Ethics in business

Freshly promoted to International Tobacco Products Manager for GB Tobacco, Fiona Fuller finds herself at the cutting
edge of the firm’s growth strategy for the next decade. Faced with declining sales volumes and increasing taxes on
tobacco products in Western Europe and the US, GBT has targeted Gold brand for a growth in sales volume growth. The
prestige image of British cigarettes since the Olympic Games in many foreign markets has permitted higher prices and
margins on Tobacco products. This is particularly true of the Gold brand, whose symbol of achievement, urban and
professional is recognised worldwide.
In Malu, GBT’s plans have run up against a government policy which formally bans the import of cigarette products.
While the health ministry supports the ban, the major beneficiaries of the policy are the government owned cigarette
monopoly and the country’s tobacco farmers.
The monopoly is required to buy the crops of the farmers at above-market prices. Intense pressure from EU tobacco
companies and the EU commission has failed to convince the government of Malu to repeal the ban on cigarette imports.
Ironically EU brands have traditionally controlled about 20% of Malu’s cigarette market as a result of unregulated
(black market) sales by established distributors in neighbouringSinglaw. Malu’s government has not enforced the ban
in the past, nor has it made any efforts to stop GBT from spending £8 million a year to advertise ‘Gold”.
Apparently the government is convinced that high prices for unregulated sales of cigarettes are sufficient protection
for the brands offered by their monopoly .
Disgusted by what he considers a duplicitous policy, SuppakornRachinda, ‘Gold” brand manager in South East Asia,
has submitted to Fiona his first ever marketing plan for Malu.
He proposes to double the advertising budget in Malu to £16 million and increase prices to Singlaw distributors by
20%. He argues that his plan will allow GBT to capitalise on its premium position in Malu and share in the lucrative
profits from the unregulated market. He asserts further that the plan will not produce higher prices in Singlaw since
the smuggling distributors will not have to raise prices, thus ensuring that the non-smuggling distributors will be
unable to do so. Finally, he maintains that the plan is consistent with the established practice of the Malu
government, if not its formal policy.
Suppakorn’s proposed marketing plan is now on Fiona’s desk, awaiting her approval for implementation this coming
year.

Using the seven-step model, evaluate her options using ethical reasoning (you should use Kant, Utilitarian and Virtue
arguments) and make a recommendation about the decision she should take.
You are advised to supplement your analysis with research into the market for cigarettes in South East Asia. It may
also be helpful to refer to the Chartered institute of Marketing code of professional standards 2012.

http://www.cim.co.uk/Files/codeofprofessionalstandards10.pdf

N.B. the company name, countries and managers are fictitious. However, the vignette is based on actual conditions faced by cigarette manufactures in some Asian countries.