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Contents
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Ethics
Ethical Behaviour
Ethics are moral principles and values that govern the actions and decisions of an individual or group. In the marketing context, ethics is the
Individual Factors
Organisational Factors
Perceived Opportunity
Individual Factors
Perceived Opportunity
Organisational Factors
Individual Factors
When marketing managers face ethically
challenging situations and are unable to resolve them all alone, they experience ethical conflict,
Organizational Factors
Perceived Opportunity
Opportunity refers to a set of conditions perceived as favourable that limit barriers or provide rewards. Most managers in marketing do not
Ethical issue refers to some situation, problem, or opportunity that can be recognised and requires a person or organisation to select from among different actions that must be evaluated as right or wrong, or ethical or unethical.
Marketing costs are too high The marketing system is inefficient Marketers and the business system collude and commit price-fixing Firms deliver poor product quality and service Consumers receive incomplete, false, and/or misleading information The marketing system produces health and safety hazards Marketers persuasively promote unwanted and unnecessary products to those who least need them
Alleged invasions of personal privacy Gathering marketing information in exchange for money or free offers
Ethical Problems in Product Strategy
Determining the appropriate degree of control over a channel Determining whether a company should distribute its products in marginally profitable outlets that have no alternative source of supply
Ethical Problems in Pricing
Probably the most regulated aspect Most unethical pricing behavior is also illegal
Ethical Problems in Promotional Strategy The source of the majority of ethical questions Ethically questionable personal selling
Gifts and bribes
Questionable advertising Promotion of questionable features (air bags) Questionable WWW related promotional practices
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Unethical Advertisement
Unethical advertising: is advertising which degrades or underestimates the substitute or the competitive products. It gives false promises or misleading information about the value of the product. It fails to give information about the side effects. It could be advertisements that are obscene or immoral. The usage of certain words as better, more, best, largest, tastiest, only can change a ethical advertisement into an unethical advertisement.
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Unethical advertising promises something that cannot be delivered like a fitness centre that advertises that the customers will loose 50 pounds per month with its program. On top of it the fitness centre says the weight loss is guaranteed. Quite plainly the fitness centre cant deliver that much of weight loss to every person who comes into his centre.
ADVERTISING ETHICS
There should not be any racial discrimination. For e.g.: Benetton
It should not hurt the sentiments of women. For e.g. Fair and lovely.
Contd.
It is morally wrong to use manipulative, exploitative , corrupting methods of persuasion and motivation For e.g. Nestle.
Contd.
The content of communication should be communicated honestly and properly.
More spending of money should be stopped.
Contd.
Advertisers are morally responsible for what they seek to move people to do. Advertising may not deliberately seek to deceive by what it says, what it implies or what it fails to say.
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Contd..
Advertisers should not promise which is impossible and cannot be delivered.
E.g. A fitness centre that advertises that the customers will loss of 50 pounds per month with its program. On top of it the fitness centre says the weight loss is guaranteed. Quite plainly the fitness centre cant deliver that much of weight loss to every person who comes into his centre.
Contd
No advertisement shall be permitted the objects whereof are wholly or mainly of a religious or political nature.
Contd.
Indecent, vulgar, suggestive, repulsive or offensive themes or treatment shall be avoided in all advertisements
GENERAL CODE
Criticism of friendly countries; attack on religions or communities; anything obscene or defamatory; incitement to violence or anything against maintenance of law and order; anything amounting to contempt of court; aspersions against the integrity of the President and Judiciary; anything affecting the integrity of the Nation; and Criticism by name of any person.
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Even big companies stoop to unethical advertising the famous examples can be.
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1. AP PL170
A.P Scooters came out in collaboration with Vespa with a scooter and they named it AP PL 170. The customers thought PL 170 meant Pay load 170. Later a lot of negative publicity was generated when the customers came to know that PL 170 does not stand for Pay load 170. PL 170 was just some fancy word work from the advertising agency.
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2. Activia Yogurt
Dannon's popular Activia brand yogurt lured consumers into paying more for its purported nutritional benefits -when it was actually pretty much the same as every other kind of yogurt. Falsely touting the "clinically" and "scientifically" proven nutritional benefits of the product, Dannon even got a famous spokesperson, Jamie Lee Curtis, for the supposed digestionregulator. But after a while, some customers didn't buy it.A class action settlement last year forced Dannon to pay up to $45 million in damages to the consumers that filed the lawsuit and others who said they'd been bamboozled. The company also had to limit its health claims on its products strictly to factual ones.
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3. Eclipse Breeze
Eclipse gum claimed that its new ingredient, magnolia bark extract, had germ-killing properties. Consumers sued Wrigley [in 2009] in federal court arguing the subsidiary of privately held Mars Inc. made misleading advertising claims about the germ-killing properties of Eclipse. As part of the settlement, Wrigley will change how it markets and labels its gum. It agreed to pay $6 million to $7 million to a fund that will reimburse consumers up to $10 each for the product and cover other costs of the settlement, according to the law firms Blood Hurst & O'Reardon and Robbins Geller Rudman & Dowd.
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8. Splenda
The Sugar Association says Splenda's "Made from Sugar" slogan is misleading, and that the sweetner is nothing more than "highly processed chemical compound made in a factory," reports CBS. In 2008, the association first filed a suit against Johnson & Johnson subsidiary McNeil Nutritionals, which then countersued the association engaging in a "malicious smear campaign." The two parties reached a confidential settlement before going to trial. Equal also took its rival to court in 2007, accusing "the makers of Splenda of confusing consumers into thinking its product was healthier and more natural than other artificial sweeteners." The two parties also reached a confidential settlement.
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9. A New Balance
A New Balance sneaker that reportedly helped users burn calories were called out when studies did not find any boosted health benefits from wearing the shoe. The toning sneaker, claimed to use hidden board technology, were advertised as calorie burners that activated the glutes, quads, hamstrings and calves. Plaintiffs discovered that the shoe was instead an injury hazard, without any secret technology, and are seeking $5 million in compensation. The sneakers cost about $100.
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10.Classmates.com
Millions of people lit up when Classmates.com sent them an email saying old friends were trying to contact them, promising to rekindle old friendships and flames if subscribers upgraded to a "Gold" membership.
But even with an upgrade, the expected reunions never came. Turns out the social networking site used the ploy to get users to pony up extra dollars. In 2008, one miffed user filed suit alleging the "deceptive" emails were false advertising. He eventually bested the website, which agreed to pay out a $9.5 million settlement -- $3 for every subscriber who fell for the dirty trick -- to resolve the case.
Unethical Advertisement
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Outline
Ethics, Morality and Values Nature of Ethics Sources of Business Ethics Law Vs Ethics Conflicts of Law and Ethics Importance of ethics Ethical Dilemmas - Its sources HR ethical issues Managing Ethics Ethical decision making
Nature of Ethics
Two theories are relevant in the context of the nature of ethics: 1. The Theory of moral unity
Business should be judged by ethical standards of the society There is only one set of ethical standards for both society and businesses Business can be amoral The market mechanism automatically works for the benefit of the society
Law Vs Ethics
Importance of ethics
If you have integrity, nothing else matters. If you don't have integrity, nothing else matters. - Alan K. Simpson
Ethics is very basic to mankind Values create credibility with the public Values create credibility with the employees Considered important for companies striving for long-term success and growth.
"Not only is ethical behaviour in business life the right thing to do in principle, we have shown that it pays off in financial returns. - Philippa Foster Black, The Director, The Institute of Business Ethics (IBE),
HR ethical issues
Race, Gender, Age and Disability Performance Appraisal
Job Discrimination
Privacy Issues
Employee Responsibility
Ethical Issues
Restructuring Layoffs
Managing Ethics
Top Management Code of Ethics
Utilitarianism
Ethical perfection is illusionary Seek advice of an intelligent person
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Ethics in Finance
Overview
Introduction Ethics in Financial Services Ethics in Financial Markets Insider Trading Hostile Takeovers Accounting Ethics Conclusion
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Ethics?
Ethics represents the attempt to resolve the conflict between selfishness and selflessness; between our material needs and our conscience. -Demsey A business that makes nothing but money is a poor kind of business. -Henry Ford
Introduction
Principal-agent model of relationship in financial transactions. Modern capitalist system based on rational-maximizer paradigm# Individuals are self seeking. # Seek to maximize own interest.
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Introduction
Behavioral assumption for modern financial- economic theory runs counter to ideas ofTrustworthiness Loyalty Fidelity Stewardship Concern for others
Insider Trading
Trading of stock or securities by individual with potential access to non-public information about the company Insiders when buys or sells based upon company owned information, violates the contract with shareholders There are legal insider trading and illegal insider trading
Hostile Takeovers
Corporate takeover which is carried out against the wishes of the board of the target company. Original company may be entirely swallowed up or may operate semiindependently.
Accounting Ethics
Nature of work of accountants require high level of ethics. Accounting concepts and conventions- GAAP
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Accounting Ethics
Preparation of financial statements. Keeping management aware of present conditions and future estimations. Confidentiality of organizations financial position
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Conclusion
Financial ethics depends on a complex interlay of FM ,industry leadership and individuals personal integrity. It makes the companys activities more legal and policies more social. As consumers we must be aware and cautious about the individuals and corporations who manage our money.
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Ethics
Whether men understand it or not, they are impelled by that power behind to become unselfish. That is the foundation of morality. It is quintessence of all ethics, preached in any language or any religion, or by any prophet in the world. Be thou unselfish, Not I, but Thou that is the background of ethical codes.
- Swami Vivekananda
Ethics.
Crucially important that our thoughts and actions be governed by ethical values and habits. Basis of ethics is to become more and more self less.
Knowledge of the importance of virtue does not deter people from moving to the evil side of things. This is the illusion covering the consciousness of man, says the Vedanta.
Politics without Principles Wealth without Work Commerce without Morality Knowledge without Character Pleasure without Conscience Science without Humanity Worship without Sacrifice
Business Ethics is the set of principles or reasons to govern the conduct of business at individual or collective level by the application of ethical reasoning to specific business situations and activities
Being Ethical
Awareness of
Need to comply with rules, laws of the land, customs and expectations of the society, the principles of morality, policies of organization or institution, general concerns for others and fairness How the products and services of an organization or institution and the actions of its members, can affect its employees, the community and society as a whole, either positively or negatively.
Ethical Dilemmas
Many issues seems straight forward and easy to resolve but are not always true Making choices amongst alternatives Questions between right and wrong
Benefits of Ethics
Improved society Maintain moral course in turbulent times Cultivate strong team work and productivity Supports employee growth Ensuring policies are legal Avoiding criminal acts of omission and lowering fines Managing values of quality, strategic planning and diversity Strong public image
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The companies that survive are the ones that can spot ethical issues and correct them before they become problems .
WAL-MART
The first true Wal-Mart opened in 1962 in Rogers, Arkansas. Wal-Mart eventually became the world's largest retailer
The company officially incorporated as WalMart Stores Inc. on October 31, 1969. Today, 7,390 Wal-Mart stores and Sams Club locations in 14 markets employ more than 2 million associates, serving more than 200 million customers per year.
Sam Walton. Walton was an entrepreneur with an innovative vision, started his own company and made it into the leader in discount retailing that it is today. In fact, Wal-Mart is considered to be the biggest company in the U.S. and it has stores worldwide .
The Wal-mart culture rests upon 3 basic beliefs which are: Respect for the Individual Service to customer
Wal-Mart employs more people than any other company in the United States outside of the Federal government, yet the majority of its employees with children live below the poverty line.
In addition, Wal-Mart likes to portray itself as a seller of U.S. manufactured goods but in reality the company has products on its shelves made in foreign countries and at questionable workshops.
It would seem that Wal-Mart encourages made in the USA but it really encourages products made outside the USA. As a result, Wal-Mart has forced many manufacturers out of business. As a matter of fact, this big giant is facing a significant amount of controversy for unethical business practices. In fact, some of these unethical business practices include the following.
According to this policy the door of the management is always open for the associates to share suggestions, ideas, and voice concerns. Whether its help with a problem, guidance or direction, or simply getting an answer to a question. Managers also treat all discussions fairly, with an open mind, and without bias. They maintain complete confidentially, whenever its possible. They work with the associates to mutually resolve any issues or
Analysis of open door policy: 1)The open door policy does little to help its
employees but gives the business the leverage it needs to terminate unwanted non compliant help. 2) Employees start out at lower wages than unionized corporations and end up quitting by the end of the first year. 3) Its anti-union policy is a central part of its obsession with minimising costs. 4) Wal-Mart provides managers with its infamous Managers Toolbox to Remaining Union Free that states: Staying union free is a full time commitment. Unless union prevention is a goal equal to other goals and objectives in the organization, management will not devote the necessary day in, day out attention and effort. If there is any evidence of moves towards unionisation, managers are ordered to phone the Wal-Mart Union Hotline immediately.
Wal-Mart engages in unit packing and other tactics to prevent organizing efforts. When workers have successfully organized, Wal-Mart has refused to bargain, or has shut down stores and units where workers have organized. Wal-Mart also prohibits employees from talking to union representatives. It is unethical for Wal-Mart to prohibit employees to talk to union representatives since according to the National Labor Relations Act; employers are not allowed to discourage employees from forming a union for they have that right.
Violated Federal Labor Law By "Bribing" Employees To Report On Coworkers Who Favored A Union.
. Therefore, the United Food and Commercial Workers Union filed a complaint with the National Labor Relations Board against Wal-Mart. The complaint, filed with the National Labor Relations Board, alleges that Wal-Mart violated federal labor
Thus, Wal-Mart is wrong by bribing employees for it encourages dishonest behavior. If Wal-Mart wants to avoid a hearing or a lawsuit in this situation, they need to post notices saying the retailer will not oppose employees talking to union representatives. In addition, if Wal-Mart takes more seriously the employees complaints, it might encourage them not to unionize.
Decreased health care coverage: Wal-Mart has decreased health care coverage to employees while touting its commitment to offering affordable care. Evidence suggests that Wal-Mart may have even adopted a strategy of eliminating long both as measures to reduce payroll and health care costs.
time workers and discouraging overweight or otherwise unhealthy workers from applying
Wal-Mart is proving to be a nation and future breaker by violating the child labor laws
and spoiling the future of the children to enrich themselves, ignoring seniority.
Reasoning given by Wal-Mart: So, Wal-Mart succeeds to defend its position as the undisputed leader of the pack when it comes to violating fundamental workers' rights
Payment of low wages: Wal-Mart pays low wages and appears to aggressively seeks to keep wages down
Gender Discrimination The company faces the largest gender discrimination case in the history of this country. Discriminatory policies are as follows: 1. Denied Training: Women had been denied training and promotion opportunities that are offered to men. 2. Under payment: women are underpaid in relation to men. According to Hoovers handbook of American business, in June 2001 a group of six current and former female Wal-Mart employees filed a sex discrimination lawsuit (seeking to represent up to 500,000 current and former Wal-Mart workers) against the company . The suit was filed because Wal- Mart failed to provide equal employment for women.
Gender Discrimination
Less Managerial positions to women: In fact, there are over 70 percent of women working at Wal-Mart, but only a small amount of those women are managers. So, men are holding more management positions than women. Less dignity and respect to women: WalMart is the nation's largest employer of women, but unfortunately they are being treated without dignity and respect."
So, those employees who couldnt afford the health plan will probably have to get their health care benefits through their spouses or the state from our tax dollars. Wal-Mart responded to this problem by offering discounts on health care coverage. Members can save as much as 50% on services not normally covered by medical insurance. Discounts are not enough. Wal-Mart still has a moral responsibility to provide
affordable health care to its employees not shift the cost onto the American taxpayers. Wal-Mart can also raise employees wages so they can afford to pay for their health plan.
REPORTINGS BY EMPLOYEES
I hate wall-mart I worked there 3 years and saw many bad practices. The final straw that made me quit was the fact that I was a full time department manager, yet only was getting 16-22 hours a week!!! When I asked why my hours where being cut they told me it was due to a lack of busness.HELLO you are WAL-MART a short drop in sales should not lead to me and my family being broke. get things together wall-mart if you would actually pay your workers enough to live maybe you would save money in the 'loss prevention' department because your workers wont have to steal from you to make ends meat!!! Mike Bismarck, Arkansas U.S.A
WALMART INJURY DEVELOPED CANCER - WALMART DOES NOT CARE *Rebuttals *Consumer
Suggestion ex-employee
In a unfortunate incident an employee was hurt and compensation was asked but was completely denied and the small wound was converted into cancer because she was poor and couldn't afford medical treatment. So in wall mart employees are not treated as a part of the family and business and have no values in the eyes of management and board as was reported by the ex-employee.
Conclusions:
The companies that survive are the ones that can spot ethical issues and correct them before they become problems. In this case Wal-Mart failed to acknowledge those potential problems and they are probably going to pay for it. Thus, Wal-Marts unethical business practices have hurt its companys reputation. If Wal-Mart wants to survive they will have to try hard to improve their image. That is, they need to show that they care about ethics by treating employees fairly. As a result, it will attract good employees and people will have no reason to complain about the company. In addition Wal-Mart needs to be socially responsible in order to avoid economic harm and in order to maintain the legitimacy granted by society.
Conclusions:
As Wal-Mart is not just a threat to the standard of living of its own employees. It damages the standard of living of numerous others in the economy. In some cases, it forces the closure of better paying firms. Business Week estimates for every WM supercenter that opens, two other supermarkets will close.
There should not be any compromise on ethics and socially responsible behaviour,as it is giving back to the society, other wise its survival will be in
Wal-Mart's immoral, predatory practices and reprehensible behavior has to be mended which is essential for the survival of Wal-Mart