Mit Bba Be Semv Partii

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



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



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



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



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.



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?



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



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?



Continued..yUsing animals for pharmaceutical

testing vis a vis cosmetic producttesting

yUsing products made for one type of

environment in another, making themunsafe



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



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



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



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.



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



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



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



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



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.



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



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



Drivers of CSRyEthical consumerism

yGlobalization and market forces

ySocial awareness and education

yLaws and regulations

yCrisis and consequence



CSR BenefitsyHuman Resource benefits by ensuring

an identity to potential recruits

yRisk mitigation

yBrand differentiation



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



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



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



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



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



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



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



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



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



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



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.



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



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



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



Time People of the Year 2002y



Ethics in Marketing &

Advertising

y4 Ps of Marketing:

yProductyPrice

yPromotion

yPlacementyEach area in itself can hold unethical

practices



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



Continued..yPricing:

y

Price fixingyPrice skimming setting high price

initially and then lowering price

yPrice discriminationyPredatory pricing lowering of prices

yPrice wars



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





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



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



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.



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.



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



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



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



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



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



McDonalds CSR



Food and Nutrition



Supply Chain



People Management



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



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



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



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



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



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



Continued..y Issues relating to employment contract

y Tenure of service

y

Slavery y Occupational health and safety



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



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



Continued..ySocial responsiveness:

yReaction and

yPro actiony In matters of:

yConsumer safety

yObsolete productsyEnvironment protection

yEmployee policies



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



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



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



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.



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



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



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



Ethics and Financey Accounting practices:

yCreative accounting

yMisleading financial analysis

yExternal auditors

y Responsibility of auditors

y Conflict of interest



Continued..yFinancial institutions:

yRates of interest

yRecovery agents

y Anti competitive practices of bribery,

kickbacks or facilitation payments



Ethics and ProductionyProducing defective or addictive

products

yProducing dangerous products

yEnvironmental damage because of

production process or lack of wastemanagement processes



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



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



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



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



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



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



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



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



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



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



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



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



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.



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



Continued..yMandatory Corporate Disclosure:

y

Disclosure of relevantinformation to entities that areaffected by or are entitled to that

information.



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



To Employees:y Rights and responsibilities

y Administrative policies

yCodes of conduct

y Vision & Mission

y Performance standards

y Grievance handling

y Disciplinary policies



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



Shareholders:yProfitability

yFinancial soundness

y Accounting methods

yCompliances

yKey personnel salaries etc.



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



FormsyConflict of interest

y

Inappropriate insider tradingyShares buy and sell in case of

imminent takeovers, mergers etc.



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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Mit Bba Be Semv Partii