For any enterprise (including small textile manufacturers), changing conditions brought on by changing competition, markets, and technology confront executives with a major and continuing challenge to decide on what specific new business interests to pursue. Unless a company constantly looks ahead, it may as well consider closing its doors altogether. Because the assessment of opportunity is so crucial to the survival of an enterprise, it is one of the most difficult and demanding tasks for marketing executives to cope with. Along with planning, it is the activity most directly concerned with matching corporate resources, present, and future, with opportunity. The case of Rugged Wear shows that the company can survive introducing new technologies and new products (new product lines) in order to meet changing conditions and remain competitive.
The main reasons to introduce new product lines are increased competition and economic crisis in Portsmouth. New products, oriented at wide consumer audience and included sportswear, will help Rugged Wear to gain market share and save working places. The rationale for new product development is that innovating firms face a range of possible marketing policies. At one extreme, they can choose policies to make the maximum short-run profit and then decide to meet competition as it arises as with a pricing policy of skimming markets (Frederick, 2002). Between these extremes, they may choose to be reimbursed for their original outlays while still holding a competitive advantage, and then use the advantage to increase volume and build a stronger market position. From a social perspective, the benefits of various innovations are often challenged. Fundamental innovations that create something new in the physical sense are hailed as beneficial. New organizational processes and arrangements are necessary to deal with new products and goals. Rugged Wear must not be directed to the maintenance of a placid, static, stable situation. Rather, it should be directed to accomplish “dynamic stability” stability through adjustments.
A large part of the marketing manager’s responsibility is the change in the structure of his organization. He must challenge accepted methods of organizing activities, for, in marketing, correct and permanent organizational arrangements do not exist. Change is the acceptable pattern. The three-phase process of change emphasized in conceptual models unfreezing, moving, and freezing of the level has particular relevance for understanding marketing organization (Truett and Truett 2006). Rugged Wear must change in two ways. First, Rugged Wear must plan to make radical adjustments over the long run to meet frantic market changes. Second, Rugged Wear must meet shorter-term changes that require less radical but continuous adaptation. Growth is accompanied by larger organizational complexes, both internal and external, that place pressures on coordination and integration. As the growth process continues, we see shifts to product, divisional, or functional areas to ease pressures on coordination. The advantage of new product lines is that the usual methods of boosting performance – process rationalization and automation – will yield dramatic improvements for the company’s needs. It should be mentioned that the external and internal factors such as structure, people, technology, and task are all interdependent as a change in one. For example, technology will influence tasks, organization structure, and staff (Frederick, 2002).
The new product will involve sportswear. Product management will help Rugged Wear to adjust production capacity and technology to consumer demand. Technically, it encompasses both product planning and product development, which in reality are synonymous. In consequence, we shall rely on the term product development in its broadest sense (Truett and Truett 2006). Product development is concerned with offering the right goods at the right time, at the right price, in the right quantities, in the right place. Referring to the process of evolving new products, it is closely associated with market development. It focuses on the future product line, on products that should be added or deleted, on the impact of products on price, promotion, warranty, and service, and on the development of criteria to evaluate product performance (Sammelson and Marks 2005). By assessing new or modified products that can be added by acquisition and internal development, product development becomes the lifeblood of a business. Decisions in this area determine the products to be produced and stocked, as well as details concerning their appearance, form, size, package, quantities, the timing of production, price lines, and anticipated market segments (Frederick, 2002). In Rugged Wear, product development should combine the scientist’s function of analyzing, classifying, and organizing information into commercially feasible new products, and the marketer’s function of assessing unsatisfied wants and needs and identifying profitable market opportunities (Keating and Wilson 2001). Moreover, needs and desires must be predicted years before the product planning activity can be implemented. Also, the development of a new product may require the creation of new machines, a new distribution system, and new processes and materials.
For Rugged Wear, that product development is a top management responsibility is implied in these observations, and in such statements as top management’s two major responsibilities are innovation and marketing (or innovation and research and development) (Keating and Wilson 2001). The establishment of product-planning departments that search for opportunities, recommend new products, and coordinate the efforts necessary to develop them is a recognition of management concern for these critical tasks. Product-diversification programs must be related to marketing objectives. The maintenance of profits and sales positions requires changes in product-and-service mixes — sometimes drastic changes (Frederick, 2002). Rugged Wear’s product line, therefore, is far from stable, even in a five- or ten-year period. The life cycle of products dictates changes, and products in developmental phases must have sufficient market capability to overcome the loss of those in stages of decline. Multiproduct firms must have a mix that is growing in total potential and profits. Although product change is rapid and inevitable, products must solve problems for sellers long enough to justify the risks of research, development, and commercialization (Baye, 2002).
Business Ethics and Social Corporate Responsibility
The relationship of business with the community has had a long and changing role and involves many areas. It starts out by creating and supplying an employment base within the community where the business resides; from this point, it expands into involvement in the areas of education, the arts, environment, urban development, job training, volunteerism, minority enterprises, summer jobs for youth, health, housing, alcohol and drug abuse, nutrition, philanthropy, prison rehabilitation, and many other areas (Groenewegen, 2004).
New product and product line development will help Rugged Wear to save working places and meet ethical principles of business. Rugged Wear supposes that a manager’s first obligation is to the shareholders and, as a top executive, a manager should protect and promote the economic interests of the stockholders. From the classical theory viewpoint, if members of society strongly desire some good or service not provided by the market, they should either seek to build a market for it or petition the government to either provide the good directly or to supply firms with the necessary motivation to provide the good. They should not look to corporations to provide it voluntarily at the risk of not meeting their required economic objectives (Beauchamp and Bowie 2003).
Following Beauchamp and Bowie (2003) the ethical investor bases investment decisions not only on economic considerations but also on sociological considerations. Many believe that ethical investors form a clientele that responds to a demonstration of social concerns. Investors of this type tend to avoid particular investments for entirely ethical reasons and would prefer to favor socially responsible corporations in their portfolios. Those social investors are not necessarily sacrificing their economic well-being. As a matter of fact, an emerging theory of social investments proposes that social and economic values can be maximized together and that this creative synergism is the practical direction taken by social investors today.
It is almost impossible for Rugged Wear not to become involved in some kind of community affairs. Some of this involvement is primarily charitable, while other community affairs with which business becomes involved pays a direct return to the company. It is difficult to separate one from the other because in most instances both community and business reap positive rewards from any business participation in community affairs (Beauchamp and Bowie 2003). The general theory behind much of it is that business participating in community affairs makes the community a better place in which to live. By making the community a better place to live, it helps improve the community for all those who live there and as an inducement for hiring new employees from distant communities possibly needed experts from other cities. For Rugged Wear, the responsibility of the community is to support the local economy and help it to overcome the current economic crisis.
Responsibilities towards employees and stockholders can be explained using legalistic ethics. It is based on the premise that moral rules are absolute laws that must always be obeyed. To a great extent, this is the concept behind much of the social responsibility legislation. If people and Rugged Wear cannot and will not act in an ethical and moral manner on their own, then the local, state, and the federal government will step in and through new laws force them to behave and act in the government’s concept of what comprises an ethical and moral way. Rugged Wear is expected to be active socially, that is, it seeks to solve social problems because in most cases corporate actions are the ones that have caused those problems (Kotler and Lee 2004).
As human systems, Rugged Wear develops a moral obligation to respond to the needs of its constituents. In other words, Rugged Wear’s philosophies shift toward more collaborative relations and a sense of purpose that includes the organization’s effectiveness as well as the improvement of the quality of life of its members. The individual personal value shifts from self-centered achievement and independence to altruistic self-actualization and interdependence (Kotler and Lee 2004). Also, Rugged Wear issues an annual environmental report at the urging of its shareholders. The company has discovered that keeping tabs on non-financial matters helps business. The company explains that reporting on environmental performance increases awareness of what it is trying to do as a good corporate citizen.
Closely related to legal compliance are moral and ethical standards. Rugged Wear should pay special attention to moral and ethical standards for both employees and corporate goals. To deal with areas that may be considered technically legal but, in the eyes of management, improper or unethical, companies must develop and disseminate explicit policies that are rigidly and expeditiously enforced if broken (Kotler and Lee 2004). Developing a code of morals and ethics is not always simple. The frame of reference is large and sometimes complex. Consideration must be given to existing and proposed laws, Judeo-Christian values, family norms, society and industry as a whole, the firm, and the background and desires of owners, managers, and other employees.
Rugged wear bears responsibility for Mexican suppliers and its community. In case of the new location, the Mexican suppliers will bankrupt and deprive many employees of jobs and opportunities to earn for living. While most standards were helpful and important, there were also a number of nuisance rules as well. In small local communities like Portsmouth, both the employer and the employee have legal, ethical, and moral rights and responsibilities in the workplace and in the community. The major emphasis should be placed on the legal rights of the employee in the workplace, along with some of the moral and ethical implications attached. For Rugged Wear, social contributions are viewed as the responsibility of individuals and not of an organization. Critics underline (Frederick et al 1992) that there are such organizations that might adhere to the letter of federal and local environmental protection laws, yet willingly allow pollution when no legal punishment is likely (Kotler and Lee 2004). It is possible to say that for Rugged Wear social responsibility “implies bringing corporate behavior up to a level where it is congruent with the prevailing social norms, values, and expectations” (Kotler and Lee 2004, p. 76). Whereas the concept of social obligation is prescriptive in nature, social responsibility is prescriptive in nature. Also, Rugged Wear should recognize that laws often change more slowly than society’s expectations, and it tries to make its actions keep pace with social norms, values, and expectations of performance. Frequently seen as good corporate citizens, socially responsible organizations are willing to assume a broader responsibility than that prescribed by law and economic requirements. For example, these organizations are likely to take steps to reduce pollution if they consider certain levels to be dangerous, even if these levels are acceptable by legal standards. Rugged Wear operates as a two-way open system, with open receipt of inputs from society and open disclosure of its operations to the public. Social costs, as well as benefits of an activity, product, or service, are thoroughly calculated and considered in order to decide whether to proceed with it. Technical and economic criteria are supplemented with the social effects of business activities, goods, or services before a company proceeds (Beauchamp and Bowie 2003).
In sum, it can be agreed on ethical behavior is legal behavior plus some other element, then it is important that this additional element be identified, if possible. At first blush, many people will probably agree that this additional element is the collection of moral principles and values of what is right and what is wrong and what is good and what is bad, as determined by group behavior or by some member of the group. At this point of definition, it appears that one’s behavior is ethical if it is legal and in accordance with group norms. Businesses have a social role as trustees for society’s resources. Since society entrusts businesses with its resources, businesses must wisely serve the interests of all the stakeholders, not just those of owners, consumers, or labor. The social costs of each activity, product, or service are priced into it so that the consumer (user) pays for the effects of his consumption on society. Business institutions as citizens have responsibilities for social involvement in areas of their competence where major social needs exist.
Beauchamp, T.L., Bowie, N. (2003). Ethical Theory and Business. 7th edition, Upper Saddle River, New Jersy: Pearson Prentice Hall.
Frederick, R. (ed.) (2002). A companion to business Ethics. Blackwell Publishers.
Kotler, Ph., Lee, N. (2004). Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause. Wiley.
Baye, M. R. (2002). Managerial Economics and Business Strategy, 6th Ed. Chapter 1, pp. 4-24. McGraw-Hill/Irwin; 4 edition.
Groenewegen, J. (2004). Who Should Control the Firm? Insights from New and Original Institutional Economics. Journal of Economic Issues, 38 (2), pp. 353-355.
Keating, B., Wilson, H. J. (2001). Managerial Economics, Second Edition. Atomic Dog Publishing; 2nd edition.
Sammelson, W. F., Marks, S. G. (2005). Managerial Economics. Wiley; 5 edition.
Truett, L. J., Truett, D. B. (2006). Managerial Economics: Analysis, Problems, Cases. Wiley; 8 edition.