The issue of legality when it comes to price gouging in America is very cut and dry, it is not acceptable. A community where everything is functioning normally rarely comes face to face with this problem anyways because the market (consumers) can adjust the price by simply not buying high priced products and opt for the less expensive alternative. The question I pose today is what happens if a natural disaster hits an area and a lot of the industry in the area takes a hit? The area is now exposed to things that were once unimaginable and with a scarce amount of resources what are merchants to do? "This opens up a whole range of interesting questions about what ethical rules apply to business in the absence of law and order.", Chris MacDonald says.
This seems like an irrational situation but when Hurricane Katrina struck the city of New Orleans there were news stories talking about multiple merchants "price gouging" and charging unfair prices to the civilians and when the earthquake struck Haiti a few months ago there were similar claims of price gouging against merchants as the price of a gallon of gas went from $0.30 to $1.20 an increase four times over. On the surface this issue seems cut and dry under our American price gouging definition but in a time of disaster can the definition be bent or twisted?
Under normal circumstances I would say an increase from $0.30 to $1.20 a gallon would be an example of price gouging, but let's step back and think for a second. This disaster has put all people, including the merchants, under great stress and they have possession of a desired resource. Is it not fair that they sell their product at a higher cost to compensate for higher expenses in the time of disaster and heightened demand? If this is not acceptable what is going to stop them from packing up shop and hoarding their product and keep the public from accessing it completely?
Obviously this issue is less cut and dry in a situation where disaster has occurred and there are many underlying ethical issues to evaluate. As with the topic of business ethics as a whole the issue of price gouging in these situations can be seen from both sides and there is ample information to support either side in these situations.
http://www.businessethics.ca/blog/2010/02/is-ethics-profitable.html
Wednesday, March 10, 2010
Tuesday, March 9, 2010
Ethics and Other Cultures
While I was reading a case study for one of my other classes I stumbled upon the idea of different cultures, specifically the Chinese, and their code of ethics when in negotiations or dealings with us Americans. This sparked my interest and I learned a lot about ethics on an international stage.
China was, and still is, one of the world's fastest growing economies and this case study talks about the early to late 90's and the perception of China. Most American corporations wanted a slice of China's massive 1.2 billion person population and competition for market share was intense. As a foreigner traveling to another country you had to know in what ways were the people you were meeting wuth different and what went through their heads. Preparation is the key to almost anything in business and there are many things about the thought process of the Chinese businessman in regards to ethics that must be taken into consideration to consider yourself prepared.
Business meetings in China operate in a completely different manner than here in the states. The Chinese read into eye contact and react to certain phrases like, "Do we have a deal?" in unorthodox manners. The Chinese hate to have demands placed upon them and for the most part it is your responsibility to understand and respect your counterpart. With that said you cannot simply concede things and roll over just to please them. The case study says the Chinese try to take advantage of perceived weaknesses and "retreat" is one of them. The case continues to talk about the role of deception and its role in negotiations. "Bing Fa texts define victory as follows: Victory is to be achieved through any means, and deception of the opponent plays a vital role in the strategy of war." The Chinese are not afraid of using deception to get what they want, common forms are hiding the truth in which the company can address false strengths of weaknesses or a bait and switch tactic. Americans have to leave their sense of self-pride at the door and realize when these types of tactics are in play, if you don't the Chinese can simply take you to the cleaners.
When we think of a business deal we think of clean, truthful negotiations, granted every once in a while a bad apple gets thrown into the bunch. We see tactics like hiding the truth and bait and switch implemented all the time in our culture but the average person, like the savvy business person must know to realize it and not be taken advantage of. Sure in our minds the Chinese should be more upfront and try not to take advantage of their counterpart but in today's world sometimes you have to in order to survive in our capitalist market. Sure the Chinese don't display the most ethical tactics, according to the article, but if they can put themselves in a better position with these tactics, legally, and their counterpart agrees, is it bad ethics or good business?
Strutton, David, and Lou Pelton. Scaling The Great Wall: The Yin And Yang Of Resolving Business Conflicts In China. Rep. 1997.
China was, and still is, one of the world's fastest growing economies and this case study talks about the early to late 90's and the perception of China. Most American corporations wanted a slice of China's massive 1.2 billion person population and competition for market share was intense. As a foreigner traveling to another country you had to know in what ways were the people you were meeting wuth different and what went through their heads. Preparation is the key to almost anything in business and there are many things about the thought process of the Chinese businessman in regards to ethics that must be taken into consideration to consider yourself prepared.
Business meetings in China operate in a completely different manner than here in the states. The Chinese read into eye contact and react to certain phrases like, "Do we have a deal?" in unorthodox manners. The Chinese hate to have demands placed upon them and for the most part it is your responsibility to understand and respect your counterpart. With that said you cannot simply concede things and roll over just to please them. The case study says the Chinese try to take advantage of perceived weaknesses and "retreat" is one of them. The case continues to talk about the role of deception and its role in negotiations. "Bing Fa texts define victory as follows: Victory is to be achieved through any means, and deception of the opponent plays a vital role in the strategy of war." The Chinese are not afraid of using deception to get what they want, common forms are hiding the truth in which the company can address false strengths of weaknesses or a bait and switch tactic. Americans have to leave their sense of self-pride at the door and realize when these types of tactics are in play, if you don't the Chinese can simply take you to the cleaners.
When we think of a business deal we think of clean, truthful negotiations, granted every once in a while a bad apple gets thrown into the bunch. We see tactics like hiding the truth and bait and switch implemented all the time in our culture but the average person, like the savvy business person must know to realize it and not be taken advantage of. Sure in our minds the Chinese should be more upfront and try not to take advantage of their counterpart but in today's world sometimes you have to in order to survive in our capitalist market. Sure the Chinese don't display the most ethical tactics, according to the article, but if they can put themselves in a better position with these tactics, legally, and their counterpart agrees, is it bad ethics or good business?
Strutton, David, and Lou Pelton. Scaling The Great Wall: The Yin And Yang Of Resolving Business Conflicts In China. Rep. 1997.
Monday, March 8, 2010
Profitability stemming from ethics
When most people my age hear business ethics they immediately think of the disaster that was Enron and how the impacts stemming from the decisions made by higher ups affected thousands upon thousands of people. Naturally with all the negative media coverage from cases like this one most would assume that ethical business practices are the key to profitability, but is this really the case? It is my belief that having a solid set of ethics is important in establishing yourself as a corporation but there are so many factors that contribute to profitability that it is hard to gauge whether good ethics bring more profit.
The key to running a successful business is making good decisions on a decision by decision basis. This sounds easy but if in reality it were this easy every business would be successful and that is obviously not fact because businesses are failing everyday. With all sorts of decisions being made daily its easy to see how prevalent ethics is in business, every decision ties in some type of ethical thought.
The bigger issue at hand is whether solid ethical behavior leads to better or sustainable profit. I am torn in this matter as I do believe that doing things by the book is the way to get to the top but I have to be honest with myself and say that this can only be somewhat true. There have been times in my life where I have taken an easier route than the book definition and still reaped similar benefits to those who did things the virtuous way. Dr. Chris MacDonald seems to agree with me, in a sense, that there is indeed some form of balance between acting by the book and the ethics seen in the Enron case. In his blog he states,"Somewhere between 'ethics never brings profits' and 'ethics always brings profits' lies the truth, and it would useful to know just where the truth lies, and what the relevant variables are." I could not state this better myself, it is ok to assume ethics brings profits but some things can be taken advantage of and work as an asset to the firm and be considered slightly shady or conspicuous to others.
Is ethics profitable? Like I said it is my belief that it is with a few tricks thrown in. Ethical dealings and decision making are crucial to running a successful, profitable business but if you can do something to better the business at half the price or in half the time why not just consider the option. If you can live with the decision and know what you are doing is within the legality of the law why not do it. Enron will always remain fresh in the heads of those who lived through it but it is my belief that situation helped better the environment of business by returning us back to reality and back to our codes of morals and ethics.
http://www.businessethics.ca/blog/2010/02/is-ethics-profitable.html
The key to running a successful business is making good decisions on a decision by decision basis. This sounds easy but if in reality it were this easy every business would be successful and that is obviously not fact because businesses are failing everyday. With all sorts of decisions being made daily its easy to see how prevalent ethics is in business, every decision ties in some type of ethical thought.
The bigger issue at hand is whether solid ethical behavior leads to better or sustainable profit. I am torn in this matter as I do believe that doing things by the book is the way to get to the top but I have to be honest with myself and say that this can only be somewhat true. There have been times in my life where I have taken an easier route than the book definition and still reaped similar benefits to those who did things the virtuous way. Dr. Chris MacDonald seems to agree with me, in a sense, that there is indeed some form of balance between acting by the book and the ethics seen in the Enron case. In his blog he states,"Somewhere between 'ethics never brings profits' and 'ethics always brings profits' lies the truth, and it would useful to know just where the truth lies, and what the relevant variables are." I could not state this better myself, it is ok to assume ethics brings profits but some things can be taken advantage of and work as an asset to the firm and be considered slightly shady or conspicuous to others.
Is ethics profitable? Like I said it is my belief that it is with a few tricks thrown in. Ethical dealings and decision making are crucial to running a successful, profitable business but if you can do something to better the business at half the price or in half the time why not just consider the option. If you can live with the decision and know what you are doing is within the legality of the law why not do it. Enron will always remain fresh in the heads of those who lived through it but it is my belief that situation helped better the environment of business by returning us back to reality and back to our codes of morals and ethics.
http://www.businessethics.ca/blog/2010/02/is-ethics-profitable.html
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