Is AmWay an ethical business model?

This post is an outcome of the recent meetings I had with people wanting me to join the AmWay.

AmWay :

Many people already know of AmWay, if not :

* AmWay is a business model that tries to deal with the consumers directly instead of going through retailers. It is a multi-level marketing business model. BTB, skipping the retailers, does not reduce the cost for the consumers, infact AmWay products are expensive than the products at retail stores.
* With AmWay, you market their products and get commission.
* You get commission not only for the products you sold, but for every product that is sold by the people who you already sold. We will see an example later in this post.

How will I judge ethical

To me, being ethical is not based on cost effectiveness. Because in many cases, being ethical could make you expensive. So I'm not looking for an answer based on cost. I try to look at AmWay from selling end as well as the consumer end . I believe, the core of the judgement should be based on how the consumer bill is distributed.

Consumer perspective

When I buy some product from a retail shop : my price will include the cost of the product (production, revenue etc), the cost of delivering, commission to be paid to the retail store. Here every single person that is paid from my bill, has worked his / her part to bring the product to me.

When I buy through AmWay, my price will include the cost of the product (production, revenue etc), commission to be paid to the person (say 'Mr.A') who sold it to me, the commission to be paid to all persons through how Mr.A joined the Am Way. Here not every single person paid from my bill has worked for me to get the product.

For example : Mr.X introduces Mr.Y to AmWay. And Mr.Y introduces me to AmWay. Then whenever I buy something through Mr.B, my bill will include a commission for Mr.Y and Mr.X. AmWay doesn't show any commission in your bill. But still there is no free lunch. If AmWay pays commission to Mr.X or Mr.Y, sure it would be from your bill. And the commissioning doesn't stop with Mr.X. If Mr.X was introduced by Mr.W who was introduced by Mr.V and so on till Mr.A, your bill has to include commission starting from Mr.Y all the way back till Mr.A.

It would definitely make sense to me, if my bill includes a commission for Mr.Y who sold to me. But it doesn't make any sense to me, if my bill includes a commission for Mr.X or anybody beyond his hierarchy who did nothing to bring my product to me. All they get is the commission from my bill. This does not sound ethical to me.

Seller Perspective

If I'm the seller, If I sell something to Mr.A, I will get a commission for selling to Mr.A. That sounds reasonable. But In AmWay, if Mr.A sells to Mr.B, I will still get a commission. Here Mr.A did all work to sell something to Mr.B. I did nothing. So getting a commission for Mr.A's work is unethical to me.

Is it Ethical?

When many people sweat their blood and brain to create things and serve consumers to make money, some people simply think through the ways of getting commission without any work. This sounds unethical to me. Here I'm not against any commissioning model like franchising, agents / agencies etc where all these people work hard to serve consumers. All that sounds wrong to me is the idea of AmWay business model and their marketing, where they try to promote "sell once and get paid for the rest of your life".

If I'm wrong on this, I will raise one other question. Is it ethical for schools to get a commission from salary of its students for life time? If some school comes with such contract, will there be any students to go for it?

So my answer is, It does not sound to be an ethical model.

Nobel Peace Prize '09

Barack Obama wins the Noble Peace prize '09.

I'm not a big fan of Obama. Nor do I agree that he deserves the prize. Infact obama accepts that he has not done anything comparable to prior winners and his achievements do not deserve the prize. But he says, its the "call to action" and he is deeply humbled.

While this news of the day created many controversies all around the world, and though I don't feel he deserves this honor for his achievements, the views of the Noble committee for declaring the prize, and the way Obama accepts the honor, sounds quite fair to me.

Mean while, I happened to see this post. It sounds funny and tempts me to give reasons that I better deserve the prize than Sridhar :)

* I never went on any kind of war with anybody (including prize war)
* I don't even watch horror / violent movies (including samurai kind of movies)
* In my childhood, I have read many moral stories. I really felt good and wished to live up to that morals.
* To my best knowledge, I've always been polite to others.
* Daily I watch "Indha Nal Iniya Nal", a tamil program that delivers a good message each day.

Thats on the funny side. I strongly believe this prize has great potential to serve its purpose, at the hands of Obama than anybody else in the world at this point of time. Congrats Mr.Obama. In your words, they made call to action. Are you ready to act?

You may be interested to read : how world views this, how world leaders hail, what the committee seems to be thinking