Consumer and Business Ethics

Master of Human Resource Management Indian Institute of Technology Kharagpur

Introduction Consumers have the right to remain informed about the

products that they are being offered.

Businesses must ensure that they offer absolute information about the products and services to their consumers.

Adhering to ethical practices in managing relations with the consumers can help organizations create a “repeat consumer” base and hence maximize profits and minimize risks of business failure.

Source: https://ethicalrealism.wordpress.com/2011/05/16/moral-issues-related-to-consumers/

Killer Cars Road Accidents: 500000+ per year

Deaths out of it: 150000+ per Year

Every 3.5 minutes, a person is dying because of a cause which can be controlled and improved

18.4% of all road accidents in India last year involved 4-wheelers (WHO Report)

Current Indian Standard for Crash Test : 46 km/hr

UN Standard for Crash Test : 56 km/hr

Annual Monetary Loss : $20 billion (International Road Federation report)Source: http://trak.in/tags/business/2014/11/08/airbags-abs-compulsory-cars-india/http://www.indiastat.com/crimeandlaw/6/unnaturalaccidents/17904/roadaccidents/17897/stats.aspx

Scope of Research Area of Research:

Automobile (4 wheelers)

Research Segment: Hatchback Indian Cars

Why Hatchback Cars? Most sought & purchased car category in India

Demography of Hatchback buyers: Middle class and Upper middle class in the age group of 25-45

Ethical Perspective: Safety Features are minimal & less Emphasized. Misleading advertisements concealing reality about the safety of the vehicles Facts are twisted. Terms & condition cover their shortcomings. Safety laws have not kept pace with time. Indian car manufacturers can either hide behind them or walk the

extra mile to ensure safety of their buyers.

Source: http://www.slideshare.net/gopal_capricorn/consumer-behaviour-group-project-a2-segment

Indian Popular Hatchback Cars Failing Global NCAP Tests

Datsun Go

Ford Figo

Hyundai i10

Maruti Alto 800

Maruti Suzuki Swift

Tata Nano

Volkswagen Polo

Maruti Suzuki and Nissan have said they meet the country's current safety standards and will keep up with required changes.

"Global NCAP can do what they want. We have our own safety road map that we are going to follow and are already following“ said Vishnu Mathur, director general, Society of Indian Automobile Manufacturers.

What manufacturers comment on the NCAP report?

Source: http://in.reuters.com/article/2014/11/04/india-crash-idINKBN0IO18M20141104http://www.ndtv.com/india-news/tata-nano-other-indian-small-cars-fail-independent-crash-tests-549345

Maruti Suzuki SwiftGlobal NCAP Report vs. Safety Highlights

Car Adult Protection Child Safety Remarks Verdict Price Range

Maruti Suzuki Swift

Scored a zero out of a

possible 17

Worse than the Alto in child

safety, scoring a dismal 7.94

out of a possible 49.

Driver’s chest protection was

weak due to contact with the steering wheel. 

Fail4.8 L – 6.5 L

(Ex Showroom Price)Source: http://www.indiatimes.com/lifestyle/can-india%E2%80%99s-top-selling-small-cars-pass-a-crash-test-228337.html

http://www.marutisuzuki.com/swift.aspx

NCAP Detail Report – Maruti Swift

Source: http://www.globalncap.org/wp-content/uploads/2014/10/Suzuki-Maruti-Swift-crash-test-results.pdf

Tata NanoGlobal NCAP Report vs. Safety Highlights

Car Adult Protection

Child Safety Remarks Verdict Price Range

Tata Nano Zero Zero

The protection offered to the driver head,

neck, chest was poor due to the hard contact with the steering wheel.

Fail2.2 L – 2.6 L

(Ex Showroom

Price)Source: http://www.indiatimes.com/lifestyle/can-india%E2%80%99s-top-selling-small-cars-pass-a-crash-test-228337.htmlhttp://www.tatanano.com/faqs-nano-twist.html

Volkswagen Polo Global NCAP Report vs. Safety Highlights

Car Adult Protection Child Safety Remarks Verdict Price Range

Volkswagen Polo (With two

airbags)12.54 out of

1729.91 out of

49Along with this, the body shell of the car was also

rated as stable after crash.Pass 5.6 L – 6.7 L

(Ex Showroom

Price)Volkswagen

Polo (Without airbags)

Zero 26.97 out of 49

The driver’s chest protection was poor due to its high

compression.Fail

Wit

h ai

rbag

s

Wit

hout

air

bags

Source: http://www.indiatimes.com/lifestyle/can-india%E2%80%99s-top-selling-small-cars-pass-a-crash-test-228337.htmlhttp://www.volkswagen.co.in/en/models/polo/highlights.html#/flash=035a0f168a907d7d3d02c940c8602c22@Safety

Most Important Safety Features

Safety Airbags: Reduces the impact of collision to a great extent

Anti Lock Brakes (ABS): Regulates Pressure Brakes so that it does not get locked and the control over the vehicle is not lost

Seatbelt Pretensioner: Restrains an occupant as early as possible in a crash

Anti-Whiplash: Reduce whiplash injuries by 50%

Laminated Glass: Reduce Injuries from broken glass pieces during collision

Source: http://www.mycarhelpline.com/index.php?option=com_latestnews&view=detail&n_id=423&Itemid=10

Why most safety features are ignored? Primary Reason

According to Mayank Pareek, president (passenger vehicle business unit), Tata Motors - “Some of the entry level cars even if you increase the price by Rs 5,000 the customer may not buy. This segment has highly price elastic products. If a person buying a Rs 1 crore car and price increases by 10% nothing happens but a person buying a Rs 300,000 car for him paying that extra Rs 5,000 becomes important. Rs 5,000 is the cut off line, if you increase the price beyond that then they put off the buying decision” - Business-standard -25th Nov’ 14

Secondary Reason

No strict law enforcing the manufacturer to install all the necessary safety features in all the vehicles. This will ensure all manufacturer are producing vehicles with safety features and the buyer will have only safe car options.

Source: http://morth.nic.in/index2.asp?slid=95&sublinkid=54&lang=1

Curbing PollutionRemedy for Outdated Vehicles

Three quarters of the total air pollution is contributed by vehicles

Delhi is estimated to have 82 lakh vehicles and out of these 29 lakh are outdated

 The Capital at present does not have any authorized scrapyard

Where will these 29 lakh vehicles go if not allowed to use?

People are still using old and outdated vehicles

No infrastructure to facilitate use of clean energy vehicles.

Reduce the use of vehicles or limit the use of polluting vehicles

Scrap the old vehicles which do not satisfy the emission standards

Either government or auto companies should take initiative to built proper scrapyard

If not taken care they might be sold to another cities

Higher taxes and insurance premium for old, polluting vehicles to make them a less attractive prospect.

Use this extra income to promote use of clean energy. E.g., Battery operated vehicles

Source: http://www.mapsofindia.com/my-india/society/air-pollution-in-delhi-is-alarming-vehicles-the-culprithttp://timesofindia.indiatimes.com/city/delhi/No-second-life-for-old-vehicles-in-Delhi/articleshow/45342183.cms

Arguments from Manufacturers

1) “We have had no norms at all and following global norms will make a large number of budget cars unaffordable.”- Hormazd Sorabjee, editor, Autocar India.

2) “Higher speed crash tests will make the cars safer, but also costlier. At the same time, it could make the drivers more aggressive as they will think that their cars are safer.”-K.K. Gandhi, director, Society of Indian Automobile Manufacturers (SIAM).

3) “It is a little premature to jump to the conclusion that airbags will solve the problem. Nobody has established any link between how many deaths have been caused because a car did not have airbags.”- R.C. Bhargava, chairman, Maruti Suzuki India.

4) “Whatever standards you fix, they should not be blindly copied from Europe, but judged in the context of Indian traffic requirements.”- R.C. Bhargava, chairman, Maruti Suzuki India.

5) “Studies show that people have low sensitivity towards high security features. Indian car owners have little desire to have basic safety features like airbags, rear parking assist and rear windscreen wipers.”- Mohit Arora, executive director, JD Power Asia Pacific.

Years Net Profit (in Rs crores)Mar-10 2,497.60Mar-11 2,288.60Mar-12 1,635.20Mar-13 2,392.10Mar-14 2,783.00

Net Profit of Maruti Suzuki for 5 fiscal years

Source: http://www.moneycontrol.com/financials/marutisuzukiindia/balance-sheet/MS24

Recommendations Ethics of care: Car manufacturers are a strong and powerful lobby and car

owners are at disadvantage.

Due Care: Manufacturers have specialized knowledge that consumers don't so that they are in a better position to appraise risk than consumers are

Ethics of duty: Follow the three principles of Kant.

Egoism: Free competition and good information will help consumers to make rational choices.

Support from government: In a recession hit car market, Govt. can come up with policies to cushion against rising manufacturing cost.

Thank You!