notes mod 3

Business Ethics and Corporate Governance

KSOM Notes by Dr. Sneha

Bangalore University

Semester III

Business Ethics

Module 3 & 4

Introduction

Suppose that putting out natural fires, culling feral animals or destroying some individual members of

overpopulated indigenous species is necessary for the protection of the integrity of a certain ecosystem. Will

these actions be morally permissible or even required Consider a mining company which has performed

open pit mining in some previously unspoiled area? Does the company have a moral obligation to restore

the landform and surface ecology? And what is the value of a humanly restored environment compared with

the originally natural environment? It is often said to be morally wrong for human beings to pollute and

destroy parts of the natural environment and to consume a huge Proportion of the planet's natural

resources. If that is wrong, is it simply because a sustainable environment is essential to (present and future)

human well-being? Or is such behavior also wrong because the natural environment and/or its various

contents have certain values in their own right so that these values ought to be respected and protected in

any case? These are among the issues (questions) investigated by environmental ethics.

Business Ethics in external context is strong consciousness of the responsibility any business has towards

the whole environment it operates within. And this responsibility shall be accomplished not only in terms of

economic and financial returns for shareholders, but in more general terms of attention and compliance to

any issues coming from the territory, the communities, the human resources, Customers and Suppliers, the

Public Institutions the business may have to deal with while pursuing its business targets and environment.

It also explores how code of business ethics respond to their ecology through innovation, strategy, —

operations and marketing.

Over the course of past two decades there has been huge increase in general awareness about ecology.

Ecology is study of plants, animals, people and institutions in relation to environment. As in normative ethics

generally, ecological ethics involves evaluating, justifying (or not), and prescribing values, norms, and

standards of character and conduct in view of the ecological conditions that contribute to the well-being of

humans and other life forms. The current agenda of ecological ethics is molded by contemporary

environmental problems. The primary concerns are climate change, multiple forms of pollution, human

population growing scarcities of some renewable and nonrenewable resources, human-induced losses in

biodiversity, the interactive dynamics of ecological degradation and economic patterns of consumption and

distribution, and, increasingly relevant, the environmental effects of genetic manipulations Coca cola and

Pepsi had caused severe ecological damage ,in 2002-03,in the state ( Himachal Pradesh by painting their

advertisements on rocks. The issue describes the ecologic importance of these rocks and the nature and

extent of environmental damage caused by the companies. Further issue is seen in limelight of the efforts



taken by the companies to repair the damage. Environmental ethics or ecological ethics is an exploration of

ethical issues pertinent to environment, for example: obligations to future generations; the question of

animal right! Endangered species; pesticides and pollution; energy technologies; depletion of resources;

globe justice and ocean resources. Consideration of the pertinent obligations of individual: businesses, and

government.

Q. Explain the meaning of ecology (8 marks)

Ecology is the scientific study of the relation of living organisms with each other their surroundings. It is the

interdisciplinary scientific study of the distribution and abundant of organisms and their interactions with

their environment. The environment of an organism includes all external factors, including abiotic ones such

as climate and geology, and biotic factors, including members of the same species and other species that

share a habitat. If the general life science of biology is viewed as a hierarchy of levels of organization, from

molecule (processes, to cells, tissues and organs, and finally to the individual, the population and the'

ecosystem, then the study of the latter three levels belongs within the purview of ecology. The word

"ecology" was pronounced in 1866 by the German scientist Ernst Haeckel (1834 1919).

Ancient philosophers of Greece, including Hippocrates and Aristotle, were among the earliest to record

notes and observations on the natural history of plants and animals. Modern ecology later branched out of

the natural history that flourished as a science in the late 19t: century. Charles Darwin's evolutionary

treatise including the concept of adaptation, as it was introduced in 1859, is a pivotal cornerstone in modern

ecological theory.

Major components of Ecology are

(a) Environment

(b) Temperature

(c) Light

(d) Water

(e) Wind

(f) Nutrients

(g) Substrate (Rocks & Soil)

(h) Abiotic components

(i) Biotic components

Q. Explain the Scope of Ecology (2 marks)



Ecology is usually considered a branch of biology, the general science that studies living organisms.

Organisms can be studied at many different levels, from proteins and nucleic acids, to cells, to individuals

and at the level of populations, communities and ecosystems to the biosphere as a whole. Ecology is a broad

discipline comprising many sub-disciplines namely; Eco physiology — examines how the physiological

functions of organisms influence the way they interact with the environment, both biotic and abiotic.

Behavioral ecology — examines the roles of behavior in enabling an animal to adapt to its environment.

Population ecology— studies the dynamics of populations of single species. Community ecology (or

synecology) focuses on the interactions between species within an ecological community Ecosystem ecology

studies the flows of energy and matter through the abiotic and biotic components of ecosystems. Systems

ecology is an interdisciplinary field focusing on the study, development, and organization of ecological

systems from a holistic perspective. Landscape ecology examines processes and relationships across

multiple ecosystems or very large geographic areas. Evolutionary ecology studies ecology in a way that

explicitly considers the evolutionary histories of species and their interactions. Political ecology connects

politics and economy to problems of control and ecological change.

Q. Explain Ecological Crisis (2 marks)

An ecological crisis occurs when the environment of a species or a population changes in a way that

destabilizes its continued survival. There are many possible causes of such crises:

It may be that the environment quality degrades compared to the species' needs, after a change of abiotic

ecological factor (for example, an increase of temperature, less significant rainfalls).

It may be that the environment becomes unfavorable for the survival of a species (or a population) due to

an increased pressure of predation.

Lastly, it may be that the situation becomes unfavorable to the quality of life of the species (or the

population) due to raise in the number of individuals, industry and business. As the Ecology crisis arises due

to unfavorable quality of life caused by industry and business, lead us to a new study branch i.e. Ecology and

Business Ethics. .

Q. What is ecology ethics? (2 marks)

Business ethics, for example, must now think not only socially and economically, but also ecologically—

considering moral responsibilities to other life forms and their habitats, present and future, in economic

planning. Henceforth, all ethics must be done in the context of ecological ethics—or else they will be

distorted and constricted ethics. Ecological ethics is the study of what humans, individually and corporately,

ought to value, ought to be, and ought to do in relationships with all other beings and elements in the

biosphere.

As in normative ethics generally, ecological ethics involves evaluating, justifying (or not), and prescribing

values, norms, and standards of character and conduct in view of the ecological conditions that contribute

to the well-being of humans and other life forms. This discipline is diverse in types, methods, values,

problems, foundational perspectives, and other elements of ethics.



Ecological ethics comes in both philosophical and religious versions; the problems and values are often the

same, though the methods and ultimate rationales are often different. The topical agenda of ecological

ethics is molded by contemporary environmental problems. The primary concerns are climate change,

multiple forms of pollution, human population growth, scarcities of same renewable and nonrenewable

resources, human-induced losses in biodiversity, the interactive dynamics of ecological degradation and

economic patterns of consumption and distribution, and, increasingly relevant, the environmental effects of

genetic manipulations.

Q. Establish Link between ecology and ethics (8 marks)

Ethics is a set of principles about right & wrong how human beings should behave.

Ecology is about inter- relationships – between living organisms (both plants & animals) and between

biological & physical entities.

The still unresolved issue seems to be how these two can be reconciled – probably in the interests of the

future of mankind & the future of all the non- human beings. The dichotomy between right & wrong began

to be significant when the needs & efforts of human beings propagated. The ethical question was probably

absent or insignificant when the main theme and effort of human life was survival, as in the hunting

gathering stage. It began to be more & more significant as one abandoned nomadic life style, became

settled within the spread of agriculture which induced a sense of individual and / or communal property.

The surplus food that agriculture created tuned the communities into a human society with diverse skills &

professions and a hierarchy of classes based on wealth & power or their lack & gave rise to different cultures

which reflected aspirations, beliefs & motivations. Environment probably played a crucial role in shaping

these. Human beings were never considered to be superior to nature. The cosmos & the nature were

considered to be so vast and complex that they would always remain beyond human comprehension but it

was not until the Industrial Revolution when the west affected a union between science and technology, a

marriage of theoretical and empirical approaches to nature, that knowledge came to be considered as

technological power over nature.

By the 19th Century conquest of nature became a normal pattern of action. This new pattern of action gave

rise to the concept of ecology As the study of the plant & animal kingdoms progressed, the western thinkers

became increasingly aware of the necessity of preserving these in the interest of human survival and so

arose the need to question the notion of human rights ( & later duties) towards the — human world.

An investigation began in the origins of right & wrong in humans & other animals. People began to discuss

whether the animals have rights, whether trees have a moral standing & how the present generation should

use nature & resources so as to ensure a decent standard of living for future generations. The constant rise

in consumption & pollution triggered a question "should we go ahead destroying everything in the belief

that technology will always find a substitute for everything?"

The other question is whether companies should bear the responsibility of creating and maintaining an

environment conducive to the welfare of people in the neighborhood? The deeper question here is whether



the right to a livable environment should or should not be considered a basic human right? Or is there any

responsibility of Industry and business towards ecology?

These questions lead a way towards establishing a link between ecology and business ethics. To a great

extent these problems can resolved if organizations start following a code of conduct for ecology. The code

of conduct for ecology is known as Ethics of Ecology or Ecological Ethics.

Q. Discuss different dimensions of pollution and resource depletion (12 marks)

The accelerating industrialization of the world, especially in addition to worldwide population explosion,

suggests that we may be overtaxing the carrying capacity of earth by our accelerating pollution of the

environment and depletion of resources.

There is considerable evidence that this is so. Resource depletion involves the consumption of finite or

scarce resources. Pollution involves the undesirable contamination of the environment by the manufacture

or use of commodities. Since clean air and water can be considered as resources, pollution, since it

diminishes their useful qualities, can be viewed as a form of resource depletion itself. Depletion

For the most part affects future generations.

Concerned with finite nonrenewable resources.

What will be around for future generations is just what's left over from the present.

For example crude oil, natural gases, coal, petroleum, water, minerals, gold, Endangered Species, energy

etc.

The dimensions of our pollution and resource depletion are unbelievable.

We pollute the air with carbon dioxide (CO2) and other greenhouse gasses: this causes global warming.

Chlorofluorocarbons (CFCs) deplete the ozone layer that protects us from harmful ultraviolet (UV) radiation.

Nitrogen and sulfur oxide emissions react with water in our atmosphere to cause acid rain which kills fish

and vegetation in lakes, and causes deforestation.

Assorted airborne toxins and particulates contribute to respiratory disease and cause cancer. We pollute

our water with phosphorous compounds from detergents and agricultural fertilizer which causes explosive

algae growth.

Organic wastes from sewerage, runoff from animal' feedlots also contribute to explosive algae growth as

well as oxygen depletion in lakes, and directly endanger human health. Toxic inorganic pollutants such as

heavy metals find their way into aquatic food chains and our drinking water.

Oil spills kill wildlife, are detrimental to tourist and fishing industries, and require expensive cleanup. Even

heat can pollute, when: we use water as a coolant in nuclear reactors and industry, it disrupts marine

habitats. Our oceans are the end recipients of the pollutants that go into our lakes and rivers, and have been

used as disposal sites themselves.



Our groundwater supplies, which provide more that 50% of U. S. drinking water, and are at risk from runoff

from landfills, waste piles, and surface reservoirs.

Toxic substances — which cause increase in mortality rates, or in irreversible or incapacitating illness, or

have other seriously adverse health effects — include acids, pesticides heavy metals, flammable solvents,

and radioactive wastes.

Our use of such substances increase tenfold increase from 1970 to the mid-80s and pose a multitude of

health risks which a difficult to assess. Solid waste from residential and industrial sources, likewise, poses

health risks from direct human exposure, and contributes to groundwater contamination. At present no safe

method of disposing of high-level nuclear wastes — which remains dangerous radioactive for thousands of

years — is known; and the nuclear power industry poses security) risks as well, since plutonium (used in

nuclear reactors) can also be used to make atomic bombs.

Following are few examples when industry/business damage environment

Tobacco production damages environment

• The land that has been destroyed or degraded to grow tobacco has effects on nearby farms. As forests,

for example, are cleared to make way for tobacco plantations, the soil protection it provides is lost and is

more likely to be washed away in heal rains. This can lead to soil degradation and failing yields.

• A lot of wood is also needed to cure tobacco leaves

• Tobacco uses up more water, and has more pesticides applied to it, further affecting water supplies. These

water supplies are further depleted by the tobacco industry recommending the planting of quick growing,

but water-thirsty eucalyptus trees.

• Child labor is often needed in tobacco farms.

Damage Caused by Sugar Industry Sugar is present in products we consume every day, yet we rarely give a

second thought to how and where it is produced and what toll it may take on the environment. According to

the World Wildlife Fund (WWF), roughly 145 million tons of sugars are produced in 121 countries each year.

And sugar production does indeed take its toll on surrounding soil, water and air, especially in threatened

tropical ecosystems near the equator. A 2004 report by WVTF, titled "Sugar and the Environment," shows

that sugar may be responsible for more biodiversity loss than any other crop, due to its destruction of

habitat to make way for plantations, its intensive use of water for irrigation, its heavy use of agricultural

chemicals, and the polluted wastewater that is routinely discharged in the sugar production process.

Damage Caused by Paper Industry

The Paper industry has been a major source of accumulated toxic chemicals in several rivers.

The paper industry is major source of toxic pollution.



Pulp and paper mills are large source of standard air pollutants such as carbon- di- oxide, nitrous -dioxide,

carbon mono oxide etc. These contribute to ozone warning, acid rain, global warming, respiratory problem

etc.

Paper making is energy intensive, drawing large amount of electricity from public utilities or forcing mills to

build their own power plans.

Paper making uses lot of water frequently from diminishing groundwater supplies.

Paper making generally produces large quantity of solid waste.

Worldwide enormous forests are being cut for paper pulp production contributing to the world tragic

deforestation trends. The activities carried out by businesses can exert considerable pressure on the

environment. There is an obvious conflict between business ethics and environment.

Profits are routinely juxtaposed with doing the right thing, as if making an ethical decision means profits

must be reduced. The environment is rarely considered central to business strategy unless there is some

regulation that constrains business goals, a mess to clean up, or a public issue which pits executives against

environmentalists.

Q. Explain contribution of industry in conservation of depletable resources (2 marks)

Conservation through improvement of the efficiencies of end use devices is one of the most effective ways

to provide relief for the resource problem. This helps to maintain economic growth and social progress of a

region. Environmental problems, resource depletion and growing demand of resources in the state/region

make it increasingly imperative that we use resources as efficiently as possible, and planners should take

note of this untapped resource.

The industrial sector constitutes a major consumer of depletable resources. Some of the steps which should

be taken by industries for conservation of depletable resources are as follows:-

• improve the efficiencies of end use devices and/or conversion equipment in all sectors;

• optimize energy sources (end use matching);

• maximize the use of renewable resources;

• balance the exploitation of resources; and

• Discourage the use of depletable resources.

To achieve the objective of conservation of depletable resources a new strategy which is taken by industries

is Green strategy



Q. What is green strategy? (8 marks)

The Green Strategy is a planning tool. It sets out sustainable development practices that aim to strike a

balance between economic development, maintaining the citizens' quality of life and preserving the

environment. If this balance is achieved, future generations will be able to enjoy and benefit from the same

natural resources we have today. In the next future the green revolution would affect every business

activity.

Consumers, governments, regulators and, increasingly, businesses are seeing green. A growing wave of

global environmentalism is forcing technology companies to produce greener products through greener

processes. Though the industry does not feel it is particularly harmful to the environment, a solid majority of

technology executives believe it is very important that their companies take measures to reduce or minimize

their environmental impact.

Thus, tech companies are taking steps both the fundamental requirement of inclusive fitness to their

surroundings. They have many operations among ways to do this but sooner or later must do it one way or

another, for better or worse for themselves and the fauna, flora, and ecosystems in which they reside."

Environmental ethics is becoming an important issue for many companies and businesses as there is a

greater push for corporate responsibility.

Leaders of organizations of all sizes and in all sectors face a growing number of issues related to ethical

behavior particularly ethical responsibility. However, there is no agreed ethics for environmental issues, and

no international environmental code.

Environmental ethics simply tries to answer the questions of how humans should relate to their

environment, how we should use the Earth's resources and how we should treat other species, both plant

and animal, but there are also those who are of the opinion that constant change is simply a fact of this

planet and the planet will readjust to new conditions as it did in the past. There are differences among

scientists as to the exact cause and nature of environmental problems and how to solve them, and so there

are differences in the approaches to environmental ethics; some think the traditional forms of ethical

thought are good guides and some that these traditional forms (at least in the West) are too human-

centered.

To expand the number of green-oriented products they produce and to reduce the reality or the appearance

of a heavy environmental footprint. For example, technology companies are developing formal

environmental policies, auditing internal green practices, appointing a senior executive to oversee green

initiatives and creating a clearer linkage between green initiatives and performance. A growing number are

also increasing the degree of external reporting relating to environmental sustainability.

Q. What are environmental ethics (8 marks?)

Environmental ethics is the part of environmental philosophy which considers extending the traditional

boundaries of ethics from solely including humans to including the non-human world. Environmental ethics



considers the ethical relationship between people and the natural world and the kind of decisions people

have to make about the environment:

Should we continue to cut down the rain forests for the sake of human consumption?

Should we continue to manufacture petrol-driven cars when we have the technology to make cars which do

not pollute the environment?

Should we knowingly cause the extinction of other species?

What are our environmental obligations to future generations?

Should humans be forced to live a simpler lifestyle in order to protect and preserve the environment?

Industry are engaged in manufacturing activities as well as repairing of manufactured goods, operating on a

commercial basis.

The raw materials of industries come from naturel these industries are being established in an unplanned

way only to serve the financial interests' of a group of people. The mere economic interests of a group of

people are destroying and polluting the nature.

In Environmental Ethics, Holmes Rolston says, "Nature, and particularly the organic world, is subject to

constant change as a result of man's economic activity. These changes include a reduction in the areas of

vegetation, the acidification of the soil and water, industrial wastes, including some highly toxic substances,

polluting the air, oceans and the soil, the combustion of large quantities of fossil fuels leading to an increase

in the carbon dioxide concentration, which may result in changes in the health regime of the earth's surface.

Throughout society's history man has modified his relations with nature, mostly in terms of the directions

and scale of his action. At the beginning man and society had a purely consumer attitude to nature; later this

consumption began to grow and take different forms. Not only did people use material provided by nature,

they processed it, giving it new properties alien to the natural world. From that moment consumer relations

were replaced by an attitude of dominating nature, extensively exploiting its resources. But this attitude to

nature should be changed, improving the relation between human and nature and every organism must be

a natural fit, integrated into a life-support system. In the wild, misfits cannot flourish and are eventually

eliminated. However, much human business revises spontaneous nature, primarily by deliberately adapting

the environment to humans rather than humans to the environment, humans do not escape.

Q. How are Environmental ethics is applicable in the following areas Land, Water, Forests, and Dams

(12 marks)



Technology has rapidly changing the earth. These changes have accelerated as man moved from a

hunter/food gatherer to a member of an agricultural society and finally into the industrial age. Many of the

present technological changes are irreversible, damaging to the land and clashing with our increasing

scientific knowledge of how biotic communities function. Individuals are faced with a moral environmental

responsibility

The land ethic is a perspective on environmental ethics first turned by Aldo Leopold (1887— 1948) in his

book A Sand County Almanac (1949). In it he wrote that there was a need for a "new ethic", an "ethic

dealing with man's relation to land and to the animals and plants which grow upon it. Aldo Leopold's land

ethics offers an alternate approach and extension to the utilitarian view of the environment. He concluded

his land ethics with a general principle: "A thing is right when it tends to preserve the integrity, stability, and

beauty of the biotic community. It is wrong when it tends otherwise." Land to Leopold had a broad meaning.

It included soils, waters, plants and animals. Water has an economic value in all its competing uses and

should be recognized as an economic good. Within this principle, it is vital to recognize first the basic right of

all human to have access to clean water and sanitation at an affordable price. While water resource

management and water conservation is to start practically everywhere on Earth, freshwater resources are

scarce and fragile, requiring us to be conscientious about conserving this life-giving resource Water ethics

focuses on water

1) Water resource management: There are ethical issues imbedded in all aspects of water management

decision making, including planning, regulating, operating, financing and investing, designing, and

implementing. Decision-makers should understand the linkage between development strategies and issues

of water allocation, supply and pricing, and consider decisions in the context of macro-economic national

and regional strategies. The reality is that water is used as a factor of production and managed as a

commodity, in some degree, by all societies. Whether explicit or not, it is valued and it clearly incurs

opportunity costs. However, all the costs and benefits are not and cannot be reduced to quantifiable

currencies. Water is priced in some way by all societies. Although water pricing needs to be taken into

account water costs, we must acknowledge the role that subsidies have played and are realistically going to

play in the future. Because of the complexities of these issues, broad public access to information and

opportunity to participate in decision-making are ethical imperatives in determining water prices and the

most appropriate institutional structures for water management.

Perform a water audit to benchmark plant-wide water use. Identify where and how water is currently being

used. Track water use over several weeks.

2) Determine the cost of the water going to each process line. These costs can be used to determine the

level of conservation that is feasible and to justify modifications with payback. 3. Establish a water

conservation team to evaluate conservation ideas, methods and equipment. 4. Obtain conservation

information from vendors, trade associations, consultants and state agencies. 5. Educate employees on the

importance of water conservation and solicit employee suggestions on ways to use water more efficiently.

Your company can save more than water with a conservation program. In Connecticut, several companies

have avoided costly expansions to their on-site wastewater treatment systems by reducing water use. Other



companies have eliminated or significantly reduced their wastewater discharges. Almost every

manufacturer that uses water can find some benefit in reducing, reusing or recycling water.

The current debates over private versus public roles in water management are too narrowly.

Forest focused and sometimes ignores important historical realities of the developed countries which e

Forest ethics is about moral values and norms on the relationships between human beings are advocating

increased privatization. Today, privatization is often seen as a way to increase and forests. Moral values and

norms are the essence of morality.

Companies large and small efficiency and to bring more water to more people (i.e., to democratize water

and sanitation) have made great strides in relying on forest certification standards for sourcing wood and

However, privatization also raises a question of open information flow and transparency paper products.

Organizations which operate to seek a profit are frequently not as prone to share critical Marginalized forest

dependent communities, and the organizations that are working to information on water flow or water

quality as their public counterparts, particularly were support them, need to benefit if a greater focus on

ethical issues is to have any validity. There is a weak regulatory environment, needs to be practical action

against agencies that are routinely involved in carrying out human Water management also confronts us

with the reality of conflicting human rights . Conflicts rights abuses in relation to forestry clearly there are

strong links between national governments over water arise from a variety of causes. Water is forcing us to

rethink our notions of security, and commercial enterprises — illegal harvesting and sale of forest products

is a large scale dependency, and interdependency. Increased interdependence through water sharing plans

activity and not easily hidden. Transport of large logs is highly visible whether by road or sea and

infrastructure networks is often viewed as increasing vulnerability and dependence and yet this issue is not

addressed — often due to the poor compliance monitoring in relation to reducing security. However, there

is an alternative way to look at interdependence. Connections legal and illegal harvested forest products

Dams are clean, reliable, and cheap ways to produce electricity. In addition to this they consumption to

some rather sophisticated and expensive technologies to completely eliminate are exceptionally valuable for

prevent floods that would normally making housing near that water use. Only you can determine to what

extent water conservation makes sense for your river next to impossible. However the problem that dams

cause is that they prevent fish from company being able to swim upstream, the heat generated by them

tends to kill sea life making these rivers pretty uninhabitable for creatures in the river. Many people oppose

dams because they change the flow of rivers and affect the migrating patterns of fish and other, faulty

design of tyres, automobiles, electrical dangers in appliances and injury risks from species, but aren't they

also a great renewable energy source?

Q. Relate business ethics and consumer (8 marks)

When profit maximization and wealth maximization are main objectives of organizations using misleading

labeling, or describing size in misleading terms. For example Apple it is difficult to always be in 100% ethical

practices. The practices taken by organization fizz bottle resembles champagne bottle. Children can get

carried away by packaging and right or wrong for consumers, is consumer ethics.



Another example is candy designed like cigarette. Deception on for consumer is main motto of consumer

ethics.

In our day to day life we come across and control .Some public and private transport carry passengers more

than its capacity (unethical practices of organization with consumer). Consumer generally purchase and is

inaccurate and incomplete testing of product Increased prices and then discount. Very products with little or

no knowledge about the origin frequently seen in the market.

Small as well as big retailers use the psychology of consumer to Consumer ethics focuses on increase their

sale, by proving discounts. Generally these discounts are provided on increased arise of products. Promoting

ordinary product as luxury product Low product price but very U Identifying unscrupulous corporations that

exploit people or animals;, and increase social poverty, inequality, and deprivation sigh service cost Many

retailers pass off MRP Several agricultural products use harmful the chemicals and pesticides, some are even

genetically tampered for taste, variety and abundance

Allowing us to share information on fair trade products or services of production without careful study on

side effects of its consumption. Exposing workplace injustices, sweatshops, and child labor violations

Harmful and Low benefit Products: Producing harmful products like tobacco based U Identifying companies

that value their employees and customers, that promote Gutka, cigarettes and Alcoholic drinks are a

concern just as promoting products that lack living wages and equality and fairness in the workplace,

provide safe and nutritional value like Maggi noodles, Frito-Lay potato chips, Chocolates and even junk food

working environments, and maintain sustainable business and environment like the fast food from

McDonalds practices

Q. Relate corporate ethics and marketing (8 marks)

Finding products that are safe to use or healthy to consume, Marketers across the world face an ethical

dilemma on marketing issues like distributor Recognizing consumer addiction and consumer propaganda

relations, advertising standards, Customer service, pricing, product development, and general

Understanding and voting against economic legislation that is unfair or predator sensitivity to ethical and

moral issues. The different ethical practices and social responsibility the initiatives personal value system of

Managers, company's attitude, culture and Consumer is integral part of market.

So, Consumer ethics lead to market ethics. One corporate philosophy can be developed through preparation

of a set of principles ethics means standard by which marketing action of an organization is judged right or

wrong which can act as a guideline to resolve all the difficult ethical situations the marketer faces, Right

marketing action leads to overall societal gain in short run as well as long run. But since the adherence to

sales producing strategy can often result in immoral or amoral actions fact is that seldom it has become

possible to define what is right and what is wrong?

The socially responsible and ethical behavior go beyond the legal and develop into standards of personal

integrity, effects, example azinomotto which is a taste enhancer but lot of negative side effect which

corporate conscience, and long run consumer welfare not declared by company. In the wake of globalization

often multinational companies face different norms of ethics unsafe product.



This concerns the production of flawed products due to company and social responsibility in each country.

The total corporate commitment towards these issues indifference, increased product complexity, and poor

quality control. The examples could include alone can bring success. Marketers must become aware of the

ethical standards and acceptable behavior in their society. In the USA a high level of awareness has

developed on these issues, and American Marketing Association has prepared guidelines on ethical norms

and values practice can occur when working with any element of the marketing mix.

Consumer’s information helps marketers to become effective in Corporate Citizenship. In fact it ranks Top

100 fortune be exposed to eat quantities of information about products and firms, they often becomes

skeptical of marketing claims and selling messages and act to protect themselves from being companies

each year on their corporate citizenship records received. Thus, when a product or service does not provide

expected value, customers will

Q. Identify issues related to consumer ethics (8 marks)

Often seek a different source. Consumer Protection Deceptive pricing practices cause customers to believe

that the price they pay for some might of value in a product or service is lower than it really is. The

deception might take the Consumer of making false price comparisons, providing misleading suggested

selling prices, omitting important conditions of the sale, or making very low price offers available only when

other Deceptive items are purchased as well. Promotion practices are deceptive when the seller

intentionally introduces deceptive pricing how a product is constructed or performs, fails to disclose

information regarding dynamic sales (a sales technique in which a person is recruited into a plan and then

expects to With the wave of globalization and liberalization the economy has become market driven make

money by recruiting other people), or employs bait-and-switch selling techniques economy. This has given

rise to the need and importance of Protecting consumers. There a technique in which a business offers to

sell a product or service, often at a lower price, in order various dimension of consumer protection ,be it

food, safety, drugs, agriculture etc., Consumer to attract customers who are then encouraged to purchase a

more expensive item).

False or are not aware of their rights and responsibilities. Prior to end of the nineteenth century, greatly

exaggerated product or service claims are also deceptive. When packages are consumer was almost

powerless to stop any wrong doing it was receiving at the hands of conventionally mislabeled as to contents,

size, weight, or use information that constitutes artists, manufacturers of shoddy goods and dishonest

salesmen. Ever since then, consumers' rights advocates. Government have been trying and succeeding little

by little to place consumer protection before Question arises how ethical for organization to practice

deceptive marketing strategies? Profit. Consumer protection is all the activities of government, business and

consumer who is not well informed about the product or such tactics, sometimes they feel organizations

designed to insure consumers' rights in the marketplace being cheated by the sellers. Consumers are

generally carried away by misleading promotional every country has designed their own Consumer

protection laws or Consumer Protection acts and glorious advertisements. Act. Consumer protection laws

designed to ensure fair trade competition and the free '' "SALE", DISCOUNT OFFERS are live example of

deceptive marketing, when we don't get of truthful information in the marketplace. The laws are designed



to prevent businesses of what is shown in offers. Engage in fraud or specified unfair practices from gaining

an advantage over competitors at Endorsement of celebrities in product advertisement.

A small example: Amitabh Bachchan may provide additional protection for the weak and those unable to

take care of themselves. Consumer Protection laws are a form of government regulation which aim to

protect the right lying to convince us that Navratna Tel is the best and that Rin washing powder is the

perfect detergent for clothes. Is he really using it? of consumers. For example, a government may require

businesses to disclose details information about products—particularly in areas where safety or public

health is an issuing Kareena Kapoor endorsing Boro Plus – It wouldn't be so funny if she didn't say in her

such as food. Consumer protection is linked to the idea of "consumer rights" (that consume! interviews that

she only uses imported brands. have various rights as consumers), and to the formation of consumer

organizations which recently in 2009 a cheating and mental suffering court case was filed by one person

help consumers make better choices in the marketplace.

Q. Explain consumer privacy/customer privacy. (2 marks)

Consumer privacy, also known as customer privacy, involves the handling and protection if customers

believe they will get more value from a product or service than they actual1of sensitive personal

information that individuals provide in the course of everyday transactions. Deception, which can take the

form of a misrepresentation, omission, or misleading. This involves the exchange or use of data

electronically or by any other means, including telephone, fax, written correspondence, and even direct

word of mouth.

Q. Explain “Protection Of Consumer Privacy In India”. (2 marks)

Consumer privacy is concerned with the manner in which information disclosed by consumer to a vendor is

collected and used. Specific issues include: behavioral advertising .Broadly, there are four potential avenues

for the protection of consumer privacy in India. Spyware, identity management, and data security/breach,

increasingly, data that is collect from.

1) Individual organizations may voluntarily commit to protect the information of their from consumers is

stored in databanks.

This is then used for both legitimate purposes (such 'clients through "Privacy Policies" These become a

component of the contractual commitments marketing, research etc.) and illegitimate extraneous purposes

(as when this data is sold between the service providers and customers and are enforced through ordinary

civil litigation. bulk to third parties). Additionally, the privacy of consumers may be compromised by action

2. Certain professions and industries have codes of privacy that they must statutorily of third parties that are

facilitated by the negligence of the vendors. The following international examples illustrate the kinds of

privacy they abide by this is true of such professions as the medical profession and the legal profession in

that the collection of data from consumers may pose.

India and the entire banking industry and the telecom industry. Rigorous privacy norms are set for each of

these industries by their respective apex governing bodies.



Penalties for breach Example

1) Toysmart — an online company- collected personal information from its use include derecognition and

monetary penalties. In 2000, Toysmart entered bankruptcy and used the consumer information unethically.

Consumer privacy may be enforced by the specialized Consumer Dispute Tribunals avoid losing everything

tried to sell its database despite its strict privacy policy. This exam illustrates how vendors may attempt to

monetize the personal information of custom 'under the Consumer Protection Act in India exceeding the

terms of the contract entered into with them.

The newly amended Information Technology Act imposes an obligation on anyone controlling CONSUMER

data to indemnify against losses caused by the leakage/improper use of that data. Example

2) In 2006 it was found that AOL's research site had a stored file that contain information collected from

more than 600,000 users between March to May of 2006. Though PROTECTION ACT, INDIA the file did not

indicate each user by name, it was eventually found that there was now The Consumer Protection Act 1986

is a social welfare legislation which was enacted as an information to correlate specific individuals to their

user number.

Q. Explain the Organization for Economic Co-Operation and Development (OECD) (12 marks)

They observe the principles of natural justice and have been empowered to give reliefs, of specificature and

also to impose penalties for noncompliance of the orders given by such bodies. The main object of these

bodies is to provide speedy and simple redressal to consumer `disputes. The provisions of the consumer

protection Act, 1986 came into force with effect from 15-4-87. Consumer Protection Act imposes strict

liability on a manufacturer, in case of supply of defective goods by him, and a service provider, in case of

deficiency in rendering of its services. The term "defect" and "deficiency", as held in a catena of cases, are to

be couched in the widest horizon of there being any kind of fault, imperfection or shortcoming.

Furthermore, the standard, which is required to be maintained, in services or goods is not to be restricted to

the statutory mandate but shall extend to that claimed by the trader, expressly or impliedly, in any manner

whatsoever.

The salient features of the Act are: (I) It covers all the sectors whether private, public, and cooperative or

any person. The Provisions of the Act are compensatory as well as preventive and punitive in nature and the

Though not a law, the OECD Guidelines drafted in 1980 provide a useful set of 1 information practices'

within which privacy of consumers may be evaluated. Briefly, the principles declared were: Collection

limitation principle (there should be limits to the collection of data), data quality principle (data should be

accurate and relevant to the purpose of specification principle, use limitation principle, security safeguards

principle, openness principle (there should be openness about data policies and changes there individual

participation principle '(enabling the individual to find out if data is bell held about him and to obtain a copy

of the data and make corrections) and

Act applies to all goods covered by sale of goods Act and services unless specifically exempted by the Central

Government; (II) it enshrines the following rights of consumers:



(a) Right to be protected against marketing of goods and services which are hazardous to life and property

(b) Right to be informed about the quality, quantity, potency, purity, standard and price of goods or service

so as to protect the consumers against unfair trade practices;

(c) right to be assured, wherever Grant of Reliefs under CPA On arriving at a finding of defect in the goods

according to Section 14 CPA, the jurisdictional possible, access to a variety of goods and services at

competitive prices;

(d) Right to be hear Consumer Forum may direct one or more of the following:

(i) To remove the defect;

(ii) To and to be assured that consumers' interests will receive due consideration at the appropriately

replace the goods with new goods of similar description which shall be free from any defect

(e) Right to seek redressal against unfair trade practices or unscrupulous exploitation c- to return to the

complainant the price;

(iv) To pay such amount as may be awarded as consumers; and

(f) right to consumer education; compensation to the consumer for the loss or injury suffered by the

consumer due to the

(III) The Act also envisages establishment of Consumer Protection Councils at the negligence of the opposite

party;

Goods which will be hazardous to life and safety when used are being offered for sale to the public in

contravention of the provisions of any law requiring traders to display information in regard to the contents,

manner and effect or use of such goods.

To discontinue the unfair trade practice or the restrictive state and district levels, whose main objectives are

to promote and protect the rights 'trade practice or not to repeat them;

To cease and desist manufacture of hazardous goods; consumers;

To provide a simple, speedy and inexpensive redressal of consumer grievance

To pay such sums as orders if injury/loss is suffered by a large number of consumers not the Act envisages a

three-tier quasi-judicial machinery at the national, state and district level identifiable conveniently;

(viii) to issue corrective advertisement for neutralizing effect of These are: National Consumer Disputes

Redressal Commission known as National Commission misleading advertisement;

(ix) not to offer the hazardous goods for sale;

(x) to withdraw the State Consumer Disputes Redressal Commissions known as State Commissions and

Districts from hazardous goods from being offered for sale;



(xi) to provide for adequate costs to parties (the Consumer Disputes Redressal Forum known as District

Forum; and Complainant).

Q. What is Ethical Consumerism (8 marks)

Ethical Consumerism is the intentional purchase of products and services that the customer considers

to be made ethically. This may mean with minimal harm to or exploitation creation of humans, animals

and/or the natural environment. Ethical consumerism is practiced through Commission started functioning

from 24 September 2003.

The government is monitoring positive buying' in that ethical products are favored, or 'moral boycott',

that is negative disposal of cases by the consumer courts through National Commission.

(a) Positive buying

(b) Moral boycott

Positive Buying means favoring ethical products, be they fair trade, cruelty free, organic, recycled, re-

used, or produced locally. This option is arguably the most important since it directly supports progressive

companies.

Moral boycott is the practice of avoiding or boycotting products which a consumer believes e be

associated with unethical behavior. An individual can choose to boycott a product.

Q. Name the theories of product liability/duties of manufacturer toward customers (2 marks)

The responsibility of manufacturers, distributors and sellers of products to the public, b, Product safety

concerns the degree of risk associated with using the product. Here, since deliver products free of defects

which harm an individual or numerous persons and to mail° product is absolutely risk free, acceptable

known levels of risk is the operative concept. good on that responsibility if their products are defective.

These can include faulty auto brakes the seller has a duty to provide a product with a level of risk no higher

than they have contaminated baby food, exploding bottles of beer, flammable children's pajamas, or lack

expressly or implicitly represented to the customer, which the customer has freely and knowingly label

warnings, agreed to assume.

The duty of disclosure is a duty of the seller to inform the buyer of both the Examples Beauty Queen

Hair Products makes a hair-permanent kit in which the formulate terms of the contract and to provide any

information about the product that might reasonably : influence the customer's purchase decision: this

includes risks, on all accounts, and on some will cause loss of hair to women with sensitive scalps, (more

stringent accounts) performance characteristics, costs of operation, product ratings, and Molly Makeup has

her hair done at the Bon Ton Beauty Shop and suffers scalp burns as applicable standards, besides.

The duty of true representation is to the duty of disclosure as loss of hair. Molly has a claim for damages

against Beauty Queen, the manufacturer.



The theories of product liabilities are:

• Contractual theory

• The Due Care Theory

• The Social Cost Theory

Q Explain Contract Theory (2 marks)

Caveat Emptor “Let the buyer beware "watch word for contact theory. On the contract; they view of

businesses duties to consumers, when a customer buys a product they enter into a "sales contract" with the

vendor. The vendor freely and knowingly reality, who agrees to give the buyer a product with certain

characteristics, and the consumer freely and knowingly agrees to pay certain amount of money for the

product.

From these 3 conditions 4 main moral duties of businesses to consumers arise:

• A duty of compliance with the terms of the contract;

• A duty of disclosure regarding the nature of the product; a

• Duty of true representation of the nature of the product and the terms of the agreement;

• A duty not to exercise undue influence in persuading the customer to enter into the contract.

Q: Explain the due care theory (refer to the notes of 2nd module) (8 marks)

Q: Explain the social cost theory /social costs view of the manufacturer's duties. (2 marks)

The view that a manufacturer should pay the costs of any injuries through any defects in the product,

even when the manufacturer exercised all due care in the design and manufacturing.

• Manufacturer should pay the costs of all injuries caused by defect in a product if any of them. Media,

today is the fastest means of communication and advertising reaches out exercised due care to countless

people in one go. The new products can be launched through T.V, Radio etc.

• Argues that injuries are external costs that should be internalized.

The social costs theory imposes strict liability for costs to consumers due to the malfunction or misuse of

consumer products on those products' manufacturers and vendors.

Q: Explain Ethics in advertising (2 marks)



On this view, How many of us miss out on the beauty soap flashed on our TV screens displaying the

manufacturer should pay the costs of any injuries sustained through the use of the product glamorous

models and then ensure to buy the same. This is the power of advertising.

Advertising promises more choice, better value new and improved products. As time is a major

constraint even when the manufacture has taken due care in the products design and manufacture, and is

the present rush of life where people do not have enough time to survey the different in informing

customers about the risks, and in instructing them in the proper use, of the products offered in the market,

advertising provides them an easy solution and access to all products. Under strict liability absence of

negligence or lack of knowledge are not excusatory. kinds of products.

Only the resultant harm matters, the only relevant considerations in assessing liability are whether the

product caused the injury and the extent of the injury In particular, evidence of?

Today advertisement is more near to people than any other promotional way. Advertisement misuse is

inadmissible.

Appropriateness advertisement action for public is even if Advertising ethics internalizing external costs

of production since injuries resulting from products — unavoidable — are part of the products total social

cost.

Internalizing the costs, it is argued an advertisement is ethical only when it is able to meet following

principle would lead to fairer distribution of costs, market prices that more truly reflect total social costs

An advertisement is ethical only when it is able to meet following principles:

Truthfulness and safer products.

Upholding human dignity

Social responsibility

notes mod 3

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