Ethical Dilemma: Your company is in a race with two other enterprises to develop

Question

Ethical Dilemma: Your company is in a race with two other enterprises to develop a new technological standard for streaming high-definition video over the Internet. The three technologies are incompatible with each other, and switching costs are presumed to be high. You know that your technology is significantly inferior to the technology being developed by your rivals, but you strongly suspect that you will be the first to the market. Moreover, you know that by bundling your product with one that your company already sells (which is very popular among computer users), you should be able to ensure wide early adoption. You have even considered initially pricing the product at zero in order to ensure rapid take up, thereby shutting out the superior technology that your rivals are developing. You are able to do this because you make so much money from your other products. Once the market has locked into your offering, the strategy will be to raise the price on your technology. One of your colleagues has suggested that it is not ethical for your company to use its financial muscle and bundling strategies to lock out a superior technology in this manner. Why do you think he makes this argument? Do you agree with him? Why? Can you think of a real-world situation that is similar to this case?

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Explanation / Answer

Yes,I agree with him.As we all know that the main objective of any business orgaization is making profit.Each and every company which are there in the market clearly focus upon optimising its profit.If he is gaining profit from its other business then he can opt for zero pricing method for increasing the sales volume.

When go out for shopping suppose for buying a packet of flour and we get a packet of biscuit free with it.We feel like we have received a lot.The zero pricing stratergy is very feasible for promoting the product.

Advertising and promotion plays a very crucial role in the selling of the product.For increasing the volume of sales this pricing startergy is very useful.

He may use the zero pricing stratergy of his products so that profit can be maximised.

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