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As formal organizations, business corporations are distinguished by

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As formal organizations, business corporations are distinguished by  [#permalink]

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New post Updated on: 03 Sep 2018, 09:28
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As formal organizations, business corporations are distinguished by their particular goals, which include maximization of profits, growth, and survival. Providing goods and services is a means to this end. If, for example, a number of individuals (outsiders or even insiders) believe that a company‘s aggressive marketing of infant formula in third world countries is morally wrong, the company is unlikely to be moved by arguments based on ethos alone as long as what it is doing remains profitable. But if those opposed to the company‘s practice organize a highly effective boycott of the company‘s products, their moral views will soon enter into the company‘s deliberations indirectly as limiting operating conditions. They can, at this point, no more be ignored than a prohibitive increase in the costs of certain raw materials.


Although the concepts and categories of ethics may be applied to the conduct of corporations, there are important differences between the values and principles underlying corporate behaviour and those underlying the actions of most individuals. If corporations are by their nature end- or goal-directed how can they acknowledge acts as wrong in and of themselves? Is it possible to hold one criminally responsible for acts that if performed by a human person would result in criminal liability?


The first case of this type to achieve widespread public attention was the attempt to prosecute the Ford Motor Company for manslaughter as the result of alleged negligent or reckless decision making concerning the safety engineering of the Pinto vehicle. Although the defendant corporation and its officers were found innocent after trial, the case can serve as an exemplar for our purposes.


In essence, the prosecution in this case attempted to show that the corporation had produced and distributed a vehicle that was known to be defective at the time of production and sale, and that even after a great deal of additional information accumulated regarding the nature of the problems, the corporation took no action to correct them. The obvious non-corporate analogy would be the prosecution of a person who was driving a car with brakes known to be faulty, who does not have them repaired because it would cost too much, and who kills someone when the brakes eventually fail and the car does not stop in time. Such cases involving individuals are prosecuted and won regularly.


If corporations have no concept of right or wrong because they are exclusively goal-directed, can they be convicted in cases of this type, and what purpose would be served by such a conviction? Perhaps we can make a utilitarian argument for convicting corporations of such crimes. The argument would be that of deterrence; conviction and punishment would deter other corporations from taking similar actions under similar circumstances. However, there appears to be considerable evidence that deterrence does not work on corporations, even if, arguably, it works on individuals. The possibility of being discovered and the potential magnitude of the fine merely become more data to be included in the analysis of limiting conditions.

Passage no 38(RC99)



1. A claim that things have ethical value to corporations only insofar as they are instrumental in furthering the ultimate goals of the corporation is:
A. necessarily true, given the information presented in the passage.
B. perhaps true, and supported by the information presented in the passage.
C. perhaps true, but not supported by any information in the passage.
D. necessarily false, given the information presented in the passage.
E. a figment of the author‘s imagination

2. If a company that produced shampoo products opted to stop the routine testing of its products on animals because it decided that it is wrong to cause the animals pain, what effect would this have on the argument made in the passage?
A. It would strongly support the argument.
B. It would support the argument somewhat, but not conclusively.
C. It would neither support nor substantially weaken the argument.
D. It would substantially weaken the argument.
E. It would weaken the argument only if the company is a government owned company

3. Which of the following assertions would most strengthen the author‘s claim that deterrence will not work on corporations?
A. The possibility of punishment does not deter many individuals from committing crimes.
B. The penalties imposed on companies have amounted to a small fraction of their profits.
C. Strict anti-pollution laws have cut down on the waste dumped by companies into rivers.
D. The trial of a corporation is often extended over a period of several years
E. Corporation have a battery of lawyers protecting their interests


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Originally posted by PeepalTree on 03 Sep 2018, 09:13.
Last edited by PeepalTree on 03 Sep 2018, 09:28, edited 1 time in total.
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Re: As formal organizations, business corporations are distinguished by  [#permalink]

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New post 03 Sep 2018, 09:17
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https://gmatclub.com/forum/rc-215763.html#p2124509

same passage without proper formatting and with only one question
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Re: As formal organizations, business corporations are distinguished by  [#permalink]

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New post 06 Sep 2018, 00:27
Can someone explain how option B is correct for the 3rd question. After reading thrice also I am able to figure out how.
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Re: As formal organizations, business corporations are distinguished by  [#permalink]

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New post 06 Sep 2018, 05:00
apurva908 wrote:
Can someone explain how option B is correct for the 3rd question. After reading thrice also I am able to figure out how.


Quote:
3) A strengthen question. Quickly paraphrase the author‘s reasons for claiming (in the last paragraph) that deterrence won‘t work: companies will just treat it as an economic consideration like any other. Search for a choice that reflects this. Only (B) has to do with economics! Further, it reinforces the idea that companies will shrug off potential penalties that have little economic consequence.


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Re: As formal organizations, business corporations are distinguished by &nbs [#permalink] 06 Sep 2018, 05:00
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