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Ethics And Corporate Social Responsibility Case Study Add in library

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Questions:

1. Which is the National Advertising Division's most important stakeholder, businesses or consumers?
 
2. Do you believe the BBB can be truly imparlial given its financial dependence on businesses?
 
3. What actions would you take to ensure an ethical misconduct disaster such as the pay-for-play scheme does not happen again?
 
 

Answers:

Executive Summary

This report is mainly focused towards performing a critical analysis of the case of BBB with a view to evaluate the important aspects related to it. On the basis of performance of analysis of the given case, it has been assessed that BBB is mainly concerned with encouraging businesses to remain ethical in performing their practices. In relation to this, it offers ratings to businesses that act as a basis to consumers in judging their performance. However, the analysis as performed has mainly assessed the stakeholders of BBB and the performance of case analysis indicated that the most significant stakeholder is the consumers of businesses. The analysis also focused towards the impartiality of BBB in respect to its financial dependence on business, and the case analysis has indicated that it is highly difficult to BBB in remain impartial provided its financial dependence on its members. The functioning of BBB in an efficient manner can be ensured by way of its members because they provide necessary fees which are essential to it in running its operations. The assessment of important actions needed in ensuring that the ethical misconduct in the form of pay for play can be avoided leads to identification that there are various such actions that could be considered in ensuring that similar kinds of pay for play can be avoided in performing the business practices.

Introduction

This report involves a critical analysis of the case of Better Business Bureau (BBB) which has been a self regulatory trade association in US. An analysis as performed has indicates that the case is related to the activities that are carried out by BBB and the various major issues and litigations that are faced by it. A critical analysis of the case implies that an important chapter of BBB is the National Advertising Division (NAD) that is mainly focused towards evaluating the advertisements of other companies, and creates awareness within consumers with regard to any fraudulent practices within such advertisements of companies. BBB is mainly concerned with creating awareness within consumers of businesses regarding the ethical and unethical practices as performed by them so that they can remain safe from engaging into any kinds of fraudulent practices. This has been ensured by BBB through a complete check-up of the business practices in relation to their compliance with ethics and social responsibilities and based on the assessment, necessary ratings are provided to them according to their performance. These ratings allow consumers in making objective decisions with respect to organisation’s performance (Jennings, 2003).

This report is aimed at assessing the case of BBB by paying specific attention to certain major areas including an assessment of the National Advertising Division’s most important stakeholder. In addition to this, the analysis also assesses whether BBB can be truly impartial provided its financial dependence on businesses, and finally, an assessment would be carried out with respect to the actions that are essential in ensuring that the fraudulent practices in the form of pay for play scheme does not happen again. Based on the findings from the entire analysis, they will be concluded in the conclusion section of this report.

 

Most Important Stakeholder of National Advertising Division (NAD)

Stakeholders of an organisation are mainly those interested parties that are directly influenced by the actions undertaken by management within it. They are directly affected by the performance of the organisation and as such, they are highly crucial to them as well. In respect to the given case analysis, it has been assessed that NAD has been an important part of BBB which has been created for the purpose of monitoring the performance of advertisements as carried out by businesses. This particular NAD system as established also has certain major stakeholders for which it mainly exist. A critical assessment of the case indicated that the most significant stakeholder of NAD is mainly the consumers. This is mainly identified from the core purpose of NAD which has been to provide the consumers of businesses with sufficient details about the ways in which their business performs. The ethical and unethical practices especially in respect to their advertising initiatives are disclosed by NAD as a part of its responsibility which allows consumers in taking most efficient decisions regarding that particular business (Flynn, 2008).

An analysis of the case of NAD indicates that the most significant beneficial from the services of the company is mainly its consumers. The consumers are benefitted from getting the reports over BBB’s website with respect to the performance of their companies as to whether they are practising in an ethical manner. As the NAD division of BBB is completely working in a manner aimed at satisfying the consumers of businesses from the fraudulent practices as undertaken by them, the most important stakeholder can be regarded as the consumers. Businesses perform the advertising practices with a view to attract customers, and they often mislead information with a view to attract more and more consumers to buy their requirements for them. However, such misleading information as provided by such organisations to their consumers are regarded as unethical from the point of view of BBB and they should therefore be avoided completely. This NAD division of BBB assesses the advertising activities of businesses which allow it in making efficient decisions in educating consumers (Jindal-Snape and Hannah, 2014).

Consumers are required to make efficient decisions with respect to their spending and they are greatly hurt when they are engaged in fraudulent practices of businesses. It is therefore essential that there should be appropriate measures aimed at protecting the interest of consumers and preventing them from engaging in fraudulent deceptions by businesses. NAD division of BBB is primarily engaged in such processes whereby it facilitates adequate level of information to consumers and thereby empowers them with the opportunity to make most relevant decisions that are free from fraudulent practices. Since the entire working of NAD is primarily towards ensuring the protection of consumers from the advertising practices of businesses, it can be said that the most important stakeholder of the company is therefore the consumers that consumes products and services as offered by businesses.

 

However, an analysis of the need for advertising regulation on the part of businesses implies that it is highly essential that they should be regulated so that customers can be benefitted to the maximum extent possible. Advertising practices offer significant level of opportunities to businesses in entering into fraudulent practices in the form of consumer deception whereby the messages regarding the products and services of the businesses are presented in a manner aimed at deceiving consumers. Businesses often make significant level of claims regarding their products and services which are not always accurate and true. Such messages are aimed at deceiving consumers with a view to encourage them to make more and more of buying of the products and services as offered by businesses. As for example, businesses often makes claim that their products and services are superior as compared to their competitors, and these claims are made on unreasonable grounds. They are aimed at attracting customers but at the same time, they are also regarded as highly unethical. Hence, NAD is primarily engaged in performing the management of advertisements by identifying any kinds of deception within it with a view to educate consumers (Giersson and Holmgren, 2000).

As the analysis above indicates that the most significant stakeholder of NAD is consumers, but at the same time, the case analysis also indicated that businesses also plays an important role in respect to the services provision of NAD. This is mainly because the advertisements of businesses are mainly examined by NAD with a view to assess the involvement of ethics or unethical values in it. As a result, businesses also form a critical part of the services as offered by NAD. The case analysis also indicated that businesses are provided ratings based on their performance over ethical values and social responsibilities in respect to their advertising related practices. This rating by BBB is solely based on their performance conditions, and the businesses that adapt unfair means in influencing the consumer’s buying decisions are generally provided with lower grades by NAD. However, the case analysis indicates that NAD also provides sufficient opportunity to businesses in rectifying the errors within their advertising campaigns so that they can categorise them as BBB accredited.

The analysis above indicates that the main stakeholder of NAD is mainly the consumers of businesses because the services of NAD are primarily influenced by affecting the consumer’s interest towards the products and services of particular organisation. Their services are aimed at creating awareness within consumers regarding the advertisement effectiveness of businesses so that they can make better decisions. The analysis also indicated that businesses also account for playing a significant role in terms of the stakeholder of NAD because they are being rated based on their performance which affects their overall performance and brand image in front of their consumers (Treviño and Weaver, 2003).

 

Impartiality of BBB Provided its Financial Dependence on Businesses

An analysis of the case study indicated about the way in which BBB performs its operations. The company is primarily engaged in safeguarding the interest of its consumers by way of providing rating to businesses depending on their ethical and social performance. BBB encourages businesses to act in a socially responsible manner and also in acting ethically with respect to their practices. Businesses that are highly ethical and responsible with respect to their actions and initiatives are usually provided ratings by BBB and they can show the ratings on their website so that it makes it easy to them in convincing their customers. However, in providing such services whereby BBB rates businesses on the basis of their performance, it is essential that there should be certain sources of revenue generation to it. Businesses can survive by having adequate revenue from their operations (Treviño and Weaver, 2003).

An analysis of the case of BBB indicates that the only way in which revenue is generated by the company is mainly through its membership feature whereby businesses seeking to get the ratings of BBB are required to become its member first. This signifies that BBB is also financially dependent on the businesses because the membership by businesses is the only source of revenue generation to the company. As this has been the only way in which survival of BBB is being ensured, the question of impartiality of BBB with respect to the rating services as provided by it is significant. The financial dependence of BBB on businesses led to my belief that BBB cannot be impartial in providing ratings to its customers i.e. the businesses. This is mainly because businesses that would subscribe the membership of BBB are likely to contribute positively in terms of certain fee to it. The fees as provided would cover up the costs that have to be incurred in reviewing the business practices in providing ratings to them (Bhatia, 2002).

Businesses that would positively accept the membership of BBB are likely to get favourable treatment in terms of their ratings and this has been evident from the cases of companies in the past whereby members of BBB are claimed to get favourable ratings as compared to the non-members or non-subscriber to its services. As for example, the analysis of the case study indicates about the Ritz Carlton case and also with respect to some of the Puck’s restaurant whereby it has been evaluated that BBB awarded higher grades especially to businesses that are accredited to it. Further, another similar example has been indicated in the case whereby it has been asserted that the members of BBB have asked businesses to become members of BBB in order to get higher grades. All these practices of BBB branches to encourage businesses in becoming its member clearly give an indication of the fact that impartiality in respect to the ratings as provided by it exists. Without revenue generation sources, it is highly difficult for an organisation to survive and this has also been evident in respect to BBB.

The case analysis leads to identification that there are various important areas whereby impartiality has been noted especially in respect to the services as offered by BBB. The partiality has been noted especially in respect to the ratings as provided by BBB to businesses. Some of them have been lower rating despite there has been lower consumer complaints and faster resolution of few such complaints. However, other businesses have received higher ratings from BBB and this is particularly because of their membership with it. This signifies the direct level of impact of membership over the performance of BBB in terms of its ratings to other businesses. As a result, it can be concluded that BBB cannot be truly impartial based on its financial dependence on the membership as subscribed by businesses (Treviño and Weaver, 2003).

 

Ethical Actions for Ensuring that Pay for Play Does not Happen Again

This section of analysis is aimed at assessing the ethical actions that would be needed in ensuring that the ethical misconduct in the form of pay for play does not happen again. However, in order to analyse such ethical misconduct to happen never in the future, it is essential to understand such concept initially and this is followed by an identification of the ways in which it can be managed in a proper manner. An analysis of the case of BBB indicates that this ethical misconduct in the form of pay for play has been taken place and it mainly indicates a type of fraudulent practice whereby the organisation and individual pay for favourable treatment at the expense of other parties. This implies that favourable decisions are undertaken in respect to an organisation that is highly favourable and the others are not considered important. This has been a fraudulent practice from the point of view of treating organisations, and it indicates a partial treatment offered to an organisation.

As in respect to the given case of BBB, there has been claim being made over the ratings provided by BBB whereby it has been claimed that the ratings are partially affected by the membership criterion. The members of BBB have received the favourable rating of A+ whereas others have struggled to make significant ratings. This indicates the existence of pay for play scheme in respect to BBB. However, this fraudulent practice has been carried out at BBB, it has adversely affected the brand image of the organisation. This type of fraudulent practice should be avoided so that they cannot affect the brand image of the organisation. In ensuring so, there are a range of ethical practices that are required to be undertaken. The major actions needed in order to ensure that similar kinds of misconduct do not happen again are briefly indicated as follows:

1. First of all, the branches that have been identified as performing this pay for play scheme should be stopped from performing again, and they should be closed down. This would act as a basis to other branches of the same organisation in not following the similar kinds of practices (Lavery, 2007).

2. Secondly, the action needed is mainly to eliminate the driving factor that becomes the primary reason driving BBB in considering pay for payment scheme. In the given case, membership fee is the main driving factor and it requires changes to the rating systems. As for instance, there should be ratings provided only to the members and the non-members should not be considered at all. This would reduce the chances of partial ratings on the part of company, and all the businesses would be rated without any kinds of discrimination (Badiou, 2002).
 
3. In addition to the above actions, the accreditation process should be reviewed by third parties so that there would be complete elimination of the fraudulent practices in the process can be ensured. The chances of applying pay for play scheme would reduce considerably from the consideration of third parties in the process of reviewing the accreditation process.
 
4. There is also a need to streamline the process with respect to receiving complaints so that there can be objective evaluation of the organisation’s processes in providing rating to them. This is also a crucial process that can be considered in ensuring that the pay for play scheme is restricted from occurrence.

These are some of the major actions that are essential to be considered in ensuring that such kind of ethical misconduct is prohibited from occurrence and most objective decisions can be possible with respect to providing ratings to organisations on the basis of their performance.

Conclusion

In this report, a critical assessment has been carried out especially in respect to the case of BBB and the performance of case analysis has indicated significant level of findings in respect to the different important areas. The analysis initially focused towards assessing the important stakeholders of NAD and the performance of case analysis has indicated significant level of findings. It has been evaluated that the most critical stakeholder of NAD is mainly the consumers of businesses because the main purpose of NAD has been to protect the interest of consumers by way of providing them complete information with regard to ethical and unethical practices as practiced by them while performing advertising activities. Although the major stakeholder has been identified as consumers, yet an analysis indicates that businesses are also an important stakeholder of NAD, as the review of activities and ratings to them are provided based on their performance. Apart from this, it has also been evaluated that BBB cannot act in an impartial manner given its financial dependence on businesses. This is mainly because the fee from the membership businesses is crucial determining factor from the point of view of performing its operations. Finally, an assessment has been carried out with respect to the actions needed in ensuring that the pay for play scheme can be avoided and the performance of analysis indicated that there are various such actions that are required to be considered in ensuring that ethical misconduct can be prohibited from occurrence.

 

References

Badiou, A. (2002), ‘Ethics: An Essay on the Understanding of Evil, Page 2’, Verso.

Bhatia, S.K. (2002), ‘Business Ethics and Managerial Values: Concepts, Issues and Dilemmas in Shaping Ethical Culture for Competitive Advantage of Organisations’, Deep and Deep Publications.

Flynn, G. (2008),’ Leadership and Business Ethics’, Springer Science & Business Media.

Giersson, H. and Holmgren, M. (2000), ‘Ethical Theory: A Concise Anthology’, Broadview Press.

Jennings, M.M. (2003). “The critical role of ethics: recent history has shown that when individual ethics are compromised, corporate ethics fail and financial disaster is not far behind”. Internal Auditor, Vol. 60(6).

Jindal-Snape, D. And Hannah, E.S. (2014), ‘Exploring the Dynamics of Personal, Professional and Interprofessional Ethics’, Policy Press.

Lavery, J.V. (2007), ‘Ethical Issues in International Biomedical Research: A Casebook’, Oxford University Press.

Treviño, L.K. and Weaver, G.R. (2003), ‘Managing Ethics in Business Organizations: Social Scientific Perspective’, Stanford University Press.

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