Assignment: I.

Utilitarianism and Capitalism

II. Reuters and Bloomberg

Submitted to:

Mohammad Saif Noman Khan

Course Instructor

Submitted by:

Ridwan Rahman

ZR-31, BBA-16

28th February, 2011

Institute of Business Administration

University of Dhaka
 Utilitarianism and Capitalism

A society, according to Utilitarianism, is just to the extent that its laws and institutions are such
as to promote the greatest overall or average happiness of its members.

How do we determine the aggregate, or overall, happiness of the members of a society? This
would seem to present a real problem. For happiness is not, like temperature or weight, directly
measurable by any means that we have available. So utilitarians must approach the matter
indirectly. They will have to rely on indirect measures. What would these be, and how can they
be identified?

The traditional idea at this point is to rely upon (a) a theory of the human good (i.e., of what is
good for human beings, of what is required for them to flourish) and (b) an account of the social
conditions and forms of organization essential to the realization of that good.

"Pure competition," exists in a market if and only if it meets the following conditions:

(1) There are sufficient numbers of buyers and sellers so that no single firm by itself can affect
the prices it pays suppliers or the prices it charges its buyers, regardless of how much or little it
produces.

(2) There are no entry or exit barriers to the market, i.e., the market is one into which new firms
can move with ease and out of which unsuccessful firms can easily exit.

(3) The outputs or products of the firms competing in the market are undifferentiated.

When pure competition exists in a market, that is, the market meets conditions (1)-(3), then the
following important consequences will follow:

(4) Resources--chiefly capital and labor--will be efficiently employed: they will be used to
produce goods at the lowest possible prices, and there will be adequate incentive for producers to
do this and to seek more efficient (cheaper) methods of production.
(5) Resources will be efficiently allocated: the "particular things that are wanted by the
community" will be provided "in the particular amounts in which they are wanted." For, again,
producers have adequate incentives to accommodate to consumer demand.

(6) Reasonably full employment for all willing workers will be maintained.

It should be clear why an economy of pure competition would recommend itself to utilitarians.
Such a form of economic organization would provide the goods that consumers wanted, at the
prices at which consumers were willing to pay for them, and in the quantities in which they were
wanted; and in doing so it would create the needed employment for all willing workers. It would
do so because it provided adequate pecuniary incentives to producers to accommodate consumer
preferences. The competition among producers for greater profit would--"as if by an invisible
hand," Adam Smith said--bring about a situation that was good for the society in general, and not
just for the individual producers.

When there is great consolidation within an industry, condition (1) is obviously violated: there
will no longer be sufficiently many sellers doing business with sufficiently many sellers. But
condition (2) typically is no longer satisfied either. Very large firms in an industry will have been
able to take advantage of economies of scale; production, to be competitive, will have to proceed
on a comparable scale. Thus there will be very high start-up costs--a considerable barrier to the
entry of new firms into the industry. The few giants that dominate the industry will have some
control over the quantity of production and hence over prices.

Condition (3) is product differentiation. In one of the standard textbook examples the product is
corn, the producers the corn growers. The product is undifferentiated; that is, the identity of the
producer, the grower, is not discernible or identifiable from the product itself. It is therefore not a
determinant of consumer preference or therefore price (though modern salesmanship,
specifically advertising, has striven to make at least some of the characteristics of the producer
relevant to price even for agricultural products). At the opposite extreme, where it has been for
some time, is the market for automobiles. Product differentiation is very advanced in this case.
Different makes and models of automobiles have long been important to consumer behavior. For
some luxury cars the identity of the producing firm (e.g., Rolls Royce) has, all by itself, an
appeal--a snob appeal--that significantly affects consumer preference. Something similar holds
for clothing. In its effects on the economists' efforts to create a general theory of price product
differentiation is a tremendous complication; it brings in a host of further motives, besides price,
for consumer demand. To my knowledge there is no sound general theory of price determination
for products that are differentiated. It remains an open area of research.

Utilitarians look at the means or opportunities available to people to achieve the kinds of lives
they find desirable. The term "utility" is used for all of the things--such as income--that people
might desire for the pursuit of their happiness. What the utilitarian aims at directly, then, is an
overall increase of utility or utilities. The utilitarian looks to increase the average utility, i.e., the
aggregate amount of utility created in the society, divided by the number of people in the society.
The utilitarian thinks a just society should seek to maximize average utility in order to promote
the happiness of its members or at least to enable its members, with increasing success, to
achieve their own happiness.

Reuters and Bloomberg

Reuters, an all purpose a news company, was founded in the late eighteen hundreds. When they
first came into existence, they used carrier pigeons in order to get their newspaper out to
potential readers. Back then, this was the most effective method of content syndication. Due to
their determination to stay in existence and the way they successfully conducted their business
operations, they now have a history of being in the world's eye for more than one hundred fifty
years.

Today, Reuters focuses on sub topics of business interests other than the financial aspect.
Subjects other than money include world politics, automobiles, blogging, podcasting,
employment, entertainment, technology and odd topics. Reuters diversified their focus off of
solely serving financial news due to their success in sustaining their worldly presence over the
course of time. A hypothetical guess is that Reuters online felt that they could capture and retain
a wider, loyal audience if they talked about other things in their news.
Michael R. Bloomberg, The CEO and founder of Bloomberg L.P. and Bloomberg Television,
started the company in nineteen eighty. Prior to his financial startup, he was an employee
working at Salomon Brothers. Mike Bloomberg was fired, or should say "got his pink slip", after
the company was acquired. Shortly after his infancy existance, he began racking up financial
terminals, which were shabby obsolete machinery donated from companies who disposed of
them. Despite the odds, Bloomberg prevailed in a time of uncertainty. He also began advertising
his magazine subscriptions for sale "Bloomberg Markets", which he honestly earned and retained
twenty subscribers. Michael aimed to only serve financial markets. He saw opportunity in this
industry where he could quench the thirst of Wall Street and those abroad in serving fresh
financial content.

The style which is served by Bloomberg Television and his magazine set him apart from all
financial competition. In Michael's company existence of twenty eight years versus Reuters of
one hundred fifty years, people say that Bloomberg came out of nowhere in left field and blew
Reuters to smitherines. How so? Their styles of doing business and content syndication set them
apart in the financial world. Reuters sells news and content licensing online, while Bloomberg
rents out his financial terminals to clients for three thousand dollars a month starting price.
Michael also came from a working class family, who had very little savings, working his way up
in life to becoming a self made billionaire.

Additionally, Bloomberg Television sells advertising inside of his video player, making it look
extra attractive to the eyeballs from fellow partnering financial companies. Some advertisers on
Bloomberg Television include niche markets on Forex, Online Checking, Bank Notes and
Offshore services. Today, a majority of advertisements on Reuters are advertisers who are
partnering merchants on Google acquired DoubleClick. Bloomber Radio carries daily broadcasts
that Reuters is not believed to have incorporated into their business model.