The Impact of Ethics Social Responsibility on the Marketing Activities - Case Study Example

Role of marketing and the impact of ethics/corporate social responsibility on the marketing activities of three organisations Organization is a structure with a ‘collage’ of humans doing their allocated work under the supervision of a leader, for the benefit of the organization as well as them. These workers will normally be apportioned into different departments for better arrangement or streamlining of work. Among the many departments, which constitute an organization, the marketing department’s role is omnipresent and crucial, as it can only boost an organization through various strategies. With every organization wanting to expand their reach and make an imprint in various markets, their effective marketing will only drive those initiatives. Thus, from time immemorial, the role of marketing is crucial because it can only attack the prospective customers’ eyes, ears and thereby mind, entice them and bring them into the store or make them buy the products or utilize the services. That is, the product or the services offered by the organization had to be made enticing for the customers to buy it or use it. To entice the customers, there should optimal marketing campaign through various mediums. Although, marketing campaigns will always results in good results for the organization, nowadays the ‘way’ organizations travel to come up with those campaigns and importantly the nature of those campaigns have come under close scrutiny of various sections of the population. That is, nowadays in this media scrutinized world, the prospective customers expect certain ethical commitments from the organizations. Thus, there are extra compulsion on the organizations to come up with marketing campaigns which take an ethical route as well as incorporate Corporate Social Responsibility (CSR). Normally, an organization as well as its leaders will be judged by the success they achieve. Judged in the sense, the organization will be appreciated, feted, discouraged, hated etc, etc… by the success or the lack of success (failure), they get. In today’s world, success of an organization is mostly correlated with profits, markets share, etc. That is, many people will accept a fact that an organization is a success, only if it achieves all the above-mentioned material things. Although this perspective is not at all wrong, the bone of contention is how an organization or its leader or manager achieves success. Whether, they achieve it through ethical means or by fraud, illegality, etc? The primary focus of any organization is to give a clean management based on preset ethics; otherwise the repercussions will be unfavorable. Focusing on ethics is paramount as it will have an effect on the business both in the short run as well as long run. Companies that do not have proper… ethics procedures risk severe damage to their reputation, criminal/legal action and regulatory penalties. The consequences could include loss of customers, reduced share price (Advice on management). So, incorporation of perfect work ethics as part of marketing campaign will only ensure smooth functioning for the organization and importantly elevate its image. As part of ethics in the external environment or along with ethics, organizations have to incorporate Corporate Social Responsibility as part of their functioning. Through this strategy, organization will show interest and take care of certain crucial social issues, coming up with constructive strategies and solution for the welfare of the society and its people. This positive action of the organization will fulfill their CSR and importantly will optimize its image among the people including its prospective customers. This part of the paper will compare and contrast the impact of ethics/corporate social responsibility on the marketing activities of three organisations – UPS, Starbucks and Nike. UPS Any organization including UPS (United Parcel Service) could not exist like they are in an island without any one around. They have to be in the midst of something, changing the lives of many people in the positive direction. However, the sentence ‘changing the lives of people’ could be restricted to only their employees by some companies, but some companies like UPS apart from changing the lives of its employees, also encourages its employees “to do something for the community” as part of their marketing strategy. This should be the motto for all the corporate because with corpus of capital, exceeding in the high ranges in their ‘treasury’ or in bank accounts, it would be feasible and importantly nice to do nice things for the community. UPS looks at this community or social responsibility in the positive way and is contributing a lot in that direction through the employees. United Parcel Service Inc (UPS for short), America’s major parcel service, is the worlds largest package delivery company. It was the brainchild of Jim Casey, an American teenager, who founded the American Messenger Company in Seattle, Washington in 1907. Then as a step towards creating a unique brand, in 1919, the company expanded beyond Seattle and changed their name to United Parcel Service, and then onwards it has been an upward progress. “From its humble beginnings, UPS has grown into a global giant” (Deresky 2006, p.342). The roles of UPS’s employees are very crucial and they have been doing activities, which compliment this marketing process of CSR. UPS has a charitable arm known as UPS Foundation and as part of this foundation activities, employees live and work in various communities, serving the people regarding their needs. UPS management on their part provides maximum backing to their employee’s efforts in serving various communities. UPS have a vision and mission in this aspect: “UPS is involved in communities where our employees live and work. We have made a personal commitment to make a difference through hands-on community service.” (ups.com). Then , as part of the CSR, UPS Foundation has contributed more than $20 million in support of hunger minimization among world population. They were able do it, by distributing the surplus food donated by food producers and food servers such as restaurants, to nonprofit organizations feeding the hungry. Along with this hunger initiative, The UPS Foundation is also putting lot of efforts to promote literacy in USA and throughout the world. UPS Foundation focused mainly on adult literacy but subsequently concentrated on workplace literacy and children’s literacy. These words from UPS Chairman sum up the Corporate Social Responsibility role of United Parcel Service. Public normally believe in what they see and hear, and if an organization want to make the people believe in them, they have to reach the minds of the people, through their genuine CSR based activities as part of marketing campaign. Any organization including UPS most times cannot allow people into their workplace or buildings to make a good impression about them. So, to make a good impression UPS, apart from showing their growth in terms of profits also allow its employers to participate in socially responsible activities. Through this way, the organization tries to make the people believe in them positively. Also, it is creating a good, satisfying image about UPS in the minds of the common people as well as various prestigious Medias, without spending large amounts of money on advertisement, another form marketing campaign. Awarding of prestigious honors for UPS’s social responsibility have heightened the image of UPS in the mind of the people particularly their customers, including the newly arriving ones. “FORTUNE Magazine’s, America’s Most Admired and Worlds Most Admired Company survey named UPS the most socially responsible company in America. UPS has been ranked #1 in its industry, both for social responsibility for the last four years.” (ups.com). So, this honor and image because of social responsibility as part of marketing campaign will surely give UPS the competitive edge and a good platform to elicit further good response. Starbucks While UPS as part of their CSR is involving the employees and contributing to hunger and illiteracy eradication, Starbucks on the other hand minimally focus on social cases and mainly focus on elevating its ethical image. That is, unlike UPS Starbucks does not focus on various deprived communities, instead focusing on mainly on its related communities like coffee growers in Africa. Another key difference between UPS and Starbucks is that UPS started its CSR based activities ‘naturally’ with the intention to help the deprived people and elevate its ethical image, while Starbucks and its leader Howard Schultz was forced to indulge in CSR activities to remove certain ethical allegations or negative image about it. Although, it was forced to do so, Starbucks has come up with effective CSR based activities earning appreciation. However, there exist ethical gaps in many key issues. Howard Schultz joined the Starbucks shop at Seattle, which was already owned by other owners. Due to differences of opinion, he left the Starbucks and started the Il Giornale coffee bar chain in 1985. Then in 1987, the original Starbucks management team sold its entire Starbucks unit to Schultz and his company. With the acceptance coming from the same persons who rejected his idea and the Starbucks’ unit in his hand, Schultz renamed Il Giornale with the Starbucks name and aggressively marketed the coffee-based beverages also as Starbucks, thereby expanding its market all over U.S. Although, it functioned effectively, Starbucks faced criticism for indulging in certain questionable and unethical practices. The first issue, which shows Starbucks lack of ethics, is its practice of using bovine growth hormone (BGH) treated milk, which is dangerous to human health. Despite these alarming harmful effects on human and animal health, Starbucks has broken its promise as outlined in a letter sent to OCA in 2001 to offer hormone free milk upon request in all company owned stores by 2002. So, Starbucks practice of continuing BGH milk exposes the ethical gaps that exist. So, even though Starbucks gives a lot of importance to ethics in the aspect of work culture and in the case Corporate Social Responsibility, unlike UPS it fails in some other aspects creating a gap and raising criticisms. Although, these activities of Starbucks creates negative image, Starbucks has also carried out constructive CSR based activities as part of marketing. Starbucks took effective CSR based decisions regarding its relationship with farmers and its commitment to social welfare programs. That is, Starbucks paid coffee farmers in Africa, who supply the copy beans, good premium prices, so that it constitutes the concept of Fair Trade and also they have enough money to look after the family, and avoid planting illegal crops. Talking about Fair Trade practices, Starbucks have taken crucial decisions in that aspect earning a good image and also ethically correcting itself. Starbuck have embraced Free Trade coffees in a big way creating number of records. “Starbucks is North America’s largest purchaser of Fair Trade CertifiedTM coffee. Starbucks is the only company licensed to sell Fair Trade Certified™ coffee in 23 countries.” (starbucks.com). This same wish for fairness is visible in the social welfare activities as well. That is, the company also helped to build schools, health clinics and other projects for the benefit of the whole farming community. Its decision to co-operate with CARE also resulted in many beneficial activities to many communities. It aided CARE by providing more than $100,000 a year. This decision of Starbucks resulted in the construction of many welfare infrastructures including clean-water systems, health and sanitation and literacy. Starbucks implemented all the above mentioned plans expecting great results profit wise, image wise and importantly ethic wise, leading it to become a top organization in terms of ethics in different surveys conducted by leading groups. In 2006, Starbucks ranked seventeenth on the Business Ethics “100 Best Corporate Citizens” and on the Fortune “100 Best companies to work for” list for eight years (2006: twenty-ninth). Social responsibility is some thing that any visible organization should indulge in, because it only provides the organization a special standing and removes the negative image, aiding its profitability. In the case of Starbucks, it is an overall strategy as it wanted a positive change of image due to the criticism it faced. That is, a survey by Global Marketing Institute found that even Starbucks customers view the company as “arrogant, intrusive and self-centered”. As a result of this survey and the need to shed this negative image, Starbucks invested significantly in Corporate Social Responsibility (CSR) activities. And in course of time, it integrated into the company‘s strategy and offered finances to the charities. “Starbucks has made significant progress addressing CSR issues relating to working conditions and equity in its supply chain, as well as Fair Trade” (Lee). But, some accuse that Starbucks are following this strategy to minimize or cover up or suppress the negative image formed by certain events. However in the overall analysis, the CSR is carried out by Starbucks as a useful concept, which can benefit many sections of people from employees to common people. Nike Nike carried out certain ethics based activities naturally and also because of compulsion and criticism. Unlike UPS and like Starbucks, Nike also faced criticism from certain quarters about various issues particularly its activities in its foreign operations involving the local workers. However, unlike both UPS and Starbucks, Nike’s main concern and focus is regarding its ethics and minimally about CSR. It tried to incorporate ethics as part of its recruitment process through its Diversity program and bringing in diversity through the organization. Organizations will have a collage of workers, who like the five different fingers in one’s hand will be different from one another having different characters, attitudes, education, background and also ethnicity, thereby bringing in the diversity element. But, some organizations will not have this diversity aspect totally or not up to recognizable levels. So, whatever be the case, certain organizations will introduce programs or strategies to recruit and assemble ‘collage’ of workers, so that the ethical issue of diversity is incorporated into their organizational structure and culture. This incorporation of diversity will bring in many benefits and could also raise the image of the organization among diverse group of people. This is what Nike is trying to do through its Diversity program. Nike Corporation is the world’s leading supplier and manufacturer of sports equipments, athletic shoes and apparels. Currently Nike has over five hundred factory or office locations in around 45 countries all over the world, the majority of these are in Asia. As part of a positive image building exercise, it planned to increase that percentage to recognizable levels. So, in 2005, it actualized that plan by adopting the diversity program in its recruitment process. “Nike set out on a five-year journey to make the company an Employer of Choice. We said diversity could be a competitive advantage. … Our commitment to diversity is an integral part of Nike’s identity as a company” (nike.com). Nike introduced diversity programs into its functioning in co-operation with six employee networks, which were established by Nike themselves in 1990’s. These networks consisting of the main minority segments of the population, by liaising with the recruiting officers of Nike, introduced as much people from their segments into the organization. The six Nike networks each containing a minority group are Networks of African-American, Asia Pacific, Disabled Employees & Friends, Gay, Lesbian, Bisexual, Transgender, Latino & Friends and finally Native American (nike.com). In worldwide operations also, Nike gives opportunities to other minority or marginalized groups. “Nike works closely with Stonewall, Britain’s leading gay equality organization, and other members of the program, to improve the working environment for our lesbian, gay and bisexual employees” (nikebiz.com). In different countries, Nike has it own ‘operations organizations’ or operations, apart from the ones, which are doing its outsourced work. To manage these operations, Nike recruits local or indigenous employees taking into account political, social, technological and demographic factors. Apart from recruiting locals and fulfilling its ethical responsibilities, Nike by taking good care of the employees in foreign operations particularly, in Third World countries is again able to meet the ethical standards. But, in the 1990’s, Nike’s image suffered a lot as it was regarded as the main proponent of sweatshop labor. That is, in its units in Third World Countries, Nike’s management was accused of treating the host country employees very badly subjecting them to physical abuse, sexual abuse and importantly making them, work for extremely longer periods, even while giving only minimum wages. This has led to several protests from various groups and organizations outside the stores, including boycott of products. To counter these negative remarks regarding labor issues, Nike launched an all out marketing campaign and importantly by indulging in corporate social activities. As part of social responsibility and to minimize its negative image, Nike did a lot of charity work and philanthropy, specifically in Third World countries for the struggling people. So, Nike incorporated ethics as well as CSR by actualizing the Diversity program and indulging in many constructive activities. Due to the appreciable success of this program, Nike was awarded honors by many organizations. Nike was added in the list of Worlds Most Ethical companies (2007), released by the Ethisphere Magazine. “…analyzes companies that go beyond making statements about doing business ‘ethically’, to translate those words into action." (nikebiz.com). Conclusion From the analysis of these three companies regarding the ethical issues as well as Corporate Social Responsibility, it is clear that each organization had various motives to indulge in those constructive activities. That is, Starbucks and Nike faced a lot of criticism because of certain issues, resulting in the deterioration of their ethical and favorable image. While UPS without any criticism from other sources launched CSR based activities to optimally develop has an ethical organization. There were also similarities and differences in the way all the three organizations carried out their CSR and ethics based activities. While UPS focused on hunger and illiteracy minimization as well as community service, Starbucks focused on providing its coffee framers premium price and building many community structures and finally Nike differing from these two companies incorporated ethics mainly in its recruitment process and toeing the line of other two companies did community as well as charity service. References adviceonmanagement.com, Famous advice on Ethics, accessed November 28, 2009 http://www.adviceonmanagement.com/advice_ethics.html Deresky, H. 2006, International Management: Managing Across Borders and Cultures, Pearson Prentice Hall, Upper Saddle River, New Jersey Lee, M, Orin Smith, accessed November 28, 2009 http://www.sustainability.com/network/global-influencer.asp?id=269 nikebiz.com, Awards & Recognition, accessed November 28, 2009 http://nikebiz.com/company_overview/awards_recognition.html nike.com, Diversity, accessed November 28, 2009 http://nikebiz.com/company_overview/diversity/learn_more.html nike.com, Employees and Diversity, accessed November 28, 2009 http://www.nike.com/nikebiz/gc/r/fy04/docs/employees_diversity.pdf Starbucks.com, Fair Trade and coffee social responsibility, accessed November 28, 2009 http://www.starbucks.com/aboutus/StarbucksAndFairTrade.pdf Ups.com 2007, UPS foundation, accessed November 28, 2009 http://pressroom.ups.com/mediakits/landing/0,2307,50,00.html?mkit_name socialresponsibility Read More