While watching the news, you may hear stories of a company getting sued for distributing an unsafe product to consumers or for falsely advertising their products. In these cases, the company has not lived up to standards of business ethics, which encompasses the guidelines and values that play an essential role in a company’s decisions and actions. With this blog post, we hope to describe to you what the concept of business ethics and how it pertains to you. Business ethics directly influences the way a company advertises their products, prices them, and even interacts with competitors. Business ethics goes hand-in-hand with how a company assumes responsibility for serving and providing value for their customers.
Many businesses believe that there is a trade-off between being ethical and being profitable. One of the biggest excuses businesses use when they are caught doing unethical things is, “Our first focus is for the profit of the company”. However, this is a false assumption to run a business with. Business ethics is crucial for the long-term profitability of businesses. Saying that there is a trade-off is a short term approach and no business can grow and thrive with this mentality. Managers who focus on the short-term profitability while ignoring ethical implications will eventually learn the hard way how wrong they are. For example, Wells Fargo engaged in unethical behavior of fraud all for the short-term profits. However, after the customers became aware of their business, there was legal action taken against Wells Fargo and they lost millions of dollars as a result. This caused them to suffer irreparable damage to their reputation and now consumer trust is at all time low. So the real question is “Is this type of behavior worth it?”, and the answer should be obvious.
As a marketer, it is your responsibility to assess the various ethical dilemmas your company may be presented with and make an educated decision. Claiming that your product can magically cure the common cold may improve short run profits, but is both unethical and illegal. However, while avoiding illegal actions like this may seem obvious, a tougher decision comes into play when marketers must decide whether or not to engage in dishonorable actions. These actions may include attempting to take advantage of uneducated consumers or luring consumers into taking dangerous actions such as going to a casino. Likely, actions like this will not create legal trouble, but can cause a negative reputation to form around your company, which will definitely impact future profits.
Consumers play a vital role in enforcing the necessity of ethics in business. Without consumers rewarding companies that behave ethically, and punishing those that fail to do so, there is no profit incentive for companies to strive for the moral high ground. Take for example ‘A Dog’s Purpose.’ The movie was set to do an initial premiere in mid-January, but shortly before the LA premiere date, PETA called for a boycott after finding footage of a German Shepherd being filmed in unsafe conditions under duress. In response, Universal cancelled the Los Angeles premiere in order to minimize bad press over the film and the studio, as it could result in a big hit in the box office. That last bit is the most important part. If consumers didn’t care about the ethical violation, then the “bad” press would not have harmed the company, since people would not have changed their movie-going habits. Universal is now far less likely to fund a film that requires the inhumane treatment of animals, since they know it could cost them a whole lot of money.
Business ethics is an important topic in today’s marketing world. Marketers and consumers around the globe should take time to think about what constitutes an ethical or unethical decision. Both the company and the consumer has a responsibility to uphold a standard of ethics that results in effective but also honest and respectable practices.
Questions, comments, concerns? Let us know in the section below! Tell us about your experiences with business ethics or your viewpoint on the topic. We’d love to hear from you!
Thank you for sticking with us for the past few months! This blog started off as an assignment for our Marketing class but we never expected to enjoy it as much as we have. We appreciate all the views and comments on our blog posts and hope this blog has helped some of you and opened your eyes to the world of marketing. We are sad to say that this is our final blog and we hope you have enjoyed this past couple months!