Unedited 10/15/11
Home

Diluting: The difference between what you might expect to receive in value, quantity, and quality, and what you actually get. For example, if a homeowner hires a plumbing company offering a premium service at a premium price, they expect the best service and the highest quality parts. The amount of dilution is expressed as a percentage of the actual value of the work. Some premium service businesses offer 100% value while many others do not because they dilute the quality and quantity of materials and cheapen the quality of the labor.

Buying factory seconds, and representing them as quality products, is dilution. Offering quality service and then speeding up the work to service another customer is also diluting. Quality work requires patience and attention to detail, thus, there is money to be made by short-changing customers by way of dilution. The component of deception active here is "leading the customer to false expectations." Diluting is a form of concealment. The idea implicit in all forms of fraud is that "if a customer would have known a fact they would not have acted to their own detriment."

The local social morality (customary ethics) reacts differently to varying degrees of concealment. Since most business people are concealing something about their products or services new people to the business world feel they must do the same to survive and prosper. But, the social morality mitigates a harsh reproach to many forms of dilution.

Businesses dilute the product or service to compete with other people. A contractor that does not employ highly skilled craftsman will have trouble building a reputation in the community. Since they cannot compete they dilute the quality of their materials, they work carelessly and fast at times—and continually add extra costs to a construction job. The dilution ratio of work such a contractor performs might fall to 10%.

An insurance broker might dilute his policies in order to make the insurance look competitive. On the "front side" of the transaction, the policyholder thinks they are getting good insurance. On the "backside" of the deal, the buyer finds she is not fully covered when submitting a claim.

Small businesses can compete for the consumer dollar where large companies cannot. They many times offer more value because their level of dilution is minimal compared to the "optimizing" company that has a very high overhead.

Note: Diluting value is an important issue both morally and ethically. A transition between morality and ethics can be seen here. A businessman who dilutes the value of his products is not necessarily an unethical businessperson. However, his behavior falls under the category of moral law because he is to an extent cheating and deceiving the public. This is a hairsplitting way of looking at morality, which is impractical at some point. Hardware stores for instance sell light switches and receptacles outlets that do not conform to industry standards. These products can reasonably be expected to last a while. However, there are product failures in excess of industry standards that cost the homeowner time and money. Moreover, many of these types of products are more difficult to wire and install increasing their actual cost. The hardware stores get these products at a deep discount and many times sell them at a price in excess of what a large professional electrical supplier might charge. Thus, it could be said that the worth of the switches and outlets are stripped of some of their value. The excesses of value dilution would be considered unethical in the sense some form of passive or overt deception is involved. The hardware store example is not deception in excess.

Note: A craftsman who runs a small business will many times exceed their client’s expectations. They pay attention to detail; work unhurried; and they keep costs within reason. A premium service might offer 98% value but the craftsman may offer 110% value. 110% is exceptional work, but it is found in every facet of the small business world.

.

• abc
• efg