3
Ethics and Social Responsibility
Professor Close
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?
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
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
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)
Marketing Environment (3)
• Compatibility is a key
• Question to consider: do you think WalMart can focus on both quality and price?
What about their labor issues?
Simpsons on Wal-Mart
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?)
Marketing Environment (5)
• Preferable Combination
– Example: Wal-Mart - financial, distribution,
and relationships
– What other example can you think of that has
a strong combination?
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
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)
Lipton is Asia…Think it will work?
Finding Opportunities (3)
• Types of opportunities:
– Product development
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Current markets, new products
Examples: autos, fashion, and what else??
Advantages include knowing the customer already
Disadvantages include cannibalization (Gillette)
Finding Opportunities (4)
• Types of opportunities:
– Diversification
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New market and product
Examples: McDonalds and what else??
Advantage includes high potential
Disadvantage include high risk (ITT – Sheraton)
Social Factors
• American values (upward mobility, work
ethic, self-sufficiency, conformity)
– Culture: manner in which people live
– Very broad
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Women’s role (U.S. vs Japan)
Fitness
Debt
Time-poor society
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?
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??)
Technology Changing Lifestyles
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
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
Legal Factors (2)
• Legal (continued)
– Regulations:
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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)
Should this be an illegal ad?
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?
Who Killed My Little Pony?
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?