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ETH–1 Marketing Ethics � Prepared and written by Dr. Linda Ferrell, University of Wyoming Marketing ethics addresses principles and standards that define acceptable conductin the marketplace. Marketing usually occurs in the context of an organization, and unethical activities usually develop from the pressure to meet performance objec- tives. Some obvious ethical issues in marketing involve clear-cut attempts to deceive or take advantage of a situation. For example, two former senior executives with Ogilvy & Mather Advertising were sentenced to more than a year in prison for conspiring to overbill the government for an ad campaign warning children about the dangers of drugs. The executives were also required to perform 400 hours of community service, pay a fine, and draft a proposed code of ethics for the advertising industry.1 The requirement to draft a code of ethics implies that the court viewed the executives’ wrongdoing as a lapse of ethical leadership in the advertising industry. Obviously, mis- representing billing on accounts is a serious ethical issue which can evolve into mis- conduct with severe repercussions. The overbilling in this case was to benefit the advertising agency’s bottom line. The Ethics Resource Center (www.erc.org) reported in its most recent National Business Ethics Survey that “one in two employees witnessed at least one specific type of misconduct.”2 At least 52 percent of employees observed at least one type of mis- conduct in the past year, while the percentage of employees willing to report the misconduct dropped by 10 percentage points between 2003 and 2005.3 This may explain the increase in corporate whistle-blowing reports to the Securities and Exchange Commission. Even with a regulatory requirement that public companies have an anony- mous and confidential means of reporting misconduct under Sarbanes Oxley and the Federal Sentencing Guidelines for Organizations, companies are likely to learn about the ethical misconduct in marketing at the same time as the public. This overview of marketing ethics is designed to help you understand and navigate organizational eth- ical decisions. � Why Marketing Ethics Is Important There are many reasons to understand and develop the most effective approaches to manage marketing ethics. All organizations face significant threats from ethical mis- conduct and illegal behavior from employees and managers on a daily basis. Well- meaning marketers often devise schemes that appear legal but are so ethically flawed that they result in scandals and legal entanglements. For example, in one case, a sales- person pretended to be in shipping rather than sales to hopefully develop customer trust. The Colorado Consumer Protection Act was found to be violated in this case. There is a need to identify potential risks and uncover the existence of activities or events that relate to misconduct. Overbilling clients, deceptive sales methods, fraud, antitrust, and price fixing are all ...
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Businesses combine for many reasons. The rationale for combining sometimes creates tunnel vision where decision-makers fail to see all stakeholders and their potential impacts. Suggest a stakeholder that is affected when companies combine. Also add the most important considerations for this stakeholder during the combination planning process. Solution Corporate Social Responsibility (CSR) is the responsibility of an organization towards the welfare and interests of the society in which it operates while maintaining a healthy bottom-line of profits. Responsible, sustainable and transparent business models help build brand and reputation as well as help strengthen the community and therefore the marketplace. Business ethics examines ethical principles and moral or ethical problems that arise in a business environment. Business ethics reflects the philosophy of business, one of whose aims is to determine the fundamental purposes of a company. If a company\'s purpose is to maximize shareholder returns, then sacrificing profits to other concerns is a violation of its fiduciary responsibility. The principles of right and wrong that guide an individual in making decisions are called ethics. As ethics are about moral values, cultural assessments can be extremely valuable when assessing the moral values in an organization. The message from businesses today is clear—employees must be well trained and capable of making ethical decisions to protect the business from legal liability and to maximize long-term profits. 3 Step checklist to analyze the ethics of common business situations: The social responsibility movement is just one aspect of the overall discipline of business ethics. Many companies believe they have a responsibility to \"give back\" to society. This focus includes contributions of time and money, a duty to provide environmentally friendly products and services, and a desire to improve the lives of individuals here and around the globe. A few companies stand out as prime examples of how social responsibility can be productively coupled with sound strategies to advance goodwill, while building sustainable and impressive businesses. Burt’s Bees - The focus for Burt\'s Bees has always been on well-being and \"the greater good.\" As part of the Natural Products Association, the company helped develop The Natural Standard for Personal Care Products, which created guidelines for what can be deemed natural. Burt\'s Bees follows the highest possible standards for packaging sustainability, furthering its dedication to the cause as a member of the Sustainable Packaging Coalition. Since the brand\'s start at a crafts fair selling $200 worth of honey, the company has since expanded to candles, lip balm and now more than 150 products. In 2009, revenue topped $250 million. The Body Shop - The Body Shop is regarded as a pioneer of modern corporate social responsibility as one of the first companies to publish a full report on its efforts and initiatives..
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Accountability for Sustainability Overview LEARNING OBJECTIVES 1. Discuss business and organizational accountability. 2. List the factors that are influencing an increase in interest and activity in business accountability. Accountability is a concept in corporate governance that is the acknowledgement of responsibility by an organization for actions, decisions, products, and policies that it undertakes. A customer of a business expects that a product manufactured and sold by a business has been designed, tested, and produced so that it is safe to use. An investor in a business expects that the managers of the company are working to maximize shareholder return and to not be wasteful of corporate resources. The federal government expects that a business pays its taxes properly and promptly. These are all examples of the expectations that stakeholders have of businesses to act in a responsible manner. Rising stakeholder expectations are motivating organizations to consider the impacts of their actions in a broad, transparent, and systematic manner. Businesses are a major actor in modern society, and stakeholders expect that businesses be a positive contributor to societal well-being. Stakeholders want companies to be more than purveyors of a product or a service; they expect them to fulfill a more positive societal role. Consumers are showing increasing concern for the environmental and societal impacts of the products and services they purchase. [1] Many investors are starting to use a company’s performance in sustainability as an indicator of business value and of management strength. A recent example of increased investor sustainability accountability expectations is when twenty-four institutional investors wrote to thirty of the world’s largest stock exchanges asking that they address inadequate sustainability reporting by companies.[2] “Shooting the Elephant” There are numerous examples of companies’ social or environmental actions affecting consumer purchasing behavior both positively and negatively. In March 2011, Bob Parsons, the CEO of GoDaddy, the world’s largest provider of web hosting and domain name registrations, posted a video of him shooting an elephant in Zimbabwe, Africa, on the Internet. The video showed the elephant being killed and local villagers stripping flesh from the carcass of the dead elephant to a score of rock band AC/DC’s “Hells Bells.” While Parsons claimed the elephant was destroying the villagers’ crops and that he was actually, providing a service to the local African community, his actions—and specifically the callous way that he documented his actions—spurred outrage from customers with many cancelling their accounts as a result. This is an example of how the social conduct of the CEO of a company carried over to the brand image of the company and resulted in a loss in revenue. Video 1 Elephant Hunt Video Follow the link to view the video: http://www.youtube.com/watch?v=HXVH4OsfapI Sidebar “Ethical Jewelry”.
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Strategic Planning and Ethics, Corporate Social Responsibility, and Sustainability Ethics are not universal. Ethics are driven by culture, religion, and the environment. However, many companies do have an ethics statement that employees need to respect. With this construct in mind, it may be assumed that senior leadership will follow the same code of ethics for the company. In times past, there were US companies (and other countries) that did not respect the environment, employees, the law, and regulations. In fact, today, there are still incidents where companies are fined or are called to task in the media. In 1984, Union Carbide had a gas leak in Bhopal, India, which resulted in over 5,000 deaths and countless injuries. The laws in India were more lenient than in the US. Union Carbide specifically had a presence in India because the company was not obligated to follow the same safety protocols as it would have in the US. The company broke no laws. However, ethically this was wrong. Did Union Carbide have a strategic initiative to build manufacturing plants in countries where the environmental and safety laws/regulations were less stringent? Probably. However, Union Carbide was not the only company that followed this strategic initiative. Let’s look at the retail industry. As recently as 2006, several US retail firms were caught using child labor (children 11 years and younger) in Bangladesh (http://www.law.harvard.edu/programs/lwp/NLC_childlabor.html). The companies involved were Wal-Mart, Hanes, J.C. Penney, and Puma. The children worked more than 10 hours a day and only had one day off. This was only 10 years after Kathie Lee Gifford was publicly humiliated for using child labor for her fashion line. There was nothing illegal. However, the media backlash for using children in such a manner was ethically disgusting to many Americans. As with Union Carbide, these companies made a decision to use cheaper labor without checking the manufacturing plants. In the long run was it a good strategic move. Perhaps for the bottom line. But the amount of money that it took to address the media backlash and the need to start to oversee the manufacturing plants for more than quality of craftsmanship probably cost more than the cheap labor. Have companies learned a lesson? Possibly. The incidents mentioned above and others that have made the news has led companies to introduce Corporate Social Responsibility (CSR) and Sustainability. What is CSR? CSR is a manner where companies’ self-regulation is integrated into its business model and hence, into the strategic objectives. Most US companies have embraced CSR but argue that they can only go so far. Why? Because it affects the bottom line or profitability. Whether the company is a for-profit or a non-profit, it needs to have enough revenue generated to pay for CSR. In theory, companies that have an active CSR monitor their activities against social norms, domestic and international, ethical standards and l.
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