In modern business, ethical dilemmas usually mean making a decision between immediate profitability and maintaining a positive relationship with customers. Taking ethical shortcuts can lead to short-term economic gains; however consumers invariably walk away from companies that have been demonstrated as having lied to them, making an honest approach to ethics the logical course of action.
Unsubstantiated Product Claims
Unsubstantiated product claims have long been a less than reputable way to move product; however in recent years numerous companies ranging from big tobacco to producers of health food have been taken to task for product claims unsubstantiated by scientific fact.
According to the British Medical Journal, as of 2003 the European Union has introduced legislation designed to prevent manufacturers from including unrealistic claims on their products, and requires common package phrasing like the term low-fat to meet a stringent set of mandated guidelines designed to only allow truthful claims to be included on food packaging.
What this means for businesses outside of Europe is that it is in their best interest to follow suit and avoid making potentially false claims before governments forcibly intervene in a public proceeding. Companies that act responsibly before such legal trends migrate into their home bases of operation stand to avoid the PR nightmare that their slower to react competitors will likely face.
Unethical Warranty Loopholes
Another common ethical quandary faced by businesses is whether or not to use specific wording in warranty contracts to enforce product exclusivity and avoid making good on promises of repairs. One example of this business behaviour is outlined in the 2007 article “Apple’s iPhone Warranty Threats Legally Sound, Lawyers Say,” by Brian Gardiner of Wired Magazine.
Gardiner goes on to outline how some iPhone users modify their iPhones by opening a component enabling it to work with any mobile service provider. Apple, having made an exclusivity deal with AT&T, proceeded to push software updates which would damage and disable iPhones not sticking with factory specifications. Apple would then cease to honour warranties for repair of these particular iPhones.
The event was also covered by Matthew Miller of ZDNet in his 2010 article entitled “Is AT&T or Apple Preventing iPhone Sim Unlocking?” in which the possibility of iPhone users having difficulty using their phones outside of the United States due to exclusivity contracts was highlighted.
What we can take away from the entire case study is that situations that place importance of inter-business relations above that of consumers can have a potentially negative impact on the relationship between customers and business. Only time will tell if this particular debacle strengthens Apple’s competition.
Customer Relations and Ethics
When it comes right down to it, most consumers are looking for a reliable sense of trustworthiness and fair play in the companies that they are dealing with. Companies that attempt to hide mistakes run the risk of a PR nightmare, as was the case of Toyota and its massive 2010 recall and subsequent public inquiries. Do customers want to deal with companies that use convoluted legalese to hide behind their seemingly obvious obligations with regard to product quality and warranties?
It might have a higher short-term cost to follow through on these promises of integrity; however in the long run consumers will recognise companies with a commitment to valuing their business.
