Business Ethics and Deceptive Advertising essay

Introduction

Every business is guided by a code of ethics in running a just and legit business according to the law and in an effort to gain acceptance in the public. Business ethics has to be practiced within all departments for a business to run smoothly. While the key factor in a business is to maximize profits through sales and minimizing costs, it is the effort of the marketing department to advertise the products and services that play a big part in enhancing performance.

Competition in an industry leads companies to creating advertisements in order to attract more customers than competitors. Other than providing all the relevant information to consumers and keeping competition at bay, advertisements also act as a reminder about a brand, and helps in introducing a new product to a market by creating awareness.

Businesses develop their own codes of ethics that define the priorities and values to be upheld (Pinnington, Macklin & Campbell, 2007). They also provide suppliers and consumers with a guideline on how to conduct business amongst each other, and what their expectations are. An organization considers employees’ ethical values and consumers’ values which should be in line with those of the organization. It makes it easier for the parties to seal a contract when doing business together.

In respect to ethics, ethical values and operations of a business, it is important to identify what is right or wrong. For a business to grow and ensure that it overcomes competition and retain consumers, observance of business ethics can be an added advantage. Therefore, organizations must provide quality and genuine products.

Portraying a good reputation to stakeholders will always prevent a business from sinking. Organizations with good business ethics are more likely to be associated with, than those dealing in corrupt activities. Therefore, it is proper to provide correct information regarding all departments of an organization.

Deceptive Advertising

Advertising is the process of passing information regarding a product to the public with the aim of attracting their attention and induce them to make purchases. Organizations advertise especially when competition is stiff in an industry. In some cases, advertisements may exaggerate some contents about a product. This deceptive advertising has been considered unethical and harmful to consumers.

An advertisement is considered to be deceptive when:

It contains a false statement regarding the product or service which is not observable by consumers after their purchase.
The said satisfaction is not derived from the product or service.
The said product or service has negative effects that were not highlighted during the running of the advertisement. In this scenario, the product or service may cause harm to the consumer.
The features of a product were exaggerated both in the way they function and in the way they look.
General Gadgets Inc. has had its doors open for business for 30 years. It could become a market leader although it realized that its market share declined over the last 10 years because of increased competition in the market. In an effort to maintain its position, the conclusion of advertising was reached and a marketing firm was outsourced. The plan was to create awareness for its new product, and increase the number of sales for the new products.

Impact of Deceptive Advertising

Emergence of Law Suits

In the case that the marketing company Sell It Like It Is hides the truth about the company’s products, the organization would face the arm of the law as consumers will seek compensation for deception, and the advertising industry standards will not let the company get away with such. Dissatisfied consumers may sue the company for non-delivery of what was promised. Compensating all consumers may end up proving being a costly affair than anticipated.

Negative Public Relations

The company would receive negative publicity. While trying to increase sales and overcome competition, the company might sink into disrepute leading to a decline in sales (O’Neill, 1998). It would affect the company’s brand negatively. Such a case could also lead to an increase in the turnover rate. The employees will lose their trust in the company as the fault goes back to the company name instead of the advertising company. To prevent the negative association to the company, employees would prefer working elsewhere.

Business Code of Ethics

A code of ethics identifies the values that guide the running of a business both internally and externally (Weiss, 2009). Despite the different beliefs held by different individuals, the company’s code of ethics provides a guide for what is right or wrong.

General Gadgets Inc. Code of Ethics

The company’s vision statement shows that it intends to provide customers with the best products. The company believes in delivering more than the customers’ expectations. Innovation is the driving force and the company promises to update all products based on the current technology.

Values

All businesses will be run under the company’s set of values which include:

Integrity
Honesty
Accountability
The company’s mission is to ensure that the society finds a way to make work easy while competing. The company also focuses on internal, external trust and credibility. The business is successful due to the trust consumers hold on the firm. In return, the company is committed to delivering as promised. To maintain this aspect, the company is dedicated to being honest, holding integrity, and meeting its goals. As a proof, the company is judged on its actions rather than on its statements and written values. Therefore, it is the role of the company to ensure that consumers obtain products that are functional and durable as stated by the company.

Respect for Others

General Gadgets Inc. provides a suitable working environment for its employees allowing everyone to uphold respect. This environment is meant to bring out the full potential of the employees. Therefore, matching tasks and personnel correctly has allowed for the exploitation of each one’s talent. General Gadgets Inc. is an equal opportunity employer and provides an environment that is free from discrimination. Any form of discrimination towards a fellow employee or customer attracts a dismissal or termination of the contract.

Presence of a Culture of Open Communication

At General Gadgets Inc., everyone can exercise his/her freedom of speech. Communication is not limited to a downward flow of information. It is effective, particularly in matters concerning ethics. Managers encourage open communication to encourage employees to ask questions which in turn helps in preventing mistakes and promotes confidence.

In regard to matters concerning what is right or wrong, employees can discuss with the management and give their views. No employee is disciplined for raising genuine ethical concerns in good faith.

Leadership from the Top

The management has the role to demonstrate what they expect employees to do through actions. Therefore, they have to uphold the code of conduct for them to demonstrate its importance.

The management communicates the expected behavior within the company ensuring that the actions displayed in public are right. Every business is judged by its actions and not what they seem to say through the media. The management is responsible for addressing ethical issues or concerns asked by employees and should in turn take the necessary steps to deal with such issues. At General Gadget Inc., ethics dialogue should be a natural way of running the business.

Adherence to the Law

General Gadget Inc. derives its set of values from the set standards of the law. It has to abide by the rules and regulations of the state. Every employee is provided with the company’s policies of which are relevant to their roles within the organization.

Competitive Rivalry

General Gadget Inc. is dedicated to a fair and vigorous competition while upholding ethical values. The company’s products are sold based on very competitive prices. Pricing and marketing strategies are decided upon by the company and decisions arrived at in accordance to the set values. The company will not indulge in activities that are unlawful or deceitful with the aim of overcoming competition in sales or in an effort to increase profit margins.

Disclosure of Information

At General Gadgets Inc., it is ensured that the information provided on other products match the full disclosure requirements. Therefore, there is no chance for selective disclosure as materials released to the public entail all information in respect to the products.

Role of Ethics: A General View

Wiley (2006) observed that the significance of ethics and the need to make ethical decisions on all avenues has gained enormous popularity in the recent times. This is based on the pressure placed on businesses by investors, creditors, stockholders and all parties who are directly or indirectly affected by businesses and their financial performance. It is vital to recognize the factors that have led to an increase in the awareness and demand for ethics.

One of the leading factors is globalization. Globalization is considered a major contributing factor to changes in businesses or work force. Acquisition of a proper understanding of international ethics is gradually becoming important. The main reason behind this understanding is based on the idea that there is a possibility that ethical practices followed by a given organization may not necessarily have to be followed in international markets. In this regard, technology can is considered to be a major tool that has contributed towards changing the ethics front in business. The dependence on technology has increased transparency in decision making (Duska and Clarke, 2011).

Competition is another key reason why organizations make ethical or unethical decisions. The state within markets is considerably bleak as retailers encounter extreme competition from both international and local competitors. This renders positions of enterprises within markets to be risky. Hence, companies may make dishonest claims and unethical decisions so as to gain a comparative advantage (Wiley, 2006).

How competition and globalization are viewed by employees such as managers may also be subject to social and cultural influences. Ethical malpractices have been associated with the misuse of resources. Although such cases affect public organizations largely, in the current times, private organizations have also faced a similar fate. Any misuse of resources is unacceptable since it may lead to closure of organizations. Closing an organization has huge implications on the larger society as it impedes development as a result of job loss and shrinking in production levels. Consequently, each stakeholder has a role to play in preventing the possibility of organizations closing down due to misuse of resources. In this regard, the role of ethics is indispensable as only ethical professionals can point out such malpractices. Hence, the observation that ethics help in ensuring organizational sustenance and societal progression is held.

There is evidence to suggest that socio- cultural factors have an impact on people’s decisions, as Duska and Clarke (2011) explained that these factors affect how people think, behave, and conduct business. The social and cultural factors influence opinions which are then used as reference points when making decisions. Ethical guidelines are the norms which are embedded within our daily lives and business practices. They are acquired through experience and knowledge on local customs, religious convictions, traditions and social norms.

Competition in an industry leads companies to creating advertisements in order to attract more customers than competitors. Other than providing all the relevant information to consumers and keeping competition at bay, advertisements also act as a reminder about a brand, and helps in introducing a new product to a market by creating awareness.

Businesses develop their own codes of ethics that define the priorities and values to be upheld (Pinnington, Macklin & Campbell, 2007). They also provide suppliers and consumers with a guideline on how to conduct business amongst each other, and what their expectations are. An organization considers employees’ ethical values and consumers’ values which should be in line with those of the organization. It makes it easier for the parties to seal a contract when doing business together.

In respect to ethics, ethical values and operations of a business, it is important to identify what is right or wrong. For a business to grow and ensure that it overcomes competition and retain consumers, observance of business ethics can be an added advantage. Therefore, organizations must provide quality and genuine products.

Portraying a good reputation to stakeholders will always prevent a business from sinking. Organizations with good business ethics are more likely to be associated with, than those dealing in corrupt activities. Therefore, it is proper to provide correct information regarding all departments of an organization.

Deceptive Advertising

Advertising is the process of passing information regarding a product to the public with the aim of attracting their attention and induce them to make purchases. Organizations advertise especially when competition is stiff in an industry. In some cases, advertisements may exaggerate some contents about a product. This deceptive advertising has been considered unethical and harmful to consumers.

An advertisement is considered to be deceptive when:

It contains a false statement regarding the product or service which is not observable by consumers after their purchase.
The said satisfaction is not derived from the product or service.
The said product or service has negative effects that were not highlighted during the running of the advertisement. In this scenario, the product or service may cause harm to the consumer.
The features of a product were exaggerated both in the way they function and in the way they look.
General Gadgets Inc. has had its doors open for business for 30 years. It could become a market leader although it realized that its market share declined over the last 10 years because of increased competition in the market. In an effort to maintain its position, the conclusion of advertising was reached and a marketing firm was outsourced. The plan was to create awareness for its new product, and increase the number of sales for the new products.

Impact of Deceptive Advertising

Emergence of Law Suits

In the case that the marketing company Sell It Like It Is hides the truth about the company’s products, the organization would face the arm of the law as consumers will seek compensation for deception, and the advertising industry standards will not let the company get away with such. Dissatisfied consumers may sue the company for non-delivery of what was promised. Compensating all consumers may end up proving being a costly affair than anticipated.

Negative Public Relations

The company would receive negative publicity. While trying to increase sales and overcome competition, the company might sink into disrepute leading to a decline in sales (O’Neill, 1998). It would affect the company’s brand negatively. Such a case could also lead to an increase in the turnover rate. The employees will lose their trust in the company as the fault goes back to the company name instead of the advertising company. To prevent the negative association to the company, employees would prefer working elsewhere.

Business Code of Ethics

A code of ethics identifies the values that guide the running of a business both internally and externally (Weiss, 2009). Despite the different beliefs held by different individuals, the company’s code of ethics provides a guide for what is right or wrong.

General Gadgets Inc. Code of Ethics

The company’s vision statement shows that it intends to provide customers with the best products. The company believes in delivering more than the customers’ expectations. Innovation is the driving force and the company promises to update all products based on the current technology.

Values

All businesses will be run under the company’s set of values which include:

Integrity
Honesty
Accountability
The company’s mission is to ensure that the society finds a way to make work easy while competing. The company also focuses on internal, external trust and credibility. The business is successful due to the trust consumers hold on the firm. In return, the company is committed to delivering as promised. To maintain this aspect, the company is dedicated to being honest, holding integrity, and meeting its goals. As a proof, the company is judged on its actions rather than on its statements and written values. Therefore, it is the role of the company to ensure that consumers obtain products that are functional and durable as stated by the company.

Respect for Others

General Gadgets Inc. provides a suitable working environment for its employees allowing everyone to uphold respect. This environment is meant to bring out the full potential of the employees. Therefore, matching tasks and personnel correctly has allowed for the exploitation of each one’s talent. General Gadgets Inc. is an equal opportunity employer and provides an environment that is free from discrimination. Any form of discrimination towards a fellow employee or customer attracts a dismissal or termination of the contract.

Presence of a Culture of Open Communication

At General Gadgets Inc., everyone can exercise his/her freedom of speech. Communication is not limited to a downward flow of information. It is effective, particularly in matters concerning ethics. Managers encourage open communication to encourage employees to ask questions which in turn helps in preventing mistakes and promotes confidence.

In regard to matters concerning what is right or wrong, employees can discuss with the management and give their views. No employee is disciplined for raising genuine ethical concerns in good faith.

Leadership from the Top

The management has the role to demonstrate what they expect employees to do through actions. Therefore, they have to uphold the code of conduct for them to demonstrate its importance.

The management communicates the expected behavior within the company ensuring that the actions displayed in public are right. Every business is judged by its actions and not what they seem to say through the media. The management is responsible for addressing ethical issues or concerns asked by employees and should in turn take the necessary steps to deal with such issues. At General Gadget Inc., ethics dialogue should be a natural way of running the business.

Adherence to the Law

General Gadget Inc. derives its set of values from the set standards of the law. It has to abide by the rules and regulations of the state. Every employee is provided with the company’s policies of which are relevant to their roles within the organization.

Competitive Rivalry

General Gadget Inc. is dedicated to a fair and vigorous competition while upholding ethical values. The company’s products are sold based on very competitive prices. Pricing and marketing strategies are decided upon by the company and decisions arrived at in accordance to the set values. The company will not indulge in activities that are unlawful or deceitful with the aim of overcoming competition in sales or in an effort to increase profit margins.

Disclosure of Information

At General Gadgets Inc., it is ensured that the information provided on other products match the full disclosure requirements. Therefore, there is no chance for selective disclosure as materials released to the public entail all information in respect to the products.

Role of Ethics: A General View

Wiley (2006) observed that the significance of ethics and the need to make ethical decisions on all avenues has gained enormous popularity in the recent times. This is based on the pressure placed on businesses by investors, creditors, stockholders and all parties who are directly or indirectly affected by businesses and their financial performance. It is vital to recognize the factors that have led to an increase in the awareness and demand for ethics.

One of the leading factors is globalization. Globalization is considered a major contributing factor to changes in businesses or work force. Acquisition of a proper understanding of international ethics is gradually becoming important. The main reason behind this understanding is based on the idea that there is a possibility that ethical practices followed by a given organization may not necessarily have to be followed in international markets. In this regard, technology can is considered to be a major tool that has contributed towards changing the ethics front in business. The dependence on technology has increased transparency in decision making (Duska and Clarke, 2011).

Competition is another key reason why organizations make ethical or unethical decisions. The state within markets is considerably bleak as retailers encounter extreme competition from both international and local competitors. This renders positions of enterprises within markets to be risky. Hence, companies may make dishonest claims and unethical decisions so as to gain a comparative advantage (Wiley, 2006).

How competition and globalization are viewed by employees such as managers may also be subject to social and cultural influences. Ethical malpractices have been associated with the misuse of resources. Although such cases affect public organizations largely, in the current times, private organizations have also faced a similar fate. Any misuse of resources is unacceptable since it may lead to closure of organizations. Closing an organization has huge implications on the larger society as it impedes development as a result of job loss and shrinking in production levels. Consequently, each stakeholder has a role to play in preventing the possibility of organizations closing down due to misuse of resources. In this regard, the role of ethics is indispensable as only ethical professionals can point out such malpractices. Hence, the observation that ethics help in ensuring organizational sustenance and societal progression is held.

There is evidence to suggest that socio- cultural factors have an impact on people’s decisions, as Duska and Clarke (2011) explained that these factors affect how people think, behave, and conduct business. The social and cultural factors influence opinions which are then used as reference points when making decisions. Ethical guidelines are the norms which are embedded within our daily lives and business practices. They are acquired through experience and knowledge on local customs, religious convictions, traditions and social norms.

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