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Corporate and Social Responsibility: Ethical Problems - Essay Example

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Running head: Corporate and Social Responsibility Ethical Problems Insert Name Insert Insert 19 April 2012 In 2004, Anna Devathasan and Jenny Suo - high school students in New Zealand local high school - analyzed the pre diluted ready to drink ribena manufactured by GlaxoSmithKline in a chemistry project and found that it did not conform to the four times the vitamin C content of oranges as advertised (Eames, 2007)…
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Corporate and Social Responsibility: Ethical Problems
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Corporate and Social Responsibility: Ethical Problems

Download file to see previous pages... Though they even telephoned the company they were put off with a casual reply “it’s the black currants which have it"(Eames, 2007). Their findings and reservations were casually dismissed and they were dully informed that the advertisement related only to the black currant fruit and not the actual product. With determination to be heard Anna and Suo contacted New Zealand’s Advertising Standards Authority and Brand Power without any support. They got a reprieve when Fair Go, a consumer affairs television show got interested in their case and the case found its way to the commerce commission, which determined that the advertising claims about the amount of vitamin C in ribena was misleading. The New Zealand Commerce Commission took up the case and sued GlaxoSmithKline. The company pleaded guilty to 10 representative charges arising from the "four times" advertising claim. They also pleaded guilty to another five charges of falsely labelling ribena cartons and packages though they contained no quantifiable vitamin C whereas it was advertised as having 7 mg of vitamin C per 100 ml. The Auckland district court fined GlaxoSmithKline $NZ227500 and it was forced to carry out a $NZ96000 (Jacques, 2008), corrective advertisement detailing the contents of their product to its customers in New Zealand and Australia; a very costly affair in customer fallout and brand tarnishing (AFP, 2007). GlaxoSmithKline violated the Fair Trading Act 1986 statute of New Zealand that encourages competition and protects consumers from misleading, deceptive conduct, and unfair trade practices. The consumers were not given accurate information about the products they were consuming and ribena being marketed as a health drink probably made many people buy the drink on that basis. GlaxoSmithKline did not apply the rules of fairness and honesty in their advertisement campaigns. They were ethically and morally wrong in misstating the content of vitamin C in their product sorely for commercial gains. Many people trusted and had confidence in the company and their products; they consumed the products based on that trust. Many customers were duped into believing that the company drinks were healthy only to be disapproved by the high school girls experiment. By incorrectly advertising the wrong vitamin C content, the company confused the public into consuming their products. This is manipulative as most of the consumers bought the drinks for their health benefits. The company also gained unfair competitive edge over its competitors as many consumers used GlaxoSmithKline products based on the health benefits it was allegedly having. By selling an inferior product marketed as a superior product, it was bound to be produced cheaply but sold expensively and hence GlaxoSmithKline had a larger profit margin than their competitors did. The labelling information in the ribena ready to drink packages and cartons unethically suggested that the product contained more of vitamin C than it had. The packages stated that the ribena product had over 22mg/100ml vitamin content whereas ...Download file to see next pagesRead More
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