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1) Watch “The Nag Factor” and answer Lucy Hughes’s question “Lucy, is that ethical?” Refer to relevant moral theories and standards discussed in the course. Be sure to anticipate and rebut counter-arguments.
20 marks. 700 words max.

2) Martina is a manager and major shareholder in Frobisher Explorations, a junior mining firm. Frobisher’s stock price rose from $1 to $5 per share on the basis of reports of a major gold discovery in the Arctic. Martina received advance notice that a consulting geologists’ report, to be made public the following week, would reveal the Arctic deposit to be actually pyrite (“fool’s gold”). The next day, Martina began to sell off her Frobisher stock. As a result of the sell-off, the share price dropped to $3. After the geology report was released the following week, Frobisher’s stock price dropped all the way back to $1 per share.

Was Martina’s action illegal? Why/why not? Legality aside, was it ethically wrong? Why/ why not? What are the ethical arguments for and against banning this kind of activity? In answering this question, identify the relevant stakeholders, characterize the effects of her actions on those stakeholders (specifying any assumptions you have to make), and refer to relevant moral theories and standards. Be sure to anticipate and rebut counter-arguments.

The Nag Factor and Its Impact on Children's Health

1.The videos show how the marketing of products manipulating the children to buy their product. This clip turns between Susan Linn (professor of Psychiatry at Harvard's Baker Children's Center) and Lucy Hughes (a marketing executive at Initiative Media). She is also known as the co-founder of "The Nag Factor". The Nag Factor is a scientific study which shows how parents are being nagged by their children for help in buying any product, such as toys, foods and game parlour (HowManyKnow). As per Hughes, 20%-40% purchases would not have made if the children have not nagged their parents. Professor Linn is against the industry that spends $12 billion/year to market to children. She compared the marketing strategy of yesteryears to the strategy of today. The question arises here, is it ethical? While Professor Linn condemned it, Lucy says she does not know, as it is her job to sell products.

The advertising and marketing society has gone so far today. As Lucy said she does not know whether it is ethical or not, she is just doing her job. She must follow a way that can reduce the chance of nagging. The Nag Factor is literally controlling the children to buy the products. Professor Linn said it is not wrong making these things for children; it’s not bad to sell toys directly to the children as well. But the way of marketing they have chosen is not ethical. The marketers of USA always use Nag Factor to reach the children so they will put pressure on their parents for purchasing the product (Fisher).

The marketers are focusing on selling their products and for that, they are relying on nag factor. But they are not thinking about the consequences of it. Today, maximum parents see themselves fighting a battle in the cereal aisle (Weiss). Identified logos and characters influence children to force their parents to purchase that product including low nutritional foods and beverages. The marketers are using television ads and the favorite cartoon characters of children to influence them for nagging.  The Nag Factor is a habit of children, who are being targeted by marketers’ messages, to unrelentingly request advertised items (Fisher, Lovell and Valero-Silva). It is affecting the health of children as they are being influenced towards the marketing and consumption of junk food. The marketers need to understand that the Nag Factor is unethical and it should not be used as a weapon to sell their product.

Marketing Tactics to Manipulate Children's Buying Decisions

Lucy conducted a study on nagging, she asked the parents to put a diary and note every single nagging done by their children. This study was not to help parents from nagging but it was to help corporations to nag children for their products more effectively. She does not even bother about whether the Nag Factor is ethical or not, she is just doing her job (Geulincx et al.). She does not care how The Nag factor affecting children and their parents. It is not possible to prevent advertising messages from reaching children, but it can be used to promote healthy eating instead of junk food. Lucy is unethical unless she changes her mind and starts focusing on the prevention of The Nag Factor.

Nagging cannot be considered as a positive behaviour. It is making a bad impact on society. Parents are being harassed by their children and the children are nagging for unhealthy foods. Lucy is not doing anything to prevent The Nag Factor even knowing that it might not be ethical. She is also aware of the impact that the Nag Factor is making on the society. Instead of preventing she is influencing it which is not ethical. As per the survey, 20%-40% purchases are being made because the children are nagging their parents (Jeurissen and Rijst). The marketers are using The Nag Factor to increase their sales and profit. They might have used the same strategy to promote healthy food which makes a positive impact on society.

2.The action of Martina is considered to be illegal because she sold of her stock of Frobisher after receiving an advanced notice. The action of Martina is unethical because selling or buying shares based on the material non-public information is considered to be insider trading. It means Martina carried out an illegal way for trading the shares on the stock exchange for his own benefit through having confidential information. Descriptive ethics states what individuals think about wrong and right. In the case, Martina carried out the activity without thinking of its consequences on the organization and its stakeholders (Murthy).  Martina has depicted a selfish nature which led to the fall in the share price of Frobisher which is unethical. Normative ethics is also a significant aspect of moral ethics or philosophy which is concerned with morally what is wrong and right. Martina is unethical because despite being a manager and major shareholder of the organization, she carried out insider trading. Martina should have followed the moral standards in order to avoid the negative impact on the organization and stakeholders.

The Ethics of Marketing to Children

The utilitarianism is the ethical theory that identifies wrong and right by focusing on the result. The theory holds that the ethical choice should produce the greatest good for the greatest number. The action of Martina depicted that it was not good for the organization and stakeholders. The decrease in the value of the shares led to the decline in the value of Frobisher. Apart from this, other shareholders, employees and managers are also affected due to the action was taken by Martina (Rothlin and McCann). The share price drop leads to the decrease in the return on the shares which are being held by the shareholders. The managers and employees faced problems in managing the processes of the business due to the decline in the value of the organization. There were no benefits and costs were very high for the stakeholders. The utilitarianism states that the sum of total benefit should be higher than the sum of total costs for a given action. The theory counts interests equally for everyone but doesn’t protect equally for everyone (Vallabhaneni).

Martina should have taken actions on the basis of moral frameworks but it does not mean that it would have resulted in the best outcome. However, the actions should e for the benefits of others and not affecting others. The deontological theories are different from the utilitarian theories. The deontological theories aim at the objective of the greatest happiness and examine any act that assists in achieving the goal (Shaw). The deontology actions are judged always independently of their result. It means that the action can be morally not right but it may unintentionally lead to the appropriate outcome. However, the actions need to be taken on the basis of the interests and welfare of the associated stakeholders. The actions of Martine are not considered to be ethical. Martine carried out insider trading because she was engaged in a trade which benefited her by getting information associated with the organization which was not yet made public.    

The interests of all the stakeholders need to be taken into account. Libertarianism theory states that each and every individual has the right to live his or her life but the rights of others should also be respected. The egalitarianism states that equality needs to be maintained and there should be no partiality. Virtue approached need that people should develop good habits in order to ensure that the ethical and moral rules are being followed. The theory directs an individual to act appropriately and for the benefit of the society (Thomas). The stakeholder theory states that the value of the shareholder needs to be maximized. The theory wants that interests need to be balanced and respect should be given to the stakeholders. The action of Martina was illegal because it was insider trading. The action is unethical because it affected both the organizations and stakeholders. The use of confidential information was illegal which should not have been carried out by Martina. The interests and values of the stakeholders were affected due to the action was taken by Martina (Barcalow).          

References

Barcalow, Emmett. Moral Philosophy. 5th ed. Belmont, Calif., U.S.A.: Thomson/Wadsworth, 2007. Print.

Fisher, C. M, Alan Lovell, and Ne?stor Valero-Silva. Business Ethics And Values. 3rd ed. Upper Saddle River, NJ: FT Prentice Hall, 2006. Print.

Fisher, C. M. Business Ethics And Values. 8th ed. Harlow: Pearson Education Limited, 2012. Print.

Geulincx, Arnold et al. Ethics. 3rd ed. Leiden: Brill, 2006. Print.

HowManyKnow. "The Nag Factor." YouTube. N.p., 2012. Web. 30 Nov. 2018.

Jeurissen, Ronald, and Maaike van der Rijst. Ethics & Business. 4th ed. Assen: Koninklijke Van Gorcum, 2007. Print.

Murthy, C. S. V. Business Ethics. 3rd ed. Mumbai [India]: Himalaya Pub. House, 2010. Print.

Rothlin, Stephan, and Dennis McCann. International Business Ethics. 7th ed. Berlin: Springer, 2016. Print.

Shaw, William H. Business Ethics. 8th ed. Boston, MA: Cengage Learning, 2017. Print.

Thomas, Rosamund M. Business Ethics. 6th ed. Bury St. Edmunds: Ethics International Press, 2011. Print.

Thompson, Mel. Ethics. 2nd ed. Blacklick, OH.: McGraw-Hill, 2006. Print.

Vallabhaneni, S. Rao. Corporate Management, Governance, And Ethics Best Practices. 11th ed. Hoboken, N.J.: Wiley, 2008. Print.

Weiss, Joseph W. Business Ethics. 10th ed. New York: Berrett-Koehler Publishers, 2014. Print.

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