So this is at this point we can say that this is scandalous. Indeed, everyone in the company knew VIOXX could have unsafe effects and they kept denying everything. Worst thing is that, they kept learning a lot of money as they invested a lot in their “killing”advertising untill 2003 so that they generated more that 2.3 billion dollars in sales.In their advert, they of course omited to tell about the risks (untill 2001, much time later, when the FDA forced the company to communicate about the risks finally) They just did not care about people, they just wanted to make money, that’s it. Plus, all the employees were trained to answered and lied to the physicians or everybody else to avoid suspections. They just kept sinking in their lie and let things escalate … Of course the employees could have lost their job if they had told anything. But it was the right choice to do if they did not want to be morally corrupted as they are at the moment.
What’s more, concerning people who had doubts and tried to inform the patients, they were all sidelines or the company threathened them like the physican, Dr.Topol, that lost his job because of this story in the end as he tried to warn people. Merk had even made a hit list of doctors who had to be “neutralized” or discredited because they criticised VIOXX. The intimidation tactics used by Merck were all very significant and aggressive. For example, we can quote one of the employees’sentences: “We may need to seek them and out and destroy where they live”.
Even today, in 2009, the company keeps denying as we can see in the article that relates the VIOXX trial. Saving people or making money ? Merk prefered making money and that is of course so not an ethical way of doing business when you prefer letting people die and lie.
In that case, the employees and the executives are of course to blame.But the FDA did not fulfilled its responsability either as they should have obliged Merk to withdraw VIOXX after the 2nd test. The study that estimated VIOXX may have contributed to more than 27 785 heart attacks had even never been published by the FDA itself.
So through that case, it is obvious that Merk did not act ethical by making faulse statements, using unsubstanstiated claims, omitted risk information, and using audio conferences to promote VIOXX for unapproved usages and unapproved dosage. But this behaviour had of course, very bad consequences as we will see later. Bad use of marketing can in that case being very dangerous as marketing dangerous medecines is similar to playing havoc with people’life. Of course, not all the pharmaceutical companies act like that. Many medecines are withdrawn much before such consequences like PROPOFAN, (to lose weight) and so on ... (cf Liste de médicaments retirés du marché français, wikipedia)
However,it seems as this can happen again if we refer to the ALLI pill.
What will happen then ? could it be another VIOXX case ?
Then, let’s talk about the “marlboro man”, product of one of the most sucessful advertising campaign in history. The marlboro man has long mermerised people around the world, and a few can deny the glamour of the rugggedly good-looking Marlboro cowboy, with boots, hat, chaps and of course, a cigarette in his mouth. Few people remember, however, that the actor who originally portrayed the Marlboro man died of lung cancer as a result of smoking. (Moral issues in business by W.H.Shaw,V.Barry and G.Sansburry- chapter 6)
In that case, we can wonder to what extend manufacturers abuse advertising. Indeed, it is kind of unethical in a certain way, as advertisers create or at least stimulate desires for products that consumers would not otherwise want as it is harmul. But they make them attractive! Moreover, the unethical aspect of tabaco companies can be seen in 2 other ways. First, they market cigarettes to teenagers. Second, they have denied for years the health risks, particulary cancer, that cigarette pose. (it is just recently that they put some some pictures on the pack, and only because the law told them to do so). Selling cigarettes is like selling guns (most of the time, Cf the Blackwater case), it can not be ethical as the product itself is harmful and can cause death.
Another problem in unethical marketing and advertising: when the message is discriminatory.
Ex: The toyota case: the advertisement parodied a Ford campaign that featured a man jumping into his Falcon and travelling high speed in wet conditions. At the end of the advertisement, we see he has been driving his very pregnant wife to hospital. The ad also suggested a controversial cover of Vanity Fair featuring a pregnant Demi-Moore posing naking. So it created a debate about whether it demeaned or exploited women. Many feminists found it offensive and exploitive, insulting or even dehumanising ; Firstly because it ridiculed pregnancy and secondly because the picture showed a headless woman . So that ad can have a strong influence on people’s mind that can be seen as belittling or destabilizing a group of people, ridiculize them or insult them. (Another example: “Y’a bon banania, an ad to sell cacao powder, using a black man with a strong african accent). We can also speak about some discriminatory marketing positioning. Ex : Abercrombie and Fitch that exclude fat and ugly people. They’ve accually been sued for that. (cf Article-Abercrombie et fitch article July 10, 2008 - Abercrombie's XXL-Sized Problem)
However, if we thing about other companies like Vuitton, Dior and Co.. for example. We could say that it is only for rich people so that it can be unethical just to sell to this segment of people, right ? In a nutshell, would the cunsumption society in which we are living be unethical? Because, finally, nothing lies on concrete values anymore but purchases, superficial and so on. So would business men be obliged to make only unethical decisions to sell ?
The answer would obviously be no. Selling is not non-ethical but it has to be done by respecting certain rules. Decisions that have been made for the VIOXX case, where lying is the opposite of ethic is scandalous, omissions, discriminatiory messages too. But selling in informing the better/correctly is possible and some companies do it, that is what makes their strengh actually. Things have to be pondered and firms have to respect ethic. If not, it can have bad consequences on people’s life,health, safety, image (women, fat people).
MArketers have to be honest when it comes to the products they sell and inform the consumers before everything.
Bad ethical policies negate the company’s image/competitiveness and leads to the loss of customers
Some business owners might be forgiven for thinking that having an ethical strategy represents a compromise with their competitive advantage. But in the world where corporate accounting and marketing scandals are prompting legislators and business leaders to embrace the “triple bottom line” of people, planet and profits, the truth increasingly is that nice guys do not always finish last. Indeed, as consumers become more globally aware and demand more honesty and transparency, it pays a lot for a company to be ethical. More than attracting customers and improving companies’ image, ethical and ecological positionning makes a sizeable contribution to the bank’s profitability as it is cost saving finally.
Let’s say a few examples. Contributing to their local community first (ex: find a local supplier: not only will this cut down on transport and delivery costs, it will help the company to reduce pollution from road traffic and also make sure that the money they spend with them remain in the local economy and support it, which indirectly may mean the employment of people who will then purchase their product or service). Or even helping an association can reinforce the companie’s image. As Charles Handy, one of the world’s leading management gurus says: “the companies that survive longest are the ones that work out what they uniquely can give to the world”. Adopting an ethical purchasing policy (ex:getting the fairtrade mark) and find suppliers who share the company’s aims like reclycing, waste less, use production processes using reduced energy/chemicals/non-renewable, no products being tested on animals... Most of the time, when selling an ethical product or service, the companies exceed the expectations of their customers by providing high-quality,long lasting products accompanied by excellent customer service. And this always set them apart from other companies and increases their sales and their profile; they really gain a competitive advantage. Then, playing a part in an ethical supply chain is also important for customers. Indeed, a closer relationship between the organizations throughout the chain bring competitive advantage, reduce costs and also helps to maintain a loyal customer base. Long term, transparent and consistent relationships are the key to sucess (ex: Camelot company in the UK, the national lottery provider is well know for its ethical policy) (Cf Business on a shoe string p 12-50)
So as we have seen, trying to respect ethics has many advantages like creating value for customers, it attracts them and it is a competitive advantage for sure. But, creating an ethical strategy means a lot more than jumping into the bangwagon and exploiting another niche market. The viral effect of the internet, which enables consumers to spread ideas and opinions quickly via email and blogs, shines a strong light on the sincere and insincere alike. The risk of marketing ethical credentials is that, should you be perceived to underperform, you may be charged with hypocrisy and deserted by your customers in droves (ex: google and its decision to remove references that the Chineese governement would object to when it lauched its chineese language version rocked public opinion after claiming that its corporate policy “do not evil” or even Starbucks who had claimed that they were committed to purchasing their coffee in a ethical and a sustanable manner, were found to by Oxfam to have tried to block Ethiopian farmers’attempts to file trademark applications for its most famous coffee names, denying them potentiel earnings of up to 47 million pounds annually in the process...
As a result, companies must be sure that their standards are genuinely adhered to because customers will be very wary of companies that lie or which start to source ethical products purely to enhance their image. Bad ethical behaviours or non-respected ethical policies can have a huge impact the company’s image, people’s trustworthiness and competitiveness. And lying to your customers is a very good reason for them to leave the organization.
Other examples can be said. A company that only cares about its customers until they purshase then, do not care and do anything about service recovery: that is not a very ethical way of doing business, and it is another reason that will make customers leave. Also, subliminal advertising, if discovered, is seen as non-moral as it “forces” customers to buy without their agreement in a certain way (it coerces and manipulate): it will negate the firm’s image too and make the customers go.
It can lead the company to bankcrupt / lose a lot of money
In some cases, non-ethical behaviors can lead to very serious consequences.
If we hark back to the VIOXX case, we can see that some people died in one way, because of non-ethical decisions ! But, once the mistake discovered, the company has to pay for the damages. And in this case, things happened that the lawsuits have been multiple so that it has been very hard for the firm’s finances as Merk paid hundred of million dollars in punitive damages and in compensatory damages.. And this amount of money is so significant that it can lead to a brankrupcy. Then, after such a thing, some relationships can be altered. Ex: between doctors/ laboratories/medical representatives or even people. They cannot trust each other so that doctors for example would prefer boycoting the products from Merk laboratory by not prescribing them.
Some measures to take to avoid it?
First of all, trying to instill ethic norms earlier (at university for example) can have an impact on the ethical judgement of future managers. Indeed, a 4-year study was conducted to measure the effect of a business and society course on the ethical judgment of students. Subjects were 460 undergraduate and graduate business students and the result was that students who take a business and society course will tend to make “more” ethical decisions.
Can a Business and Society Course Affect the Ethical Judgment of Future Managers?
. . Dordrecht: . Vol. 11, Iss. 3; pg. 217, 7 pgs
Then, some statistics reflect a growing realization that a discussion of ethics is a desirable and perhaps essential component of business education. Yet, there still remains considerable disagreement about how, where, and when ethics instruction should occur. In particular, one key debate centers on whether students should be given a choice about exposure to ethical issues (through the mechanism of an elective course) or whether ethical analysis should be required (through a mandatory ethics course or coverage of ethical issues within a required course). ? (Journal of business ethics, volume 13 number 5 mai 1994). As far as I am concerned, I think ethics courses should be required. Indeed, an elective ethics course has a number of drawbacks. By virtue of having ethics designated an elective course, students (and faculty) may be predisposed to view the subject matter as "interesting," but not essential. A required course symbolically conveys the importance of a subject matter to students and others. Students may not realize the future value of an ethics course. Furthermore, as those who enroll in such courses may already value ethical analysis, elective ethics courses may simply be "preaching to the converted. A reasonable supposition is that those who are most in need of the course, students who think that business ethics doesn't exist, or that it cannot be relevant to actual business practice, will not sign up for an elective : That is why it should be mandatory so that teaching business ethics may avoid bad marketer behaviours and make people aware of the stakes then.
Help/encourage the companies to make ethical decisions
Then, Helping the marketers and the companies to adopt an ethical attitude can be a good thing if they do not know how to proceed. For instance, if a firm wants to set up a fair trade business, they can get information on websites like FINE.asp to know all the criterias they have to adhere or even the ETI base code that is an alliance of trade unions, non-governemental institutions that aims to improve corporate codes of practice in term of working conditions. Or, if the firm is looking for a fairtrade importer, it can be found through the British Association for fair trade shops. Then, if the firm needs more ideas, it can look at the websites of those companies that are known to have a strong ethical policy, such as the Co-operative bank. What’s more, you have all the organizations like GAP that helps companies to “green” themselves, the WRASP program (that gives some tips on recycling or reducing energy consumption); or NCBC for more social performance and many other organizations that can be useful to help firms be more “ethical” Business on a shoe string – Working Ethically . Then, governement is also trying to encourage firms to green themselves by making them pay less taxes.
Control organizations/ Laws to regulate
Hopefully, control organisms exist to ensure certain norms are respected, and penalities are expected if not (ex: FDA for VIOXX...) The link with moral/ethics is that people have to know what is going on as it gives them a moral goods. At the time people do not know the company betrayed them (example) they suffer a moral harm. ([(Contemporary ethical issues by John W Dienhart and Jordan Curnutt + FDA website + Moral issues in business by W.H.Shaw,V.Barry and G.Sansburry) + business ethics courses]. So they have to be informed.
The approach we are developing by the way, is called the imperfect market approach (IMA), which holds we need governement regulation because free markets fail in ways that can be very harmul to individuals and society ( Cf Samuelson and Nordhaus theory – 1985) (cf p 31- Business Ethics - Contemporary ethical issues by John W Dienhart and Jordan Curnutt)
Concerning advertising for example in Australia, you can find the Advertising Claims Board (ACB) that basically deals with matters of truth in advertising. Then, the Advertising Standards Board (ASB)’s principle role is to judge matters of taste and decency in advertising, responding to customers complaint. Using the advertising code of ethics as its term of reference, the ASB considers ad which people find offensive on the basis of discrimination (race, nationalyty, age, sex, sexual preference, religion, disability, political belief, violence, language, portrayal sex, sexuality or nudity, health and safety, alarm or distress to children. (cf Business Ethics, problems and cases, 2005, Damien Grace, p93)
According to the IMA, free markets contain many features that provide business with powerful incentives to give consumers misleading and false information so that it suggests that government should intervene to ensure that marketing campaigns are truthful. Then, consumers often have difficulty to evaluating products they buy because of asymetric information.. But besides that, some businesses sell products and services like food, air travel, automobiles and medicine, the failure of which can cause illness and death. That’s why for example, we can find on the american scene, the Food and Drug Administration (FDA) as we have seen in the VIOXX case, that regulates the accuracy of labeling particular products like food, drug and cosmetic. Also, the Federal Trade Commisssion (FTC) deals with the false and deceptive advertising of all consummer products. Without the FTC, companies could practice things like the bait and switch advertising or without the Federal Trade Commission (FTC), firms could set up prices so that would not be any fair trade competition anymore and that would be bad for the consumers as the prices would be higher.
So that safety regulations is useful as it may prevent customers from choosing to purchase a riskier, though less expensive product. Take, for example, the notorious Ford Pinto with its unsafe gas tank. In 1978, after all the negative publicity, scores of lawsuits and the trial of Ford Motor Company for reckless homicide, the sale of Pintos fell dramatically. Consummers preferred a safer car for comparable money.
Another example would be the cigarettes. Thanks to law, packs of cigarettes must now have aweful pictures which show some types of illness that smoking can cause.So that the tabacco companies cannot deny the link between lung cancer and smoking anymore
Letting the free market regulate
To finish, can we say that doing nothing could also be a solution? Indeed, we can think about the fairness of the system: the company will have its reputation changed anyways: it is the natural punishment. After the VIOXX case for example, Merk and Co can be sure that there will be no back on the top 100 best corporate citizens and companies. This approach is called the free market approach, that holds that government intervention with transaction is not necessary because all the information customers need to make informed purchases will be supplied there, then if a product does not work for the consumer, the producer will lose repeat business as customers turn to ther producers. If enough consumers turn to other producers, the producer in question will go out of business and competitive companies will prosper. Because producers know they have to give good information to survive, they do not mislead customers. For these reasons, the FMA holds that the free market itself provides a sufficient incentive for producers to make safe products and supply accurate information.Moreover, there are economic costs to control → (Liberal point of view).
Then, in one way, you can even think that controls are useless, as there can be some dangerous products on the market, even after the controls (ex: VIOXX, or even the toys called Bindeez beads that was contaminated by the illegal date rape drug GHB that can cause illness and death when ingested by children; which is a recent example that happened in Australia)
To conclude we can say that non-ethical decisions can have very negative consequences. The worst thing is obviously when it comes to people’s safety/life as we have seen through the VIOXX case or other examples.
Then, more than having bad consequences on people’s life, non-ethical marketers can also affect their company if they take unethical decisions. Indeed, it firstly negates the company’s image if they do so, and it tends to lead to the loss of customers, most of the time, as customers do not trust the firm anymore and feel betrayed, desapointed.
What’s more, in some serious cases, the company can lose a lot of money through lawsuits and can even bankrupt. So the question we answered was : Is there anything we can do about it ? Any measures to take to avoid marketers make non-ethical decisions ?
First of all, as we have seen, trying to instill ethic norms earlier (at university for example) can have an impact on the ethical judgement of future managers as we have seen before as they will tend to make “more” ethical decisions.
Then, Helping marketers and companies to adopt an ethical attitude can be a good thing if they do not know how to proceed.
Hopefully, control organisms also exist to ensure certain norms are respected, and there are penalities if not (ex: FDA for VIOXX...)
Concerning the last hypothesis about the free market approach, we can say that is obviously not the best. Of course there is some kind of fairness as the company that is known as non-ethical will lose customers but most of the non-ethical decisions are not spread out. There are many cover-ups for sure.
Moreover, the control organisms have helped more people than they have hurted people for sure in any ways. Then, most people feel safer thinking that some people are here to ensure their security as you cannot control everything, check everything, you do not have the time. Then, there are actually no markets that currently escape governmental or trade regulation; customers are certainly not rational in their bying decisions and with the increasing electronic and mechanical complexity of contemporaty products, it would be impossible for customers to understand their complexity.
These organisms are actually like laws for human beings. Without laws, there would be no rule. The weakest would be beaten by the strongest, there would be no fairness, that would be the anarchy. It is quite similar with the market. As we have seen, even with laws, there can be some mistakes as some unsafe products are on the market then we discover a long time after it has to be pulled out. What would it be if there was no organization to look after our safety then ? would be worse, for sure.
But the real issue is, how to regulate ? Indeed, legislation has to be in the middle of the “too much controls” and the “not enough” controls. For example, in 1974, American legislation required an interlock that would be require drivers to fasten their seat belts before their car could move. No doubt the law would have saved lives, but a public outcry forced lawmakers to receind it. Apparently, many drivers saw interlock systels as a nuisance and believed their inconvenience outweighted any gain in safety. In some other cases though, safety regulations may prevent people from choosing to purchase a riskier but less expensive product (CF: the FORD PINTO case we developed earlier). This example touches on the larger controversy over “legal paternism” which is a doctrine that the law may justifiably be used to restrict the freedom of individuals for their own goods. No one doubts that the law justifiably restrict people from harming other people, but a sizable number of moral theorists deny that law should attemp to prevent people from running risks that affect only themselves. Then, how effective is regulation? because as we have seen before, very bad impacts occur even with all the measures that are taken.
By the way, who really bears responsability for safety finally? What about the consumer’s responsability ? Of course businesses have their responsabilities because they make the main decisions about the products customers will use but, if we refer to the market approach to safety, it seems clear that customers are both willing and capable in making personal decisions regarding safety for some products (ex: cigarettes, alcohol).
Anyways. Does good ethics mean good business ?
LIST OF REFERENCES
- TEXTBOOK :Case 12 VIOXX, dodge Ball
- Moral issues in business by W.H.Shaw,V.Barry and G.Sansburry
- Business Ethics - Contemporary ethical issues by John W Dienhart and Jordan Curnutt
- Business on a shoe string – Working Ethically
- Managing with a conscience by Frank K. Sonnenberg
- Business Ethics – problems and cases, Damien Grace, Stephan Cohen
Articles / Magazines:
- Journal of business ethics, volume 13 number 5 mai 1994 –Publisher : Springer Netherlands p 369-378
- Journal of business ethics , volume 76, number 4 p 451-461 -2007
- Journal title: The Thomist, Source: ISSN 0040-6325 ,1997, vol. 61, no2, pp. 189-218 Editeur / Publisher Thomist Press, Washington; Author: MIRKES R
- Can a Business and Society Course Affect the Ethical Judgment of Future Managers?
. . Dordrecht: . Vol. 11, Iss. 3; pg. 217, 7 pgs
- The Australian newspaper online
-FDA website Article : Managing drug safety issues Q&A with Paul Seligman
-Basilique des Saints Ambroise et Charles Borromée, Monsignor Raffaello Martinelli : Is money right or wrong ?
-Abercrombie et fitch article July 10, 2008 - Abercrombie's XXL-Sized Problem
- -Blackwater case : Erik Prince: Unethical businessman or deranged war criminal? August 5, 5:27 PM by Soheil Rezaee
- ALLI pills: April 2009- http://www.regimesmaigrir.com/actualites/article.php?id=219