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8/4/2019 Mit Bba Be Semv Partii
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Consumer Safety and
Protectiony Origin was studies funded by organizations
themselves regarding safety of products and its
featuresy There are several cases where organizations have
behaved with great disregard for consumer safety
y There are also several cases where large volumes of products have been recalled due to even a singleidentified case of unsafe product
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Continued..yConsumer safety should be one of the most
fundamental ethical principles for
manufacturers
y Johnson and Johnson we believe that ourfirst responsibility is towards the doctors,
nurses, patients, mothers and fathers and allothers who use our products
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Contract Viewy The contract view of organizations to its
customers:
y When a consumer buys a product, the consumerenters into a sales contract with theorganization. Therefore, duties are:
y Duty to comply reliability, service life,maintainability and safety
y Duty of disclosure
y Duty to not to misrepresent
y Duty to not to coerce
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Continued..y Duty to comply
y Reliability product will function as it is led to
expect that it will functiony Service life time period for which the product will function as effectively as led to believe
y Maintainability ease with which a product can
be repaired and kept in operating conditiony Safety degree of risk associated with a product
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Continued..y Duty of disclosure
y Refers to ingredients, product ratings, cost of repairs,
performance etc.y Duty to not to misrepresent
y Misrepresentation leaves people with no choice
y Deceiving a buyer into thinking something about a
product that the seller knows is falsey Duty to not to coerce
y Taking advantage of buyers insecurity, gullibility etc.
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Consumer Safetyy Danger inherent to some activities and products:
y Bungee jumping
y Flying in planesy Driving cars
y Using new products
y Using heavy machinery and tools
y How much harm is safe?
y How much safe is safe?
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Continued..y Just as much is practicable and attainable
yGeneral public will need intervention of
experts and technicians to decide on safety of each product
yProducers usually end up giving a base level
safety to all consumers, and compete on thebasis of additional safety features andreduced risks
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Continued..a few questions..y Is it ethical only to produce as per prevalent
laws and regulations?
y What are obligations of the company when adefect becomes known after the product hasgone into widespread use?
yHow much should a company consider itself responsible for abuse of the product?
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Continued..yUsing animals for pharmaceutical
testing vis a vis cosmetic producttesting
yUsing products made for one type of
environment in another, making themunsafe
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Liability LawsyEarlier - Caveat Emptor onus on buyer
yNegligence Theory buyer needing to provethat manufacturer failed to exerciseadequate care
yStrict Liability holds manufacturer liable
regardless of anythingy Absolute Liability holds manufacturer
liable only for harm caused by defective
products
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Consumer Movement and
Educationy It is a movement which safeguards interests
of consumers from being exploited by
sellers in situations like artificial scarcity,black marketing, defective goods selling etc.
y It creates a sense of belonging for consumers
and educates them about unfair tradepractices
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Continued..y It results in social awareness by creating
grievance handling cells, fair price shops,
and voluntary organizations for consumerprotection
yConsumer education is a necessity under theConsumer Protection Act of 1986
yThe objective is to create awarenessregarding rights and remedies available
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Continued..ySome type of products routinely need
consumer education:
y InvestmentsyTrademarks and grades on brands
yLoans
yTechniques used to make consumers awareinclude lectures, exhibitions, newsletters,newspapers, agitations etc.
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C P Act - 1986y Objectives:
y Better protection of interests of consumers
y
Make provisions for establishment of consumer councilsy Authorities for settlements of consumer disputes
y Power to lodge a complaint directly with themanufacturer, and then to the District Forum, if
unresolvedy Power to lodge a complaint against public sector
companies and public utility services
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Continued..y To provide simple, speedy and inexpensive
redressal of consumer grievances, the Act
envisages a three-tier quasi-judicial machinery atthe national, state and district levels.y National Consumer Disputes Redressal Commission
known as National Commission
y State Consumer Disputes Redressal Commissions
known as State Commissionsy District Consumer Disputes Redressal Forum known as
District Forum
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Continued..y General directives to do one or more of the
following:
y to remove the defect pointed out by theappropriate laboratory from the goods inquestion;
y to replace the goods with new goods of similar
description which shall be free from any defect;
y to return to the complainant the price, or, as thecase may be, the charges paid by the
complainant
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C S Ry Corporate Social responsibility (CSR), also known
as Corporate Responsibility, Corporate
Citizenship, Responsible Business, SustainableResponsible Business (SRB), orCorporate SocialPerformance
y Form of self regulation integrated into business
models
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Continued..y A business is expected to take on responsibility for the
impact of its activities on the environment,
consumers, employees,communities, stakeholders and all other members of the public sphere
y CSR-focused businesses should proactively promote
the public interest by encouraging community growthand development, and voluntarily eliminatingpractices that harm the public sphere, regardless of legality.
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Continued..y Essentially,CSR is the deliberate inclusion of public
interest into corporate decision making, and honoring
of a triple bottom line People, Planet and Profit
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Criticismy Thomson-Reuters columnistChrystia Freeland has
called CSR a fetish encouraged by the philanthropies
that feed off it, and funded by the corporate executives who find that it serves their bottom line.
y Consumers have been willing to pay more and buy more from companies with a CSR halo
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Drivers of CSRyEthical consumerism
yGlobalization and market forces
ySocial awareness and education
yLaws and regulations
yCrisis and consequence
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CSR BenefitsyHuman Resource benefits by ensuring
an identity to potential recruits
yRisk mitigation
yBrand differentiation
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CSR ConcernsyPurpose of corporations is to maximize
returns of shareholders
yCSR with questionable motives BP, British American Tobacco and McDonalds
yReeks of corporate hypocrisy and insincerity as companies claiming to promote CSR simultaneously engage in harmful activities
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Whistle Blowingy A whistle blower is a person who raises
a concern about wrongdoing occurringin an organization or body of people,usually this person would be from thatsame organization
y Whistle blowing can be done internally or externally
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Continued..yThe act itself can be ethical only if:
y It is motivated with a concern for thelarger interest of society, employees ororganization
yThe employee has a clear, unbiased and
just view of the actions or situationyThe actions are selfless, altruistic and not
motivated by revenge
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Continued..yThe action has hues of super-loyalty to the
organization, wherein he does not want
anyone in the company participating in wrongdoing
y Whistle blowing often results into a self
defeating action
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Continued..y Internal whistle blowing:
yDisclosing about fellow employeesmisconducts, to higher authorities withinthe organization
yExternal / Corporate whistle blowing:
yMaking open to the general public, theknowledge about the companys
wrongdoings
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Continued..yTreatment to whistle blower:
yMore often than not, he / she is:
y Harassed
y Passed aside for promotion
y Treated as the black sheep
y Ostracized
y In few cases, his / her success to stick tomorality is recognized and rewarded
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Critical Criteriay Critical criteria to be observed by a whistle blower:
y Ethical and unquestionable motive
y
Knowledge and proof that actions of some employee orthe organization are going to cause damage
y First report should be made to the immediate superior
y If there is no change, he should go up the managerialchain, till the Board of Directors
y After having exhausted all internal channels, he canthen approach external channels
y The chance of successful whistle blowing should be worth the risk taking and the exposure to danger
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India and other examplesy Satyendra Dubey, who accused employer NHA I of
corruption in highway construction projects
in India in a letter to then Prime Minister AtalBihari Vajpayee, was assassinated in November2003.
y Dubey, an Indian Institute of Technology (IIT),
Kanpur alumnus, was killed in Bihar for exposingcorruption by contractors in building the nationalhighways
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Continued..y Manjunath Shanmugam, originally from Andhra
Pradesh, and an officer in the Indian Oil
Corporation (IOC), was killed after he exposedadulteration in petrol pumps in Uttar Pradesh. He was an MBA from the Indian Institute of Management (IIM), Lucknow.
y Enormous media coverage following these deathshas finally led to the Whistleblower Protection Actin India, named as Public Interest Disclosure andProtection to Persons Making The Disclosure Bill,
2010
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Continued..y The onus will be on the Central VigilanceCommission (C V C) to protect the identity of the
citizens who provide information about the misuseof governmental authority and funds
y It provides the Central VigilanceCommissionpowers of a civil court to hand down harsh penalty
to people revealing identity of whistleblowers.y Apart from India, this kind of Act is prevalent only
in US, UK, Australia and New Zealand the oldestbeing in US, in 1989
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Continued..Cathy Harris, a former United StatesCustoms employee exposed rampant racial
profiling against black travelers while working atHartsfield International Airport in Atlanta,Georgia.
According to Harris's book, Flying While Black: A
Whistleblower's Story, (1998) she personally observed numerous incidents of Black travelersbeing stopped, frisked, body-cavity-searched,detained for hours at local hospitals, and subjected
to public and private racist humiliation.
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ContinuedyThe book also details her allegations of
mismanagement, abuse of authority,
prohibited personnel practices, waste, fraud, violation of laws, rules and regulations,corruption, favoritism, workplace violence,
racial and sexual harassment, intimidationetc., and other illegal acts that occur daily tofemale federal employees
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Continuedy C ynthia Cooper WorldCom:
y Former VP Internal Audit at WorldCom
y
Unearthed a $ 3.8 billion fraud at WorldComy Book Extraordinary Circumstances
y Sherron Watkins Enron:
y VP Corporate Development Enrony First to be concerned and write to CEO Kenneth
Lay about aggressive accounting in Enron
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Continued..yColeen Rowley FBI
ySpecial Agent of FBI
yMade headlines after 9/11 about writing amemo about the agencys slow actionprior to the 9/11 attacks
y All these 3 whistle blowers were selected asTime Magazines People of the Year - 2002
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Time People of the Year 2002y
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Ethics in Marketing &
Advertising
y4 Ps of Marketing:
yProductyPrice
yPromotion
yPlacementyEach area in itself can hold unethical
practices
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Continued..y The very premise of marketing could also be
considered unethical is marketing really needed
for goods and services, about which eachmanufacturer can claim superior quality
y Product:
y Unethical products
y Skimming on quality of product but not making peopleaware
y Production process and testing
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Continued..yPricing:
y
Price fixingyPrice skimming setting high price
initially and then lowering price
yPrice discriminationyPredatory pricing lowering of prices
yPrice wars
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Continued..y Place:
y Territorial discrimination
y
Monopolistic practicesy Promotion:
y Activities to induce consumers to buy product
y Issues over:
y Truth and honesty y Violence, sex and profanity
y Taste
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Arguments against AdvertisingyRaising cost of product
y
Glamorizing of productsy Advertisement and product unrelated
yCreating inferior feeling in masses on
non-possession of productyNegative influence on children, masses
and developing countries
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Dovey In an advertisement, Dove shows a young
girl who is about to face all the dangers of
beauty industry, including plastic surgery,liposuction, weight pills etc.
yThe video warns the viewer against the
adverse effects of such procedures and goeson to suggest Dove products for natural lookand self-confidence
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Continued..yShortly after the advertisement went live,
Green peace released a video in response to
Dove about the making of Dove productsand ingredients.
yThe video features a young Indonesian girl
seeing how her countys forest is massively destroyed for palm oil production. The oil is
widely used across Dove products.
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Continued..yThe parody has been more popular than the
original video and gained a lot of public
support. As a result, Unilever, the company behind Dove, imposed a moratorium ondeforestation for palm oil production,
agreeing to support the call by Green Peace.
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Continued..y Place:
y Territorial discrimination
y
Monopolistic practicesy Promotion:
y Activities to induce consumers to buy product
y Issues over:
y Truth and honesty y Violence, sex and profanity
y Taste
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Continued..y Negative advertising - attack advertisements
y Delivery channels of marketing
y Other issues:y Marketing research: - invasion of privacy
y Wrong use of marketing audience targeting
the vulnerabley Advertising targeting children
y Over-focus on materialism
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Arguments against AdvertisingyRaising cost of product
yGlamorizing of products
y Advertisement and product unrelated
yCreating inferior feeling in masses on
non-possession of productyNegative influence on children, masses
and developing countries
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Some more Practicesy Collusion
y Black markets for illegal goods
yGray markets for illegal distribution channels
y Deceptive pricing
y Truth in lending monthly installments
y Unit pricing
y Counterfeiting
y Product piracy
y Bidding
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McDonalds and Green Peacey McDonalds:
y is complicit in Third World starvation
y
wastes vast quantities of grain and watery destroys rainforests with poisons and colonial invasions
y sells unhealthy, addictive junk food
y alters its food with artificial chemistry
y exploits children with its advertisingy is responsible for torture and murder (of animals)
y exploits its workers and bans unions
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McDonalds CSR
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Food and Nutrition
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Supply Chain
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People Management
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Product EndorsementsyKent Water Purifier - Hema Malini Endorser
y Also a Member of Parliamenty2007 suggested a tax cut on purifiers using
RO technology
y When confronted, she said that she does not want to get into rules, but would like to takeup people causes
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Continued..yCelebrities believing in the
product?
y Wholesome image of the celebrity lending credibility to the product
yProduct or company status havingan effect on reputation of celebrity
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HRM and Related IssuesyRights of employees:
yRight to work
yRight to respectyRight to just wages
yRight to organize
yRight to strikeyEqual pay for equal work
yRight to privacy
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Ethical Issues in HRMy Discrimination: organizations should have anti-
discriminatory policies, stating that they will not
discriminate on the basis of:y Gender
y Caste
y Class
y
Race and religiony Sexual preferences
y Physical disabilities / medical conditions
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Continued..yThe Glass Ceiling Effect:
yan unofficial, invisible barrier that
prevents women and minorities fromadvancing in businesses
yOther related issues:
yPerformance commitment to consumersand pressure on staff
yPizza Delivery and accidents
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Continued..y Child Labor
y Large product companies using children in
developing countries for lesser productioncosts
y Infringing on employee privacy workplacesurveillance
y Who watches the watchers?
y Employee confidentiality reference checking
y Union Busting
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Continued..y Issues relating to employment contract
y Tenure of service
y
Slavery y Occupational health and safety
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Deloitte & Touchey 1993, D & T established the The Initiative for the
Retention and Advancement of Women to develop women leadersy Program focuses on men and women as colleagues
y Enhanced career opportunities for women
y Supported balance between work and personal life
y Active communication
y Building personal goals into professional livesy Providing senior level mentors for growth of women
professionals
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Social ResponsivenessySocial Responsiveness:
y Action taken to rectify a situationafter responsibility has beenascertained
y
Can also indicate a companys actionsto prevent things from going wrong
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Continued..ySocial responsiveness:
yReaction and
yPro actiony In matters of:
yConsumer safety
yObsolete productsyEnvironment protection
yEmployee policies
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Continued..yRole of Government in Social
Responsibility and HRM:
yMinimum Wages Act 1948
yPayment of Wages Act
y
Factories Act 1948y Workplace sexual harassment
policies
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Sexual Harassment Policiesy Preventive Steps:
1. Express prohibition of sexual harassment should benotified and circulated.
2. Inclusion of prohibition of sexual harassment in thestanding orders under the Industrial Employment(Standing Orders) Act, 1946 by the employers.3. Provision should be made for appropriate workconditions for women.
4. Communication and awareness creation among womenand all employees
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Continued..yMovement in India started after 1997, after
the case of Vishakha Vs. The State of
RajasthanyThe Vishakha Guidelines for prevention of
sexual harassment in workplace were
formed after that
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Guidelines:y Sexual harassment had been explicitly- legally defined
as an unwelcome sexual gesture or behavior whetherdirectly or indirectly as
y Sexually colored remarks
y Physical contact and advances
y Showing pornography
y
A demand or request for sexual favorsy Any other unwelcome physical, verbal/non-verbal
conduct being sexual in nature.
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Legal Provisionsy According to India's constitution:
ySexual harassment infringes thefundamental right of a woman togender equality under Article 14 of the Constitution of India
y And her right to life and live withdignity under Article 21 of theConstitution
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Continued..yMany provisions in other legislations protect
against sexual harassment at workplace:
ySection 354, IPC deals with assault orcriminal force to a woman with the intentto outrage her modesty
ySection 509, IPC deals with word, gestureor act intended to insult the modesty of a
woman
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Actions:y Formation of comprehensive guidelines or policies
about sexual harassment by each organizations
y
A clear route of grievance handling in case of an eventof this nature
y Committees deal with related grievances
y Prompt disciplinary action
y Communication of the policies and guidelines toemployees
y Training women employees on identification andsensing of sexual harassment
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Ethics and Financey Accounting practices:
yCreative accounting
yMisleading financial analysis
yExternal auditors
y Responsibility of auditors
y Conflict of interest
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Continued..yFinancial institutions:
yRates of interest
yRecovery agents
y Anti competitive practices of bribery,
kickbacks or facilitation payments
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Ethics and ProductionyProducing defective or addictive
products
yProducing dangerous products
yEnvironmental damage because of
production process or lack of wastemanagement processes
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Continued..y New technologies and ethics:
y Cloning
y
Genetically modified foody Radiation through microwaves and mobile phones
y Product testing;
y Testing on animals
y
Testing on vulnerable groupsy Testing on economically disadvantaged groups
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Professional Ethicsy Doctors Hippocratic Oath and rules of practice
y Shall treat everyone equally
y Shall not take disadvantage of patients
y Shall respect privacy of patients
y Shall prevent more than cure
y Shall adhere to my calling
y Product endorsements celebrities and medical
associationsy Lawyers
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Trade Secrets
A trade secret is a formula, practice, process,
design, instrument, pattern or compilationof information which is not generally
known to others, by which a company canobtain an economic advantage over
competitors
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Continued..y Also known as classified or confidential
information
yKnowledge about the firmyKnowledge developed by people in the firm
y Inventions and discoveries
yPeople migrating to other companies, withthe know-how
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Secret and Confidentialy What kind of knowledge is secret and
confidential?y
Techniquesy Formulae
y Tools
y Designs
y
Consumers Listsy Vendors Pricing Information
y Personnel Policies
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Continued..yCriteria for considering information
confidential:
ySecurity needed for safeguarding theinformation
y Investment in creation or obtaining the
informationy Value of the information to the
competitor
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Continued..y Tools for protection of trade secrets:
y Employee agreements non disclosure, non
competey Trade secret protection policies
y NDAs with third parties
y Thorough documentation for provingownership of trade secret
y Security systems
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Ideas, Information and
Knowledgey A fund of ideas is omni existent, in the form of
partial completion, expired patents or nascentstage ideas
y Pioneers might work on new ideas with the help of older ideas, doing further research on their own
y Education also bring forth a stream of people willing to to take up research as work
y Needs and consumer demands bring aboutinventions, innovations and discoveries
y Fund generation for research is a key angle
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Continued..y VentureCapitalists are agencies providing capital,
facilities, staff etc.
y
After breakthrough in the idea, the invention ispatented / copyrighted and used further forcommercial purposes
y Other companies might make similar products
without infringing on the patent rights reproduction of products with sufficient changes reverse engineering
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Intellectual Property Rightsy Intellectual property (IP) is a term referring to a
number of distinct types of legal monopolies overcreations of the mind, both artistic andcommercial.
y Common IPR include
y Patents
y Trademarksy Copyrights
y Industrial Design Rights
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Continued..y Patent:
y A patent for an invention grants a property rightto the inventor that will prevent anyone elsefrom making, using, or selling an invention.
y A patent lasts for a limited amount of time,usually 14 years from the date the application was filed
y A patent is considered "property," and can besold, mortgaged, or licensed by the owner
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Continued..y Copyrights:
y A copyright protects original works that fallunder the categories of literature, dramatic,musical, artistic, and intellectual (software).
y These works may be published or unpublished,and the owner has exclusive rights to reproducehis or her work in any medium.
y A copyright protects a form of expression, butnot the subject matter of the work.
y Act in India formed in 1957, and then amendedto include software in 1984
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Continued..y Trademark:
y A trademark is used to protect a word, symbol, device, orname that is used for the purpose of trading goods.
y The trademark indicates the source of goods anddistinguishes them from the goods of others.
y A trademark is also used to prevent others from using amark that might be confused with another
y Trademarks, however, do not prevent other people orbusinesses from producing the same product or servicesunder a d ifferent mark.
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Legislation in Indiay Legislations having impact on trade secrets are:
1. Copyright Act, 19572. The Designs Act, 2000, 2001 and 20083. The Information Technology Act, 20004. Indian Penal Code5. The Indian Contract Act
6. The Competition Act, 20027. Civil ProcedureCode8. Criminal Procedure Code
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Continued..yMandatory Corporate Disclosure:
y
Disclosure of relevantinformation to entities that areaffected by or are entitled to that
information.
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To Customers:y Product features
y Ingredients
ySafety
y Manufacture and expiry dates
y Compliances to environmental or any othermandatory standards
y Warnings if applicable
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To Employees:y Rights and responsibilities
y Administrative policies
yCodes of conduct
y Vision & Mission
y Performance standards
y Grievance handling
y Disciplinary policies
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Government:y Number of workers
y Conditions of work
y
Network of companies to whom work is beingoutsourced
y Vendors
y Financial status
yMethods of accounting
y Movement of goods
y Safety and standard compliance reports
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Shareholders:yProfitability
yFinancial soundness
y Accounting methods
yCompliances
yKey personnel salaries etc.
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Continued..y Insider Trading:
y Use of information available to insiders of anorganization made for personal gains to thedetriment of the organization and society
y An employee gains information about thecompany and its plans, which is not available tounauthorized people within the company or
outsidersy The information is made use of, for personal
gains
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FormsyConflict of interest
y
Inappropriate insider tradingyShares buy and sell in case of
imminent takeovers, mergers etc.
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Ethics and Insider TradingyRelative harm
yCreation of artificial movement(stocks)
yUsing information that should not beused in that way
yUsing information that belongs to thecompany
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