{"id":67,"date":"2015-08-28T18:36:04","date_gmt":"2015-08-28T18:36:04","guid":{"rendered":"https:\/\/courses.candelalearning.com\/waymakerintromarketing1xmaster\/?post_type=chapter&p=67"},"modified":"2016-02-18T17:21:55","modified_gmt":"2016-02-18T17:21:55","slug":"why-it-matters-ethics-and-social-responsibility","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/clinton-marketing\/chapter\/why-it-matters-ethics-and-social-responsibility\/","title":{"raw":"Why It Matters: Ethics and Social Responsibility","rendered":"Why It Matters: Ethics and Social Responsibility"},"content":{"raw":"

Why apply principles of ethics and social responsibility in marketing?<\/h2>\r\nGenerally speaking, students believe that there are two primary reasons to act\u00a0ethically:\r\n
    \r\n\t
  1. Acting\u00a0ethically is the right thing to do from a moral perspective;<\/li>\r\n\t
  2. If you act\u00a0unethically, then you might get caught and be punished.<\/li>\r\n<\/ol>\r\nNeither of these is a bad reason to apply principles of ethics and social responsibility, but it is worth considering another reason, as well. In most cases strong ethical behavior leads to strong business results. Behaving ethically is actually good business. Let's look at two different auto companies whose track records on ethical behavior have had very different outcomes.\r\n

    Tesla Motors and Social Responsibility<\/h3>\r\n\"Photo<\/a>\r\n\r\nTesla Motors was founded in 2003 by a group of engineers who wanted to prove that electric cars could be better than gasoline-powered cars. They hoped to build\u00a0cars that wouldn't require the tradeoffs in power and comfort of\u00a0electric cars in the past. The founders pledged\u00a0that each new generation of cars would be increasingly affordable, helping the company work toward its mission: to accelerate the world\u2019s transition to sustainable transport.[footnote]https:\/\/www.teslamotors.com\/about[\/footnote]\r\n\r\nIn order to design and build\u00a0luxury electric cars, Tesla invented\u00a0a number of new technologies that it patented in order to protect its competitive advantage. In June 2014 the company announced that it was releasing access to all of its patents, making its technological advances open to competitors and inventors. In the announcement, company CEO Elon Musk said, \"Tesla Motors was created to accelerate the advent of sustainable transport. If we clear a path to the creation of compelling electric vehicles, but then lay intellectual-property land mines behind us to inhibit others, we are acting in a manner contrary to that goal. Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.\"[footnote]https:\/\/www.teslamotors.com\/blog\/all-our-patent-are-belong-you[\/footnote]\r\n\r\nTesla has a mission with an emphasis on social responsibility; it\u00a0strives to develop products that have both a societal and economic benefit. \u00a0Industry analysts and consumers alike see this as a distinct advantage in the marketplace. Investment analyst Seeking Alpha explains:\r\n
    Companies like Toyota Motor\u00a0and Honda are already pushing for gas-less cars and more and more efficiency from their cars. Tesla is not single-handedly pushing this, but it is part of the overall push to improve one of the most important aspects of our country\u2014how we envision the car. Yet, the company extends beyond this\u2014challenging how we vision luxury, how we understand how to build a car, and what the future electric grid could look like.[footnote]http:\/\/seekingalpha.com\/article\/2801365-tesla-social-responsibility-scorecard-shows-strengths-and-weaknesses?page=2[\/footnote]<\/blockquote>\r\n

    Volkswagen and Ethical Behavior<\/h3>\r\n\"Volkswagon<\/a>\r\n\r\nThe car company Volkswagen (which is part of the larger Volkswagen Group) does not have a formal mission statement, but its goal is \"to offer attractive, safe, and environmentally sound vehicles that\u00a0can compete in an increasingly tough market and set world standards in their respective class.\"[footnote]http:\/\/www.strategicmanagementinsight.com\/mission-statements\/volkswagen-mission-statement.html[\/footnote]\r\n\r\nIn September 2015, the Environmental Protection Agency announced that Volkswagen had installed special\u00a0software in its cars to\u00a0manipulate\u00a0emissions\u00a0levels (making it appear that the cars are less polluting than they are). A week later\u00a0Volkswagen\u00a0disclosed that 11 million diesel vehicles contained\u00a0the devices, and CEO Martin Winterkorn resigned. The price of\u00a0Volkswagen stock plunged\u2014losing 30 percent of its value overnight\u2014and the company scrambled\u00a0to understand what had happened and control the damage to its reputation.\r\n\r\nIn the months following the discovery of the deceptive devices,\u00a0investigators identified a team of Volkswagen employees who had hatched\u00a0the plan and implemented\u00a0it over a number\u00a0of years. An\u00a0internal evaluation identified a \"culture of tolerance\" for rule breaking at the company. It also came to light\u00a0that Volkswagen's emphasis on \"results at any cost\" had contributed to the\u00a0breach in ethical standards. Industry experts believe that the company's violation of consumers' trust will be will be exceedingly difficult to repair\u00a0and that it may take years to rebuild the Volkswagen brand.\r\n\r\nTesla and Volkswagen\u00a0both compete in the same global market but have seen very different patterns in their stock prices (years 2011\u20132015 shown below). Some of these differences can be attributed to important differences in their approach to ethics and social responsibility.\r\n\r\n\r\n\r\n
    \"A<\/a><\/td>\r\n\"A<\/a><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n

    Learning Outcomes<\/h3>\r\n