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Group Case -Business Ethics

In: Business and Management

Submitted By SaraPhoenix
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Q 1: Discuss and analyze the ethical issues reflected in the case.

The case is about British American Tobacco (BAT), London-based tobacco firm, which is involved in doing unethical activities and hence breaking their marketing code in Africa. BBC had investigated and found BAT is trying to attract more young African buyers of its product by adjusting marketing strategy to meet young people's needs. They are actually promoting and selling cigarettes in form of “single sticks”, which is attractive to young people of poor African countries like Nigeria, Malawi and Mauritius, who cannot afford to buy a whole packet of cigarettes.

Now, there is nothing wrong with marketing one's product to target an audience of possible consumers. However, in this case, BAT allegedly targeted African children as young as 11 by aggressively marketing single sticks' to them. The company also hosted events that targeted young people despite their publicly stated commitments. Now, we know that most ethical issues concerning business consumer relations refer to the ‘marketing mix’, ethical issues in product policy, marketing communications, pricing and marketing strategy.

Ethical Issues in marketing management – Product Policy

At the most basic level, manufacturers should exercise due care in establishing that all reasonable steps are taken to ensure that their products are free from defects and safe to use as well as effective and fit for the purpose. Cigarette may be effective as they claim it to be. It works as stress reliever and give one some attitude, the purpose may be fulfilled, but it is not a safe product in any measure. And though consumers’ right to a safe product is not an unlimited right, but here they targeted children as young as 11 found buying and consuming single cigarettes. They are really vulnerable and unlimited right is not applicable for them.

Ethical issues in marketing management – marketing communications
Here BAT is making both individual and social impact. Because smoking is still a taboo in those countries mentioned and less than 10% of the population smoke. So, BAT is practicing deceptive practices by creating false beliefs about cigarettes in the individual’s consumers’ mind. They put posters of depicting single cigarettes and showing the price. As for social impact, they sponsored a music event where there was no formal age check, they offered lavish prizes in competitions featured by them, and they offered single cigarettes which are particularly attractive to young people, they also painted shops the same color as Matinee, one of their leading brands. By doing these, they are making cigarettes intrusive and unavoidable. African people were good without cigarettes as it was said earlier less than 10% were smokers, but by offering cigarettes in attractive manner, they are creating artificial wants.

Ethical issues in marketing strategy
If company is criticized when there is a perceived violation of the consumers, that is, right to be treated fairly (duty of care). Targeting vulnerable consumers is unethical. Consumers here must be treated as vulnerable as they have lack of sufficient education or information to use products safely and also they are unable to fully understand the consequences of their action, because they are too young to make competent independent decisions. They can be easily manipulated as there are customers as young as 11 years old.

Perceived harmfulness of the product: There is a positive relation between vulnerability and harmfulness. More vulnerable the customer, the product is more harmful. Here customers are really vulnerable, they are illiterate, not able to take proper decision as they do not have sufficient information about what could happen if they start smoking in such an early age.

Q 2. Analyze the activities of BAT using the normative ethical theories and find out whether these activities are right or wrong.

In this case we found that British American Tobacco (BAT) which is a London-based tobacco firm involved in doing unethical activities and also break their marketing code in their African operation. According to the normative ethical theories, we analyze the activities of BAT in Nigeria, Malawi and Mauritius:

According to the Traditional theory

Consequentialist:

Egoism: According to egoism theory activities done by BAT at Africa is ethical. In Malawi BAT sponsored music events where the company was not arrange any formal age checking on the gate. They also allow selling single cigarettes which goes against their marketing code. In Mauritius BAT has painted shops with the color that represent one of their brand. All these activities done by BAT was for company’s short term benefit. But in the long run, market mechanism will force customers, international bodies to realize it and protest against it. Here we found that outcome of these unethical marketing practices is good so according to this theory situation is ethically right.

Utilitarianism: This theory is also based on outcome not action. Here we do cost benefit analysis taking the two scenarios. One is breaking marketing code and other is maintaining the marketing code.

| |ACTION1: |ACTION2: |
| |Breaking Marketing code |Maintaining Marketing Code |
| |PLEASURE |PAIN |PLEASURE |PAIN |
|BAT |Profit will be higher |Bad Conscience |Good Conscience |Losing profit |
|Shopkeeper or Seller |Earn money | | |Have to find new |
| | | | |opportunity to make money|
|Celebrities |Attractive image and |Negative impact on | |May have to find other |
| |among young generation |celebrity image | |such opportunities |
| |and earn money | | | |
|Young generation |Feeling of being adult or|Severe bad impact on |Healthy and proper life |May find other way to |
| |have got maturity that |health |as their parent’s want |showing an attractive |
| |may reflect in their | | |growing up personality |
| |personality | | | |
|Family members | |Anxious for their |Get relief from |Children may find |
| | |children |anxiousness for their |vulnerable way |
| | | |children | |

According to Utilitarianism theory, we found that benefit is more than cost in case of breaking BAT’s marketing code. On the other hand cost is higher than benefit in case of maintaining the marketing code. So according to Utilitarianism theory breaking marketing code is ethical because here benefit is more than cost.

Non Consequentialist:

Ethics of Duties: We know that there are three maxims in ethics of duties. So, we can analyze the case according to the three maxims:

Maxim 1(Consistency): Here BAT has broken its own marketing code. BAT has done such unethical issues at their African operation but they did not apply such things at their home country. We can say that it is not a consistent practice. So, it is unethical according to maxim 01.

Maxim 2(Human Dignity): BAT’s unethical promotional campaign like selling single cigarettes, arranging music event, painting the shops encourages or promote young generation to become a smoker violate the basic human right So, it is unethical according to maxim 2.

Maxim 3(Universality): It is not possible for BAT to flash their unethical activities publicly or in front of media that they are breaking their marketing codes and encouraging young people to become a smoker. So, it is unethical according to maxim 3.

So according to Ethics of duties we can say that the practice of breaking marketing code and promoting cigarettes to young people in Africa is an unethical practice.

Ethics of rights and justice:

Rights: Here BAT’s promotional campaign in Africa promote cigarette among young generation. By doing this basic human rights is violated because by this children are developing nicotine habit and it increase the probability of smoking related diseases. So, it is unethical.

Justice: BAT is applying two different promotional programs in home country and Africa and they make profit through young generation. The justice of the BAT was not right. So according to justice it is an unethical practice.

Contemporary Theory:

Virtue Ethics: In the case, we found that BAT is promoting cigarette among young people. By doing this they are violating basic human rights. This is not ethically right. So we can say that this decision involves intellectual virtue but lacking moral virtue

Feminist Ethics: As this theory focuses on relationship, caring, harmony so according to this theory Mr. Proctor should not talk to the media because it will affect their good relationship with the top management.

Discourse Ethics: This theory says that if there is ethical dilemma then all the parties should sit together and should try to find an acceptable solution. According to discourse ethics, to solve the ethical dilemma at Africa all the parties-Mr. Proctor, top management, any international bodies, media should sit together and found a norm for the unethical practices.

Post modern Ethics: According to post modern ethics some of the factors need to be considered:

Holistic Approach: The decision that is promoting cigarette among young generation which is taken by top management of BAT is not applicable or expected in their own life. So this is an unethical decision.

Example rather than principle: BAT should follow the example or practice rather than principal which was applied in home country.

Think local, act local: BAT should consider local culture and context when they break their marketing code. According to the local culture promoting cigarette among young generation is unethical. So BAT should be careful when they break the code.

Preliminary Characteristics: BAT should learn from previous unethical decisions and their outcomes. Company should concern to make decision regarding this sensitive issue.

Q 3: Analyze the influencing factors in the decision making process of Mr. Proctor.

After analyzing the case, we have seen that British American Tobacco (BAT) Company is doing their business unethically in some of the African countries like Nigeria, Malawi and Mauritius. By doing unethical business, BAT is actually breaking their own marketing code of conduct. In Africa smoking is still considered as taboo and only 10% of the population smoke. So to make the cigarettes more popular, BAT is targeting the young people of African countries like Nigeria, Malawi and Mauritius. To stop the unethical practice, Chris Proctor, head of science and Regulation at BAT blow the whistle against the company. Two types of influencing factors helped him to make such decision .The influencing factors are-

← Individual Factors-The unique characteristics of Mr. Proctor that actually helped him to make relevant decision

← Situational Factors- The particular features of the surrounding environment that influence him to make judgment about what is right or wrong.

Individual influences in Mr. Proctor’s decision making:

← Education and Employment: Mr. Proctor was an educated person that reflects through his ethical decision making. Previously he had worked for a NGO for 10 years and there he also made ethical decisions. In BAT he was working as the head of Science and Regulation and he was worried about the unethical practice of BAT. So he threatened his company to act ethically but the company did not response. Finally he made his decision to talk to the media.

← National and cultural characteristics:

People from different cultural background have different national, cultural or religious out look towards an issue. Mr. Proctor was a West African and he had his own values, beliefs regarding ethical decision making. Few factors influences him to build such values; like

Collectivism: As Mr. Proctor was a West African so he was worried about African people and try to save them from the danger of different diseases.

Power Distance: BAT is an organization where power distance is practiced. Although Mr. Proctor was the head of Science and Regulation but he had not enough power to influence the decision of the company. Many times he protested against the unethical practice of BAT but the board did not pay any attention.

Uncertainty Avoidance: Mr. Proctor scores low in uncertainty avoidance as he took the risk of his professional life and protest against his own company.

← Psychological Factors:

Post –conventional: Mr. Proctor had the personality who does the things that they think they should do. As he thought that BAT was doing unethical thing by targeting young people and selling single sticks of cigarettes to make it more popular. So, he decided to protest and finally he spoke with the media.

Locus of control: Mr. Proctor was an internal locus person because he belief that he had control over his life. He knows that if he raises voice then he can do something for the well being of the African countries. As BAT was promoting cigarettes in a wrong manner so he decided to whistle blow and safe the African nations.

← Personality Integrity and Moral Imagination:

High Personal Integrity: Mr. Proctor had high personal integrity because he sticks to his decision to protest against the unethical business of BAT. The practice that BAT follows will hamper the well being of African people in the long run. So, for the sake of the society he took the risk of his professional life.

Moral imagination: Mr. Proctor had high moral imagination power. He knew that if he did not whistle blow about the unethical business of BAT then it will expand and in the long run destroy the young generation of African countries. So, he blew the whistle against his own company

Situational influences on Mr. Proctor’s decision making:

← Moral Intensity: The moral intensity of Mr. Proctor’s decision depends on six factors:

Magnitude of consequences: The magnitude of BAT action was massive. As they were targeting young people so even children of 11 years also started smoking and the smoking related diseases increased drastically. The smoking related death in Africa was 100,000 a year, but that figure would increase to double in the next 20 years. So, magnitude of consequences is very high in the African society.

Social consensus: The social consensus was very high because BAT‘s unethical business bring a change in the African society. People were highly affected by the unethical decision so Mr. Proctor had raise his voice to protect the African countries.

Probability of effect: The probability of effect was very high because the BAT unethical work was creating many social problems. Smoking became a habit among the young generation and the smoking related death also increases.

Temporal immediacy: The temporal immediacy of the BAT‘s action had low score because they made the African people habituated to smoking gradually. It will effect the society in the long run.

Proximity: Mr. Proctor’s proximity was higher as he was a West African so he wanted to protect his own natives. The unethical practices of BAT was gradually destroying the young generation of African countries so Mr. Proctor try to stand besides those affected people.

Concentration of effect: The unethical work of BAT was hampering the life of African young people. As the concentration of effect was higher so BAT continue their business without showing any interest to Mr. Proctor’s protest.

← Moral Framing: ▪ Moral muteness- Image of power and effectiveness: To protect his own native people, Mr. Proctor did not thought about the image of his own company. He took the risk and protest in the media about the unethical work of BAT.. ← Bureaucracy: BAT follows the formal structure of decision making. The top management took most of the decisions whether it would be ethical or unethical. Although Mr. Proctor tried to warn his management to stop the unethical practice but they did not show any interest. ← Work roles and organizational norms: ▪ Organizational norm and culture: BAT has their own organizational norm and culture. They have separate marketing code but they were not following the code in African countries like Nigeria, Malawi and Mauritius. Although Mr.Proctor protested against their violation of code but they continue their business. ← National and cultural context : African cultural context is different from other western culture. Although smoking is widely accepted in western countries but in African countries it is still considered as taboo. But BAT marketed their cigarettes in such a way that the young generation of African countries get addicted to it. So, the number of smoking related death increasing every year in African nations. It has been estimated that this problem will increase to double in next 20 years. So, being a West African Mr. Proctor tried his best to save the African people from the danger of smoking. So, all the above factors influence Mr. Proctor to protest in front of media and help the African people.

Q 4. What could be done for increasing the effectiveness of BAT’s marketing code?

British American Tobacco operates in an industry where their product itself is harmful for their customers. So, in order to design and implement their marketing program more effective and non-questionable, BAT should design their marketing program in a more ethical concern way. We may list those activities as following-

• British American Tobacco must stop selling their products to younger people who are less than 18 years old. They can achieve this goals by the following way-

o Stop selling Cigarettes in a stick rather than in a packet because it will make the purchase of Cigarette more difficult for the younger people.

o Sales outlet needs to be chosen selectively. They must not choose any outlet which is near to any school, college or children park.

• British American Tobacco can enforce some educational seminars like awareness about the danger of smoking, parents’ attitude and behavior of smoking especially in front of their children etc.

• Their promotional activities are some what lucrative to their unhealthy product. They should position their product only for adults while at the same time disclosing all the information regarding the harmfulness of their product. The company must not target the younger generations for their products.

• Any sorts of celebrity associations should be avoided because people specially the younger ones get attracted to these celebrity attitude and behavior.

• The branding of the company like painting of shops with the same color, attractive packaging allures people to their product. But company like British American Tobacco must avoid these sorts of activities.

• British American Tobacco can position themselves in the mind of consumer as a socially responsible company which will enhance their brand equity. They must avoid positioning themselves as a lucrative and glamorous brand.

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...INTI INTERNATIONAL UNIVERSITY COURSE STRUCTURE COURSE: MGT3219 Business Ethics (4 cr.) PREREQUISITE(S): None COURSE DESCRIPTION: This module provides students with sound understanding of the moral principles that governs corporate, group and individual responsibilities in everyday business operations LEARNING OBJECTIVES: The aims of this course are to enable students to: 1. Introduce students to the ethical concepts that are relevant to resolving moral issues in business 2. Impart the reasoning and analytical skills needed to apply ethical concepts to business decisions making 3. Identify the moral issues involved in the management of specific problem areas in business 4. Provide an understanding of the social and natural environments within which moral issues in business arise LEARNING OUTCOMES: Successful students will be able to: 1. Discuss the importance of practicing ethics in business 2. Describe the relationship between justice and different types of economic distribution 3. Discuss the legitimate and illegitimate influence of organisation on their employees and to link the possible moral issues in personnel policies and procedures 4. Integrate the concept of informed consent with various methods of obtaining information, privacy 5. Assess moral issues such as loyalty to company, conflict of interest, abuse of official position, insider trading, bribes, kickbacks, receiving gifts and entertainment that can......

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