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Presentation on Business Ethics

Presentation By,

Markets & Consumer protection.

Business Firms Duties to consumers. Due care theory . The social costs view of the manufactures duties. Advertising ethics. Consumer privacy.

Markets & Consumer protection

Markets :-

In the market approach to consumer protection, consumer safety is seen as a good that is most efficiently provided through the mechanism of the free market whereby sellers must respond to consumer demands. Consumers want products to be safer, they will indicate this preference by paying more & showing preference for manufactures of safe products.

7 charactertistics market approach

There are numerous buyer & sellers. Everyone can freely enter & exist the markets. Everyone has full & prefect information.

All goods in the market are exactly similar.

There are no external costs. All buyers & sellers are rational utility maximizers.

The market is unregulated.

Critics argue against

Everyone has full & perfect information Gathering information is expensive.

All buyers & sellers are rational utility maximizers: Few people good at estimating probabilities. People are irrational & inconsistent when weighing choices.

Most consumer markets are monopolies / oligopolies.

Business Firms Duties to consumers

The four main moral duties of a business form
Duty to comply :-

Provide quality products to consumers that lives upto those claims that the firm expressly made about the product. Quality of products includes: Reliability Service life Maintainability Product safety

Duty of Disclosure :-

The sellers should disclose exactly what the customer is buying (characteristics) & the terms of sale. Duty not to misrepresent :Misleading the person to act as the deceiver wants him to, by hiding the truth. Duty not to coerce :Taking the advantage of people who often act irrationally under the influence of fear or emotional stress.

Problem with the contractual theory

It is unrealistic in nature as manufactures dont enter into any

direct contract with the consumer.

Assumption that buyer & seller are equal in the sales

agreement based on the doctrine of caveat emptor.(let the buyer be aware).consumers may have to buy 100 of products so they may not have knowledge of all products.

Due care theory

It views manufacture are in advantaged position, as they have specialized knowledge of the product & they have the duty to take special care to ensure that consumers interests are not harmed by the products they offer. Areas of producers responsibility to due to care theory Design Production Information

Problems with Due Care

No clear method for determining when one has exercised

enough due care. Assumption of manufacture who discovers risks of the product before the consumer buys & uses it. Manufactures important decision for the customer based on levels of risks that are proper for consumers to bear.

Thank you..