Assignment 220
Delp10
B207BPowerpoint-Week6.pptxB207B
Shaping Business Opportunities II
Block 2
Session 16:
16.1 Ethical issues for marketing in a global context…… (Reading 24)
16.2 Ethical issues: consumer perspectives……. (Reading 24)
16.3 Ethical issues: worker perspectives…….. (Reading 24)
16.4 Compatibility issues between the global marketplace and poverty alleviation….. (Reading 24)
16.5 Globalization and corporate social responsibility……… (Reading 25)
Block 2- Reading 24
Globalization – ethical issues
Ethical issues for marketing in a global context
Crane and Matten(2016) identified three key ethical issues of globalization in relation to consumers, to which may be added a fourth:
differing standards of consumer protection
the exporting of consumerism and increase in cultural homogenization
the targeting of marketing at lower-income consumers in developing countries
geographical segregation of business operations.
Reading 24: Globalization- ethical issues
Differing standards of consumer protection
Some companies take advantage of differences in the legal regulations to market their offerings where there are fewer constraints on their activities. For example, pharmaceutical companies have been censured for marketing their products in countries in which they are subject to lower levels of control.
However, it is not just developing countries in which consumers may be less protected. Less regulation of pharmaceutical marketing in the USA enables companies to market their medicines directly to consumers through mass advertising aimed at encouraging consumers to ask their doctors to prescribe particular brands of medicines, while they are promoted indirectly via pharmacies in developing countries.
Reading 24: Globalization- ethical issues
Crane and Matten (2016) note that there is seldom such coordinated international action and that large differences in the standards of consumer protection still exist for many products, including automobiles, medicines, food and drink.
Differing standards of consumer protection
Reading 24: Globalization- ethical issues
Exporting consumerism and increasing cultural homogenization
Another ethical issue associated with global marketing is the criticism that it involves exporting not only goods and services to other parts of the world, but the transmission of the values embedded in them and therefore encourages the spread of consumerism.
Doubts have been raised about the impact of consumerism on wellbeing. For example, the psychologist and writer Oliver James(2007)argued that an obsessive spiral of consumerism made people more likely to succumb to depression, anxiety and addictions – a phenomenon he has dubbed as ‘affluenza’–and that this was spreading to the rest of the world.
Reading 24: Globalization- ethical issues
Globalization has led to cultural homogenization at the expense of local cultures. Crane and Matten (2016) highlight the similarity of shops and products offered on high streets in cities around the world and the dominance of global brands in entertainment and sport, with concern focusing on the aggressive tactics of some multinational corporations (MNCs) that have squeezed out local providers and the role of international marketing activities in exporting consumerism
Exporting consumerism and increasing cultural homogenization
Reading 24: Globalization- ethical issues
Targeting lower-income consumerism developing countries
Cultural homogenization is also evident in research comparing the preferences between local and foreign brands among predominantly middle-class consumers in India. This revealed that consumers who admired the life styles in economically developed countries preferred foreign brands of products for status-enhancing reasons
Reading 24: Globalization- ethical issues
Ethical issues are also raised when lower-income consumers in developing countries are targeted by marketing. There are two key concerns:
Marketing products beyond the reach of low-income consumers perpetuates dissatisfaction.
Low-income consumers might be exploited.
Targeting lower-income consumerism developing countries
Reading 24: Globalization- ethical issues
The first concern is that targeting products at low-income consumers, whether they desire them or not, can be detrimental
It should be recognized that exclusion from targeting can also increase the gap between the affluent and the poor with respect to vital issues such as health.
Diseases and conditions that affect primarily the poor may be neglected by the pharmaceuticals industry in favor of researching and developing treatments that are easier
However, targeting vulnerable populations in which levels of consumer protection may be lacking raises important ethical issues
Targeting lower-income consumerism developing countries
Reading 24: Globalization- ethical issues
Low-income consumers may be considered potentially vulnerable because of:
1- their economically restricted circumstances, which mean they do not have the same choices open to them as more affluent consumers.
2- They may also not have the level of education or information to make informed decisions about consumption and use of certain products.
For example, they may be unaware of safety issues or health risks. Consumer vulnerability has been conceptualized as powerlessness in the marketplace that negatively affects consumers’ personal and social self-perceptions.
These economic, educational and informational restrictions may leave vulnerable consumers exposed to exploitation and at a disadvantage in terms of bargaining power when it comes to the exchange process. However, it should be noted that while some groups (such as the poor)may be more prone to experience vulnerability, that does not mean that everyone in those groups will always experience vulnerability.
Targeting lower-income consumerism developing countries
Reading 24: Globalization- ethical issues
Geographical segregation of business operations
One of the effects of global business is that it separates geographically some of the causes and effects of the scope of business’ operations.
For example, demand for a product in developed country might be satisfied by a corporation that sources raw materials for and manufacture of that product from one or more developing countries, with the result that consumers in the developed country are shielded from any negative consequences emanating from the depletion of raw materials or manufacture under dangerous or harmful conditions. Consumers might be impacted indirectly, however, whether or not they are aware of it, by the loss of manufacturing jobs in their home country
Reading 24: Globalization- ethical issues
Another effect of the geographical separation of business operations is that some large MNCs have taken advantage of national boundaries on government control to reduce the tax they pay without violating the laws in different countries. Well-publicised examples include Starbucks, Google and Amazon (BBC, 2013). Such behavior has fueled calls for greater corporate accountability (Crane and Matten,2016).
Geographical segregation of business operations
Reading 24: Globalization- ethical issues
Block 2- Reading 25
Globalization and corporate social responsibility (CSR)
Introduction
All of the activities related to a specific brand, by both the organization and its suppliers, contribute to the brand’s reputation and will affect its brand equity: ‘the monetary value of the psychological goodwill which the brand has created over time through communication investment and consistent focus on products, both of which help build the reputation of the name’.
However, brand formulations can unravel if corporations have not also given similar attention to the concept of corporate social responsibility(CSR).Corporate reputation, consumer trust and loyalty are all influenced by consumers’ perceptions of a firm’s CSR
Reading 25: Globalization and corporate social responsibility
Corporate Social Responsibility (CSR)
CSR ‘is about corporations taking responsibility for the conduct and impact of their businesses’. While some make genuine efforts to minimize the negative impact of their business activities, most organizations recognize the need to be at least seen to be doing ‘the right thing’. The three main perspectives on CSR are:
It is the right thing for corporations to do – the moral argument.
It is expected of corporations – there are pressures on corporations to demonstrate CSR.
It is in corporations’ interests to engage in CSR – enlightened self interest. The latter has been dubbed SCR –‘strategic corporate responsibility’–the downgrading of a corporation’s responsibilities to ‘a mere market opportunity to achieve competitive advantage’
Reading 25: Globalization and corporate social responsibility
Brand misconduct can adversely affect corporations. A number of high-profile brands have been damaged by exposés of unethical activities by their subcontractors. For example, the fashion industry is particularly vulnerable to threats to its brands’ reputations, owing to:
the widespread use of long, complicated supply chains
production by subcontractors in developing countries
the highly competitive markets
the many potentially damaging effects of production processes on social wellbeing, human health and the environment.
Corporate Social Responsibility (CSR)
Reading 25: Globalization and corporate social responsibility
See Examples (Reading 25 ….P.188-189)
Naomi Klein
Nike
Gap
Corporate Social Responsibility (CSR)
Reading 25: Globalization and corporate social responsibility
Debate about CSR
The issue of responsibility has been the focus of much debate. Questions have included whether a corporation can be regarded as a moral agent, the nature of CSR, what a corporation’s responsibilities are and how best to accomplish CSR.
Reading 25: Globalization and corporate social responsibility
Can a corporation be regarded as amoral agent?
The question of whether a corporation can be considered a moral agent is important to establish because it determines whether corporations can be held morally responsible. Central to this debate have been arguments relating to intentionality and the attribution of blame and punishment. In brief:
Intentionality has been argued to be attributable to corporations on the basis that they have an internal decision structure, consisting of a hierarchical chart indicating the corporation’s internal levels and positions of power together with a corporate policy specifying decision rules.
Membership of a corporation has been reasoned to involve accepting shared responsibility and consequently shared blame.
In law corporations can be criminally liable – as can individuals and senior officers in a corporation .
Debate about CSR
Reading 25: Globalization and corporate social responsibility
The nature of CSR and corporations’ responsibilities
Debate about the nature of CSR surrounds the extent to which CSR is discretionary. While some writers explicitly define CSR as discretionary (e.g. Kotler and Lee, 2005), others view CSR as essential commitment to ethical principles, processes and impact (e.g. Wood,1991).
Murphy (2009) highlighted that CSR ‘is a broad term including moral/ethical, social and environmental concerns, commonly called the “triple bottom line approach”’. The triple bottom line encapsulates the notion that corporations have economic, social and environmental goals. This has influenced the CSR reporting of many corporations and is also known as the3Ps –‘people, planet and profits’.
Debate about CSR
Reading 25: Globalization and corporate social responsibility
In terms of the types of responsibilities that corporations have, a shift in focus from the distribution of corporations’ profits to how profits are generated and the ethical issues involved in corporations’ core business processes. This is recognized in the following definition of CSR: ‘It is how a company carries out its main stream business operations that determine whether or not it is socially responsible.’
Globalization and global business highlight connections between developed and developing countries and the importance of multinational corporations taking responsibility for their operations around the globe.
Debate about CSR
Reading 25: Globalization and corporate social responsibility
Accomplishing CSR
Goodpaster and Matthews (2001) identified three different perspectives on how best to accomplish CSR:
1- Corporate morality is best achieved through the market system (i.e.by corporations focusing on being profitable).
2- Government intervention is needed to ensure moral behavior by corporations with corporations’ responsibilities being limited to political and legal compliance.
3- Corporations should manage their social responsibilities themselves.
Reading 25: Globalization and corporate social responsibility
Accomplishing CSR
Relying on market forces to eliminate organizations that ignore their responsibilities depends on consumers’ ability to discriminate between them in their purchasing decision-making. In reality consumers rarely have sufficient knowledge or accurate in formation to shape the market in this way. Furthermore, CSR is not a primary consideration in consumers’ purchase decision-making
There is also a notorious gap between consumers’ ethical purchase intentions and their actual behavior
Reading 25: Globalization and corporate social responsibility
While increasing consumers’ concern for the environment can positively influence behavior intentions, concern alone may not be sufficient to stimulate environmentally responsible behavior; changes in the dominant social paradigm have been argued to be necessary.
The dominant social paradigm has been defined as ‘the values, metaphysical beliefs, institutions, habits, etc. that collectively provide social lenses through which individuals and groups interpret their social world’
Accomplishing CSR
Reading 25: Globalization and corporate social responsibility
Governments are also taking responsibility. There are international standards banning the use of unsafe chemicals and international labor standards, covering issues such as child labor.
There is variation in the level of government regulation around the globe. Governments also cannot always be relied upon to act disinterestedly. They have to balance a range of interests, and democratic governments have to please the majority of voters, who may not be well-informed about social and environmental matter
Accomplishing CSR
Reading 25: Globalization and corporate social responsibility
Leaving corporations to self-regulate their responsibilities is subject to similar limitations. Corporations may also find that their interests sometimes conflict with those of other groups, as happened in the oil industry in Nigeria, which raised human rights’ issues.
Accomplishing CSR
Reading 25: Globalization and corporate social responsibility
Regional variations in perspective on who bears responsibility and how it is handled have been identified (Crane and Matten,2016), as shown in Table1. Differences in countries’ broad approaches to ethics in business are attributable to a range of historic influences that include cultural, religious, economic, corporates candals, political change and conflict factors.
Accomplishing CSR
Reading 25: Globalization and corporate social responsibility
Accomplishing CSR
Reading 25: Globalization and corporate social responsibility
Instead of viewing the three perspectives identified by Goodpaster and Matthews as different ways of achieving CSR, each of the three stakeholders (consumers, government and corporations) could be seen as having a role to play and the tensions between the three approaches might help to ensure that all three parties maintain a focus on CSR
Ethical Trading Initiative (ETI)help to share the responsibility between companies, trade unions and NGOs:
It is a leading alliance of companies, trade unions and NGOs that promotes respect for workers’ rights around the globe. It’s visions a world where all workers are free from exploitation and discrimination, and enjoy conditions of freedom
Accomplishing CSR
Reading 25: Globalization and corporate social responsibility
