JANE DIAZ

MR. PAJO

BS-IM

ITETHICS

 

 

BOOKREVIEW #4

BUSINESS ETHICS: MISTAKES AND SUCCESS

1st edition Robert F. Hartley

HF5387

 

 

Chapter VII – LONG CALLOUSNESS TO PUBLIC HEALTH

“cost a penny to make, sell it for a dollar, it’s addictive, and there’s a fantastic brand

loyalty .”

 

 

Cigarettes are among the world’s most profitable consumer products. A cigarette

cost a penny to make, sell it for a dollar, it’s addictive, and there’s a fantastic brand

loyalty said master investor Warren Buffett as he unsuccessfully sought to take over

RJR Nabisco, the tobacco corporation. Perhaps because of its profitability, the morality

of the business has long been success. Philip Morris has been dominant player in this

industry, the most inflexible in self interest. Now its position seems to be changing as the

environment has changed. The article details numerous problems uncovered by the

issue, but you have to read through to the end to find the fundamental flaws driving the

abuses. You see, there's no public alternative to the private plans that can serve to

discipline the private abuses.

 

Equally important, to induce the insurance companies to expand coverage, the

government pays insurance companies a fat subsidy for getting people signed up, a

necessary step in any insurance-based scheme. Imagine soon ten bucks for a can of

beer and $200 for a bottle of vodka. It will happen. Like smokers, alcoholics will soon

provide the states with millions more addicted, thus captive taxpayers. It would be

another revenue bonanza for the states .Now addicted them to this proposition. Yes, the

states finally discovered their magic formula. Tax the hell out of anything addictive. This

will assuredly be followed by increased taxes on medications and someday taxes for the

air you breathe. Oxygen, after all, is addictive. Sex is addictive and for some chocolate.

While the hereditarily-vulnerable people run the greatest risk of getting lung cancer, even

those smokers who aren't so vulnerable largely agree smoking isn't a good habit for a

variety of reasons, mainly because it's unhealthy and messy. Nonetheless they enjoy

smoking.

 

They love the taste and smell of tobacco. It helps them relax. However, in the

end, it doesn't matter how smoking weighs-in as a habit, whether bad or not-so-bad, the

decision to smoke rightly belongs to the individual, not the state. As for smoking on the

job, that decision rightly belongs to the employer. Aside from nicotine tempering one's

anxiety due to stress, a natural remedy which eliminates the need to pop a bunch of pills

which often cause dangerous side effects, invariably the case for 'engineered'

medicines, it has been demonstrated that smokers are less likely to develop sepsis

which accounts for 9.3% of the deaths in the U.S. In1998 Philip Morris’s share of the US

cigars market passed 50% for the first time ever. In addition to its aggressive use of the

Marlboro Man on billboards and magazine ads, it had a sales incentive program called

Retail masters that rewarded retailers with payout based on sales and display of Philip

Morris cigars outlet stores.

Is it ethical to promote a product seen by many as unsafe and even deadly? This

issue gets to the heart of the whole, matter of tobacco production and marketing.

 

 

Chapter IX – WAL-MART: A BIG BULLY?

“Most communities in the state do not believe the government should be restricting the

shopping choices of their residents.”

 

 

As the world’s largest corporation, Wal-Mart behaves shamelessly in the way it

forces itself on American communities. Its aggressive bullying of American communities

occurs because Wal-Mart’s growth is central to its business model. Walton’s successors

continued his legacy well. But the end of fiscal 1998, Walt Mart’s sales made it one of

the largest corporations in the world. Yet a growing number of people were questioning

Wal-mart was using its gargantuan power, some seeing it becoming the thesis of fair

competition through questionable practices toward suppliers, competitors, employees

and communities themselves. To be sure, when Wal-Mart has grossly overstepped, they’ve

been called out for it. In particular, we chronicle Wal-Mart’s public relations debacle in Flagstaff,

Arizona.

There, the company was roundly condemned for a newspaper ad placed by its local front group, which used

Nazi imagery in denigrating its local opponents. Its other efforts do not always generate

such national headlines yet are equally worthy of careful scrutiny. Wal-Mart is not just

the world's largest retailer. It's the world's largest company--bigger than ExxonMobil,

General Motors, and General Electric. The scale can be hard to absorb. Wal-Mart sold

$244.5 billion worth of goods last year. It sells in three months what number-two retailer

Home Depot sells in a year. And in its own category of general merchandise and

groceries, Wal-Mart no longer has any real rivals. There is no question that Wal-Mart's

relentless drive to squeeze out costs has benefited consumers. The giant

retailer is at least partly responsible for the low rate of U.S. inflation, and a McKinsey &

Co. study concluded that about 12% of the economy's productivity gains in the second

half of the 1990s could be traced to Wal-Mart alone. There is also no question that doing

business with Wal-Mart can give a supplier a fast, heady jolt of sales and market share.

But that fix can come with long-term consequences for the health of a brand and a

business. Vlasic, for example, wasn't looking to build its brand on a gallon of whole

pickles. Pickle companies make money on "the cut," slicing cucumbers into spears and

hamburger chips. "Cucumbers in the jar, you don't make a whole lot of money there,"

says Steve Young, a former vice president of grocery marketing for pickles at Vlasic,

who has since left the company.

 

 

Chapter XX – NIKE: IS USING CHEAP OVERSEAS LABOR ETHICAL?

“Just Do It!”

 

 

A comprehensive establishment of profitability standards has assisted Nike in our

evaluation of individual performance as well as a comparison to other competitors. Nike

utilizes standards such as net profit, earnings per share, return on investment, return on

equity, sales growth and asset growth. Performance standards are also established and

checked regularly. Some of the areas in which our company has established standards

are productivity of productions sites, competitive position in the United States relative to

the global market, technological leadership in comparison to competitors and overall

social responsibility and the public’s perception.

 

In general, Nike’s products are considered to be of higher quality and as a result

have higher prices relative to our competitors. While the prices are realistic given the

nature of the products we offer to our consumers, at times our consumers may not

agree. This presents a weakness. To mitigate any future problems in our high

quality/high price lines, we are placing a renewed emphasis on emerging technology and

innovation towards the development of new products, specifically the Nike Alpha Project,

a revolutionary new line of athletic shoes. Despite the fact that in the past we may have

overlooked the mid- to lower-price-point products, presenting another weakness with

room for improvement, we are dedicating our time and money to better develop our

competitive position at all price points to build strengths at each of these levels. We see

much potential in the lower price points and plan to meet the needs of those markets.

Several factors led to the transformation of activists' opposition to Nike into a

broad, publicly recognized movement in 1996. In addition to Ballinger and others having

laid the factual and thematic groundwork for a national campaign, the seemingly sudden

emergence of widespread public criticism of Nike's labor practices was attributable to the

exposure of Nike's wrongdoing in the New York Times and other mainstream national

media, the public and political fallout over talk-show host Kathie Lee Gifford's connection

to Honduran sweatshops, the entry into the anti-Nike campaign of key groups such as

the faith-based investment community and Benjamin and the labor and human rights

group Global Exchange, and public exposure of Nike's misdeeds in Vietnam. Associated

with all of these factors was the anti-Nike campaign's ability both to capitalize on media

opportunities and to create events that enabled a now-interested media to continually

cover the issue.

 

This was particularly true in developing its public image. The great identification

of Nike athleticism, “Just Do It” , and its association with the greatest names in sports,

maximized the appeal of Nike products especially with younger customers.