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Not All Companies Are Viewed As Equal

601 words | 3 page(s)

In the land of fair trade, the public may view industries differently leading to unfair targeting of some industries, for instance the tobacco industry. This is unethical since tobacco-based companies, just like any other companies, have obligations and goals that they have to meet through production and sale of cigarettes despite the negative effects they pose on consumers. For them, meeting the stakeholder’s desires should come first relative to the concern that cigarette smoking may have harmful social effects on consumers. The fact that the consumer is willing to buy a cigarette should give the presumption that they already know how the product interacts with them.

It is the work of consumers to research on the products that are available in the market and make better informed decisions on buying them. Kotler (1972) (as cited in Carrigan & Attalla, 2001), found out that customers do not always desire what is necessarily good for them (for example, tobacco). Carrigan and Attalla (2001) further found out that most consumers pay little attention to ethical considerations in their purchase decision-making behaviour.

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Corporate governance involves the structure of rights and responsibilities that are shared among the various stakeholders that influence the operation of a corporation. Due to many players who control decisions in such a firm, capitalism, through a wide variety of factors, determines how decisions are made. The main factor is property rights. These rights are the legal and economic constructions established via cooperate law, bankruptcy law, and contractual articles of a corporation (Al-chian & Demsetz, 1973) (as cited in Aguilera & Jackson, 2003). These rights determine the extent to which shareholders can control voting rights, information, and managerial power in a corporation. Those with more property rights have more powers thus they can easily influence decisions. Also, small shareholders may face mandatory information disclosures while big shareholders may enjoy private information. Property ownership rights thus guides the utilization of capital in a firm thus favoring dominant interests in corporate governance. Another key factor is the financial system that generates different patterns of decision making by determining the relation of capital to the firm.

The financial system influences corporations through banks or the households. Firms that invest based on bank loans become dependent on the banks that call for strict capital monitoring, which in turn causes long-term commitment on capital. On the households’ side, the public invests in firms through equities. These equities give them the power to influence decisions and even leave in case the firm does not meet their needs. Other parties that have become partisan to decision making due to capitalism include workers and trade unions to which the workers are members. These two bodies can influence decisions through collective bargaining agreements or internal channels of communication respectively.

A company can meet both its best interests and those of the consumers at the same time. This is not easy since in most cases companies want to charge the highest price possible while consumers want to pay the least price possible for a given product. With the changing business environment, it is easier to maintain an existing customer than obtain a new one. Minculete and Negrilă (2014) argue that “customers tend to buy goods from companies with which they had good experiences even if their products are not better than those offered by competitors”. By connecting consumer needs with organizational objectives, companies can conjointly meet both their needs as well as those of consumers. This is the strategy of marketing management that recognizes, comprehends, and utilizes business dynamics from the marketing point of view. It unites customers, the company, and competitors to provide consumers facilities that are related to prices.

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