International Legal and Ethical Issues In Business

International Legal and Ethical Issues In Business

The business environment includes two types of operators: small-scale business dealers and large-scale business dealers. Great dealers dominate the market and operate as monopolies most of the time, resulting in fewer opportunities for smaller ones. As a result, the law must protect smaller businesses from the dominance and trust of giant and established corporations. Antitrust laws are one example of such laws, which aim to prevent large corporations from abusing their market economies of scale. These laws regulate the level of competition to avoid adverse market conditions. As the study elaborates, several ethical and legal issues are related to business regulation.

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Exemplification 1

According to the case facts, there are several reasons why the drugmaker would prefer to stymie the competition. TTheical industry is susceptible, and any strategy miscalculations would result in revenue loss. Drug companies want to make as much money as possible from their sales. When provided at a lower cost, generic products or brands can sometimes give equal benefits. As a result, drug companies would suffer significant losses if they gave generic drug brands equal market access. The alternative is to reduce generic competition to a level that does not pose a threat (Andrews, 2009).

Furthermore, the drug manufacturer incurs high costs in the production and distribution of the drugs. The sales process must generate profits to compensate because the sales process must generate profits to pay. After all, the business requires a significant capital outlay, such as compliance with the law and regulations. Thus the product’s success is critical. In such a case, the drugmaker must do everything possible to eliminate any competition, such as generic competition, to ensure his work’s successors would be obstacles to maximizing profitability and attracting more investors.

There are legal barriers to entry into the operational market in every business. In our case, the pharmaceutical industry has its own set of challenges. To begin, some manufacturers have patent licensing agreements. In this case, the pharmaceutical manufacturer must have sufficimarketing power to exclude smaller and itinerant generic competitors (Dimitry, 2010). CVS is an example of a large pharmaceutical company. Consider the following scenario: a retailer or a supplier signs an exclusive contract with CVS, implying that no other generic dealers will have access to such a retailer. Furthermore, some key companies may be able to obtain raw materials at a lower cost than smaller competitors. It implies they will have a more significant competitive advantage because smaller generic businesses will incur higher charges in producing comparable drug brands than larger ones.

The preceding example depicts dilemma scenarios, particularly those involving ethical practices. The first difficulty is the possibility that larger pharmaceutical firms, due to their large economies of scale, can control strategic drug raw materials and ingredients. Similarly, the trial of smaller generic competitors may go unnoticed due to the dominance of the larger generic competitors. This is because of the larger generic competitors for this. Established pharmaceuticals may defame the smaller ones and total assets, such as advertising channels, to discredit the more minor drugs. As a result, larger pharmaceutical companies have more bargaining power, which may lead to these companies buying out large-scale suppliers like CVS from collaborating with generic producers (Roth, 2009). As a result, there is a disparity in the industry and the formation of monopolies. Smaller competitors have no chance of reaching their full potential.

Example No. 2

As a result of this case, some consumers may express dissipation with the merger’s prospects. To begin, the union may reduce the ducts and services provided (Dimitry, 2010). Consider the example of Apple Inc—furthermore, AT&T Company. AT&T was the iPhone’s exclusive carrier when it was first introduced. This implies that no other mobile phone manufacturers could compete with AT&T. The collaboration of these two companies resulted in a telecommunications behemoth. As a result of this investment strategy, customers were required to sign long-term contracts to use their iPhone smartphones (Carroll, n.d.).

Similarly, consumers may react due to rising costs associated with new mergers and partnerships. The example of Apple explains this, and AT&T. Customers could not afford the iPhone and other products produced by the association. Furthermore, consumers had to pay more for telecommunication carrier fees and other accessories. As a result of the excessive payments, consumers were locked out.

Aside from pricing, there are some drawbacks that consumers have tolerated when there is a merger. The quality of the products and services produced and provided due to the union may change. Any changes in the production of previously offered products and services by single companies would compel customers to comply with the new conditions. For example, an upgrade in products and services would require customers to agree or disagree on the unique quality, as some would prefer previous versions of the service or product in question.

As a result of the merger, a completely new business will be formed, and customers will lose their previously developed customer loyalty and attachment to independent customers. Mergers result in the restructuring of the combined company, and any previous favors customers received would no longer exist in such a new business.

The case presents several ethical quandaries concerning business practices. The first scenario is customer dissatisfaction with the newly formed partnership or the contract. The point of Apple and AT&T provides a good explanation. The collaboration between these two companies required that the clients eliminate their monthly bill payments for telecommunication services by establishing a yearly payment contract with a three-year minimum period (Carroll, n.d.). Most customers may be dissatisfied with such a decision because the lengthy contract may limit their ability to terminate the agreement if they so desire.

Similarly, some penalties may be associated with the agreements established under a new merger. For example, in Apple Inc. and AT&T, the three-year contract requires imposing penalties on clients who breach the agreement. As a result, customers who wish to subscribe to services from other providers may be inconvenienced because they must pay an additional penalty. The gist of this scenario is that mergers and other business contracts involving two companies limit customers’ ability to make independent and free decisions.

Customers must also comply with new regulations imposed on the newly merged businesses. Monitoring agencies such as the Federal Trade Commission may require that linked companies establish new rules and policies, which are then extended to customers, who must comply if they want to use the company’s services (Federal Trade Commission, n.d.).

Finally, ethical and legal issues are critical in guiding business participants such as households and firms. The law must be put in place to ensure that established businesses that benefit from significant economies of scale do not abuse their power by attempting to kick out or bar generic competitors. If only larger businesses existed, the market would be unbalanced. Similarly, companies should offer advantageous deals to their customers. Apple and AT&T are two examples of companies that create poor customer conditions. Mergers and partnerships should aim to provide better terms for their customers, not to drive them to other competitors in search of better deals.

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References

Andrews, J. (2009). Drug Competition In Peril. The Baltimore Sun. Retrieved from http://articles.baltimoresun.com/2009-08-28/news/0908270062_1_biologics-generic- versions-market-exclusivity

Carroll III, J. (n.d.). The Apple iPhone and AT&T Story: Customer Experience and Partnerships. IPSOS. Retrieved from http://www.ipsos-na.com/knowledge- ideas/loyalty/points-of-view/?q=customer-experience-and-partnerships

Dimitry, K. (2010). International Legal and Ethical Issues in Business. Just Answer. Retrieved from http://www.justanswer.com/business-law/3depz-international-legal-ethical-issues- business.html

Federal Trade Commission. (n.d.). Exclusive Dealing or Requirements Contracts. Retrieved November 4, 2015, from https://www.ftc.gov/tips-advice/competition- guidance/guide-antitrust-laws/dealings-supply-chain/exclusive-dealing-or

Roth, Z. (2009). Drug Makers Paying off Competitors to Keep Cheap Generics Off-Market.OffM. Retrieved from http://talkingpointsmemo.com/muckraker/drug-makers- paying-off-competitors-to-keep-cheap-generics-off-market

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Go to the American Nurses Association website https://www.nursingworld.org/. You will be redirected to an external site. Find an article there about ethics and legal issues that interest you. Then, read and cite one of these articles in your discussion. Post your initial discussion post by Wednesday and two response posts by Friday.

Items to include in this discussion:

1. Discuss the pros and cons of your chosen legal or ethical issue.
2. Give examples of possible scenarios to support both sides of the case.
3. Include current HIPAA regulations in your discussion.