Business Ethics BS Commerce

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To what extent it is necessary for a company to follow ethics along with normal business operations in a society?

Actually both the multinational and local companies have to give special respect to business ethics while operating in a particular society. Multinational companies do special care in this regard and those companies deeply study the local norms and culture before entering a new country. For example, most of the multinational fast food restaurants including Chinese restaurants offer dishes and recipes that are more suitable and acceptable in our culture. Actually it is the following of ethical approach in business that gives a long term business advantage to a company. And if a company ignores moral and religious values in a country due to any reason, then it surely violates “virtue ethics” that you will study in later chapters. Those business models that only focus on profit were the old ones. In the modern day world, following of business ethics with social benefit for stake holders of society makes a positive impact on the business growth. This point of view is also supported from utilitarian and justice theories of business ethics.

Explain pre-conventional, Conventional and post-conventional stages with examples.

These are actually the stages of moral development in a human being as identified by Kohlberg’s research. Pre-conventional stage includes;

1. Punishment and obedience orientation

2. Instrument and relativity orientation Pre-conventional stage is the early childhood stage of moral development. Child formulates his actions based on negative physical consequences of something, like physical punishment and for his own physical needs like hunger etc.

For example, a child may avoid doing something based on his fear that his parents will punish him / her.

At conventional stage of moral development, child prefers fulfilling the expectations of others like family, peers etc. It has two more stages which are following,

1. Interpersonal Concordance Orientation 2. Law and Order Orientation One cares for social relations and legal obligations at this stage. This is the middle level stage of moral development that comes after pre-conventional stage as per Kohlberg’s findings. For example, an adult individual who is wise and literate about the society’s laws would try to maintain the social relations and would respect the laws as well. Third and last stage of moral development is post conventional stage that comes in a person’s life at the later stage. It is divided in the two more stages. 1. Social contract orientation 2. Universal ethical principles orientation At post conventional stage, person becomes aware of the need for due process in the society for maintaining relations. For example, one becomes more aware of the universally applicable ethical principles and their applications in the society.

What is moral reasoning?

Moral reasoning is basically a psychological phenomenon in which a person has to decide by using his logic that what is ethically and morally right or wrong in a particular situation. For example, a salesperson may gain a short term benefit by telling lye to his / her customers but that may harm the repute of his shop in the long run. So his moral reasoning will be his logical judgement to choose between the right and the wrong option in that situation.

Explain arguments for and against business ethics?

The major argument that favors ethics in business is that ethics are universal. So ethics should be applied in business as well. Some other philosophers support ethics in business and state that ethics don’t harm profit oriented approach in business. Profit oriented approach can be followed along with business ethics. The three arguments against the business ethics are the following, 1) First argument against business ethics is that a perfectly competition free market where profits are predefined will ensure the ethical behaviour in the market. 2) Secondly, from employees’ perspective, they are bound to follow the employer in their jobs. 3) Third argument is that obeying the existing law is enough for the business and there are no more requirements of business ethics parallel to the regulating law.

Explain the cost benefit analysis?

Cost benefit analysis is used in the utilitarian view. In following utilitarian cost benefit approach, you have to compare net social cost against net social benefits for justification of an action. If the net social benefits are more, then the action is justifiable from utilitarian view. For example, a manufacturing organizations / factory need to see whether it is polluting the surrounding areas environment and what control / consolidation measures it can take in this regard. Moral development of a person takes place over a period of time. It is a cognitive and learning process that a person goes through with the passage of time.

What is the difference between egalitarians and John Rawl’s Thoery of Justice?

Rawl’s theory of justice states that the just and fair distribution of benefits is based on the following two conditions / principles. 1. Every person has the equal right for basic liberties. (called principle of equal liberty) 2. There should be greatest benefits provided to the least advantaged persons in a society. This was also called difference principle. He also stressed equal opportunity for all the people in a society which is called the principle of equal opportunity. Those holding the view of egalitarianism support equality in human beings. They support equal distribution of benefits and burdens in a society.

Explain “law of diminishing marginal utility” and “law of increasing marginal cost”.

Principle of diminishing marginal utility means that consumption for each extra unit of a commodity will gives you lesser satisfaction / decreased utility than the previously consumed unit. For example, consider that you purchased one dozen of oranges for eating. While eating the first orange, you will feel satisfaction. But at the same time, each next orange that you will eat after it will give you lesser satisfaction or utility. This is an example of principle of decreasing marginal utility. Principle of increasing marginal cost explains the supply side phenomenon. It states that each extra unit of production for a commodity will increase the average cost of production for the manufacturer. For example, if a manufacturer of a commodity gets extra order for the supply of his commodity, then he will have to use additional production resources for manufacturing the extra product. And this will increase the average cost associated with the manufacturing process.

In what sense does Galbraith deserve a medal for freedom?

In the sense that a certain conception of freedom does underlie his thinking. This is what is called “positive” freedom. It means a condition whereby people are provided by government, and at the expense of other people, with what they could use to advance their lot. Such provisions would “free” them to move forward. The freedom of the American founders is quite different, mainly backed by a different idea of human nature. It is that people in communities require first and foremost not to be thwarted in their efforts to make headway in life. Others may not be conscripted into involuntary servitude to provide them with what they might need because if they are not thwarted by them, they will be able to do this on their own. Not equally rapidly, not to the same extent, perhaps, but if they only apply themselves, they will flourish without coercing others. Galbraith has never championed this kind of “negative” freedom. So his views are alien to the American political tradition. It is not surprising, then, that he receives the Medal of Freedom from President Bill Clinton, someone who has done nothing at all to further freedom in this truly American sense. To Galbraith’s minor credit, however, he did, a few years ago, finally admit that capitalism is a far better economic system than socialism. He did this only in the wake of the collapse of the Soviet Empire. And even then with great reservations and regret. He was asked, in an interview published in Alitalia’s October 1996 “in flight” magazine: “You spoke of the failure of socialism. Do you see this as a total failure, a counterproductive alternative?” He replies this way: “I’d make a distinction here. What failed was the entrepreneurial state, but it had some beneficial effect. I do not believe that there are any radical alternatives, but there are correctives. The only alternative socialism, that is the alternative to the market economy, has failed. The market system is here to stay.”

Internet privacy forms a subset of computer privacy.

Internet privacy consists of privacy over the media of the Internet: the ability to control what information one reveals about oneself over the Internet, and to control who can access that information. Many people use the term to mean universal Internet privacy: every user of the Internet possessing Internet privacy. People with only a casual interest in Internet privacy need not achieve total anonymity. Regular Internet users with an eye to privacy may succeed in achieving a desirable level of privacy through careful disclosure of personal information and by avoiding spyware. The revelation of IP addresses, non-personally-identifiable profiling, and so on might become acceptable trade-offs for the convenience that such users would otherwise lose in using the workarounds needed to suppress such details rigorously. On the other hand, some people desire much stronger privacy. In that case, they may use Internet anonymity to ensure privacy — use of the Internet without giving any third parties the ability to link the Internet activities to personally-identifiable information of the Internet user.

Why do companies develop ethics programs?

Ethics should govern all human activity; there is no reason to exempt business activity from ethical scrutiny. Business is a cooperative activity whose very existence requires ethical behavior. Another more developed argument points out that no activity, business included, could be carried out in an ethical vacuum.

Define at least five organizational factors of oligopolistic competition which lead companies to engage in unethical practices.

1. Crowded and Mature Market – When large numbers of new entrants or declining demand create overcapacity in a market, the resulting decline in revenues and profits creates pressures on middle-level managers. They may respond by allowing, encouraging, and even ordering their sales teams to engage in price fixing. 2. Job-Order Nature of Business – If orders are priced individually so that pricing decisions are made frequently and at low levels of the organization, collusion among low-level salespeople is more likely. 3. Undifferentiated Products – When the product offered by each company in an industry is so similar to those of other companies that they must compete on price alone by continually reducing prices, salespeople come to feel that the only way to keep prices from collapsing is by getting together and fixing prices. 4. Culture of the Business – When an organization’s salespeople feel that price fixing is a common practice and is desired, condoned, accepted, rationalized, and even encouraged by the organization, price fixing is more likely. 5. Personnel Practices – When managers are evaluated and rewarded solely or primarily on the basis of profits and volume so that bonuses, commissions, advancement, and other rewards are dependent on these objectives, they will come to believe that the company wants them to achieve these objectives regardless of the means. 6. Pricing Decisions – When organizations are decentralized so that pricing decisions are pushed down into the hands of a lower part of the organization, price fixing is more likely to happen. Price decisions should be made at higher organizational levels. 7. Trade Associations – Allowing salespeople to meet with competitors in trade association meetings will encourage them to talk about pricing and to begin to engage in price setting arrangements with their counterparts in competing firms. 8. Corporate Legal Staff – When legal departments fail to provide guidance to sales staff until after a problem has occurred, price-fixing problems are more likely.

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