There’s always been a thin line between the definition of a shrewd business policy and an unethical policy.
It’s shrewd business from his perspective if a car salesman doesn’t disclose a problem with the car that he knows exists. Billions of dollars in derivatives were sold: it was a shrewd financial product. Was it unethical that most derivative sellers didn’t explain what customers really were buying? In many cases the sellers didn’t know themselves what they were selling.
There are countless things to admire about Procter and Gamble. Recently, though, P&G announced it will pay bills from its advertising agencies in from 75 to 100 days.
Normal industry terms are sixty days. For the 9th straight year, P&G is the world’s largest advertiser, spending almost $3 billion. This is shrewd business on the part of P&G. An extra 15 to 60 days interest on their advertising money amounts to a substantial sum.
Shrewd because they can get away with it. Unethical because P&G knows that everyone from whom they buy advertising media or production contracted for that with the expectation of being paid in sixty days. So the cost of borrowing for cash flow is transferred from P&G to its vendors.
Shrewd or unethical? What do you think?
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