The possible abuses in capitalist market may include business firms and manufacturers using unethical business practices during the production or manufacturing of products. As businesses firms and manufacturers in capitalism are profit-oriented, they tend to ignore the consideration of the potentially consequences of their products to their consumers. Hence, they are more likely to produce products that are in demand, as long as the profit motive is achieved. For instance, the car manufacturers might ignore the importance of installing seat-belts, air-bags and other safety features as these safety devices lowered their revenues. As a result, consumers in capitalist market or the society as a whole would be exposed to products that are unsafe and harmful such as defective goods.
Cendant Corporation had the pressure to comply with their shareholders and to maintain a stable financial status to prove that they were a profitable organization with a bright company image. Another pressure presented in this case for Cendant Corporation was that for the top management once again. The top management needed to have their financial information seem profitable, therefore pressured the accountant of the company to falsify and “cook the books” to make the financial statements seem actually “profitable” when it wasn’t what It really was. As said in the previous question, income smoothing was used in this case by Cendant Corporation as an unethical practice to make the investors believe that their shares were all bright
They have greater concern on stakeholder well –being. A firm that decided to ignore the social issues may results in a loss of strategic opportunities ('Shareholder value or social responsiblity? ', 2007). Involved in CSR activities are proven to create good image and reputation for a company. In the long run, it helps a company to increase shareholders’ value and achieve sustainable business
This new chip can decreased the sales revenue in a short term because it seems to be unnecessary for customers who already owned the computer with this effective chip. However, if the company not promote this chip, sales revenues will remain stable, unsurprisingly. Therefore, if we apply the utilitarianism to this case, it is certain that the happiness of customer is the highest priority. In other words, the manager should select the choice that will ensure the happiness of most customers (Chryssides and Kaler, 1993). For this reason, there is another involving factors that need to be considered: how happiness can be
Bribery can lead to decrease in the productivity at national level which incurs a cost to society as a whole. Those receiving the bribes earn money in easy fashion and those paying obtain benefits without any real effort. This can lead to decrease in research and development and lower quality products. In addition, bribing can be seen as a form of trade barrier since it distorts the open market in order to give advantage to those providing the money. As a result, members of this country cannot fully enjoy the benefits that result from free trade and international
Whereas, a number of people said that they would not prefer an imitated product for an original. The foremost reasons for purchasing imitated products were because they are cheaper than the original, had value for money and had similar packaging but, they disagreed with the fact that they were better than the original and that they are similar in quality. There are some people who always check the product name whilst purchasing but there are also some who overlook the product name and sometimes the misinterpretation of logos does affect the purchasing decisions made by consumers. Price and quality are the main factors influencing most while purchasing imitated products but, they prefer purchasing these products occasionally. Depending on the variation of the products available, many people reject the imitated product given by the shopkeeper but they prefer to check the product first and also depending on the budget, product and warranty a decision is taken.
Ethical and responsible business activities are important to the sustainability and success of a firm in a country’s marketplace. If multinational enterprises ignore business ethics to take malpractices (e.g. bribery) to gain profits, they may damage their brand, prestige and stakeholders’ interests, which would reduce their profitability in future. Nearly all governments around the world defining bribery as an illegal act. Violation of these regulations can result in individual fines and long jail time (Ferrell, Fraedrich and Ferrell, 2013).
Therefore, whichever company makes the profit, it finally ends up as a profit of the parent firm. 3.Since companies in an oligopolistic market have full control over it, they are capable of deciding prices as per their choice. Though this practice is illegal, it works in favor of these businesses. 4.Dominant market players usually make long-term profits in an oligopolistic environment. This is possible because the market does not allow an old business to increase its share.
Basically, ethics are at their essence which is it is the moral judgments about what is right and what is wrong. Business ethics is focusing on examine the policies and conduct within the context of commercial enterprise in an organizational as well as in an individual level. In business, the ethics in business is an applied ethics where professionals and researchers use principles and theories to solve any ethical problems that exist in business. At the quarter of the 20th century, as technologies like internet have made world business or international business all more viable, the business ethics domestically have grown in importance along with the power and significance of major businesses. So that, international business ethics take center stage as a major concern of the modern era.
Disadvantages of Multinational Corporations: • Potential Abuse of Workers Multinational companies often invest in developing countries where they can take advantage of cheaper labour. Some multinational corporations prefer to put up branches in these parts of the world where there are no demanding policies in labour and where people need jobs because these multinationals can demand for cheaper labour and lower standard in healthcare benefits. • Threat to Local Businesses Another disadvantage of multinational corporations in other countries is that they have the potential to dominate the market. These giant corporations can dominate the markets they are in because they have the more renowned products and they can afford to even sell them at lower prices since they have the financial resources to buy in a much larger quantity. This can devour all the other small businesses offering the same goods and services.