Case Study I
Is Bluffing Ethical?
The recent financial crisis and thereafter recession sent shockwaves through the U.S. economy. Many businesses had to scale back, file for bankruptcy, or even close altogether. The jewelry business is no different, increasing levels of unemployment and stagnant wages caused many to limit their discretionary spending. In our example, the jewelry chain turned to debt financing to ensure the survival of their business. However, this practice was unsustainable, which put this business in a position where filing for bankruptcy was an enticing prospect. In spite of their struggling financial position, the Rolex representative for the business presents an interesting proposition, the jewelry company can enter a three million dollar, debt financed, commitment to sell a new line of watches that could potentially save their business. This presents an ethical dilemma, does the jewelry business enter the commitment knowing they do not have the funds to meet it? The act that would the greatest good, or rather the fewest negative repercussions, for the greatest number would be to purchase the inventory from Rolex in hopes it would solidify their financial position, or provide potential leverage before the business files for bankruptcy.
An ethical theory that would support this argument would be the consequentialist view. This view argues that the act of bluffing, or any act altogether, is not inherently evil. Rather, a consequentialist believes that the factor that determines the rightness or wrongness of an act is the consequence or aftermath that comes from an act. When applying this view to the case of the jewelry store, it would not matter if the company possessed the means to pay for the watches...
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...great financial shape, attempted to enter into an agreement with the company. Therefore, his potential choice to enter the agreement would be entirely ethical. The business owner did not break any laws or attempt to intentionally misguide the representative concerning the position of his business.
Bluffing is very common, and sometimes even expected in business. It is often seen as a way of strengthening ones position and creating more favorable conditions. In like matter, entering the contract with Rolex to sell the new watches would be strengthening the position of the business. As a result of this improved position, the business could, in the worst case, have a better position while going through bankruptcy but in the most likely course of action, save the business from bankruptcy. Hence, benefitting the ownership, employees, and the Rolex representative alike.
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