1. 3 Ethics and Social Responsibility Professor Close

2. Corporate Social Responsibility (1) CSR = businesses’ concern for societal welfare Ethics = moral values guiding a leader or organization Morals = rules developed by cultural values/norms Can you think of any companies that practice CSR?

3. Corporate Social Responsibility (2) Happy people = good business If you have to ask “is this ethical?...” it likely is NOT cool Need to rethink long terms solutions

4. Marketing Environment (1) Factors outside our control in the short run (CPA) Consider the strategy (where are the opportunities?) Broad objectives: beyond pleasing our customers

5. Marketing Environment (2) Broad objectives: –Useful function (Wang computers) Need satisfaction (Hallmark) PR purposes (RJR vs. Alcohol) –Organization to support Entrepreneur’s challenge Example: organization charts –Profit (#1, long run) Other financial subordinate (market share, Eastern) Time horizon: When will firm generate profit? (Amazon) Considers resources (how many years)

6. Marketing Environment (3) Compatibility is a key Question to consider: do you think Wal- Mart can focus on both quality and price? What about their labor issues?

7. Simpsons on Wal-Mart

8. Marketing Environment (4) Resources: remember 2x2 matrix; how to find strong areas –Examine functional areas Financial: Wal-Mart (purchasing) Production: –Larger capacity (cost/unit, economy of scale) –Flexibility (Sara Lee and what else?) –Often opposed Marketing: –Brand strength –Channel relationships (car dealers, franchisees, and what else?)

9. Marketing Environment (5) Preferable Combination –Example: Wal-Mart - financial, distribution, and relationships –What other example can you think of that has a strong combination?

10. Finding Opportunities (1) Types of opportunities: –Market penetration Current products and markets Examples include –Increase rate of use (shampoo, Coke, and what else??) –Longer duration (airlines and what else??) Advantage of market penetration is that it is the easiest method Disadvantage is the threat of saturation

11. Finding Opportunities (2) Types of opportunities: –Market development Current products, new markets Example: international expansions –What successful or unsuccessful international expansions can you think of? Advantages include high potential Disadvantages include applicability (KFC in Japan)

12. Lipton is Asia…Think it will work?

13. Finding Opportunities (3) Types of opportunities: –Product development Current markets, new products Examples: autos, fashion, and what else?? Advantages include knowing the customer already Disadvantages include cannibalization (Gillette)

14. Finding Opportunities (4) Types of opportunities: –Diversification New market and product Examples: McDonalds and what else?? Advantage includes high potential Disadvantage include high risk (ITT – Sheraton)

15. Social Factors American values (upward mobility, work ethic, self-sufficiency, conformity) –Culture: manner in which people live –Very broad Women’s role (U.S. vs Japan) Fitness Debt Time-poor society

16. Economic Factors Economy: a system of producing, distributing, & consuming wealth (what is our purchasing power?) –Shifts (purchasing declines in recession) –Examples: Interest rates influence buying (0% financing) Rising costs, inflation unavoidable –Good life = debt? –Why are we so in debt?

17. Technological Factors Technological: application of knowledge to perform tasks more efficiently/effectively Effective: accomplishing tasks Efficient: accomplishing tasks with minimum use of resources –Base of economic environment (research) –Technology transfer is rapid (Pentium chips and what else?) RSS and blogging –Ethics: consumer research (hits on web sites, selling your info, privacy??)

18. Technology Changing Lifestyles

19. Political Factors Political –International Nationalism: emphasis on “our” country influences trade (buy American) Trade groups: ease trade among members –EU – lowers trade barriers among European nations (looking East) –NAFTA – Canada, U.S., and Mexico –What do you see as the advantages and disadvantages of each? Consumerism –Champions individual vs company –Ralph Nader – unsafe @ any speed

20. Legal Factors (1) Legal (close with political) –Philosophy: Competition is encouraged Federal law conveys intent, but not detailed interpretation –Sellers must: Tell the truth Meet contracts

21. Legal Factors (2) Legal (continued) –Regulations: Food and drugs must be safe & sanitary Magnuson-Moss Act: warranties Robinson-Patman Act: price discrimination Consumer Product Safety Commission (sets standards) –Protects from unsafe products (bicycle – unsafe) –Stricter on children State/local laws vary (California) –Let the buyer beware (pro-consumer)

22. Should this be an illegal ad?

23. Competitive Factors Competitors –Fight for market share or profits –Tend to become similar (sodas, beer, any others?) –Competitive barriers Position difficult to copy (any area of firm) Marketing helps maintain distinction (image, etc) Can usually avoid “head on” competition –We love competition, why?

24. Who Killed My Little Pony?

25. Summary Marketing environment and strategy Six environments –Social –Economic –Technology –Political –Legal –Competitive Note: we will over demographic factors in a following unit. Any questions?