Business Ethics Case Study: Merck

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Questions and Answers

What is the primary aim of ethics as described?

To determine the legality of corporate actions

To establish reasonable moral standards that individuals can accept (correct)

To create a universal set of rules for all individuals

To describe how different societies approach morality

How do ethics differ from social sciences in studying morality?

Both ethics and social sciences study morality in the same way

Ethics studies morality from a legal perspective, while social sciences focus on behavior

Ethics studies morality descriptively, while social sciences study it normatively

Ethics is normative, while social sciences engage in a descriptive study of morality (correct)

What viewpoint do some theorists hold regarding moral responsibility of corporations?

Moral notions apply solely to individuals and not corporations (correct)

Corporations should be considered morally responsible like individuals

Corporations can never commit immoral actions

Only shareholders of corporations should be held accountable for their actions

What was the main controversy surrounding the Arthur Andersen case?

Whether corporations should be charged instead of individuals Signup and view all the answers

What do critics argue regarding the accountability of corporate behavior?

Individuals act on behalf of corporations and should be responsible for their actions Signup and view all the answers

According to the content, how might corporate culture influence ethical behavior?

It directs and shapes the decisions and actions of individuals. Signup and view all the answers

What conclusion can be drawn regarding corporate organizations and moral duties?

Corporate organizations can have moral duties and responsibilities for their actions. Signup and view all the answers

In the context of ethics, how is the role of individuals within a corporation viewed?

Individuals’ actions contribute to the corporate culture and moral responsibility. Signup and view all the answers

What is a significant driver of international business activity in newly industrialized countries?

Low wages and growing markets Signup and view all the answers

Which of the following statements best reflects the morality of the free market system?

It relies on competition for fair resource allocation. Signup and view all the answers

What percentage of New York Stock Exchange companies were involved in antitrust suits in the previous five years?

10% Signup and view all the answers

What economic model is characterized by no buyer or seller being able to significantly affect the price of a good?

Perfect competition Signup and view all the answers

What is the primary ethical concern with anticompetitive practices within the market?

They can lead to market monopolization. Signup and view all the answers

What percentage of corporate executives believe many businesses engage in price fixing?

60% Signup and view all the answers

Which form of market competition involves a few firms dominating the market?

Oligopoly Signup and view all the answers

Why is it critical for a market to maintain its competitiveness?

To justify the existing economic system. Signup and view all the answers

What was the primary ethical dilemma faced by Merck regarding Ivermectin?

The victims were mostly impoverished individuals. Signup and view all the answers

What decision did Merck ultimately make regarding the distribution of Ivermectin?

They gave the drug away for free. Signup and view all the answers

What potential consequence did Merck fear about developing the human version of Ivermectin?

It might harm their profitable animal drug sales. Signup and view all the answers

What financial investment was estimated for the development of the human version of Ivermectin?

$100 million Signup and view all the answers

What was the total annual sales figure for Merck mentioned in the case?

$2 billion Signup and view all the answers

What societal issue was highlighted in the case study concerning the victims of river blindness?

They largely had no access to any medical treatment. Signup and view all the answers

How did Merck's decision regarding Ivermectin challenge common assumptions about corporate behavior?

Companies can balance profit with ethical obligations. Signup and view all the answers

What is a potential criticism of the ethics of care?

It can lead to unjust favoritism. Signup and view all the answers

What legislative change was mentioned that could impact competition in the drug industry?

The Drug Regulation Act Signup and view all the answers

When should utilitarian standards be applied?

When resources are insufficient to meet everyone's objectives. Signup and view all the answers

Which standard must be employed to evaluate how benefits and burdens are distributed?

Standards of justice Signup and view all the answers

What comprises moral reasoning concerning individuals' treatment?

Evaluating special duties and agreements. Signup and view all the answers

What is a strategy to incorporate different moral considerations into reasoning?

Ask systematic questions about utility, rights, justice, and caring. Signup and view all the answers

Which standard is essential for addressing moral questions within close relationships?

Standards of caring Signup and view all the answers

Which of the following is NOT one of the four main kinds of basic moral considerations?

Philosophical standards Signup and view all the answers

What potential outcome can arise from the ethics of care?

Experiencing caregiver burnout. Signup and view all the answers

What does Bentham define as the right action from an ethical standpoint?

An action that produces the greatest sum total of utilities for all involved. Signup and view all the answers

Which of the following is NOT one of the three considerations outlined for determining moral actions?

Estimate the resources necessary to perform the action. Signup and view all the answers

Why is utilitarianism often appealing in discussions about government policy?

It seeks to identify actions that provide the greatest societal benefits for the least cost. Signup and view all the answers

How do traditional utilitarians view the morality of an action?

Each action must be evaluated based on its specific circumstances. Signup and view all the answers

What is a key criticism of utilitarianism regarding moral actions?

It denies that actions can be universally classified as right or wrong. Signup and view all the answers

What is meant by 'the greatest sum total of utility'?

Producing the most overall happiness and welfare for all affected parties. Signup and view all the answers

How does utilitarianism relate to the perception of immoral actions, such as lying?

Lying is deemed immoral due to its long-term costly effects. Signup and view all the answers

What aspect of economics has been influenced by utilitarian views?

The evaluation of actions based on overall welfare and utility. Signup and view all the answers

What do Friedrich A. Hayek and others believe should be the role of government in a free market economy?

To allow free exchanges by protecting property rights Signup and view all the answers

What is the core principle of Locke's view on private property?

Labor expended on a thing grants ownership rights Signup and view all the answers

Which advantage does Adam Smith's theory of absolute advantage emphasize?

Free trade allows countries to maximize their economic well-being Signup and view all the answers

According to the content, what is one of the influences of Locke's views on property in American law?

Private property rights are nearly absolute Signup and view all the answers

What does Smith suggest about workers in specialized production?

They gain skill through repeated tasks Signup and view all the answers

What does Locke's theory imply about economies incorporating free markets?

Free markets align with individual liberty and property rights Signup and view all the answers

Which factor does Smith identify as a reason for greater efficiency in production?

Long production runs create effective methods Signup and view all the answers

What is the significance of country-specific advantages in Smith's theory?

They are essential for understanding market dynamics Signup and view all the answers

Study Notes

Introduction

Business ethics deals with the moral implications of business actions
The text presents a case study of Merck, discussing their decision to release a potentially life-saving drug for free
Merck's managers felt morally obligated to develop the drug, even though it might not generate profits
Ethical behavior can often benefit a company in the long run
Ethical decisions are not always clear-cut and companies have responsibility to shareholders
Companies that engage in unethical behavior often face consequences

Business Issues

Ethics is the study of morality, a field of investigation
Ethical principles guide individual and group conduct
Personal ethics and professional ethics impact different contexts
Defining the differences between morality and ethics: Ethics examines morality whilst morality is the subject matter of ethics study
Moral standards are standards for right and wrong, often deeply held
Moral standards differ from non-moral standards by addressing substantial harm or benefit to human kind
Moral standards are not subject to authority figures
Moral standards should be prioritized over self-interest, and are made with impartiality considerations

Theory of Ethical Relativism

Some theorists argue that moral notions apply only to individuals and not organizations
In 2002, Arthur Andersen was charged for obstructing justice in helping Enron Hide its debts
Critics argue that companies should not be held responsible for actions of employees, as only people can act
Ethical relativism posits that different cultures have different ethical beliefs
There is no single right answer to ethical dilemmas because of diverse cultural norms
Cultural relativism is the belief that morality varies from culture to culture
Ethical relativism contends that there are no universal moral principles

Moral Developments and Moral Reasoning

Moral development is a process of growth in ethical awareness, reasoning and actions
Kohlberg's Stages of Moral Development identifies six stages:
- Punishment and obedience orientation
- Instrumental and relativity orientation
- Interpersonal concordance orientation
- Law and order orientation
- Social contract orientation
- Universal ethical principles orientation

Moral Reasoning

Moral reasoning involves both understanding moral standards and applying them to specific cases.
Moral reasoning depends on logical thinking, accurate facts and consistent moral standards.
Moral reasoning should consider all reasonable perspectives

Utilitarianism

Utilitarianism is a consequentialist approach to ethics
Determining right or wrong by focusing on the best outcome producing the greatest happiness for the greatest number
Calculating the costs and benefits of an action
An action is right if and only if the sum total of utilities produced by that act is greater than the sum total of utilities produced by any other act.
Critics of utilitarianism raise concerns about measuring and predicting consequences.

Universalizability and Reversibility

Universalizability requires acting on principles that everyone could act on.
Reversibility requires being willing for others to act on the same principles.
This approach differs from utilitarianism (which focuses on consequences) and instead focuses on the reasons behind the actions

Justice and Fairness

Justice concerns the fair allocation of benefits and burdens in society
Distribution of resources, responsibilities, burdens and punishments
Compensatory justice seeks to compensate individuals for losses caused by others
Distributive justice aims for fair distribution of societal benefits and burdens

Free Trade Theories

Free-market economic systems assume that individuals act in self-interest.
Free trade is about maximizing utility through specialization
Individuals benefit from specialization and exchange, as they can get more for less
Critics like Marx argue that free market systems lead to inequality, and may not be fair to everyone

Competition and the Market

Analysis of perfect competition: the buyer and seller's actions impacting other parties are not significant
Monopoly where a single seller holds a significant portion of the market
Oligopoly where a limited number of sellers dominate the market.
Factors affect a free market equilibrium.
- The demand side (buyers): Diminishing marginal utility—the less buyers consume, the less they are willing to pay
- The supply side (sellers): Increasing marginal costs—the greater the output, the more costly it becomes for sellers to produce more
Critics of utilitarian analyses of markets, raise concerns about measuring costs and benefits accurately

The Ethics of Care

The ethics of care emphasizes relationships and concrete interactions amongst people.
Special consideration is made for vulnerable communities.
Prioritsizes caring for dependent and vulnerable parties
Interdependence, and consideration for others
Ethics of care and justice are not mutually exclusive, but rather complementary

Moral Virtue Ethics

Virtue ethics focuses on the character traits of a morally good person.
Habits, or character traits, that produce good actions.
Focus on the moral qualities or virtues of an individual
Individuals strive to develop virtues and live in accordance with their virtues, to pursue excellence in their activities.

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Description

Explore the complexities of business ethics through the case study of Merck and their decision to release a drug for free. This quiz delves into the moral implications of business actions and the impact of ethical behavior on long-term success. Understand the differences between personal and professional ethics and the consequences of unethical conduct.