Business Ethics Fundamentals

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Questions and Answers

What does business ethics primarily study?

Technological advancements in production

Consumer preferences and behavior

The effectiveness of advertising strategies

Morality in business practices and values (correct)

Which of the following is NOT one of the eight ethical principles followed by organizations?

Fiduciary

Popularity (correct)

Fairness

Transparency

How do moral rules affect stakeholders in business ethics?

They create benefits exclusively for investors.

They primarily concern the company's competitive strategy.

They impact multiple groups including consumers and the environment. (correct)

They only affect consumers and employees.

Which reason highlights the necessity for business ethics due to increased competition?

Fiercer competition among businesses Signup and view all the answers

What is the primary focus of 'dark marketing behaviors'?

Misleading and exploitative marketing tactics Signup and view all the answers

Which of the following factors contributes to the need for business ethics in today's market?

Globalization and world population growth Signup and view all the answers

Which ethical principle emphasizes respect for other people?

Dignity Signup and view all the answers

What expectation do consumers have regarding pricing practices?

Non-discriminatory and fair pricing Signup and view all the answers

What is the primary goal of corporate social responsibility (CSR)?

To conduct business in a morally sound and principled manner Signup and view all the answers

Which type of corporate social responsibility focuses on community engagement and support?

Philanthropic Responsibility Signup and view all the answers

How can a business practice environmental responsibility?

By reducing carbon emissions and energy usage Signup and view all the answers

What is an example of economic responsibility in corporate social responsibility?

Sourcing products from local businesses Signup and view all the answers

Which of the following is NOT a potential benefit of socially responsible marketing?

Decreased product quality Signup and view all the answers

1What aspect of CSR involves correcting previous ethical wrongs?

Bright behaviours Signup and view all the answers

Why should companies be cautious about marketing campaigns that promote shopping as stress relief?

They may drive consumers to compulsive shopping. Signup and view all the answers

Which of these companies is best known for its initiatives in economic responsibility?

Patagonia Signup and view all the answers

What can be a consequence of compulsive buying behavior?

Psychological and personal consequences Signup and view all the answers

Which of the following examples exemplifies ethical responsibility?

Employee wellness programs Signup and view all the answers

What does sustainability imply in a business context?

The ability to maintain practices at a given level indefinitely. Signup and view all the answers

Which of the following best describes the 'Triple Bottom Line' approach?

Balancing profit, people, and planet in business practices. Signup and view all the answers

What is one of the significant environmental consequences of waste?

Leaching chemicals into groundwater. Signup and view all the answers

What is a challenge companies face in packaging sustainability?

Creating packaging that offers the same protection while being eco-friendly. Signup and view all the answers

What does a 'circular economy' emphasize?

Using and reusing products to minimize waste. Signup and view all the answers

What characterizes 'Voluntary Simplicity' as a lifestyle choice?

Limiting material consumption to free up resources. Signup and view all the answers

Which group is described as 'highly committed simplifiers' in the context of Voluntary Simplicity?

People who significantly change behaviors to lower consumption. Signup and view all the answers

What is one way consumers can contribute to sustainability?

By recycling product packaging whenever possible. Signup and view all the answers

Study Notes

The study of morality, what society considers right or wrong
Business ethics examines morality in business values and practices
Stakeholders include consumers, employees, investors, vendors, local communities, larger societies, governments, and other countries
Ethical treatment of animals and environmental impact are key considerations

Outline

Dark Marketing Practices
Dark Consumer Behaviours
Bright Behaviours
Practice!

Dark and Bright Behaviours

Transactions between buyers and sellers should be fair and balanced (win-win).
Normal behaviour in transactions requires adherence to norms.
Dark behaviors involve exploiting others for personal gain.
Bright behaviours involve going above and beyond in transactions to benefit community or environment.

Unsafe Marketplace

Consumer protections have increased, but the marketplace has become more unsafe in some areas
Online purchase scams (fake websites, counterfeit goods)
Diet/health supplement scams (miracle weight-loss pills, hormone balancing)
Loan and income tax scams
Cryptocurrency scams
Romance scams

Example: Hormone Balancing

Claims were scientifically proven to be false and dangerous.
Some products may be harmless, while others can negatively affect health.

Business Ethics

Study of morality in business
Moral rules affect many stakeholders
Important considerations are treatment of animals and the environment

A Need for Business Ethics

Improved production capacity
Increased competition among businesses
Expanding consumer choices
Scientific advancements and space exploration
Global population growth
Political and environmental activism

Ethical Principles

Fiduciary: Diligence and prudence in handling responsibilities
Property: Safeguarding tangible and intangible assets
Reliability: Keeping commitments and fulfilling promises
Transparency: Honesty, truth, and disclosure of information
Dignity: Respecting others and protecting them
Fairness: Treating all equally and appropriately
Citizenship: Respect for laws and the natural environment
Responsiveness: Quick reactions to problems

The Dark Behaviours of Marketers

Marketing tactics that are misleading, exploitative, and unethical.
Unsafe or harmful products, misleading pricing, planned obsolescence, exploitative sales, false advertising, bait-and-switch advertising, greenwashing, targeting vulnerable populations, consumer privacy violations, mishandling of private data.

Unethical Marketing and the 4Ps

Marketers deliver value using the four P's.
Product: Safe, functional products desired by consumers.
Price: Non-discriminatory pricing that is fair.
Promotion: Honest communication that doesn't exploit vulnerable populations.
Place: Fair treatment of consumers through retailers and distributors

Unethical Marketing and the 4Ps (Strategies)

Product: Developing a good, service, or experience that satisfies customer needs, or harmful/unsafe products that aren't disclosed.
Place: Distributing products or services through multiple channels, or deliberately restricting availability.

Example: VW “Clean Diesel”

Volkswagen advertised environmentally friendly vehicles but were not as advertised.
The company used illegal devices to manipulate emissions tests.
Vehicles emitted much higher levels of harmful emissions than allowed.

Consequences of Unethical Practices

Loss of profits and reputational damage
Legal issues and fines
Public relations disasters
Tarnished brand image
Decreased investments and stock prices
Distrust from partners and employees
Consumer cynicism (a loss of trust)

Example: VW “Clean Diesel” (Outcomes)

Over $30 Billion in fines, penalties, and restitution
Stock prices dropped 1/3 within a short time
Reduction in profits
Efforts to recover brand image via new leadership, technological advancements, and ethical practice changes

Discouraging Unethical Marketer Behaviours

Activism: Any action to draw attention to an issue and create positive societal change
Movements, marches, protest demonstrations, rallies, strikes, boycotts, whistle-blowing, government lobbying, fundraising, canvassing, consumer rights organizations, and internet activism
Quiet activism: Making small, mindful consumption choices or refusing to support unethical companies
Slacktivism: Passive participation in activism (online likes, shares, etc.)

Governmental Regulation

Reflects societal concerns and counteracts business self-interest
Enforces compliance with regulations
Protects businesses through the promotion of economic growth, regulating competition, trade, and intellectual property rights
Regulatory agencies (e.g., Health Canada, Industry Canada, Competition Bureau of Canada, CRTC, Privacy Commissioner of Canada, Canadian Food Inspection Agency)

Consumer Privacy

The Department of Justice, Industry Canada, and various privacy regulators protect individual consumer rights.
Canada's privacy regulations are governed by PIPEDA.

Canada's Anti-Spam Law (CASL)

The law came into effect in 2014 and was supplemented by restrictions on malware (2015).
It mandates unequivocally explicit consent from recipients for stated communication purposes.

Self-Regulation

Voluntary regulation imposed by the industry or corporation.
Exemplified by agencies like the Better Business Bureau (BBB), Canadian Association of Broadcasters, and the Canadian Marketing Association.
Criticised for having limited power to remedy and penalize offenders when standards are violated.

Consumer Ethics

Consumers generally follow acceptable norms for marketplace behaviour.
Judgments about right and wrong in the marketplace depend on changing societal standards, personal morals, and perceptions of harm and justice.

Consumer Misbehaviour and Problem Behaviour

Misbehaviour: Violates acceptable norms, self-indulgent, self-interested, and lacks concern for others. Examples include shoplifting, filing fraudulent claims, and drunk driving.
Problem Behaviour: Excessive reliance or overuse of products or participation in compulsive behaviors. Example, compulsive shopping or eating, or addiction to items.

Dark Consumer Behaviours (Acquisition)

Deviant Acquisition Behaviours: Consumer misbehavior or problems in acquiring goods, like Consumer Aggression, Theft, and Compulsive buying.

Consumer Aggression

Aggressive and violent behaviour, especially during sales events like Black Friday.
Driven by perceived lack of freedom and control.
Rooted in evolutionary drives to protect from threats or inspired scarcity.

Consumer Theft

Costly for businesses and consumers
Reasons include the inability to afford items, poverty, compulsion or emotional triggers, and the desire to maintain a certain standard of living
Items popular for theft share characteristics of CRAVED- Concealable, Removable, Available, Valued, Enjoyed, and Disposable.

Compulsive Buying

An unusual obsession with shopping that significantly affects the individual.
Involves chronic problem behavior, secrecy, and uncontrolled financial, psychological, and personal consequences.
Driven by emotions, low self-esteem, lack of control, and a desire to offset other issues.

Companies that go beyond ethical considerations to correct past mistakes.
Ethical Responsibility: conducting business to higher principle standards (employee safety, health, and well-being, equality/diversity/inclusion)
Philanthropic Responsibility: Providing back to the community. (Advocacy, supporting community events or initiatives)
Economic Responsibility: Prioritizing financial sustainability and contributing to economic well-being of the community (Fair Trade, sourcing local products, economic development).
Environmental Responsibility: Minimizing the negative impacts on the planet. (Reduce carbon emissions, eco-friendly packaging, recycling)

Sustainability

The ability to maintain a given level or practice indefinitely.
In business, it's often called the Triple Bottom Line accounting: Profit, People, Planet (environmental) considerations.

Sustainability and Packaging

Packaging is a significant part of marketing, but it's a large contributor to waste.
Packaging material has negative environmental impacts; landfills leach chemicals into groundwater and release toxic air pollutants.
Canada ranks high in per-capita trash production.
Companies face challenges in finding alternative packaging methods that safeguard products while aligning with sustainability concerns.

Voluntary Simplicity

A lifestyle choice to limit material consumption and resource use.
Highly or Less committed simplifiers adjust consumption patterns based on ethical or personal preferences
Changing behaviour may be disruptive in extreme cases (e.g., homesteading), or gradual and less disruptive (e.g., purchasing fair-trade coffee)

Review Questions

Define and provide examples of dark marketing practices.
Describe 2-3 of the eight ethical principles and provide examples of marketing practices that may violate them.
Describe how marketers typically use the 4 P's to create value for consumers and how these strategies may be used in unethical ways.
Discuss the role of activism, consumer advocacy, government regulation, and self-regulation in discouraging unethical marketing practices.
Distinguish between consumer misbehaviour and consumer problem behaviour, and provide an example of each.
Discuss the relationship between limited-quantity promotions, scarcity, and consumer aggression and violence.
Describe what items are popular for theft using the acronym CRAVE.
Define compulsive buying, distinguish it from impulsive behaviour, and describe why it occurs.
Define Corporate Social Responsibility (CSR) and describe the four different types that companies might engage in.

Practice Questions

The provided practice questions relate to previously described topics.

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Description

Test your knowledge on the key concepts of business ethics, including ethical principles, corporate social responsibility (CSR), and stakeholder impacts. This quiz covers various aspects of ethical behavior in organizations and the implications for businesses in the competitive market.