Industry Studies: Consumer Goods Industry

Topic: Regulatory and ethical contexts and managing a global reputation

Topic Number: 7

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Overview

One of the major challenges that consumer goods organisations operating globally need to face is the different regulatory regimes around the world. Furthermore, different countries also have a range of ethical stances that they adopt which can be very different from the home country a consumer goods company operates in.

In many instances companies have had to adapt their business practices or even had to pull out of certain countries as the requirements have conflicted with their own internal policies. It is in this lecture that we will explore these issues further. We will also look at the importance of managing a global reputation given the rate and pace with which news travels globally.

Finally we will evaluate whether business and ethics are able to go hand in hand.

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Learning Outcomes

• Understand and communicate the various ethical and regulatory environments and how they differ from each other

• Evaluate the consequences of poor reputation management

• Determine and present an understanding of the role of ethics and business for the CGI

Business Ethics

In law a man is guilty when he violates the rights of

others. In ethics he is guilty if he only thinks of doing so.

Immanuel Kant

Corporate executives and business owners need to

realise that there can be no compromise when it comes to ethics, and there are no easy shortcuts to success.

Vivek Wadhwa

What is business ethics?

• Ethics: an individual’s personal beliefs about whether a decision, behavior, or action is right or wrong

• Ethical behavior: behavior that conforms to generally accepted social norms

• Unethical behavior: behavior that does not conform to generally accepted social norms

Ethical Generalisations

• Individuals have their own personal belief system about what constitutes ethical and unethical behavior

• People from the same cultural contexts are likely to hold similar beliefs as to what constitutes ethical and unethical behavior

• Individuals may be able to rationalize behaviors based on circumstances

• Individuals may deviate from their own belief systems based on circumstances

• Ethical values are strongly affected by national cultures and customs

Ethics in Cross-Cultural and International Contexts

Behavior towards employees

Hiring Practises Career Development

• Equal opportunities

• Fair recruitment practices

• Same process for all

• Equal opportunities

• No glass ceiling

• Pathway to progression

Behavior towards employees

Compensation & Benefits

Workers Rights & Dignity

• Fair compensation

• Relevant benefits

• Fair terms

• Working environment

• Working conditions

• Employee treatment

How Employees Treat the Organization

Conflict of Interest Confidentiality Honesty

A conflict of interest occurs when a decision potentially benefits the

individual to the possible detriment of the

organization.

Ensuring that one keeps company

secrets confidential

Doing the right thing by the business.

Perspective differs depending on the circumstances and

culture

Employees, the Organization, & Other Economic Agents

Customers Competitors

Suppliers Trade Unions

Managing Ethical Behavior Across Borders: Guidelines and Codes

Written Guidelines Codes of Ethics

• Compliance with regulations

• Conflicts of interest

• Outside directorships

• Corporate opportunities

• Honesty

• Integrity

• Promise-keeping

• Loyalty

• Fairness

• Caring

• Respect

• Law abiding

Managing Ethical Behavior Across Borders: Guidelines and Codes

Organisation Practises: Say one thing do another?

Managing Ethical Behavior Across Borders: Guidelines and Codes

Corporate Culture

The Corporate Reputation

What is corporate reputation management?

Reputation management is the understanding or influencing of an individual's or business's reputation. It was originally coined as a

public relations term, but advancements in computing, the internet and social media made it primarily an issue of search results. Some parts of reputation management are often associated with ethical grey areas, such as astroturfing review sites, censoring negative

complaints or using SEO tactics to game the system and influence results.

Brand Vulnerability Index

Source: Burson Marsteller, 2014

Calculating your Brand Vulnerability Index Score

6 principles for managing a reputation

The great majority of business decision-makers feel it is now much harder to manage news flow and reputation, and that

the internet, social media and the need to respond extremely quickly are key challenges.

Real-time Transparency

Not only do rumours spread fast, they are also going

global at frightening velocity. Channeled through online communities and affinity groups and escalated via micro-blogs and search

engines.

Under pressure from governments, NGOs, activists

and other stakeholders, organisations are being forced to be more open about their

activities. It is also much harder for organisations to

keep secrets.

Source: WPP, 2014

6 principles for managing a reputation

Accountability Professionalism

Many types of organisations are being made to be more

accountable for their actions, and to involve stakeholders to

a greater extent in the decision-making processes.

Consider how social media is being used…

NGOs and activists are becoming increasingly adept

at using the plethora of channels and tools at their

disposal to increase awareness of their campaigns and activities, organise and activate support and raise

money.

Source: WPP, 2014

6 principles for managing a reputation

Consistency Culture & Operations

Nowadays, people have access to not just the greater amounts of information, but also, thanks to the internet

and search engines, to much of the same information.

There’s also the ever greater array of gatekeepers busily

patrolling Wikipedia and other key information gateways.

Some firms are well-suited to the new spirit of openness

and authenticity – especially relatively flat organisations

that place a premium on internal knowledge-sharing

and open external relationships.

Yet the majority are struggling to identify and put in place the appropriate structures, protocols and tools to meet

the challenges. Source: WPP, 2014

Creating a competitive advantage: Gain better employees?

Source: Net Impact, 2013

Do you agree?

Creating a competitive advantage: Differentiate from competitors?

Source: Marks and Spencers, 2014

Creating a competitive advantage: Differentiate from competitors?

Source: Marks and Spencers, 2014

End of presentation

© Pearson College 2013