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Social responsibility towards the competitors

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Social responsibility towards the competitors

  2. 2. Agenda Overview of CSR Unfair Competition -Definition -Antitrust laws Cartels Intellectual Property Rights
  3. 3. CSR Overview  CSR policy function as built-in, self-regulating mechanism whereby business monitors and ensures its actives compliance with the spirit of the laws, ethical standards, and international norms.
  4. 4. Unfair Trade Practice Resorting to unethical business behavior to gain a competitive edge (Advertising fraud, patent/ trademark infringement, socially irresponsible gimmicks, etc.)
  5. 5. REASONS why companies resort to Unfair Trade Practices  Globalization of Competition  Better Informed & more discerning customers  Increasing number of competitors  Rapid advance in both soft &hard technology  Advance in scientific fields
  6. 6. In short, competition is getting stiffer & stiffer, any kind of edge will count, which is why some companies resort to unethical practice.
  7. 7. When does competition become UNFAIR? When profit maximization becomes the sole driving force of the business that it pursues it with any means necessary. Resorting to: .Fraud .Violation of Human Dignity .Patent/ Trademark Infringement .Socially Irresponsible gimmicks
  8. 8. ANTI TRUST LAWS TRUST: or Corporate Monopoly was Created for the Purpose of eliminating competition in an area of business & of controlling the market for a product.
  9. 9. Coverage of Anti trust Laws Price fixing between competitors Abuses of market power by a monopolist or dominant firm Agreement between competitors to restrict output
  10. 10. Price Fixing between Competitors Price: often the principal way by which firms compete Agreements on price initiatives, price ranges, price targets, collusion between competitors on the floor prices are generally illegal under antitrust laws.
  11. 11. Are similarity of prices, simultaneous price changes, or high price, indications of price fixing? NO, Not always… Supply and demand can cause these. Price fixing must be PROVEN. (systematic exchange of pricing information between competitors)
  12. 12. How do we determine the JUST PRICE Pricing Process: require business to effectively calculate resources/needs, supply and demand. Just Price: one in which both buyer & seller are given what is due the ( price a manufacturer chargers its customers for G&S is total cost investment plus normal profit)
  13. 13. “Buying & Selling were instituted for the common good of both parties since each needs the product of the other.. Therefore, the contract between them should rest upon equality of the thing to things. The measure of the value of a thing which is exchanged should be given by its money price. Hence to sell a thing dearer or buy it cheaper than it is worth is unjust.” -St. Thomas Aquinas
  14. 14. Abusing Market Dominance Dominance: refers to a position of considerable economic power in a market held over a period of time.
  15. 15. Why is the abuse market dominance unethical, socially irresponsible and anticompetitive? New rivals are barred to compete Prices controlled are above the equilibrium level The product becomes the sovereign of the market
  16. 16. Oligopoly: Agreements between Competitors Oligopoly: agreements between competitors wherein prices can be set at highly profitable levels & restricts competition
  17. 17. Why is oligopoly wrong? 1. It is basically a MONOPOLY 2. NO competition= no benefits to the consumer - no improved product quality - no better price - no choice
  18. 18. CARTELS A Cartel is a formal (explicit) agreement among competing firms. It is a formal organization of producers and manufactures that agree to fix and production.
  19. 19. Strategies of Cartels Market division & Market Sharing Agreements between competitors to restrict output Collective boycotts Resale price maintenance agreements
  20. 20. -conformity among competitors to divide sales territories or allocate customers (agreement no to complete) Market division & Market Sharing
  21. 21. Agreements between competitors to restrict output -collusion between competitors to restrict production facilities in order to drive up the price
  22. 22. Collective boycotts -conformity between competitor not to deal with another person or business (illegal because it twist/deforms the competitive process by foreclosing competitive opportunities for suppliers or by denying customer choice)
  23. 23. Resale price maintenance agreements -agreement between a supplier & dealer that fixes the minimum resale price of the a product
  24. 24. GREY AREAS An agreement between competitors to adopt standards that require fire-resistant materials for certain products. Con: the agreement to adopt is restrictive. The manufacturers have limited their own ability to use other materials & have limited supplier choice Pro: will benefit consumers in terms of safety
  25. 25. INTELLECTUAL PROPERY RIGHTS -constitutes those original creative works that have economic value & are protected by law.
  26. 26. REASONS They reward the creators of original works by preventing others from copying, performing of distributing those works without permission They provide incentives for people to produce scientific & creative works that benefit society at large
  27. 27. PATENT LAW -protect inventions that demonstrate technological progress
  28. 28. COPYRIGHT LAW -Protect a variety of literary & artistic works, including paintings sculpture, prose, poetry, plays musical competitions, dances photographs, motion picture, radio, TV, computer programs
  29. 29. TRADEMARK LAW -Protects words & symbols that serve to identify different brands of G&S in the market place
  30. 30. COUNTERFEITING -A criminal offense of making an imitation of an article with intent to defraud others into accepting it as a genuine item