business

Consumerism

• Definition: The advocacy of the rights and interests of consumers in their interactions with businesses.

• Purpose: Protect consumers from unfair business practices.

Collaboration in Business

• Partnerships: When two or more firms collaborate, they may form a new company for specific projects. Example:

  • One firm provides funding while another offers expertise.

• Collusion: Occurs when companies secretly work together to commit wrongful acts, like price fixing.

• Oligopoly: Market structure characterized by a small number of large firms. Key points:

  • Difficult for new firms to enter.

  • If one firm changes its pricing strategy (e.g., lowering prices), the others may follow suit to remain competitive, leading to potential losses for all companies involved.

Impact of Economic Events

• Price Fluctuations: Economic crises (e.g., COVID-19) can dramatically affect car prices. During such times:

  • New car deliveries decrease, which raises the demand and prices for used cars.

• Market Adjustments: Companies may struggle to retain profitability when stuck in a cycle of price cutting without sufficient consumer demand.

Ethical Dilemmas and Responsibilities

• Whistleblowing: Employees who see unethical practices must consider whether to disclose misleading or harmful actions in their company. Examples include:

  • Knowledge of defective products like harmful baby formula.

  • Insider trading based on unpublicized information that affects stock value.

• Insider Trading: Selling stock based on private knowledge (e.g., knowing that FDA approval will not be gained), which is illegal.

  • Case study: Martha Stewart faced legal issues for misleading the FBI related to insider trading, despite selling stock based on her knowledge about company performance.

Financial Mismanagement

• Improper Financial Practices: Example include:

  • High executive salaries and bonuses misleading financial statements.

  • Hiring of family members for high salaries leading to conflicts of interest.

  • Check Kiting: Process of writing a check from one account and depositing it in another to create an illusion of funds, manipulating financial records.

Byproducts in Production

• Definition: Byproducts are secondary products resulting from manufacturing processes that are usually not intended but occur inadvertently.

• Ethics of Counterfeit Goods: Issues arise when consumers unknowingly purchase counterfeits, often disguised as authentic products.

  • Counterfeiting can severely mislead consumers and damage legitimate businesses.

Ethical Issues in Advertising

• Types of Ethical Issues: There are various ethical dilemmas in advertising that companies face. Notable concerns include:

  1. Misleading claims about product effectiveness.

  2. False representation of product origins or quality.

  3. Exploiting vulnerable populations or creating fear-based marketing.

  4. Lack of transparency in sponsorships or endorsements.

• Environmental Ethics in Advertising: Companies may buy credits to offset environmental impact while marketing products as 'green.'