I was asked to select a moral question that a marketing manager is or may be confronting in today’s world and apply the Ethical Reasoning Process in addressing the issue. Ethical dilemmas are a daily concerns for some managers. Patrick Murphy, Gene Laczniak, Norman Bowie, and Thomas Klein, authors of Ethical Marketing, outline the importance of senior leadership in corporate ethics. The article focuses on ethical reasoning.

Here’s an example of ethical reasoning. Please consider if marketing managers should take advantage of selling overpriced government products and services that run counter to the concepts of corporate responsibility. The focus involved a past experience with Westinghouse, Inc. which was contracted to the federal government. Of course, businesses operate to make a profit. However, one may wonder to what extent.

Below is the application of ethical reasoning to this situation:

(1) Definition of an ethical problem: The ethical problem was related to the extent that Westinghouse managers would pursue profitability at the risk of legal actions and damage to the company’s brand. Marketing ethics is the systematic study of how moral standards are applied to marketing decisions, behaviors, and institutions.

(2) Selection of an ethical standard: Westinghouse operated under moral relativism in dealing with the federal government. Moral relativism claims that it is personalized according to the individual and his or her circumstances or cultural orientation. Westinghouse, Inc. executives found themselves with this ethical dilemma. In 1992, Westinghouse was a corporate empire, commanding over $12.8 billion in sales and employing over 116,000 people.

Because of its powerful market position, Westinghouse became a corporate oligarchy in the United States. They were active in several business sectors, including radio and television broadcasting; electronic products; industrial operations; power systems; transport temperature control equipment; and environmental cleanup services. Westinghouse executives’ attitude of ‘being too big to fail’ also carried the baggage of ‘anything goes for profit.’

(3) Application of the ethical standard: Managers set the standards for corporate culture. Ethics involves a company’s values. Mark Johnston and Greg Marshall, authors of Relationship Selling, share how employees watch how senior managers act on ethical matters rather than what they say. Therefore, senior managers should lead the way by example. Overall, leadership always sets the tone for ethical practices in their organizations. In the early 1990s, Westinghouse operated six U.S. government-owned nuclear facilities involving nuclear production. Eventually, the company became the largest civilian government contractor.

With a variety of massive contracts with the military, Westinghouse became the twelfth largest defense contractor. However, there was a great ethical price. Westinghouse had been involved in numerous ethical violations, including labor and environmental problems. In March 1991, the DOE’s Inspector General found that Westinghouse and Bechtel Corp. attempted to conceal millions of dollars in overruns by misleading the federal government. In 1985, a Westinghouse employee was found to defraud the Pentagon of $200,000 by overcharging for electrical equipment. Furthermore, Westinghouse was in numerous litigations of violating environmental laws and circumventing safety requirements.

What should a marketing manager do? Marketing managers are responsible for connecting with key stakeholders and promoting their products or services. At Westinghouse, the marketing manager should have reinforced to corporate executives the importance of protecting the company’s brand.

The executives took a very narrow view of profitability. The marketing manager should have discussed a long view approach. Of course, this solution would have gotten the marketing manager fired, but he wouldn’t have gone to jail. In becoming a corporate mogul in the early 90s, Westinghouse created a profit generating machine that lacked a moral compass to navigate its ethical problems.

© 2013 by Daryl D. Green

References:

Donahue, J. (1992). “Corporate profile: Westinghouse web. Retrieved on September17, 2012 from http://www.multinationalmonitor.org/hyper/issues/1992/03/mm0392_11.html
Johnston, M. & Marshall, G. (2010). Relationship Selling. New York: McGraw-Hill Irwin.
Murphy, P., Laczniak, G., Bowie, N., and Klein, T. (2005). Ethical Marketing. Upper Saddle River, New Jersey: Pearson Hall.