Consumer Safety and Protection

y Origin was studies funded by organizations

themselves regarding safety of products and its features y There are several cases where organizations have behaved with great disregard for consumer safety y There are also several cases where large volumes of products have been recalled due to even a single identified case of unsafe product

Continued..
y Consumer safety should be one of the most

fundamental ethical principles for manufacturers y Johnson and Johnson we believe that our first responsibility is towards the doctors, nurses, patients, mothers and fathers and all others who use our products

Contract View
y The contract view of organizations to its

customers: y When a consumer buys a product, the consumer enters into a sales contract with the organization. Therefore, duties are: y Duty to comply reliability, service life, maintainability and safety y Duty of disclosure y Duty to not to misrepresent y Duty to not to coerce

Continued..
y Duty to comply
y Reliability

product will function as it is led to expect that it will function y Service life time period for which the product will function as effectively as led to believe y Maintainability ease with which a product can be repaired and kept in operating condition y Safety degree of risk associated with a product

Continued..
y Duty of disclosure
y Refers to ingredients, product ratings, cost of repairs,

performance etc.

y Duty to not to misrepresent

y Misrepresentation leaves people with no choice y Deceiving a buyer into thinking something about a

product that the seller knows is false

y Duty to not to coerce

y Taking advantage of buyers insecurity, gullibility etc.

Consumer Safety
y Danger inherent to some activities and products:
y Bungee jumping y Flying in planes y Driving cars y Using new products y Using heavy machinery and tools

y How much harm is safe? y How much safe is safe?

Continued..
y Just as much is practicable and attainable y General public will need intervention of

experts and technicians to decide on safety of each product y Producers usually end up giving a base level safety to all consumers, and compete on the basis of additional safety features and reduced risks

Continued..a few questions..

y Is it ethical only to produce as per prevalent

laws and regulations? y What are obligations of the company when a defect becomes known after the product has gone into widespread use? y How much should a company consider itself responsible for abuse of the product?

Continued..
y Using animals for pharmaceutical testing vis a vis cosmetic product testing y Using products made for one type of environment in another, making them unsafe

Liability Laws
y Earlier - Caveat Emptor onus on buyer y Negligence Theory

buyer needing to prove that manufacturer failed to exercise adequate care y Strict Liability holds manufacturer liable regardless of anything y Absolute Liability holds manufacturer liable only for harm caused by defective products

Consumer Movement and Education

y It is a movement which safeguards interests

of consumers from being exploited by sellers in situations like artificial scarcity, black marketing, defective goods selling etc. y It creates a sense of belonging for consumers and educates them about unfair trade practices

Continued..
y It results in social awareness by creating

grievance handling cells, fair price shops, and voluntary organizations for consumer protection y Consumer education is a necessity under the Consumer Protection Act of 1986 y The objective is to create awareness regarding rights and remedies available

Continued..
y Some type of products routinely need

consumer education: y Investments y Trademarks and grades on brands y Loans y Techniques used to make consumers aware include lectures, exhibitions, newsletters, newspapers, agitations etc.

C P Act - 1986
y Objectives:
y Better protection of interests of consumers y Make provisions for establishment of consumer councils y Authorities for settlements of consumer disputes

y Power to lodge a complaint directly with the

manufacturer, and then to the District Forum, if unresolved y Power to lodge a complaint against public sector companies and public utility services

Continued..
y To provide simple, speedy and inexpensive

redressal of consumer grievances, the Act envisages a three-tier quasi-judicial machinery at the national, state and district levels.
y National Consumer Disputes Redressal Commission

known as National Commission y State Consumer Disputes Redressal Commissions known as State Commissions y District Consumer Disputes Redressal Forum known as District Forum

Continued..
y General directives to do one or more of the

following: y to remove the defect pointed out by the appropriate laboratory from the goods in question; y to replace the goods with new goods of similar description which shall be free from any defect; y to return to the complainant the price, or, as the case may be, the charges paid by the complainant

CSR
y Corporate Social responsibility (CSR), also known

as Corporate Responsibility, Corporate Citizenship, Responsible Business, Sustainable Responsible Business (SRB), or Corporate Social Performance y Form of self regulation integrated into business models

Continued..
y A business is expected to take on responsibility for the

impact of its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere y CSR-focused businesses should proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality.

Continued..
y Essentially, CSR is the deliberate inclusion of public

interest into corporate decision making, and honoring of a triple bottom line People, Planet and Profit

Criticism
y Thomson-Reuters columnist Chrystia Freeland has

called CSR a fetish encouraged by the philanthropies that feed off it, and funded by the corporate executives who find that it serves their bottom line. y Consumers have been willing to pay more and buy more from companies with a CSR halo

Drivers of CSR
y Ethical consumerism y Globalization and market forces y Social awareness and education y Laws and regulations y Crisis and consequence

CSR Benefits
y Human Resource benefits by ensuring an identity to potential recruits y Risk mitigation y Brand differentiation

CSR Concerns
y Purpose of corporations is to maximize

returns of shareholders y CSR with questionable motives BP, British American Tobacco and McDonalds y Reeks of corporate hypocrisy and insincerity as companies claiming to promote CSR simultaneously engage in harmful activities

Whistle Blowing
y A whistle blower is a person who raises a concern about wrongdoing occurring in an organization or body of people, usually this person would be from that same organization y Whistle blowing can be done internally or externally

Continued..
y The act itself can be ethical only if:
y It is motivated with a concern for the

larger interest of society, employees or organization y The employee has a clear, unbiased and just view of the actions or situation y The actions are selfless, altruistic and not motivated by revenge

Continued..
y The action has hues of super-loyalty to the

organization, wherein he does not want anyone in the company participating in wrongdoing y Whistle blowing often results into a self defeating action

Continued..
y Internal whistle blowing:
y Disclosing about fellow employees

misconducts, to higher authorities within the organization y External / Corporate whistle blowing: y Making open to the general public, the knowledge about the company s wrongdoings

Continued..
y Treatment to whistle blower:
y More often than not, he / she is:

Harassed y Passed aside for promotion y Treated as the black sheep y Ostracized y In few cases, his / her success to stick to morality is recognized and rewarded
y

Critical Criteria
y Critical criteria to be observed by a whistle blower:
y Ethical and unquestionable motive y Knowledge and proof that actions of some employee or y y y y

the organization are going to cause damage First report should be made to the immediate superior If there is no change, he should go up the managerial chain, till the Board of Directors After having exhausted all internal channels, he can then approach external channels The chance of successful whistle blowing should be worth the risk taking and the exposure to danger

India and other examples

y Satyendra Dubey, who accused employer NHAI of

corruption in highway construction projects in India in a letter to then Prime Minister Atal Bihari Vajpayee, was assassinated in November 2003. y Dubey, an Indian Institute of Technology (IIT), Kanpur alumnus, was killed in Bihar for exposing corruption by contractors in building the national highways

Continued..
y Manjunath Shanmugam, originally from Andhra

Pradesh, and an officer in the Indian Oil Corporation (IOC), was killed after he exposed adulteration in petrol pumps in Uttar Pradesh. He was an MBA from the Indian Institute of Management (IIM), Lucknow. y Enormous media coverage following these deaths has finally led to the Whistleblower Protection Act in India, named as Public Interest Disclosure and Protection to Persons Making The Disclosure Bill, 2010

Continued..
y The onus will be on the Central Vigilance

Commission (CVC) to protect the identity of the citizens who provide information about the misuse of governmental authority and funds y It provides the Central Vigilance Commission powers of a civil court to hand down harsh penalty to people revealing identity of whistleblowers. y Apart from India, this kind of Act is prevalent only in US, UK, Australia and New Zealand the oldest being in US, in 1989

Continued..
Cathy Harris, a former United States Customs employee exposed rampant racial profiling against black travelers while working at Hartsfield International Airport in Atlanta, Georgia. According to Harris's book, Flying While Black: A Whistleblower's Story, (1998) she personally observed numerous incidents of Black travelers being stopped, frisked, body-cavity-searched, detained for hours at local hospitals, and subjected to public and private racist humiliation.

Continued
y The book also details her allegations of

mismanagement, abuse of authority, prohibited personnel practices, waste, fraud, violation of laws, rules and regulations, corruption, favoritism, workplace violence, racial and sexual harassment, intimidation etc., and other illegal acts that occur daily to female federal employees

Continued
y Cynthia Cooper WorldCom:
y Former VP

Internal Audit at WorldCom y Unearthed a $ 3.8 billion fraud at WorldCom y Book Extraordinary Circumstances
y Sherron Watkins

Enron: y VP Corporate Development Enron y First to be concerned and write to CEO Kenneth Lay about aggressive accounting in Enron

Continued..
y Coleen Rowley

FBI y Special Agent of FBI y Made headlines after 9/11 about writing a memo about the agency s slow action prior to the 9/11 attacks

y All these 3 whistle blowers were selected as

Time Magazine s People of the Year - 2002

Time People of the Year 2002

y

Ethics in Marketing & Advertising

y 4 Ps of Marketing:
y Product y Price y Promotion y Placement

y Each area in itself can hold unethical

practices

Continued..
y The very premise of marketing could also be

considered unethical is marketing really needed for goods and services, about which each manufacturer can claim superior quality y Product:
y Unethical products y Skimming on quality of product but not making people

aware y Production process and testing

Continued..
y Pricing:
y Price fixing y Price skimming

setting high price initially and then lowering price y Price discrimination y Predatory pricing lowering of prices y Price wars

Continued..
y Place:
y Territorial discrimination y Monopolistic practices

y Promotion:
y Activities to induce consumers to buy product y Issues over:
y y y

Truth and honesty Violence, sex and profanity Taste

Continued..
y Negative advertising - attack advertisements y Delivery channels of marketing

y Other issues:
y Marketing research: - invasion of privacy y Wrong use of marketing audience

targeting

the vulnerable y Advertising targeting children y Over-focus on materialism

Arguments against Advertising

y Raising cost of product y Glamorizing of products y Advertisement and product unrelated y Creating inferior feeling in masses on non-possession of product y Negative influence on children, masses and developing countries

Dove
y In an advertisement, Dove shows a young

girl who is about to face all the dangers of beauty industry, including plastic surgery, liposuction, weight pills etc. y The video warns the viewer against the adverse effects of such procedures and goes on to suggest Dove products for natural look and self-confidence

Continued..
y Shortly after the advertisement went live,

Green peace released a video in response to Dove about the making of Dove products and ingredients. y The video features a young Indonesian girl seeing how her county s forest is massively destroyed for palm oil production. The oil is widely used across Dove products.

Continued..
y The parody has been more popular than the

original video and gained a lot of public support. As a result, Unilever, the company behind Dove, imposed a moratorium on deforestation for palm oil production, agreeing to support the call by Green Peace.

Continued..
y Place:
y Territorial discrimination y Monopolistic practices

y Promotion:
y Activities to induce consumers to buy product y Issues over:
y y y

Truth and honesty Violence, sex and profanity Taste

Continued..
y Negative advertising - attack advertisements y Delivery channels of marketing

y Other issues:
y Marketing research: - invasion of privacy y Wrong use of marketing audience

targeting

the vulnerable y Advertising targeting children y Over-focus on materialism

Arguments against Advertising

y Raising cost of product y Glamorizing of products y Advertisement and product unrelated y Creating inferior feeling in masses on non-possession of product y Negative influence on children, masses and developing countries

Some more Practices

y Collusion y Black markets

for illegal goods y Gray markets for illegal distribution channels y Deceptive pricing y Truth in lending monthly installments y Unit pricing y Counterfeiting y Product piracy y Bidding

McDonalds and Green Peace

y McDonalds:
y is complicit in Third World starvation y wastes vast quantities of grain and water y destroys rainforests with poisons and colonial invasions y sells unhealthy, addictive junk food y alters its food with artificial chemistry y exploits children with its advertising y is responsible for torture and murder (of animals) y exploits its workers and bans unions

McDonalds CSR

Food and Nutrition

Supply Chain

People Management

Product Endorsements
y Kent Water Purifier - Hema Malini

Endorser y Also a Member of Parliament y 2007 suggested a tax cut on purifiers using RO technology y When confronted, she said that she does not want to get into rules, but would like to take up people causes

Continued..
yCelebrities believing in the

product? yWholesome image of the celebrity lending credibility to the product yProduct or company status having an effect on reputation of celebrity

HRM and Related Issues

y Rights of employees:
y Right to work y Right to respect y Right to just wages y Right to organize y Right to strike y Equal pay for equal work y Right to privacy

Ethical Issues in HRM

y Discrimination: organizations should have anti-

discriminatory policies, stating that they will not discriminate on the basis of:
y Gender y Caste y Class y Race and religion y Sexual preferences y Physical disabilities / medical conditions

Continued..
y The Glass Ceiling Effect:
y an unofficial, invisible barrier that

prevents women and minorities from advancing in businesses y Other related issues: y Performance commitment to consumers and pressure on staff y Pizza Delivery and accidents

Continued..
y Child Labor

Large product companies using children in developing countries for lesser production costs y Infringing on employee privacy workplace surveillance y Who watches the watchers? y Employee confidentiality reference checking y Union Busting
y

Continued..
y Issues relating to employment contract y Tenure of service y Slavery y Occupational health and safety

Deloitte & Touche

y 1993, D & T established the The Initiative for the
y Program focuses on men and women as colleagues y Enhanced career opportunities for women y Supported balance between work and personal life y Active communication y Building personal goals into professional lives y Providing senior level mentors for growth of women

Retention and Advancement of Women to develop women leaders

professionals

Social Responsiveness
y Social Responsiveness:
y Action taken to rectify a situation

after responsibility has been ascertained y Can also indicate a company s actions to prevent things from going wrong

Continued..
y Social responsiveness:
y Reaction and y Pro action

y In matters of:
y Consumer safety y Obsolete products y Environment protection y Employee policies

Continued..
y Role of Government in Social Responsibility and HRM:
y Minimum Wages Act 1948 y Payment of Wages Act y Factories Act 1948 y Workplace sexual harassment

policies

Sexual Harassment Policies

y Preventive Steps: 1. Express prohibition of sexual harassment should be notified and circulated. 2. Inclusion of prohibition of sexual harassment in the standing orders under the Industrial Employment (Standing Orders) Act, 1946 by the employers. 3. Provision should be made for appropriate work conditions for women. 4. Communication and awareness creation among women and all employees

Continued..
y Movement in India started after 1997, after

the case of Vishakha Vs. The State of Rajasthan y The Vishakha Guidelines for prevention of sexual harassment in workplace were formed after that

Guidelines:
y Sexual harassment had been explicitly- legally defined

as an unwelcome sexual gesture or behavior whether directly or indirectly as

y Sexually colored remarks y Physical contact and advances y Showing pornography y A demand or request for sexual favors y Any other unwelcome physical, verbal/non-verbal

conduct being sexual in nature.

Legal Provisions
y According to India's constitution:
y Sexual harassment infringes the

fundamental right of a woman to gender equality under Article 14 of the Constitution of India y And her right to life and live with dignity under Article 21 of the Constitution

Continued..
y Many provisions in other legislations protect

against sexual harassment at workplace: y Section 354, IPC deals with assault or criminal force to a woman with the intent to outrage her modesty y Section 509, IPC deals with word, gesture or act intended to insult the modesty of a woman

Actions:
y Formation of comprehensive guidelines or policies

about sexual harassment by each organizations y A clear route of grievance handling in case of an event of this nature y Committees deal with related grievances y Prompt disciplinary action y Communication of the policies and guidelines to employees y Training women employees on identification and sensing of sexual harassment

Ethics and Finance

y Accounting practices:
y Creative accounting y Misleading financial analysis y External auditors

Responsibility of auditors y Conflict of interest

y

Continued..
y Financial institutions:

interest y Recovery agents y Anti competitive practices of bribery, kickbacks or facilitation payments

y Rates of

Ethics and Production

yProducing defective or addictive

products yProducing dangerous products yEnvironmental damage because of production process or lack of waste management processes

Continued..
y New technologies and ethics: y Cloning y Genetically modified food y Radiation through microwaves and mobile phones y Product testing; y Testing on animals y Testing on vulnerable groups y Testing on economically disadvantaged groups

Professional Ethics
y Doctors

Hippocratic Oath and rules of practice

y Shall treat everyone equally y Shall not take disadvantage of patients y Shall respect privacy of patients y Shall prevent more than cure y Shall adhere to my calling

y Product endorsements celebrities and medical

associations y Lawyers

Trade Secrets
A trade secret is a formula, practice, process, design, instrument, pattern or compilation of information which is not generally known to others, by which a company can obtain an economic advantage over competitors

Continued..
y Also known as classified or confidential

information y Knowledge about the firm y Knowledge developed by people in the firm y Inventions and discoveries y People migrating to other companies, with the know-how

Secret and Confidential

y What kind of knowledge is secret and

confidential?
y Techniques y Formulae y Tools y Designs y Consumers Lists y Vendors Pricing Information y Personnel Policies

Continued..
y Criteria for considering information

confidential: y Security needed for safeguarding the information y Investment in creation or obtaining the information y Value of the information to the competitor

Continued..
y Tools for protection of trade secrets:
y Employee agreements

non disclosure, non

compete y Trade secret protection policies y NDAs with third parties y Thorough documentation for proving ownership of trade secret y Security systems

Ideas, Information and Knowledge

y A fund of ideas is omni

existent, in the form of partial completion, expired patents or nascent stage ideas y Pioneers might work on new ideas with the help of older ideas, doing further research on their own y Education also bring forth a stream of people willing to to take up research as work y Needs and consumer demands bring about inventions, innovations and discoveries y Fund generation for research is a key angle

Continued..
y Venture Capitalists are agencies providing capital,

facilities, staff etc. y After breakthrough in the idea, the invention is patented / copyrighted and used further for commercial purposes y Other companies might make similar products without infringing on the patent rights reproduction of products with sufficient changes reverse engineering

Intellectual Property Rights

y Intellectual property (IP) is a term referring to a

number of distinct types of legal monopolies over creations of the mind, both artistic and commercial. y Common IPR include
y Patents y Trademarks y Copyrights y Industrial Design Rights

Continued..
y Patent: y A patent for an invention grants a property right

to the inventor that will prevent anyone else from making, using, or selling an invention. y A patent lasts for a limited amount of time, usually 14 years from the date the application was filed y A patent is considered "property," and can be sold, mortgaged, or licensed by the owner

Continued..
y Copyrights:
y A copyright protects original works that fall

under the categories of literature, dramatic, musical, artistic, and intellectual (software). y These works may be published or unpublished, and the owner has exclusive rights to reproduce his or her work in any medium. y A copyright protects a form of expression, but not the subject matter of the work. y Act in India formed in 1957, and then amended to include software in 1984

Continued..
y Trademark:
y A trademark is used to protect a word, symbol, device, or

name that is used for the purpose of trading goods. y The trademark indicates the source of goods and distinguishes them from the goods of others. y A trademark is also used to prevent others from using a mark that might be confused with another y Trademarks, however, do not prevent other people or businesses from producing the same product or services under a different mark.

Legislation in India
y Legislations having impact on trade secrets are:

1. Copyright Act, 1957 2. The Designs Act, 2000, 2001 and 2008 3. The Information Technology Act, 2000 4. Indian Penal Code 5. The Indian Contract Act 6. The Competition Act, 2002 7. Civil Procedure Code 8. Criminal Procedure Code

Continued..
yMandatory Corporate Disclosure:
yDisclosure of relevant

information to entities that are affected by or are entitled to that information.

To Customers:
y Product features y Ingredients y Safety y Manufacture and expiry dates y Compliances to environmental or any other

mandatory standards y Warnings if applicable

To Employees:
y Rights and responsibilities y Administrative policies y Codes of conduct y Vision & Mission y Performance standards y Grievance handling y Disciplinary policies

Government:
y Number of workers y Conditions of work y Network of companies to whom work is being

outsourced y Vendors y Financial status y Methods of accounting y Movement of goods y Safety and standard compliance reports

Shareholders:
y Profitability y Financial soundness y Accounting methods y Compliances y Key personnel salaries etc.

Continued..
y Insider Trading:
y Use of information available to insiders of an

organization made for personal gains to the detriment of the organization and society y An employee gains information about the company and its plans, which is not available to unauthorized people within the company or outsiders y The information is made use of, for personal gains

Forms
yConflict of interest yInappropriate insider trading yShares buy and sell in case of

imminent takeovers, mergers etc.

Ethics and Insider Trading

y Relative harm y Creation of artificial movement (stocks) y Using information that should not be used in that way y Using information that belongs to the company