Ethics in Commerce Sparrow

Ethics and Social Responsibility

Salutations class, and welcome to week seven of the course, we certainly are moving right along through these eight weeks of marketing; the finish line is within sight.  We have covered an extensive amount of information on the wonderful world of marketing, and looked in depth into the four P’s of the marketing mix. Last week we explored the decisions and behavior of a consumer. This week, we are going to take a look at the importance and necessity of the practice of ethics and social responsibility and the vital role it plays within the world of marketing. Let’s get started on discovering the role of ethics and social responsibility. The Concept of Ethical Behavior It has been said that ethics is something everyone likes to talk about but nobody can define. Ethics refers to the moral principles or values that generally govern the conduct of an individual or a group.  Ethics also can be viewed as the standard of behavior by which conduct is judged. Standards that are legal may not always be ethical, and vice versa.  Laws are the values and standards enforceable by the courts. Ethics, then, consists of personal more principles. For example, there is no legal statute that makes it a crime for someone to “cut in line.” Yet, if someone doesn’t want to wait in line and cuts to the front, it often makes others very angry. If you have ever resented a line-cutter, then you understand ethics and have applied ethical standards in life. Waiting your turn in line is a social expectation that exists because lines ensure order and allocate the space and time needed to complete transactions. Waiting your turn is an expected but unwritten behavior that plays a critical role in an orderly society.  So it is with ethics. Ethics consist of those unwritten rules we have developed for our interactions with one another. These unwritten rules govern us when we are sharing resources or honoring contracts. “Waiting your turn” is a higher standard than the laws that are passed to maintain order. Those laws apply when physical force or threats are used to push to the front of the line. Assault, battery, and threats are forms of criminal conduct for which the offender can be prosecuted. But the law does not apply to the stealthy line-cutter who simply sneaks to the front, perhaps using a friend and a conversation as a decoy. No laws are broken, but the notions of fairness and justice are offended by one individual putting himself or herself above others and taking advantage of others’ time and position.  Ethical Behavior in Business Morals are the rules people develop as a result of cultural values and norms. Culture is a socializing force that dictates what is right and wrong.  Moral standards may also reflect the laws and regulations that affect social and economic behavior. Thus, morals can be considered a foundation of ethical behavior.  Today’s business ethics actually consist of a subset of major life values learned since birth. The values businesspeople use to make decisions have been acquired through family, educational, and religious institutions. Ethical values are situation specific and time oriented. Everyone must have an ethical base that applies to conduct in the business world and in personal life.  One approach to developing a personal set of ethics is to examine the consequences of a particular act. Who is helped or hurt? How long do the consequences last? What actions produce the greatest good for the greatest number of people? A second approach stresses the importance of rules. Rules come in the form of customs, laws, professional standards, and common sense. “Always treat others as you would like to be treated,” is an example of a rule.  Ethical Decision Making There is rarely a cut-and-dried answer to ethical questions. Studies show that the following factors tend to influence ethical decision making and judgments:

Extent of Ethical Problems Within the Organization: Marketing professionals who perceive fewer ethical problems in their organizations tend to disapprove more strongly of “unethical” or questionable practices than those who perceive more ethical problems. 

Top Managements Actions on Ethics: Top managers can influence the behavior of marketing professionals by encouraging ethical behavior and discouraging unethical behavior.

Potential Magnitude of the Consequences: The greater the harm done to victims, the more likely it is that marketing professionals will recognize a problem as unethical.

Social Consensus: The greater the degree of agreement among managerial peers that an action is harmful, the more likely it is that marketers will recognize a problem as unethical.

Probability of a Harmful Outcome: The greater the likelihood that an action will result in a harmful outcome, the more likely it is that Marketers will recognize a problem as unethical.

Length of Time Between the Decision and the Onset of Consequences: The shorter the length of time between the action and the onset of negative consequences, the more likely it is that marketers will perceive a problem as unethical. 

Number of People to be Affected: The greater the number of persons affected by a negative outcome, the more likely it is that marketers will recognize a problem as unethical. As you can see, many factors determine the nature of an ethical decision. Ethics an ethical behavior play a valuable role within the marketing world and conducting business.  Applying Ethical behavior within business practices enables marketing managers and employees to make better decisions and to have a positive and effective approach on the business all around.  Now let’s move forward onto lecture two to dig into the concept of social responsibility and cause-related marketing. 

References

Lamb, C., Hair, J., McDaniel, C., (2014). Principles of Marketing. Mason, OH: South-Western, Cengage Learning.

Corporate Social Responsibility

Corporate Social Responsibility (CSR)

CSR is a business’s concern for a society’s welfare. This concerns is demonstrated by managers who consider both the long-range best interests of the company and the company’s relationship to the society within which it operates.

Corporate social responsibility can be a divisive issue. Some analysts believe that a business should focus on making a profit and leave social and environmental problems to nonprofit organizations and government. Economist Milton Friedman believed that the free market, and not companies, should decide what is best for the world (Lamb, C., Hair, J., McDaniel, C., 2014). Friedman argued that when business executives spend more money than necessary to purchase delivery vehicles with hybrid engines, pay higher wages in developing countries, or even donate company funds to charity; they are spending shareholders’ money to further their own agendas. It would be better to pay dividends and let the shareholders give the money away if they choose. On the other hand, CSR has an increasing number of supporters based on several compelling factors. One is that it is simply the right thing to do. Some societal problems such as pollution and poverty-level wages have been brought about by corporations’ actions; it is the responsibility of business to right these wrongs. Businesses also have the resources, so businesses should be given the chance to solve social problems. For example, businesses can provide a fair work environment, safe products, and informative advertising.  Another, more pragmatic, reason for being socially responsible is that if businesses don’t act responsibly, then government will create new regulations and perhaps levy fines against corporations. Finally, social responsibility can be a profitable undertaking. Smart companies can prosper and build value by tackling global problems.  Pyramid of Corporate Social Responsibility Total CSR has four components: economic, legal, ethical, and philanthropic.  The pyramid of corporate social responsibility, portrays economic performance as the foundation for the other three responsibilities. At the same time that it pursues profits (economic responsibility), however, a business is expected to obey the law (legal responsibility); to do what is right, just, and fair (ethical responsibility). These four components are distinct but together constitute the whole.  If the company doesn’t make a profit, then the other three responsibilities are moot.  Sustainability The newest theory in social responsibility is called sustainability. This refers to the idea that socially responsible companies will outperform their peers by focusing on the world’s social problems and viewing them as opportunities to build profits and help the world at the same time. When an organization focuses on sustainability, it is acting with long-term consequences in mind and managing its business in such a way that its processes or overall state can be maintained indefinitely.  A company that believes in sustainability will integrate long-term economic, environmental, and social factors into its business strategies while maintaining its competitiveness and brand reputation.  To do so, a company must have effective planning for long-run economic growth. This requires focusing on product and service innovation and building customer loyalty. Cause-Related Marketing A sometimes controversial subset of social responsibility is cause-related marketing.  Sometimes referred to as simply “cause marketing,” cause-related marketing is the cooperative efforts of a for-profit firm and a nonprofit organization for mutual benefit. Any marketing effort for social or other charitable causes can be referred to as cause-related marketing.  Cause marketing differs from corporate giving (philanthropy), as the latter generally involves a specific donation that is tax deductible, whereas cause marketing is a marketing relationship not based on a straight donation. An example of cause-related marketing is Whirlpool. Whirlpool donated a range and refrigerator to every home built by Habitat for Humanity for a year.  Week 7 Review Class, we have learned some wonderful information on the concept of ethical behavior, ethics within business, as well as the importance of corporate social responsibility and  cause-related marketing. Clearly we can see there is so much more to the world of marketing than what meets the eye, and in order for an organizations marketing strategies to be successful they certainly have a significant amount of  lessons and tools to be considered beforehand. Organizations choosing to bestow ethical practices within it business operations as well as partaking in corporate social responsibility are all ways of ensuring a successful business.  Let’s you and I head on over to this weeks power point presentation to discuss more in depth the vital role of ethics and social responsibility within the marketing/business world.  References

Lamb, C., Hair, J., McDaniel, C., (2014). Principles of Marketing. Mason, OH: South-Western, Cengage Learning.