Business Law and Ethics - Essay Example

The Alternative Cost Loss Allocation Approach The alternative cost allocation approaches often require allocation of the costs in such a manner that there is an equitable distribution of costs of the proposed alternative. These approaches are basically a larger part of a philosophy which undertakes to consider cost sharing as an essential part of the whole distribution process of cost allocations. From legal perspective, the alternative cost/loss allocation approach basically aims to provide a clear and concise understanding of the responsibility for the repayment for cost recovery purposes.

This also requires that there must be a comprehensive understanding and development of a framework which allows a proper rationalization of costs allocated. Ethically it becomes the responsibility of the all the relevant stakeholders to ensure that the cost allocations are made in accordance with the ethically acceptable procedure. This also means that the inefficiencies of the government in allocating costs properly shall be identified and must be shared in order to restrict the loss. If alternative cost allocation mechanism is faulty, it is most certain that the losses will be incurred and overall responsibility of failure will therefore fall on those who basically fail to properly account for the alternative costs identified at the initial stage.

It is also important to understand that the overall cost allocation and prevention of loss must be devised in such a manner that it can provide an organization enough time to prepare for its response in case of extreme external situations. The greater role of regulators therefore may serve as an strong deterrence against such type of approaches.The article that I am going to discuss is about the “fees on debit and credit transactions raise costs for all, critics say” published in Washington Post on June 3, 2009.

1 This article discusses as to how the hidden costs on the credit as well as debit cards make the purchasing as more expensive for those who prefer to pay cash. The charging of unauthorized commissions by the consumers therefore require that there must be an increase in the social costs for using this type of service. Paying higher fees against your debit or credit card therefore requires the more extensive role of government. Though, according to the article, Bankers argue that this type of fee is necessarily important in order to run the credit system however, it also, on the other hand, attempt to increase the cost for consumers.

Thus the overall cost allocation/loss approaches might not have been used at the time of deciding about the explicit and implicit costs to be allocated. Thus the implicit costs which often involve allocation of alternative costs require that the organizations must consider aspects like social cost and cost of maintaining social harmony within the society. The higher the fees paid by the consumers without actually knowing that they are paying for it therefore requires a comprehensive understanding of how the costs are charged by the firms and what are some of alternative cost approaches that can effectively prevent the loss.