Price Gouging - Case Study Example

Assignment In the recent past, it cannot be disputed that the corporate environment is increasingly becoming very complex and extremely competitive. As such, the business owners at all levels are going to great lengths to put sufficient measures in place to address the emergent challenges in a timely manner. Respective measures are geared towards cushioning them against the negative implications that stem from the increased competition. To a great extent, dealing with the challenges in an effective manner is requisite for corporate success. One of the important goals of the respective measures pertains to the need to maximize profits and minimize costs. Undoubtedly, this gives the business owners a competitive edge and helps them to stay way ahead of their challenges. Relative strategies are sustainable and play an instrumental role in enhancing growth and development. Nonetheless, it is worth appreciating that the respective measures have been compounded by various legal as well as moral controversies. As much as the business owners would wish to establish and maintain optimal growth, it is also important to ensure that the measures they take are within the social, moral and legal confines. In this respect, it should be acknowledged that the social values and virtues provide an important basement upon which all corporate activities should be based. It is against this background that this paper analyzes the concept of price gouging in light of the first case study. In detail, it underscores the moral and legal concerns that stem from the respective case study. In light of this context, price gouging is a malpractice that is defined by business owners extracting more money than what the industry demands from the consumers (Alas and Tafel 376). The main aim of such business owners is usually to make exorbitant profits in a bid to stay ahead of their competitors. Other reasons that make these corporate stakeholders to assume this particular practice pertains to the need to maintain the corporate pace and be at par with their competitors. As aforementioned, this practice is contentious and generally compounded by various controversies. While the business owners believe that this is aimed at furthering their good, the consumers suffer immensely as they struggle to shoulder the relative costs. In this particular case study, Joshua Thompson, a consumer in the movie industry is troubled by the practices that are assumed by the theatre owners. Previously, the avid movie goer used to buy his own snacks in an effort to reduce the costs that he used to incur. However, the management of the movie house recently announced that its consumers are not allowed to bring snacks to the movie house. Of great interest however is the fact that the movie owners charge very high prices for their snacks that can be found cheaply in the market. Thompson asserts that the prices of the snacks are outrageous and contends that the consumers are being over exploited by the movie owners. For this reason, he decides to take legal measures against that particular movie house. From an ethical point of view, Thompson assumes a moral responsibility of protecting the entire consumer base against the malicious practices of the movie owners. His argument in this regard is based on the legal provisions by the Michigan Consumer Protection Act (Berrman 66). This is a state statute whose role is to protect the consumer base against business malpractices such as price gouging. His legal advisors encouraged him and the lawyers maintained that the particular movie house compensates all clients that had previously been affected in different ways by this particular malpractice. Undoubtedly, the rights of the consumers in this case had been violated. Recent market researches indicate that indeed, movie house owners have continued to extract excess cash from the consumer base through hiking of prices. Statistical evidence ascertains that consumers now pay close to four times more than what they are legally required to pay (Adkins and Radtke 282). Since their options are limited, they are compelled to pay up the price in order to enjoy the respective services. The movie owners on the other hand argue that the maintenance and running costs are extremely high. For this reason, they are also compelled to take practical measures to address the same. Nonetheless, De George contends that the prices that are charged are very high and enable the movie owners to make a profit of up to 80% (De George 116). In this respect, it is certain that indeed, the movie owners are over exploiting the consumers. As much as they must take measures to maintain an upward growth by ensuring that they make profits, they should also put in consideration the consumer needs. Arguably, this would make their practices more sustainable and very rewarding. Accordingly, one of the moral concepts that emerge from the price gouging practice pertains to coercion. In light of the case study, the movie owners are immoral because they indirectly force the consumer base to pay up the raised prices. From a moral point of view, Abrams indicates that this is akin to a coercive threat of offer (Abrams 10). Presumably, the movie owners are charged with the ethical responsibility of providing the consumer base with the required goods and services in a timely manner and at reasonable prices. Reasonable in this context refers to either the price that is required or one that is much lesser than that of the market price. Coercion from this point of view is apparent because of the fact that the market conditions compel the consumers to pay the price regardless of their knowledge that the rates are high. In other words, the clients have limited options and therefore cannot simply refrain from paying up the price. According to Arnold, the practice that is assumed by the movie owners is immoral because of its inherent wrongful exploitation (Arnold 417). In this respect, the movie owners are taking advantage of the vulnerability of the consumers to benefit from them. The consumers are vulnerable because they cannot find relative services elsewhere at a cheaper price. Seemingly, the trend has been very persistent and most of the movie owners in almost all places across the nation have assumed the trend. For this reason, the consumers actually have limited options and for them to continue enjoying the services, they are compelled to pay the price that is quoted for them. The decision that Thompson takes to move to court on the other hand is ethical. This is aimed at enhancing the holistic wellbeing of the consumers. From a utilitarian point of view, all activities as well as motives that are geared towards increasing the degree of happiness of the clients is morally permissible (Agle and Van Buren 572). Certainly, the decision that is undertaken by Thompson to curb the practice would be beneficial to the entire consumer base. Seemingly, this practice has also raised various legal concerns. As mentioned earlier, the facts to this case are within the provisions of the Michigan Consumer protection Act. This Act aims at protecting the diverse needs of the consumer against the unethical malpractices that are assumed by the business owners. According to Trevino and Nelson, the Act seeks to check instances of unfair competition as well as deceptive practices (Trevino and Nelson 71). Specifically, it prohibits up to nine deceptive, unfair and unconscionable business practices. The Act is applicable to individuals as well as businesses and different types of trades. One of the shortcomings of this Act pertains to its failure to detail its provisions for each industry. This according to Liuzzo has greatly compromised its application process (Liuzzo 83). In particular, this shortcoming has made it difficult for it to be effected accordingly. This can be used to explain why the movie owners claim that their practices are within the legal confines because they are not covered by the provisions of this law. To this effect, it is imperatively important for the inherent gaps to be bridged accordingly. This would go a long way in easing the application process and enhancing its effectiveness in fighting price gouging. According to Agle, Donaldson and Freeman, the Act plays an instrumental role in checking the immoral practices of the business persons (Agle, Donaldson and Freeman 153). It has benchmarks that are employed for determining whether the behaviors and conduct of the business persons are lawful. It detects any unlawful practices and seeks to address these by ensuring that the respective person faces the legal procedure. For the law to be effective in fighting the emergent crimes, it needs to be amended accordingly. Relative measures would play a leading role in addressing the problems that the consumers are currently facing. In addition, the characteristic publicity would inform the consumer base about its rights. To a great extent, this would increase their participation in fighting crimes and encouraging ethical practices within the business sphere. Undoubtedly, the outcomes would be more rewarding and probably, the behavior would be checked. In conclusion, Thompson’s case study underscores the immoral and unethical practices that are currently assumed by business persons in the movie industry. As it has come out from the study, movie owners charge exorbitant prices for the snacks and food provided at their joints. Their behaviors in this respect are influenced by the increasing competition in the business sphere. Seemingly, this requires them to take practical measures towards maintaining high profits. This practice however contravenes the Michigan Consumer Protection Act that is responsible for protecting the holistic welfare of consumers. The practice by movie owners is unethical because of its characteristic coercion and exploitation of the consumer base. Furthermore, its outcome decreases the level of happiness of the consumers. The Michigan Consumer protection Act on the other hand has not been very effective in addressing this emergent issue. This is attributable to the intrinsic gaps that undermine its effective application. These need to be checked in order to attain optimal outcomes in the fight against crimes. Works Cited Abrams John. Conscious growth. Business Ethics, 18.2 (2004): 9-11. Print. Adkins, Nell and Radtke Robin. Students and faculty members perceptions of the importance of the importance of business ethics and accounting ethics education: Is there an expectations gap? Journal of Business Ethics, 51.3 (2004): 279-300. Print. Agle Bradley and Van Buren Harry. God and Mammon. Business Ethics Quarterly 9.4 (1999): 563-582. Print. Agle Bradley, Donaldson Thomas and Freeman Edward. Dialogue: Toward superior stakeholder theory. Business Ethics Quarterly, 18.2 (2008): 153-157. Print. Alas Ruth and Tafel Kulliki. Conceptualizing the dynamics of social responsibility: Evidence from a case study of Estonia. Journal of Business Ethics, 81.2 (2008): 371-385. Print. Arnold, Dennis. The rights of employees. 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