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SEMESTER FALL 2013
BUSINESS ETHICS (MGT 610)
ASSIGNMENT NO. 01
DUE DATE: 12 NOVEMBER 2013 MARKS: 15
Topic: Role of moral reasoning in business promotion
Learning Objectives: This case study was designed for following objectives;
1. To enable the students for learning practical application of theoretical concepts.
2. To enable the students for learning practical importance of moral reasoning in business decisions.
Learning Outcomes: This case study will aim at following learning outcomes;
1. Students would be able to learn the importance of business ethics in the different decisions of business including business promotion.
2. Students would be able to understand the application of moral reasoning for ethical decision making.
Professional ethics for doctors require thoroughly examining the medicine of each company and then prescribing the best one to their patients. Similarly, professional ethics of sales persons in pharmaceutical companies should require to thoroughly explaining the features of their medicine to the doctors. This product knowledge helps doctors to prescribe the best medicine for patients. But it is an unfortunate reality that medicine companies give heavy incentives including sales commission to the doctors. This unethical practiceenhances sale of company’s medicines even if it offers lower quality medicines. This is a practice that is neither supported by utilitarian view nor by justice
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view of ethics. It also violates the consumer rights who are innocent patients and believe that their doctor has recommended the best medicine based on its features. This unethical practice of business promotion in this sector has emerged like a trend in the recent few years.
Mr. Ahmad is a newly appointed sales manager in Himalaya Pharmaceutical Company. Top management of the company has set a relatively bigger sales target for this year. This company normally targets a niche market of ENT specialist doctors in public hospitals and private clinics. This niche marketing strategy of the company normally gets implemented through direct selling method. In direct selling method, sales person has to directly approach the potential purchaser or sales booster (like doctors in this case). So, in this sector, it is best to directly approach the relevant doctors who have the authority to prescribe medicine of a particular company.
Sales team of Mr. Ahmad suggested a sales incentive strategy for doctors as the best way to boost sales in shortest possible time. Most of the sales team members were of the view that this has been a successfulpractice in the past not only for this company but also for the competitors. Team members also thought that this combination of incentive and direct selling strategy will save advertising budget as well. Now, Mr. Ahmad is in a cognitive dilemma as he is to quickly decide a sales strategy. He knows that incentive based sales strategy may be a useful strategy as a short term measure for boosting the sales. But his moral reasoning finds that this may damage the company’s reputation and competitive advantage in the long run. There is no such corporate law or regulatory policy by the ministry of health for prohibiting this type of business promotionpractices. That’s why; many companies only follow this profit oriented business model.
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Answer the following questions based on your acquired knowledge about business ethics.
1. Identify pro and cons if the sales manager of this company rejects incentive based direct selling strategy on ethical grounds. (5 marks)
2. How can Mr. Ahmad solve this situation of prisoner’s dilemma with logical arguments of moral reasoning? (10 marks)
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assalam.o.alaikum tariq brother
i am not understand about pro and cons please explain and help us to solve the current assignment and give more useful material about this assignment
iska reply konse chapter se mil sakta hai?
ye pir apna point of view hi explain karna hai ke kai advantages and disadvantages hain?
After this assignment, student will:
• Understand the importance of ethics and moral reasoning in business decisions.
• Will find a sense about real life scenario where ethical consideration is needed.
Liquefied Petroleum Gas (LPG) has been a deregulated sector in Pakistan for almost a decade.
The primary objective of this price deregulation by the government was to bring more
investment in the oil and gas sector of Pakistan. Local production in the country is less than the
demand of this product. According to a rough past estimate, local production of LPG in the
country is 1600 metric ton and its demand is around 3000 metric ton per day. Different LPG
companies that were licensed by Oil & Gas Regulatory Authority (OGRA) had to manage the
product demand of the market mostly through de‐marketing activity and import of LPG (in few
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cases through illegal channels from Iran). This massive gap in the supply and demand of the
product also created black marketing and import of product without paying taxes on the import
and without the prior permission of OGRA. Price trend in the market over the years is that this
product’s price increases in winter due to extra demand and decreases in summer due to
decrease in the demand. LPG initially was thought to be a pro‐poor fuel but it was not the actual
case in the market because its prices remained out of the reach for a poor person during winter
Real time scenario
In a routine price cartel situation just before the winter season, managers of the different LPG
licensed companies were sitting together in a meeting for deciding a mutually agreed price with
extra and unchecked profit during the upcoming winter season. Most of the managers were
keen to have a constant increase in the price during winter with their mutual consensus but one
of the managers, Mr. Ali suggested that this constant increase in the fuel price will increase the
suffering of common and poor people. All the other stake holders heavily criticized Mr. Ali as he
was suggesting a cut on the profit for the interest of society. Some of the senior managers in
that meeting told Mr. Ali that he had no right to think for these ethical considerations in
business as he is representing his company as an employee and that there is no such law to
regulate the price of the product. Mr. Ali’s point of view was that he was also representing the
same interest of his company for increasing the profit but he said that he is also seriously
concerned about the low purchasing power of this fuel of the common person and that he will
remain firm on this argument. This initiated a new dimension of brainstorming for social
responsibility and ethical consideration in that business meeting. Now on one side there was
short term strategy to earn high profit and on the other side, there was a long term strategy of
business growth with ethical consideration.
Considering the above mentioned scenario, answer the following questions based on the
knowledge that you have acquired from this course so far.
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1: In your point of view, what may be the possible reason of prisoner’s dilemma in this
situation? How will the ethical consideration help this business sector as a long term growth
strategy? (10 Marks)
Prisoner’s dilemma does exist in this situation. The primary reason is that Mr. Ali
is considering the ethical aspect of the business strategy with a firm view while
the other stakeholders are only focused on the profit aspect of business strategy.
This is the main reason that has temporarily restricted the cooperation in this
team. Ethical considerations are normally parallel to business law but even if a
relevant law does not exist; those ethical considerations are the guiding principles
which are useful as a business strategy for the longer period of time. Violation of
ethics and morality may give huge benefit in the short term but long term repute
of any business depends on ethical parameters. For example, in this case, repute
of whole LPG sector depends on the fairness of its market operators.
plz i need useful material about this assignment
or the Solution of Question No. 02... See this topic and answer
2: How can Mr. Ali create the spirit of moral reasoning in this interest group? Discuss with logical
points. (10 Marks)
Mr. Ali can create the spirit of moral reasoning in the team through solid
arguments and by convincing the stakeholders about the benefits of long term
strategy of ethical considerations. For example, he may convince the meeting
members through following points,
Short term and profit oriented strategy may gain huge advantage for this
sector on temporary basis but for the long term public repute and acceptance
of market operators, product price should remain fair.
Unchecked increase in prices during winter season may ultimately force the
government to regulate the price in this sector which may create even greater
business loss with respect to current unchecked and huge profit margin.
Ultimately, it is the responsibility of the business operators towards the
society to consider the aspect of social responsibility as well.
Even if a relevant law does not exist for the price regulation in this sector, in
case of arbitration or litigation agency may consider the ethical aspect in
favour of consumers who are paying much more for this product than they
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first question ka kia answer hai????
assignments in this semester are non-graded. it wouldn't effect your final result if u r not gona submit it ...
for details check yout grading scheme or MDB sections..
rahima zubair thanks for info
hahaha tu bnao hi ni :P