Introduction and Situational Analysis
According to business ethics, a moral dilemma occurs when a choice has to be made between two alternatives that are equally undesirable. Several reasons can lead to ethical dilemmas including conflict of organization and personal values or between social and organizational goals. A business is said to experience an ethical dilemma if they have two or more choices that have a direct impact on the profitability of the organization, competitiveness, and relevant stakeholders (Shaw, 2016). An example of a product that was implicated in engaging in potentially ethical issues was Four Loko. The creators of the alcoholic drink decided to add caffeine as part of the ingredient leading to Bing drinking especially amongst youths. The danger associated with this strategy was that the caffeine delayed the feeling of drunkenness hence causing people to consume alcohol beyond their levels. Four Loko was also packaged as a soft drink increasing the likelihood of underage drinking (Rossheim et al. 2015). The ethical dilemma, therefore, arises because although the additional ingredient and packaging were strategies that increased sales, they ultimately risked the health of the general population especially the young generation.
Stakeholders
Business activities and choices in one way or the other impact the stakeholders including the customers, business associates, communities, employees, and the government. The first stakeholder to be impacted by the ethical dilemma was the customers. Research has shown that consumers today have much information on the product and if a company engages in deceitful or deceptive practices, they are likely to have their longevity suffer. The formula utilized by Four Loko caused customers to overdrink and to increase their chances of intoxication. The use of deceptive marketing strategies was also a significant concern that attracted the younger generation to the alcoholic drink thinking that it was a beverage. The employees, on the other hand, had to engage in unethical business practices such as increasing high proportions of caffeine to the drink and using colorful packaging to ensure that the alcoholic drink resembled an energy drink. On the contrary, shareholders made more profits as alcohol sales increase as a result of these two important strategies. The company received more revenues hence improving its market positioning.
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Ethical Theory
According to the marketing code of ethics, the concept of selling must remain aware of the “basic principle of the sovereignty of all consumers in the marketplace and the necessity for mutual benefit to both buyer and seller in all transactions” (Sales & marketing creed: the international code of ethics for sales and marketing). This is one critical area that the producers of Four Loko failed to take into consideration. The ethical concept that best explains this situation is the utilitarianism ethical theory. It states that actions are classified as morally right or wrong depending on their consequences. Four Loko engaged in a morally wrong act because the overall outcome was an increased intoxication of people beyond the normal levels. It also utilized deceptive marketing skills that drew teenagers in excessive alcohol intake. It should be noted that businesses have an obligation to their consumers and above all, a responsibility to produce safe commodities. Since the consequences were all significantly wrong, then the company producing the drink engaged in an ethically immoral act.
Conclusion and Recommendations
Business must show an increased sense of responsibility and honesty towards their customers and stakeholders at large. They must also apply the marketing code of ethics to ensure that in all their endeavors, they maintain the highest professional conduct and ethical standards. Four Loko should have made its plans to use caffeine in its alcohol public to enable scrutiny and feasibility tests to determine the suitability of such a strategy. Moreover, it should have utilized genuine means of marketing to avoid confusing its vulnerable customer-base.
References
Rossheim, M. E., Thombs, D. L., Wagenaar, A. C., Xuan, Z., & Aryal, S. (2015). High alcohol concentration products associated with poverty and state alcohol policies. American journal of public health , 105 (9), 1886-1892.
Sales & marketing creed: the international code of ethics for sales and marketing, Marketing Codes of Ethics https://www.smei.org/page/16
Shaw, W. H. (2016). Business ethics: A textbook with cases . Nelson Education.
