Ethical issues and examples Youll find lots of examples of business ethical decisions and dilemmas in areas such

as:

Lets take one of the above suppliers. A business cannot claim to be ethical firm if it ignores unethical practices by its suppliers e.g.

Use of child labour and forced labour Production in sweatshops Violation of the basic rights of workers Ignoring health, safety and environmental standards

An ethical business has to be concerned with the behaviour of all businesses that operate in the supply chain i.e.

Suppliers Contractors Distributors Sales agents

The two articles below provide a good example of the ethical issues that arise in the supply chain: click on the images to read the stories:

Pressure for businesses to act ethically

Businesses and industries increasingly find themselves facing external pressure to improve their ethical track record. An interesting feature of the rise of consumer activism online

has been increased scrutiny of business activities. Pressure groups are a good example of this. Pressure groups are external stakeholders they

Tend to focus on activities & ethical practice of multinationals or industries with ethical issues Combine direct and indirect action can damage the target business or industry

Some examples of business-related pressure groups can be found from the following links:

Direct consumer action is another way in which business ethics can be challenged. Consumers may take action against:

Businesses they consider to be unethical in some ways (e.g. animal furs) Business acting irresponsibly Businesses that use business practices they find unacceptable

Consumer action can also be positive supporting businesses with a strong ethical stance & record. A good example of this is Fairtrade.

Is ethical behaviour good or bad for business?

You might think the above question is an easy one for businesses to answer? Surely acting ethically makes good business sense? As with all issues in business studies, there are two sides to every argument: The advantages of ethical behaviour include:

Higher revenues demand from positive consumer support Improved brand and business awareness and recognition Better employee motivation and recruitment New sources of finance e.g. from ethical investors

The disadvantages claimed for ethical business include:

Higher costs e.g. sourcing from Fairtrade suppliers rather than lowest price Higher overheads e.g. training & communication of ethical policy A danger of building up false expectations

Deceptive Advertising and Ethics

Another breach of marketing ethics has to do with the use of deceptive advertising. This form of advertising is not specific to one target market, and can sometimes go unnoticed by the public. There are a number of different ways in which deceptive marketing can be presented to consumers; one of these methods is accomplished through the use of humor. In a study conducted by Hassib Shabbir and Des Thwaites, 238 advertisements were assessed and 73.5% of them were found to have used deceptive marketing practices. Of those advertisements that were conducted deceptively, 74.5% of them used humor as a masking device in order to mislead potential customers. Part of what drives this study is the idea that humor provides an escape or relief from some kind of human constraint, and that some advertisers intend to take advantage of this by deceptively advertising a product that can potentially alleviate that constraint through humor. Through the study it was also found that all types of humor are used to deceive consumers, and that there are certain types of humor that are used when making certain deceptive claims. It is important to understand that humor is not the only method that is used to deter consumers minds from what a product actually offers. Before making important purchases, one should always conduct their own research in order to gain a better understanding of what it is they are investing in. ][28] [edit]The

use of ethics as a marketing tactic

Business ethics has been an increasing concern among larger companies, at least since the 1990s. Major corporations increasingly fear the damage to their image associated with press revelations of unethical practices. Marketers have been among the fastest to perceive the market's preference for ethical companies, often moving faster to take advantage of this shift in consumer taste. This results in the expropriation of ethics itself as a selling point or a component of a corporate image.

The Body Shop is an example of a company which marketed itself and its entire product range solely on an ethical message. Greenwash is an example of a strategy used to make a company appear ethical when its unethical practices continue. Liberation marketing is another strategy whereby a product can masquerade behind an image that appeals to a range of values, including ethical values related to lifestyle and anti-consumerism.[29]

"Liberation marketing takes the old mass culture critique consumerism as conformity fully into account, acknowledges it, addresses it, and solves it. Liberation marketing imagines consumers breaking free from the old enforcers of order, tearing loose from the shackles with which capitalism has bound us, escaping the routine of bureaucracy and hierarchy, getting in touch with our true selves, and finally, finding authenticity, that holiest of consumer grails." (Thomas Frank)[30] [edit]Marketing

strategy

The main theoretical issue here is the debate between free markets and regulated markets. In a truly free market, any participant can make or change the rules. However when new rules are invented which shift power too suddenly or too far, other participants may respond with accusations of unethical behaviour, rather than modifying their own behaviour to suit (which they might not be able to anyway). Most markets are not fully free: the real debate is as to the appropriate extent of regulation. Case: California electricity crisis, which demonstrates how constant innovation of new marketing strategies by companies such as Enron outwitted the regulatory bodies and caused substantial harm to consumers and competitors. A list of known unethical or controversial marketing strategies:

Anti-competitive practices Bait and switch Planned obsolescence Pyramid scheme Vendor lock-in / Vendor lock-out Viral marketing / guerilla marketing

Controversial marketing strategies associated with the internet:

Embrace, extend and extinguish Search engine optimisation Spamdexing Spyware / Adware

[edit]Further

issues in marketing ethics

Marketing ethics overlaps with environmental ethics in respect of waste problems associated with the packaging of products.[31] Some, such as members of the advocacy group No Free Lunch, have argued that marketing by pharmaceutical companies is negatively impacting physicians' prescribing practices, influencing them to prescribe the marketed drugs rather than others which may be cheaper or better for the patient.[32] Ethically thinking is responding to situations that deal with principles concerning human behavior in respect to the appropriateness and inappropriateness of certain communication and to the decency and indecency of the intention and results of such actions. In other words, ethics are distinctions between right and wrong. Businesses are confronted with ethical decision making every day, and whether employees decide to use ethics as a guiding force when conducting business is something that business leaders, such as managers, need to instill. Marketers are ethically responsible for what is marketed and the image that a product portrays. With that said, marketers need to understand what good ethics are and how to incorporate good ethics in various marketing campaigns to better reach a targeted audience and to gain trust from customers.

Marketing ethics, regardless of the product offered or the market targeted, sets the guidelines for which good marketing is practiced. When companies create high ethical standards upon which to approach marketing they are participating in ethical marketing. To market ethically and effectively one should be reminded that all marketing decisions and efforts are necessary to meet and suit the needs of customers, suppliers, and business partners. Ethical behavior should be enforced throughout company culture and through company practices.