Marketing Ethics & Social Responsibility Test 1

What is a conflict of interest (define and provide an example)? How do you avoid conflicts of interest?

-A conflict of interest exists when a person must choose whether to advance his or her own interests, those of the organization, or those of some other group. The U.S. General Accounting Office found conflicts of interest when the government awarded bids on defense contracts. To avoid these, employees must be able to separate their private interests from their business dealings. Organizations must also avoid potential conflicts of interest when providing products.

What is abusive or intimidating behavior? How do you as a manager deal with subordinates that engage in this type of behavior?

-Abusive or intimidating behavior can refer to many things-physical threats, false accusations, being annoying, profanity, insults, yelling, harshness, ignoring someone, and unreasonableness-and their meaning differs from person to person. This is not tolerable and managers need to address to situation directly and head on because bullying behaviors in the workplace tend to spread. Someone who has been bullied in the workplace is likely to find it acceptable to bully others in the workplace.

What are the major social issues of concern in social responsibility? Explain the role of corporate governance in corporate social responsibility.

*The development of a stakeholder orientation should interface with the corporations governance structure -Major social issues include: loss of privacy in marketing purposes, consumer protection (deceptive advertising), sustainability, and corporate governance. Corporate governance involves the department of formal systems of accountability, oversight, and control. Strong corporate governance removes the opportunity for employees to make unethical decisions and research shows that corporate governance has a positive relationship with social responsibility. Firms with strong corporate governance prompt them to disclose their social responsibilities and this can establish trust among stakeholders.

Why is consumer fraud important to control? What is the difference between collusion and duplicity in consumer fraud?

- Consumer fraud is important to control because it allows an individual/group to derive an unfair economic advantage over an organization. It hurts the organization, however, sometimes it can be difficult to prove. Collusion typically involves an employee who assists the consumer in fraud while duplicity involves a consumer staging an accident in a store and then seeking damages for the store's lack of attention to safety.

Define fraud. How do you determine marketing fraud versus puffery?

- Fraud is any purposeful communication that deceives, manipulates, or conceals facts in order to harm others. Marketing fraud is the process of dishonestly creating, distributing, promoting, and pricing products while puffery is defined as exaggerated advertising, which no reasonable buyer would rely upon.

Why do so many people distrust business? Why have some industries been much more negatively affected, in terms of increased distrust, versus others?

- Scandals, misconducts, and cover-ups that have been publicly exposed have caused major distrust with consumers, especially in the financial and banking areas. Because of the financial crisis in 2008, these industries have been hit with harder regulations because heads of the companies knew what they were doing wrong, but decided to do it anyways and promotes it throughout the companies.

Explain the 6 step process of implementing a stakeholder orientation. Describe each step.

- Step 1 Assessing the Corporate Culture → This step is used to identify an organization's missions, values, and behavior likely to have implications for social responsibility -Step 2 Identifying Stakeholder Groups → It is important to recognize stakeholder needs, wants, and desires. These lead to identifying key constituencies such as consumer groups, regulators, or the media. -Step 3 Identifying Stakeholder Issues → steps 1 and 2 together lead to the identification of the stakeholders who are both the most powerful and legitimate. Step 3 consists of understanding the main issues of concern to these important stakeholders. -Step 4 Assessing Organizational Commitment to Stakeholders and Social Responsibility → This step brings the past three stages together to arrive at an understanding of social responsibility that specifically matches the organization of interest. This step will be used to evaluation current practices and to select concrete social responsibility initiatives. -Step 5 Identifying Resources and Determining Urgency → the prioritization of stakeholders and issues and the assessment of past performance lead to the allocation of resources. Two main criteria can be considered in this step: the level of financial and organizational investments required by different actions, and the urgency when prioritizing social responsibility challenges. When the challenge under consideration is viewed as significant and stakeholder pressures on the issue can be expected, the challenge is considered urgent. -Step 6 Gaining Stakeholder Feedback → Stakeholder feedback is generated through a variety of means such as: first, stakeholders' general assessment of a firm and its practices can be obtained through satisfaction or reputation surveys. Second, to gauge stakeholders' perceptions of a firm's contributions to specific issues, stakeholder media can be assessed. Third, more formal research may be conducted using focus groups , observation, and surveys.

Why is bribery an important ethical issue? What is the difference between active bribery and passive bribery? Why is bribery so difficult to detect in many organizations?

-Bribery is an important ethical issue because it can be used by someone to gain an advantage in a workplace relationship. Active bribery is when the person who promises or gives the bribe commits the offense (briber) and passive bribery is when an offense is committed by the official who receives the bribe (bribee). Bribery is so difficult to detect in many organizations because sometimes it is not actually an offense because the advantage was permitted or required by the written law or regulation of the foreign public officials country.

Define business ethics comprehensively. How do principles and values relate to business ethics? How do morals relate to business ethics? Why is it critical to have an understanding of all aspects of business ethics as a leader in an organization?

-Business ethics consists of organizational principles, values, and norms that may originate from individuals, organizational statements, or from the legal system. Principles are specific and pervasive boundaries for behavior that should not be violated. Values are enduring beliefs and ideals that are socially enforced. Morals refer to a person's personal philosophies about what is right or wrong. It is critical to understand this because business ethics has become a major concern in business today.

What are the different types of discrimination? Please describe several forms of discrimination in detail.

-Discrimination can be through the basis of race, color, religion, sex, marital status, sexual orientation, public assistance status, disability, age, national origin, or veteran status. Race, gender, and age discrimination are major sources of ethical and legal debate in the workplace. One dominated by European American men, the U.S. workforce today includes significantly more women, African Americans, Hispanics, and other minorities, as well as disabled and older workers. These groups traditionally faces discrimination and higher unemployment rates and been denied opportunities to assume leadership roles in corporate America. Another form includes discriminating against people on the basis of age. The Age Discrimination in Employment Act specifically outlaws hiring practices that discriminate against people 40 years of age or older.

Why is it important to protect intellectual property rights? Is there a relationship between intellectual property and privacy issues?

-Intellectual property rights include the legal protection and rights to music, books, and movies. These rights are important because if they are infringed upon, companies and individuals run the risk of losing profits, reputation and identity. It can also threat the health and well-being of consumers. Example: illegally produced medications given to consumers who are unknowingly consuming them can cause major health issues and even death. These issues can coincide with privacy issues, especially within the healthcare and internet industries. Consumers may be unaware of illegal services and products they are using because of infringement on intellectual property rights, which directly runs into privacy issues.

Why is it so important, today, to understand the interaction between primary and secondary stakeholders? Are there certain industries and companies that have some closer relationships with secondary stakeholders based on the industry, etc? Please share examples.

-It is so important to understand the relationship and interaction between primary and secondary stakeholders because, although secondary stakeholders may not be as present as primary stakeholders, secondary stakeholders can have just as much power to influence outcomes. Special interest groups, the mass media, trade associations, and competitors will have a closer relationship with secondary stakeholders in a company because they do not engage directly with the company. These industries are also closer with secondary stakeholders because they embrace specific values and standards that dictate acceptable and unacceptable corporate behavior.

Define and identify primary and secondary stakeholders. What constitutes a stakeholder orientation? What are the key concerns of an organization's stakeholders? How can you address stakeholder interests in a way that helps to differentiate your brand and better connect with customers?

-Primary Stakeholders are the people whose support and resources are needed for a firm's survival. These stakeholders can include employees,customers, and shareholders. These are also the people who have a direct stake in a business and whose opinion matters the most. On the other hand, Secondary Stakeholders do not directly engage in transactions with a company. These stakeholders are important to a firm, but are not essential to a firm's survival. These stakeholders are also associated with media and trade. Stakeholder orientation can be defined as the degree to which a firm understands and addresses stakeholder demands. Stakeholder orientation is comprised of three sets of activities which include (1) the organization-wide generation of data about stakeholder groups and assessment of the firm's effects on these groups, (2) the distribution of this information throughout the firm, and (3) the responsiveness of the organization as a whole to this information. .......

What is sexual harassment? What is the difference between a hostile work environment and a dual relationship?

-Sexual harassment is any repeated, unwanted behavior of a sexual nature perpetuate upon one person by another. It can be verbal, physical, or written and can occur between many different types of people. In a hostile work environment, these criteria must be met: The conduct was unwelcome, severe, persuasive, and regarded to be offensive as to alter his/her conditions in the workplace. A dual relationship is a personal, loving, and/or sexual relationship with someone whom you share professional responsibilities. A dual relationship is wanted versus a hostile environment or sexual harassment.

Explain and compare and contrast the shareholder model of corporate governance with the stakeholder model of corporate governance. What are the priorities of each?

-Shareholder model of corporate governance: Goal: maximize wealth for investors and owners Focuses on developing and improving the formal system for maintaining performance accountability between top management and shareholders The goal in this model is to maximize wealth for investors and owners. The shareholder orientation should drive a firm's decisions towards serving the best interests of investors. This model is more restrictive. -Stakeholder model: -Company is answerable to stakeholders -This model adopts a broader view of the purpose of business. They promote stakeholder welfare along with corporate needs and interests. In this model, the company is more answerable to its stakeholders and they also identify which stakeholders are primary. Once primary stakeholders are identified, they can implement corporate governance mechanisms to promote the development of long term relationships.

Why is it so difficult to recognize an ethical issue? How do you develop ethical issue awareness among employees?

-Some ethical issues are difficult to recognize because they are gray areas that are hard to navigate. The first step in developing ethical awareness among a business is to learn to identify which stakeholder issues contain an ethical component. Businesspeople must understand the universal moral constants of honesty, fairness, and integrity.

Evaluate some of the ethical issues faced by WalMart. What was the major contribution to consumers provided by WalMart? How would you characterize WalMart's organizational culture? Be specific and use examples.

-Some of the ethical issues faced by Walmart include unsafe working conditions, extremely low wages for employees, discrimination, hiring illegal immigrants, and sexual harassment in the workplace. Major contribution???? Walmart's organizational culture can be described as more customer focused than employee focused. Walmart seems to care a lot more about revenues, profits, and customer satisfaction than the well-being of their stores, employees, and working conditions. It is almost as if Walmart wants to be the best at what they do for their customers, being an all inclusive discount superstore, and they do not care what it takes on the employer end on how to get there. Maybe major contribution to consumers provided by Walmart could be the consistent low prices?

Why is it critical to long term success to implement a stakeholder orientation? Who balances the interests of competing stakeholders and settles conflicts? What are fiduciaries?

-Stakeholder orientation is the degree to which a firm understands and addresses stakeholder demands. Though it is important to recognize the needs of shareholders, stakeholders represent a greater majority in an organization's interests because they can include customers, employees, bondholders, vendors, and suppliers. When organizations make decisions, they have to think about how stakeholders (the general public) will react to these decisions. It would not be in a company's best interest to only pursue the wants and desires of just shareholders because stakeholder's have just as much of an impact.

Define stakeholders. Describe the normative and descriptive approaches to stakeholder theory. How do you support a positive reputation with stakeholders? Review each tactic by specific stakeholder.

-Stakeholders are people who have a stake or a claim in some aspect of a company's operations, markets, and industry. A normative approach to stakeholder theory sets forth ethical guidelines that dictate how firms should treat stakeholders. A descriptive approach to stakeholder theory focuses on the actual behavior of a firm and addresses how decisions and strategies are made for stakeholder relationships. To support a positive reputation with stakeholders you must have social responsibility. Social responsibility relates to trying to accomplish positive things towards your stakeholders. ***

What are the 4 key benefits of successful business ethics programs? Explain each and how they contribute to the bottom line.

-The 4 key benefits of business ethics are that ethics contributes to employee commitment, investor loyalty, customer satisfaction, and profits. In employee commitment, firms take care of employees and vice versa. This increases group creativity and job satisfaction. In customer satisfaction, companies are viewed as socially responsible which boosts trust and satisfaction. Regarding profits, being ethical pays off with better performance. Ethical conduct is becoming a part of strategic plans with the goal of higher profitability. When a firm is ethical, it gains investors' trust and confidence which is vital to sustaining financial stability within the firm.

Of the 6 eras in business ethics, starting with before the 1960s to the 21st Century, which era do you feel is the most impactful on improving organizational ethical behavior and why? Be specific.

-The era that I think is the most important is the 21st century of business ethics. The 21st century has brought the Sarbanes-Oxley Act and the Dodd-Frank Act. The Sarbanes Oxley Act created an accounting oversight board that requires corporations to establish codes of ethics for financial reporting and to develop greater transparency in financial reports to other interested parties. The Dodd Frank Act was the most sweeping financial legislation since Sarbanes Oxley. It was designed to make the financial services industry more ethical and responsible. It required regulators to make many rules to promote financial stability, improve accountability and transparency, and protect consumers.

What were the major ethical issues and challenges at Enron? How could a company with a 60 plus page code of ethics fail? What role did the culture of the organization play in the company's demise? What ultimately lead to the collapse of the company?

-The major ethical issues at Enron included their backstabbing and complacent company culture, their "rank and yank" system, and their creative way of creating accounts. Enron's company culture was very different and hypocritical of what they stated their company values to be. They had a company cultured in which encompassed arrogance, lack of accountability, cutthroat attitudes, and over competitiveness. Enron was also very creative when it came to their accounts. They had a mass of "offshore" accounts in which they were able to make debt look like real profitable accounts. Enron was also able to sneak around money, on their balance sheets without money actually leaving the company, making it look like Enron had a whole lot more money than they really did. The combination of backstabbing company culture and shady accounting helped lead to the downfall of this empire, but what really knocked them off their peak was the amount of shifted blame, lack of defense witnesses, and backstabbing.

What is the shareholder model of corporate governance as opposed to the stakeholder model of corporate governance?

-The shareholder model of corporate governance is founded in classic economic precepts, including the goal of maximizing wealth for investors and owners. For publicly traded firms, corporate governance focuses on developing and improving the formal system for maintaining performance accountability between top management and the firm's shareholders. Thus, a stakeholder orientation should drive a firm's decisions toward serving the best interests of investors. The stakeholder model of corporate governance adopts a broader view of the purpose of business. Although a company has a responsibility for economic success and viability to satisfy its stockholders, it must also answer to other stakeholders, including employees, suppliers, government regulators, communities, and the special interest groups with which it interacts.

Describe and diagram the Steps of Social Responsibility. Why is it important to successfully navigate each of these 4 steps? Explain citizenship and reputation. Why is reputation such a valuable organizational asset?

-The steps of social responsibility include: Economic (maximizing stakeholder wealth), Legal (abiding by all laws and government regulations), Ethical (following standards of acceptable behavior as judged by stakeholders), and Philanthropic (giving back to society). It is so important to navigate through each of these four steps in order to properly drive appropriate decisions that are interrelated with all levels of social responsibility. Corporate citizenship is used to express the extent to which businesses strategically meet the economic, legal, ethical, and philanthropic responsibilities placed on them by stakeholders. Reputation is defined as the beliefs or opinions that are generally held about an organization and reputation is so important for a company because they are critical in sustaining relationships with important constituents. A single negative incident can trash a company's reputation and can influence customer perceptions for years.

Luxottica is a global eyewear giant. How would you defend their business model of vertical integration? What are the potential risk areas, for consumers, associated with this control of so much of the market? Be specific and use examples.

-Though vertical integration is difficult to maintain and accomplish, organizations who are successful with it have a competitive advantage over non-integrated organizations. Integrated companies owns the manufacturing of its products and, therefore, does not have to rely on suppliers. Integrated companies also controls distribution and is the retailer; this cuts out the need for a middleman and companies like this can offer their own brand name at a lower, or in this case, higher price. In Luxotica's case, cutting costs of suppliers and middlemen gives them more cost savings, but instead of lowering their own brand costs, they raise them. For a vertically integrated company of this massive size, such as Luxottica, they run the risk of being viewed as a monopoly to consumers because of their vast control over the market. Consumers have limited options when choosing eyewear, and therefore, might feel like they are paying way more than they should. Eyewear is vital for some consumers, but some consumers might feel trapped or even helpless when trying to buy their eyewear because Luxottica owns a majority of the eyewear industry. For the consumers who cannot afford eyewear, this might be a huge concern for them.

Provide at least 5 strong reasons why it's important to understand business/marketing ethics? How can doing so impact your career and your employer's success (be specific here)?

-To be able to identify ethical issues when they arise, you can't deal with what you don't see. -To understand ways to resolve ethical issues -To know how to cope with conflicts between your own personal values and morals, and those of the organization in which you work -You don't see the work that you do from beginning to end -Ethics = risks Understanding business ethics can contribute to employee commitment, customer satisfaction, and ethics contributes to profits.

How would you develop an ethical organizational culture? How is this process complicated in multinational companies and global business operations? What are some of the 'best practices' in overcoming global business ethics challenges?

-To develop an ethical organizational culture, many businesses communicate core values to their employees by creating ethics programs and appointing ethics officers to oversee them. Globally, businesses are working closely together to establish standards of acceptable behavior. Some companies refuse to do business with organizations that do not support and abide by certain standards. To develop better ethical corporate cultures, many businesses communicate core values to their employees by creating ethics programs and appointing ethics ethics officers to oversee them. Globally, businesses are working together to establish standards of acceptable behavior → North American Free Trade Agreement (NAFTA), Southern Common Market (MERCOSUR), and the World Trade Organization (WTO)