PHL 318 Business Ethics Exam 1

1. The (No) Harm Principle

The fact that an action would harm someone is a moral reason against it. The greater the magnitude and probability of the harm, the stronger the reason to avoid it.

11. The Principle of Reciprocity (Gratitude)

The fact that an action would reciprocate those who have benefited us is a moral reason in favor of doing it. The greater the past benefit, and the more that the action would help to reciprocate it, the more strongly the reason to do it.

Eleven Basic Moral Principles

1. The (No) Harm Principle

Moral Tunnel Vision

A situation in which a person's consciousness is so focused on a single goal (even a morally decent goal) that s/he fails to notice other important moral values that are relevant in the situation. Thus, one goal or value "crowds out" other values and goals from one's consciousness.

Aristotle on character

Know the basics of Aristotle's theory of character...

price gouging

Pricing products unreasonably high when the need is great or when consumers do not have other choices. Ofter illegal.

5. The Principle of Honesty

The fact that an action (including a form of communication) would lead someone believe something false is a moral reason to avoid it. The more serious the falsehood, the stronger the reason to avoid it.

7. The Like Cases Principle

The fact that an action is relevantly similar to another action that you have good reason to believe is wrong is a reason to believe that the first action is also wrong. The more relevant the similarities between the two actions, the stronger the reason to believe that if one is wrong, then so is the other.

9. The Principle of Special Roles (Loyalty)

The fact that an action would be disloyal to someone to whom you owe loyalty is a moral reason to avoid it. The more serious the disloyalty, the stronger the reason to avoid it.

2. The Benefit Principle (or Principle of Benevolence)

The fact that an action would benefit someone is a moral reason in favor of doing it. The greater the magnitude and probability of the benefit, the stronger the reason to perform the action.

10. The Principle of Reparation (Responsibility)

The fact that an action would help to set right previous harms or wrongs done to others is a moral reason in favor of doing it. The greater the harm or wrong, and the more that the action would help to set it right, the stronger the reason to do that action.

4. The Autonomy Principle

The fact that an action would violate a person's autonomy is a moral reason to avoid it. The more complete the denial of autonomy, the stronger the reason to avoid performing that action. •Autonomy is the ability to be "in charge" of one's own life, within the boundaries of ethics and the law. It is not the freedom to do evil or to control other people's lives.

8. The Principle of Fidelity

The fact that an action would violate a promise or commitment is a moral reason to avoid it. The more important the commitment or promise, the stronger the reason to avoid violating it.

3. The Rights Principle

The fact that an action would violate someone's rights is a moral reason to avoid it. The more seriously the action would violate someone's rights, the stronger the reason to avoid doing it.

6. The Reversibility Principle (a.k.a. Golden Rule)

The fact that you would object to being treated in a certain way is a moral reason to avoid treating someone else in that same way. The more you would object to being treated that way, the stronger the reason to avoid treating someone else that way.

predatory pricing

selling a product below cost for a short period of time to drive competitors out of the market. Technically illegal but some states find it hard to say if its right or wrong.

Parable of the Sadhu

the lesson of personal values vs. organizational or group values is drawn. Be familiar with the events described in Bowen McCoy's "Parable of the Sadhu," and what they can tell us about phenomena like moral tunnel vision.

Principle of Utility

used in utilitarianism; requires that the rule used in making a decision must bring about positive results when generalized to a wide variety of situations 1. The principles of harm and benefit are the only true principles of morality. In fact, the principles of harm and benefit are simply two sides of the same coin—the Principle of Utility. 2. There is no "harm-benefit asymmetry".

Harm-Benefit Asymmetry

•In simpler terms, the HBA claims that it is immoral to harm one person in order to benefit someone else UNLESS the benefit GREATLY outweighs the harm.

Virtue Ethics (Aristotle)

"conformity to ones life to moral and ethical principles" does not focus on whether a particular decision is ethic or not but whether the decision maker is ethical or not

horizontal price fixing

- Occurs when competitors that produce and sell competing products collude, or work together, to control prices, effectively taking price out of the decision process for consumers. - Horizontal) price fixing (sometimes called "collusion") occurs when firms that should be competing cooperate to set their prices to an pre-determined, agreed-upon level instead of letting it be determined by supply, demand, and competition among firms. - This is unethical because: The same reason is that it is wrong with the attempt to rig or fix a sporting event. The activity is supposed to be competitive, and to fix the outcome is to avoid the competition. Mainly illegal

Three moral guidelines for ethical competition

1.Don't avoid competition by cooperating with the companies you should be competing with 2.Focus on competing fairly: Be more innovative and efficient so you can offer a better product or service at price that's better for your customer but still profitable for you, rather than relying on unfair uses of superior market power, deeper pockets, dirty tricks, etc. 3.Run your own business, and let others run theirs. Avoid trying to pressure other businesses to make decisions that should be theirs to make. Violating these simple rules is usually unethical, and often legally dicey as well.

prima facie principle

A moral principle that applies in all cases unless an exception is warranted.

Tying arrangements

Exists when a seller requires the purchase of unwanted items/services in order to obtain the desired item/service. Mostly illegal and unethical because it goes against the free buying market.

Law Stuff

Law Stuff: As I've mentioned a number of times, there's quite a bit of overlap between ethics and the law. So I will expect you to be familiar in at least a general way with antitrust law. For example, if I talk about the Sherman Anti-Trust Act, I will expect you to recognize that it is one of the laws governing competition, but I will not ask you any specific questions about it. (For example, I would not ask you which forms of anti-competitive practice violates which particular anti-trust law, though you should be aware of which practices are usually illegal.) Also, since one of the main themes of the course is how business law often reflects a core based on moral principles, you'll have to know in at least a general way what kinds of things are illegal so that you can answer questions about why they are illegal. Thus, for example, I will expect you to know how the Leegin decision changed the legal status of vertical price fixing. However, when I ask about the law, my questions will generally be focused on the law's moral content. Thus, our focus in the Leegin case is not its legal technicalities, but on the reasoning that the Court gave for deciding that, by and large, vertical price fixing is not really such a bad thing after all.

Robert Solomon's Theory of Business Metaphors

Solomon argues that the metaphors we use to describe business are not just more entertaining or colorful ways to speak. Instead, they affect how we think about business. "How a person thinks about business—as a ruthless competition for profits or as a cooperative enterprise whose aim is the prosperity of the community—preshapes much of his or her behavior and attitudes. . ." (p. 1) "How we talk reflects how we think, and how we think affects how we act and the nature of the organizations and institutions we create for ourselves. If we talk like brutes and we think like brutes, we will act like brutes and build organizations suitable only for brutes." (p. 2) What is central to the jungle metaphor is the image of a scenario utterly unconstrained, of animals and plants in a constant battle for survival, against the environment, with one another." (p. 3) "However competitive a particular industry may be, it always rests on a foundation of shared interest and mutually agreed-upon rules of conduct. Competition takes place not in a jungle but in a well-ordered society that it both serves and depends upon" (p. 2). "Business life, unlike life in the mythological jungle, is fundamentally cooperative. It is only within the bounds of mutually shared concerns that competition is possible. Contrary to the 'every man for himself' metaphor, business almost always involves large cooperative and mutually trusting groups that include networks of suppliers, service people, customers, investors" (p. 2).

Ethics and the Law

The relationship between ethics and the law. Sometimes the rule of law and the rule of ethics demand the same response by a person confronted with a problem, while in some situations the law may permit an act that is ethically wrong.

Wall Street movie

Two themes in the movie: 1.The conflict between two visions of business 2.The story about character illustrated by the corruption and redemption of Bud Fox. Two ways to think about business: 1. Abstract greed: Business competition is seen as war - survival of the fittest. Profits seen as the only goal worth pursuing. 2. A "better way to think about business": Sees profits as an important means of vital goods, but not as the only important value worth pursuing.

vertical price fixing

Vertical relationships hold between firms that do business with one another -for example, a wholesaler and retailer -vertical relationships extend up and down the chain of distribution Occurs when parties at different levels of the same marketing channel (e.g., manufacturers and retailers) collude to control the prices passed on to consumers. - illegal Know what it is and the various names under which it is known. You should know the basics of its changing legal status, and be familiar with how the Leegin decision changed that status. You should know that even under the Leegin decision, vertical price fixing is still legally dicey (and you should know why that is). You should understand the moral arguments for and against allowing vertical price fixing. (That is, you should understand why many people regard vertical price fixing as morally objectionable and want to overturn the Leegin decision, as well as why other people think that the Leegin decision was correct.) You should recognize vertical price fixing in concrete situations (e.g., in mini-cases).

You should recognize names like Aristotle, John Stuart Mill, W. D. Ross, and Immanuel Kant, and be able to match them to their most significant contributions to ethical theory. You should also know the following basic ideas from moral theory: utilitarianism, Kant's ethical theory, virtue, and prima facie principles. Be familiar with the Harm-Benefit Asymmetry

W.D. Ross: •Moral decision-making involves applying ordinary moral principles (honesty, benevolence, non-maleficence, fidelity, gratitude, justice) to situations. • •These principles are "prima facie" (provisional); moral decision-making often involves settling conflicts between them. • •A prima facie duty's relative strength or importance in a given situation depends on the facts of the situation. John Stuart Mill: - The theory of utilitarianism Immanuel Kant: - Immanuel Kant believed that autonomy was a sacred gift that no other earthly creatures had - Kant believed that the other way to express the Categorical Imperative is (roughly) the Golden Rule/Reversibility Principle.

Abstract Greed

When profit motive crowds out all other values and goals

THE FOUR BASIC MORAL QUESTIONS

You should memorize the four basic questions to ask when evaluating whether an action is ethical (I won't ask you to list them, but I will ask questions that you will only be able to answer if you have memorized them.)

Utilitarianism

idea that the goal of society should be to bring about the greatest happiness for the greatest number of people