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Overview And Analysis Of Ethical Consumerism Add in library

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Question:

Write an analytical business report on what ethical consumerism means for businesses?

 

Answer:

Introduction

This report is on the Rana Plaza garment factory collapse in Bangladesh on 24th April 2013 which killed around 1,138 people and left many children orphaned. This incident was the worst incident in the world which killed so many people. It was found later that Rana Plaza used to source clothes to 28 brands all over the world and few of the famous brands like Primark, Bonmarche, Matalan, Mango, and Benetton. The incident took place because of the poor workplace health and safety standards. These workers became the victims of human rights violations, suffering while others get rich to make fashionable clothes for rich consumers. As per the investigation it was found that the building was illegally extended to eight stories which is one of the reasons for the building to collapse. This incident could have been avoided if the company would have followed the ethical steps to improve the condition of the building and the safety of the employees. And if the officials would have taken correct measurement or action towards the illegal construction of the building the incident of Rana Plaza could have been avoided. Today most of the companies follow ethical way of production and follow all the rules and regulation mentioned by the government to avoid such incidents and to avoid huge fines from the government.(Department of Rural Economy, University of Alberta,2006)

Today Ethical consumerism is encouraged and people are concerned about the products they buy, they make sure that the product is not harmful for the environment or society and Ethical consumerism even encourages them to think about how the product is produced and distributed and if it is doing any benefit to the society and environment(Creyer,1997).

Overview and analysis of ethical consumerism

Ethical consumerism can be defined as practice of purchasing products and services which does not harm the environment or the society. Now days, consumers are buying goods that are ethically sourced, ethically made and ethically distributed. They are more interested to know how and where it is made and if the product environmental friendly. Ethical consumerism encourages ethical production it means the producing recycled product, no child labor or slavery is involved in producing the product and the product should be organic. There has been a rise in the demand of ethical clothing where consumers want human rights clothes and looking for ways to purchase them which is forcing the clothing industries to produce high quality clothes in an ethical way. By following the ethical way of production the company can win the trust of its customers and increase their goodwill in the market. Consumers are looking for more ethical products and they want more information about the product that they are purchasing, hence the company should make sure that they provide all the details on the product so that they win the trust of the customers and give a good completion to their competitors. The business to make sure that they follow all the ethical ways in the production of the goods or services to avoid any incidents or non ethical issues. (Itv, 2014)The workers of Rana Plaza were forced to work in the damaged building as there was lot of pressure on the management to complete the order from few of the brands in the western countries and the management of the Rana Plaza had no option but to send the workers to complete the orders. This unethical behavior of the companies forces them to follow unethical procedures that results in damages or accidents like Rana Plaza. Few companies due to the rigorous competition tend to cost cutting and shortcuts on safety to make more profit or meet there client’s requirements. There were many experiments done on ethical consumerism and it was found that if a company invests in even a small degree of ethical production, buyers will reward it just as much as a company that goes much further in its efforts. With the change in the consumers thinking and buying trend it is now important for the companies to follow the ethical way of working so that it can make profits for a longer time. This is the way how the company can ensure its revenue and increase its profits in future.(Treanor,2014)

 

Detailed review on Co-operative Group

Co-operative Group was voted the most ethical company of the past 25 years in UK. It has gone through a rough phase of its carrier but still manages to work ethically and has won trust of the customers. They follow the ethical way of working to make sure that they do no harm to the society and to the environment.(Fisher,2014) The Co-operative Group believes in openness, honesty, social responsibility, caring for others. They believe that no one is perfect in this world and they don’t hide their imperfectness and try to overcome it by working hard. They even believe in taking responsibility for their actions and we give their members a say in the way they run their business. They make sure that they are honest in what they do or how they do it. To improve the community they encourage people to take responsibility of their society. They do lot of charity from their profits to help the society to grow. (The Co-operative Group n.d.)

Few of the principles that they follow to work ethically are Voluntary and open membership where membership is open for everyone, Democratic member control gives all the members the rights to participate in policy making and electing representative, they follow Member economic participation where all profits are controlled by the members and is used for their benefits , co-operatives always works with Autonomy and have independence even while dealing with the government and other organizations, co-operatives makes sure that they educate and provide training to all their staffs for ethical growth in the company, co-operatives work together with other co‑operatives to strengthen the co-operative movement as a whole, co-operatives also work to improve and develop the society both locally and internationally.(The Co-operative bank, n.d.) Hence it is very important in today’s world to carry on business ethically so that it wins the customers trust that helps in running the business in profit for a long time. There are many companies that try to hide the harmful effect of its product on an individual or on the society or environment and losses customers trust. They are more interested in short term profit where as companies who is interested in long term profit gives out all the information about the product and creates a goodwill and trust among the customers.(Confino,2011)

 

The result of the survey done

The result of the survey done at GSM London showed that the consumers buying behavior depends on tastes and preferences which is influenced by cultural, social, personal, and psychological factors. Now a day’s customers have become more ethical in buying products, they have started thinking of the effects on the society or environment the product may have. And if they find that the product have an unethical effect on the environment then they prefer not to buy the product and they quickly shift to the next product. The survey revealed that people are ready to pay little more for products and services that use ethical way of production. And the consumers are even interested to know how the product that they are buying is produced and if it is produced in an ethical way (Leadingincontext, n.d.). The buying behavior of the consumers even depends on the personal factors, like customer’s loyalty and satisfaction are the two personal factors that affect the consumer’s behavior the most. People are more inclined towards branded products as it holds a symbol of status in the society and hence consumers are ready to pay more for these products. The survey in revealed that Advertisement and Communication can even change the consumers buying behavior. The survey shows that by advertising the product on television or through communication there is an emotional response created among the customers which results in changing the buying behavior (GOMES, 2013).It was even noticed during the survey that the purchasing power and revenue even plays an important role in changing the customers buying behavior. A purchasing power of the individual will have a impact on the buying behavior, for example if a person has less purchasing power or less money for disposal then the consumer will be ready to compromise on the goods and will not think about the ethical and non-ethical consumerism. The survey even shows that lifestyle even affects the consumers buying behavior, like a person who has a good and balanced lifestyle will prefer organic food and will make sure that he buys products that is produced ethically and it does no harm to the environment or the society (Tallontire, Rentsendorj & Blowfield, n.d.) The number of consumers’ are increasing every day who are willing to buy ethical goods which are produced ethically and does not violate any laws, the consumers are ready to pay more for these products to safe the future of the world. Consumers buying behavior even changes due to the availability of the product or the easy access of the product. Now a day’s people prefer buying products online where they can easily compare the products and can search for more options. People can today get connected to the world through mobile or internet. Smartphone’s have made online shopping more accessible and easier; today people are booking products directly from the company through smart phones, hence changing the shopping behavior of the consumers. (Webb, n.d.)

 

Conclusion

From the above researches done we can conclude that the Rana Plaza incident happened because of the non-ethical procedures followed by the company. The management forced the workers to work in a poor working condition and the workplace did not have any safety measurements. The workers were forced to work to complete the demand of the clothes in the foreign markets and the management ignored all the unethical productions of these products which lead to such a huge disaster which killed thousands of workers and left many children orphans (Chand, n.d.).

The other survey on Co-operative Group revealed that it has gained the trust of the people for last 25 years by following the ethical way of working. The company holds a strong position among its competitors. The survey done shows that the company keeps transparency in its action and never ignores its responsibility. The company even does lot of charity to its society to make a better world for the future. The company even makes sure that they are honest in whatever they do and how they do it. To secure our future and the next generation everyone needs to support Ethical consumerism and make this world a better place to live (Pandey &Pandey,2013)

 

Recommendations

A company can become more ethical by running the company in more sustainable and ethical manner. The company should have clear ethical objectives set to achieve its goal s and make profits. We all know that business is run to make profits but the profit should be made by following the ethical way.The company should make sure that they make ethical policies and procedures and they strictly follow these policies and procedures at any cost.They should even understand the ethical method of production and the effects of the ethical and non ethical production of goods on the society and environment. By following these ethical steps a company can ensure its profit in future and win the customers trust and loyalty which will help the company in the long run (The consumer factor, n.d.).

 

Reference

Burke, J. (2013). Bangladesh factory collapse leaves trail of shattered lives. The Guardian

Department of Rural Economy, University of Alberta (2006).Do Ethical Consumers Care About Price? A Revealed Preference Analysis of Fair Trade Coffee Purchases. [online] Available From:https://onlinelibrary.wiley.com/doi/10.1111/j.1744-7976.2006.00066.x/abstract;jsessionid=BE4F360BE8409AE0366F9A067ADAF7F5.f03t03?deniedAccessCustomisedMessage=&userIsAuthenticated=false [Accessed: 8th April 2015].

Creyer, E. (1997). The influence of firm behavior on purchase intention: do consumers really care about business ethics? [online] Available From: https://www.emeraldinsight.com/doi/abs/10.1108/07363769710185999 [Accessed: 8th April 2015].

Itv (2014).Co-op voted UK's most ethical company of last 25 years. [online] Available From:https://www.itv.com/news/update/2014-08-04/co-op-voted-uks-most-ethical-company-of-last-25-years/ [Accessed: 8th April 2015].

Treanor, J. (2014).Co-operative Group voted most ethical despite scandal and £2.5bn loss. [online] Available From: https://www.theguardian.com/business/2014/aug/04/co-op-most-ethical-company-scandal-loss [Accessed: 8th April 2015].

Fisher, M. (2014). Co-op Group voted UK's 'most ethical' company. [online] Available From:https://www.fruitnet.com/fpj/article/162322/co-op-group-voted-uks-most-ethical-company. [Accessed: 8th April 2015].

The Co-operative Group (n.d.). The Co-operative Group Values and Principles. [online] Available From: https://www.co-operative.coop/corporate/aboutus/The-Co-operative-Group-Values-and-Principles/ [Accessed: 8th April 2015].

The Co-operative bank (n.d.). Introduction. [online] Available From: https://www.co-operativebank.co.uk/aboutus/ourbusiness/ethicalpolicy [Accessed: 8th April 2015].

Confino, M. (2011).What motivates consumers to make ethically conscious decisions? [online] Available From: https://www.theguardian.com/sustainable-business/motivates-consumers-environmental-ethical-decisions [Accessed: 8th April 2015].

Leadingincontext (n.d.). What Does Ethical Consumerism Mean for Business? [online] Available From: https://leadingincontext.com/2012/10/10/what-does-ethical-consumerism-mean-for-business/ [Accessed: 8th April 2015].

GOMES, W. (2013). Reason and responsibility: the Rana Plaza collapse. [online] Available From: https://www.opendemocracy.net/opensecurity/william-gomes/reason-and-responsibility-rana-plaza-collapse [Accessed: 8th April 2015].

Tallontire, A, Rentsendorj, E & Blowfield, M (n.d.). ETHICAL CONSUMERS AND ETHICAL TRADE: A REVIEW OF CURRENT LITERATURE. Social and Economic Development Department, NRI

Webb, C. (n.d.). How to Change Consumer Behavior Through Advertising. [online] Available From:https://smallbusiness.chron.com/change-consumer-behavior-through-advertising-11281.html [Accessed: 8th April 2015].

Pandey, A. & Pandey, M. (2013). IMPACT OF LIFESTYLE ON BRAND PREFERENCE OF BUYER BEHAVIOUR. Abhinav. Volume II, ISSN – 2320-0073

The consumer factor (n.d.). The 4 factors influencing consumer behavior. [online] Available From: https://theconsumerfactor.com/en/4-factors-influencing-consumer-behavior/ [Accessed: 8th April 2015].

Chand, S. (n.d.). 5 Factors Influencing Consumer Behaviour | Explained. [online] Available From: https://www.yourarticlelibrary.com/products/5-factors-influencing-consumer-behaviour-explained/22163/. [Accessed: 8th April 2015].

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