Question #1: As the e-Activity states, CompUSA executives were criticized for employing a "pay for play" model that meant vendors who paid the company more were given more exposure in stores and in promotions. Assess the congruity of this model enforced by CompUSA in relation to capitalist ideals. Based on your assessment, criticize or defend the "pay for play" model on moral grounds.
According to some capitalist ideals, individual demand is the source of any value in the economy or market. Therefore, according to this kind of definition, the “pay for play” model utilized by CompUSA executives was incongruous with capitalist ideals because it gave undue influence to people who could be marketing an inferior, more expensive, or product/service that would have been less desirable to the demands of individuals without the special promotion offered by the company. It takes away the power of individual demand and gives it to an inanimate, inhuman group that is less concerned with demand than with accumulating wealth. On the other hand, capitalism also idealizes that proprietors should be able to market and sell products and services without the interference of government; therefore, it seems rational that merchants should be able to distribute goods any way they see fit, including accepting payment for special promotion, as a way to increase competition. Overall, however, it seems that the transference of the idea of demand from individual demand to that of a group’s (company’s) desire for profit makes what happened go against capitalist ideals.
Question #2: The CompUSA e-Activity mentions that the Fiorentino brothers violated their "fiduciary responsibilities" to the company, which ultimately resulted in the company losing millions of dollars; however one may question if there are ever legitimate business reasons to engage in such activities. Defend or criticize the position that, at times, there are legitimate business reasons for accepting bribes or kickbacks.
If a society is not trying to conform to a consistent legal or economic system such as capitalism, it could possibly be acceptable to accept a bribe or a kickback for favors, services, and profits. However, most often, there is no good reason to offer or accept a bribe or a kickback. Bribes and kickbacks are like unearned rewards, they are not the same thing as bonuses offered as incentives. For example, if CompUSA offered bonuses to vendors whose products attained certain levels of profits it would create fair competition because any vendor could possibly attain this result. CompUSA, the vendor, and individuals purchasing the product would all be winners because the product would be a superior one that really earned the profits it attained. However, CompUSA instead made vendors pay them in order to get the kind of exposure necessary to sell products. This creates a bias about a product that means that instead of everyone being a winner, the individuals that are supposed to drive the market are instead losers, paying for possibly inferior products and services with the only questionably positive effect being the lining of executives’ pockets. In any case, kickbacks and bribes change the playing field in such a way that only people and companies in favor or who have the money to buy favor can really profit. It is a losing situation.
References
Silver, Stephen (24 Jan 2012). Systemax Suit Alleges Fiorentinos Stole Millions. Dealerscope. Retrieved from http://www.dealerscope.com/article/systemax-suit-alleges-fiorentinos-stole-millions/1
Walker, Elaine (9 Jan. 2012). Lawsuit: Former CompUSA executives stole millions. The Palm Beach Post. Retrieved from http://www.palmbeachpost.com/news/business/lawsuit-former-compusa-executives-stole-millions/nL26P/
