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Business Ethics as Rational Choice

Business

Quiz 3 :
Initial Case Studies

Quiz 3 :
Initial Case Studies

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Suppose that when John Pepper discovered the espionage, he also discovered that very similar information appeared in the business media the day before the trash bins were raided. How does the analysis change?
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Case Summary:
The then chairman of PG (company that deals in FMCG products) Mr. JP in 2001 found out that some contractors of his company are spying the trash bins of its competitor, UL. Some of the 80 documents these contractors got from the trash bin that carried information regarding the hair care products of UL. JP confessed this espionage to the officials of UL and promised not to use this information. But UL demanded a compensation of $20 million and reassign some of PG's hair care managers. And also created restriction in some of the hair care products of PG. UL also asked PG to get the analysis done by the auditors that the company has not used any of the information taken from UL through trash bins.
Supposing that when Mr. JP discovered the espionage, he also discovered that very similar information appeared in the business media the day before the trash bins were raided then in this case the discovery changes the analysis of the case will definitely change. When the information that the contractors of PG spied already gets displayed in the media then PG has no responsibility over it because apart from its contractors, there are people from media or others who too got the information about UL's products and strategies through some sources. Thus PG does not have a responsibility for this espionage and should keep mum over the issue.

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In the previous exercise, suppose that shortly after the Unilever story appeared, other media outlets reported that the journalist paid a Unilever insider for the information, and the insider was fired.
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Answer:

Case Summary:
The then chairman of PG (company that deals in FMCG products) Mr. JP in 2001 found out that some contractors of his company are spying the trash bins of its competitor, UL. Some of the 80 documents these contractors got from the trash bin that carried information regarding the hair care products of UL. JP confessed this espionage to the officials of UL and promised not to use this information. But UL demanded a compensation of $20 million and reassign some of PG's hair care managers. And also created restriction in some of the hair care products of PG. UL also asked PG to get the analysis done by the auditors that the company has not used any of the information taken from UL through trash bins.
Supposing that a media reporter confessed that he paid an insider of UL to get the information shown over media about company's future plans and products and then this insider employee is fired then again the analysis will change.
In this case, the UL has to take a serious action and through investigation has to call on to understand the matter and resolve the issue that is making the company suffer. UL now has to take an internal analysis of its systems and has to once again create his honest and loyal people in the organization. Thus in this PG has no role to play because the media reporter has already confessed how by showing money he got the inside information of UL.

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Suppose that P G acquires secret Unilever marketing plans from an attached file that a Unilever employee mistakenly sends to a P G employee.
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Answer:

Case Summary:
The then chairman of PG (company that deals in FMCG products) Mr. JP in 2001 found out that some contractors of his company are spying the trash bins of its competitor, UL. Some of the 80 documents these contractors got from the trash bin that carried information regarding the hair care products of UL. JP confessed this espionage to the officials of UL and promised not to use this information. But UL demanded a compensation of $20 million and reassign some of PG's hair care managers. And also created restriction in some of the hair care products of PG. UL also asked PG to get the analysis done by the auditors that the company has not used any of the information taken from UL through trash bins.
Supposing that PG acquires secret UL's marketing plans from an attached file that a UL's employee mistakenly sent to a PG employee then in this case again there is no mistakenly role played by PG because the file and the information in it has been mistakenly forwarded to PG's employee. Also if PG will try to make the things clear with UL, there is no surety that UL will understand and appreciate the honesty by PG and will not take any action on PG. Thus in this scenario the analysis would be that PG is again clean and UL has to take thorough analysis of its internal systems.

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In the previous exercise, suppose that the attached file is deliberately sent to P G from a disgruntled Unilever employee who was fired for some other reason.
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Is all spying wrong? For example, is spying on another country for national security generalizable?
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Spy or customer ? Business Equipment Corporation (BEC) has developed a new technology that will enable it to launch a fax machine superior to anything now on the market. Kyle, product manager at BEC, goes into panic when he reads that Hiyota, a competitor, plans to release a new high-quality fax machine before BEC's product will be ready. Kyle must find out what the machine can do as soon as possible, so he can give the production department new specifications if necessary. He asks his marketing consultant Lynn to make an appointment with a Hiyota sales representative and pretend to be a customer. During their discussion, she will obtain copy samples and learn as much as possible about product features, pricing, and marketing strategy. Lynn is hesitant about the ruse and doesn't want to waste the sales rep's time. However, Kyle insists that it is perfectly legal because no trade secrets will be stolen. People do this sort of thing all the time, and it is Hiyota's responsibility to make sure information doesn't leak out before the product hits the market. Besides, sales reps are accustomed to unproductive sales pitches, and who knows, the rep may convince Lynn to buy the new Hiyotas for her company.
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It is argued above that returning a damaged car violates the sales agreement because the car is not in the same condition as when the agreement was made. Suppose Joe refutes this by pointing out that even if therehad been no accident, he would not have returned the car in precisely the same condition. The few miles to the restaurant would put some wear and tear on the automobile, but no one would say that the agreement was breached. Thus the fact that the car is returned in an altered condition is insufficient to show that the agreement is breached. What is the flaw in this refutation?
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There is a small chance that Juan will get in serious trouble with his boss when it is later discovered that the trade-in car is damaged. How might Joe argue that this does not affect the outcome of the utilitarian test?
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Suppose Joe grants that if sellers always delivered damaged goods when the damage is inconspicuous, buyers would check carefully. But he, in particular, would still be able to deliver the damaged car, because the dealer would have already checked the car carefully and would not check again. Let's suppose Joe is right about this. Why does his action still fail thegeneralization test?
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You engage a real estate "agent" (actually, broker) to help you find a house in an unfamiliar city and give her the price range. She only shows you houses that are at the upper end of the range, because her commission is a fixed percentage of the sales price. Does her conduct conform to professional ethics?
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Pricey insurance. Mark, an insurance salesman, is concerned about the product he sells most. It is a "whole" life policy that provides death benefits, retirement savings, and a fund that can be accessed in an emergency. The problem is that it is not a good deal for the young families who buy it from him. They would do better to buy a "term" life insurance policy, which provides only a death benefit, and use the savings to buy an annuity. On the other hand, term insurance and annuities are much less profitable for the company, and the sales commission is therefore much less. Mark's commission on a whole life policy is 110% of the first year's premium. Mark can support his family only by selling a substantial number of these policies. Is Mark living up to professional and other ethical obligations?
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It is often said that if there is risk associated with a medical product, there should be full disclosure of that risk. Can you defend this claim using the conditions for rational choice, even when disclosure is not required by law?
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A pharmaceutical company has developed a remarkably effective headache remedy and is deliberating whether to market it over the counter or as a prescription drug. Over-the-counter sales would be more profitable and would reach far more headache sufferers. However, the medication doesn't ease migraine headaches, the most severe type of headache. In fact, clinical trials suggest that for 10% of migraine sufferers, use of the medication results in twice as many headaches as before. The effect seems to be permanent, or at least to last as long as the trials. An over-the-counter label could carry a warning to migraine sufferers, but many of them don't realize that their headaches are migraines. If the drug required a prescription, doctors would dispense it only to patients without migraines. Would over-the-counter sales satisfy the Difference Principle? Hint. There are two groups to compare when applying the Difference Principle: those with severe cases and those with mild cases.
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A new flu medication can act as a cure or as a vaccine, but a curative dose is 10 times larger than a vaccination. The cure and the vaccine always work. Half of healthy persons who don't receive the vaccine will get the flu. The medication is in short supply. Health authorities can use all of it as a cure or all as vaccine, or some combination of the two. What allocation maximizes utility? What allocation(s) satisfies the Difference Principle? Hint. Utility is measured by the number of persons who don't get the flu. There are potentially four groups to consider when applying the Difference Principle: treated sick patients, untreated sick patients, vaccinated healthy patients, and unvaccinated healthy patients. The benefit to a group can be measured by the probability that a person m that group will get the flu.
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In the previous exercise, suppose that the vaccine works only half the time. What allocation maximizes utility? What allocation(s) satisfies the Difference Principle?
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A million persons nationwide have a chronic disease. A thousand of them have a rare, severe form of the disease that is fatal, and the rest have a mild form that gives them a headache once a week. A new bioengineered drug can cure a mild case or convert a severe case to a mild case. The drug is hard to manufacture and in short supply, and a severe case requires very large doses. There is enough to treat all the severe cases or all the mild cases, but not both. How should the drug be allocated to satisfy Rawlsian ethics?
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In the previous exercise, suppose that severe cases are not fatal but only-cause headaches twice a week. Everything else is the same. What is the ethical allocation? Hint. Examples such as this one suggest that a purely Rawlsian allocation may be inappropriate when the utilitarian cost is too high. This is an active research issue in ethics, particularly in the health area.
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Suppose the boss compromises and allows you to describe the list of performance results as a "sample" of results (it is, after all, a sample consisting of all but one). Does this change the analysis?
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Suppose the boss compromises some more and allows you to report only the average performance of the funds. Does this change the analysis?
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On sale next week. Bernie walks into an electronics store and tells Sam, the salesman, that he is looking for a particular model of flat-screen TV. The model is in stock and will in fact go on sale for l5% off the following week. However, Sam does not mention the upcoming sale to Bernie, because Sam's commission would be proportionately less. Is this ethical?
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