Marketing Law and Ethics at British Petroleum Oil Spill - Essay Example

? Marketing Law & Ethics Table of Contents Introduction 3 Issues Involved 4 Legal, ethical and moral environment in which the firm operates 5 Interaction of the marketing practices and Legal, Ethical and Moral Environment- Analysis and Evaluation 7 Schuman’s moral principles Framework 7 Recommendations and Conclusion- Possible solutions for resolving the issues 10 Reference 12 Bibliography 13 Appendix 14 Introduction Firms are confronted with a number of ethical dilemmas during undertaking their marketing functions. Thus practitioners have been concentrating on developing a definite definition of marketing ethics and developing such moral standards for guiding marketing decisions, institutions and behaviours. Among the common ethical issues which arise during the marketing situations are deceptive marketing, misguiding customers regarding prices, giving gifts to the customers, provision of unsafe products, indulging into anti competitive distribution agreements etc. Organizations today have to adhere to the minimum environmental and ethical standards while conducting their operations locally or globally (Schlegelmilch, 1998, p.7). The project seeks to present some of major ethical issues faced by organizations. In this context the case of British petroleum oil spill would be considered and the various CSR that the organization undertook thereafter. The company has been criticised of being responsible for some of the major safety and environmental accidents. Since then the company has been involved in a number of socially responsible activities and voiced their concern for the climatic changes arising out of such businesses. It has also tried to implement practices of curtailing the emission of greenhouse gases. The project then seeks to analyze and evaluate the interactions between the marketing practices and the moral, legal and ethical environment in which the company operates. This is done through the use of the different theories and practices pertaining to values and ethics. This is followed by the development of a suitable solution for resolving the issues and. Issues Involved The oil business conducted by the company has been responsible for raising a number of moral, ethical and legal issues arising out of such situations like greenhouse gas emissions, oil spillages, injuries at the workplace etc. These factors have not only been resulting in loss of the company’s goodwill but have also generated huge revenue losses. As the company accounts for a major strength of the economy, earning a bad reputation would eventually result in a shock for the British economy (Lustgarten, 2010). The thought that the company has not been acting in socially responsible manner causes damage to the economy as well. CSR activities must be such which contributes to the economy while a poor CSR causes damage to the economic benefit of the nation on the whole (Werther & Chandler, 2010, p.28). BP has also been accused of a number of major accidents which has caused injuries to workers working in the company. This has been responsible for the arrival of a number of legal issues. A number of rules and compliances have come up for safeguarding the interest of workers. Companies have to specially abide by such compliances in the form of compensating for the loss of workers in case they meet accidents and injuries during the time of service. Companies have to implement sufficient safety standards for ensuring the safety of workers and their wellbeing. Criticisms regarding ethical issues were pointed at the company when it was charged of manipulating the prices of propane. In fact In that case, it had to settle the issue with the United States Department of Justice. Moreover it had to make a payment of $300 million in the form of fines for the purpose. This can be considered to be a case of ethical failure of the firm. The above accidents and incidents also reflect the status of moral standards followed in the company. The families of those workers meeting with accidents in the company have been claiming compensation on grounds of negligence and low morality. The moral position of the company would get reflected through the way it would handle such cases and practices against avoiding such errors in its operations (Lustgarten, 2010). Legal, ethical and moral environment in which the firm operates It is seen that British Petroleum has to cater to a number of legal, ethical and moral requirements in order to remain sustainable in the market. Thus they have implemented such compliances which align with the environment in which it operates. Some of the ethical constraints arise because of the Government’s constant efforts to keep the environment safe and clean. The company strives to bring down its environmental damage in the form of adulterated waters, polluted atmosphere and emission of such pollutants which hampers the health of workers and citizens on the whole (BP, 2005, p.15). The government has imposed a number of company standards which it requires to follow. It also has to abide by such regulations pertaining to transport usage and handling, disposal of wastes and raw materials. It is required to dispose its raw materials in environmentally responsible manner. The government has especially imposed the HSSE plan or the ‘Health Safety Security Environment’ which the company is required to comply with. The ethical norm that the company requires to follow mainly caters to its employees and their recruitment, working in the organization and retention strategies. It is a global company and employs more than 100,000 people from across the world. The strength of the company mainly lies in its diversity and every employee in the organization is respected and recognised. The government is especially concerned with its workforce and tries to protect the rights and dignity of workers. Thus BP operates in an environment in which the workers are considered most important and respected (BP, 2005, p.19). The external ethical environment faced by British Petroleum can be explained with the help of Haidt’s social institutional approach. This approach stands on the fact that moral reasoning is considered to be a post hoc construction which occurs after a particular agent has already made a moral judgement, which is further based on a certain moral institutions. Thus we are able to understand why a particular thing is wrong or why is it right. The social institution model can be demonstrated in the below figure. Figure 1: Social Institution of moral judgement (Source: Fennell, 2006, p.268) As per the above theory the company is required according to the ‘social persuasion link’ which occurs at the time when one’s moral judgement impacts others directly which consequently influences the judgement of these people (Callender, 2010, p.63). The ethical environment of British Petroleum is such which influences the activity of the company directly. As already mentioned the company has had to face severe criticism for being careless in its business, which has been the cause of some of the major and severe accidents, due to which many lives have been lost and quite a few have been injured. Thus it can be seen that the business activity of the company directly influences the lives of others which can be regarded as a case of social persuasion link under which the company is persuaded to act per the impact of its activities on the lives of others. Interaction of the marketing practices and Legal, Ethical and Moral Environment- Analysis and Evaluation BP’s marketing practices are framed as direct outcome of the impacts it causes on its external and internal environment. In other words the marketing practices are built on certain ethical practices which the company considers (Refer Appendix). The marketing practices are thus built around certain moral principles. This can be explained with the help of the moral principles framework as developed and presented by Schumann. The strength of the above framework lies in its ability to attract the support of researchers and practitioners in this field. Schuman’s moral principles Framework BP’s CSR operations may be explained with the help of the five moderators as presented in Schuman’s framework, namely, external moderators, organizational moderators, significant other moderators, issue specific moderators and the individual moderators (Schlabach & Peer, 2007, p.81). The marketing practices in British petroleum are primarily influenced by the external and issue specific moderators and to an extent by the individual moderators. Considering the individual moderators which consider the individuals closely associated with the company and the impacts of its business on them, BP has devised certain norms which forms the basis of all its functions of operating in the market. It found that few of the employees in BP were made aware of the safety and security issues associated with its business which was the major cause of some of the big accidents in the company. This is reflected through the folling table. Figure 2: Workers informed about the accidents, incidents and miss investigations (Source: BP-a, 2007, p.245) The above table reveals the shortcomings of the functioning at BP. Because of this the company has devised a safety management system as being an integral part of its marketing process. Under this system it has been devising such practices and programs in order to address the process risks. The programs and practices include the implementation of new standards, new engineering and technical practices, new internal guidance, and the dedication of resources. Such corporate and safety practices are to be translated into measurable criteria for the system to be effective and yielding positive results. This also includes the application of quantitative and qualitative criteria for risk management (BP-a, 2007, p.14). Considering the issue specific moderators the company has been compelled to implement such safety measures arising out of the various accidents and incidents which have been occurring in the company. BP has specifically focussed on the measuring of safety performances. It has introduced periodic performance evaluation and corrective actions for the removal of identified deficiencies. The company has acknowledged the importance of near miss investigations and incidents. Consequently it has devised methods of communicating among the entire organization about the incidents and the lessons to be learnt from them also. It identifies the systematic causal factors contributing to the accidents and implement special programs to avoid more of such incidents. Regular safety audits have been introduced in its system which is also made an integral part of its marketing functions. Each and every business unit has to report to its higher authority about the safety performances through a bottom up reporting system. The reporting is aggregated and presented to the marketing and segmenting department. The report thus presented also gives a measure of the extent of success of the marketing department of the company (BP-a, 2007, p.15). The company tried to incorporate the safety culture in all its marketing practices. This not only helped to reduce the number of accidents and incidents but has helped to regain the long lost good will of the company. The safety management practices have been made an integral part of the company’s corporate strategy. Recommendations and Conclusion- Possible solutions for resolving the issues Analysis of the project brings forth the fact that the company has lost much of its reputation because of unethical practices which earned tremendous criticisms from nations across the world. Some of the illegal activities and unfair practices have resulted in destructing the goodwill of the company resulting in revenue losses and productivity. Thus the company would have to act is a socially responsible manner in order to regain its lost reputation. Going by the aspects which is explained in the study a number of factors has been recommended. BP must strive to apply the principle of ethical conduct in the organization. Not abiding by the conduct or breaching the law would mean fines and custodial sentences. BP’s corporate management must demonstrate and provide effective leadership and set and establish the right goals in terms of the process safety. These individuals would be made responsible for demonstrating their commitment towards the process safety. They would also be responsible for circulating the message of the importance and criticality of the process safety which would be the basis in which the policies and practices would be designed and developed. For this purpose the implementation of an integrative and comprehensive system of process safety management is an absolute necessary. The policy decisions and the actions taken must reflect the company’s concern for the issues and their impacts of the company’s image and employees. Since BP is an international business which participates in the well being of the society, it must devise such strategies which abide by the political norms prevailing at that location. In order to avoid any kind of criticism of political bias of the company, it is recommended that BP must not interfere with any democratic process nor accept any kind or cash from any democratic party. It is also recommended that BP involves itself in ethical practices against bribery in the form of gifts, fees, loans or rewards. Bribery is considered to be the most unfair of all unethical practices and results in undermining the fairness prevailing in the market. It distorts the costs of transactions and results in spoiling the openness, honesty and decency of the society. Under the “US Foreign Corrupt Practices Act” and the “UK’s Anti-Terrorism Act” bribery is considered to an illegal act and must be prohibited at all costs (BP-b, 2002, p.11). Most importantly BP must devise special practices in order to ensure justice for the people it employs in the organization. It must make a thorough analysis of the issues of human rights and their impacts on potential businesses and liaise with the external organizations at every stage. Its CSR practices must also ensure that the local communities are able to participate in the wealth that it creates and that their labour rights are preserved and reserved. It must aim to promote awareness about the issues of human rights and the responsibilities of staff. This is particularly important during cases of potential conflicts like during union disputes and strikes. This must also include establishing transparent relationships with the public forces and the security contractors based on contractual conditions which safeguards and prevents the abuse of human rights. Reference BP. (2005). Our Commitment to Integrity. [Pdf]. Available at: http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/C/coc_en_full_document.pdf. [Accessed on August 18, 2011]. BP-a. (2007). The report the BP U.S. refineries independent safety review panel. [Pdf]. Available at: http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/SP/STAGING/local_assets/assets/pdfs/Baker_panel_report.pdf. [Accessed on August 18, 2011]. BP-b. (2002). Finding your way through the maze. [Pdf]. Available at: http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/B/BPs_guidelines_on_business_conduct.pdf. [Accessed on August 18, 2011]. Callender, J. S. (2010). Free will and responsibility: a guide for practitioners. Oxford University Press. Fennell, D. A. (2006). Tourism ethics. Channel View Publications. Lustgarten, A. (2010). BP Had Other Problems in Years Leading to Gulf Spill. [Online]. Available at: http://www.propublica.org/article/bp-had-other-problems-in-years-leading-to-gulf-spill. [Accessed on August 17, 2011]. Schlegelmilch, B. B. (1998). Marketing ethics: an international perspective. Cengage Learning EMEA. Schlabach, G. A. & Peer, K. S. (2007). Professional Ethics in Athletic Training. Elsevier Health Sciences. Werther, W. B. & Chandler, J. D. (2010). Strategic Corporate Social Responsibility: Stakeholders in a Global Environment. SAGE. Bibliography Barbazette, J. (2006). Training needs assessment: methods, tools, and techniques, Volume 1. John Wiley and Sons. Demetriou, A. & Efklides, A. (1994). Neo-Piagetian theories of cognitive development: implications and applications for education. Routledge. Gregory, A. (2004). Public relations in practice. Kogan Page Publishers. Kolah, A. (2002). Essential Law for Marketers. Butterworth-Heinemann. McConnell, J. H. (2003). How to identify your organization's training needs: a practical guide to needs analysis, Volume 2. AMACOM Div American Mgmt Assn. Thorpe, M. & Edwards, R. (2003). Culture and processes of adult learning: a reader. Routledge. Appendix Figure 3: BP's ethical practices (Source: BP-b, 2002, p.6) Read More