Business Ethics Rules - Essay Example

Business Ethics Business Ethics Smoking is injurious to health causing sever health problems.This is reality known to everyone even the tobacco industry yet they deny the fact that there is any link between smoking and disease. According to centre of disease control and prevention (CDC) smoking is the main cause of preventable deaths in US and 16% of deaths worldwide. The issues discussed in the chapter are: product safety, business responsibilities towards consumers and advertisement issues. PRODUCT SAFETY In today’s complex environment each individual is dependant on others for survival as they themselves do not produce each and everything required by them. Therefore, consumers are dependant on business and believe that the product provided by the company wont be harm them. The Legal Liability Of Manufacturers Before 1916 consumers used to claim for damages from the retailers that is party who is in direct contact with consumers but after MacPherson v. Buick Motor Car case the court realize the reality of larger manufacturers and national system of product distributions. The court in this case moved to “due-care” theory of manufacturers responsibility towards consumers as they have more knowledge regarding the product. Once this theory was widely spread the policy moved from this towards caveat emptor which held consumer responsible for the product they purchase. Late on after the two important cases in 1960 and 1963 the “strict liability” approach dominated the legal thinking, where the manufacturer needs to compensate the consumer for the damage caused by the product even if the producer was careful in producing the product. Even this approach was not without critics where it was argues that its unfair with the firms who take extra care in producing the product and should not be held responsible for the defects which are not their faults. Protecting the public A lot of development took place in providing consumers with safe products. One of the important developments was the Consumer Product Safety Act 1972 which protects consumers from unreasonably risky products. This, on the other side worried the critics about the economic cost which will tend to increase as cost of employing new standards will be added in the final products prices. Furthermore, many times consumers themselves reject the safety technology used but consumer always weight the benefits in terms of prices which is again a worrisome issue for critics as consumers are willing to give up safety measure for cheaper product. The important aspect of all this is that whether regulations are effective or not for the businesses. Certain cases highlight that regulations do helps businesses in being responsible towards consumers yet there are instances where it’s not effective. THE RESPONSIBILITY OF BUSINESS Businesses responsibilities are not fulfilled by following the regulations only they have certain moral responsibilities also which should be taken care of. There are certain steps which firms need to follow to act morally. 1) Businesses need to give safety an extra priority especially if the product can cause serious injuries frequently, even if it incurs cost in implying safety standards. 2) Businesses should discard the misconception that accident happens to misuse of product by consumer and should provide proper guidance as to how product can be safely used. 3) Special monitoring of manufacturing process is required to identify product defects during the process through rigorous testing and establishing research department for safety concerns. 4) Companies need to make sure that there marketing and advertising strategy should be reviewed by safety staff as the consumers will use the product the way it is marketed. 5) Companies need to assure that product contain information regarding safety issues, its usage procedure, conditions when product fails and warnings. 6) Firms needs to investigate complains of consumers for product improvements. Other areas of where businesses need to be responsible are: Product quality is one of the aspects which is the responsibility of businesses at least up to a level that is claim. This is assumed as their primary responsibility as its consumer’s basic right to get what they pay for. One method through which businesses show this responsibility is by providing warranties of the product. These warranties could be expressed or implied. Express warranties are claims mentioned on labels or warranty card and implied include the claim that product is fit for ordinary use. Prices play an important in gaining the consumers, a lot of businesses use psychological pricing such as $9.99, etc to attract consumers. Moreover, consumers assume that a rise in price means a rise in quality which might not be the case. The businesses use this human psychology for their benefit and raise the prices without improving the quality of it. Another area of pricing used by businesses is promotional pricing which also confuses and irritate the consumers. However, lot of businesses use fixed pricing concept which should not be done so bluntly whether done by retailer or manufacturer. It is businesses responsibility to provide consumer clear, accurate and complete information about the product. The packaging and labeling of the product plays and important part in educating the consumers about the product yet labeling on the product is not sufficient to answer consumers’ queries. Moreover, not only this in fact lot of times labeling is used to misguide consumers by printing vague information or mentioning a statement which is not true. As far as packaging is concerned even that is used to confuse consumer by providing products in different sizes and making consumer feel that the bigger the better for them. Therefore, most of the time packaging and labeling is creating confusion rather than helping consumers. DECEPTIVE AND UNFAIRNESS IN ADVERTISING The mode of advertisement is widely used to sell a company’s product and the famous ones become part of the culture. Because every company spends billions on advertisement therefore they also use deceptive techniques to make their ads helpful in selling more. To persuade consumers, advertisements are prone to: Ambiguity To persuade lot of businesses tend to create ambiguous ads which can mislead the consumers. Because advertisements are open to interpretations by consumers it should be taken as an added responsibility by the companies to make sure provide correct information using right words eliminating the chances of misinterpretation. Concealed facts Businesses conceal facts in their advertising which are not positive for their product or which can make their product less desirable by the consumers. This is a technique used by all the companies where they hide the negatives of the product and portray their product as the best among all options. This tactic can misguide the consumers and can constrict their choice as they are not aware fully about the product. Exaggeration Advisers tend to mislead by exaggerating about the product and by making claims that are not supported by the evidence. They deceive consumers by using puffery phrases in advertisements to boost the positives of the product and this at times misguides the buyers. Psychological Appeals Advertisers tend to persuade consumers by appealing to emotional needs of the human and not by providing reasons to buy. This is one of the greatest area of moral concern these days as ads tend to hit the psychological side of the human by highlighting power, prestige, sex, acceptance, etc. Such ads appeal to subconscious mind of consumer which is a level below conscious awareness. THE FEDERAL TRADE COMMISSION (FTC) ROLE The federal trade commission was created in 1914 to protect consumers from deceptive advertising and fraudulent commercial practices. The most important question for this commission related to prohibit deceptive advertising is whether it should protect from the view of reasonable consumer or ignorant consumer. If they tend to protect ignorant consumers then they have to deal with lot more cases and restrict many more advertisements as they are misguiding consumers who do not act sensible at all. But the main issue is to decide what us misleading to number of consumers as it’s a debatable issue. Ads directed at Children Another special group which is looked and protected by FTC irrespective of how reasonable they are: children. Advertisements to children are a big business now as children spent billions on snacks and candies and on the other hand advertisers spend around $1.5 billion on children advertisements. Moreover, these advertisements are not only regarding the children related product in fact other products too with the aim that children of today will become there consumers of future and secondly with the aim that children will force their parents to make purchases. Because children are the most pure audience they can be misled easily as they are the ones who interpret the ads literally. THE DEBATE OVER ADVERTISING The issue of advertising does not end with deceptive advertisement only in fact it is argued that they provide little information and appeal to psychological needs to consumer for the product which unlikely to satisfy it. Consumer needs Some defender of advertisement argues that all these glamorous pictures, images of sex, etc. are needed by the consumer. The connection between advertisement and consumer’s emotions actually satisfy the deeper needs of consumers. On the other hand critics argue that even if they satisfy the inner need in the end product fail to satisfy the emotion that they are appealing in advertisements. Market economies The defenders of advertisement see advertising as an aspect of free competition in a competitive market. But this has a weakness that is that advertising does not fit in the economist model of free market as it means providing complete information for optimal buying. Advertisements do create brand loyalty but critics believe that the goal of advertisers is to sell maximum products and to make money. Moreover, critics argue that it’s a waste of resources and time whereas defenders think it’s necessary for economic growth. Free speech and media Firstly, advertisement enjoy protection under the First amendments as a form of speech but this does not mean that they can show any undesirable social consequences and get away with it. Secondly, advertising subsidizes the media. The fact that its free results in far more consumption than it would have been in other case. Read More