Ethical Dilemmas in Product Development
Transcript of Ethical Dilemmas in Product Development
Ethical dilemmas in product development
The contract view
• Duty to provide consumers with a product that lives up to expectation.
• Factors affecting the claims:– Reliability– Service life– Maintainability– Product safety
The due care theory
• Have an obligation to exercise due care to prevent the consumer from being injured by defective products.
• Areas:– Design– Production– information
Ethical issues in product decisions in seven stages
1. When the idea is first mooted
2. Screening of product designs
3. Product development and evaluation.
4. Marketing strategy
5. Test marketing
6. Introducing in the market
7. Product decline stage.
• The other areas where the ethical issues plays a major role is– Violation of the laws
• Patent• Trademark• Copyrights
Ethical dilemmas in finance
Finance
Can be classified into☺Financial services- stock exchanges☺Financial markets- investment banks, commercial
banks, mutual fund companies etc.
Financial services
Operates through personal selling by stockbrokers , insurance agents, tax advisors ad other financial professionals.
Creates innumerable opportunity for abuse Churning Twisting Flipping
Three objectionable practices in selling financial products to clients are☺Deception☺Churning☺Suitability
Deception
Salespeople avoid speaking of commissions Misleading information through promotional
materials Can also occur when essential information is
not revealed.
Churning
Defined as excessive or inappropriate trading for client’s account by a broker who has control over the account with the intent to generate commissions rather than to benefit the client
Suitability
The most common cause of unsuitablity are:☺Unsuitable types of securities☺Unsuitable grades of securities
High finance
Operations that are highly vulnerable to risk. 4 major types of high finance are:
☺Stock market operations☺Bank operations☺Stock market operations through international
swapping transactions and derivatives☺Mergers and acquisition.
Most ethical issues are in the area of high finance
The special ethical features of high finance are
Rewards are from speculative forecasting Focus of org is to fulfill the naked greed Decisions are highly risky and are equivalent to
gambling No transparency in systems Systems are such that rewards for risk taking go to
one set of persons while cost have to be incurred by others
The rewards are huge and therefore tempt the risk takers
Internal controls are weakened coz of the mystique of the subject
Insider trading
Insiders are chairman directors officers etc and principal shareholders with 10 % or more stock.
Can access confidential information Not all insider trading is illegal or unethical
Mergers and acquisitions
They have been castigated for destroying industries, capital structures, causing unemployment, unsettling suppliers, customers and traditional power relations and responsible for many of the ills of modern economies.
What will happen during takeover
Swap ratios for shareholders will go in favor of predator company
Employees employed in the predative company get less advantage
Suppliers of materials gets lesser importance Culture change in the case of cross border
mergers
What can be done????
Firstly, the specific agreements entered into have been legitimate arrangements. That means, not all undertakings are legitimate for business. So the question is, whether all expectations of stakeholders are legitimate.
Secondly, such expectations are to be respected if they are created by formal, written contracts or promises made. Unethical breach of contracts will badly affect business in the long run.
What can be done????
Thirdly, if inappropriate expectations have been created by the management to facilitate a takeover, it becomes unethical. For example, workers could be promised of a higher pay, job security, etc. in view of a merger.
if the unethical undertakings were simply suggested, business has no obligation to fulfill them. So the new acquirer will have to assess how strong and how long were the expectations.
Ethical Dilemmas In Human Ethical Dilemmas In Human Resource ManagementResource Management
HRMHRM
Includes personal management, industrial relations and most importantly management planning and control.
2 moral obligations– The obligation of the employee to pursue the
organizations goals and avoid any activities that might threaten that goal
– The obligation of the employer to provide with a fair wage and fair working conditions.
Hiring/ Recruitment
Screening Tests Interviews
Promotions
Seniority Inbreeding Nepotism
Discipline and discharge For proper functioning of the organization HR should
establish guidelines on– Appearance– Punctuality– Dependability– Efficiency and cooperation
Concern for fairness, non injury and respect for persons.
Four types of discharge are firing, termination, layoff and position elimination.
Before discharge employee should be given sufficient warning, severance pay and also proper counseling
Wages
Factors that has to be taken into consideration b4 determining wages and salaries– The prevailing wages in the industry and the area– The firms capabilities– The nature of the job– Minimum wage laws– What are other employees inside the organization
earning for comparable works– Local cost of living
Health and safety
Remain foremost moral concern in the workplace
Stress and the occupational diseases are greater
The right to privacy When ever an organization infringes on an
individuals personal sphere it must justify that infringement.
Polygraph test, personality test drug test and monitoring of employees on the job can intrude into employee privacy.
The exact character of these devices, the rationale for using them to gather information in specific circumstances and the moral cost for doing must always carefully evaluated
Job discrimination
Discrimination involves false assumptions about the inferiority of a certain group and harms individual member of that group.
Discrimination on the basis of sex or race or caste also violates people’s moral rights and mocks the ideal of human moral equality.
Whistle blowing
Term was first used for the government employees who go to public with complaints of corruption or mismanagement in government agencies.
Whistle blowing is an attempt by a member or an ex-member of an organization to disclose wrong doing in or by the organization.
Types of whistle blowing
Whistle blowing types
Internal
External
Arguments
Argued that external whistle blowing is always wrong because employees have a contractual duty to be loyal to their employer and to keep all the business aspects confidential.
External whistle blowing can be justified only if other means such as internal whistle blowing of preventing a wrong has been tried but have failed
Moral justification for external whistle blowing
Wrong is serious enough. Clear substantiated reasonably comprehensive
evidence. Reasonably serious attempts (if internal whistle
blowing has failed) Reasonable certain (that external whistle
blowing will prevent the wrong)
Companies whistle blowing policy
Components are:– An effectively communication statement of
responsibility for the employees– A clearly defined procedure for reporting– Well trained personnel to receive and investigate
reports– A commitment to take appropriate actions– A guarantee against retaliation
Ethical dilemmas in technology management
J k Galbraith defines technology as a systematic application of scientific or other organized knowledge to practical task.
Some technological innovations are wonders, some other are horrors.
All ethical issues raised by new technologies are related in one way or another to question of risk.
Use of IT
To monitor the activities of other companies
May invade the privacy of individuals.
Ethical issues
Privacy
Accuracy
Property
Accessibility
Specific threats
Loss , theft or corruption of data
Inappropriate use of data
Theft of mainframe computer crime
Theft of equipment / programs
Errors in handling , entering processing transferring or programming of data
Equipment malfunction
Destruction from viruses and similar attacks.
Computer crimes
Use of computers to embezzle funds or assets
Destruction of alteration of s/w or data
Unauthorized access or theft of s/w equipment or data
Unauthorized use of computers and computer services.
Attacks on computer systems
Virus
Trojan horse
Salami slicing
Methods of attack
Data tampering/diddiling
Programming techniques
Preventing computer crime
Hire carefullyEncrypt data and programsMonitor system transactionsSeparate employee functionsConduct frequent auditsRestrict system useEducate people in security measuresProtect sources with password or access cards Virus detection /eradication software packages
Main moral dimension of an info society
Information rights and obligations-spell out corporate privacy and due process policies
Property rights and obligations- clarify how corporation will treat property rights of software owners.
Accountability and control- clarify who is responsible and accountable for info
System quality- identify methodologies and quality stds to be achieved.
Ethical analysis as a five step methodology for analyzing a situation
Identifying the facts
Identifying the values
Identifying the stake holders
Identifying the options
Consequences of action
Competition and ethics
Perfect competitionMonopoly competitionOligopolistic competition
Price fixingManipulation of supplyExclusive dealing arrangementsTying arrangementsRetail price maintenance arrangementsPrice discrimination