Examples of both are shown in the table below:
Why are ethical and CSR issues important?
As seen from the two following references, customers prefer to use businesses which show ethical and corporate social responsibility.
The government as well, is keen to encourage businesses to take an interest in their local community, and in the environment. The Department of Trade and Industry, which is spearheading the campaign, says that CSR activities, such as supporting education and promoting sustainability, are “good for society and good for business”.
()
Article: Metro newspaper, London, Prynn, Jonathan, 22/5/06
A recent article, published in a newspaper study by the grocery research body IGD, has indicated that ‘more than 50% of shoppers choose ethically when they buy their groceries’ with 52% classing themselves as “ethical’ (appendix 1).
Consumers now expect large companies with recognisable brands to have impeccable environmental and social credentials or their brand image could suffer. Ignoring social demands for good ethical practices can destroy customers’ trust and can lead to government legislations.
Incorporating ethics and social responsibility programmes can enhance public reputation, which can increase market share, costs savings and profits. (Dibb, Sally et al 2006, Marketing Concepts and Strategies, Houghton Mifflin, USA.)
Ethical and Unethical Organisations
Corporate social responsibility and ethical practices seems to benefit an organisation’s reputation. Shell, for instance, has been accused of human rights abuses in a number of countries, including the Middle East and there is grave concern by UN and WTO about how Shell treats their employees.
On the other hand, BP are seen to be environmentally friendly, fight global warming through actions such as petrol with lower carbon monoxide and encourage fair trade worldwide, for example.
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Shell is currently under immense pressure from Human rights activists and there is a growing concern among government and academic scientists that current methods of usage of carbon monoxide (fuel aviation) is causing global worming. The European Union has already banned Shell from expanding to four of the most environmentally friendly countries, i.e. Netherlands, Swiss, Amsterdam and Spain. ()
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Shell: As the largest seller of fuel in the world, Shell has been criticized for some of its corporate actions, from issues such as totally disregarding environment issues, practices, reliance on low standards, employment practices, the privatization of some petrol stations, to the abuse of workers' rights, including in 1998 the of a wealthy Iranian oil tycoon who was a threat to Shell at that time. ()
Shell has been fined £20 million in 2003 for missing the deadline for Eco line (carbon monoxide reduce by 30% within 5 years). The EU has given them until 2008 to reduce their carbon wastage by 44% or the company could face up to £65 million fine by September 2008 when G8 has a meeting on global warming issues.
Ethical organisations
BP believes that it is wrong for the majority of the world's citizens to be condemned to a life of poverty and firmly advocates the protection of human rights for workers in all countries. While recognising the limitations of its influence, BP will seek, wherever it can, to ensure producers in developing countries receive a fair reward and workers have safe and decent conditions to operate in.()
BP - Mission Statement
- Provide a great work environment and treat each other with respect and dignity.
- Provide eco friendly petrol and environmentally friendly gases (gas emission)
- Embrace diversity as an essential component in the way they do business.
- Contribute positively to our communities and our environment.
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Recognise that profitability is essential to our future success (http://BP.co.uk/en-GB/)
Thus, it can be seen from the breakdown of the two marketing mixes
2 (A)
Management of individual elements in the Marketing Mix
In the tables below, the marketing mix is examined and compared, showing the management (BP) and mismanagement (Shell) of individual elements:
Mismanagement of individual elements in the Marketing Mix
Thus, it can be seen from the breakdown of the two marketing mixes
2 (B)
Effectiveness in Shell marketing strategy
Shell Stores Inc is the largest company in the world measured by turnover, and it enjoyed double-digit revenue growth over the review period. For the financial year ended 31 January 2005, the company generated revenues worth £285.2 billion, an increase of 11% on the previous year. The growth of Shell is phenomenal!
In terms of the ethical and social responsible stance, they have a defensive strategy and prefer to pay millions in fines for the abuse of people and the environment. The overall cooperate strategy of growth is their main focus, with the introduction of Shell Bank and financial services. They also continue to penetrate the markets abroad, with the recent exception of South Korea where they found it difficult to reach their objectives (CityAM, International Business News, 23 May 2007)
Effectiveness of BP marketing strategy
BP aims to be the leading environmentally friendly supplier, and eco friendly petrol and gas emission cars account for a growing percentage of sales. BP has a strong ethical policy and is firmly committed to supporting climate change. They have taken a proactive attitude, by realising that customers have become more ethical and socially aware. An article in (Metro newspaper, London, Prynn, Jonathan, 22/5/07) said that, ‘Shell has the most ethical customers with 20% of the eco friendly sector, but less than 4% of the total fuel market”. They source locally and have suppliers who are well known companies world wide for tackling climate change e.g. (OCIMF) Oil Companies International Marine Forum.
They have a cause related marketing strategy with Fair-trade, WTO and Green Peace and have set up their own foundations to support workers in South Africa in the form of education, social care and housing and tackling the worlds biggest challenge global worming.
Bruk Kassaye Group 2 A Marketing Planning
Kew, John, P (2005) Great ideas and blind alleys: Business Environment, Management In Strategic, vol 28 (3), p.283-299.
Kew, John, P (2005) Great ideas and blind alleys: Business Environment, Management In Strategic, vol 28 (3), p.283-299.
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Dibb, Sally, P (2006) Marketing Concepts and Strategies: Marketing, p.283-299.
Shell, 12th January 2006, Date site accessed 20 May 2007
Shell, http://en.wikipedia.org/wiki/Shell Last updated 9th September 2006, Date site accessed
19th May 2007
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BP Mission Statement, ) Last updated 9th September 2006, Date site accessed 22nd May 2007
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