Ethical and Social Responsibility Implications - Tobacco Companies - Essay Example

? of the of the of Ethical and social responsibility implications Consumers all around the world are becoming aware of their health. The governments in different countries are floating awareness campaigns against the habit of smoking. This has led to decline in sales figures of cigarettes in the developed nations, such as the United States. In the United States sale of cigarettes is falling at the rate of around 2 per cent per year (Anon., n.d.). The Federal Government has increased taxes on cigarettes, strictly implemented non smoking rules in public areas and increased campaigns regarding health concern of the people of America. This has effectively increased awareness among the people of the country about the harmful effects of smoking and eventually caused a decline in sales of cigarettes. The tobacco producing companies based in the US are therefore turning to other sources of demand for their products. They operate with profit motive and so they need to maintain sales in order to remain profitable in the long run. The companies are facing actions like lawsuits and pending legislations in the country. But in the developing nations these sellers do not face much legal barrier. There is much less government regulation in these countries and also owing to lack of supervision and corruption the laws are sufficiently implemented. Therefore these companies are getting a more easy way to capture the market in the less developed countries. The marketing strategies adopted by these countries are aggressive and they make use of every possible way to develop an interest among the public in these companies and their products (TTAC, 2011). Ethical issues are arising in relation to the activities of these companies. In the developing nations all sections of the population are totally aware of the effects of smoking. Therefore, the cigarette companies get the opportunity to make strong campaigning about their products. While this increases their sales revenue on one hand, the people of the countries become addicts to these products and are thereby harmed considerably from the negative effects of these products (Schwartz, 2011). As a matter of fact, these companies are making efforts to convince the different agents in the third world countries, such as, the public authority bodies (government bodies and policy makers), the media (both print and social networking media) as well as the general public, about the goodness of their products. Although the product packages and advertisements display a symbol of warning about the bad effects of smoking, the effect of these symbols is reduced to a large extent under the impact of the bold advertisements and marketing campaigns in favor the lifestyle benefits received from consumption of cigarettes. For example, tobacco companies sponsor big social events such as music concerts, corporate seminars and other events. These companies invite journalists in these programs and bear all expenses for their luxury fooding and lodging. All these activities play down the negative impacts of smoking and the health risks associated with it. In countries like Philippines and Indonesia, such campaigns make huge influence on the general image f the company in the minds of the public, which leads to the development of a positive image about this company among the target customer base. However, it is difficult to react to these activities and limit their effect since the exact influence of these activities is not measurable. According to the decision tree illustrated in the case study, goals of the company are optimized in this process. It can move the path of profit maximization and future growth. On the economy, also, these activities cast positive impact since there is national output rises and there is higher allocating of resources in these industries as profit level rises. However, it has a negative effect on the society and the individual. The social “good of life” (Anonymous, n.d.) is hampered as the population consumes products that are harmful for their health. The effect of such consumption might be realized in the medium to long run. The effect of this problem is faced at both the individual as well as the social level. More number of young population start smoking and individuals fall victim of difficult health issues. A society with physically unfit individuals creates an unfit nation. The nation therefore lacks the vigor to remain competitive. It faces various demographic issues and becomes submerged in more critical economic problems. If the labor force of the economy is unhealthy, it is difficult for the economy to develop further. Alternative strategy recommendations for tobacco companies and price of ethical behavior Tobacco companies are facing a serious dilemma in the current business scenario. Competition in this industry is rising steeply as more new entrants are entering the industry owing to low set up costs and low regulations from the government in the third world countries. Therefore, the companies have to increase sales in order to earn higher revenue and maintain competitiveness in the industry. Simultaneously, these companies are facing strong public scrutiny due to the ethical issues associated with the health problems occurring due to high level of tobacco consumption in the developing countries. One strategy to survive in such a dilemma is to reveal the true effect of tobacco consumption while making campaigns and not down play these warnings. The companies should be honest about the true marketing intentions but should not try to reduce the importance of these warnings against cigarette consumption in order to increase sales figures. This would help the adult population of these countries to make informed choice regarding consumption of cigarettes. The government of these nations would also need to be more vigilant about the campaigns and the activities of the public bodies at the local level to generate awareness against smoking. Tobacco companies might assist the governments in their activities by bearing a portion of the cost of launching awareness programs. The companies might provide funds for research and development projects about producing items that are safer, contain lesser amount of nicotine and are less harmful than the previous versions of the product (Cancer, 2003). These companies however pay high price for not abiding by the ethical behavioral standard (Lasher, 2010). The companies are taking route to deceptive marketing and are not truly acknowledging the real price the smokers need to pay in the long run (Friedman, 2009). If the companies start behaving ethically, they would be losing out on a large number of consumers. This is because if the consumers of the third world countries are made well aware of the real danger of smoking they would become more conscious about their health. This would be a major shift in consumption pattern of the population of these countries since the number of smokers would be greatly reduced. The implication of this is that there would be significant reduction sales and hence less revenue would be generated by these companies. The Federal government should not support international expansion of US based tobacco companies According to the corporate decision making tree, businesses should run in such a way that their business decisions do not disrespect the rights of the individual or other business firms in the industry. In order to follow the ethical standard of businesses, corporate decision making has to ensure that their activities impart fair results to all parties involved in the business activity directly or indirectly and that the canons of justice are satisfied. Under this structure, it is evident that the Federal government of the United States should not support the interest of the tobacco companies in expanding their business in international locations. This is because activities of tobacco companies have been restricted in the US owing to the negative health effects of tobacco consumption on the people of the country. On this ground it should be taken into consideration that consumption of tobacco also creates harmful effects on the health of residents of these countries (Cancer, 2003; Gostin, 2002). Since it is a cause of diseases, the US government should not promote the tobacco companies abroad (Douglas, Whelan, Lukachko & Ross, 2000). Besides, the Federal government itself is making anti-smoking campaigns worldwide. The agents launching programs on this agenda are working effectively in and outside the States. Due to variation in government regulation the amount of nicotine varies in the products containing tobacco. Hence, if the government allows the companies to freely expand their operation in the third world countries, there would be variation in the level of harm caused due to consumption of tobacco. Population of some countries might suffer more than other countries. The tobacco companies are already having a good market share in certain countries and are already earning good revenue from sales in these markets. All these reasons indicate that the US government should not promote interest of these companies outside the Unites States. Tobacco companies should not be forced to stop marketing Cigarettes are not illegal products. It is a kind of product that put such effects on human beings whose long term impact is much higher and significantly harmful than its short term impact. A large proportion of the population in the third world countries are smokers. Young generation comprise of a major portion of this population. Tobacco products, particularly, cigarettes, are often flaunted as lifestyle products by the young generation. The problem of high incidence of smoking in the third world countries is therefore rooted deep in the mentality of the population and their social infrastructure. Forcing tobacco companies to stop their marketing activities would not be able to affect smoking habit of the population significantly. Rather in turn, it would merely increase company revenue by reducing their cost of marketing. There are other methods to reduce tobacco consumption by the masses. Governments should take strict steps to monitor the level of nicotine in cigarettes and other products containing tobacco, the companies should be asked to change the theme of their advertisements. Advertisements should be made in such a way that they do not underplay the harmful effects of the commodity. Alongside advertisements, strong warnings should also be posted about the dangers of smoking and anti smoking advertisements should be placed on the internet, television and print media more frequently. Efforts should be made to ensure that these advertisements are powerful enough to convey the message to the targeted audience. Besides, the government should also increase the amount of corporate tax as well as sales tax on tobacco companies. The government should also supervise the events sponsored by tobacco companies (Croley, 2009). Awareness events, against diseases like cancer or ‘thalassemia’, are often sponsored by tobacco companies. The government should take care that such activities by the companies do not neutralize the effect of public awareness programs against smoking by shifting public view in favor of the products offered by these companies. References Anonymous. (n.d.). Making socially responsible and ethical marketing decisions: Selling tobacco to third world countries. Retrieved from http://highered.mcgraw-hill.com/sites/dl/free/007352994x/862122/case_4_6_Making_Socially_Responsible_and_Ethical_Marketing.pdf . Cancer. (2003). Tobacco funding & scientific research workshop. Retrieved from http://cancercontrol.cancer.gov/brp/tcrb/tfms.pdf . Croley, S. P. (2009). Regulation and public interests: The possibility of good regulatory government. Princeton: Princeton University Press. Douglas, C. E., Whelan, E. M., Lukachko, A. M. & Ross, G. L. (2000). Bridging the ideological divide: An analysis of views on tobacco policy across the political spectrum. New York: American Council on Science and Health. Friedman, L. C. (2009). Tobacco industry use of corporate social responsibility tactics as a sword and a shield on secondhand smoke issues. The Journal of Law, Medicine and Ethics, 37(4), 819-27. Gostin, L. O. (2002). Public health law and ethics: A reader. California: University of California Press. Lasher, W. (2010). Practical financial management. Connecticut: Cengage Learning. Schwartz, M. S. (2011). Corporate social responsibility: An ethical approach. Ontario: Broadview Press. TTAC. (2011). How tobacco companies fight tobacco control. Retrieved from http://www.ttac.org/tcn/peers/pdfs/02.02.11/OK_Tobacco_Industry_Tactics.pdf . Read More