MANUFACTURERS & VENDORS - Business Ethics - Definitions

How far must manufacturers and their representatives go to make their products and services completely safe?

WHAT Is the relationship between a business and its customers? a contract, or is there more to it than that?

Hos does the fact that companies usually know more about their products than their customers IMPACT their duty to protect customers from injury or harm?

What responsibility do businesses have for customer injuries no one could reasonably have foreseen or prevented?

What about customer's privacy - what obligations do companies have?

MARKET APPROACH TO CONSUMER PROTECTION:

Consumer safely is seen as a good that is most efficiently provided through the mechanism of the free market whereby sellers must respond to consumer demands.

PROBLEMS WITH THE ASSUMPTION OF FULL INFORMATION:

• Many products are too complex for consumers to understand
• Markets cannot provide consumers with product information.

FREE RIDERS:

individuals who enjoy the benefits of a good without paying their share of its costs.

RATIONAL UTILITY MAXIMIZER:

A person who has a well defined and consistent set of preferences, and who knows how personal choices will affect those preferences.

PROBLEMS WITH THE ASSUMPTION OF RATIONAL UTILITY MAXIMIZATION:

• Few people are good at estimating probabilities.
• People are irrational and inconsistent when weighing choices.
• Many consumer markets are monopolies or oligopolies.

CONTRACT VIEW OF THE FIRM'S DUTIES TO ITS CUSTOMERS:

The view that the relationship between a business firm and its customers is relationship, and the firm's moral duties to the customer are those created by this contractual relationships.

RELIABILITY:

The probability that a product will function as the consumer is led to expect that it will function.

SERVICE LIFE:

The period of time during which the product will function as effectively as the consumer is to led to expect it to function.

MAINTAINABILITY:

The ease with which the product can be repaired and kept in operating condition.

PRODUCT SAFETY:

The degree of risk associated with using a product.

MORAL DUTIES TO CONSUMERS UNDER CONTRACTUAL THEORY:

• Duty to comply with express and implied claims of reliability, service life, maintainability, and safety.
• Duty of disclosure
• Duty not to misrepresent
• Duty not to coerce

DUE CARE THEORY OF THE MANUFACTURER'S DUTIES TO CONSUMERS:

The view that because manufacturers are in more advantaged position, they have a duty to take special care to ensure that consumers' interests are not harmed by the products that they offer them.

CAVEAT EMPTOR:

Let the buyer take care.

CAVEAT VENDOR:

Let the seller take care.

AREAS OF PRODUCER RESPONSIBILITY ACCORDING TO DUE CARE THEORY:

• Design
• Production
• Information

SOCIAL COSTS VIEW OF THE MANUFACTURER'S DUTIES TO CONSUMERS:

The view that a manufacturer should pay the costs of any injuries sustained through any defects in the product, even when the manufacturer exercised all due care in the design and manufacture of the product and has taken all reasonable precautions to warn users of every foreseen danger.

• Manufacturer should pay the costs of all injuries caused by defect in a product even if exercised dure care.
• Argues that injuries are external costs that should be internalized.

STRICT LIABILITY:

A legal doctrine that holds that manufacturers must bear the costs of injuries resulting from product defects regardless of fault.

CRITICISMS OF THE SOCIAL COST VIEW:

• Unfair to manufacturers since it forces them to compensate unforseeable injuries.
• Assumption that adherance to the social cost view will prevent accidents is false.
• Leads to successful consumer lawsuits in cases where manufacturers took all due care.

COMMERCIAL ADVERTISING:

Communication between a seller and potential buyers that is publicly addressed to a mass audience and is intended to induce members of this audience to buy the seller's products.

• Public communication aimed at mass audience
• Intended to induce members of its audience to buy the sellers's products
• Succeeds by creating a desire for the seller's product or a belief that a product will satisfy a pre existing desire.

PRODUCTION COSTS:

The costs of the resources consumed in producing or improving a product.

SELLING COSTS:

The additional costs of resources that do not go into changing the product, but are invested instead in getting people to buy the product.

DECEPTIVE ADVERTISING:

• Is a function of the author's intent to make the audience believe what is known to be false.
• OR a function of The media's communication of the false message.
• OR a function of The audience's vulnerability to deception.

RIGHT TO PRIVACY:

The right of persons to determine what, to whom, and how much information about themselves will be disclosed to other parties.

PSYCHOLOGICAL PRIVACY:

Privacy with respect to a person's inner life.

PHYSICAL PRIVACY:

Privacy with respect to a person's physical activities.

IMPORTANCE OF PRIVACY:

• Protects individuals from interference, shame, embarassment, hurting loved ones, self-incrimination
• Enables the development of personal relationships,professional relationships, distinct social roles and self determination.