1-1 BA 385 - Business Environment Week 7 Chapter 7 Consumer and Community Relations

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BA 385 - Business Environment

Week 7 Chapter 7

Consumer and Community Relations

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Consumers

Those individuals who purchase, use, and dispose of prodects for themselves and their homes.

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Consumer Economic Issues

• Consumers expect that promises will be fulfilled through the exchange process.

• Buyer/seller disagreement (i.e. products not meeting expectations) can result in fraudulent activities.

• Consumer fraud results from intentional deception to derive unfair economic advantage from an organization.– Shoplifting (shrinkage)– Collusion (secret cooperation)– Duplicity (double-dealing)– Guile (deceipt)

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Some Legal Issues and Relevant Laws

• Health and safety– Pure Food and Drug Act, 1906

• Credit and ownership– Home Ownership and Equity Protection

Act, 1994

• Marketing, advertising, and packaging– Federal Trade Commission Act, 1914– Telemarketing and Consumer Fraud and

Abuse Prevention Act, 1994

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Consumer Rankins of Advertising Issues

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Consumer Legal Issues • With respect to U.S. consumers, legal

issues fall under the domain of the Federal Trade Commission (FTC) which enforces federal antitrust and consumer protection laws.

• Food & Drug Administration (FDA) monitors foods, drugs, medical devices, cosmetics, veterinary products, and potentially hazardous consumer products.

• Consumer Product Safety Commission monitors injuries resulting from consumer products.

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Additional Legal Issues• Sales and warranties

– Magnuson-Moss Warranty Act, 1975– Lemon laws

• Product liability– Toy Safety Act, 1984

• International issues– Most developed nations promote consumer laws– Varying attitudes

• Product liability lawsuits less common in Japan• GMO foods in the EU

– Developing nations lag behind

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Ethical Issues

• Consumer Bill of Rights (JFK)– Right to choose– Right to safety– Right to be informed– Right to be heard– Right to seek redress– Right to privacy

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Ethical Issues (cont.)

• Consumerism– The movement to protect consumers

from an imbalance of power with business and to maximize consumer welfare in the marketplace.

– Sparked by Ralph Nader’s Unsafe at Any Speed in 1965

– Rise of consumer groups • Consumers Union• Public Interest Research Group• National Consumers League

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Philanthropic Issues

• Consumers are increasingly concerned with organizations’ social responsibility.

• Organizations are increasingly linking philanthropic efforts with consumer interests in order to strengthen ties to consumers.– Avon—breast cancer fundraising– Home Depot—Habitat for Humanity– Midas—children’s car seats

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Community Stakeholders

A community includes those members of society who are aware of, concerned about, or in some way affected by the operations and output of the organization.

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Community Stakeholders (cont.)

• Issues of concern include:– Pollution of the environment.– Land use.– Economic advantages to the region.– Discrimination.– Exploitation of workers and consumers.

• Neighbor of choice– An organization that builds and sustains

trust within the community and improves the quality of life.

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Community Relations

• The organizational function dedicated to building and maintaining relationships and trust with the community.– Often supports local community through

philanthropic activities.– More strategic significance within the

organization/no longer just a buffer– Develops community mission statements

to identify the needs of the people relative to the organization’s competence.

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Common Myths about Community Relations

• No local government/community consent is necessary.

• Talking to the community will create trouble.

• One-way communications efforts are sufficient to improve community relations.

• The community cannot add anything meaningful to this process because it is too technically complex.

• Community leaders will request costly or unreasonable solutions.

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Top Community Issues for Business

• Social Responsibilities– Supporting

environmental issues

– Demonstrating ethical behavior

– Earning profits– Employing local

residents– Paying taxes

• Most Impact– Education– Job training and

development– Health care– Crime– Substance abuse

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Economic Issues• Business is vital to the community.

– Buyer-seller interaction stimulates the economy.

• Contagion effect– Signal to other firms attractiveness of market or

location

• Likewise, a company’s departure or retrenchment from a community can be devastating to the local economy.– Downsizing– Plant closings/offshoring

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Legal Issues

• Companies are granted a license to operate.– Business license– Sales tax I.D. number

• A company must therefore operate within legal and regulatory parameters.

• Some communities place additional legal constraints. – Size constrainst on mega-retailers (sprawl)– Living wage requirements

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Ethical Issues

• Companies responsible to the Community, evaluate the role and impact of their decisions from an ethical perspective.

• Significance of their role in the Community demands their leadership in tackling problems– Supporting education.– Reducing traffic congestion.– Supporting environmental initiatives.

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Philanthropic Issues• Historically this has meant providing

support for worthy causes. (Gifts, grants and other resources)

• Now more focused on positive publicity• Growth of Volunteer programs

– Employees donate time in support of social causes.– Employees get greater job satisfaction, motivation and

enjoyment.– Communities benefit from the application of new skills and

initiative toward problems– Companies develop better community relations with

reduced turnover and higher productivity.

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Strategic Implementation

• Include community views in corporate planning.

• Manage, nurture, and continuously assess community relations and needs.– Educate and listen to consumers– Run surveys to discover strengths and

weaknesses in stakeholder relations– Hire consumer affairs professionals– Develop a community relations office.

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1-1 BA 385 - Business Environment Week 7 Chapter 7 Consumer and Community Relations