capstone 2

Developmental Levels for Assessing Ethical Issues

Preconventional Level

This level for assessing ethical issues is based on defining right and wrong in the terms of incentives and punishment provided by authority figures. An example of this might be a law that prevents speeding. An individual can choose to exceed the speed limit, but if caught, he or she could face a fine, loss of driving privileges, or even jail time. The speed of any given roadway is determined by factors that are typically unknown to the individual. The laws provide some control over behaviors by providing either incentives or punishment for specific activities. Laws provide boundary conditions for ethical behavior but do not provide a framework on which to determine the ethics of any set of actions.

Conventional Level

The development of a conventional level of ethics focuses on social and cultural norms. The concepts of right and wrong are based on what society has taught the individual, or what the individual views as standard behavior. In the case of a speed limit, this would be traveling at the same speed as everyone else on the road. The speed limit might be sixty miles per hour (mph), but if everyone else is going sixty-five mph, the individual will determine that the correct speed is five mph above the posted limit. The law might state a specific speed but the culture might provide room for limited flexibility on the proper speed. Law enforcement might even provide the same flexibility in determining what speed limit to enforce and might only give tickets to drivers who are exceeding the speed limit by more than five mph.

Postconventional Level

This level attempts to provide a definition of right and wrong from a universal point-of-view. Postconventional ethics would be a set of principles designed with a rational and reasonable point-of-view that considers everyone’s interests before coming to a definition of right or wrong. In the case of the speed limit, the primary factor would be safety and efficiency rather than legality or the speed of other drivers. A driver would look at the safest and most productive speed which, based on research, is approximately eighty-five percent of the current speed of traffic. Higher or lower speeds have a greater risk of crashing or creating inefficiency in factors such as fuel consumption.

Individualistic and Communal Approaches

Ethical standards in organizations are based on both the individualistic approach and the communal approach. In the individualistic approach, individuals are charged with behaving in an ethical manner, and management focuses on changing individual behaviors. In the communal approach, individuals are partially responsible for the actions of each organizational member. If one member acts in an unethical manner, the individual is charged with changing the behavior of the communities and members of the organization.

The Value of Ethics

In the development and use of IT solutions, organizations and individuals should adopt a postconventional communal approach to ethical management. Individuals are ultimately responsible for their own actions concerning ethical behaviors, but each individual should expand his or her scope to include the ethical behavior of the entire organization. Each individual should attempt to understand how each set of actions fits into the strategic intent of the organization’s use of information systems.

The Value of Ethics

Google is famous for having an informal corporate motto of “don’t be evil” (Google, 2009). This unofficial motto was expanded into point six of their corporate philosophy—“You can make money without doing evil” (Google, n.d.).

The premise is that even though Google is a business with a focus toward providing a ROI through the creative application of technology, the business is most successful and can provide the best value to its users when Google and its employees behave in an ethical manner. Ethical behavior does not prevent profit and can be a valuable part of the service offering of an organization.

Businesses that provide clear guidelines concerning individual and organizational ethical behavior create a competitive advantage for themselves in the marketplace by increasing trust and confidence of the consumers. In the management of IT resources, ethical behavior creates value by protecting the integrity of the information contained in these systems.

The creation of ethical guidelines creates a foundation on which information is protected from internal and external threats. The ethics of an organization help define the security strategy, governance, and policies. An organization that lacks strong ethical guidelines has limited data protection and confidentiality. The selection of technology that protects data and information confidentiality should be a product of the ethical code of conduct and the business strategy of the organization.

Google. (n.d.). Our philosophy: Ten things we know to be true. Retrieved from http://www.google.com/about/corporate/company/tenthings.html

Google. (2009). Code of conduct. Retrieved from http://investor.google.com/corporate/code-of-conduct.html

The Business-to-Consumer (B2C) Model

Business-to-consumer (B2C) e-commerce has seen a majority of growth in providing product and service information while developing niche markets. The largest B2C online spenders are individuals with incomes over $75 thousand a year who are between the ages of forty-five and fifty-four. These consumers tend to require a higher level of information on the products and services they purchase. They want higher quality at the best value, and are willing to support niche markets that fit their own personal belief systems.

The surprising fact about B2C e-commerce is that it provides lateral growth to traditional marketplaces; it provides customers a tool for collecting information on products and services while supporting more difficult niche products and services. In 2010, fifty-one percent of the holiday shoppers used e-commerce sites to research prices and read reviews; however, these consumers ultimately visited a store to purchase the product or service if it was available locally. This means that even with the growth of e-commerce, most consumers are still purchasing products and services through traditional channels (Google & Ipsos OTX, 2011).

The exception to this rule can be found in the growth and development of customized markets for products or services with limited demand in crowded local markets. B2C e-commerce is providing consumers with distinctive marketplace features—product and service information and access to niche markets.

Google, Ipsos OTX. (2011). Post 2010 holiday learnings for 2011. Retrieved from  http://www.thinkwithgoogle.com/insights/library/studies/post-holiday-learnings-for-2011/

B2C E-Commerce versus Traditional Stores

In 2011, Amazon.com was the largest Internet retailer (Internet Retailer, 2011). Amazon provides an interesting case study for the marketplace dynamics of B2C e-commerce. A majority of the purchases online are for products that are on sale or are difficult to find in local stores. Amazon provides the products cheaper than a local retail location, or it may be the only place a consumer can purchase the specific product (Clifford & Miller, 2012).

For example, the top selling game from the Toys & Games section of Amazon was Rory's Story Cubes. Rory's Story Cubes was rated highly in customer reviews and had limited availability in other stores with physical locations. Customers could only purchase this highly rated game from Amazon; therefore, it became the top selling item in the category.

Consumers purchased Rory's Story Cubes from Amazon because it was highly rated, part of the top selling items, and had limited availability. The case of Rory's Story Cubes is a good example of how B2C e-commerce is not a replacement for the traditional marketplace as e-commerce simply provides an additional level of service to consumers that did not exist in the past. Though consumers still favor the traditional model, B2C e-commerce has been successful by focusing on product and service information, decision support, and easy access to niche products.

For example, milk will never be a top selling product on Amazon. Local grocery stores provide a more convenient selection at lower prices. A consumer cannot purchase most food goods on Amazon even though overnight shipping is available. However, a consumer can purchase dog food on Amazon. The top selling dog food is Newman's Own Organics Adult Dog Food Formula, which is highly rated but only available online because of the limited market for this type of dog food in traditional retail locations. Organic dog food does not have a high volume to support a position in a traditional retail environment but the product’s characteristics make it ideal for a B2C site such as Amazon.

Clifford, S., & Miller, C. C. (2012, January 15). Online shoppers are rooting for the little guy. The New York Times. Retrieved from http://www.nytimes.com/2012/01/16/business/some-shoppers-rebel-against-giant-web-retailers.html?_r=1

Internet Retailer. (2011). Top 500 guide. Retrieved from http://www.internetretailer.com/top500/list/?_sm_au_=iVV70ZQJn5tMwfJP

The Business-to-Business (B2B) Model

Business-to-business (B2B) e-commerce operates under different conditions. Businesses benefit from B2B e-commerce by utilizing information systems to streamline the supply chain process. Businesses can plan for repetitive process and can use information systems to help automate and improve supply chain inefficiency.

For example, the purchase of raw materials can be automated and controlled using information systems. The rate of raw material consumption can be calculated and then controlled to ensure just-in-time delivery of resources. B2B can be used to ensure that an organization is never out of material for the production line.

The same process can ensure that the organization does not purchase excess material. Ordering excess material can be as inefficient as a deficiency because both are nonoptimal uses of a limited resource. The systems used to procure products should be streamlined to make sure that the organization always has enough material in the pipeline to provide maximum efficiency.

B2B e-commerce can provide a business with a competitive advantage by optimizing and automating supply chain management. However, these systems are only as effective as the implementation of the management strategy.

Issues Concerning E-Commerce

E-commerce can be a powerful tool for B2C and B2B suppliers and consumers; however, because of the dynamic nature of this new marketplace, there are ongoing legal issues that a business must consider. The Federal Trade Commission (FTC) is charged with making sure that commerce is managed in a fair manner concerning the consumers. Businesses that utilize an e-commerce system have to understand that they have a legal requirement to provide truthful advertising, ensure that Web product purchase guidelines are followed, and make sure that consumer data and privacy is protected.

B2B e-commerce issues include the creation of strong contracts based on specific performance requirements. Organizations must protect the performance of their supply chains, and this is done by creating contract vehicles that ensure consistent performance. A highly optimized supply chain does not add value if a supplier never meets their performance requirements. Consistency is the key to optimized B2B e-commerce; therefore, performance must be a part of the legal contract that provides incentives and controls for compliance.

The final component of B2C and B2B is the ethical concern associated with e-commerce which is critical to business success. Businesses that believe they can make a quick profit with unethical behavior are often driven out of business by angry customers. Information is permanent on the Internet and bad reviews can remain forever. An unethical organization cannot hide from bad reviews or a bad track record. Users will utilize all resources at their command to ensure that future consumers avoid a questionable business.

E-commerce is a rapidly changing marketplace full of information. IT can be leveraged to provide an efficient and effective experience for the consumer in both B2C and B2B environments. Organizations must attempt to understand the governance associated with e-commerce. Lastly, ethics are a critical part of a successful e-commerce business model. Unethical organizations do exist but their own behaviors quickly undermine their business models.