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Csr presentation

  1. 1. Corporate Social Responsibility Towards the Competition By Raymund N. Sanchez
  2. 2. Agenda <ul><li>Overview of CSR
  3. 3. Unfair competition </li><ul><li>- Definition
  4. 4. - Antitrust laws
  5. 5. - Microsoft case </li></ul><li>Cartels
  6. 6. Intellectual Property Rights </li></ul>
  7. 7. Blood Diamonds
  8. 8. CSR Overview CSR policy functions as a built-in, self-regulating mechanism whereby business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms.
  9. 9. Unfair Trade Practices <ul>Resorting to unethical business behavior to gain a competitive edge (advertising fraud, patent/ trademark infringement, socially irresponsible gimmicks, etc.) </ul>
  10. 10. Reasons why companies resort to Unfair Trade Practices <ul><li>Globalization of competition
  11. 11. Better informed & more discerning customers
  12. 12. Increasing number of competitors
  13. 13. Rapid advance in both soft & hard technology
  14. 14. Advances in scientific fields </li></ul>
  15. 15. In short, competition is getting stiffer & stiffer, Any kind of edge will count, which is why some companies resort to unethical practices.
  16. 16. When profit maximization becomes the sole driving force of the business that it pursues it with any means necessary. Resorting to: <ul><li>Fraud
  17. 17. Violation of human dignity
  18. 18. Patent/Trademark infringement
  19. 19. Socially irresponsible gimmicks
  20. 20. others </li></ul>When does competition become UNFAIR ?
  21. 21. Anti Trust Laws <ul><li>Trust: or corporate monopoly was created for the purpose of eliminating competition in an area of business & of controlling the market for a product </li></ul>
  22. 22. Coverage of Anti Trust Laws <ul><li>Price fixing between competitors
  23. 23. Abuses of market power by a monopolist or dominant firm
  24. 24. Agreement between competitors to restrict output </li></ul>
  25. 25. Price Fixing between Competitors <ul><li>PRICE: often the principal way by which firms compete
  26. 26. Agreements on price initiatives, price ranges, price targets, collusion between competitors on floor prices are generally illegal under antitrust laws </li></ul>
  27. 27. Price Fixing between Competitors <ul>Are similarity of prices, simultaneous price changes, or high price, indications of price fixing? </ul><ul>NO, not always Supply & Demand can cause these. Price fixing must be PROVEN. (systematic exchanges of pricing information between competitors) </ul>
  28. 28. How do we determine the “Just Price” <ul><li>Pricing Process: requires business to effectively calculate resources/needs, supply/demand.
  29. 29. Just Price: one in which both buyer & seller are given what is due them (price a manufacturer charges its customers for G&S is total cost of investment plus normal profit) </li></ul>
  30. 30. How do we determine the “Just Price” <ul>“ 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 thing to things. The measure of a 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 </ul>
  31. 31. How do we determine the “Just Price” <ul><li>Prada
  32. 32. Louis Vuitton
  33. 33. Rolex
  34. 34. Rolls Royce
  35. 35. Q: Do these products ask for a “Just Price”? </li></ul>
  36. 36. Abusing Market Dominance <ul><li>Dominance: refers to a position of considerable economic power in a market held over a period of time </li></ul>
  37. 37. Abusing Market Dominance Q1: Is Being Dominant bad? Q2: Why is the law punishing companies for being too good at what they do?
  38. 38. Abusing Market Dominance <ul><li>Conduct of dominant companies that violate antitrust laws: </li><ul><li>Refusal to supply for non-objective reasons
  39. 39. Unfair discrimination between equivalent transactions
  40. 40. Non-objective refusal to grant access to essential facilities
  41. 41. Unfair / predatory pricing
  42. 42. Engaging in practices to raise rivals costs or foreclose competitor entry
  43. 43. Unfair rebating practices & customer ties </li></ul></ul>
  44. 44. Case Study – Microsoft IE <ul><li>During the browser wars, 95% of PC were pre-loaded with Windows
  45. 45. Microsoft's IE was introduced in 1995 due to being incorporated into the Windows 95 OS
  46. 46. Market share diminished from Netscape who then charged Microsoft with anti competitive behavior </li></ul>
  47. 47. Oligopoly: Agreements between competitors <ul><li>Oligopoly: agreements between competitors wherein prices can be set at highly profitable levels & restricts competition </li></ul>
  48. 48. Oligopoly: Agreements between competitors Why is Oligopoly wrong? 1) It is basically a monopoly 2) No competition = no benefit to the consumer -no improved product quality -no better price -no choice
  49. 49. Cartels <ul><li>A cartel is a formal (explicit) agreement among competing firms. It is a formal organization of producers and manufacturers that agree to fix prices, marketing, and production. </li></ul>
  50. 50. Cartels <ul>Strategies of Cartels <li>Market division & market sharing
  51. 51. Agreements between competitors to restrict output
  52. 52. Collective boycotts
  53. 53. Resale price maintenance agreements </li></ul>
  54. 54. Cartels <ul>Market division & market sharing: conformity among competitors to divide sales territories or allocate customers (agreement not to compete) </ul>
  55. 55. Cartels <ul>Agreements between competitors to restrict output: collusion between competitors to restrict production facilities in order to drive up the price </ul>
  56. 56. Cartels <ul>Collective boycotts: conformity between competitors not to deal with anther person or business (illegal because it twists/deforms the competitive process by foreclosing competitive opportunities for suppliers or by denying customer choice) </ul>
  57. 57. Cartels <ul>Resale price maintenance agreements: agreement between a supplier & dealer that fixes the minimum resale price of a product </ul>
  58. 58. 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 Q: Is this a Cartel? Should this be illegal?
  59. 59. Intellectual Property Rights <ul>Intellectual Property: Constitutes those original creative works that have economic value & are protected by law </ul>
  60. 60. Reasons for Intellectual Property Rights <ul><li>They reward the creators of original works by preventing others from copying, performing or distributing those works without permission
  61. 61. They provide incentives for people to produce scientific & creative works that benefit society at large </li></ul>
  62. 62. Intellectual Property Rights <ul><li>Patent law: protects inventions that demonstrate technological progress </li></ul>
  63. 63. Intellectual Property Rights <ul><li>Copyright law: protects a variety of literary & artistic works, including paintings sculpture, prose, poetry, plays, musical competitions, dances, photographs, motion pictures, radio, TV, computer programs </li></ul>
  64. 64. Intellectual Property Rights <ul><li>Trademark law: protects words & symbols that serve to identify different brands of G&S in the marketplace </li></ul>
  65. 65. Intellectual Property Rights Q: By assigning exclusive rights to an idea/thing, doesn't it make IPR anti-competitive? A: Trick Question. IPR has an expiration date.
  66. 66. Intellectual Property Rights By giving IPR a termination date, it allows society to benefit from the idea/thing after the inventor has had an opportunity to earn a good/fair/reasonable reward. Note: trademarks never expire
  67. 67. Intellectual Property Rights <ul><li>Counterfeiting: a criminal offense of making an imitation of an article with intent to defraud others into accepting it as a genuine item </li></ul>
  68. 68. Intellectual Property Rights Is piracy truly a 'Victimless' Crime? No! 1) Creators are robbed of income supposed to be for them 2) Consumers receive defective products
  69. 69. Intellectual Property Rights <ul><li>Reverse Engineering: process of analyzing & copying products off the competitor, sufficient to replicate the parts using appropriate fabrication techniques & coming out with new products in the company's own version </li></ul>
  70. 70. Intellectual Property Rights <ul>How do we protect IPR? <li>Government implementation
  71. 71. Improved technology (digital watermarks)
  72. 72. Consumer understanding </li></ul>
  73. 73. References <ul><li>Corporate Social Responsibility, Basic Principles & Best Practices by Jose Mario B. Maximo
  74. 74. Multinationals & Corporate Social Responsibility by Jennifer A Zerk </li></ul>
  75. 75. -END-