HU-304

Professional Ethics
& Human Values
Assignment
VI SEM

DELHI TECHNOLOGICAL UNIVERSITY

Submitted By: Group 6

Devang S. Nath (2k17/ME/081) Kushagra (2k17/ME/125)
Hitesh Kumar (2k17/ME/111) Kabir Mandia (2k17/ME/114)
Jovial Sotra (2k17/ME/113) Deepashu Singh Seepal (2k17/ME/079)
 Ethical And Unethical Dimension of
Companies

1. Introduction:
Ethics is generally known as a system of moral principle that affects how people
make decisions. Ethics is also concerned what is good for individuals and society,
like as, how people live a good life, what are people’s rights and responsibilities,
who define the language of right and wrong, and what is thought to be good or
bad. Ethics in business refers to an application of a moral principle of conduct to
the strategic and operational management of a business. For the today business,
ethics is prioritized as one among the main factor during the decision-making
process. Businesses that can maintain a high ethical point usually can benefit from
its own acts and creates satisfaction to both internal and external stakeholders.
Ethical viewpoints continue to change over time as people interact with different
society contexts such as people, time and rules. For business, ethics is important
for sustain growth because it maintains profits in the long-term.
Moreover, business ethics are moral principles that guide the way a
business behaves. The same principles that determine an individual’s actions also
apply to business. Acting in an ethical way involves distinguishing between
“right” and “wrong” and then making the “right”
choice. It is relatively easy to identify unethical business practices. For example,
companies should not use child labour. They should not unlawfully use
copyrighted materials and processes. They should not engage in bribery.
According to Investopedia, “Business ethics is the study of proper business
policies and practices regarding potentially controversial issues, such as corporate
governance, insider trading, bribery, discrimination, corporate social
responsibility and fiduciary responsibilities. Law often guides business ethics,
while other times business ethics provide a basic framework that businesses may
choose to follow to gain public acceptance.”
Three major areas of study within ethics recognized today are:
Meta-ethics, concerning the theoretical meaning and reference of moral
propositions, and how their truth values (if any) can be determined
Normative ethics, concerning the practical means of determining a moral course
of action
Applied ethics, concerning what a person is obligated (or permitted) to do in a
specific situation or a particular domain of action.
Moreover, business ethics are moral principles that guide the way a business
behaves. The same principles that determine an individual’s actions also apply to
business. Acting in an ethical way involves distinguishing between “right” and
“wrong” and then making the “right”
choice. It is relatively easy to identify unethical business practices. For example,
companies should not use child labour. They should not unlawfully use
copyrighted materials and processes. They should not engage in bribery.
According to Investopedia, “Business ethics is the study of proper business
policies and practices regarding potentially controversial issues, such as corporate
governance, insider trading, bribery, discrimination, corporate social
responsibility and fiduciary responsibilities. Law often guides business ethics,
while other times business ethics provide a basic framework that businesses may
choose to follow to gain public acceptance.”

2. Case studies:
There are several case studies about multiple businesses out there, which have
portrayed the either of both the virtues, viz Ethical and Unethical practises in real
life scenarios.
 ETHICAL
Tata Swach: The World’s Cheapest Water Purifier

This case is about the development of Tata Swach, a water purifier introduced by
the Tata Group of Companies in 2009. Tata decided to develop Swach after it
realized the need for clean water in the rural areas of India. Swach was developed
keeping in mind the rural market and was introduced as the world’s cheapest
purifier. It was targeted at fLirst time users in rural India but became a huge
success in the Indian urban market too. The case also discusses the various CSR
activities followed by Tata to create awareness about the importance of safe
drinking water.

The development of Swach could be traced to the 1980s when a professor from
IIT Kanpur, P C Kapoor, used rice husk ash (RHA), to filter bacteria from water.
Later on, he joined TRDDC as a consultant. Kapoor with this team developed
filters named as ‘Sujal’ using RHA cement and pebbles. RHA comprised 80-85%
of activated silica , which facilitated the entrapping of pathogenic bacteria, and
5% activated carbon that helped in removal of color and odor from the water.
Sujal was able to successfully remove the odor, color, and particulate matter from
impure water. Tata Swach, the water purifier, delivered safe drinking water at a
new market benchmark of Rs.30 per month for a family of five. It was user-
friendly and affordable and did not require electricity, boiling, or running water
to operate. It was priced at Rs.999 and had a capacity of 18 liters. The replaceable
filter, which automatically stopped water suypply after its useful life, was priced
at Rs.249 and could be used to purify 3,000 liters of water.

TATA SWACH: CSR

Tata Swach, apart being a commercial product, was distributed as a part of the
Tata Group’s CSR activity. On January 30, 2011, Tata Chemicals with the US-
based public charity, Hawaii Children's Foundation, distributed one hundred Tata
Swach purifiers in the villages and primary schools of Babrala, Uttar Pradesh,
northern India.

Azim Premji Foundation: A Philanthropic initiative to Improve Indian

Rural Primary Education
The case elaborates on Indian business tycoon, investor, and philanthropist
Azim Premji’s (Premji) philanthropic initiative – the Azim Premji Foundation
(APF) – which envisioned transforming the Indian primary education sector. In
2001, Premji through his foundation, APF, started taking initiatives to fulfill the
goal. The case discusses the vision, strategies, and programs that drove the
change. It describes APF’s efforts to accomplish the change in three broad
phases of implementation, elaborating on the objectives, initiatives, and
challenges that shaped each phase.
The case also throws light on the persona of Azim Premji – the values, beliefs,
principles, and practices which shaped him into a successful entrepreneur and a
passionate philanthropist. The case shares a few reminiscences from Premji’s
early life that laid the foundation for his leadership style.

Premji, who signed the ‘Giving Pledge’– a global declaration to give away a
substantial amount of one’s wealth to charity – worked relentlessly to transform
the Indian primary education sector. However, the task was a mammoth one and
the road ahead was replete with challenges – systemic, administrative, involving
people, etc. Though the primary education sector in India attracted substantial
donor interest, it was known for the low quality of its outcomes due to inherent
problems. While Premji along with his associates worked relentlessly toward
the mission, how far they would succeed in achieving the ambitious targets
remained to be seen.
Premji was shocked by the abysmal conditions that plagued the Indian primary
education system. He felt the government’s commitment to primary education
was not commensurate with the importance of the sector. The investment made
in the primary education sector was not substantial compared to the impressive
investments in higher studies. Before APF began its philanthropic initiatives it
carried out a series of extensive studies in 1999-2000 to understand the
landscape of primary education in India – particularly rural India.

The Case of Nestle- Maggi

Nestle a well-known brand produces Maggi the instant noodles, soups stocks,
sauces and seasoning. As factory jobs for women were created by the 19th century
industrial revolution in Switzerland thus they had very little time to prepare
meals. Thus, Swiss Public Welfare Society asked Julius Maggi to create such a
vegetable food product that would be as quick to prepare ans as easy to digest as
singing a song. This led to birth of the original company in 1872. Initially, protein
rich legume meals were brought to the market. Later on, it was followed by
readymade soups. Interestingly the formula (tastemaker), which paved way for
Maggi noodles, was developed back in 1863 by Julius Maggi. Maggie merged
with Nestle family in 1947 and in 1982 was launched in India.
1. 1982: Entry of Maggi noodle into the Indian market
2. May 21,2015: the Uttar Pradesh food safety body puts concerns over
"dangerous levels" of lead and MSG in Maggi, and asked Nestle to recall the
batch collected for testing fromBarabanki
3. June 3: The retail chains like Big Bazaar took off Maggi from their shelves
4. June 3: Delhi government puts ban on Maggi for 15 days, other states order
tests
5. June 3: A complaint filed with the National Consumer Disputes Redressal
Commission against Nestle India on Maggi by the Government.
6. June 4: The states asked by the Central Government to give reports on the
Maggi controversy
7. June 4: Nestle India releases the lab test results of Maggi samples on its
websites showing that the lead quantity is below FSSAI-prescribed levels
8. June 5: FSSAI orders Nestle to "withdraw and recall" all its nine Maggi noodle
variants, stop their production and also the exports, saying samples were found
to be "unsafe and hazardous" for human consumption.
9. June 10: Maggi samples tested for lead and arsenic levels in Bengaluru found
within permissible limits while there was no clarity on monosodium glutamate
(MSG)
10. June 11: Nestle India moved to Bombay High Court for judicial review of
FSSAI ban
11. June 12: Bombay High Court declines interim relief to Nestle,
12. June 14: Maggi sales unaffected as told by Pakistani Retaillers as consumers
have not reacted to reports of lead contamination in Indian manufactured noodles
13. Nestle India posted on its websites that a major part of contaminated Maggi
stock worth Rs 320 crores will be incinerated at 5 cement factories across India
into fuel.
14. June 30: Nestle allowed by Bombay High Court to export all varieties of
Maggi noodlesfrom India, though restrictions on domestic marketing continued.
15. July 1: Food Standards Authority of Britain claimed that Maggi noodles
manufactured in
India and exported to Britain, were safe to consume and contained lead well
within permissible levels
16. July 3: Canadian food regulator said Maggi safe for human consumption.
17. Aug 1: Suresh Narayanan, takes charge as the new India chief Nestle and says
that Maggiwill soon be back on retail shelves, even as the company will launch
more instant snacks and also focus on other areas of operations.
18. Aug 5: Goa Deputy Chief Minister Francis D'Souza favored lifting of ban on
the Maggi following the latest tests conducted at the central government lab in
Karnataka finding it safe for consumption.
19. Aug 11: Rs.640-crore class action suit filed by Indian government against
Nestle allegingunfair trade practices on Maggi noodles; hearing by National
Consumer Disputes Redressal Commission on Aug 14
20. Aug 13, 2015: Bombay High Court lifts ban on Maggi noodles. Orders fresh
tests on new samples. The Market response to the Case-Maggi commanded 63%
of India’s $800 million noodle market before reports that the product contained
excess lead in 2015. Its sales suffered a huge drop due to the controversy. Maggi
has been a market leader for three decades since 2009.
It is very clear from the above graph that from 2009 Maagi enjoyed the highest
market
share of noodles market in India.In the year 2014 before the controversy of May
2015 Maggi was the market leader with approximately 64% market share.
It is very clear from the above graph that from 2009 Maagi enjoyed the highest
market share of noodles market in India.In the year 2014 before the controversy
of May 2015 Maggi was the market leader with approximately 64% market share.

Nestlé response
To regain the trust of the public it was vital for Maggi to assure better quality.
Nestle focused on its strengths and came up with more confidence. Nestle India
knew that the people of India are of short memory, they will forget things easily
and again accept the brand.
So Maggi again introduced itself in market with improved packing to build the
perception in public that the company has come up with improved product and
improved quality
The very first response of the FMCG giant was that it rejected the accusation that
the noodles were unsafe. Their website displayed that there were no orders to
recall the product. They were very confident about the quality of their product.
A statement displayed on their website said that “The quality and safety of our
products are the top priorities for our Company. We have in place strict food
safety and quality controls at out Maggi factories… We do not add MSG to Maggi
Noodles, and glutamate, if present, may come from naturally occurring sources.
We are surprised with the content supposedly found in the sample as we monitor
the lead content regularly as a part of the regulatory requirements.”
But due to governmental ban and public rage the company Nestle withdrew
Maggi noodles. Although Nestle repeatedly claimed that the noodles were safe
but the truth lies on the other side. At least six states banned Maggi noodles.
Nestle repeatedly claimed that for the brand the trust consumers and the safety of
Maggi is their first priority.
Nestle continuously claimed that the consumers are misunderstanding the
company
Maggi noodles sales in India represent a minute fraction of Nestle's company-
wide revenue of almost 92 billion Swiss francs ($98.6 billion).
As a response to this crisis the company-Nestle developed a great strategy. They
defended their product on all social media channels and rejected all claims that
its noodles were unsafe for consumption. They showcased the best use of social
media to connect the masses with them. Earlier they were using the websites for
promotion of the product and for maintaining its image.
The company made an impressive effort through Maggi India Twitter account by
responding to every tweet from customers on this issue
They explained in their tweets that lead occurs naturally in soil and water.
Nestle also tried to explain the science behind the reason for the ban in simple
terms so customers could easily understand. They did so to regain the trust of the
customers.
Through the strategy of using smart use of social media during the crisis, the
brand limited further damage by reassuring and informing customers about the
quality of the noodles. Through this means only they encouraged the public to
continue buying the noodles in the future.
Nestle make it sure to continuously keep its customers up to date regarding the
investigation into the safety of Maggi noodles in India.
The company again and again re-assured the customers that the noodles are safe.
They left no chance to prove that they are a transparent company working closely
with the Indian authorities to resolve the issue.
Nestle also launches a FAQ page on the official website.

After a severe drop in the Percent market share after the july 2015 crisis Maggi
steadily increased their market share from 10% in October 2015 to 62% in June
2017 and projected to reach 64% by September 2017. They regained their
position of market leaders and again Maggi enjoys the crown.

UNETHICAL

Mcdonald’s: The Case of Unhealthy Ingredients

Originally, McDonald’s served only hot dogs, hamburgers, cheeseburgers,
milkshakes, and the pre-1960s type of French fries. Today's menu includes
numerous other items that have been added through the years such as chicken,
fish, salads, snack, coffee and desserts. Now this restaurant is the world's leading
global foodservice retailer with over 36,000 locations serving approximately 69
million customers in over 100 countries each day. More than 80% of restaurants
worldwide are owned and operated by independent local business men and
women. The true vision of this company is to offer best experience to the
customer, this company is focusing on creating a better tasting, high-quality food
to their customer and providing the world-class experience that makes the
customer feel warmly welcome and comfortable.
The unethical case is concerned with unethical ingredients. McDonald’s
foods contain too many calories and not enough nutrition such as large amounts
of added sugar, unhealthy fats and is highly processed; which directly effects on
consumers’ overall health. When these foods become the diet for people the
possibility consequence includes poor health, overweight and obesity. The issues
do not stop here; being overweight can lead to heart disease, diabetes, and stroke.
He will have to quit work. His family will have less income and saving. However,
their spending is higher. They will have to make time to look after him and spend
money to provide him a good treatment. His children may also have to enter labor
force early to support the family. Thus, he becomes a burden. When more and
more consumers have heart disease, stroke or diabetes, indirectly, the companies
in same the industry are losing their customers because more people might start
to feel insure toward fast foods consumption and thus switch from fast foods. As
a result, the industry will become less dynamic, and companies within the
industry will make less profit so they may start to consider eliminating their
staff’s numbers. This will increase the unemployment rate for the nation. To
decide if the actions were moral, we need to think about the purposes of
McDonald’s. If the purpose is to make more money by making people well-being
at risk for profit, it is immoral. If the corporation’s purpose is to make food
affordable for everyone by selling cheap food, then the company may not be
immoral. That would be more about having a bad solution decision than greedy
purpose towards the customers. In an official way, we do not know the real
purpose of the corporation, we think it would be hard to make a conclusion in
either way. Subjecting to this, the moral concern would also be changed. In
addition, people perceive situations differently and thus, there are many
discussions about the definition of ethic and ethical issues. All practitioners do
not have one common definition of the topic. Thereby, It would be useful to base
our analysis on the well recognize ethical framework. According to Business
Ethics Book by Laura, Joseph and Chris, there are three models that can be used
to explain if the acts involve in morality: deontology, utilitarianism and virtue
ethics. Utilitarian people make decisions that produce better consequences than
alternatives.

Zara: Unpaid Zara Workers Cry for Help

Zara, one of the most luxurious brand was caught in one of the controversy in
which its workers are pleading for help for not getting paid for their work.
Imagine shopping for clothes at your favourite high street store and checking its
tag for the price or size, only to come across a rather peculiar message that reads,

“I made this item you are going to buy, but I didn’t get paid for it.”

That’s exactly what some shoppers discovered while they were on a retail therapy
sesh at one of the Zara stores in Istanbul recently, as they found these cries for
help in the form of secret messages hidden inside the pockets of garments in-
store, the Associated Press reported.
Apparently, an outsource manufacturer for Zara called Bravo Tekstil had
reportedly shut down overnight and failed to pay its employees their three-
month salary including severance allowance.
Hence, the factory workers resorted to having these messages printed on the
clothes tags and sneakily slipped into the pockets of garments to urge shoppers to
back their campaign and pressure Zara into paying them what they’ve earned.

So far, Zara’s parent company Inditex (that also owns Mango and Next) has yet
to comment on this matter.
According to Independent, this isn’t the first time the Spanish fashion retailer has
been involved in such controversy. Previously, the fast-fashion company has also
come under fire for causing environmental damage, ripping off designs from
young designers and overlooking poor factory conditions.

In fact, they were once sued for allowing unsafe and abusive working conditions
along with allegations on child labour and savoury. The worse is probably when
they exploited Syrian refugees as young as 15 years old!

Apple
Apple Company is one of the world’s most renowned companies for its quality
products such as the electronics which include the computers, tablets and mobile
Phones. The company is also renowned worldwide for its innovations associated
with the innovations linked to their products. Additionally, this company’s
reputable status is associated with its ability to have provided thousands of people
with job opportunities hence, a source of living to these individuals.

One of the unethical behaviors of the Apple Company is the violation of their
employees’ rights and labor laws. This is evidenced by the long working hours
its employees have to work. For instance, surveys done by the authorities in the
company revealed that the employees were working in the company for a duration
of more than 60 hours a week and some employees working in the organization
for a duration of more than six days in a week. Additionally, the company is
involved in the employment of children who are less than 15 years and providing
false information in their records. The employees are paid less wages as compared
to the duration of their working hence, violating their rights which is unethical.

IBM
IBM stands for International Business Machines, is an American multinational
technology company. It was earlier called CTR which stood for Computing-
Tabulating-Recording Company. It was renamed in 1924 to IBM when it started
to expand into other countries. IBM initially produced hardware products, but
more recently it has expanded to other services such as softwares and cloud
computing for bigger corporations. Nowadays it produces and sells computer
hardware, middleware and software, and provides hosting and consulting services
in areas ranging from mainframe computers to nanotechnology. IBM is also a
major research organization, holding the record for most U.S. patents generated
by a business (as of 2020) for 27 consecutive years.
The city of Los Angeles alleges in an ongoing 2019 lawsuit that the Weather Co.,
a subsidiary of IBM, did not clearly notify users that it was collecting their private
locations with the Weather Channel app. The app encouraged its 45 million active
monthly users to grant it access to their locations to get more personalized local
weather data and then allowed IBM’s Watson Advertising products to monetize
the coordinates. IBM says it made the appropriate disclosures and would defend
its data-collection practices.

A Case of Satyam Computers

The case-Introduction
Satyam Computer’s scandal is India’s Enron . It is an “unethical creative
accounting culture” scandal. This is a type of ‘creative’ accounting leading to
fraud and investigations
But why did a leading company in one of India’s most successful industries of
recent years inflated its profits?
The revenues driven by the exports of India’s IT industry have grown at a very
high compound annual rate of almost 30 per cent since 2000. Satyam
Computers were once the crown jewel of Indian IT industry, however, the
debacle of Satyam raised a debate about the role of its CEO in driving a
company to the heights of success and its relation with the board members and
core committees.

Timeline of the case

1987 : Ramalinga Raju established Satyam Computer Services Ltd.

1991 : Satyam got listed on the Bombay Stock Exchange, IPO over subscriber 17
times.

2006: Revenues cross '$1 billion.' Raju became Nasscom Chairman.

2007: Raju was named Ernst & Young Entrepreneur of the Year.

2008
September 23: Satyam was awarded with Golden Peacock Award for Corporate
Governance and Compliance.

December 16: Satyam Chairman Ramalinga Raju announced plan to buy Maytas
Infra and Maytas Properties owned by his sons for $1.6 billion.

December 23: Satyam barred from business with the World Bank for 8 years for
alleged malpractices in securing contracts. Shares fall to lowest in 4 years.

December 25 - Satyam asked World Bank to apologize.

December 26 - Board member Mangalam Srinivasan resigned followed by exits

of members Vinod Dham, Krishna Palepu.

December 30 - One of Satyam's largest investors said that it will sell its stake.
More suitors join in the fray to acquire Satyam.

2009

January 2: Satyam founder's stake fell by a third to 5.13%.

January 6: Satyam employees received letter from M Ramalinga Raju admitting

fraud

January 7: Ramalinga Raju resigned, disclosed a Rs 7000-crore accounting fraud

in balance sheets about the cash which never existed in the company.

January 8: Satyam's bank Citibank freezed its 30 accounts.

January 9: Ramalinga Raju and his younger brother B Rama Raju arrested by
the Police. Central Govt disbanded Satyam board and appointed its own 10
directors.

January 10: Satyam's largest investor Lazard seeked a nomination board. SEBI
grilled Raju.

January 23: CID arrested the 2 PwC auditors

April 6: CBI filed chargesheet against Satyam founder Raju and 8 others

2010, August 18: Former Satyam chief Ramalinga Raju granted bail
2011

October 29: SC issues notices to Satyam fraud accused to cancel bail

2012

March 21: Tech Mahindra, Satyam announced merger to form Indias 5th largest
IT exports company

2013

September 17: US court ordered fresh proceedings into claims against Satyam
2014

July 16: Sebi baned Satyam's Ramalinga Raju for 14 years from the market.
March 09: Final judgement date in Ramalinga Raju case deferred to April 9
April 09: All accused guilty of fraud including then chairman Ramalinga Raju in
an accounting scam worth Rs7,000 crore ($1.1 billion) & sentenced to 7 years of
jail.

The case:
With cheap skilled labour having shored up profits that were lightly taxed when
compared with the norm, net profits must have been substantial and rising too.
The scam brought to the light the role of corporate governance (CG) in shaping
the protocols related to the working of audit committees and duties of board
members. This accounting fraud committed by the founders of Satyam in 2009 is
a mockery at auditing system. This scam has justified that the conduct of business
is marked by human greed, ambition, and hunger for power, money, fame and
glory. Scandals in the accounting practices have proved that strong corporate
governance, ethics and accounting & auditing standards are the need of the hour.
The Satyam scandal puts pressure on the importance of securities laws and CG
in emerging markets. This major financial reporting fraud is studied for ‘lessons-
learned’ and ‘strategies-to-follow’ to reduce the incidents of such frauds in the
future.

Unethical fraud culture at satyam

1. Maintaining Records: Mr. Raju maintained thorough details of the
Satyam’s accounts and minutes of meetings, since 2002. He stored records
of accounts for the latest year (2008-09) in a computer server called “My
 Home Hub.” Details of accounts from 2002 till January 7, 2009 – the day
Mr. Raju came out with his dramatic (5-page confession) were stored in
two separate Internet Protocol (IP) addresses.

From this figure it is clear that the account were inflated to befool the investors
& the markets.
2. Fake Invoices and Bills: Fake invoices and bills were created using the software
applications, such as “Ontime” that was used for calculating hours put in by an
employee.

1. Web of Companies: A web of 356 investment companies was used to

allegedly divert funds from Satyam Computers Limited. All these 356
 companies made several transactions in the form of inter-corporate
investments, advances and loans within and among them only.
One such company which was founded with a paid-up capital of Rs. 5 lakh,
had made an investment of Rs. 90.25 crore, and received unsecured loans
of Rs. 600 crore. Amazing!!

The cash raised in such a manner was used to purchase several thousands acres
of land, across Andhra Pradesh, to relish the slice of the ever flourishing realty
market.
2. The Modus Operandi of Accounting Fraud: Satyam’s top management
simply cooked the company’s books by overstating its revenues, profit
margins, and profits for everysingle quarter over aperiod of 5-years,
from 2003 to 2008. False and fabricated invoices were generated for
inflating sales and the amounts shown as receivables in the books of
accounts, thereby inflating the revenues of the company.

Fabricated accounts
of Satyam Computers

3. Riding a Tiger: Raju was forced to admit his fraud following an failed
attempt to have Satyam invest $1.6 billion in Maytas Properties and Maytas
Infrastructure (“Maytas” is Satyam spelled backwards)—two firms
promoted and controlled by his family members.
Notwithstanding Raju’s confession, the Satyam episode has brought into sharp
relief the role and efficacy of independent directors. SEBI requires all the Indian
publicly held companies to ensure that independent directors make up at least half
their board strength.

The market response

The Satyam scam was a jolt to the market, especially to the stockholders of
Satyam. Companies were forced to pare their technology budgets dur to the
Rs7,136 crore accounting scandal at Satyam Computer Services Ltd. The scandal
casted a cloud over corporate governance standards in India but still the damage
was limited to Satyam Computers.
Indian companies faced higher levels of scrutiny and audits and the verification
processes. Although the Indian IT companies relied on their strong value
proposition which ensured continued work flow to India.

After the Scandal the shares of Satyam suffered a huge setback and the price
declines to less than Rs 50 per share.
Such accounting frauds are in connivance with auditors and chartered
accountants. The role of the external third party auditors, who were tasked to
ensure that no financial bungling is undertaken to carry out promoters’ interest or
hide facts, have also been brought to question because of such scams.

3. Company’s Advertisements Tactics: Ethical/Unethical

“HOW ETHICAL AND UNETHICAL IS COMPANY'S

ADVERTISEMENT ?”
The world of advertising has come a long way from mission to profession to
industry. Some people describe it as false, untrue, misleading and obscene. Today
Advertising Industry has been facing a lot of criticism as the advertisement which
is being telecasted does not follow the norms of ethics. Advertisements should be
socially, culturally and morally ethical. Advertisements appearing on television
and radio have to be approved by Doordarshan and AIR authorities. Similarly,
advertisements in newspapers and magazines and on outdoor sites are also
regulated by guidelines. In today’s competitive market, it is free for all it’s just
the matter of money or how much one is ready to spend, thus advertisers
sometime follows the unethical practices to fight or became superior then its
competition. For many years, the advertising industry has practiced, promoted
voluntary self regulation. Most advertisers and media recognize the importance
of maintaining consumer trust and confidence. The circle of self-regulation in
advertising is expanding day by day. Even the code of ethics drawn up by the
Advertising Standards Council of India (ASCI) has not had much impact. Thus
they do not provide solution for every unethical practice.

Ways of Unethical Advertisements:

There are several types of advertisement which leaded to unethical advertisement:
Surrogate advertising:
Surrogate advertising is advertising which involves a brand or product message
inside an advertisement which is telecasted for another brand or product.
Surrogate advertising came into existence after the Government took initiative
to ban advertisements of products that are injurious to health or body. After
implementation of it the major companies of liquor & tobacco were badly
affected so they found other ways of advertise their products. They have found
an alternative path of advertising which helped them to keep on reminding the
people of their liquor/tobacco brands: they have introduced various other
products with the same brand name in their product line.
The advertisements for such new products are called or placed under the category
of "Surrogate Advertisements". The main objective of this type of advertisement
is to compensate the losses arising out of the ban on advertisements of one
particular product (i.e. liquor). The companies always say that the order of the
government is being implemented and advertisements of liquor are banned, but
the objective of the Government imposing the ban is not fulfilled. It's a new
weapon of Proxy War. (Mary McMahon, 2015) (Rima Bhardwaj, 2009)
Analysis of some Surrogate advertisements:
(i) Diageo:
Diageo has built associations with its brands Smirnoff and Johnnie Walker.
Smirnoff with its cult associations with electronic music with events such as ‘War
of the DJs‘, Nightlife Exchanges etc, andJohnnie Walker with its famous
advertisements on ‘Keep Walking’ with celebrity achievers such as Vijay
Amritraj and Narayan Murthy, successfully associating Johnnie Walker with
success and also making the brand logo well known (the famous ‘Striding Man’
logo, which also has a society in its name – the Striding Man society, for Johnnie
walker drinkers)
(ii) Sab Miller:
Sab Miller has been promoting Haywards 5000 with campaigns featuring
Bollywood actors such as Sunil Shetty and Sanjay Dutt. The catch of course is
that they are shown to be promoting Haywards 5000 soda, and not the beverage.
And soda promotion is perfectly acceptable.
(iii) Bacardi:
Many can recall the Bacardi ads of yore with the famous Bacardi Music! Again,
it was not the beverage brand that was being promoted. The direct promotion was
for the Bacardi Soda and the Music CDs, but indirectly, a brand name for Bacardi
was built
(iv) Kingfisher:
It is basically beer brand; without doubt, this is one of the most successful
examples of surrogate advertising. The extension of the Kingfisher brand to the
airline gave a great push to the original category, beer. The Kingfisher brand has
also been successfully extended to other categories such as mineral water and
club soda.
(v) Puffery:
Puffery is an exaggerated statement made by the companies for the purpose of
attracting buyers to a particular product or service. Puffery advertisement is
basically used by the business in order to rise up the image of their product.
Statements made in puffery are usually of subjective opinions rather than
objective representations of facts. It is assumed that puffery act as an opinion for
the consumers that cannot be verified.
The difference between puffery and factual representations is the degree of
specify their claim towards the product. Puffery contains broad, general claims,
as in the motto
“The Best burger in the West”
No one can prove the burger is really the best, but no one can prove it is not (Ken
LaMance, 2014)
Analysis of some Puffery Advertisements:
(i) Red Bull: The famous energy drink Red bull shows in advertisement
that after drinking it gives you wings i.e. Red bull gives you wings but
we actually knows that it does not grows wings on your back after
drinking it
(ii) Axe Deodorant: Axe deodorant (chocolate fragrant) ad which shows
that after spraying it that person’s whole body turns to chocolate which
is practically not at all possible.

Unverified claims
These are those kind of advertisement in which the company who is advertising
its particular product makes a false statement or commitment about its product.
The unverified claims are generally seen in energy drinks which commit to
increase your stamina, foods that increase your child brain or a breakfast that
makes you fit. But as the consumer use them, they see that there stamina is still
the same, there child is just as regular as he was, and there figure hasn’t changed
an inch. Advertisements like these convey information that’s false,
scientifically wrong and misleading. (Roshani Dhamala, 2014)
Analysis of some Unverified Claims
(i) Kellogg’s Special K:
Kellogg's special k claims that after having it as your breakfast one will became
slim and trim but there is no scientific prove for it. Thus it’s a wrong or misleading
statement committed by the Kellogg’s company.
(ii) Horlicks:
Horlicks claims that it makes your boy taller, stronger and sharper but practically
a boy cannot be taller, stronger and sharper just by drinking milk with mixed with
this product Horlicks.
(iii) Woman stereotype:
Television remains of the most predominant mediums that promote stereotypical
about the gender roles with the help of advertisement. “Media has become an
important source of creating stereotypes because they are sometimes the only
source of information we have about other groups and they often represent a
distorted view of those groups”. NO matter what type of life a women lives, the
society will create some sort of stereotype about the women’s. Generally the
entire household product such as soap, washing powder etc. mainly uses women
in order to advertise it which generate or add to the stereotype in the society about
the women’s that they are limited within the boundaries of their house only.
(iv) Detergent powder:
The famous washing powders like Rin, Tide, Fena, wheel etc always uses a
women in order to promote their brand as well as their product.
Comparative Advertising:
According to academic literature, “Comparative ads are those ads which involves
directly or indirectly naming competitors in an ad and comparing one or more
attributes in an advertising medium." Comparative advertising, as the name
suggests, is advertising where a party (the advertiser) advertises his goods or
services by comparing them with the goods or services of another party. Such
other party is usually his competitor and is often the market leader in the particular
trade. The comparison is made with a view towards increasing the sales of the
advertiser. This is typically done by either suggesting that the advertiser’s product
is
of the same or a superior quality to that of the compared product or by denigrating
the quality of the compared product. The more blatant form of comparative
advertising refers to the product by name and this is generally known as
comparative brand advertising. (Smriti Chand, 2015)
Analysis of some comparative advertisements:
One of the famous controversial comparative advertisements was Rin and Tide
Natural where in the ad of Rin it directly showed the competitor product Tide and
committed that it is a better and superior washing powder then that. Another
controversial comparative advertisement was Colgate and Pepsodent where
pepsodent claimed directly that pepsodent now better than colgate strong teeth
delivers 130% germ attack power.
Use of children in advertisement:
Nowadays market is very highly influenced with children’s entering into
advertisement. Marketers are using children in their commercial advertisements
to push their sales. This is done because Indian children are allowed to watch each
& every advertisement in the television, so marketers are taking advantages of it.
As in the present time there is a rapid increase of use of children in advertisement.
This leads to influence our Indian culture as well as Indian children’s to push their
parent for particular products. Some of the advertisements are very relevant to
children where marketers should use children to promote their products in the
market otherwise they can’t. For instance, ads of Horlicks, Johnson & Johnson
etc. But apart from this there are many commercial ads where marketers use
children even the products are not for children like, Super Nirma, Surf Excel etc.
which is irrelevant for marketing point of view. These types of ads are basically
to win emotion of the customers.Using children in advertisements particularly in
India where many people can’t afford the products but children force them to buy
those products which affect their economic levels, so marketers should go for
children advertisement for their relevant products only.
Analysis of some children advertisements
(i) McDonalds:
McDonalds is advertising the McAloo Tikki burger and Fries in what has become
a popular and controversial advertising campaign in India. The
Boyfriend/Girlfriend television commercial at the centre of the campaign features
two young children sitting on a bench. The girl asks the boy if he would consider
them boyfriend and girlfriend. He refuses the proposal, saying that girlfriends
demand too much. He changes his mind
when she says that she’d be satisfied with a McAloo Tikki Burger.
(ii) IDBI Bank:
IDBI bank uses children in order to show their friendship which will be continued
by the bank also. The concept of this advertisement was quite unique but it was
not at all necessary to use small children in it as a true friendship is followed by
adult also. They were just used to win the emotions of the customers.
The Advertising Standards Council of India:
The Advertising Standards Council of India (ASCI) (1985) has adopted a Code
for Self-Regulation in Advertising. It gives commitment to provide honest
Advertising and fair competition in the market. It is there for the protection of the
legitimate interests of consumers and all concerned with advertising i.e.
Advertisers, Media, Advertising Agencies and others who help in the creation or
successful placement of advertisements.
ASCI have one underlying goal i.e. to maintain and enhance the public
confidence in advertising. ASCI attempts to ensure that advertisements conform
to its Code for Self-Regulation which requires advertisements to be:
 ● Against Harmful Products/Situations-Not used indiscriminately for the
promotion of products, hazardous or harmful to society or to individuals
particularly minors, to a degree unacceptable to
society at large.
● Honest Representations-Truthful and Honest to consumers and
competitors.
Non-Offensive to Public-Within the bounds of generally accepted
standards of public decency and propriety.
• Fair in Competition-Not derogatory to competition. No plagiarism.

ETHICAL AND UNETHICAL DIMENSIONS OF SOCIAL

MEDIA

Social media has a much wider reach beyond marketing and technology. Other
implications are rarely discussed. There are rules of ethics and etiquette for social
media that must be followed.
Ethics, by definition, is the concept of what is good, bad, right and wrong. In
social media, the right ethic equals the right perspective and the right thinking on
how to leverage social media appropriately and how to engage people in the right
manner.
Etiquette is a code of behavior within the context of our society. In social media,
the right etiquette equals acting the right way. There definitely is a right way and
a wrong way to use social media. Anyone who has ever been spammed (and that
basically means everyone) understands this concept.
It is very important to remember that whenever you connect with a social media
network, you are joining a community. In any community, there is an appropriate
time to discuss business. You need to be sure to treat the people in your
community with respect and kindness.
It is of utmost importance to respect the boundaries of others. Aggressive targeted
marketing has no place in social media. Your motivation for being a part of the
community is to give others the benefit of your experience and to build
relationships with other members of your community.
The three main principles of social media ethics and etiquette are
1. Authenticity—people will respond positively if you are sincere.
2. Transparency—having hidden agendas will only count against you.
3. Communication—getting to know people as people and letting them get to
know you.
You should always communicate in an honest and open manner. If you show
others who you are and what you stand for truthfully, people will respect you and
become fond of you. You will establish rapport. Truth is an ethical value that
other people respect. They, in turn, will want to be truthful with you also.
From the point of view of etiquette, you should always say who you are, mention
your affiliations, and be clear about your intentions. That is proper behavior.
Transparency is essential, in business and in life. Ethically speaking, you
should always share information that you feel will help others. It is a
demonstration of good etiquette if you tell the truth, even if and when it is
difficult.
Without communication, you have nothing. Valuable and mutual conversations
get you noticed by other people. Even though your ultimate goal is to sell your
products and/or services, you should never just promote your business, give your
readers a hard sell or advertise blatantly. Social media is not the appropriate venue
for this.
It is totally ethical to use social media sites to spread your message, a message
that you believe other people will be interested in and will fulfill some need of
theirs; however, you need to be very careful about your approach. Your main
objective is to drive more traffic to your business through your website and blog.
You want to build relationships with others and you want them to trust you and
to consider you an expert in your area. You want to be the person who comes to
mind first when they have a question. Connecting with people through social
media channels is not a short-term thing; it is the beginning of a great relationship
that will hopefully endure for a very long time.
The unethical use of social media has resulted in the breach of individual privacy
and impacts both physical and information security. Reports in 2019 [ 1], reveal
that persons between the ages 8 and 11 years spend an average 13.5 hours weekly
online and 18% of this age group are actively engaged on social media. Those
between ages 12 and 15 spend on average 20.5 hours online and 69% of this group
are active social media users. While children and teenagers represent the largest
Internet user groups, for the most part they do not know how to protect their
personal information on the Web and are the most vulnerable to cyber-crimes
related to breaches of information privacy [2, 3].

In today’s IT-configured society data is one of, if not the most, valuable asset for
most businesses/organizations. Organizations and governments collect
information via several means including invisible data gathering, marketing
platforms and search engines such as Google [4]. Information can be attained
from several sources, which can be fused using technology to develop complete
profiles of individuals. The information on social media is very accessible and
can be of great value to individuals and organizations for reasons such as
marketing, etc.; hence, data is retained by most companies for future use.