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Question Week 9

Question Week 9. Robert Hein Franziska Keich Anke Sander Sabrina Schlothane. Agenda . Problem Definition Ethical Business Competitive Differentiation Examples The Body Shop Fairtrade Conclusion. Problem.

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Question Week 9

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  1. QuestionWeek 9 Robert Hein Franziska Keich Anke Sander Sabrina Schlothane

  2. Agenda • Problem • Definition • Ethical Business • Competitive Differentiation • Examples • The Body Shop • Fairtrade • Conclusion

  3. Problem Is „Ethical Business“ a viable form ofcompetitivedifferentiation in consumermarkets? Illustratethepointsyoumakebyreferencetoexamplesfromtwosectorswithwhichyouarefamiliar.

  4. „EthicalBusiness“ “Ethical business means conducting all aspects of business and dealing with all stakeholders in an ethical manner” Rania Ahmed Azmi, Alexandria University (July 2006) • Transactions after ethical principles • Study of good behaviour • Deals with corporate conduct • Includes working towards the ending of child &forced labour as well as sweatshops • looks at health and safety & labour conditions

  5. ImportanceofEthicalbusiness • Increasing importance of ethical behaviour • Growing demand for higher standards of corporate social responsibility • Stakeholders (esp. customers) hold companies responsible for their actions • Firmsthatwanttosustaindistinctivecompetitiveadvantagesneedtoprotect, exploitandenhancetheiruniqueintangibleassets, particularilyintegrity  buildingfirmsofintegrityisthehiddenlogicofbusinessethics

  6. Competitive Differentiation • Competitive Differentiation • Todistinguishcompanyfromcompetitors • Can bederivedfrom: • Employmentprinciples • Products • Price • Quality • Brand • Corporate SocialResponsibility (environment, localcommunities) • Differential Advantage: „perceiveddifference in valuethatleadstargetcustomerstopreferonecompany´soffertothoseofothers“ (Doyle, 2000)

  7. …in Consumer Markets • Differentiation: • Price • Quality • Innovation • Distribution • Availibility • ... • Ethicalbusiness???

  8. Customers • Fourtypesofcustomers (Doyle 2000)

  9. Competitive Advantage Creation

  10. The Body Shop • Unique business philosophy • Not only limited to profits • BUT also try to encompass socially responsible principles • By 2004 • > 1,980 Body Shop stores • > 40 countries • Voted the second most trusted brand in the U.K. Source: http://www.evancarmichael.com/Famous-Entrepreneurs/883/Changing-Business-as-Usual-The-Body-Shop-Becomes-a-Success.html

  11. The Body Shop • Unique philosophy • Differentiation from competition • Relative success in market niche • Corporate Values: • AgainstAnimalTesting • Support Community Trade • Activate SelfEsteem • Defend Human Rights • ProtectOur Planet

  12. Fairtrade • Fair trade criteria • price that covers the cost of production • reasonable working conditions • environmental standards • long-term contracts to allow for sustainable production • AND additional payment of a social “premium” for development purposes.

  13. Fairtrade (cont.) Hugh Phillips,retailanalyst (2006) “After BSE, salmonella and so on, people increasingly want to know where their food comes from. Initially this was to do with food quality, purity, with organics and so on, but more recently it has spread to the ethical basis of how it was traded.”

  14. Is „ethicalbusiness“ a viable form ofcompetitivedifferentiation? • „Consumersareincreasinglyreluctantto deal withcompaniestheyregardasunethical“ • Bernoth (1996) • Whencustomerspercievecompaniesastrustworthy • More likelytochooseproducts • More likelytorepurchase • Competitive Advantage • Companies thattradeethically • Occupymarketniche • Differentiatefromcompetitors

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