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Promoting Unethical Behaviour towards Customers Report


Introduction

Organizations encounter challenges in solving the dilemma of choosing between ethical practices and benefits. Organizational leaders understand that telling the customers the truth may result in a company losing clients. In return, it can affect the business’ profit (Giacalone & Thompson 2006). It becomes hard for organizational heads and staff to choose between lying to clients to preserve a company’s profit and telling them the truth, which might result in the business losing the customers.

In many cases, organizations find themselves engaging in unethical activities to preserve and improve their profits. Such predicaments lead to internal and external tension in an enterprise. Currently, the responsibilities of organizations have changed (Giacalone & Thompson 2006).

Organizations are no longer responsible for making profits only. Giacalone and Thompson (2006, p. 271) maintains, ‘Organisations not only have to answer to shareholders but also the stakeholders within their communities’. One wonders if ethical organizations can make significant profits. Research shows that organizations that engage in unethical activities get short-term returns. However, ethical organizations can adopt lasting business models. Consequently, they establish business relationships that enable them to achieve long-term profits. Numerous organizations have proved that companies can be moral, sustainable, socially accountable, and beneficial simultaneously.

Context of Unethical Dilemma

In 2011, San Francisco’s board of supervisors came up with a campaign that prohibited fast-food joints from giving away toys to encourage children to eat junk food. McDonald’s Company was notorious for happy meals, which was a promotional instrument that sought to encourage kids to purchase the company’s fat-laden foods (Jaslow 2011). It was established to assist McDonald’s to build a pool of loyal customers.

The campaign dubbed San Francisco’s Healthy Food Incentives Ordinance aimed at helping children to engage in healthy eating. McDonald’s used toys to entice children and encourage them to eat junk foods. Despite the popularisation of the campaign, McDonald’s spotted its weaknesses and opted to exploit them at the expense of the children and their parents (Jaslow 2011). The company started to charge ten cents to parents if they wanted the meal to come with a toy.

With the high rate of childhood obesity, one would have expected McDonald’s to be at the forefront of the fight against unhealthy eating habits. Unfortunately, encouraging children to eat healthily would have adversely affected the company’s profit. Thus, McDonald’s found itself violating the established policies to maintain its profit margin.

Stakeholders Affected by the Incident

Whenever a business engages in unethical behaviors, its actions affect many stakeholders. They include the customers, employees, and the business itself (Carroll 2004). In the case of McDonald’s, the move to continue to run the happy meals program affected numerous stakeholders. They include the customers (children), the employees, and the company.

Stakeholder Map

Interested in the Effects on Direct or Indirect Impact
Stakeholder Group Reputation Finance Profit Health Trust Direct Indirect
Customers
Employees
Company

Impacts of the Dilemma on Stakeholders

Customers

The dilemma of choosing between acting ethically or unethically has numerous effects on the customers. In the context of McDonald’s the customers were children who purchased junk food. The decision to continue to run the happy meals program had numerous direct impacts on the children. Presently, stakeholders in the health department are encouraging parents to promote healthy eating amid the children.

Besides, parents are discouraged from purchasing junk food for their kids. The objective of promoting healthy eating is to safeguard children from illnesses attributed to unhealthy eating. Encouraging children to buy junk food affected them directly regarding health. The actions of McDonald’s subjected the children to the risk of contracting obesity and other illnesses associated with unhealthy eating.

Customers hope to get value for their money whenever they purchase products (Carroll 2004). Any product that does not add value to a client costs them financially. The promotion of junk food by McDonald’s cost the children financially. Junk food has limited nutritional value to children. Indeed, one may argue that purchasing junk food does not add value to the customer. Instead, the customer ends up spending his/her money on “wrong” products.

Employees

The promotion of junk food by McDonald’s affected the employees indirectly. One may argue that employees benefited from the promotion because they established a good relationship with the company’s leadership. From one perspective, the argument can be true. The leadership of McDonald’s expects employees to help in the sale of all products that the company produces. The employees must help the business to make a profit.

They do not have the authority to tell organizational leaders what to do (Carroll 2004). Instead, they are supposed to focus on helping the company to make a profit at any cost. Even though the public may not directly blame the employees of McDonald’s for participating in the promotion of junk food, it may never trust them in the future. Customers do not expect employees to cheat them. Instead, they expect organizational staff to be honest in their dealings. When customers realize that employees are not honest in their activities, they stop trusting them (O’Fallon & Bufferfield 2005). Besides trust, employees can injure their reputation for engaging in fraudulent activities.

McDonald’s is renowned for its preparation and sales of fast foods. Customers believe that the company prepares its products with a lot of integrity. Besides, they trust that McDonald’s employees cannot sell products that might have negative impacts on them or their children. Encouraging kids to purchase junk foods despite knowing that they have adverse effects on them is unethical. Additionally, formulating disguised promotion strategies to continue to sell prohibited products amounts to dishonesty and may affect one’s reputation.

Company

The most apparent repercussion of organizational corruption is the damage to a company’s public image (Walsh et al. 2009). A company that engages in fraudulent activities gains a poor repute among its customers and prospective clients. Once the customers, media, regulators, suppliers, or partners discover that an enterprise engages in tricky business to enrich itself, they fall out with the organization.

Carroll (2004, p. 117) posits, ‘A business person who straddles a fine line between what is right and what is expedient should remember that it takes years to build a good business reputation, but one false move can destroy that reputation overnight’. McDonald’s is renowned for participating in corporate social responsibility programs aimed at promoting health in society. No one expects the company to contribute to the deterioration of health in the public.

By McDonald’s going against the spirit of the ordinance, it betrayed the public. Placing the business’ profit above the health of the children was great duplicity. The move adversely impacted the reputation of the enterprise. Although many customers did not realize the tactics that the company crafted to continue to promote happy meals, those who did develop a negative attitude towards McDonald’s.

Besides the reputation, the dilemma to continue or to stop promoting happy meals affected the company’s profit. The termination of the promotion would have resulted in a reduction in the company’s profit margin. McDonald’s came up with disguised promotion tactics to ensure that it does not appear to violate the spirit of the ordinance. In the process, the company managed to sustain its profitability at the expense of the children.

Most customers could not understand the tactics that McDonald’s applied to continue with the sales of junk food. Thus, one can argue that the customers did not lose trust with the company. Nevertheless, some clients understood the strategies that the company applied and were astonished. The customers expected McDonald’s to help in the fight against childhood obesity. Instead, the company was doing the opposite to safeguard its interests. The clients who realized what McDonald’s was doing were astounded, and they stopped to rely on the enterprise.

Ethics Theories

Numerous ethics dictate what employees and organizational leaders ought to do in times of dilemmas. They are not supposed to consider the interests of organizations at the expense of the customers. Instead, they are expected to make decisions that would not affect the companies’ relationships with clients. Some ethics theories that outline how managers behave or should conduct themselves in the times of dilemmas include utilitarianism, egoism, and ethics of duties among others.

Utilitarianism

Utilitarianism is a ‘normative ethical theory that places the locus of right and wrong solely on the outcomes of choosing one action/policy over other measures/policies’ (McGee 2010, p. 82). The theory encourages individuals to consider the interests of others before making decisions. The reason for applying this theory is its attempt to offer solutions to practical challenges in a manner that does not negatively affect all the stakeholders. The theory allows a person to evaluate the possible outcomes of a prevailing situation and settle for the most feasible and ethical solution. According to utilitarianism, an action is wrong if it has adverse effects not only on the executioner but also everybody that it affects.

Organizational managers possess significant powers that allow them to make decisions on matters that affect the daily operations of enterprises. In some cases, the managers encounter complex problems that require careful deliberation. Some of the decisions that the managers are expected to make do not lie within the organizational policies. At times, the managers are needed to make difficult decisions without having to consult their seniors. Such times demand a manager be considerate.

An administrator may require relying on utilitarianism when called upon to make critical decisions within a short duration (McGee 2010). It would guarantee that the manager acts within the boundaries of ethics.

Utilitarianism encourages managers to be prudent when making decisions (McGee 2010). Rushing to make decisions may have a lasting positive or adverse impact on the organization depending on its repercussions on the stakeholders. Thus, managers should make decisions that they can stand with if asked to defend themselves in the future (O’Fallon & Bufferfield 2005). Based on the utilitarianism, a manager encountered with a dilemma akin to that of McDonald’s should evaluate the repercussions of violating the spirit of the ordinance.

The rate of childhood obesity is currently alarming. Everybody has a responsibility to play in the fight against the problem. As such, the manager should shelve the interests of the company for the good of all stakeholders. Failure to promote happy meals did not mean that McDonald’s would make losses. It would have slightly affected the company’s profit margin. On the other hand, it would have enabled the company to maintain a good rapport with stakeholders, thus establishing a lasting profitable relationship.

Ethical Egoism

Ethical egoism refers to a normative moral belief that people should act in a manner that satisfies their self-interests (Trevino & Brown 2004). The theory holds that actions whose results can profit the performer can be perceived as ethical. Ethical egoism contrasts the principles of moral altruism. The ethical altruism holds that individuals must engage in activities that benefit others (Trevino & Brown 2004). It does not imply that ethical egoism encourages people to harm the well-being and interests of other individuals in the course of making principled deliberations.

One should understand that whatever he/she considers as self-interest may have negative, positive, or no impacts on others (Shafer-Landau 2013). The reason for applying the ethical egoism theory is because it succinctly explains why individuals behave in certain ways. The theory explains why people tend to engage in activities that suit their interests at the expense of others.

Based on the ethical egoism theory, an organizational manager is bound to make decisions that suit his interests. In reality, the manager would not make decisions that can be detrimental to an organization. Making such decisions would amount to self-destruction. Managers are likely to lose their jobs for failure to make decisions that suit the interests of enterprises (Phillips, Freeman & Wicks 2003).

Thus, managers benefit whenever they make sound judgments that work for the good of the organizations. Based on the ethical egoism theory, it would have been difficult for the leadership of McDonald’s to decide to terminate the happy meals campaign. The managers had to look for alternative ways of running the program undetected. Stopping the program would have affected the company’s profit, thus putting the managers in a precarious position.

To safeguard their jobs, managers at McDonald’s Company would have opted to violate the spirit of the ordinance. After all, many people were still willing to purchase junk food despite their health effects. The company was out to make a profit and did not force the customers to buy its products. Even though allowing employees to continue to sell the junk food could taint the managers’ image that amounted to a slap on the wrist compared to what the company’s leadership would have done if the profit margin went down.

Ethics of Duties

Deontologists hold that people are obliged to do what is right. According to the ethics of duties theory, people are supposed only to engage in the right activities and refrain from partaking in illegal actions (Lacewing 2015). The theory claims that the effects of an action do not determine if it is good or bad. Instead, the nature of something determines if it is right or wrong. The ethics of duties theory identifies two groups of responsibilities.

First, people have responsibilities towards their colleagues. These are the responsibilities that prevent people from engaging in activities that might hurt others. Second, individuals have duties that depend on their social or personal relationships (Lacewing 2015). For instance, organizational leaders have the duty not to engage in economic activities that might have negative impacts on employees or customers.

The ethics of duties theory emphasizes that people should endeavor to comply with their responsibilities. It does not dictate that people have to ensure that they maximize the good in their duties. The reason for applying this theory is because it brings out the distinction of what amounts to right or wrong. Many times, organizational leaders engage in activities that seem useful to the public. However, the leaders only do them for their interests (Lacewing 2015). For instance, organizational leaders may encourage the sale of quality products not because it is morally right but since it would help to boost the profit of an organization. The ethics of duties theory argues that people should engage in activities because they are morally right.

Based on the ethics of duties theory, a manager should engage in activities that meet the needs of organizational stakeholders. The manager should not do it because the stakeholders demand so, but because it is morally right. In the case of McDonald’s, the manager should have decided to stop selling junk food for the benefit of the company and its stakeholders. A person must have goodwill to do something (Lacewing 2015). One should not appear to be under duress. Contravening the spirit of the ordinance would have short-term benefits to McDonald’s. A manager should consider the long-term benefits for the company.

Further Information

In most countries, numerous laws regulate the preparation and distribution of fast foods. The fast-food restaurants are supposed to ensure that they abide by the established rules regarding food preparation, handling, storage, and distribution. Additionally, individuals have the right to know the ingredients used to prepare the food. Customers have a right to understand the nutritional value of the food before they purchase them (Hosmer & Kiewitz 2005).

Unfortunately, a majority of fast-food restaurants do not provide information regarding the nutritional value of their meals. Consequently, many people purchase food that does not add any nutritional value to their bodies. It underlines the reason there is an increase in the cases of obesity. In the United States, the Food and Drug Administration (FDA) requires fast-food restaurants to comply with regulations that require them to provide information about the nutritional value of their diets (Hosmer & Kiewitz 2005).

The demand to meet these regulations puts many food restaurants in dilemma. Displaying information regarding the nutritional value of the food would discourage many customers from purchasing junk foods. Thus, fast food restaurants are torn between displaying the information, which would mean losing clients and concealing it to retain customers. Most organizational leaders think that the FDA is there to protect customers at the expense of the businesses. However, abiding by the FDA regulations would help to build the image of the business, thus guaranteeing it a profitable long-term relationship with customers.

Based on the FDA guidelines I would decide not to continue to sell junk food. I would do that because it is morally right. Even though the move would affect the profit margin of the company for a while, it would have long-term benefits to the organization. Organizations engage in corporate social responsibilities to build their public image and create a rapport with consumers (Hosmer & Kiewitz 2005). The fight against childhood obesity is on the rise. Ceasing to market products that increase the possibility of a child suffering from obesity would auger well with the public. In return, it would help a company to establish a good relationship with clients. Indeed, it would help to boost the customer base of the enterprise.

Conclusion

The contemporary consumers are conscious of their health. Most clients decline to purchase products that would adversely impact their health. Thus, organizations must sell products that add value to the customers if they wish to achieve a lasting, profitable relationship with clients. In light of the current business environment, I would abandon not only the sale but also the preparation of fat-laden food products that have adverse impacts on children.

Currently, organizations encounter numerous ethical dilemmas. For instance, multinationals face the dilemma of dealing with suppliers who do not respect the rights of their employees. Some vendors provide organizations with vital raw materials that are hard to source elsewhere. It becomes difficult for the organization to cut ties with the suppliers. Such a dilemma follows utilitarianism. To resolve the dilemma, one requires considering the interests of all stakeholders. Continuing to relate to the suppliers would intensify the suffering of the employees. On the other hand, terminating the relationship with the suppliers would affect the production level of the organization. Thus, one requires making decisions that benefit all the parties involved.

Reference List

Carroll, A 2004, ‘Managing ethically with global stakeholders: a present and future challenge’, Academy of Management Perspectives, vol. 18, no. 2, pp. 114-120.

Giacalone, R & Thompson, K 2006, ‘Business ethics and social responsibility education: shifting the worldview’, Academy of Management, Learning & Education, vol. 5, no. 3, pp. 266-277.

Hosmer, L & Kiewitz, C 2005, ‘Organizational justice: a behavioral science concept with critical implications for business ethics and stakeholder theory’, Business Ethics Quarterly, vol. 15, no. 1, pp. 67-91.

Jaslow, R 2011, ‘’, CBS News. Web.

Lacewing, M 2015, Kant’s deontological ethics, Routledge, New York.

McGee, R 2010, ‘Analyzing insider trading from the perspectives of utilitarian ethics and rights theory’, Journal of Business Ethics, vol. 91, no. 65, pp. 78-93.

O’Fallon, M & Bufferfield, K 2005, ‘A review of the empirical ethical decision-making literature: 1996- 2003’, Journal of Business Ethics, vol. 59, no. 4, pp. 375-413.

Phillips, R, Freeman, R & Wicks, A 2003, ‘What stakeholder theory is not’, Business Ethics Quarterly, vol. 13, no. 4, pp. 479-502.

Shafer-Landau, R 2013, Ethical theory: an anthology, John Wiley & Sons, Inc, West Sussex.

Trevino, L & Brown, M 2004, ‘Managing to be ethical: debunking five business ethics myths’, Academy of Management Perspectives, vol. 18, no. 2, pp. 69-81.

Walsh, G, Mitchelle, V, Jackson, P & Beatty, S 2009, ‘Examining the antecedents and consequences of corporate reputation: a customer perspective’, British Journal of Management, vol. 20, no. 2, pp. 187-203.

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IvyPanda. (2020, October 9). Promoting Unethical Behaviour towards Customers. Retrieved from https://ivypanda.com/essays/promoting-unethical-behaviour-towards-customers/

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1. IvyPanda. "Promoting Unethical Behaviour towards Customers." October 9, 2020. https://ivypanda.com/essays/promoting-unethical-behaviour-towards-customers/.


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IvyPanda. "Promoting Unethical Behaviour towards Customers." October 9, 2020. https://ivypanda.com/essays/promoting-unethical-behaviour-towards-customers/.

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IvyPanda. 2020. "Promoting Unethical Behaviour towards Customers." October 9, 2020. https://ivypanda.com/essays/promoting-unethical-behaviour-towards-customers/.

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IvyPanda. (2020) 'Promoting Unethical Behaviour towards Customers'. 9 October.

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