MODULE 4: FOUNDATIONS OF THE PRINCIPLES OF BUSINESS ETHICS

Philosophical Ethics
Facing an ethical dilemma is oftentimes an uncomfortable situation. In worse cases, it may compromise your credibility
and dignity. It can make you lose face or lose your job. In times when you need to assess a situation if you are about to do
the right thing, most people would naturally find the answer in their religious beliefs or the value system they grew up with.
However, this is a relative viewpoint, because if ethics is based on religion, and if different cultures have differing religious
beliefs. then what is ethically wrong in one belief may be ethically right in another.
Unlike religious ethics, which explains human well-being in religious terms, philosophical ethics provides justifications
that must be applicable to all people regardless of their religious viewpoints (Hartman, DesJardins, MacDonald 2014).

Study the following statements:

1. I will donate to Yolanda victims to help them rebuild their lives.
2. I will donate to Yolanda victims because God expects me to help other people.
Both involved the same action, but the first statement is a philosophical justification an ethical judgment, while the
second statement is primarily a religious reasoning behinds action.

Three Ethical Frameworks

Ethical Framework Source of Moral Activity

 Making decisions based on ethical consequences
Utilitarianism
 Results-based approach
 The ends justify the means
 Making decisions based on principle, and not just on consequences
Ethics of Principles and Rights
 The ends DO NOT justify the means
 Grounded on character traits and emphasizes moral character in contrast to
Virtue Ethics
moral rules or consequences of actions

The Classical Philosophers and Philosophies and Their Implications on Business

1. Socrates (469-399 BCE)- “The Gad-fly at the Marketplace” is one of the few individuals whom one could say have
shaped the cultural and intellectual development of the world for without him, history would be profoundly different.
This is Socrates’s philosophical idea:
“The unexamined life is not worth living.” Socrates pointed out that human choice was motivated by the
desire for happiness.
Socrates thought of the Entrepreneurs. The Socratic Method is a way of thinking that allows individuals
to define their own purpose of learning and exploring its purpose through open-minded questioning of what they
hold to be true. Socrates insisted on a right to think of us by introducing the philosophical concept, “Dare to
Disagree”.
2. Plato – “The Philosopher-King” is one of the world’s best known and most widely read and studied philosophers.
He was the student of Socrates and theteacher of Aristotle. He wrote in the middle of the 4th Century BCE in
ancient Greece. This is Plato’s philosophical idea:
“Good people do not need laws to tell them to act responsibly, while bad people will find a way around
the laws.”
Plato maintains a virtue-based eudemonistic conception of ethics. Happiness or well-being (eudaimonia) is
the highest aim of moral thought and conduct, and the virtues (aretê: excellence) are the requisite skills and
dispositions needed to attain it.
3. Aristotle – “All or Nothing” (384-322 BCE) is a towering figure in ancient Greek philosophy, contributing to logic,
metaphysics, mathematics, physics, biology, ethics, politics, agriculture, medicine, dance, and theater. These are
some of Aristotle’s philosophical ideas:
“Happiness is the meaning and the purpose of life, the whole aim, and end of human existence.”
“Let people seek fulfillment.”
The word happiness in ethics is a translation of the Greek term “eudaimonia” which connotes success and
fulfillment. For Aristotle, this happiness is our highest goal. In relation to business, Aristotle concludes that the role
 of the leader is to create an environment in which all members of an organization can realize their potential.

4. Immanuel Kant (1724–1804). “Duty based Ethics”. He is one of the most influential philosophers in the history of
Western Philosophy. He was not concerned with the consequences of one’s actions or the harm caused to one’s
individual interests. Instead, he is focused on motives and the willingness of individuals to act for the good of others,
even if the action might result in personal loss. Doing something for the right reason was more important to Kant
than any particular outcome.
For example, business ethics is littered with cases of companies that have suffered damaging crises due to
their leaders’ lack of commitment to act based on goodwill and about what benefits others.
5. Jeremy Bentham and John Stuart Mill- “Utilitarianism” revolves around the concept of “the end justifies the
means”. It believes that outcomes, as a result of an action have a greater value compared to the latter.
Utilitarianism is a philosophy or belief suggesting that an action is morally right when the majority of people
benefit from it. Also, the doctrine that an action is right as it promotes happiness, and that the greatest happiness of
the greatest number should be the guiding principle of conduct. Utilitarianism is a moral theory that advocates
actions that promote overall happiness or pleasure and reject actions that cause unhappiness or harm. A utilitarian
philosophy, when directed to making social, economic, or political decisions, aims for the betterment of society.

Utilitarianism: A Consequentialist (Results-based) Approach

Utilitarianism is also called the consequentialist approach to ethics and social policy-that each one should act in
ways that produce better consequences or results, regardless of the means taken to reach those results. "Better
consequences" are results that promote huma well-being such as happiness, dignity, health, integrity, freedom, and
respect for all the people involved or affected. This approach also upholds the following principles:
1. A decision is morally right if it promotes the greatest good for the greatest number of people.
Example: The new environment secretary was approached by several mining business magnates to provide them
with mining permits. However, the applications for mining permits were rejected because the new environment
secretary believes that the mining activities will have severe negative impacts on the environment.
2. It is morally right if the net benefits over costs are greatest for all people affected, compared with the net benefits
over costs of all other possible choices.
Example: The new transportation secretary, in the pursuit of solving traffic problems in Metro Manila, came up with
a permanent solution. However, this solution will require shutting off the MRT operations for one year. Other
solutions, on the other hand, will just be temporary and will just ignite angry commuters more because of the
frequent breakdown of the MRT coaches that can happen over a longer period of time, with no clear resolution to
the problems.
3. It is morally right if its benefits are greatest for each individual and if these benefits outweigh the costs and benefits
of alternatives
Example: The aggressive drive of the government to apprehend drug addicts and rehabilitate them will not just
benefit the drug addicts themselves but also their families and society.

Utilitarianism can be categorized as rule-based or act-based utilitarianism.

Two Types of
Rule-based Utilitarianism Act-based Utilitarianism
Utilitarianism
General principles are used in deciding on the The decision is based on the likelihood of
Definition greatest benefit that can be achieved from an achieving greatest utility or good by analyzing
action. actions or behavior.
Key Uses analysis of particular actions or behavior to
Uses rules to determine ethical behavior.
Concept(s) determine what is the best behavior.
 An employee of a company that manufactures
milk tainted with melamine (a toxic industrial
compound that gives the appearance of higher
Companies usually have a confidentiality clause,
protein content when added to milk, which causes
where employees who share trade secrets,
protein deficiency and malnutrition leading to
Application in formulations, company documents, etc., may be
infant deaths) may choose to divulge this
Business given sanctions or terminated when they divulge
information to the media or public to save babies
this information to a competitor or to the public.
from dying. While it violates the confidentiality
clause of the company, the employee may feel
that he or she is doing the right thing to serve the
greater good of more people.

Utilitarian concepts are widely practiced in the government and business environments, because utilitarianism
considers both the collective interests as well as some interests, analyzes and formulates alternative choices based on the
greatest good of everyone involved in the decision, and estimates the costs and benefits of alternative choices for the
affected groups. Since the consequences of each action will depend on the specific facts of each situation utilitarianism
tends to move toward practical thinking. No act is ever right or wrong in every situation if it produces the greatest good for
the greatest number of people. Ultimately, utilitarianism's goal is to achieve the best consequences for all parties involved in
the actions.

Utilitarianism and Business Decisions

Utilitarianism answers the fundamental question "What should we do?" which is always applicable in business because
of the many decisions that need to be done. In reference to maximizing overall good, business organizations are always on
the lookout for conducting cost-benefit analysis and making a decision based on the maximum benefits that can be
achieved with minimal costs.
Business organizations can use utilitarianism by identifying the different stakeholders that will be affected by a decision,
calculate the costs and benefits for each group, and decide on a course of action that will generate the greatest good for the
greatest number.
In the example provided in table, when an employee found out that melamine is being used in the milk that his or her
company manufactures, there are different stakeholders that will be affected by divulging this information:
1. The consumers will benefit from the employee's action as the company will most likely be shut down, or the milk
manufactured will be withdrawn from the market, so the babies will stay safe.
2. The company may be closed down.
3. The employees will lose their jobs.
4. The suppliers of the company will lose a client.
5. The environment may benefit if the company has dismal manufacturing practices.

By assessing the effect utilitarianism will have on the different stakeholders involved, the management or the governing
body can take action on the situation.
However, there are also challenges in using utilitarianism in making decisions.
1. There really is no exact definition of "good" for all concerned, and there is no agreement on who decides, whose
interests are prioritized in decisions, and for whose good it is that must be considered
2. It will be hard to quantify the costs of nonmonetary stakes and long-term effects of an action.
3. While utilitarianism considers the collective interest, there are times when individual interest may need to be
prioritized

Ethics of Principles and Rights

Considering the greatest good in decision-making is an ethical way of arriving at a decision, but it is also important to
consider principles and not just consequences This explores the relationship between legislative and judicial branches of
government legislative role creates policies and regulations based on utilitarian principles, while judicial role enforces these
laws to achieve justice and fairness. The second framework in this ethical philosophy is that some decisions need to be
made based on principles rather than consequences. For example, paying a bribe to customs will promote greater good for
the stakeholders, as follows:
1. The company will be able to process the raw materials immediately so they can be turned into products.
 2. The consumers will not experience delay in enjoying the products
3. The customs officials will receive additional compensation that they can use to feed their families.

However, the Philippine Constitution Republic Act No. 3019, or the Anti-Graft and Corrupt Practices Act, prohibits public
officials from receiving any gift in exchange for a favor. Thus, paying a bribe is not ethical based on ethics of principles and
rights.
Aside from the law, there are also rules, duties, and guidelines set by organizations and institutions which a member
must follow. As a student, it is your duty to pass your subjects and not to cheat on the exams. As a daughter or son, it is
your duty to follow the instructions of your parents. As a friend, you are not to spread gossip about your friends. As a church
member, you follow the rules on dress code or proper conduct during a church service. Employees of an organization also
follow set rules and regulations formulated by the company. These rules serve as a social agreement or a contract that
helps you function and get through you relationships with people.

Virtue Ethics
Virtues can be described as the character traits that would constitute a good and meaningful life. Being happy, friendly,
joyful, and calm; preserving integrity and dignity; having good relationships; and possessing modest things are a few of the
characteristics of having a meaningful life.
Virtue ethics is grounded on character traits and emphasizes moral character in contrast to moral rules (deontology) or
consequences of actions (consequentialist approach in utilitarianism). It has roots in ancient Chinese and Greek philosophy
and is recognized to have been established by Plato and Aristotle. It focuses on the type of person you want to be grounded
on good character, motives, and core values, and not on the actions at should be taken.

Impacts of Different Belief Systems on Business Ethics

Human beings have different personalities, different goals, different values, and thus, have different belief systems.
Companies with cultural diversity welcome people with different backgrounds from different cultures. These different
backgrounds, especially religious orientations or belief systems, have impacts on business ethics.
 Christianity
The Christian religion follows the Hebrew Bible by taking a positive view of physical and human creation
and by seeing God as deeply concerned with the ethical behavior of human creatures towards one another. It also
teaches that in the persona of Jesus of Nazareth, Christ entered history to redeem humanity from the self-inflicted
wounds of sin and to create a new age in which humanity will come to live God's own life of love, peace, unity and
justice. The Old and the New Testaments serve as the foundation of this religion.
In Christianity, human dignity and concern for people are crucial. This religion also emphasizes a sense of
justice in business such as strict adherence to contracts, compliance with regulations, and working for the benefit of
the common good. Christians ought to focus on how business impacts individuals, the workers in particular. They
should be well-paid and they should find their work meaningful and inspiring.
A trading Christian does not try to win another's products or services for less than it is worth. One should
not want to get a decent deal for his own wares by using extortion. If a person buys from a poor seller, that buyer
must exercise charity and justice. He/she must pay the full price that the goods are worth. If friends and relatives
are not interested in what a Christian vendor sells, the latter should not break off connection with them when they
decided to choose differently.
Christians should be transparent and honest with their dealings, products, and services. They should not
push people to buy goods or services because it does not reflect the heart of the Father, but that of mammon’s
(according to Webster Dictionary, mammon means material wealth or possessions especially as having a debasing
influence).
 Judaism
Jews believe there is one God, who not only created the world, but who every Jew should have an intimate
and interpersonal relationship with. They believe that God works continuously in the world and affects all that
people do. Further, there is a covenant relationship between God and the Jews in exchange for the many good
deeds God has done for the Jewish people and continues to do.
Judaism, which for its written law relies on the Torah, has greatly influenced marketing and business
ideology. Jewish culture, values and ideas, including the modern market, have penetrated many aspects of modern
life. Some important points include market honesty, fair pricing, and business relationships.
Honesty on the market. It is illegal for traders to falsify the weight and measurement of the goods or
products.
 Fair pricing. There should be good value for money. You shall not cheat each other when you sell
something to your neighbor or buy something from him or her. Likewise, if a person is ignorant of the true worth of
an item and wants to sell it, the buyer should not take advantage of the confusion and underpay the seller. The
Talmud (comprehensive written version of oral laws of the Jews) cares much about price control.
Business relations. Employers are obligated to pay workers on schedule. One of the guiding principles for
business ethics highlighted in the Jewish tradition is the legitimacy of business activity and profit, conducted within a
framework of religious and ethical norms.
Truly, business ethics occupies such important place in Jewish laws, culture, and tradition that at the final
judgment, the Talmud has this to ask an individual: "Were you honest in your business dealings?"
In Judaism, work, including manual in nature, is held in great esteem like a sort of human partnership with
the divine.
 Islam
Muslims believe in the Oneness of God—- that all things are created by God and that He is all-powerful and
all-knowing. They further believe that God has no offspring, sex, class, body, and He is not affected by human life's
characteristics.
For Islam, the source of rules is the Qur'an. Islamic teachings place great emphasis on respect for ethical
and moral codes in human behavior. Islamic principles prevent abusing people through putting restrictions on
misleading advertisements. Under Islamic law, if a seller sells an item by making false statements, the buyer shall
have the right to cancel the transactions.
Additionally, according to Hayes (1998), the following principles are expected among Muslim businessmen:
a. Contracts must be fair to both or all parties.
b. Speculation, such as gambling, is not allowed. If the money comes from the gambling industry, one
will not be allowed to invest in the Islamic Mutual Fund.
c. Interest is prohibited. That is probably the most common thing that is identified with Islamic finance.
One moral practice is that one is not allowed to charge or take interest.
d. When a business is in trouble, compassion is required. In every country that has Islamic traditions in
its legal system, when anyone is in bankruptcy or is suffering financial reversals, one should not put
pressure on them. Because when someone is down, it is not the right thing to do. When they are
down, one does not kick them.

Muslims also believe that business should be conducted in accordance with the rules of nature which God
governs.

 Buddhism
Founded on the teachings of Siddhartha Gautama, who is called “Buddha” or “the enlightened one”, is
Buddhism. From the beginning, the basis of Buddhist practice was meditation and the observance of moral
precepts. The five fundamental moral precepts practiced by members of the monastic orders and the laity are:
refraining from taking property, behaving unchastely, speaking wrongly, stealing, and drinking intoxicants.
In business, Buddhists are guided by the following principles:
a. The goals should be defined. The clearer the goal is, the easier it is to be defined. Is it about gain? Is
it giving satisfaction to your customers?
b. The principle of cause and effect should be followed. We need to use intuition in the case of a
business proposal to work out the factors that would take us to our ultimate aim. The process
resembles reverse engineering. We begin to trace back the logical sequence of acts which would
contribute to a given goal. This framework helps identify the steps needed to accomplish the aim
and provides a clear basis for a project roadmap.
c. Empathy and compassion for the customers have to be developed. It is crucial to understand the
challenge that our potential customers may encounter, and to have an empathic approach towards
it. We need to recognize and always keep in mind the problems that our target customers have in
their life and try to solve this issue in the best possible way based on that understanding.
Compassion is the basis for a customer-first or a user-centered approach in business.
d. Be flexible, innovative, and mindful of impermanence. Buddhist theory puts into practice another
useful insight: everything is constantly changing—we ourselves, the world, and all the people around
us. It is very easy to get caught with an idea that seems logical and solid, but it often becomes a
trigger for narrow-minded thinking, stubbornness, and inflexibility in a rapidly changing reality.
 e. Your team, yourself and the consumer have to be respected. The Buddhist ethics is based on the
non-violence principle. They know everyone deserves to be happy and does not want to struggle. If
we base our actions on that understanding and try not to harm others, we gain their respect and
confidence. It brings trust and understanding in the team if we respect our colleagues. We try to stop
doing something offensive behind or in front of people and make ourselves transparent.

The Buddhist business code and professional ethics are also closely tied to being environment-friendly.
Buddhists pursue the "right livelihood" and are usually against businesses that do not really care for the
environment or harm animals. Essentially, according to Buddhist teachings, the principles of ethics and morals are
governed by examining a certain action that must avoid any harm.

 Hinduism
Hindus believe in one true, formless, boundless, all-inclusive and eternal God called Brahman. He is not an
abstract concept but a real entity that everything in the universe (seen and unseen) encompasses.
Hinduism is not an organized religion, and its value system has no single, systematic approach to teaching
nor do Hindus have a simple set of rules, like the Ten Commandments to follow. Whatever practices (local, regional,
caste and community-driven)—throughout the Hindu world influence the interpretation and practice of beliefs.
Hindus have a positive attitude towards business and wealth creation, yet wealth is not the ultimate goal.
What is more important are ethics (dharma), and salvation (moksha).
For business, prices and profits should be fair. Tax system should give reasonable rates, should be
economical in its implementation, and should not have adverse impact on economic growth. There must be high
taxes on luxury goods. Workers should receive fair and just wages, depending on their ability and productivity.
It is worth noting, overall, that every faith has its own biases. Nevertheless, each of them has the core
concept that faith would give rise to a commitment to maintain a desirable work climate. This is why our society
cannot remove the effect of religion on modern business. We should be mindful of disparities in beliefs among
various cultures and accept them. While there are global ethical standards, we must also show respect for each
community's different values.

Impact of Filipino Practices and Belief Systems on Business Ethics

Filipinos have their own unique culture and practices. These form part of our identity as a nation and our character as a
race. With very rich cultural heritage, we enjoy a value system that is diverse and different. However, some of our practices
may actually have an impact on business organizations.

1. Bahala na
There is no exact English translation for Bahala Na. However, there are several interpretations for this. The first
one is that Bahala was derived from the word Bathala, who was worshipped by the Filipinos during the Pre-Spanish
period. This belief in putting life in the hands of God may be a symbol of how devout Filipinos can be. They just leave
everything to God, including their problems and their sufferings. They are fatalistic, putting their lives in the hands of
fate.
On the other hand, according to Lagmay (1977, as cited in Pe-Pua et al., 2000), Bahala Na is determination and
risk-taking. He said that when Filipinos say “bahala na”, they are ready to face every difficult situation and are
determined to achieve their goals or objectives. When they mention those words, it is like they are getting courage or
strength into their system, and they will not surrender.
In business, you cannot just put its life in the hands of fate. Everything must be carefully studied or planned;
otherwise, all of your efforts will go down the drain.
2. Utang na loob
Gratitude or utang na loob is typically embedded in the Filipino culture. One should not forget to consider the good
acts others may have done particularly in times of great need. Many times, this debt of appreciation is violated by
others who have served us good. With this system, people are forced to do something in exchange for favors that
others did.
Business is affected by this so-called utang na loob especially if the businessman has faced ethical issues.
3. Ningas-cogon
Ningas is a noun that means flame, burning, or fire, while cogon is a plant that can be quickly burnt with its
presence. Ningas cogon means the swift burning of cogon, which connotes the eagerness of the Filipinos just at the
beginning, but then rapidly lose interest shortly after it begins, or lack of follow-up.
 Same thing could happen in business. The enthusiasm is there at the start of the venture but since it is not one’s
inclination, then he/she gradually loses his/her interest.
4. Padrino system (palakasan/patronage system)
Padrino system, or patronage in Filipino culture and politics, is the system of value in which one gets support,
endorsement, or political appointment through family affiliation (nepotism) or friendship (cronyism), as opposed to one's
worth.
Meaning, the owner or manager hires friends or relatives regardless of their qualifications. This could cause conflict
inside the enterprise and eventually could also be the reason for losing the more qualified employees or workers. This
system in the Philippines is the root cause of numerous scandals and corruption.
Businessmen can quickly get business deals using padrino system if the padrino poses as go-between presenting
and vouching his character to close the deal.
5. Amor propio / self-respect
Amor propio is a Spanish term meaning caring for oneself, or self-love. It is a feeling of self-esteem or self-respect
that prevents a person from swallowing his or her pride. Sensitivity to personal insult or offending situations is included.
In business, Filipino customers are normally sensitive to hear a No for an answer, hence, one will get a Yes but
might be disappointed afterwards.
6. Mañana habit
The Spanish word mañana means tomorrow or the future. It is also known in English as procrastination and as
mamaya na in Filipino. It might just as well mean putting off something until another time. This habit has made Filipinos
less efficient and less energetic in doing the task.
In business, mañana habit could lead to less efficient workforce. It could also lead to losing customers in case one
is into delivery business. When he/she always postpones doing something, his/her loads of work could pile up and that
could give him/her (and his/her co-workers) too much stress.
7. Delicadeza
Delicadeza is a Spanish term which when translated into English means daintiness. It is defined as acting in a
manner which is refined or being delicate in taste. Often, it may mean good decorum or absolute obedience to what is
right, legal, or ethical. Perhaps it can be better understood by saying walang delicadeza or makapal ang mukha (thick-
faced) for those who do not have it.
In business, it is best to do what is right, what is legal, and what is ethical. After all, goodwill attracts good vibes!
8. Hiya
Shame or hiya is a common Filipino value. This is a sense of social propriety and it conforms with established
cultural standards. Filipinos feel they ought to live up to agreed moral expectations and if they fail to do so, they add
dishonor not just to themselves, but also to their families. If anyone is publicly humiliated, insulted or fails to meet
standards, they may feel ashamed and they lose their self-esteem.
Shame or hiya also happens in business. For example, one sells rice and other consumables. Now here comes
his/her close friend requesting one sack of rice to be paid at the end of that month. On the due date, it is the seller who
is even ashamed to remind his/her close friend of the latter’s obligation.
9. Pakikisama/pakikipagkapwa-tao
Another Filipino characteristic is loyalty, or pakikisama. That is a shared understanding of the other person's
personality and consciousness. It treats others as equal, and with respect and integrity. This is simply a realistic
translation of the pakikipagkapwa-tao in industry since the aim is to deliver useful products and services to others so
that their standard of living would get better.
In business, for example, Pedro is a sole proprietor. His cousin approached him and was trying to borrow P5,000
for an emergency reason. Because he had no personal cash that time, out of pakikisama, he got the amount of P5,000
from his business collection and lent it to his cousin.
10. Family orientation
Philippines is recognized as a family-centered country. The Filipinos consider their family as an important social
structure which they have to look after. They put premium on their family's safety and unity. The practice of nepotism is
evident (members of the same family employed in the same enterprise). It is the closeness of the Filipino families that
makes them the model of most business organizations.
However, in business, it is said that it is not advantageous to hire relatives because one cannot just easily fire
them even though he/she is dissatisfied with their work performance.
11. Suki system
Suki is a Tagalog term which means loyal customers. Here, there is a customer-supplier relationship that is built.
Normally, the supplier would give discounts, good quality products or service, or even “credit line” once the trust is
earned.
12. Bayanihan/team spirit
The bayanihan is a Filipino term which originated from the word bayan meaning town or community. Later on,
bayanihan meant "being a bayan" and is being used to refer to a spirit of unity within a group, or individual cooperation
and joint efforts.
The adage "no man is an island" is even more true, and even critical in business world – where interactions and
the willingness (or unwillingness) to collaborate with others will make or break a business. It is in bayanihan where
one's local environment is a vital tool. And that it will help his/her people and his/her company get ahead by harnessing
the strength of his/her own people.
13. Palabra De Honor
Palabra de Honor is a Spanish word meaning "Word of Honor". This is an individual's unwritten promise to
someone to do or not to do something. Palabra de honor needs a sense of truthfulness and honesty in every Filipino.
We have to respect our words by upholding our promises, even without any legal document.
In business, for example, when one promised his/her employees of a salary increase after six months of working
in his/her enterprise, then he/she should really give them an increase when they have reached six months.
14. Lakas ng loob
Courage or lakas ng loob, is the strength of mind or spirit that enables a person to meet challenges, situations, or
pain bravely or without fear.
For example, in one’s desire to expand his/her business, he/she got a loan from a commercial bank payable in five
years.
15. Pakikipagsapalaran
Pakikipagsapalaran or being venturous is the ability of a person to take risks, even if they are prone to a potential
loss.
For example, even without an experience in selling, one ventured into an online business this time of pandemic by
just following some ideas coming from his/her friends.
16. Frugality/pagtitipid
This is known as economical management of resources, being careful in spending, and avoiding unnecessary
expenses.
For a small business, frugality is really important. One will save his/her money effectively by living frugally and by
managing his/her spending. When business starts to succeed, there is a tendency to overspend so it is an advantage if
he/she knows how to control his/her expenses.

Ways to Improve Business Practices Guided by the Philosophies, Belief System, or Filipino Values
As a business owner, you are probably aware of where your business could improve. Sometimes business owners
want to improve their business but are not sure how to begin. This is an overview of some key steps you can take to start
improving your business.
Assess your situation
Before you start making changes, it is a good idea to make sure you have a full understanding of the factors
affecting your business success. These may include your current business practices, market trends, or changes to the
wider environment in which you operate.
Tools that can help you assess your business' situation include:
 SWOT-analysis — helps you identify your business' strengths, weaknesses, opportunities, and threats.
 Benchmarking — measures your business’ performance against similar sized businesses in your industry.
 Market research — investigates your business' market and industry to identify trends, changes, and customer or
client demands.
 Trend analysis — uses business data collected over time to identify consistent results or trends.
 Webinars (web-based seminars) — provide useful information to help develop your business skills.

Set clear goals

Business goals can be as broad or as specific as you want them to be. Writing down your goals clearly will make it
easier for you to achieve them. Make sure your goals are S.M.A.R.T.:
 Specific — state clearly what you want to achieve.
 Measurable — make sure you can evaluate the success.
 Achievable — check if your objective is something you have the time and resources to meet.
 Relevant — make sure your objectives improve profit drivers and improve some part of your business.
  Timely — set a specific date for completion.
Once you have written down your goals, you should prioritize them to decide which ones to focus on first. Some
goals may need to be more urgent than others.
It is also important to recognize that some goals will need to be addressed with a long-term strategy as you will not
be able to meet them immediately because of resources, finances, or time.

Identify strategies for achieving your goals

Review your goals and list the factors you think are creating your current circumstances. Think about what strategy you
could use to improve the situation.
Depending on the goals you are trying to meet, you may want to think about using the services of a business
professional such as a professional trainer, contractor, or business adviser. Think realistically about what you can do
yourself and where you may benefit from some support.

Develop a plan for implementing your strategies

To achieve your goals, you need to work out how to implement your strategies. Strategies often include several specific
actions or tasks. It is a good idea to develop a plan on how you will do this.
Write your plan in a format that suits you. It should include:
 a time frame — how long a task will take to complete as well as the start and finish dates.
 actions — state the individual actions as precisely as you can.
 responsibilities — assign accountability for each action so everyone knows precisely what you expect from
them and who is responsible for ensuring the work is done.
 resources — list budget, staff, or supplies needed to complete each action.
 a desired outcome — state how you will know that the action has been completed.

When you have developed your plan, you might want to also update your overall business plan.

Measure the results

Establishing how you will measure the results that you want to achieve may be as simple as checking what you have
completed. With larger goals, you may have to establish a more complex measurement process like increasing profit by a
set percentage, or gaining a particular number of new clients. With these types of goals, it can also be useful to set points to
measure their success as you are working on them. This will help you keep your plan on track.
Consider how often you want to measure your business achievements. This can also help you set new goals regularly.
Learn more about measuring the success of your innovation.