Corporate Ethical Issues and Ensuing Influence-Case Study of Murdoch’s Phone Hacking Scandal

Corporate Ethical Issues and Ensuing influence-Case study of Murdoch’s phone hacking scandal 1. Research Background The business ethics refers to the ethics of enterprise operation. Not only for the enterprises, all organizations related to business are supposed to have ethical issues. As long as the groups of people are having business activities,there are always exist ethical issues in essence(Drucker,1981,pp66). A moral enterprise should pay attention to the human nature,avoid conflict and friction with the society,actively take the behavior beneficial to society.The concept of business ethics is emerged in the United States in the 70s, Japanese have also started the research on enterprise ethics issues in recent years.

Some people think that enterprises take the profit making as main object,and the ethics is the pursuit of moral standard, the business objectives have no necessary link with the enterprise society responsibility, so that the business objectives is contradictory to the business ethics. In fact this is the superficial phenomenon,the thinking mode of profit pursuit is behind the new age.In the modern era, if the enterprise only focus on profit-push, and without considering the enterprise ethics,the operation activity of this enterprise will not be accepted by the society and obsoleted by the times. That is, if there is not ethics guide in the enterprises operation activities, the business itself cannot be successful. To marketers, consumer behavior is a very important proposition,this is not only because that consumer behavior analysis is the foundation of the marketing strategy,but also because that the attention to consumer is the important contribution of marketing to commercial practice(Montiel,2003,pp229).

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More and more enterprises realize that only the enterprises which really understand consumers can develop better products and services. In 2011, a phone hacking scandal that started at Rupert Murdoch’s Sunday tabloid News of the World was rapidly escalating into a full-fledged conflagration that threatens Murdoch, his global media empire, and the British government. “News of the World” is one of the biggest selling British newspaper,it has 168 years of history,feature for publishing celebrity news(Robinson, James,2011).London police station has revealed that the victims of “News of the World” phone hacking behavior could be as many as 4000 people(Davies,2011). Britain’s “Sunday Telegraph” reported that victims of the famous media mogul rupert murdoch subsidiary companies private phone hacking may be up to more than 100 people, among them,there include two British royal family members-Princess Eugenie and Beatrice(Mendick,2011). Report quoted a London lawyer’s words,the murdoch subordinates “News of the World” was accused of eavesdropping on private telephone, there may be many people will be arrested.

On the 8th,April,2011, “News of the World” admitted that they have been phone hacking for eight celebrities for a long time, A British law firm said they have instituted legal proceedings to the “News of the World” on behalf of the five people among the 24 victims. Whereas, the other similar cases compared to this scandal can only be called as “the tip of the iceberg”. This incident triggered a big public opinion storm in the global range, people begin to pay close attention to the news industry business ethics issues, as well as the relevant influence to cosumer’s rights.Based on this event, this paper start a topic about consumer awareness of ethical issues in business and how these issues affect consumer behavior. 1.

Aims& Objectives The focus of this paper will be on extension strategy of Ethical Issues in Business and its Influence. The dissertation project will cover the following aims: · Definite different type of Ethical Issues in Business and analyze its influence on consumer awareness. Come with case study to analyze how the business ethics issues impact on consumer behavior, and the interactive relationship between business operation and consumer awareness. · Recommend countermeasures for future development The objective of the dissertation is to present an architecture and framework model for issues based on the reaction of consumer awareness to the enterprise business ethics issues, providing comprehensive solutions for managing and dealing the ethical issues in business operations and its influence over consumer purchasing behavior.There are three research questions the researcher wants to analyze during this thesis: · What is the definition for business ethics? · What are the impacts of business ethics on consumer awareness? · How the business ethics issues effect consumer purchasing behaviour? 2. The Significance of this Paper Business ethics from the analysis of business nature and prophase of business activities, provided people the ethical business conduct code of judging if the business activities accord with moral criterion.

The enterprise ethics is the conduct code sum total of dealing the relationship between enterprise internal employees, enterprise and society as well as the enterprise and the customers(Clark,2003,pp36). The current enterprise in order to pursue the economic profit ignored its social member identity and social benefit goal. Meanwhile,because they are excessively pursuing profit, many enterprises produced some immoral marketing activities, such as fake mimicking phenomena, price discrimination, false price, false propaganda and the phenomenon such as environmental pollution,etc.These immoral behavior not only harm the legitimate interests of the consumers,bring economic loss to the customers and even endanger the life safety of the consumers(Gioia,1999,pp232). The direct result will cause consumers lost trust on enterprise, eventually making enterprise eliminated by society in the fierce competition. If enterprise business ethics would affect the customer’s consumer behavior and customer loyalty behavior- this paper is devoted to the research of the problem.

Based on the notorious Murdoch’s phone hacking scandal, the dissertations will analysis the deep reasons related to ethical issues. By discussing the powers and accountabilities of organizations, in particular the roles and responsibilities of boards of directors and senior manager, the dissertation will research into the Murdoch and his global media empire. To combine with the current environment of news industry, it will lead to finding a more sound and health method of sustainable development for the company. 2 Literature ReviewBusiness ethics has drawn more and more attention during 1980s and 1990s, most major corporations focus on the non-economic value of ethics codes and social responsibility. Adam Smith has said: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

” (Smith,1776, pp55). Ethics implicitly regulates corporation’s business action and consumer behavior. The famous economist Milton Friedman have an pinion that” responsibility generally will be to make as much money as possible while conforming to their basic rules of society, both those embodied in law and those embodied in ethical custom”(Friedman,1984). Ethical issues of one corporation cover a wide range; it can be related to employees, suppliers, customers and corporate governance, social entrepreneurship, etc. Business consultants Peter Drucker have said:” There is neither a separate ethics of business nor is one needed”( Drucker,1981,pp23), this emphasized the corporate social responsibility (CSR) for a standard business enterprise.It needs the restriction of laws in micro and macro levels represent the value of an organization.

Business ethics can be classified into the category of applied ethics; it refers to the aspect of management such as profit pursuit or the responsibility of an enterprise to their employees(Charlotte,2004,pp39). In November 2001,Enron submitted documents to the United States Securities and Exchange Commission, admitted that they made false account, applied to the court for bankruptcy protection in December,the bankruptcy listing assets up to 49. billion dollars(Markham,2006,pp68),which become the largest bankruptcy enterprise in U. S. history; In 2002, Arthur Andersen company close down, Worldcom financial scandals,etc.

series of bad events rocked the American and global industry world. Ignoring the ethical standards, violation of laws and regulations, unfair competition without public awareness not only damaged the rights and interests of honest business operators and the vast majority of consumers,the enterprise itself also lost public trust.In that sense, unfair competition in the market will never produce a winner. In the 1970 s,some advanced enterprises in United States, Western Europe and Japan already set up strict internal ethics system and supervision system in the organization,these concepts promote the enterprise to change old management idea,located the enterprise on the pursuit of profits and benign promotion, make the enterprise conducting a sustainable operation(Kingsolver,2006,pp269).For example, the body shop in US paid great attention to the enterprise ethics in the very beginning since they ve been founded,the professional ethics requirements of “The world” magazine also ranked at the first place in news media industry,the profitability of these two companies both exceed the standard of this industry. Therefore, ethics is the cornerstone of the enterprise survival, he enterprise can embrace the profits and soul at the same time.

3 Research methodologies 3. 1. Research Philosophy Based on the ethical issues in business operation, this paper will take a multiple level investigation into the deep reason for ethical issues and analyze its impact on consumer awareness and how this influence the purchasing behavior, this chain reaction will be analyzed systematically.From the start of business ethics introduction, the author will further talk about this topic in the CSR aspect, a society can determine its demand through the market, if the enterprise use resources to provide social required products and services as effective as possible, and sell the products in a price that consumers are willing to pay, the enterprise fulfilled its social responsibilities.The CSR has close relationship with business ethics,it is beneficial to the sustainable operation of enterprise,the ethical responsibility is the expectations of society on the enterprise, the enterprise should try hard to make the society to avoid the negative influences of their own operating activities, products and services,accelerate industrial technology upgrade and the optimization of the industrial structure(Korschun,2008,pp34). This paper will also make research on the factors to effect on ethical decision-making to better demonstrate the idea of business ethics concept.

On the other hand, the author will explore the degree of consumer awareness on business ethics issues; the process of purchase decision making, in the part of the interaction between business ethics and consumer behavior, the author will conduct a case study on Murdoch’s phone hacking scandal to demonstrate how the business ethics issues impact consumer behavior, and analyze the underlying reasons for such events, with this particular case study, the importance of research on the business ethics issues and its ensuing influence will be emphasized. . 2 Research approach To answer the research questions mentioned above, the researcher decides to use the research methodology following: · Case study On July 10th, 2011, “News of the World”, the world-class “tabloids” with a 168 years history dorp out of the market forever. As a exclusive news paper in Murdoch group, it wrote a line of big character: “thank you, good-bye” in the final version of its front page,the crashing down of such a century newspaper left us a lot of things to ponder over.In the apology letter to the victims, Murdoch said:” To me,my father and all the people related with news group, this is a particularly regretful incident, these(phone hacking) behavior have failed to meet the expectations of our standard “( Robinson,2011). Obviously, this event initiate a introspection for this industry in business ethics.

Based on this case study, the author further the research in to the reaction between business ethics and consumer behavior to demonstrate how business ethics influence consumer awareness and purchase behavior, it provides a substance material for the research on this subject. 3. 4.Data collection method In order to collect the necessary information, this paper will conduct two random Questionnaires to the passengers, the range of questionnaire will cover the reaction to Murdoch phone hacking scandal and business ethics issues, the questionaire table is taking a form of anonymity, the results will be recorded and conduct statistic analysis for the data reference of this dissertation writing. 4 Outlines 1.

Introduction 1. 1 Definition of business ethics 2 Corporate social responsibilities 2. 1 Definition 2. 2 Importance of CSR 3 Managing business ethics 3. 1 Aim and codes 3.

2 Ethical decision-making Consumer awareness and behavior 4. 1 Basic information 4. 2 Necessity of consumer awareness 4. 3 Information evaluation 4. 4 Purchase decision 4. 5 Influential factors of consumer behavior 5 Interaction between business ethics and consumer behavior 5.

1 Case study of Murdoch’s phone hacking scandal 5. 1. 1 Background of this event 5. 1. 2 Reactions of World News Group regarding this event 5. 1.

3 Ensuing effects 5. 1. 4 Underlying reasons for this scandal 5. 1. 5 Suggestion 5.

2 Questionnaire 6 Conclusions Bibliography References: Armstrong, M. B. (2002). Ethical Issues in Accounting. In N. E.

Bowie (Ed. , The Blackwell guide to business ethics , Oxford: Blackwell, pp. 145–157, ISBN 0-631-22123-9 Bhattacharya, C. B. , Sankar Sen and Daniel Korschun (2008), “Using Corporate Social Responsibility to Win the War for Talent,” MIT Sloan Management Review, 49 (2), 37-44 Clark, Margaret M.

,JD. ,SPHR(July 1, 2003) , “Corporate Ethics Programs Make a Difference, but not the only difference”, HR Magazine,pp 36 D. A. Gioia, (1999), “Practicability, Paradigms, and Problems in Stakeholder Theorizing,” Academy of Management Review, 24(2). Davies, Nick (8 June 2011).

“Phone-hacking scandal widens to include Kate Middleton and Tony Blair”.The Guardian. Dirkx, J. M. (2005). To develop a firm persuasion: Workplace learning and the problem of meaning.

Elliott & Turnbull 2005, pp. 155–174 Drucker, P. (1981). “What is business ethics? ” The Public Interest Spring (63): 18–36. Fisman, R.

, & Miguel, E. (2008). Economic Gangsters: Corruption, Violence and the Poverty of Nations. Princeton: Princeton University Press ISBN 0-691-13454-5 Friedman, M. (1984). “Milton Friedman responds—an interview with Friedman.

” Business and Society 84(5) Huevel, K. et al. , (2009). Meltdown: how greed and corruption shattered our financial system and how we can recover.New York: Nation Books ISBN 1-56858-433-4.

James, Robinson (8 April 2011). “Phone hacking: NI to apologise to victims including Sienna Miller”. The Guardian. Kingsolver, A. (2008). Capitalism.

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55 Appendix Questionnaire I Questionnaire for Murdoch’s phone hacking scandal Part One: This part questionnaire is about phone hacking scandal in a project.Please consider your answer and respond to the corresponding questions 1 What is your reaction when you heard about the Phone hacking scandal? 2 If this incident happens to you, what measures will you take? 3 If you are Rupert Murdoch, what you steps will you take to redeem the image of News Corporation? 4 Do you agree that press ethics is contradicted to profit making? 5 Please give some suggestions to a business owner about how to manage the ethics issues in business operation. Questionnaire II Questionnaire for business ethics |Part two: This part questionnaire is about business ethics in a project.Please consider your answer and respond to the | |following statements with a level you chose. | | 1 |2 |3 |4 |5 | |I strongly disagree | I disagree | I am not sure | I agree |I strongly agree | |NO. |Questions about business ethics |Disagree Agree | |1 |Making profit is the top priority for a business |1 |2 |3 |4 |5 | |2 I often purchase commodity for its advertising |1 |2 |3 |4 |5 | |3 |I will buy a commodity for its reliable reputation |1 |2 |3 |4 |5 | |4 |A successful enterprise should take more social responsibility |1 |2 |3 |4 |5 | |5 |Ethical issues has little impact on my purchase decision making |1 |2 |3 |4 |5 | |6 |Business ethics issue is universal in all industries |1 |2 |3 |4 |5 | |7 |I am quite clear about my rights and interests as a consumer |1 |2 |3 |4 |5 | |8 |I will collect enough information before purchasing a commodity |1 |2 |3 |4 |5 |