Marketing Ethics and Social Corporate Response Exam 1
2. 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)?
It is important to study business ethics because it enables businesses to develop a collective agreement on organizational ethics, to provide specific guidelines for making complex business decisions, to identify ethical issues when they arise, to understand ways to resolve these ethical issues, and to know how to cope with conflicts between your own morals and those of the organization in which you work. By understanding business ethics and implementing it in the workplace, you can impact your career and your employer's success through being able to make well-informed ethical decisions, eliminate distractions like unethical behavior, increase long term profitability through investors observing your ethical behavior, and improve your company's image through corporate social responsibility.
5. 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 interest in a way that helps differentiate your brand and better connect with customers?
Primary stakeholders are those whose continued associations and resources are absolutely necessary for a firm's survival. Secondary stakeholders are those who are not typically engaged directly in transactions with a company and are therefore not essential to its survival. The degree to which a firm understands and addresses stakeholder demands constitutes a stakeholder's orientation. Stakeholder's key concerns include product quality, safety, and worker's rights. You can address stakeholder interest by adopting initiatives to ensure your company abides by and exceeds stakeholder expectations and has a positive impact on the stakeholder's issues.
4. What are the 4 key benefits of successful business ethics programs? Explain each and how they contribute to the bottom line.
A successful business ethics program contributes to employee commitment, investor loyalty, customer satisfaction and profit. Employee commitment comes from workers who are willing to make personal sacrifices for the organization and the more a company is dedicated to taking care of its employees, the more likely the employees will take care of the organization. It contributes to the bottom line because an ethical culture for employees leads to increased group creativity, job satisfaction, trust and it will decrease turnover. Investor loyalty is based on investors becoming more concerned with the ethics and social responsibility that creates the reputation of companies in which they invest. It contributes to the bottom line because whether or not a business has investors determines its financial stability. Customer satisfaction is based on the business developing long-term relationships with its customers and stakeholders through focusing on the customer, placing their interests first, listening to customer feedback, and developing trust. It contributes to the bottom line because customers are directly related making profit and having repeated purchases. The last benefit is profit in which an ethical culture can help achieve financial performance through positively affecting business performance and product innovation. It contributes to the bottom line because companies cannot stay in business without turning a profit.
9. Explain and compare and contrast the shareholder model of corporate governance with the stakeholder model of corporate governance. What are the priorities of each? Explain the 6 step process of implementing a stakeholder orientation. Describe each step.
The shareholder model of corporate governance is founded on maximizing wealth for investors and owners and it prioritizes developing and improving the formal system for maintaining performance accountability between top management and shareholders. The stakeholder model of corporate governance is broader in that a company has a responsibility for economic success, for satisfying its stockholders, and for answering to its other stakeholders including employees, suppliers, government regulators, and special interest groups. The first step of implementing stakeholder orientation is assessing the corporate culture by identifying the organizational mission, values, norms, and behavior likely to have implications for social responsibility. The second step is identifying the stakeholder groups and recognizing their needs, wants, and desires and assessing their power. The third step is identifying stakeholder issues and understanding their main concerns. The fourth step is assessing organizational commitment to stakeholders and social responsibility by evaluating current practices and selecting concrete social responsibility initiatives. The fifth step is identifying resources and determining urgency through determining the level of financial and organizational investments required by different actions and through prioritizing social responsibility challenges.
11. What is abusive or intimidating behavior? How do you as a manager deal with subordinates that engage in this type of behavior? What is a conflict of interest (define and provide an example)? How do you avoid conflicts of interest?
a. Abusive or intimidating behavior includes actions such as physical threats, false accusations, and yelling. As a manager dealing with this behavior, you should create policies that place reprimand letters or dismissal for this behavior, you should emphasize mutual respect in the employee handbook, and you should encourage employees to report the conduct. A conflict of interest exists when an individual must choose whether to advance his or her own interest, those of the organization, or those of some other group. For example, a manager hiring his family members or relatives for a new position when another candidate is more qualified shows a conflict of interest. You avoid conflicts of interest by separating their private interests from their business dealings.
26. How effective has the NCAA been in controlling ethical conduct? Who are the major participants on a college campus that impact athletics teams' ethics? Evaluate the NCAA Principles of Conduct in terms of impacting player/coach misconduct. Should the NCAA be more aggressive in oversight of NCAA schools or just leave it up to the Universities to police, as they do now?
a. As a whole, I think the NCAA should be more aggressive and active in policing their schools and to do more for the athletes. The major participants on a college campus that impact athletics teams' ethics include players, coaches, assistant coaches, athletic directors, and the athletics department. In the specific example of the Louisville scandal where players were have recruiting parties where they had female escorts come, the NCAA stripped Louisville of 123 wins and they faced a monetary fine as well. I think stripping a team of wins does not do very much to prevent this behavior in the future because everyone still knows that they actually won the games and the players will still have their rings that signify the win. Yes it does make the scandal public and show that Louisville acted unethically, but I think they could have given them a more severe penalty because stripping their title from them is a slap on the wrist basically. They should definitely be more aggressive in policing their schools because the universities mainly try to protect the reputation of their players and their athletics program rather than admit fault and punish accordingly. The schools do not want negative publicity because that costs them money and that hurts their program's goals and so they will try to slide things under the rug. The NCAA should bring this unethical situations to light with harsh penalties to promote more ethical behavior.
12. 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?
a. Bribery is an important ethical issue because it still happens on a daily basis as a standard practice, especially in dealing with foreign companies who have different standards. Active bribery is when the person who promises or gives the bribe commits the offense while passive bribery is an offence committed by the official who receives the bribe. Bribery is difficult to detect because is arises out of relationships with people and thus management has to be aware of the relationship between employees and outside parties which is hard to regulate.
1. 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?
a. Business ethics is managing risks in organizations by comprising organizational principles, values, and norms which may originate from individuals, organizational statements, or from the legal system that primarily guide individual and group behavior in business. Principles relate to business ethics because they are specific and pervasive boundaries for behavior that should not be violated, and they are often the basis for rules. Values are enduring beliefs and ideals that are socially enforced and good examples for business ethics are teamwork, trust, and integrity. Morals refers to a person's personal philosophies and what is right and wrong. As a leader, you must understand all aspects of business ethics in order to establish and implement business ethics in your organization that encompasses moral rules and beliefs and you must serve as an example to your employees.
13. What are the different types of discrimination? Please describe several forms of discrimination in detail. What is sexual harassment? What is the difference between a hostile work environment and a dual relationship?
a. Discrimination types include race, color, religion, sex, age, marital status, public assistance, disability, national origin, and veteran status. Religious discrimination involves treating a person (an applicant or employee) unfavorably because of his or her religious beliefs. National origin discrimination involves treating people (applicants or employees) unfavorably because they are from a particular country or part of the world, because of ethnicity or accent, or because they appear to be of a certain ethnic background. Race discrimination involves treating someone (an applicant or employee) unfavorably because he/she is of a certain race or because of personal characteristics associated with race. Sexual harassment is any repeated, unwanted behavior of a sexual nature, perpetrated upon one individual by another. A hostile work environment must meet these three criteria: the conduct is unwelcome; the conduct is severe, pervasive, and regarded by the claimant as so hostile or offensive as to alter his or her conditions of employment; and such that a reasonable person would find it hostile or offensive. A dual relationship is a personal, loving, and/or sexual relationship with someone with whom you share professional responsibilities.
21. What is the Dodd-Frank Wall Street Reform and Consumer Protection Act? How does it relate to marketing decisions related to consumer financial issues?
a. The Dodd-Frank Wall Street Reform and Consumer Protection Act is a law that seeks to improve financial regulation, increase oversight of the industry, and prevent the types of risk-taking, deceptive practices, and lack of oversight of the 2008-2009 financial crisis. It relates to marketing decisions related to consumer financial issues because it developed the agency called the Consumer Financial Protection Bureau that regulates the offering and provision of consumer financial products or services. It prevents unfair lending and credit card practices and it has the ability to check the safety of financial products before they hit the market.
22. Diagram the "Framework for Understanding Ethical Decision Making in Business" in Chapter 5 and explain each of the boxes and how the framework functions? Be specific as to the variables.
a. Ethical and unethical behaviors are determined by business ethics evaluations and intentions which are influenced by the four interrelated factors of ethical issue intensity, individual factors, organizational factors, and opportunity. Ethical issue intensity is the relevance or importance of an event or decision in the eyes of the individual, work group, and/or organization. It involves moral intensity or the individual's perceptions of social pressure and harm they believe their decisions will have on others. Individual factors are the moral philosophies and values of an individual which can be subjective and vary across cultures. It involves the values and philosophies between differences in gender, education, nationality, and age. Organizational factors include corporate culture which involves values and norms that prescribe a wide range of behavior for organizational members, ethical culture which involves the integrity of decisions made under corporate policies, the influence of coworkers, top management's leadership, and the opportunity for unethical behavior, and obedience to authority which includes the extent to which organizations emphasize respect for superiors. Opportunities describes the conditions in an organization that limit or permit the ethical or unethical behavior. It relates to an individual's immediate job context or where they work, who they work with, and the nature of the work. Those four factors influence business ethics, intentions, behavior, and evaluations which lead to making an ethical or unethical decision.
14. Define fraud. How do you determine marketing fraud versus puffery? Why is consumer fraud important to control? What is the difference between collusion and duplicity in consumer fraud?
a. 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 exaggerated advertising, blustering, and boasting upon which no reasonable buyer would rely upon and is not actionable under the Lanham Act. Consumer fraud is important to control because consumers take advantage of businesses by attempting to deceive them for their own gain. Collusion occurs when an employee assists a customer in fraud. Duplicity is when a customer takes advantage of a business by staging an accident in a store and seeking damages or by purchasing, wearing, and then returning clothes.
20. How would you respond to a statement that 'marketing ethics is an oxymoron'? How would you respond to the statement that 'marketing ethics is common sense"?
a. I would say that marketing ethics is somewhat of an oxymoron. I would like to think that once you educate people on marketing ethics and have strong company values and a strong code of conduct that they will always behave ethically, but that is not always true. You would think marketing ethics is common sense as companies promote the idea of just "do the right thing" but this is not the case. Business people in ethics training and specific rules or a code of conduct to regulate their behavior and give them a guideline for how to act ethically. You may think that you are ethical and you can make ethical decisions, but put under stress and forced to perform business transactions that you are unfamiliar with the process of can lead normally ethical people to make unethical decisions.
10. 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? What is the shareholder model of corporate governance as opposed to the stakeholder model of corporate governance?
a. It is critical to implement a stakeholder orientation that maximizes positive outcomes to meet stakeholder needs because caring for the well-being of stakeholders leads to increased profits and ethical success. The board of directors and officers of corporations are fiduciaries for the shareholders and they balance their interests and settle conflict. Fiduciaries are persons placed in positions of trust that act on behalf of the best interests of the organization. The shareholder model of corporate governance is founded on maximizing wealth for investors and owners and it prioritizes developing and improving the formal system for maintaining performance accountability between top management and shareholders. The stakeholder model of corporate governance is broader in that a company has a responsibility for economic success, for satisfying its stockholders, and for answering to its other stakeholders including employees, suppliers, government regulators, and special interest groups.
15. Why is it important to protect intellectual property rights? Is there a relationship between intellectual property and privacy issues?
a. It is important to protect intellectual property rights because infringement on the rights can threaten a company's profit and reputation and it can threaten the health and well-being of consumers. Both intellectual property and privacy issues are related to technology. As the use of technology and the Internet increase, the threats to intellectual property rights and privacy issues increase.
6. 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.
a. It is important to understand their interaction because they have the power to influence and affect the business they support. Both primary and secondary stakeholders embrace specific values and standards that dictate acceptable and unacceptable corporate behaviors. Yes, there are certain industries and companies that are heavily regulated, have an impact on the environment and are in very competitive markets tend to be more scrutinized by mass media and special interest groups, thus forming closer relationships. For example, college sports teams are regulated by the NCAA and all healthcare providers are regulated the Department of Health and Human Sciences and the CMS.
23. What are principles vs. values, please define each. How do principles and/or values impact the ethics of an organizational culture?
a. Principles are widely accepted, used to develop values and standards, valued across cultures and used to establish pervasive boundaries for behavior. Values relate to choice and are subjective, provide guidance to organizations, differ across cultures and firms, and are used to develop norms. They impact the ethics of an organizational culture because companies take basic principles and translate them into core values to implement in the work place. An organizational culture needs shared values in order to work effectively.
19. What is the Federal Sentencing Guidelines for Organizations? What are the 7 steps companies must implement to demonstrate due diligence in managing organizational risks?
a. The Federal Sentencing Guidelines are incentives for organizations to develop and implement programs designed to foster ethical and legal compliance. The seven steps companies must implement to demonstrate due diligence include: first, a firm must develop a code of conduct that communicates required standards and identifies high risk areas; second, high-ranking personnel in the organization must have oversight over the program; third, no one with a known propensity to engage in misconduct should be put in a position of authority; fourth, a communications system or ethics training must be put into place; fifth, there must be a way for employees to report misconduct without fearing retaliation and monitoring and auditing systems must be set up; sixth, if misconduct is detected, the firm must take appropriate and fair disciplinary action; seventh, if misconduct occurs, the organization must take steps to prevent similar offences in the future.
7. 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?
a. The bottom and most basic level is economic where companies have a responsibility to maximize shareholder wealth and create value. The next level is legal where companies are expected to abide by all laws and government regulations. The third is ethical where companies are expected to follow standards of acceptable behavior as judged by stakeholders. The final is philanthropic or activities that are not required of businesses but that contribute to human welfare or goodwill. It is important to follow these four steps in order for your company to be profitable, obey the law, avoid harm in being ethical, and be a good corporate citizen. Corporate citizenship is the extent to which businesses meet the economic, legal, ethical, and philanthropic responsibilities placed on them by shareholders. Reputation is one of an organization's greatest intangible assets with tangible value. Reputation is so valuable because a single negative incident can influence perceptions of a company's image and reputation instantly and for years later and it can change employee behavior.
17. What are the elements of an ethical culture? How do the elements work together to create an ethical culture?
a. The elements of an ethical culture include values, norms, artifacts, behavior, voluntary action, governance, core practices, and legal compliance. They work together to create an environment to structure behavior. Values are broad and long-term beliefs. Norms dictate and clarify behavior through rules, principles, policies, and procedures. Artifacts are visible, tangible external symbols of values and norms. Values, norms, and artifacts have different impacts on behavior. Governance, core practices, and legal compliance are organizational decisions shaped by the firm.
16. What is the institutionalization of business ethics? What are the three dimensions of institutionalization and please describe each?
a. The institutionalization of business ethics is the established laws, corporate culture, and industry best practices in establishing an ethical reputation. The three dimensions of institutionalization are legal, voluntary, and core practices. Legal or mandated boundaries are externally imposed levels of appropriate conduct such as laws, rules, and regulations. Voluntary practices include the beliefs, values, and voluntary contractual obligations of a business. Core practices are a highly appropriate and common practice that helps ensure compliance with legal requirements, industry self-regulation, and societal expectations.
8. What are the major social issues of concern in social responsibility? Explain the role of corporate governance in corporate social responsibility.
a. The major issues of concern in social responsibility are social issues, consumer protection, sustainability, and corporate governance. Corporate governance involves the development of formal systems of accountability, oversight, and control. Strong corporate governance mechanisms remove the opportunity for employees to make unethical decisions. There is a positive relationship between corporate governance and corporate social responsibility engagement.
24. What are the keys to restoring a damaged reputation? Grade VW on how well they have done in the face of scandal?
a. There are several ways to go about restoring a damaged reputation which include developing your action plan of what to do immediately, in the short term, and in the long term to restore your reputation. You should begin by figuring out what went wrong, apologizing for your mistake and being quick to admit your fault as a company, solving the issue, and recommitting to focusing on the customer and their needs. If these aren't enough, you could put more into social corporate responsibility and donate money to a similar cause related to your issue or start initiatives to support the cause. You can also completely rebrand your company if necessary. VW responded averagely to its scandal. They apologized but refused to admit fault and invested in ads that acknowledged the scandal but offered no apology. Later, the CEO stepped down, they got new management, they developed a plea agreement and they recalled their vehicles worldwide. This is a normal response of corporations to their faults, but if I were to grade their response out of 10 I'd give them a 6/10. They eventually did the right thing, but it took them too long and they wasted money on ads that did not ease the public's negative view of them.
3. 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?
a. To develop an ethical organizational culture, you should implement compliance and ethics initiatives that will lead to workplace confrontation over ethics issues, have reports to management of observed misconduct, develop an ethics hotline, and communicate core values to employees through an ethics program with ethics officers to oversee them. The process is complicated globally because there are not global standards of acceptable behavior. In order to overcome the global challenges, businesses can abide by ISO 19600 which is a global compliance standard, and they can adopt the Global Compact which is a set of ten principles concerning human rights, labor, the environment, and anti-corruption.
25. What has caused Wells Fargo to lose sight of its vision and values. How did the focus on the short term cause them to violate their duties to stakeholders? How should the Wells Fargo culture be changed to improve ethical conduct and financial performance?
a. Wells Fargo lost sight of their vision and values when they participated in fraud, creating fake credit card and checking accounts, made unattainable sales quotas, and terminated those who called out the unethical behavior. Their focus solely on making sales led them to have a sales program with unattainable sales quotas. This put too much pressure on its salesmen and they had to choose between not meeting the quota and fear of losing their job or using unethical methods to reach the quota. Wells Fargo's culture should be changed to focus on the customer first and gaining their trust back, to focus on the long term instead of the short term, and to focus on ethics training to prevent future ethical problems and to develop a way for employees to report unethical behavior anonymously.
18. What is whistleblower protection? How should one determine when to be a whistleblower? What are the potential opportunities and challenges associated with being a whistleblower?
a. Whistleblower protection is a law established by the Sarbanes-Oxley Act that prohibits the employer from taking certain actions against employees who lawfully disclose private employer information to parties in a judicial proceeding involving a fraud claim. One should be a whistleblower when they detect unethical behavior in a public company or an accounting firm. The potential opportunities of being a whistleblower include being granted special damages and attorney's fees, while the challenges include the possibility of losing your job or being penalized prior to solving the financial crisis.