Ethical Issues Concerning Marketing Departments of Major Global Corporations - Essay Example

MARKETING ETHICAL DILEMMAS Introduction Globalization refers to the process of international integrations arising from the interchange of products and services due to advances in transportations and telecommunications infrastructures and internet. The spread of globalization has made marketing ethical issues to be of more concern to corporations.. Marketing field is no exception and marketing staff are facing increasing challenges and ethical dilemmas (Doole & Lowe, 2008). Interests in the ethical issues that pertain to international business have grown enormously due to the complexity of the global business environment of the 21st century. Ethical issues for corporations are very important, especially in the age of the internet as information is accessible to everyone (Ghauri & Cateora, 2014). Marketing activities usually pose significant ethical issues in business such as price discrimination and unfair pricing, miscellaneous unfair competitive practices, dishonest advertising, price collusion with competitors, exploiting social paradigms, establishing guilt, post-purchase dissonance, insufficient expertise and cutting corners (Geis, 2007) (Shilling, 2002). The report discusses the major ethical issues concerning marketing departments of major global corporations. In addition, it identifies and critically evaluates three marketing ethical dilemmas they corporations face. It then recommends courses of action in each case and it is illustrated with specific examples. Definition and explanation of an ethical dilemma Ethical dilemma, otherwise called moral dilemma, are situations in which there are two alternatives whereupon choice is to be made between them, however neither the option has the capacity to resolve the situation in a morally or ethically acceptable manner because the individual and societal ethical or moral guidelines are not able to provide a satisfactory result or outcome for the chooser (Doole & Lowe, 2008). A circumstance is viewed or regarded as a moral dilemma on the off chance that it fulfils the accompanying three conditions. The first basic condition obliges that an individual must make a decision about the best course of action (Ghauri & Cateora, 2014). Also, there must be different courses of action for the chooser to select from. Finally, there should be no perfect solution so that regardless of the course of action taken; at least one ethical principle is compromised (Ghauri & Cateora, 2014). Therefore, the chooser is subjected to an intricate circumstance that involves an apparent mental conflict between moral imperatives and complying with one option results in transgressing the other (Goldstein and Edmund, 2003). For example, workers usually do not know what to do if they see their co-workers harassing another employee. They worry for their jobs in case they report a superior. It is also unethical to conduct personal business on company time and also take credit for other’s work. Identification and outline of 3 ethical dilemmas When organizations operate in their home markets, the vast majority of their workers normally come from areas with same common culture (Geis, 2007). Therefore, their home market customers tend to share the social and moral principles of organization staff and administration to an expansive degree (Ghauri & Cateora, 2014). However, when such businesses enter an international market, the greater part of their clients or customers come from a culture that may have totally distinctive qualities. Therefore, the organization usually needs to pick the degree to which it will respect foreign market practices while it keeps a core of moral and social values on which it declines to trade off resulting in marketing moral dilemma (Doole & Lowe, 2008). There are several ethical dilemmas as far as marketing departments of major global corporations are concerned (Ghauri & Cateora, 2014). Examples of the moral dilemmas that are faced by major global corporations include price discrimination and unfair pricing, miscellaneous unfair competitive practices, post-purchase dissonance, exploiting social paradigms, price collusion with competitors and dishonest advertising (Shilling, 2002).. In addition, there are three ethical dilemmas or challenges that fraud examiners and other anti-fraud professionals often work to uncover in their course of work (Geis, 2007). Some of such ethical misconduct or transgressions tend to be criminal whereas other represent more subtle problems regarding decision-making and character (Goldstein and Edmund, 2003). Other examples of ethical dilemmas are Establishing Guilt, Insufficient Expertise and Cutting Corners(Geis, 2007). According to Bruce Dorris, they assist in developing a clearer picture regarding whether a fraud has been committed (Ghauri & Cateora, 2014). Establishing guilt is a situation where legal guilt or innocence is established when a fraud is committed. A Certified Fraud Examiner, CFE, may be charged with the duty of investigating a client suspected of fraud; CFE should not establish guilt or innocence but only gather evidence even if it clearly creates a picture implicating the employee in wrongdoing. They are required to present the evidence without stating their opinion as to whether the suspect is guilty of innocent. It is the duty of the decider such as appropriate HR professional or management or prosecutors to determine (Doole & Lowe, 2008). Stating their opinion is likely to unfairly bias the so called evidence-gathering and fact-finding task. On the other hand, insufficient expertise is a moral issue faced by an employee in a situation that is beyond their skill set (Glowik & Smyczek, 2011). If one lacks proper training in a given field, they should forward the problem to people with proper expertise (Ghauri & Cateora, 2014). But if their yearning to maintain customer’s business influences them to attempt working on the case beyond their level, they could end up destroying the evidence thus breaking the law and hindering investigation (Goldstein and Edmund, 2003). Cutting corners arises from the temptation to cut corners in gathering evidence (Geis, 2007). An individual having a difficulty in getting some information may be tempted to contact a friend who is a government examiner to get that information because the friend is privy to sensitive information. It is highly unethical and possible criminal for an individual to take such a shortcut even if it might be very tempting. Company employees who commits such ethical breaches are normally could involve consequences such loss of or damage of reputation, lawsuit or legal ramifications because privacy or confidentiality laws are broken (Ghauri & Cateora, 2014). On the other hand, companies are faced with post-purchase dissonance in that they may be tempted to sell products have inferior qualities to customer’s expectations through mail orders. In addition, they may exploit social paradigms by using offensive marketing approaches (Geis, 2007). Critical evaluation of each ethical dilemma: The three best ethical dilemmas that will be critically evaluated are dishonest advertising, miscellaneous unfair competitive practices and price collusion with competitors. False or dishonest advertising is defined as “any advertising or promotion that misrepresents the nature, characteristics, qualities or geographic origin of goods, services or commercial activities”. Advertisements are regarded as false or dishonest when the following five conditions are proved. First, a false statement of fact must have been made regarding the goods, services or commercial activity of the advertiser or another person (Geis, 2007). Secondly, the statement misleads, or is able to misinform or deceive a bigger portion of the company’s target audience. Thirdly, the deception is has the possibility of affecting the audience’s purchasing decision (Shilling, 2002). Fourthly, the advertising likewise involves products and services or commercial activity in interstate commerce. Finally, the deception has able to result in or has actually resulted in the plaintiff’s injury. The advertisement normally injures consumers in terms of money (Doole & Lowe, 2008). Several cases of false advertisement includes Dannon’s Activia yoghurt, seasoned beef of Taco Bell, Definity eye cream, vehicle’s horsepower of Hyundai and KIA, Groupon’s tourism ads and Rice Krispies & Frosted Mini-Wheats. Each of the above cases meets all the required five conditions and therefore the respective companies paid some money in damages to the consumers. The consumers were right to file a lawsuit because the companies grossly misrepresented their products by stating feature and qualities that the products actually did not have thus misleading the consumers (Ghauri & Cateora, 2014). For example, Dannon purported that Activia yoghurt had nutritional benefits but it was actually pretty much as other kind of yoghurt. Another ethical dilemma facing marketing department that is to be critically evaluated is miscellaneous unfair competitive practices (Shilling, 2002). Unfair competition entails deceptive business practices that tend to cause economic hardship to other businesses (Glowik & Smyczek, 2011). Unfair competitive practices covers the deliberate attempts to misrepresent a product and unfair business practices that gives a company advantageous or favourable conditions to a company while at the same time harming the position of other companies with respect to their ability to compete on fair and equal terms (Geis, 2007). Unfair competitive practices normally injure consumers due to deceptive trade practices that companies use to outdo their rivals. Examples of unfair competitive practices are trademark infringement, trade libel, misappropriating of trade secrets and tortuous interference (Ghauri & Cateora, 2014). Infringing a trademark entails using a logo, name or other identifying characteristics in deceiving consumers into thinking that they are purchasing a competitor’s product. For example, Guess was involved in unfair competitive practice when they knocked off the designs of Gucci Ghauri & Cateora, 2014). In the suit, Guess was accused of infringing on some of marks of Gucci thus causing it to lose sales as well as harm to its brand. Guess mimicked Gucci’s trademarked designs on belts, wallets, shoes and other items thus making customers to believe that they were purchasing products of Guess’s competitor which indeed was not true because the products were theirs (Shilling, 2002). Also, Sky also won such a case against Microsoft which used the “SkyDrive’ name for their clod service thus infringing the Sky’s trademark. This misappropriation of a name or a likeness is unethical as it gave Microsoft a commercial advantage. Therefore, in both cases damage was paid to the affected company (Doole & Lowe, 2008). Finally, there is price collusion with competitors. Collusion occurs when firms get together secretly and agree to increase set a common price (Geis, 2007). Basically, price collusion tends to eliminate the effect of market competition as the colluding firms force consumers to pay more than what they would pay in a free market. Six oil companies including Shell, America’s Chevron, BP, Engen, France’s Total and Sasol have been accused of price collusion on South Africa. The companies have engaged in extensive exchange of commercially sensitive information thus keeping diesel prices artificially high. It is unethical for companies to track the sales of each other and align their strategies in the market at the detriment of others (Doole & Lowe, 2008). It is therefore justified to subject them to penalties because the manner in which they conduct their business is unfair nd unethical. Other examples are four major flat glass makers including Guardian, Asahi Saint-Gobain, and Pilkington that met secretly to discuss artificially increasing their prices. The Four companies were heavily fined by the European Council because they violated the ban on price fixing and cartel behaviour (Glowik & Smyczek, 2011). Discussion and recommendations for courses of action taken or proposed to resolve or address each issue Marketing ethical dilemma normally affect a company negatively as such practices destroys the reputation and public image of a company and should ensure that the practices are avoided by all means possible to ensure positive public image and reputation (Geis, 2007). This helps in attracting and retaining customers. In addition, unethical behaviour makes the company to incur unnecessary expenses in the name of damages paid to the plaintiffs as awarded by courts in case a lawsuit is filed (Ghauri & Cateora, 2014). Several alternatives can be used to address or resolve the three ethical dilemmas. First, in the case of False or dishonest advertising, Dannon, Taco Bell, Definity, and Hyundai and KIA would have used management actions to avoid the actions. Under this solution, top management activities are used in reducing ethical conflicts that employees experience (Doole & Lowe, 2008). Top management is required to serve as role models by not sending false or ambiguous messages (Goldstein and Edmund, 2003). They should actually discourage unethical or illegal conduct by promptly reprimanding any form of unethical behavior. In addition, the company needs to develop, promote and enforce industry and corporate codes of conduct. A company’s top management is usually responsible for setting the ethical tome of the company. If the CEO declares that violators will be severely punished, all codes of ethical behavior will be strictly followed (Michalos & Poff, 2013). Miscellaneous unfair competitive practices can be resolved or addressed by code of ethics as it aids in attaining appropriate and high ethical standards in international businesses (Glowik & Smyczek, 2011). This general code of ethics should be particular for marketers and top management should ensure that they strictly followed and an employee that violates them should be punished (Doole & Lowe, 2008). This should have stopped Guess and Microsoft from stepping over the line. The companies should have compared the designs of the products before committing to any promotional activities (Michalos & Poff, 2013). In case such problems arise, the offended company should file a lawsuit and the court awards damages to compensate for the loss suffered. Additionally, tough and stern litigation measures should be implemented to prevent companies from engaging in such practices. For instance, a high fine should be enacted (Geis, 2007). Finally, as far as price collusion is concerned, top management should also encourage code of ethics to avoid such a practice. It is unethical for companies to operate to the detriment of other companies or third parties. The top management of the six oil companies Shell, America’s Chevron, BP, Engen, France’s Total and Sasol should ensure that the company’s and business’ code of ethics are followed to the latter (Goldstein and Edmund, 2003). Organization should also reward employees that are ethical and punish those that re unethical. This will help in fostering ethical behaviours and discouraging unethical or illegal ones (Geis, 2007). It is against business ethics for companies to have engaged in extensive exchange of commercially sensitive information and a very heavy fine and penalties should be implemented to discourage such practices (Michalos & Poff, 2013). Conclusion Globalization results in international integrations due to interchange of products and services. It has been facilitated by advances in transportations and telecommunications infrastructures and advancement in internet. This has made ethical issues become of more concern to corporations due to the spread of globalization and marketing activities have created significant ethical issues or dilemmas in global business activities. Ethical dilemmas are situations in which there are two alternatives whereupon choice is to be made between them, however neither the option has the capacity to resolve the situation in a morally or ethically acceptable manner. Such ethical issues include price discrimination and unfair pricing, miscellaneous unfair competitive practices, dishonest advertising, price collusion with competitors, post-purchase dissonance, exploiting social paradigms, invasion of privacy, and flawed products, establishing guilt, insufficient expertise and cutting corners. The three best ethical dilemmas critically evaluated are miscellaneous unfair competitive practices, dishonest advertising, and price collusion with competitors. The three ethical dilemmas can be resolved or addressed by management actions, code of ethics and tough and strict litigation measures. Top management should act as role models to discourage unethical or illegal conduct by promptly reprimanding any form of unethical behavior. A heavy fine should be put in place to discourage such practices. References Doole, I., & Lowe, R. (2008). International marketing strategy: Analysis, development and implementation. London: Cengage Learning. Geis, G. (2007). White-collar criminal: The offender in business and the professions. New Brunswick, N.J: Aldine Transaction. Ghauri, P. N., & Cateora, P. R. (2014). International marketing. Glowik, M., & Smyczek, S. (2011). International marketing management: Strategies, concepts and cases in Europe. München: Oldenbourg. Goldstein, Paul, and Edmund W. Kitch. (2003). Unfair Competition, Trademark, Copyright, and Patent. New York: Foundation Press Michalos, A. C., & Poff, D. C. (2013). Citation classics from the Journal of business ethics: Celebrating the first thirty years of publication. Dordrecht: Springer. Shilling, Dana. (2002). Essentials of Trademarks and Unfair Competition. New York: John Wiley. Read More