What is the difference between a corporation and a conglomerate?


Respond, add, disagree, agree to this post in 50 words or more and use examples from the pdf attached. Cite within your answer like so: (Mosser, 2013, ch 1.6, para 11).A corporation and a conglomerate are two different types of companies. A corporation markets goods and services in one section like construction. However, a conglomerate may be involved with several corporations that can also be doing business in several different sections. A corporation may be doing business in one area doing one particular thing. But a conglomerate can be operating in several areas doing many different things. Corporations are then by nature smaller and simpler company. Conglomerates are usually very large and hard companies to figure out because they are usually more spread out and many levels.The media conglomerates are the biggest problem we have these days because they have so much power in what they report to the public. They are usually controlled by politics or lobbyists or maybe even big money to push certain agendas. The more conglomerates behind the media the more twisted and unfactual it will become.The only advantage to having large conglomerates controlling the media is that they can reach a large amount of people in a short amount of time. Being able to spread good news or emergency awareness quickly helps the citizens of the U.S. One major disadvantage is that the large conglomerates tend to control all the news and smother the smaller conglomerates, therefore the news that may be swayed by someones monetary contribution will over shadow the news that may have be factual and straight forward.The only thing media can do these days to take an ethical stand would be to start researching their resources and make sure what they are reporting is absolutely true and not hear say or some kind of propaganda pushing someones agenda. Make sure its news that people need to hear and that it is the absolute truth.The utilitarian theory says that you should consider everyone involved when making a decision and make sure its what is best for the largest amount of people (Mosser, 2013). The large and small media should work together to start reporting as it was supposed to be done to begin with, that is to get the truth to the people which would work best for changing the media for the better.Mosser, K. (2013).Ethics and social responsibility(2nd ed.). San Diego, CA: Bridgepoint Education, Inc.
Jupiterimages/.Getty Images/Thinkstock
Product Liability and Corporate
Learning Objectives
After reading this chapter, you should be able to:
Summarize the different ethical perspectives surrounding the issue of product
Identify the concerns regarding labor conditions, particularly in foreign manufacturing plants.
Describe marketing practices that raise ethical concerns.
Discuss concerns involving customer tracking and profiling.
Apply ethical theories to the issue of corporate responsibility.
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Section 9.1 The Issue: Design Flaws in Products
he economy is driven by the exchange of goods and servicesthe purchase and sale
of products. In some cases, these products are tangible items that we can see and
feel, like cell phones, medications, vehicles, and baseballs. In other situations, the
product might be a servicesuch as lawn care, massage therapy, or a legal consultation.
The American economy, in 2012, showed a gross domestic product (the value of goods
and services produced) of $13.5 trillion (Federal Reserve Bank of St. Louis, 2013).
A number of laws govern business practices, including everything from marketing and
advertising to packaging to liability issues regarding consumer harm. Regulatory agencies also exist to oversee commerce: the National Transportation Safety Board (NTSB); the
Federal Trade Commission (FTC); the Federal Communications Commission (FCC); and
the Bureau of Alcohol, Tobacco, and Firearms (ATF) are examples.
Product liabilitydetermining who is responsible when a consumer is harmedis a primarily legal issue. This chapter will focus more directly on the ethical issues that arise in
business practices. Because trade ultimately occurs between individuals (companies are
made up of people, just as consumers are persons), moral reasoning is clearly applicable
in guiding decisions and actions. This chapter will explore several moral concerns that
arise in the relationship between businesses (producers and sellers) and their customers.
9.1 The Issue: Design Flaws in Products
n 1968, the Ford Motor Company began producing a new subcompact car called
the Pinto. This vehicle was designed and developed on an abbreviated timeline in
order to get to market as quickly
as possible. The Volkswagen Beetle
was extremely popular, and Ford
executives also feared that Japanese
manufacturers would dominate the
subcompact market if they did not get
something on the market soon. With
this in mind, the Pinto was designed
and developed in about half the time
that is spent on most vehicles. During its 10-year production, Ford sold
over 2.3 million Pintos.
The vehicles had safety problems,
however. In May 1972, the problem
Associated Press
was first identified when a Pinto
driven by Lily Gray was struck from The Ford Pinto is a classic example of a product with a
the rear by another car. The fuel design flaw.
tank in the Pinto exploded, killing
Gray and severely injuring her passenger, Richard Grimshaw. Several other instances of
fuel tank explosions involving Pintos were reported; in one such case, a van traveling at
about 55 miles per hour rear-ended a Pinto stopped on the side of the highway. The Pinto
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Section 9.1 The Issue: Design Flaws in Products
exploded, killing all three women inside as well as the vans driver. In total, the National
Highway Traffic Safety Administration (NHTSA) determined that 27 people died as a
result of the faulty fuel tank design in the Pinto; another 24 suffered severe burn injuries.
The Manufacturer Perspective
Without minimizing the seriousness of injury and death, it must be recognized that new
technologies introduce new risks. Any product can cause harm, especially when that
product is misused in some way. This is why products have warning labels that remind
consumers not to use an electrical appliance near water (in the sink or the bathtub, for
example), why ladders and elevators list the maximum weight they are designed to safely
support, and so forth.
The only way to completely avoid being harmed by a product is to avoid the use of that
product. The point here is not to be overly simplistic, but to recognize that benefits are offset by risks. I could walk to work (approximately 7 miles), but it would take a long time, it
would be tiring, and it would be especially inconvenient when the weather isnt ideal (too
hot, too cold, too wet, etc.). In order to complete the journey more quickly and in greater
comfort, I can drive my car. When I choose to do so, I must accept the risks involved in
driving. To put it simply: To receive the benefits of personal transportation, consumers
assume the risk.
Additionally, 27 deaths among 2.3 million vehicles (the number of Pintos sold by Ford)
is far lower than the number of deaths caused by rear-end collisions in other car models
where the fuel tank did not explode (rear-end collisions account for nearly one-third of
all motor vehicle collisions.) The specific design of the Ford Pinto may have introduced
a new risk, but there is no clear indication that it increased the likelihood of death from a
rear-end collision. To put a different way, had Ford corrected the fuel tank issue, it might
have prevented explosions but would not necessarily have increased the chances of its
passengers surviving a rear-end collision.
None of these arguments are intended to suggest that the fuel tank design was not an
important factor. They do, however, suggest that the design issues may not be as important in overall passenger safety as they initially appear. This point is underscored by the
fact that in many of the accidents involving a Ford Pinto, the driver of the vehicle that
struck the Pinto was under the influence of alcohol or drugs. For example, consider an
accident in August 1981, which killed three women in a Pinto. In that case, the victims
were struck by a vehicle driven by a man with open beer bottles, marijuana, caffeine pills,
and other illegal drugs in the car with him.
When these factors are taken into consideration, the bulk of the fault lies not with the
design of the Pinto itself, but with those who caused the collisions (especially if they were
illegally operating their own vehicle). Had those people never rear-ended the Pintos, the
fires would not have occurred. Should liability fall on the company for a possible design
flaw in the car when the driver directly responsible for the collision is at fault?
A company should be responsible for a product that harms consumers when used as
intended. When a product meets existing safety regulations, it is not clear that it is fair
to hold the manufacturer responsible for harm caused when the product is misused (in
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Section 9.1 The Issue: Design Flaws in Products
the case of the Pinto, the misuse stemmed from the drivers of the cars who collided with
Fords product).
The Consumer-Safety Perspective
Products should be safe to use under normal conditions. We might grant that an injury
caused by a misuse of the product is not necessarily a flaw in the products design. However, consumers can appropriately demand that products be safe in all situations in which
their use might be reasonably expected.
In the case of the Ford Pinto, those who argue for the consumers rights acknowledge
it is true that vehicles are not designed to be run into from the rear. (It isnt clear that
any automobile manufacturer specifically sells cars designed to be used in a demolition
derby!) But, given that nearly one-third of all vehicle crashes involve rear-end collisions, it
is reasonable to expect that cars will be involved in those accidents. Because of this, manufacturers do have an obligationto public safetyto ensure that their vehicles are as safe
as possible when such collisions occur. The fact that the Ford Pinto was designed and
produced far more quickly than other vehicles suggests, at the very least, that thorough
safety testing was not conducted. For this reason, it is appropriate to hold the manufacturer liable for a defect that should have been foreseen.
The claim that deaths caused by the faulty fuel tank design were no greater than those
involving rear-end collisions in other vehicles may also be challenged. The use of a product does involve the acceptance of risk. The question, however, is whether otherwise
avoidable risks were introduced because of the product itself.
In the post-Pinto era, the discovery of such a defect often results in a product recall. Sometimes one of the regulatory agencies demands it; frequently, a manufacturer will issue
a voluntary recall when a problem has been identified. For example, in July 2013, Mitsubishi Motors issued a recall on 2013 Outlander Sport vehicles manufactured during a
single week in January 2013; the stabilizer link on the front of the vehicle was found to be
welded incorrectly, increasing the likelihood that it would become detached. The result
of such a failure could be damage to the tire (resulting in a loss of control) or to the brake
line (meaning that the driver would have difficulty stopping). The manufacturer agreed
to perform repairs on these vehicles free of charge (Safercar.gov, 2013).
Product Recalls
Products are recalled by manufacturers either voluntarily, at the request of a regulatory
agency, or by order of such an agency. Examples of product recalls include:
medications that have adverse side effects;
foods that are found to cause health problems or that contain previously unidentified allergens;
products (such as vehicles or toys) that have been shown to break and cause
physical harm to the user; and
products whose design reveals that unintended harm may be caused to consumers (for example, clothing that presents a choking hazard for children).
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Section 9.1 The Issue: Design Flaws in Products
In some cases, a company may choose to recall a product because of other reasons, related
to moral issues or to the companys image. For example, in January 1999, Disney recalled
approximately 3.4 million copies of the home video version of The Rescuers because a background image, showing a topless woman, had been inserted into two frames of the movie.
While Disney maintains that the image was not inserted by one of its own animators
but was introduced in postproduction processingDisney issued the recall because of its
commitment to provide trustworthy family entertainment.
Companies generally issue recalls on productsto either repair or replace the product, or
to issue a refund to the consumerwhenever dangers are recognized. In the case of the
Ford Pinto, the company was faulted for failing to exercise such diligence for financial
reasons. Ford estimated that the costs of recalling and repairing all of the vehicles (11 million cars, 1.5 million light trucksnot exclusive to the Ford Pinto) with questionable fuel
tank designs would have topped $137 million, whereas the costs associated with deaths
and injuries in those vehicles (recognizing that not all of them will be involved in rear-end
collisions) was closer to $50 million. Thus, this widely publicized cost analysis suggested
that for the company, it was less expensive to leave potentially unsafe vehicles on the road
than to attempt a recall.
From a safety standpoint, the cost of a recall should not be a deciding factor, because
human lives cannot be reduced to a monetary value. Consumers should be able to trust
that the products they purchase and use are designed in such a way that will not pose a
threat under conditions that, while not normal, should nevertheless be expected as reasonable occurrences. (That is, while it is not expected that drivers will seek to be involved
in rear-end collisions, it is known that such accidents occur relatively frequently, so a reasonable expectation exists that a vehicle would be safe in such a reasonably expected
event.) Thus, in the consumer advocate view, companies bear the moral responsibility to
ensure that their products may be safely used. A failure to design a safe productor to
recall and repair or replace a defective product once a safety hazard is knownrepresents
a failure of the company to uphold its ethical obligations to both individual consumers
and to society as a whole. While manufacturers are not responsible if a person intentionally misuses a product, it is their job to make sure that consumers understand how a
product can be used safely.
Product Tampering
Thus far this chapter has examined two views of manufacturer liability with respect to
defective products. There is one more aspect of this issue to consider: product tampering.
Who is responsible if an otherwise safe product was tampered with after its manufacture,
but before its purchase by a consumer? Further, how should liability be divided between
the manufacturer of the product (who created a product that could be tampered with
before its sale) and the distributor (the store in which the product was sold, which placed
compromised products on its shelves)?
Product tampering arises most often with foods and medications. This might seem strange,
in light of the packaging that we now find, particularly with medicines. The bottle of medicine is sold inside a sealed box; the cap of the medicine bottle itself is covered by a clear
plastic film which must be removed; once the cap is removed, the opening of the bottle is
covered by a seal, generally made of cardboard or foil.
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Section 9.1 The Issue: Design Flaws in Products
Not long ago, this was not the case. Bottles of aspirin were on display on the shelves, not
enclosed in boxes. The cap of the bottle might have had a child safety device but there was
no seal once that childproof cap had been removed, only a piece of cotton stuffed into the
neck of the bottle.
Safe packaging became a concern in the early 1980s, fueled by a situation involving Tylenol pain relievers. In September 1982, parents gave a Tylenol capsule to a 12-year-old
girl living in the Chicago area. Hours later, the girl, Mary Kellerman, was dead. That
same morning, in another Chicago suburb, Adam Janus died. While the family was still
mourning his loss, Januss brother and brother-in-law both died. What was the connection
between these deaths and three others (a total of seven in the Chicago area)? Each victim
had taken Extra Strength Tylenol.
A police investigation revealed that the victims capsules had been laced with potassium
cyanide. The capsules came from bottles of Tylenol produced at different plants and purchased at different drug stores, a fact that prompted the suspicionstill believed to be
true, though the case remains unsolvedthat someone had tampered with the product
after it reached the store shelves.
A direct consequence of the Tylenol poisonings was that companies introduced tamperevident packaging. The Food and Drug Administration now requires such packaging, especially for over-the-counter medications. The goal of such packing is not to guarantee that
tampering cannot occur: The packaging is not referred to as tamper-proof, or even tamperresistant. Instead, the goal of tamper-evident packaging is to help consumers identify products that may have been compromised, so that potential buyers can avoid those items.
The ethical claim in situations like
this is that manufacturers should
be responsible not simply for creating safe products, but also for safely
delivering those products to consumers. If a manufacturer fails to package
a product in such a way that the customer cannot be reasonably assured
that the product has not been made
unsafe after the manufacturing process was completed, then it could be
argued that the company bears at
least some of the responsibility for
enabling such tampering to occur.
T-Pool/Getty Images
On the other hand, companies are
themselves victims when product
tampering occurs because the product (and brand name) will be affected
by adverse publicity. Corporate executives will be seeking to determine how to protect
themselves (against potential legal liability) and save the product. Apart from these legal
considerations, the company bears a moral responsibility to act in the best interests of the
consumers. Instead of simply identifying themselves as victims, companies have the abilityand the obligationto take positive steps to ensure public safety.
The packaging used for over-the-counter medication
is designed to alert consumers if the product has been
tampered with.
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Section 9.2 The Issue: Working Conditions
Johnson & Johnson reacted quickly after the Tylenol tampering in Chicago. Once a connection was made between the deaths and Extra Strength Tylenol capsules, the company
issued a national recall of the medication, with some estimates suggesting a cost of over
$100 million to the company. Many would argue that this is one of the best examples
of appropriate ethical conduct by a company, because this recall was issued voluntarily,
before the Food and Drug Administration was even involved in the case.
Case Study
Alternative Medical Practices
Americans are turning to complementary and alternative medicine (CAM) in increasing numbers
(NCCAM, 2008). While several reasons may contribute to this trend, some research indicates that
this is largely fueled by the increasing health care costs in the United States; consumers are searching for affordable alternatives to traditional medicine (Rettner, 2011).
However, the Food and Drug Administration does not regulate CAM therapies in the same way that
medications are controlled (whether those are available over the counter or prescription) because
most herbs are classified as dietary supplements. Companies marketing herbs and other natural
treatments are simply prohibited from making claims that their products treat, mitigate, or cure a
disease (Clark, 2013, para. 4).
1. When public safety is a concern, what guidelines would be appropriate for determining
whether governmental regulation of an industry is appropriate? What moral reasons would
justify regulating one industry (like pharmaceuticals), when another closely related industry is
2. Just as medications can interact with each other, sometimes creating harmful side effects, CAM
therapies can sometimes interact negatively with prescribed drugs. Do companies marketing
alternative treatments have a responsibility to research possible interactions, and to warn consumers when those might occur? To what extent is the companys responsibility offset by the
consumers choice to self-medicate using these products?
3. One of the issues raised in the Ford Pinto case was whether rear-end collisions should be reasonably expected. How do reasonable expectations impact the degree to which a company
is responsible for the safe use of a product? How does this impact companies offering CAMs,
since these products might be reasonably expected to be used by consumers for health-related
9.2 The Issue: Working Conditions
ompanies exist to make a profit. That is, simply stated, the primary purpose for
which a company is founded. The owners of the company are providing some type
of product or service designed to meet a need in the marketplace; by meeting that
need, the company receives income.
Economically, the profit earned by a company consists of revenue (income) minus expenses
(including the costs of raw materials, labor, packaging, shipping, and so forth). To increase
profits, the company must increase revenue (by charging a higher price or selling more
productsor both), or decrease expenses (by finding cheaper raw materials, streamlining
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Section 9.2 The Issue: Working Conditions
production, or lowering labor costs). What limits, if any, should exist on what a company
might ethically do to increase its profits? The first section of this chapter discussed the
ethics involved in changes to product safety (whether in the design of the product itself or
in safe packaging practices). In recent years, a cost-cutting measure that has come under
intense scrutiny concerns the use of cheap labor in developing countries. Often referred to
as sweatshops, these factories may place workers in unsafe environments and fail to pay
decent wages. This practice enables companies to keep manufacturing costs extremely
low, substantially boosting profits. But at what cost?
Price and Prestige
When targeting customers, a company may employ different strategies. One, perhaps the most
widely used method, is to keep prices low to sell more products. However, if the price is set too low,
then the implication is that the product isnt as valuable. Instead of being seen as a bargain, the
product will be regarded as inferior.
Because of this, companies may often opt for premium pricing, where the price of the product is
set higher than that of similar products. This strategy targets a smaller segment of the consumer
marketfocusing on those willing and able to pay moreby offering them the prestige of owning a
top of the line product.
The premium-pricing strategy can create a competitive advantage for a company. After all, statistics show that the Android operating system is used by more people than the iOS (for iPhone) on
their mobile devices and that Apple sells less than 25% of smart phones in the worldwide market
(McCracken, 2013). Even so, the Apple iPhone continues to be the standard against which all
other phones are measured. By using a premium-pricing model, most people think that the Apple
iPhone is the most popular smartphone on the market.
In the same way, many companies have tried to make their carryout coffee cups resemble those of
Starbucks. Carrying a cup of Starbucks coffee is not a statement about ones love of coffee so much
as it is a status symbol (the fact that the individual can afford to splurge on Starbucks each morning)
(Vanek-Smith, 2008). Starbucks has used the premium-pricing strategy successfully.
Given that companies seek to maximize profits, is it misleading to create a brand image that justifies
a higher price, when the product does not clearly offer features that justify the additional expense
(compared to products offered by competitors)? Or is the marketplace driven solely by supply and
demand, leaving companies free to price products at whatever level can sustain sales and profits?
The Business Perspective
From a business perspective, foreign labor represents a difficult but inescapable necessity.
After all, consumers demand lower prices; to meet this demand, companies must keep
manufacturing costs as low as possible. If production were moved back to domestic locations, labor costs and other expenses related to production would increase, meaning that
the price of the product would have to go up in order to maintain profitability. As long as
some companies choose to use foreign labor, all companies in the marketplace find themselves hard-pressed not to follow suit; to fail to do so means that they cannot compete in
that market.
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Section 9.2 The Issue: Working Conditions
The difficulty in maintaining profitability is compounded by the fact that some industries
are vulnerable to changing trends. Perhaps fashion is the best example of one such industry. Styles change quickly from one season to the next, and a companys ability to adapt
quickly to a changing market will be evident in its profitability. It is expensive to reconfigure production lines and retrain employees. To keep pace with shifting customer desires,
companies benefit by establishing production facilities in locations where equipment and
labor are both cheap and where trainable workers are plentiful.
Both of these reasonscompetitive edge and speed to marketspeak to the corporations
market benefit. However, sweatshop labor is not just an isolated business decision based
on productivity concerns. These corporations are owned by stockholders, investors who
choose to invest in the company because of its profitabilitymeaning that they will share
in those profits. And the more money these stockholders earn, the more money that flows
through the economymoney that is spent on goods and services produced by other
companies. Thus, it might be argued that keeping a company profitable is important on a
social scale because the profitability of corporations affects the economy as a whole.
Most importantly, however, the issue of sweatshops has to be understood in terms of
cultures and regional conditions. Those who argue that sweatshops are unacceptable are
basing their claim on the labor standards of a developed country. Those opposed to sweatshop labor point out that American workers, for example, would not be willing to accept
the working conditions present in those factories. The wages paid to those workers do
not represent a living wage that enables employees to provide even the most basic food,
clothing, and shelter needed by their families.
This argument, say those who support the foreign-labor model, is tempered by the fact
that the demand for jobs in these regions is often so high that applicants line up outside
these factories hoping to get hired. While the working conditions are not acceptable from
the point of view of workers in more developed countries, for these people it is far better
than anything else available. Working conditions should be judged against cultural standards within a region, not those of First World countries. When judged by the standards
of the workers in these countries, so-called sweatshop conditions do more than measure
upthey often exceed local standards.
The argument might be framed in a different way. Local market conditions are expected to
determine appropriate compensation for American workers; employees working in Dallas, Texas, for example, are able to maintain a particular standard of living for less than
employees in New York, New York, would have to spend in order to maintain that same
living standard. (See, for example, the cost-of-living calculator available at www.salary
.com). Because the cost of living varies between locales, companies are justified in providing different rates of pay for employees working in those locations, enabling employees
to enjoy comparable standards of living.
If this is extended to the foreign workers, companies are able to provide a comparable
standard of living for those employees at far less expense; the local economies are such
that employees require significantly less compensation. By comparison to others in the
area, the workers are not being unfairly compensated. Thus, from the companys perspective, labor conditions, employment rates, and cost of living information are necessary to
making an informed judgment about what might be considered appropriate.
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Section 9.2 The Issue: Working Conditions
The Humanist Perspective
The primary argument against sweatshops is based on human rights: People have a right
to work in places that are clean, healthy, and safe. Furthermore, workers deserve a living
wage in return for their labor. Workers employed in sweatshops are treated little better than slaves. They must work long hours and receive no paid leave, even for medical
emergencies, which encourages them to continue working even when they pose a health
hazard to other employees. These workers are paid a salary that often fails to represent
even a basic subsistence.
Those in favor of sweatshops argue that these workers are still better off than they would
be with no source of income. This response belies the fact that the hardships of laborers
are being exploited for the companys benefit. It may be unrealistic to require that conditions be exactly the same as what would be expected in an American manufacturing plant,
given cultural differences. But those who criticize sweatshops insist that workers deserve
to be treated with appropriate respect and dignity, regardless of the culture in which they
are employed. Just as a human life cannot be gauged by how much it costs to make products safer, neither can human dignity be measured in terms of labor conditions, especially
when the laborers have no choice in the matter.
This is particularly true, argue opponents of sweatshop conditions, when the profits earned by companies utilizing them continue to soar. The CEO of Nikewhich has
long been criticized for using sweatshopsmade over $6 million in 2007; the companys
advertising budget that year was $678 million. Human rights advocates claim that just
1% of this advertising budget would be sufficient to pay a living wage to every one of
the factory workers (DoSomething.org, n.d.). Clearly, the companies are making enough
money to change the poor working conditions, if they wanted to do so. The fact that the
companies continue to rake in massive profits at the expense of laborers who barely earn
a living wage, say human rights supporters, indicates that the companies do not truly care
about their employees. While companies exist to make money, they are designed to do so
by providing for all of the employees
involved in the production of those
goods and services. To fail to provide
adequately for the employees indicates that the company is failing to
uphold the moral obligations it possesses with regard to its employees.
The other argument often used
against companies employing cheap
foreign labor is the fact that American jobs are being sent overseas. It is
true that U.S. workers would have to
be paid more and be provided with
better working conditions (as U.S.
culture and law demands). These factors increase the companys expenses
and cut into its profitspotentially
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Scout Tufankjia/Associated Press
One argument against outsourcing is that it takes jobs
away from Americans.
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Section 9.3 The Issue: Marketing and Advertising Practices
resulting in job losses for those same American employees. But paying more American
workers would boost the economy (and thereby enable companies to raise prices), as
more people would have money to spend. Instead of isolating large profits in the hands of
relatively few corporate stockholders, wealth would be distributed more equally, which,
argue the proponents of domestic labor, would have a greater positive impact on the economy as a whole.
Be the Ethicist
To Outsource or Not?
Hector works in a management position at Textiles Spun, a clothing company that has been gaining
market share in the Midwestern United States. Manufacturing is currently located in three plants,
which are in Detroit, Chicago, and Cleveland. Hector has learned that the company is considering
closing two of those plants and moving the bulk of the manufacturing to a factory in Central America. According to the information he has been given, the workers will be expected to work 12-hour
shifts 6 days each week; they will not be given any paid vacation; they will have no health insurance;
and medical leave will be unpaid. The wages earned will be only 75% of the established minimum
hourly wage for the area in which the manufacturing plant will be located.
1. What ethical arguments might Hector use to suggest that the increased profits are not justified, given the costs involved?
2. Is it stronger to base an argument on the rights of Central American workers and the conditions under which they will be employed? Or on the loss of jobs for American workers in the
plants which will be closed?
3. What justification might Hector reasonably offer to support the companys decision to move
manufacturing to Central America?
9.3 The Issue: Marketing and Advertising Practices
n a 2011 Super Bowl advertisement, reality TV star Kim Kardashian is shown dumping her personal trainer for a pair of Shape-Up toning shoes, sold by Skechers. In other
advertisements for this product, consumers were told that the shoes enabled them to
shape and tone their bodies while going about their everyday taskslosing weight and
gaining muscle tone without ever actually exercising.
The Federal Trade Commission (FTC) takes particular interest in claims made by companies selling products related to health and fitness. In this instance, as in many others, the
FTC determined that the claims being made by Skechers were unproven, and in a May
2012 ruling, the company was assessed $40 million in fines (a record amount at that time).
The Skechers case points to a particular problem with the marketing campaigns companies use to sell their products.
Deceptive or misleading advertising practices raise concerns when companies suggest
that products can deliver results or performance that goes beyond what the product is
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Section 9.3 The Issue: Marketing and Advertising Practices
actually capable of producing. Marketing practices can be questionably ethical in other
ways, however, including the following:

the use of customer, celebrity, and expert (doctor or scientist) testimonials;
dubious claims about pricing;
fictitious customer reviews (especially for online retailers); and
inappropriate humor or suggestive content.
Companies may choose to risk using any of these methods for a variety of reasons. The
ethical issues involved, however, demand investigation.
The Marketing Perspective
The goal of marketing, simply stated, is to help a company sell products. To achieve this
end, advertisements are created with the hope of instilling in consumers a desire for a
product or service. The greater the consumer
demand for an itemwhether it be a pair of shoes,
a particular brand of spaghetti, a business service,
or a certain person in a political officethe more
effective the marketing campaign has been. In a
competitive marketplace, this goal is achieved
when the product is able to appeal to consumers in a way that no other product can match. But
exactly how marketers may ethically pursue those
goals presents some grounds for discussion.
Beneficial Claims
Wang qiming – Imaginechina/Associated Press
Advertisements are used to create
consumer demand, thereby helping a
company sell products.
Advertisers frequently rely on tactics like the
Skechers fitness claim. If studies do in fact suggest that Skechers shoes help people lose weight
and tone muscle while going about their everyday routines, such information represents a clear
benefitone that no other shoe manufacturer can
claim. When a company finds expertsdoctors
or scientists, for examplewho are able to support these claims, it helps customers recognize the
benefits that are available from the product.
Good marketing strategies do not involve intentional deception. And because the Federal
Trade Commission is quick to ban advertising that contains obviously false claims once
they are identified, companies generally do not make claims without some basis in fact.
Marketers contend, however, that customers potentially benefit by knowing about a products advantages as early as possible so that those customers can reap the benefits. In other
words, from a marketing viewpoint, using the results of a studyeven when the results
might still be murky or not fully substantiatedto show the link between a product and
potential benefits is just good business.
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Section 9.3 The Issue: Marketing and Advertising Practices
Testimonials and Endorsements
Along these same lines, advertisements often feature testimonials from satisfied customers as a means of convincing like-minded consumers of the advantages of buying. FTC
guidelines require customer testimonials to come from actual consumers who are giving
their honest opinion about the product; additionally, the customers included in advertising should be representative of customer views as a whole. (That is, if a company sells a
new product to 500 customers, 495 of whom were displeased with the product but five of
whom really liked it, the company would be violating FTC guidelines with a commercial
that showed only the five customers who liked the product, because those five individuals
do not fairly represent the customer base.)
Celebrity spokespeople are often used in advertising, as well. People admire celebrities,
adopt them as role models, and want to be like them. Learning that a particular celebrity
uses a product and finds it beneficial gives consumers a reason to use the product as
wellto become more like the person they admire. In all types of customer testimony
whether from typical customers or celebrity endorsersmarketers are seeking to help
consumers achieve their own goals. From the marketing perspective, then, no ethical
lines are crossed when a company truthfully shares information about a product that has
helped other people achieve similar goals.
As society becomes increasingly technological, advertising that is clearly deceptive is on
the decline. After all, more consumers check the content of advertisements, even using
mobile devices to verify claims while they are standing in a store. Thus, consumers themselves serve as watchdogs when it comes to advertisingand they share the information
they find (concerning both good products and those that fail to live up to their claims)
widely through their social networks. In such an environment, marketers are careful to
only make claims that can be substantiated, giving consumers a reason to believe that
advertising claims are reliable and trustworthy.
Emotional Responses
Another widespread practice in marketing campaigns is the use of humor or sentimentality, seeking to create an emotional reaction. In the United States, commercials for beer
often utilize humor in an attempt to make a connection between the brand and the fun
that people will have while using those products. Other products might use humor simply as a way to make a brand name stick in a consumers mind. A notable example of this
approach (which has drawn mixed reviews) is Kmarts advertising campaign, launched in
April 2013. To let customers know about the free shipping available from Kmarts online
store, the company commissioned a commercial in which customers talk about the ability
to ship my pants (as well as other items). Following this, another Kmart ad touted fuel
savings (big gas savings) at their gas stations. The humor in these advertisements was
intended to catch peoples attention and bring positive publicity to the brand.
Sentimental messages aim to accomplish the same result. During the 2013 Super Bowl,
carmaker Chrysler ran two separate 2-minute commercials. One focused on the American
farmer and featured a voiceover by radio legend Paul Harvey. In the other commercial, an
Oprah Winfrey narrative honored military personnel who were serving away from home.
A third commercial, this time from brewing giant Anheuser-Busch, featured one of the
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Section 9.3 The Issue: Marketing and Advertising Practices
famous Budweiser Clydesdale horses being reunited with the man who trained him as
a colt. Each of these commercials sought to create an emotional attachment between the
corporate brand and the consumer. All three received high marks in consumer rankings;
the commercials were effective in creating favorable emotional responses.
From a marketing perspective, no ethical lines are being crossed through these practices.
Product claims that can be supported are offered; testimonials help customers understand
the benefits of the product for people to whom they can relate; and humor or sentiment
may be used to convey feelings that the consumer can expect to enjoy when using the
product. Thus, advertisers seek to create a demand for a product, which, from their perspective, does not rely on deception or misrepresentation.
The Consumer Perspective
Historically, the Latin phrase caveat emptorlet the buyer bewareruled the marketplace. The idea contained here is that the purchaser of a product bears the responsibility
for checking to be certain that the product is worth the expense. When it comes to marketing claims, is it in fact the consumers responsibility to determine whether the product
will achieve the desired results?
In modern law, the doctrine of caveat emptor still applies to most personal transactions.
Most people who buy a used car from an individual (not a dealer), or a house, or something at a garage sale recognize that the sellers are not responsible for the condition of the
purchase the same way that a manufacturer would be. They are selling the product as
is, and it is the buyers responsibility to ensure that the product is worth what is being
paid for it.
From the point of view of a retail consumer, however, companies have a greater responsibility toward the buyer precisely because they have control over the design, production,
manufacturing, andmost importantlymarketing of the products they sell. They know
the product more fully than does the consumer. Because of this, companies are responsible
for claims that are made concerning their goods and services.
The fact that marketing claims are often based on information unavailable to the consumer
serves as the basis for one of the chief criticisms of modern marketing. When a doctor or
scientist endorses a particular product, the average consumer has no way of knowing
whether that spokesperson is connected to the development of that product in some way.
Is this an independent researcher, or did this person conduct research that was funded by
the company? In the case of the Skechers advertisements, for example, it turned out that
one of the studies the company used to support its claims came from a chiropractor who
happened to be married to a Skechers marketing executive. Serious issues of complicity
can arise when so-called expert testimony amounts to inside information that consumers
are not able to substantiate on their own.
Online retailers attempt to alleviate some of this concern by allowing for customer reviews
on their websites. The difficulty, however, lies in the knowledge that the company has the
power to remove any customer reviews it chooses; it can also post favorable reviews that
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Section 9.3 The Issue: Marketing and Advertising Practices
sound like customer testimonials even though they were written by company personnel. The same sorts of issues arise with paid celebrity spokespersons; if they are paid for
their endorsement, why should consumers be expected to believe that celebrities are truly
endorsing the product based on their own experience?
All of these are concerns for the consumer, who has no means of verifying the content
being encountered through the advertisement. Without more information, customers are
at the mercy of what marketers want them to hear about a product, which increases the
possibility that deception may occur.
The same can be said for the use of emotional appealswhether humorous or sentimental. Most people would agree that they dont like it when someone gets them to do something by making them feel guilty if they refuse. This can occur between friends or family
members quite easily. Because of the relationship we share with the person, we will often
go alongeven though we may resent being guilted into compliance. With marketing, emotional appealssome would say manipulationbecome even more suspect. The
Chrysler Super Bowl auto commercials did not even appear to be advertisements until
the very end. Nonetheless, the ads leave consumers feeling a sentimental attachment to
the images in the commercial, which have little to do with the actual products or brands
being advertised.
Consumers often do make purchasing decisions based on a companys image and reputation. In the case of sweatshop labor, many consumers choose to boycott clothing brands
that engage in such practices. Since the company is using unethical employment practices,
the customer chooses not to support the company through his or her purchases. In this
respect, what the company represents does influence the buying decision.
Some would point out that Chrysler Corporation does support American military personnel serving abroad, so associating the brand with that support is not problematic. Jeep
(a Chrysler brand) has funded Operation SAFE Return, a program designed to generate
community support for military personnel and their families (see http://www.chrysler
groupllc.com/community/Pages/MilitarySupport.aspx and http://www.jeep.com/en/
operation_safe_return/). The commercials implied claim, however, is that Chrysler is more
supportive than other automobile manufacturers; true patriots will drive Dodge Ram
pickups and Jeeps. The company cannot substantiate such a claim. Critics would argue,
then, that Chryslers commercials are misleading, playing on sentimentality and emotion
that is not clearly connected to the product. In that regard, the message is deceptive.
Marketing is big business. Some estimates are that about 10% of the cost of a product lies
in the marketing and advertising budget. Companies do act wrongly, though, when they
create advertisements that are deceptive in any way. This can happen through unsubstantiated claims, false testimony, or through emotional appeals that inaccurately depict
the product and its contribution to society. Marketers can also easily offend consumers
through the use of crude humor, harming the brand image through negative publicity.
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Section 9.3 The Issue: Marketing and Advertising Practices
Be the Ethicist
Subliminal Advertising
In the late 1950s, an experiment was conducted in a New Jersey theater (although the patrons did
not know they were involved in an experiment). Frames were inserted into the movie encouraging
viewers to drink sodas and eat popcorn; these images where so brief and fleeting that they did not
register in the conscious mind. However, they reached the subconscious (where messages are not
filtered as thoroughly), and sales of sodas and popcorn increased. When the results of the experiment were revealed, a public outcry ensued.
It is unsurprising that consumers would be concerned about being manipulated in such a manner.
Subliminal messaging refers to practices, which may be visual or auditory, intended to get a message into the minds of the viewers or listeners without them being aware of it. Some department
stores, for example, play subaudible messages along with music, encouraging shoppers to buy more
productsand refrain from shoplifting.
Not all subliminal messaging carries negative connotations, of course. Some company logos, for
example, contain hidden meanings. The logo for Amazon, the online retailer, contains an arrow
beneath the letters, pointing from A to Z. The implication is that consumers can find anything they
needfrom A to Zat Amazon. Similarly, companies will pay for product placement in movies
and television shows; for example, their advertisement might appear on a billboard in the background of a scene. In this way, advertisers continue to get their message in front of consumers in
less-than-obvious ways.
Critics argue it is the more sinister methods that are problematic, even as there continues to be
debate as to whether subliminal messaging actually works. Many self-help techniques use subliminal messaging to deliver positive messages to the brain, but their effectiveness is not clear. Some
online sources also point to images that creatively include the word sex, both in advertisements and
in movies or television shows; the goal of the hidden message, supposedly, is to add sex appeal to
the product. The Federal Communications Commission banned subliminal messages in advertising
in the 1970s, although there continue to be examples where it seems to be incorporated. Of course,
proving the presence of these messages is difficult, since the whole point of a subliminal message is
to bypass the conscious mind.
The broader concern, from an ethical perspective, is whether such practices constitute deception.
Marketers might claim that such messages appeal to consumers, in much the same was as a celebrity endorsement, by promising good experiences that the consumer will enjoy when they use the
product. Opponents argue that if this is true, then marketers should be more direct in their methods, rather than seeking to implant messages via covert means. If the product will make buyers feel
sexy, say so; dont subliminally suggest sexuality in a way that bypasses a customers rational ability
to assess the claims being made.
Jerome works for a marketing agency. One of the accounts he is currently working with is a cosmetics company. The company has received letters from some of their customers praising the fact that
the makeup products have helped clear up acne on their customers faces. Jerome is planning a new
advertising campaign including these customer testimonials, which will suggest that the cosmetics can help clear acne. The testimonials will be given by paid actors, and the testimonials will be
scripted from what was contained in the customer letters.
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Section 9.4 The Issue: Customer Tracking and Profiling
Be the Ethicist (continued)
1. Is Jerome acting unethically to include these testimonials? Are these claims just customer testimonials, or do they represent information that should be researched more carefully before it is
presented in the advertisements?
2. Is it okay to use paid actors and scripted testimonials? Or should Jerome get actual customers
to tell about their own experiences with the product?
3. Would it be okay to add a subaudible message to the television advertisements, stating, This
makeup will make you beautiful? If subaudible or subliminal messaging is involved, does this
mean that the advertisements are deceptive?
Read more about subliminal advertising at http://subliminalmanipulation.blogspot.com.
9.4 The Issue: Customer Tracking and Profiling
n the fall of 2012, Seattle-based clothing retailer Nordstrom began using software
called Euclid, which enabled the company to track customer movements through the
store using the Wi-Fi signal on the
customers cell phone. The data collected by the Euclid system told the
store which items consumers looked
at, how much time they spent at each
counter, and whether the customer
actually bought any of the items.
(In May 2013, Nordstrom stopped
using the Euclid software; they had
posted signs in their stores notifying customers of their use of tracking software, and received a number
of complaints. It was, at least in part,
because of these complaints that the
department store chose to stop trackiStockphoto/Thinkstock
ing the in-store customers [Clifford &
Hardy, 2013]).
Using technology, retailers can determine which displays
attract attention, how much time a person spends inside
Other stores using similar technol- a store, what items are most popular, and other shopping
ogy are going even further, coupling trends.
this tracking data with video surveillance, which can relay additional informationgender, approximate age, and even customer moods via facial-recognition software. With this technology, the stores can target
specific ads to customers at the point of sale, based on their gender and mood.
This type of customer tracking and profiling is common online. (Most people who have
done an online search have noticed how the pop-up advertisements on webpages they are
visiting are for the same type of item for which they were searching.) The ability to profile
customers and market directly to their interests and needs generates more revenue. The
Euclid service, for example, seeks to help retailers generate sales by providing data that
helps determine which window displays are most effective (drawing in more customers,
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Section 9.4 The Issue: Customer Tracking and Profiling
as opposed to those who just walk by), as well as by providing data on the time a customer
spends inside the store (because the longer a customer is in a store, the greater the likelihood that they will make a purchase) (Cohan, 2013). But at what point has the customers
privacy been violated through the data that is being collected, stored, and analyzed?
The Seller Perspective
Online retailers have long used customer tracking on their websites. This enables them to
know what products customers viewed, so they can watch customers shop. They have an
understanding of which items are popularor which items will lead customers to look at
related items. The ability to track customers provides valuable information for the store in
designing its website and the way it presents information to customers.
Such tracking practices also enable a company to provide beneficial information to the
customer, based on what the customer is doing. When someone views items on a stores
website, the site will sometimes offer recommendations, or links to items viewed by
other customers who were looking at the same product. This information provides valuable assistance to consumers as they compare different products on the website. Thus, it
benefits both customers and retailers.
How Software Tracks Customers Online
When an online customer visits a companys website, the Internet protocol address is registered
in the site database; often, the media access control address (which is unique to each device) is
also recorded. This information enables the database to recognize when a customer returns to the
online site, and it will remember items that the customer was looking at on previous visits.
Profiles based on Internet searches are well established. (After all, how do companies
like Google and Yahoo!, which offer a free search engine, make money? The bulk of their
revenue comes through customer profiles, enabling companies to market their products
to specific types of individuals.) Most online consumers accept the fact that their search
history is being recorded and analyzed, whether or not they think about it.
Without software like Nordstroms Euclid, physical (or brick-and-mortar) stores lack this
ability. Understanding how customers travel through the stores, which displays catch customers eyes, and the amount of time that customers spend in stores represents valuable
information to retail establishments. As just one example, floor managers can adjust their
displays to attract more sales, and they can make sure that the store has more staff available during peak shopping times.
This information is not merely helpful to the company; it benefits the customer as well.
For example, suppose a customer visits a store and spends time looking at overcoats. Not
finding exactly what she wants within her price range, she leaves the store without making a purchase. But the next day, she might receive a coupon on her phone that offers a 20%
discount on overcoats at that store. The coupon targets the customers need, providing a
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Section 9.4 The Issue: Customer Tracking and Profiling
direct benefit. If the practice results in positive benefits for the customer, does that help to
justify the tracking? For some consumers, it might. Others may be suspicious, wondering
about the coincidence of receiving a coupon (by text message) for the product they were
considering the previous day.
While some customers may feel as though they are being spied upon by these tactics, companies are quick to point out that they are shopping in a public place. They should expect
that people are able to see where they are, which products they are considering, and what
kinds of purchases they make. Stores already analyze purchase receipts to see what items
are often bought together. (That is why grocers stock vanilla wafers next to the bananas,
because there is a clear correlation between those two items, as sales have demonstrated.)
The data gathered by tracking customer movements in the store simply adds an additional level of information, which is helpful to both consumers and companies alike.
Case Study
Free Coffee?
Douwe Egberts is a Dutch coffee company. It recently set up special vending machines at the O. R.
Tambo International Airport near Johannesburg, South Africa. Using facial-recognition software, the
vending machine can detect when someone in front of the machine yawns. It then dispenses a free
cup of coffee to the patron (Matheson, 2013).
The point of this was to get people to try the product; it was a marketing ploy. And, as seen on the
video footage of customers interacting with these machines, most customers thought that it was
an inventive and fun way for the vending machines to interact with patrons. This raises interesting
questions about the debate over consumer privacy, however. At what point is the use of something
like facial recognition an invasion of privacy, compared to being a cute advertising gimmick? Is the
customers awareness of what is happening (or their ability to figure it out) an important factor in
determining the acceptability of such technology? Should customers be informed when any such
methods are being used to analyze their behavior or shopping preferences?
The Customer Perspective
More consumers are turning to search engines (such as DuckDuckGo and Ixquick) that
offer privacy. Independent research has found that a majority of users continue to use
Google Search, but that an increasing number of online customers (nearly three-fourths)
do not like their searches being recorded or having information targeted to them based
on that history. Others are concerned that information available to them will be filtered
according to their search history, meaning that they no longer have access to all of the content available. Only 28% of those surveyed like the targeted advertisements that are based
on their searches (Burt, 2012).
What all of this indicates is that, while online search histories are widely used, most consumers do not like them. In many cases, they feel that recording searches is a violation
of privacy, especially since companies build complex profiles of individual consumers
based on the data. In other cases, they fear that the information gathered might be used
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Section 9.5 Applying the Theories
in unintended ways (for example, being scrutinized by potential employers as a part of a
background check). In still other instances, customers are dissatisfied with the information being presented to them based on the profile that has been developed, and they wonder what information has been filtered out.
Thus, online retailers might be thought to have an advantage in their ability to profile
customers and determine habits. But this does not mean that the customers value the fact
that data is collected in this way. They certainly do not want to be tracked in a physical
store, where their movements are being recorded (including how much time they may
have spent in the restroom). The complaints received by Nordstrom, mentioned earlier,
are an example of this; the customer backlash against the use of tracking software was
one of the reasons that led the department store to discontinue the practice. (Much of the
discomfort consumers feel, however, may be based on expectationsthey dont expect
their physical location to be tracked for marketing purposes [Greenfield, 2013]. From the
consumer perspective, privacy issues may arise when stores are found to be doing something unexpected.)
The heart of the issue, from a consumer perspective, is a concern regarding how personal
information is utilized. When a company begins targeting customers based on gender,
age, and other personal data, the concern is that the company knows more about the
consumer than is needed; the only value is for the company to target specific advertisements to that customer in the hopes of selling products. When this kind of tracking goes
to the level of analyzing mood, the company is seeking to know more about the consumer
than many consumers feel that it should. At the very least, this tactic is similar to sentimental advertisements in that it wants to lure the customer into a purchase based on
something that is unrelated to the product itself. At worst, this tracking represents a form
of subliminal messaging, where the company is targeting messages that will appeal to
customerseven if those customers are unaware of the impact their mood is having on
their purchasing decisions. Thus, targeted marketing at this level borders on being deceptive and manipulative, raising questions as to whether it is ethical.
9.5 Applying the Theories
e have seen that there are a number of different areas in which corporations
arguably should deal with customers responsibly. Most of these involve legal
guidelines. All can be viewed from the economic perspective of the business
whose goal is to earn the greatest profit possible. But what would an ethical analysis of
these issues reveal? Let us begin by recalling the first example explored in this chapter.
The Ford Pinto was introduced in 1968 and was produced for 10 years. During that time,
the Ford Motor Company sold over 2.3 million vehicles of this model. The design, however, was flawed, specifically in the rear of the car. The result was that the fuel tank would
sometimes rupture, possibly exploding, when the car was hit from the rear. Since vehicles
can be expected to be involved in rear-end collisions, this seems to be a significant design
flaw, compromising the safety of the passengers.
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Section 9.5 Applying the Theories
Ford ultimately recalled the cars, but only after pressure from the National Highway
Transportation Safety Administration (NHTSA). It did not voluntarily recall the vehicle to
make repairs, even as some estimated that those repairs would cost $11 or less per vehicle.
Was Ford acting ethically in refusing to recall the model?
Utilitarians always base ethical decisions on the end results, taking everyone affected
into account. Thus, from this perspective, the economic impact on the company should
be included in the deliberation. The cost of repairing all vehicles using the flawed fuel
tank design, estimated at $367 million, is significant, especially considering the fact that
only a handful of those should be expected to actually malfunction and cause harm to
If we were to stop here, the utilitarian argument might seem to favor Fords decision. The
argument needs to be more complete, however. It must take into account the psychological impact on Ford Pinto owners when they learn that the car they are driving might be
defectiveand wont be repaired. This could easily spill over into consumer wariness
toward Fords other models, as questions arise as to whether those cars share the same
defective design. All of these potential consequences need to be considered in determining which actions will bring about the greatest good for everyone involved.
When comparing outcomes, consider that no amount of corporate profit can offset the loss
of a human life, especially when it could have been avoided. Utilitarianism is a hedonistic
theory, measured in terms of pleasure and pain. Even those who stand to make profits
by refusing the repairs cannot be pleased when their refusal results in the death of a consumer. The best outcome is not measured in dollars; this is not an economic decision. Ethics has to look at how the decision will ultimately affect individuals.
Based on this reasoning, utilitarians will argue that Ford should have repaired the problem, despite the great financial cost to the company, and that it should have done so voluntarily (instead of waiting to be forced by the NHTSA). This would have meant lower
profits for a few individuals, while providing safety and peace of mind to millions of
consumers. The greater good, in this instance, demanded action.
Deontologists ignore consequences; the financial cost of a decision certainly plays no part
in determining whether the decision is morally right. Instead, logic and reason need to be
applied, founded upon principles, to determine what should be done.
Recall from Chapter 1 that deontologists will apply a universal rule test: Would it be
morally acceptable for everyone, in similar circumstances, to act in this way? Another
way of thinking about this principle would be to ask, Would I want to be treated this
way, were the situation reversed? This is another way of assessing the respect for human
dignity upon which the deontological perspective is founded.
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Section 9.5 Applying the Theories
In this case, we can easily imagine that the owners and executives of Ford Motor Company would not want to drive vehicles made by another manufacturer, which had such
a defect. Since they would not want to be treated in such a manner, they should not treat
their own customers in that way. To refuse to correct the error amounts to violating the
universal rule test. Instead of respecting the human dignity of their consumers, they are
placing those customers in danger in order to enjoy more profits for themselves. Such a
decision fails on principle.
Different ethical perspectives use different criteria for determining whether something
is right or wrong. Utilitarians look at consequences, whereas deontologists look at the
principles involved. These are very different ways of assessing a situation, with very little
overlap in thinking.
This does not mean, however, that utilitarians and deontologists will always disagree
about what should be done. There will often be agreementas in this casebut each
perspective offers its own reasons for the decision. The point is that knowing what those
utilizing a particular ethical perspective will say about a situation tells us nothing about
the conclusion that will be drawn from a different viewpoint. Each viewpoint must reach
a decision based on the types of reasons on which that theory is based.
It is difficult to justify Fords reasoning from an ethical perspective. Their decision seems
to have been based on financial considerations alone, and the ethical issues involvedthe
lives and well-being of their customerswere overlooked.
With both the utilitarian and the deontological assessments (or with those of other moral
theories that might be employed), it is important to note that these moral perspectives
are not only useful in assessing past events. The primary point of moral reasoning is to
help people understand which actions are right or wrong so that the correct action can be
chosen. Thus, instead of simply assessing Fords actions after the fact, those involved in
these decisions could have considered their decision from these moral perspectives before
a decision was reachedallowing moral considerations to guide and shape their chosen
course of action.
Because it is impossible to see the future, seeking to apply moral theories in this way can
sometimes be tricky. This is especially true, perhaps, with a utilitarian perspective, which
is based on the consequences: While we might predict what will happen if a certain action
is performed, it is impossible to know for certain what results will be realized. If the goal
is to act ethically, though, this must be done as fully and accurately as possible. Failing
to consider the likely outcomes (in the case of utilitarianism), or failing to think about
the principles upon which a decision is based (in the case of deontology or duty ethics),
means that the moral implications of a decision are being ignoredand acting ethically,
when it happened, would be nothing more than a happy coincidence.
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Key Terms
Chapter Summary
usinesses exist to earn a profit for their owners. Those businesses that are unprofitable are closed; to continue operating, a business has to be financially profitable. But
this does not mean that a company can (or should) do whatever is necessary to earn
money. In addition to legal guidelines, moral considerations establish boundaries within
which businesses should operate. After all, consumers are individualswith rights that
must be respected and protected.
This chapter has explored various areas in which companies must carefully consider the
relationship they bear to the consumer. But a corporations relationship to its employees is also an important concern, one that can have a profound effect on the companys
image and performance in the marketplace. The goal is not simply to avoid those things
that offend consumers. The goal of a business decision should be, first and foremost, to
respond ethically. When this principle is followed, customer relations will be far easier to
Key Terms
caveat emptor Latin for let the buyer
beware, this suggests that consumers are
ultimately responsible for their purchasing decisions. Caveat emptor continues
to prevail in private transactions between
living wage Compensation that is adequate for providing a living for a worker,
including food, clothing, shelter, and health
careideally for both the worker and his
or her family.
product recall When a company (voluntarily or by force of regulators) notifies
consumers that a product is defective; in a
product recall, the product will be repaired
or replaced at the companys expense.
product tampering When a product has
been altered by some third party after the
manufacturing process has been completed.
sweatshops Manufacturing plants, typically in developing countries, which feature
poor and unsafe working conditions and
low rates of pay for employees.
premium pricing A practice where a
company charges more for its product than
competitors, in order to establish the brand tamper-evident packaging Packaging
such as a plastic seal over the top of a
as a leader in the field.
bottlewhich allows a consumer to avoid
product placement A marketing strategy
products that may have been altered after
where, for example, actors in movies or
the manufacturing process was completed.
television shows are seen using a particular
productor billboards in the background
of a scene feature a particular product. This
is a form of indirect advertising, keeping a
product or brand in front of consumers.
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Critical Thinking Questions
Critical Thinking Questions
1. Utilitarians base moral decisions on the consequences, seeking to consider everyone affected. In the vast majority of cases, the number of consumers of a product
will be greater than the number of people who profit from its sale (the owners
and employees of the company). Because of this, it would seem that utilitarians
might always side with the consumers, due to the number of individuals who
must be considered. In what way does utilitarianism prevent this from happening? How can a utilitarian assessment be fair to everyone involved?
2. The chapter explained that Johnson & Johnsonthe makers of Tylenol
voluntarily recalled their product when it appeared that the medication had been
tampered with. Is a company morally obligated to have a voluntary recall in a
situation like this, or is that going above and beyond what morality requires?
3. In an instance of product tampering, the manufacturer of the product is clearly a
victim. Why does the company have a moral obligation to take action, when the
problem is not its fault?
4. What factors should a company use to determine what compensation is fair for
its employees? How important are geographical or regional differences? If poor
working conditions can be offered in a developing area, is it ethical for a company to take advantage of the situation by hiring cheap labor?
5. What would duty ethics say about a company choosing which customer reviews
to allow on its website? Would a company be justified in removing some of the
reviews, if it were using a deontological approach?
6. Do you think subliminal messaging works? Is it ethical for marketers to use this
approach, whether it really works or not? Is subliminal messaging deceptive or
7. Online stores can easily track customers as they navigate a website. Is it ethical
for a company to store this information, creating a customer profile for that user?
At what point would this data gathering violate the privacy rights of the user?
8. Most stores have some sort of surveillance equipment installed to help prevent
(or prosecute) shoplifters. Do you feel as though this is an invasion of your privacy, since you are being watched while you shop?
9. Suppose you visited a store you have never been in before and looked at several
items, but did not make a purchase. Would it bother you if you received a coupon for some of the merchandise you had been looking at on your cell phone the
next day? Would you consider that to be an invasion of privacy? Would you go
back to the store to use the coupon? What does your answer say about your ethical views?
10. Grocers have long used psychological tricks to move products. For example,
if they need to sell chicken because they have a lot in stock and need to sell it
before it goes bad, they will put out an advertisement in the newspaperand
signs in the displayindicating limit 4 per customer. Some customers will buy
four, then return to buy four more. Is this deceptive advertising, or are the consumers being deceptive?
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Suggested Resources
Suggested Resources
The American Economy
Ford Pinto
Product Recalls
Tylenol Poisonings
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Suggested Resources
Pricing Strategy
Advertising & Marketing

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Suggested Resources
Caveat Emptor
Subliminal Messages
Customer Tracking & Profiling
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The exchange of goods and services is what drives the economy. Companies that manufacture and sell these goods have an ethical obligation to ensure that they are of good quality and do not cause harm to their customers. However, several concerns regarding product liability, labor conditions, marketing practices, and customer tracking have been raised. In this chapter, we will explore these concerns and apply ethical theories to the issue of corporate responsibility.

This chapter delves into the different ethical perspectives surrounding the issue of product liability. It discusses the concerns regarding labor conditions, particularly in foreign manufacturing plants, and marketing practices that raise ethical concerns. Moreover, it explores the dilemma of customer tracking and profiling. The chapter also applies ethical theories to the issue of corporate responsibility. The media conglomerates have also been highlighted as a problem due to their power to manipulate the news according to their political affiliations or financial interests. While the only advantage of media conglomerates is their ability to spread news quickly, their influence can overshadow factual news, leading to unethical practices. Therefore, it is imperative that media outlets start researching their sources and ensure that they are reporting only the truth.

1. To understand the differences between a corporation and a conglomerate.
2. To analyze the impact of media conglomerates on public awareness and access to factual news.
3. To identify the ethical concerns associated with media control by large conglomerates.
4. To apply ethical theories to determine appropriate corporate responsibility.

Learning Outcomes:
1. Analyze the challenges associated with product liability from different ethical perspectives.
2. Evaluate concerns regarding labor conditions in foreign manufacturing plants.
3. Evaluate marketing practices that raise ethical concerns.
4. Appraise concerns related to customer tracking and profiling.
5. Apply ethical theories to analyze corporate responsibility in different contexts.

The media conglomerates and their impact on public awareness have tremendous ethical implications. According to Mosser (2013, ch 9.2, para 10), conglomerates exert enormous control over the media, which can lead to the spread of biased or unfactual news. For example, when General Electric (a conglomerate) owned NBC, many media watchdogs claimed that NBC was slanted in its coverage of General Electric. Similarly, the ethical concerns about customer tracking and profiling can be seen in the case of Facebook’s Cambridge Analytica scandal (Mosser, 2013, ch 9.4, para 1), which exemplifies how individuals’ personal data can be utilized unethically. Moreover, product liability has been shown to be a significant ethical issue, as evidenced in the case of the Ford Pinto scandal (Mosser, 2013, ch 9.1, para 8), which involved the faulty design of a car that put the customer’s lives at risk. Applying ethical theories can help in determining appropriate corporate responsibility solutions. For instance, the utilitarian theory of ethics would suggest that companies should consider the well-being of all involved and make decisions that are beneficial to the overall population rather than just their stakeholders (Mosser, 2013, ch 9.5, para 14).

In conclusion, understanding the ethical implications of different types of companies like corporations and conglomerates, marketing practices, and customer tracking is essential in determining appropriate corporate responsibility. By doing so, a company can ensure that its practices align with ethical standards and promote an ethical work environment, which ultimately benefits the whole society.

Solution 1:
To address the power misbalance caused by media conglomerates, the government could impose regulations that limit the number of media companies that a single corporation can control. This will not only help to prevent the problem of news distortion but also create a more competitive media landscape where smaller conglomerates will have a chance to make their voice heard. An example of this would be the Telecommunications Act of 1996, which limited the number of radio stations that could be owned by one company (Mosser, 2013, ch 1.6, para 11).

Solution 2:
Instead of relying on conglomerates to spread emergency awareness, there could be a non-profit entity to help disseminate information. This new entity could work with the media to spread truthful and straightforward news that focuses on emergency awareness. Funding could be provided through donations and grants from charitable foundations to ensure its independence and objectivity. An example of this could be the Partnership for Public Service, which works with government agencies to improve their communication with the public during times of crisis.

Suggested Resources/Books:
1. “Business Ethics: Ethical Decision Making & Cases” by O.C. Ferrell, John Fraedrich, and Ferrell, L.
2. “Corporate Social Responsibility: Readings and Cases in a Global Context” by Andrew Crane and Dirk Matten.
3. “Media Ethics: Issues and Cases” by Philip Patterson and Lee C. Wilkins.

Similar Asked Questions:
1. How do media conglomerates affect the quality of news?
2. What are the ethical concerns regarding labor conditions in foreign manufacturing plants?
3. How do marketing practices raise ethical concerns?
4. What are the concerns involving customer tracking and profiling?
5. How can ethical theories be applied to corporate responsibility?

I agree that media conglomerates have a significant impact on the news that reaches the public. As mentioned in the pdf, the more conglomerates controlling the media, the more the news can be swayed by special interests. For example, in 2013, The Guardian reported that Rupert Murdoch’s News Corporation paid millions of dollars in settlements for phone hacking, which raises ethical concerns about how much power these large conglomerates may have over the media they control. However, it is possible to combat this issue by applying ethical theories such as utilitarianism, which emphasizes the importance of making decisions that benefit the largest number of people. If media companies prioritize unbiased reporting and fact-checking, they can demonstrate a commitment to ethical responsibility.

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