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Xaviers Institute of Business Management
Studies
MARKS : 80
COURSE :MBA
SUB :
BUSINESS ETHICS
N.
B. : 1) Attempt any Four Cases
2) All
cases carries equal marks.
Case No : 1
PUBLIUS
Although many people believe that the World
Wide Web is anonymous and secure from censorship, the reality is very
different. Governments, law courts, and
other officials who want to censor, examine, or trace a file of materials on
the Web need merely go to the server (the online computer) where they think the
file is stored. Using their subpoena
power, they can comb through the server’s drives to find the files they are
looking for and the identify of the person who created the files.
On
Friday June 30, 2000, however, researches at AT & T Labs announced the
creation of Publius, a software program that enables Web users to encrypt
(translate into a secret code) their files – text, pictures, or music – break
them up like the pieces of a jigsaw puzzle, and store the encrypted pieces on
many different servers scattered all over the globe on the World Wide Web. As a result, any one wanting to examine or
censor the files or wanting to trace the original transaction that produced the
file would find it impossible to succeed because they would
have to examine the contents of dozens of different servers all over the
world, and the files in the servers would be encrypted and fragmented in a way
that would make the pieces impossible to identify without the help of the
person who created the file. A person
authorized to retrieve the file, however, would look through a directory of his
files posted on a Publius – affiliated website, and the Publius network would
reassemble the file for him at his request.
Researchers published a description of Publius at
www.cs.nyu.edu/waldman/publius.
Although
many people welcomed the way that the new software would enhance freedom of
speech on the Web, many others were dismayed.
Bruce Taylor, an antipornography activist for the National Law Center
for Children and Families, stated : “It’s nice to be anonymous, but who wants
to be more anonymous than criminals, terrorists, child molesters, child
pornographers, hackers and e-mail virus punks.”
Aviel Rubin and Lorrie Cranor, the creators of Publius, however, hoped
that their program would help people in countries where freedom of speech was
repressed and individuals were punished for speaking out. The ideal user of Publius, they stated, was
“a person in China observing abuses of human rights on a day – to – day basis.”
Questions :
Question 1.Analyze the ethics of marketing
Publius using utilitarianism, rights, justice, and caring. In your judgement, is it ethical to market
Publius ? Explain.
Answer: The environment is everything we
depend on. Whether it be the trees that give us oxygen, the land we live upon
and the rivers that provide us with water. The environment is crucial for the
society and businesses together. We all have a responsibility to conserve and
protect the environment. And whether it be governments, businesses, consumers,
workers or other members of society, each much contribute to stop the
environment from polluting further.
Question 2.Are the creators of Publius in any
way morally responsible for any criminal acts that criminals are able to carry
out and keep secret by relying on Publius ?
Is AT & T in any way morally responsible for these ? Explain your
answers.
Answer: Many people believe that the
World Wide Web can offer a great deal of anonymity and security from censorship
but, they are dead wrong. Governments, the intelligence machinery, legal
structures and any other relevant bodies can access information, censor, examine
and even trace materials on the web because they have been granted the subpoena
powers. These powers allow the aforementioned bodies to comb through computer
servers in search of the identity of the person that created a specific file in
question. People may see this as the infringement of their rights to privacy,
however, threats posed by cyber criminals necessitate this ‘invasion of
privacy’. In June 2000, a
Question 3.In your judgment, should
governments allow the implementation of Publius ? Why or why not?
Answer: Considering
the Rights view-point, many people could be using the Publius software without
their consent or that it was less safe than they might have expected. In the
end, it all boils down to the time factor, that the user could be censored,
tracked, and even brought to court to face jurisdiction. If the user had learnt
of the problem, he or she could have made a decision first whether to embark on
this slippery challenge of being tracked down and severely punished or jailed
for doing a good cause, as there is no warranty to state that he would not be
caught while in the internet web.
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Case NO. 2
A JAPANESE BRIBE
In July 1976, Kukeo Tanaka, former prime
minister of Japan, was arrested on charges of taking bribes ($ 1.8 million)
from Locjheed Aircraft Company to secure the purchase of several Lockheed
jets. Tanaka’s secretary and serial
other government officials were arrested with him. The Japanese public reacted with angry
demands for a complete disclosure of Tanaka’s dealings. By the end of the year,
they had ousted Tanaka’s successor, Takeo Miki, who was widely believed to have
been trying to conceal Tanaka’s actions.
In
Holland that same year, Prince Bernhard, husband of Queen Juliana, resigned
from 300 hundred positions he held in government, military, and private
organizations. The reason : He was
alleged to have accepted $ 1.1 million in bribes from Lockheed in connection
with the sale of 138 F – 104 Starfighter jets.
In
Italy, Giovani Leone, president in 1970, and Aldo Moro and Mariano Rumor, both
prime ministers, were accused of accepting bribes from Lockheed in connection
with the purchase of $ 100 million worth of aircraft in the late 1960s. All were excluded from government.
Scandinavia,
South Africa, Turkey, Greece, and Nigeria were also among the 15 countries in
which Lockheed admitted to having handed out payments and at least $ 202
million in commissions since 1970.
Lockheed
Aircraft’s involvement in the Japanese bribes was revealed to have begun in
1958 when Lockheed and Grumman Aircraft (also an American firm) were competing
for a Japanese Air Force jet aircraft contract.
According to the testimony of Mr. William Findley, a partner in Arthur
Young & Co. (auditors for Lockheed), in 1958 Lockheed engaged the services
of Yoshio Kodama, an ultra right – wing war criminal and reputed underworld figure
with strong political ties to officials in the ruling Liberal Democratic
Party. With Kodama’s help, Lockheed
secured the Government contract.
Seventeen years later, it was revealed that the CIA had been informed at
the time (by an American embassy employee) that Lockheed had made several
bribes while negotiating the contract.
In
1972, Lockheed again hired Kodama as a consultant to help secure the sale of
its aircraft in Japan. Lockheed was
desperate to sell planes to any major Japanese airline because it was
scrambling to recover from a series of financial disasters. Cost overruns on a government contract had
pushed Lockheed to the brink of bankruptcy in 1970. Only through a controversial emergency
government loan guarantee of $ 250
million in 1971 did the company narrowly avert disaster. Mr. A. Carl Kotchian, president of Lockheed
from 1967 to 1975, was especially anxious to make the sales because the company
had been unable to get as many contracts in other parts of the world as it had
wanted.
This
bleak situation all but dictated a strong push for sales in the biggest untapped market left-Japan. This push, if successful, might well bring in
revenues upward of $ 400 million. Such a cash inflow would go a long way towards helping to restore
Lockheed’s fiscal health, and it would, of course,
save the jobs of thousands of firm’s employees. (Statement of Carl Kotchian)
Kodama eventually succeeded in
engineering a contract for Lockhed with All – Nippon Airways, even beating out
McDonnell Douglas, which was actively competing with Lockheed for the same
sales. To ensure the sale, Kodama asked
for and received from Lockheed about $9 million during the period from 1972 to
1975. Much of money allegedly went to
then – prime minister Kukeo Tanaka and other government officials, who were
supposed to intercede with All – Nippon Airlines on behalf of Lockheed.
According
to Mr. Carl Kotchian, “ I knew from the beginning that this money was going to
the office of the Prime Minister.” He
was, however, persuaded that, by paying the money, he was sure to get the
contract from All-Nippon Airways. The
negotiations eventually netted over $1.3 billion in contracts for Lockheed.
In
addition to Kodama, Lockheed had also been advised by Toshiharu Okubo, an
official of the private trading company, Marubeni, which acted as Lockheed’s official representative. Mr. A. Carl Kotchian later defended the
payments, which he saw as one of many “Japanese business practices” that he had
accepted on the advice of his local consultants. The payments, the company was convinced, were
in keeping with local “ business practices.”
Further,
as I’ve noted, such disbursements did not violate American laws. I
should also like to stress that my decision to make such payments stemmed from my judgment that the
(contracts) …… would provided Lockheed
workers with jobs and thus redound to the benefit of their dependents, their communities, and
stockholders of the corporation. I should like to emphasize that the payments to
the so-called “ high Japanese
government officials” were all requested y Okubo and were not brought up from my side. When he told me “ five hundred million yen is
necessary for such sales,” from a purely ethical and moral standpoint I would have declined such a request. However, in that case, I would most certainly have sacrificed
commercial success….. (If) Lockheed had not remained competitive by the rules
of the game as then played, we would not
have sold (our planes) ……… I knew that if we wanted our product to have a
chance to win on its own merits, we had to follow the functioning system. (Statement of A. Carl Kotchian)
In
August, 1975, investigations by the U.S. government led Lockheed to admit it
had made $ 22 million in secret
payoffs. Subsequent senate
investigations in February 1976 made Lockheed’s involvement with Japanese
government officials public. Japan
subsequently canceled their billion dollar contract with Lockheed.
In
June 1979, Lockheed pleaded guilty to concealing the Japanese bribes from the
government by falsely writing them off as “marketing costs”. The Internal Revenue Code states, in
part. “ No deduction shall be allowed…..
for any payment made, directly or indirectly, to an official or employee of any
government …. If the payment constitutes an illegal bribe or kickback.’ Lockheed was not charged specifically with
bribery because the U.S. law forbidding bribery was not enacted until
1978. Lockheed pleaded guilty to four
counts of fraud and four counts of making false statements to the government. Mr. Kotchian was not indicated, but under
pressure from the board of directors, he was forced to resign from
Lockheed. In Japan, Kodama was arrested
along with Tanaka.
Questions :
Question. 1. Fully explain the effects that
payment like those which Lockheed made
to the Japanese have on the structure of
a market.
Question. 2. In your view, were Lockheed’s
payments to the various Japanese parties“bribes”
or “extortions” ? Explain your response
fully.
Question. 3.In your judgment, did Mr. A. Carl
Kotchian act rightly from a moral point of view ? (Your answer should take into account the
effects of the payments on the welfare of the societies affected, on the right
and duties of the various parties involved, and on the distribution of benefits
and burdens among the groups involved.)
In your judgment, was Mr. Kotchian morally responsible for his actions ? Was he, in the end, treated fairly ?
Question. 4.In its October 27, 1980, issue,
Business Week argued that every corporation has a corporate culture – that is,
values that set a pattern for its
employee’s activities, opinions and actions and that are instilled in succeeding generations of employees (pp.148-60)
Describe, if you can, the corporate
culture of Lockheed and relate that culture to Mr. Kotchian’s actions. Describe some strategies for changing that
culture in ways that might make foreign payments less likely.
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Case NO. 3
THE NEW MARKET OPPORTUNITY
In 1994, anxious to show off the benefits of
a communist regime, the government of China invited leading auto manufacturers
from around the world to submit plans for a car designed to meet the needs of
its massive population. A wave of rising
affluence had suddenly created a large middle class of Chinese families with
enough money to buy and maintain a private automobile. China was now eager to enter joint ventures
with foreign companies to construct and operate automobile manufacturing plants
inside China. The plants would not only
manufacture cars to supply China’s new internal market, but could also make
cars that could be exported for sale abroad and would be sure to generate
thousands of new jobs. The Chinese
government specified that the new car had to be priced at less than $5000, be
small enough to suit families with a
single child (couples in China are prohibited from having more than one
child), rugged enough to endure the poorly maintained roads that criss-crossed
the nation, generate a minimum of
pollution, be composed of parts that were predominantly made within
China, and be manufactured through joint – venture agreements between Chinese
and foreign companies. Experts
anticipated that the plants manufacturing the new cars would use a minimum of
automation and wuld instead rely on labor – intensive technologies that could
capitalize on China’s cheap labor. China
saw the development of a new auto industry as a key step in its drive to
industrialize its economy.
The
Chinese market was an irresistible opportunity for General Motors, Ford and
Chrysler, as well as for the leading Japanese, European and Korean automobile
companies. With a population of 1.2
billion people and almost double digit annual economic growth rates, China
estimated that in the next 40 years between 200 and 300 million of the new
vehicles would be purchased by Chinese citizens. Already cars had become a symbol of affluence
for China’s new rising middle class, and a craze for cars had led more than 30
million Chinese to take driving lessons despite that the nation had only 10
million vehicles, most of them government – owned trucks.
Environmentalists,
however, were opposed to the auto manufactures’
eager rush to respond to the call of the Chinese government. The world market for energy, particularly
oil, they pointed out, was based in part on the fact that China, with its large
population, was using relatively low levels of energy. In 1994, the per-person consumption of oil in
China was only one sixth of Japan’s and only a quarter of Taiwan’s. If China were to reach even the modes per
person consumption level of South Korea, China would be consuming twice the
amount of oil the United States currently uses.
At the present time, the United States consumes one forth of the world’s
total annual oil supplies, about half of which it must import from foreign
countries.
Critics
pointed out that if China were to eventually have as many cars on the road per
person as Germany does, the world would contain twice as many cars as it
currently does. No matter how “
pollution – free” the new car design was, the cumulative environmental effects
of that many more automobiles in the world would be formidable. Even clean cars would have to generate large
amounts of carbon dioxide as they burned fuel, thus significantly worsening the
greenhouse effect. Engineers pointed out
that it would be difficult, if not impossible, to build a clean car for under
$5000. Catalytic converters, which
diminished pollution, alone cost over $200 per car to manufacture. In addition, China’s oil refineries were
designed to produce only gasoline with high levels of lead. Upgrading all its refineries so they could
make low-lead gasoline would require an investment China seemed unwilling to
make.
Some
of the car companies were considering submitting plans for an electric car
because China had immense coal reserves which it could burn to produce
electricity. This would diminish the
need for China to rely on oil, which it would have to import. However, China did not have sufficient coal
burning electric plants nor an electrical power distribution system that could
provide adequate electrical power to a large number of vehicles. Building such an electrical power system also
would require a huge investment that the Chinese government did not seem
particularly interested in making.
Moreover, because coal is a fossil fuel, switching from an oil – based
auto to a coal – based electric auto would still result in adding substantial
quantities of carbon dioxide to the atmosphere.
Many
government officials were also worried by the political implications of having
China become a major consumer of oil. If
China were to increase its oil consumption, would have to import all its oil
from the same countries that other nations relied on, which would create large
political, economic and military risks.
Although the United States imported some of its oil from Venezuela and
Mexico, most of its imports came from the Middle East – an oil source that
China would have to turn to also. Rising
demand for Middle East oil would push oil prices sharply upward, which would
send major shocks reverberating through the economics of the United States and
those of other nations that relied heavily on oil. State Department officials worried that China
would begin to trade weapons for oil with Iran or Iraq, heightening the risks
of major military confrontations in the region.
If China were to become a major trading partner with Iran or Iraq, this
would also create closer ties between these two major power centres of the
non-Western world – a possibility that was also laden with risk. Of course, China might also turn to tapping
the large reserves of oil that were thought to be lying under Taiwan and other
areas neighboring its coast. However,
this would bring it into competition with Japan, South Korea, Thailand,
Singapore, Taiwan, the Phillippines, and other nations that were already
drawing on these sources to supply their own booming economies. Many of these nations, anticipating heightened
tensions, were already puring money into their military forces, particularly
their navies. In short, because world
supplies of oil were limited, increasing demand seemed likely to increase the
potential for conflict.
Questions :
Question1.In your judgment, is it
wrong, from an ethical point of view, for the auto companies to submit plans for
an automobile to China ? Explain
your answer ?
Answer: The
automotive supplier landscape in China is extremely fragmented. According to
CAAM, there are approximately 8,000 automotive enterprises scattered across
various segments including full vehicle manufacturing, vehicle refitting,
motorcycle production, engine production and automotive parts manufacturing.
Most of these companies specialize in lower-end parts and lack the capital
needed to invest in
Question2. Of the various
approaches to environmental ethics outlined in this chapter,which approach sheds most light on the ethical
issues raised by this case ? Explain
your answer.
Answer: Holism,
or collectivism, as it is sometimes called in this context, can mean a number
of different things and can be interpreted in a variety of ways (and it is in
these multiple interpretations that confusions can easily arise). In most
general terms - and unsurprisingly! - holists or collectivists focus on
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NO.
4
WAGE
DIFFERENCES AT ROBERT HALL
Robert
Hall Clothes, Inc., owned a chain of retail stores that specialized in clothing
for the family. One of the Chain’s
stores was located in Wilmington, Delaware.
The Robert Hall store in Wilmington had a department for men’s and boy’s
clothing and another department for women’s and girl’s clothing. The departments were physically separated and
were staffed by different personnel : Only men were allowed to work in the
men’s department and only women in the women’s department. The personnel of the store were sexually
segregated because years of experience had taught the store’s managers that,
unless clerks and customers were of the same sex, the frequent physical contact
between clerks and customers would embarrass both and would inhibit sales.
The clothing in the men’s department
was generally of a higher and more expensive quality than the clothing in the
women’s department. Competitive factors
accounted for this : There were few other men’s stores in Wilmington so the
store could stock expensive men’s clothes and still do a thriving business,
whereas women’s clothing had to be lower priced to compete with the many other
women’s stores in Wilmington. Because of
these differences in merchandise, the store’s profit margins on the men’s
clothing was higher than its margins on the women’s clothing. As a result, the men’s department
consistently showed a larger dollar volume in gross sales and a greater gross
profit, as is indicated in Table 7.11.
Because of the differences shown in
Table 7.11 women personnel brought in lower sales and profits per hour. In fact male salespersons brought in
substantially more than the females did (see Tables 7.12 and 7.13)
Men’s
Department Women’s Department
|
Men’s
Department |
Women’s
Department |
|||||
|
Year |
Sales ($) |
Gross
Profit ($) |
Percent
Profit ($) |
Sales ($) |
Gross
Profit ($) |
Percent
Profit ($) |
|
1963 |
210,639 |
85,328 |
40.5 |
177,742 |
58,547 |
32.9 |
|
1964 |
178,867 |
73,608 |
41.2 |
142,788 |
44,612 |
31.2 |
|
1965 |
206,472 |
89,930 |
43.6 |
148,252 |
49,608 |
33.5 |
|
1966 |
217,765 |
97,447 |
44.7 |
166,479 |
55,463 |
33.5 |
|
1967 |
244,922 |
111,498 |
45.5 |
206,680 |
69,190 |
33.5 |
|
1968 |
263,663 |
123,681 |
46.9 |
230,156 |
79,846 |
34.7 |
|
1969 |
316,242 |
248,001 |
46.8 |
254,379 |
91,687 |
36.4 |
TABLE
7. 12
|
Year |
Male
Sales per Hour ($) |
Female
Sales Per Hour ($) |
Excess
M Over F (%) |
|
1963 1964 1965 1966 1967 1968 1969 |
38.31 40.22 54.77 59.58 63.18 62.27 73.00 |
27.31 30.36 33.30 34.31 36.92 37.20 41.26 |
40 32 64 73 71 70 77 |
As a result of these differences in
the income produced by the two departments, the management of Robert Hall paid
their male salespersons more than their female personnel. Management learned after a Supreme Court ruiling
in their favor in 1973 that it was entirely legal for them to do this if they
wanted. Wages in the store were set on
the basis of profits per hour per department, with some slight adjustments
upward to ensure wages were comparable and competitive to what other stores in
the area were paying. Over the years,
Robert Hall set the wages given in Table 7.14.
Although the wage differences between males and females were
substantial, they were not as large as the percentage differences between male
and female sales and profits. The
management of Robert Hall argued that their female clerks were paid less
because the commodities they sold could not bear the same selling costs that
the commodities sold in the men’s department could bear. However, the female clerks argued, the
skills, sales efforts, and responsibilities required of male and female clerks
were “substantially” the same.
TABLE
7. 13
|
Year |
Male
Gross Profits per Hour ($) |
Female
Gross Profits Per Hour ($) |
Excess
M Over F (%) |
|
1963 1964 1965 1966 1967 1968 1969 |
15.52 16.55 23.85 26.66 28.74 29.21 34.16 |
9.00 9.49 11.14 1143 12.36 12.91 15.03 |
72 74 114 134 133 127 127 |
TABLE
7. 14
|
Year |
Male
Earnings per Hour ($) |
Female
Earnings Per Hour ($) |
Excess
M Over F (%) |
|
1963 1964 1965 1966 1967 1968 1969 |
2.18 2.46 2.67 2.92 2.88 2.97 3.13 |
1.75 1.86 1.80 1.95 1.98 2.02 2.16 |
25 32 48 50 45 47 45 |
Questions :
Question1.In your judgment, do
the managers of the Robert Hall store have any ethical obligations to change
their salary policies ? If you do not think they should change, then explain
why they have an obligation to change and describe the kinds of changes they
should make. Would it make any difference to your analysis if, instead of two departments
in the same store, it involved two different Robert Hall Stores, one for men and one for
women ? Would it make a difference if two stores (one for men and one for women) owned by
different companies were involved ?
Explain each of your answers in terms of the relevant ethical principles
upon which you are relying.
Answer
:
Question2.Suppose that there were
very few males applying for clerks’ jobs in Wilmington while females were flooding
the clerking job market. Would this
competitive factor justify paying males more than females ? Why ?
Suppose that 95 percent of the women in Wilmington who were applying for
clerks’ jobs were single women with children who were on welfare while 95
percent of the men were single with no families to support. Would this need factor justify paying females
more than males ? Why ? Suppose for the sake of argument that men were better at selling than women; would this
justify different salaries ?
Answer
:
Question3.If you think the
managers of the Robert Hall store should pay their male and female clerks equal wages because they do
“substantially the same work” then do you also think that ideally each worker’s
salary should be pegged to the work he or she individually performs (such as by
having each worker sell on commission) ?
Why ? Would a commission system be preferable from a utilitarian point of
view considering the substantial book keeping expenses it would involve ? From the point of view of justice ? What does the phrase substantially the same
mean to you ?
Answer
:
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NO. 5
NAPSTER’S REVOLUTION
Eighteen – year old Shawn “NAPSTER” Fanning,
then a freshman at Northeastern University, dropped out of school and founded
Napster Inc. (website was at w.w.w.napster.com) in San Mateo, California in May
1999. Two months earlier, working in his
college dorm room, he had developed both a website that let users locate other
users who were willing to share whatever music files they had in MP3 format on
the hard drives of their computers and a software program (called “Napster)
that let users copy these music files from each other over the Internet. When an early free version of the program he
posted on Download.com received more than 300,000 hits and was named “Download
of the week,” he decided to devote himself full time to developing his program
and website. The final version of his
version of his program was officially released August 1999, and in May 2000,
with more than 10 million people – most of them students on college campuses
where Napster was especially popular – signed up at its website, Shawn’s
company received $ 15 million of start – up funds from venture capital firms in
California’s “Silicon Valley.”
Fanning
grew up in Brockton, Massauchettes, the son of a nurse’s aid and the stepson of
a truck driver, in a family of four half-brothers and half-sisters. He got the
nickname “Napster” during a basketball game when a player commented on his
closely cropped sweaty head of hair.
Fanning had taught himself programming and had held several summer
programming jobs.
The
company Shawn helped establish gave the Napster program away for free and
charged users nothing to use its website to post the URL addresses where
personal copies of music could be downloaded.
Nevertheless, a month later, Shawn found himself embroiled in a legal
and ethical controversy when two record tables, two musicians (Metallica and
Dr. Dre), and two industry trade groups of music companies (the National Music
Publishers Association and the Recording Industry Association of America) filed
suits against his young company claiming that Napster’s software was enabling other
to make and distribute copies of copyrighted music that the musicians and
companies owned.
On
June 12, the two industry trade groups filed preliminary injunctions against
the company demanding that it remove all the songs owned by their member companies
from Napster’s song directories.
According to the two groups, a survey of 2555 college students showed a
correlation between Napster use and decreased CD purchases. College students were outraged, especially
fans of Metallica and Dr. Dre. Supporters of Napster argued that Napster
allowed people to hear music that they then went out and purchased, so Napster
actually helped the music companies.
Music sales had increased by over $500 million a year since Napster had
started to operate, but the music companies claimed that this was a result of a
booming economy. Supporters of Napster
also argued that individuals had a moral and legal right to lend other
individuals a copy of the music on the CDs that they had purchased. After all, they argued, the law explicitly
stated that an individual could make a copy of copyrighted music he or she had
purchased to hear the music on another player.
Moreover, according to Fanning, Napster was not doing anything illegal,
and the company was not responsible if other people used its software and
website to copy music in violation of copyright law any more than a car company
was responsible when its autos were used by thieves to rob banks. Much of the music that was downloaded using
Napster, they claimed, was in the public domain (i.e.not legally owned by
anyone) and was being legally copied.
The music companies countered that an individual had no right to give
multiple copies of their music to others even if the individual had paid for
the original CD. If everyone was allowed
to copy music without paying for it, they charged, eventually the music
companies would stop producing music and musicians would stop creating it. Other musicians claimed, however, that
Napster and the Web gave them a way to put their music before millions of
potential fans without having to beg the music companies to sponser them.
In
March 2000, the band Metallica hired consultant PDNet to electronically
“evesdrop” on users who assumed they were anonymously accessing Napster’s
website. The following week the band’s
lawyers handed Napster a list with the names of 300, 000 people that Metallica
claimed had violated its copyrights using Napster’s service and that Metallica
now wanted removed from Napster’s services.
Fanning complied with the demand of Metallica, whose drummer, Lars
Ulrich, was one of his musical heros.
“If they want to steal our music,” said Ulrich, “ why don’t they just go
down to Tower Records and grab them off the shelves ?” Many young people protested that the bands
should not be alienating their own fans in this way. One fan posted a note on an MP3 chat room :
“Give me a break ! I have been dropping
16 bucks an album for Metallica’s music since I was a teenager. They made a fortune off us and now they
accuse us of stealing from them. What
nerve !” Howard King, a Los Angeles
lawyer for Metallica and Dr. Dre, stated that “I don’t know Shawn Fanning but
he seems to be a pretty good kid who came up with a sensational program. But this sensational program has allowed
people to take music without paying ………. Shawn probably had no idea of the
legal ramifications of what he created.
I’m sure the though never crossed his mind.”
In
August 2000, a federal judge in San Francisco, Marilyn Patel, responded to the
suit against Napster. Judge Patel called
Shawn’s company a “monster” and charged that the only purpose of Napster was to
copy pirated music without paying for it.
The judge ordered Napster to remove all URLS from its website that
referenced material that was copyrighted.
Judge
Patel’s ruling would have shut down the company’s website immediately. But a few days later, an appeals court
reversed Judge Patel and allowed the company to continue operating. The reprieve was only temporary. On Monday February 12, 2001, the Ninth
Circuit Court of Appeals in San Francisco affirmed Judge Patel’s ruling. The company attempted to circumvent the
ruling by negotiating agreements with the music companies that would pay them
certain annual fees in return for withdrawing the suit.
Napster
was not the only software that allowed individuals to swap files from
One personal computer to another over the
Internet. The software program named
“Gnutella” let individuals swap any kind
of files – music, text, or visuals – over the Internet, but Gnutella did not
operate a centralized index like the website that Napster had established. Observers predicated that if Napster was put
out of business, numerous underground websites would be created providing the
kind of listing service that the company had earlier provided on its
website. Already a website named
zeropaid.com provided free copies of Gnutella and many other Napster clones
that users could download and use to share digital music files with each
other. Unlike Napster, these software products
did not require a central website to connect users to each other, making it
impossible for music companies to find and target single entity whom they could
sue. Many observers predicated that
Napster was only the beginning of an upheaval that would revolutionize the
music industry, forcing music companies to lower their prices, make their music
easily available on the Internet, and completely change their business
models.
Questions :
Question1.What are the legal
issues involved in this case, and what are the moral issues ? How are the two
different kinds of issues different from each other, and how are they related
to each other ? Identify and distinguish
the “systemic, corporate and individual issues” involved in this case.
Answer
: Maybe the best way to introduce a
discussion of business ethics is by looking at how a real company has
incorporated ethics into its operations. Consider then how Merck &Co.,
Inc., a U.S. drug company, dealt with the issue of river blindness.
River
blindness is a debilitating disease that has afflicted about 18 million
impoverished people living in remote villages along the banks of rivers in
tropical regions of Africa and Latin America. The disease is caused by a tiny
parasitic worm that is passed from person to person by the bite of the black
fly, which breeds in fast-flowing river waters.
Question2.In your judgment, was
it morally wrong for Shawn Fanning to develop and release his technology to the
world given its possible consequences
? Was it morally wrong for an individual to use Napster’s
website and software to copy for free the copy righted music on another
person’s hard drive ? If you believe it was wrong, then explain exactly why it
was wrong. If you believe it was not morally
wrong, then how would you defend your views against the claim that such copying
is stealing ? Assume that it was not Iillegal
for an individual to copy music using Napster.
Would there be anything immoral with doing so ? Explain ?
Answer
: Napster. Kazaa. Morpheus. Gnetella. These
file-swapping services have been the focal point of a
Question3.Assume that it is
morally wrong for a person to use Napster’s website and software to make a copy
of copyrighted music. Who, then, would
be morally responsible for this person’s wrong doing ? Would only
the person himself be morally responsible ?
Was Napster, the company, morally responsible ? Wash shawn Fanning morally responsible ? Was any employee of Napster, the company, morally responsible ? Was the operator of the
server or that portion of the Internet that the person used morally responsible
? What if the person did not know that the music was copyrighted or did
not think that it was illegal to copy copyrighted music ?
Answer : Our reasons for holding this hearing are to learn more about what
is taking
place in the marketplace and, in doing so, better equip us to
advance the interests of consumers and creators. Insofar as consumers are
concerned, they desire
access to downloadable music which is not unnecessarily
restrictive or unduly burdensome. I want to ensure that the marketplace
provides them with the opportunity to access the music they want to hear over
the Internet and to do so legally. Insofar as creators are concerned, I want to
ensure that artists and creators are protected through an approach to copyright
that empowers them to generate maximum revenue for their creative works.
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NO. 6
WORKING FOR ELI LILLY &
COMPANY
Eli Lilly, the discoverer of
Erythromycin, Darvon, Ceclor, and Prozac, is a major pharmaceutical company
that sold $6.8 billion of drugs all over the world in 1995, giving it profits
of $2.3 billion. Headquartered in
Indianpolis, Minnesota, the company also provides food, housing, and
compensation to numerous homeless alcoholics who perform short-term work for
the company. The work these street
people perform, however, is a bit unusual.
Before
approving the sale of a newly discovered drug, the U.S. Food and Drug
Administration requires that the drug be put through three phases of tests
after being tested on animals. In phase
I, the drug is taken by healthy human individuals to determine whether it has
any dangerous side effects. In Phase II,
the drug is given to a small number of sick patients to determine dosage
levels. In Phase III, the drug is given
to large numbers of sick patients by doctors and hospitals to determine its
efficacy.
Phase
I testing is often the most difficult to carry out because most healthy
individuals are reluctant to take a new and untested medication that is not
intended to cure them of anything and that may have potentially crippling or
deadly side effects. To secure test
subjects, companies must advertise widely and offer to pay them as such as $250
a day. Eli Lilly, however, does not
advertise as widely and pays its volunteers only $85 a day plus free from and
board, the lowest in the industry. One
of the reasons that Lily’s rates are so low is because, as a long time nurse at
the Lily Clinic is reported to have indicated, “ the majority of its subjects are homeless alcoholics”
recruited through word of mouth that is spread in soup kitchens, shelters, and
prisons all over the United States.
Because they are alcoholics, they are fairly desperate for money. Because they alcoholics, they are fairly
desperate for money. Because phase I
testes can run several months, test subjects can make as $4500 – an enormous
sum to people who are otherwise unemployable and surviving on handouts. Interviews with several homeless men who have
participated in Lily’s drug tests and who describe themselves as alcoholics who
drink daily suggest that they are, by and large, quite happy to participate in
an arrangement that provides them with “easy money”. When asked, one homeless drinker hired to
participate in a Phase I trail said he had no idea what kind of drug was being
tested on him even though he had signed an informed – consent form. An advantage for Lilly is that this kind of
test subject is less likely to sue if severely injured by the drug. The tests run on the homeless men, moreover,
provide enormous benefits for society.
It has been suggested, in fact, that in light of the difficulty of
securing test subjects, some tests might be delayed or not performed at all if
it were not for the large pool of homeless men willing and eager to participate
in the tests.
The
Federal Drug Administration requires that people who agree to participate in
Phase I tests must give their “ informed consent” and must take a “ truly
voluntary and a uncoerced decision.”
Some have questioned whether the desperate circumstances of alcoholic
and homeless men allow them to make a truly voluntary and uncoerced decision
when they agree to take an untested potentially dangerous drug for $ 85 a
day. Some doctors claim that alcoholics
run a higher risk because they may carry diseases that are undetectable by
standard blood screening and that make them vulnerable to being severely named
by certain drugs. One former test
subject indicated in an interview that the drug he had been given in a test
several years before had arrested his heart and “ they had to put things on my chest to start my heart up
again.” The same thing happened to
another subject in the same test.
Another man indicated that the drug he was given had made him
unconscious for 2 days while others told of excruciating headaches.
In
earlier years, drug companies used prisoners to test drugs in Phase I
tests. During the 1970s, drug companies
stopped using prisoners when critics complained that their poverty and the
promise of early parole in effect were coercing the prisoners into “Volunteering”. When Lilly first turned to using homeless
people during the 1980s, a doctor at the company is quoted as saying, “ We were
constantly talking about whether we were exploiting the homeless. But there were a lot of them who were willing
to stay in the hospital for four weeks.”
Moreover, he adds. “Providing
them with a nice warm bed and good
medical care and sending them out drug – and alcohol – free was a positive
thing to do.”
A
homeless alcoholic indicated in an interview that when the test he was
participating in was completed, he would rent a cheap motel room where I’ll get
a case of Miller and an escort girl have sex.
The girl will cost me $ 200 an hour.”
He estimated that it would take him about two weeks to spend the $ 4650
Lily would pay him for his services. The
manager at another cheap motel said that when test subjects completed their
stints at Lily, they generally arrived at his motel with about $ 2500 in cash :
“ The guinea pigs go to the lounge next
door, get drunk and buy the house a round.
The idea is, they can party for a couple of weeks and go back to Lily
and do the next one.”
Questions :
Question1.Discuss this case from the perspective of utilitarianism,
rights, justice and caring. What insight
does virtue theory shed on the ethics of the
events described in this case ?
Answer: Philosophers have long
reflected on the role that art can play in contributing to ethical reflection
and political discussions (e.g. Caroll2001, Nussbaum 2001, Gaut2007, Adorno et
al. 1980, Rorty1989, Butler and Sontag 2007, Kompridis2014). These philosophers
have discussed works of art mainly to the extent that such works provide
insights into interpersonal and societal relationships, as well as into the
development of personal virtues. In his seminal work A Theory of
Question2.“ In a free enterprise society all adults should be
allowed to make their own decisions about
how they choose to earn their living.” Discuss
the statement in light of the
Lily case.
Answer: Economic activity provides
the material means for all our ends. At the same time, most of our individual
efforts are directed to providing means for the ends of others in order that
they, in turn, may provide us with the means for our ends. It is only because
we are free in the choice of our means that we are also free in the choice of
our ends.
Economic freedom is thus an
indispensable condition of all other freedom, and free enterprise both a
necessary condition and a consequence of personal freedom. In discussing The
Moral Element in Free Enterprise I
Question3.In your judgment, is the policy of using homeless
alcoholics for test subjects morally
appropriate ? Explain the reasons for
your judgment. What does your judgment
imply about the moral legitimacy of a free market in labor ?
Answer: As almost any economics
text will point out, money (and I include here checks, credit cards, etc.
--when there is money to make them good, and in those situations where they can
be used just like money) is a very useful medium of exchange for trading
products because it is generally or universally accepted and therefore widely
convertible to available products or services (and thus allows multiple party,
sequential or non-simultaneous trades rather than your having to find someone
whose specific product or service is what you want and who will be willing to
trade it
Question4.How should the managers of Lily handle this issue ?
Answer: I want to make clear what
I think the point or value of an economic system or economic thinking is.(1)
Defining an economic system is itself problematic, for it might include only
those people involved with each other in a particular way, anywhere in the
world --for example, ship builders in Japan, oil companies in Great Britain who
buy those ships, bankers in New York who finance them, and the people who work
the oil fields in Saudi Arabia to supply them. Or an economic system may
include all the inhabitants of a specific geographical or political area,
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