricing

Takes place in an open market where price is fair when it tends

Ethical Issues in Fair Price

Tarde Secrets and Corporate Disclosure

Example of Potential Trade Secrets

 A formula for a sports drink

What is required to maintain a trade secret?

Advantages of Trade Secret Protection

 Unlimited duration -trade secrets could potentially last longer

Famous Trade Secrets

 Formula for Coca-cola

 Each person has the right to the information he needs to enter a

PRODUCT MISREPRESENTATION, CAVEAT EMPTOR, AND THE

products. Misrepresentation of product features is what happens

What 3 things must be present for it to be a misrepresentation?

THE MORALITY OF LABOR STRIKE

What happens when workers go on strike?

WHISTLE BLOWING AND MULTILEVEL MARKETING

Multilevel Marketing (MLM)

How Pyramid Schemes Work

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