3 Ethics and Social Responsibility

1. 3Ethics and Social Responsibility Professor Close

2. Corporate Social Responsibility (1) • CSR = businesses’ concern for societal welfare • Ethics = moral values guiding a leader or organization • Morals = rules developed by cultural values/norms • Can you think of any companies that practice CSR?

3. Corporate Social Responsibility (2) • Happy people = good business • If you have to ask “is this ethical?...” it likely is NOT cool • Need to rethink long terms solutions

4. Marketing Environment (1) • Factors outside our control in the short run (CPA) • Consider the strategy (where are the opportunities?) • Broad objectives: beyond pleasing our customers

5. Marketing Environment (2) • Broad objectives: • Useful function (Wang computers) • Need satisfaction (Hallmark) • PR purposes (RJR vs. Alcohol) • Organization to support • Entrepreneur’s challenge • Example: organization charts • Profit (#1, long run) • Other financial subordinate (market share, Eastern) • Time horizon: When will firm generate profit? (Amazon) • Considers resources (how many years)

6. Marketing Environment (3) • Compatibility is a key • Question to consider: do you think Wal-Mart can focus on both quality and price? What about their labor issues?

7. Simpsons on Wal-Mart

8. Marketing Environment (4) • Resources: remember 2x2 matrix; how to find strong areas • Examine functional areas • Financial: Wal-Mart (purchasing) • Production: • Larger capacity (cost/unit, economy of scale) • Flexibility (Sara Lee and what else?) • Often opposed • Marketing: • Brand strength • Channel relationships (car dealers, franchisees, and what else?)

9. Marketing Environment (5) • Preferable Combination • Example: Wal-Mart - financial, distribution, and relationships • What other example can you think of that has a strong combination?

10. Finding Opportunities (1) • Types of opportunities: • Market penetration • Current products and markets • Examples include • Increase rate of use (shampoo, Coke, and what else??) • Longer duration (airlines and what else??) • Advantage of market penetration is that it is the easiest method • Disadvantage is the threat of saturation

11. Finding Opportunities (2) • Types of opportunities: • Market development • Current products, new markets • Example: international expansions • What successful or unsuccessful international expansions can you think of? • Advantages include high potential • Disadvantages include applicability (KFC in Japan)

12. Lipton is Asia…Think it will work?

13. Finding Opportunities (3) • Types of opportunities: • Product development • Current markets, new products • Examples: autos, fashion, and what else?? • Advantages include knowing the customer already • Disadvantages include cannibalization (Gillette)

14. Finding Opportunities (4) • Types of opportunities: • Diversification • New market and product • Examples: McDonalds and what else?? • Advantage includes high potential • Disadvantage include high risk (ITT – Sheraton)

15. Social Factors • American values (upward mobility, work ethic, self-sufficiency, conformity) • Culture: manner in which people live • Very broad • Women’s role (U.S. vs Japan) • Fitness • Debt • Time-poor society

16. Economic Factors • Economy: a system of producing, distributing, & consuming wealth (what is our purchasing power?) • Shifts (purchasing declines in recession) • Examples: • Interest rates influence buying (0% financing) • Rising costs, inflation unavoidable • Good life = debt? • Why are we so in debt?

17. Technological Factors • Technological: application of knowledge to perform tasks more efficiently/effectively • Effective: accomplishing tasks • Efficient: accomplishing tasks with minimum use of resources • Base of economic environment (research) • Technology transfer is rapid (Pentium chips and what else?) • RSS and blogging • Ethics: consumer research (hits on web sites, selling your info, privacy??)

18. Technology Changing Lifestyles

19. Political Factors • Political • International • Nationalism: emphasis on “our” country influences trade (buy American) • Trade groups: ease trade among members • EU – lowers trade barriers among European nations (looking East) • NAFTA – Canada, U.S., and Mexico • What do you see as the advantages and disadvantages of each? • Consumerism • Champions individual vs company • Ralph Nader – unsafe @ any speed

20. Legal Factors (1) • Legal (close with political) • Philosophy: • Competition is encouraged • Federal law conveys intent, but not detailed interpretation • Sellers must: • Tell the truth • Meet contracts

21. Legal Factors (2) • Legal (continued) • Regulations: • Food and drugs must be safe & sanitary • Magnuson-Moss Act: warranties • Robinson-Patman Act: price discrimination • Consumer Product Safety Commission (sets standards) • Protects from unsafe products (bicycle – unsafe) • Stricter on children • State/local laws vary (California) • Let the buyer beware (pro-consumer)

22. Should this be an illegal ad?

23. Competitive Factors • Competitors • Fight for market share or profits • Tend to become similar (sodas, beer, any others?) • Competitive barriers • Position difficult to copy (any area of firm) • Marketing helps maintain distinction (image, etc) • Can usually avoid “head on” competition • We love competition, why?

24. Who Killed My Little Pony?

25. Summary • Marketing environment and strategy • Six environments • Social • Economic • Technology • Political • Legal • Competitive • Note: we will over demographic factors in a following unit. • Any questions?