Application of Ethical Standards

Unit 4:
 Learning objectives
• Manufacturing- duties of manufacturer, consumer rights, informed
consumer, consumer politics, consumer privacy, ethical consumption,
classification of unethical behavior, legal versus morale and ethics
business ethics;
• in the market place- Product positioning and competing, pricing and its
consequences, packaging and labeling, brand management and
imperatives, advertising and communication, exploitative nature of
advertising;
• finance and value- Financial accounting and standards, responsibilities
of financial institutions, capital market and its regulator.
 Manufacturers
• A manufacturer is a person or company that uses
various tools, equipment, and processes to create
finished things from raw materials and then sells them
to consumers.

• Manufacturers play a crucial role in the production and

distribution of goods and services. Here are some of the
key duties of a manufacturer:
Product Safety and Quality Assurance:

Compliance with Regulations

Accurate Labeling and Packaging

Warranty and Guarantee Policies

Recall and Safety Alerts

Environmental Responsibility

Consumer Education and Support

Consumer Rights in Relation to Manufacturers:
• Right to Safety: Consumers have the right to expect that the products they
purchase are safe for use when used as intended.
• Right to Information: Consumers have the right to receive accurate and complete
information about the products they purchase, including ingredients, potential
risks, usage instructions, and warranties.
• Right to Choose: Consumers have the right to choose from a variety of products
and brands in the marketplace, free from coercion or misleading advertising.
• Right to Redress: If a product is found to be defective or unsafe, consumers have
the right to seek compensation, replacement, or repair from the manufacturer.
• Right to Consumer Education: Consumers have the right to be educated about
their rights and responsibilities, enabling them to make informed purchasing
decisions.
 • Research and Compare: Take the time to
research products and compare options before
making a purchase. Look for reviews, ratings,

Being an
and feedback from other consumers.
• Read Labels and Packaging: Pay attention to
product labels for information on usage,
ingredients, and potential hazards.

Informed
• Understand Warranties and Guarantees:
Familiarize yourself with the warranty or
guarantee policies of the products you buy.
• Stay Informed About Recalls: Stay updated on

Consumer: product recalls and safety alerts by checking

official websites or subscribing to relevant
notifications.
• Know Your Rights: Familiarize yourself with your
rights as a consumer to ensure you are protected
in case of issues with a product.
 • Consumer politics refers to the collective
actions, behaviors, and decisions made
by consumers to influence policies,
practices, and behaviors of businesses,
industries, and governments.

Consumer • This can include activities like boycotting

certain products or companies,
advocating for specific regulations or

Politics: policies, and supporting or funding

initiatives that align with consumer
values and interests.
• Consumer politics often aim to promote
consumer rights, protect the
environment, and ensure fair and ethical
business practices.
 • Consumer privacy involves the
protection of individuals' personal
information and data from unauthorized
access, use, or disclosure.
• This encompasses a wide range of

Consumer information, including names, contact

details, financial records, and online
activities. With the increasing reliance

Privacy:
on digital technologies, safeguarding
consumer privacy has become a critical
concern.
• Laws and regulations, such as the
General Data Protection Regulation
(GDPR) in the EU, are in place to ensure
that businesses handle consumer data
responsibly and transparently.
 • Ethical consumption, also known as
ethical consumerism, is a consumer
behavior that takes into consideration
the ethical, social, and environmental
impacts of purchasing decisions.
• It involves choosing products and

Ethical services that align with one's values

and support companies that

Consumption:
demonstrate responsible business
practices.
• This may include buying products
made with sustainable materials,
supporting fair labor practices, and
avoiding products associated with
unethical behaviors or harm to the
environment.
Classification of Unethical Behavior:
Unethical behavior in consumer contexts can take various forms. Here
are some common classifications:
• Deceptive Marketing: This involves misleading or false advertising practices, such as
exaggerating product benefits or making false claims about a product's capabilities.
• Product Misrepresentation: This occurs when a product is presented in a way that does
not accurately represent its true characteristics, quality, or origin.
• Exploitative Labor Practices: This includes instances where companies engage in unfair
labor practices, such as unsafe working conditions, inadequate wages, or child labor.
• Environmental Harm: This involves actions or practices that result in environmental
damage, such as pollution, deforestation, or habitat destruction.
• Price Gouging: This refers to the practice of charging excessively high prices for goods or services
in times of high demand, often taking advantage of consumers during emergencies or crises.

• Data Misuse: This involves the unauthorized or unethical use of consumer data, including selling
or sharing it without consent, or using it for purposes other than what was initially intended.

• Unfair Competition: This occurs when businesses engage in anti-competitive practices, such as
monopolistic behavior or predatory pricing, to gain an unfair advantage in the market.

Understanding these classifications helps consumers and regulators identify and address unethical
behavior in the marketplace, promoting fair and responsible business practices.
Legal versus morale and business ethics

Legal, moral, and ethical

considerations are all
important aspects of
conducting business
responsibly. However, they
are distinct concepts:
Legal Considerations:
• Laws and Regulations: Legal considerations pertain to the
rules and regulations set forth by governments and
regulatory bodies. These are mandatory and must be
followed by businesses. Violating laws can lead to penalties,
fines, or even legal action.
• Enforceability: Legal standards are backed by the force of
law, meaning they are enforceable through the legal system.
Moral Considerations:
• Personal Beliefs: Morality is often tied to personal or
cultural beliefs about what is right or wrong. It may not
necessarily be universal, and it can vary from person to
person.
• Not Legally Binding: Unlike legal obligations, moral
considerations are not legally binding, and there are no
formal penalties for failing to meet moral standards.
Ethical Considerations:
• Professional Codes of Conduct: Business ethics involve adhering
to a set of principles and values that guide decision-making and
behavior within the context of business. This can include
honesty, integrity, fairness, and responsibility.
• Balancing Stakeholder Interests: Ethical considerations often
involve balancing the interests of various stakeholders, including
customers, employees, shareholders, and the community.
Key Differences:
• Enforceability: Legal standards are backed by the law and are enforceable through the legal
system. Morality and ethics, on the other hand, rely on personal or societal values and are
not backed by legal enforcement.
• Subjectivity: Morality is subjective and can vary from person to person or culture to culture.
What is considered morally acceptable in one context may not be in another. Ethics, while
also subjective to some extent, often rely on established professional codes of conduct.
• Consequences: Violating legal standards can lead to concrete legal consequences, such as
fines, imprisonment, or loss of license. Violating moral or ethical standards may lead to social
or reputational consequences, but these are not as clearly defined or regulated.
• Overlap: There can be overlap between legal, moral, and ethical considerations. Some
actions or behaviors may be both legally required and ethically/morally expected. However,
there can also be situations where something is legally permissible but morally or ethically
questionable.
 Product positioning and competing

Product Positioning:
• Product positioning refers to the way a product is perceived by consumers in relation to
its competitors. It involves creating a unique image or identity for the product in the
minds of consumers.

Key Considerations:
• Target Audience: Understanding the needs, preferences, and behaviors of the target
audience is crucial for effective product positioning.
• Points of Differentiation: Identifying what sets the product apart from competitors in
terms of features, benefits, or value proposition.
• Market Research: Conducting thorough market research helps in identifying the right
positioning strategy.
Methods:
• Perceptual Mapping: This is a visual representation of how consumers perceive
products or brands in relation to each other. It helps in identifying gaps and
opportunities in the market.
• Unique Selling Proposition (USP): This is a distinctive feature or benefit that sets a
product apart from its competitors.

Examples:
• Apple positions its products as premium, innovative, and user-friendly, which
appeals to a specific target market willing to pay a premium for these qualities.
• Walmart positions itself as a low-cost retailer, targeting price-sensitive consumers.
Competing in the Marketplace:
• Competing in the marketplace involves strategies and actions taken by businesses to gain
a competitive edge over rivals. This includes understanding and responding to the moves
of existing competitors.

Key Considerations:
• Competitor Analysis: Understanding the strengths, weaknesses, strategies, and market
positions of existing competitors.
• Market Dynamics: Knowing the broader market trends, customer preferences, and
external factors that may impact competition.
• Innovation and Adaptation: Being agile and responsive to changes in the market,
technology, and consumer behavior.
Strategies:
• Cost Leadership: Offering products at lower prices compared to competitors (e.g., Walmart).
• Differentiation: Creating unique products or services that offer distinct benefits (e.g., Apple).
• Focus Strategy: Concentrating on a niche market or specific segment (e.g., luxury brands like
Rolex).

Examples:
• Coca-Cola and Pepsi are classic rivals in the soft drink industry, constantly innovating and using
marketing strategies to outperform each other.
• Nike and Adidas fiercely compete in the sportswear and athletic footwear market through
product innovation, endorsements, and marketing.
 Pricing and its consequences,
Business ethics in pricing refers to the moral principles and values that guide a
company's decisions and actions related to pricing strategies and practices. It involves
considering the fairness, transparency, and honesty of pricing policies. Here are some
considerations regarding business ethics and pricing, along with their consequences:
 Transparency and Honesty: Maintaining
transparency and honesty in pricing builds trust with
customers, leading to stronger customer loyalty and
positive word-of-mouth referrals.
Compliance with Laws and Regulations: Fair Pricing Practices: Fair pricing practices
Complying with laws and regulations helps
maintain a company's legal standing and
promote a level playing field for customers
credibility. and help establish a positive brand image.

Long-Term Value over Short-Term Gains: Prioritizing long- Avoiding Price Gouging: Engaging in price
term value over short-term gains can lead to sustained gouging can result in reputational damage,
customer loyalty and increased customer lifetime value. legal penalties, and loss of customer trust.

Consideration of Affordability: Showing Competitive Pricing Practices: Engaging in predatory

consideration for affordability can lead to positive pricing can lead to regulatory scrutiny, legal action, and
public perception and can attract a broader customer long-term damage to the industry's competitive
base. landscape.
“By considering the ethical implications of pricing decisions,
businesses can create a positive brand image and foster strong
customer relationships. Violating ethical principles in pricing
can lead to severe consequences, both in terms of reputation
and legal repercussions.”
Applying ethical standards in various aspects of business operations, including
packaging and labeling, brand management, and advertising, is crucial for
maintaining trust, credibility, and long-term success. Here are the key considerations
for each area:
Packaging and Labeling:

a. Accuracy and Transparency:

• Ensure that all information on packaging and labels is accurate, clear, and not misleading. This includes
ingredient lists, nutritional information, and any potential allergens.

b. Environmental Impact:
• Choose sustainable packaging materials to minimize environmental harm. Avoid excessive packaging or
materials that are not biodegradable or recyclable.

c. Safety and Consumer Health:

• Ensure that packaging protects the product and does not pose any health risks to consumers. For instance,
it should not contain harmful chemicals or contaminants that could leach into the product.

d. Regulatory Compliance:
• Comply with all relevant local, national, and international regulations regarding packaging and labeling. This
includes adherence to food safety standards, product safety regulations, and truth in advertising laws.
Brand Management and Imperatives:

a. Consistency and Integrity:

• Maintain consistency in brand messaging and imagery to build trust and recognition. Avoid
making exaggerated or false claims about the product or its benefits.

b. Customer Value and Satisfaction:

• Prioritize delivering value to customers over short-term gains. Ensure that your products or
services meet or exceed customer expectations.

c. Ethical Sourcing and Production:

• Use ethical and sustainable sourcing practices for raw materials. Ensure fair labor practices are
followed throughout the supply chain.

d. Social Responsibility:
• Engage in socially responsible activities, such as giving back to the community or supporting
charitable causes. This can enhance the positive perception of the brand.
Advertising and Communication:

a. Honesty and Transparency:

• Be truthful and transparent in all advertising and communication efforts. Avoid making false claims or
exaggerating the benefits of a product or service.

b. Respect for Consumer Privacy:

• Adhere to data protection and privacy laws when collecting, storing, and using customer information for
marketing purposes.

c. Cultural Sensitivity:
• Ensure that advertising and communication efforts are culturally sensitive and do not offend or
marginalize any specific groups.

d. Avoiding Discrimination and Stereotyping:

• Steer clear of using language, imagery, or messaging that promotes discrimination, stereotypes, or
biases based on race, gender, religion, or any other characteristic.

e. Regulatory Compliance:
• Adhere to all applicable advertising standards and regulations set forth by regulatory bodies. This
includes laws related to false advertising, unfair competition, and consumer protection.
By applying ethical standards in these areas, businesses can build strong relationships
with customers, enhance their brand's reputation, and contribute positively to society
and the environment. This not only benefits the company in the long run but also
helps create a more sustainable and responsible business ecosystem.
Exploitative nature of advertising
• Advertising can be considered exploitative for
several reasons, largely due to the ways in
which it often aims to manipulate consumers'
desires and emotions. Here are some key
aspects of the exploitative nature of advertising:
Manipulation of Emotions and Desires:

Creating Unrealistic Expectations

Exploiting Vulnerable Populations

Promoting Consumerism and Materialism

Encouraging Debt and Financial Instability:

Promoting Unrealistic Body Images

Lack of Transparency and Misleading Claims:

Promoting Unhealthy Products

Cultural Appropriation and Stereotyping

Finance and Value

Financial Accounting and Standards

Definition: Financial accounting involves recording, summarizing, and reporting

financial transactions of an organization.

Purpose: Provides stakeholders (investors, creditors, etc.) with accurate and

reliable financial information for decision-making.

Standards: Generally Accepted Accounting Principles (GAAP) and International

Financial Reporting Standards (IFRS) set the guidelines for financial reporting.
 Responsibilities of Financial Institutions

Role: Financial institutions (banks, credit unions, investment firms) act as

intermediaries between savers and borrowers.
Safekeeping of Funds: They safeguard deposits and provide secure channels for
financial transactions.

Lending: Offer loans to individuals and businesses to facilitate economic activities.

Investment Management: Manage portfolios and invest funds on behalf of clients.

Risk Management: Mitigate risks through various financial products and services.
 Capital Market

Definition: A market where long-term financial instruments like

stocks, bonds, and derivatives are bought and sold.
Primary Market: Where new securities are issued and sold to initial
investors.
Secondary Market: Where existing securities are bought and sold
among investors.
 Regulator of the Capital Market
Role: Regulators oversee the functioning of the capital market to ensure fairness,
transparency, and investor protection. Key Functions:

Enforcement of Rules: Ensure compliance with securities laws and regulations.

Market Surveillance: Monitor trading activities for irregularities or misconduct.

Investor Education and Protection: Educate investors about risks and safeguards.

Licensing and Oversight: Regulate market participants (brokers, exchanges, etc.).

Policy Formulation: Develop rules and policies to enhance market integrity.

 Value in Finance

Definition: Value in finance is the worth, usefulness, or benefit

derived from an investment or financial decision.

Maximizing Shareholder Value: A common goal of corporations is

to increase the wealth of shareholders through profitable
operations and efficient use of resources.

Risk and Return: Balancing risk and return is crucial to achieving

optimal value in investments.
Discussion:
• https
://time.com/5460793/dewayne-lee-johnson-monsanto-lawsuit
/
• Create a PPT presentation on the ethical topic you fear the
most. Attach relevant case and example on to it.