Impact of Unethical Issues on Multinational Business Brand Recognition

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Impact of Unethical Issues on Multinational Business Brand Recognition

Impact of unethical issues in multinational business that influences brand recognition



Chapter 1: Introduction-

1.1 Background of research topic-

Brand recognition is the extent to which the customers recognise the product or service by the name, logo, etc. brand recognition and awareness helps in developing trust in the brand. There are different strategies that businesses use for increasing brand awareness and improving brand recognition (Zia et al., 2021). The companies use different marketing activities for connecting with the customers and increasing brand awareness and recognition. Global companies often conduct market research for identifying the success of the different brand recognition strategies used by them. Large companies are often considered successful when the customers recognise the brand by the logo, packaging, slogans, name etc. (Zia et al., 2021).

There are different factors that also affect the brand image of the company and it reduces the trust of the customers in the brand. For example, the unethical activities conducted by the businesses highly impact their brand image and brand recognition. It is important for businesses to conduct the business activities ethically for developing a positive brand image and developing and maintaining trust among the customers. Conducting the business operations ethically helps in increasing customer retention; increases brand loyalty and helps in spreading positive word of mouth (De Cremer and Vandekerckhove, 2017). The unethical activities that the businesses conduct are hidden terms and conditions in the agreements, unethical accounting, false product claims, etc. it supports the businesses in enhancing the business profitability and promotes short term business growth. When the customers get aware of the unethical business practices of the company it negatively impacts brand recognition. Unethical business practices can impact business profitability and impacts customer loyalty. It creates a negative brand image and creates various challenges for the businesses (Askew et al., 2015).

The research will focus on identifying the impact of unethical business practices on the brand recognition of the business. The researcher will focus on identifying the factors that cause unethical practices. Through the research, it will identify how the unethical business activities conducted by the companies create challenges for the business and it will help in identifying its impact on the business. Through the research, the strategies will be identified that the businesses can use for reducing the chances of unethical challenges that the company could need to face. The researcher will mainly focus on identifying the impact of unethical business practices on the multinational businesses of the UK. The research will mainly focus on the retail industry and will include the examples of different retail businesses in the country. The research will focus on identifying the impact of unethical businesses activities on the retail businesses of the UK. The report includes the recent examples of the Marks and Spencer Company, Gap, Primark. Etc. that has recently faced challenges due to unethical business activities conducted by them. The research will help in identifying the strategies that multinational businesses can use for reducing the occurrence of unethical business practices.

1.2 Research questions

  • What are the implications of unethical practices on the different multinational businesses in the retail sector?

  • What are the factors that influence the occurrence of unethical practices at the workplace of multinational businesses?

  • What are the unethical practices in multinational businesses?

  • What are the strategic approaches that could be minimised to restrict the occurrence of unethical challenges and enhance brand recognition?


Research aims and objectives-

Aim:

The primary aim of the research is to gather knowledge and analyse the “impact of unethical challenges witnessed by different multinational businesses in retail sector upon their brand recognition”


Research objectives:

  • To identify the impact of unethical challenges on the different multinational businesses in the retail sector.

  • To highlight the implications of unethical practices upon sustaining brand recognition of different multinational businesses

  • To illustrate the factors that influence the generation of unethical practices at multinational businesses

  • To identify the strategic approaches that can serve beneficial to minimise unethical challenges at multinational businesses


1.3 Justification of the research

Conducting unethical business activities may create various challenges for the businesses and it is essential to understand and identify the impact of unethical activities on the brand reputation. There are various unethical activities that are conducted in the workplace like ineffective working conditions, discrimination among the employees, etc. the unethical activities create various challenges for the businesses, and it is important for the companies to conduct the business operations ethically (Hegarty and Moccia, 2018). The unethical business activities are conducted due to ineffective policies of the company, lack of knowledge and awareness among the employees etc. The research will focus on identifying the challenges that businesses may face due to unethical business activities. It will help in identifying the factors that influence the generation of unethical practices (Hegarty and Moccia, 2018).

The research will focus on identifying the strategies that businesses can use for reducing the occurrence of unethical practices in the organisation. It will help in reducing the challenges for the business and will help in developing and maintaining a positive brand image. Through the different sources, the information will be collected for identifying the impact of unethical practices on the different multinational businesses. The research will focus on identifying the impact of unethical business practices on the different multinational businesses in the UK. The research will mainly focus on the retail industry and will include the examples of different multinational organisations from the retail industry. It will help in identifying the different challenges that the companies face due to unethical business activities and will help in developing strategies for reducing the challenges for the business. With the increasing awareness among the customers, it is important for the companies to conduct the business activities ethically for fulfilling the customer expectations. It helps in developing and maintaining trust among the customers and provides a competitive advantage to the business (De Cremer and Vandekerckhove, 2017).

1.4 Methodology outline

The research methodology is based on the details of the procedures used by the researcher for identifying, selecting, collecting and analysing the information for the research topic. The methodology chapter includes details regarding the tools and methods used for data analysis and collection by the researcher. The methodology chapter provides the details of the research philosophy and the research design used for conducting the research. The data for the research will be collected from secondary sources (Mohajan, 2018). The researcher will collect the data from the different sources that will help in collecting relevant information for the research. The secondary data will be available easily and collecting data through the secondary method will be less time-consuming. The data collected through different sources will be analysed through the thematic analysis method. It will help in getting relevant information from the data collected. The thematic analysis method will make the data analysis process easier for the researcher and will help in getting relevant information for achieving the research objectives.

1.5 Outline of the chapters

There are five different chapters included in the report. The first chapter of the report is the introduction it includes the background of the research and aims and objectives for conducting the research. The chapter provides the details of the importance of conducting the research. The second chapter of the research is the literature review. The literature review includes the data collected from the different sources for the research topic. The literature review includes a detailed analysis of the different topics related to the research. It helped in understanding the different concepts effectively and helped in achieving the research objectives. The third chapter of the report is a research methodology that provides the details of the research design and methods and includes the selected paradigm of the research. It includes the methods and procedures used for data analysis and collection and includes ethical considerations related to the research. The fourth chapter of the research is research analysis and findings it includes the research findings and includes the discussion of the research questions. The fifth chapter of the research is interpretation and conclusion that includes the conclusions for the research objectives and research questions. The chapter provides the limitations for the research and opportunities for conducting further research.

1.6 definitions

Business ethics- business ethics are the values of the company that the company follows while conducting operational activities. The common ethical considerations in the business include environment, anti-corruption laws, human rights, etc. the companies make a commitment for following some specific moral practices and ethical standards based on the industry that the company belongs to. It also shows the values that the business wants to promote. It shows the corporate culture of the company and helps in developing trust among the customers (Brenkert, 2016).

Unethical business practices- unethical business practices are the practices conducted by the businesses that are below the minimum standards for the business code of conduct. The activities are considered as behaviours that are morally wrong and may lead to mistreatment of the environment, humans, and animals. Some of the examples of unethical business practices are discrimination among the employees, providing defective products etc. (Kabeyi, 2018).

Brand recognition- brand recognition is the ability of customers to identify a specific brand by different attributes like brand name, logo, tagline, packaging etc. it is a concept used in marketing where the companies use different strategies for increasing brand awareness and brand recognition. A brand is considered successful when the customers recognise the brand by the different attributes associated with the brand (Zia et al., 2021).

Brand image- brand image is the perception of customers for the brand. The customers develop a perception regarding the brand by their experience and interactions. It is the aggregate of ideas, impressions, beliefs, and perceptions that the customers have for the brand. Different customers have different brand images, and a positive brand image helps in attracting customers. The companies use different strategies for developing a positive brand image and it requires time and effort for developing a different brand image in the market (Zhang, 2015).

Marketing- marketing includes the different practices and activities that businesses undertake for the promotion of their products and services. Marketing activities help in increasing awareness among the customers and help in providing information to the customers regarding the product or services. The companies use different tools for the promotion of their services and products according to the target customers (Zhang, 2015).

1.7 Summary

Unethical business activities highly influence the brand image and recognition, and it is important for businesses to conduct the business ethically the reduce the challenges. The research will help in collecting information related to the impact of unethical business practices on the business and its brand recognition. The next chapter of the research is a literature review that will help in collecting the information from the different sources related to the research topic. The research will be based on the multinational businesses from the retail industry of the UK.



Chapter 2: literature review

2.1 Introduction

The literature review focuses on collecting the information related to the impacts of unethical issues on businesses and their influence on brand recognition. The chapter helps in identifying the factors that influence the generations of unethical practices at the workplace. It will identify the challenges that the companies may face due to unethical activities, and it will help in developing strategies that the businesses can use for reducing the occurrence of unethical activities in the company. The chapter will help in collecting data for the different topics in the research and will promote a better understanding of the different topics.

2.2 Unethical practices at the workplace

Based on the information provided by Aleassa and Megdadi 2014, There are different unethical practices that the employees face at the workplace. There are different activities that the employees are not aware of, and they face challenges due to that. An ineffective system for reporting for the practices and fear among the employees restricts them to reporting for the challenges faced by them. According to Edralin, 2015, abusive behaviour, discrimination among the employees, not paying enough wages to the employees etc. are some of the common unethical practices at the workplace. The employees mostly face abusive behaviour at the organisation by their managers and supervisors. Due to power and high position in the organisation, the managers mistreat the employees and disrespect them. The disrespect and negative behaviour cause dissatisfaction among the employees.

For example: according to the information provided by Glassclothing 2020, in the retail industry in the UK there are different companies that have been using unethical practices at the workplace. Marks and Spencer are one of the multinational companies that is using unethical practices in the company in different countries. It has been identified that the company is abusing the employees and forcing them to work overtime. In the report of Glassclothing 2020, it is mentioned that the employees are not paid properly in the countries like Bangladesh and India. Some of the workers in the Marks and Spencer Company in Bangladesh and India have said that they are not being paid even half of the legal overtime rate. The workers were also told that if they refused to work overtime, they were told to find new jobs. After the issue was raised against the company it has taken actions for its suppliers and ordered them to reduce the working time and pay according to the legal guidelines of the country. The issue highly impacted the brand image of the company and created challenges for the business. Based on the report of Impactful 2021, not only Marks and Spencer but the other retail companies were also identified for the unethical practices conducted by them. The Primark Company and Gap also forced their employees to work overtime and paid less to their workers working in India. After the issue was raised the companies developed different strategies for avoiding unethical practices at the organisations in different countries and ensured that the problem will not be repeated. Marks and Spencer Company took strict actions for dealing with the problem and the representative of the company said that is important for the suppliers of the company to follow the code of conduct and conduct the business operations ethically.

Based on the study of Aleassa and Megdadi 2014, mainly in developing countries the workers are not educated properly and are not aware of their rights. They do not have proper awareness and knowledge regarding their rights and due to that, they face challenges in the organisation. Due to a lack of employment opportunities and education, they are forced to work overtime and low wages. According to Govindan et al 2021, companies should take strong actions against unethical activities for reducing the challenges for the business. The companies should develop a specific code of conduct for the suppliers that they need to follow for doing business with the company. Global organisations also the employees face challenges and when the issue is identified it creates various challenges for the businesses. It impacts the brand image in the local and international markets and influences the profitability of the company.

Through the information provided and examples, it can be identified that the different companies from the retail industry were providing low wages to their workers, forcing them to work overtime and were conducting various unethical practices in the different countries where they were operating. The unethical practices created challenges for the businesses and highly impacted the brand image.



2.3 Unethical business practices in the retail industry-

According to the information provided by Lambert 2014, unethical business practices in the retail industry include making commitments and promises to the customers but not fulfilling the commitments. Providing defective or false products to the customers is also unethical, the companies provide low quality or defective products to the customers in order to enhance the business profitability. Based on the analysis of McMurrian and Matulich 2016, it provides short term advantages for the business but impacts customer trust and loyalty. The negative feedback of the customers regarding the defective or low-quality products impacts the purchasing decisions of the customers and impacts the brand image and recognition of the company. The ineffective or false marketing of the products and services also creates challenges for the business. The false promotions attract customers to buy the product but due to bad quality, it creates dissatisfaction among the customers and impacts customer loyalty.

According to LeBaron 2014, in the internal organisation also the retail businesses conduct unethical practices for reducing business expenses. The management of the company conducts discrimination among the employees, forces employees to work overtime, pay low wages to the workers etc. the internal unethical practices impact the performance of employees and organisation and create challenges for the company. There are different unethical activities that are conducted in the retail industry by the businesses that create challenges in long term for the companies.



2.4 Impact of unethical challenges on the different multinational businesses-

According to Lawrence and Kacmar 2017, unethical activities include discrimination among the employees, ineffective working conditions; health and safety at the workplace, false product claims etc. conducting unethical business activities provides short term benefits to the companies and it creates major challenges in long term. The unethical activities highly influence the brand image and recognition and impact customer trust and loyalty. For developing and maintaining a strong position in the market it is essential for the businesses to conduct the business activities ethically. Global organisations need to follow different rules and regulations according to different countries and failing to do that causes various challenges for the business.

Darwish and Abdeldayem 2019, identified that unethical business activities create challenges and concern for the businesses and it negatively impacts the business. The unethical activities create a lack of trust among the employees and the customers. It impacts the sales and profitability of the business and creates long term challenges for the business. Due to unethical business practices, the company may need to pay fines that may cause financial loss for the business.

According to Saxena et al 2020, ethical business activities provide various advantages to the business it helps in developing a positive brand image, increase the loyalty of employees and the customers, increase employee satisfaction, enhance the performance of the employees etc. There are different challenges that multinational businesses face due to unethical business practices. The unethical business activities create various issues for the businesses that have a long-term impact. The unethical activities highly impact the brand reputation and recognition of the company. For multinational companies, unethical activities impact the brand image and recognition of the company in the local and international markets. Unethical business practices at the workplace impact the performance and productivity of the employees and it impacts the business performance.

Ogbari et al 2016, in their study, identified that discrimination among the employees; low salary etc. leads to dissatisfaction among the employees and impacts their performance. It creates high employee turnover in the organisation and the management of the company faces challenges for recruiting new employees in the organisation. The negative review of the employees on the employment conditions of the company will challenge the human resource managers to recruit experienced professionals in the organisation. The poor work environment causes a downfall in the productivity of the employees, and it impacts the productivity of the company. The companies should have clear policies and should focus on creating awareness among the employees regarding ethical practices.

According to Stöber et al 2019, the companies providing false or defective products, or hidden terms and conditions etc. also face challenges as it creates dissatisfaction among the customers and impacts customer loyalty. The customers post negative reviews and feedback regarding the product or services provided by the company, and it highly impacts the brand image. It impacts the purchasing decisions of the other customers and impacts the sales and profitability of the business. It spreads negative word of mouth and impacts customer relationships. The companies should provide good quality products and services to the customers and should provide proper information and guidelines for the product. For example: according to the information provided by Glassclothing 2020, recently the Marks and Spencer Sweatshop scandal highly impacted the brand image and reputation of the company in the domestic and international market, and it created various challenges for the business. The companies should take immediate actions for the issues faced by the company for reducing the challenges for the business.

Kaptein 2017, mentioned in their study that for unethical business activities the companies may also need to pay fines that may cause a financial loss in the business and impacts business profitability. Sometimes due to the impact of the false products on the customer’s health, the companies also lose their license. The company also face legal actions for the unethical business activities. It enhances the expenses of the business and impacts the brand image. Unethical business practices impact the investment in the business. It impacts the share prices of the company reduces the interest of investors and stakeholders in the business. The lack of investment impacts the growth opportunities for the business and reduces the opportunity for business expansion.

Through the views of different authors, it has been identified that unethical business activities create various challenges for the business. The practices impact the brand image of the company and influence the purchase decisions of the customers. The practices impact the performance of the employees and influence the organisation's performance and productivity. It is important for the businesses to conduct business activities ethically for reducing the challenges for the business and develop a positive brand image in the market. The companies should have specific policies and codes of conduct for reducing the chances of unethical practices in the organisation.



2.5 Impact of unethical practices on brand recognition-

Through the research conducted by Hemsley-Brown and Alnawas 2016, it has been identified that the unethical practices are increasing in businesses, and it is creating major challenges for businesses. The unethical activities are increasing concern among the managers and the companies are developing different strategies for promoting ethical behaviour in the organisation. The increasing awareness among the customers is also encouraging the businesses to promote ethical behaviour in the organisation. Ethical behaviour helps in developing trust among the customers and improves customer relationships.

The ethical behaviour of the businesses creates a positive image of the company and has positive effects on the perception of the customers towards the brand. The unethical activities influence the trust and loyalty of the customers. The unethical practices of the business impact the brand image of the company and it influences the purchasing decisions of the customers. Unethical practices have a negative impact on the brand reputation, and it changes the perception of the customers towards the brand. The change of the perception of the customers has a long-term impact on their purchasing decisions of the customers and it impacts the sales and profitability of the business. For example: based on the report of Glassclothing 2020, the unethical practices conducted by Marks and Spencer, Primark. And Gap highly impacted their brand image and recognition and changes the perception of the customers towards the brand. The companies faced legal challenges; it impacted their brand image and reputation and influenced the sales and profitability of the company.

According to Boerman and van Reijmersdal 2016, the occurrence of unethical practices impacts the brand image and recognition of the company in the local and global market and creates long term challenges for the business. With the increasing awareness among the customers and increasing use of social media the issue of unethical business activities is becoming more important. Social media helps in rapidly spreading the awareness among the customers regarding the unethical business activities of the company and it creates challenges for the business. It impacts the position of the company in the market and impacts the investment in the business. The investors get attracted to investing in the business when the company has a positive brand reputation and image, and a negative image impacts the investment in the companies that impacts the business growth opportunities.



2.6 Factors influencing the generation of unethical practices

According to Boda and Zsolnai 2016, there are different factors that influence the generation of unethical practices are poor leadership in the organisation. Poor leadership in the company is one of the major causes of the generation of unethical practices. The leaders do not communicate the policies and fail to follow the code of conduct and guidelines of the company that creates unethical practices in the organisation.

Based on the information provided by Lašáková and Remišová 2015, the leaders and managers also do discriminate among the employees and disrespect them increase employee dissatisfaction and impact the business performance. The ineffective management in the organisation also creates unethical practices in the company. Ineffective development of policies by the company is also one of the major reasons for the generation of unethical practices. The management of the company should focus on developing specific policies and should communicate the strategies effectively for reducing the challenges for the business.

According to Singh and Vasudeva 2014, the ineffective policies create challenges for the business. The ineffective system in the company for reporting for the unethical practices also increases causes unethical practices in the organisation. Due to an ineffective reporting system, the employees are unable to report for unethical practices and it increases the unethical practices in the organisation. The management of the company also encourages unethical practices for short term financial benefits. Forcing the employees to work overtime and pay low wages to the employees reduces the expenses of the company and provides short term financial benefits to the organisation. The lack of knowledge among the employees also promotes unethical practices in the company. The employees are not aware of their rights, and it promotes unethical behaviour in the organisation. For example, according to Glassclothing 2020, the employees of Marks and Spencer Company in different countries were not aware of their rights and policies and it promoted unethical behaviour in the organisation. it provided short term benefits to the company but in long term, it creates various challenges for the company and impacted the brand image of the company.

There are different factors that encourage unethical practices in the organisation and create challenges for the business. The lack of awareness among the employees, short term financial benefits, poor leadership and management are some of the major causes of the generation of unethical practices in the organisation.



2.7 strategic approaches for reducing the occurrence of unethical challenges-

According to Popa and Salanta 2014, it is essential for global businesses to develop strategies for reducing the unethical challenges at the workplace. The strategies support reducing the challenges for the business and help in maintaining a positive brand image in the market. The managers of the company should focus on developing the strategies at the time of developing the annual budget. The management of the company should communicate the policies and strategies effectively to the employees for making them aware.

According to information provided by Arend et al 2017, the organisation should have a specific code of conduct and straightforward guidelines for reducing unethical activities in the organisation. The guidelines of the company should be understood easily by everyone. The guideline should include the expectations of the company with the employees for promoting ethical behaviour at work. Developing specific guidelines will help in reducing the chances of the occurrence of unethical practices in the organisation.

According to Crifo and Forget 2015, companies should communicate the code of conduct and policies of the company to employees effectively. The management of the company should provide ethics training to the new hires and should communicate the policies for making them aware of the code of conduct of the company. The companies should also communicate the policies to the existing employees. It helps in making the employees aware and through that, they can respond immediately when they find any misconduct in the organisation. The management of the company should provide tools to the employees where they can report for the violations and misconduct in the organisation. There should be a specific reporting system where the employees can report for the violence or misconduct faced by them. The customers should also have a system where they can report false products, or any other issues faced by them.

According to the analysis of Welter and Smallbone 2017, the management of the company should be proactive in solving the unethical issues faced in the company. The management of the company should take strong action against unethical activities and should ensure that the problem cannot be repeated in the future. Taking strong action against the unethical practices will help in developing trust among the employees and customers and will reduce the chances of reoccurrence.

Based on the information provided by Fung 2014, the companies should monitor the activities in the organisation regularly for ensuring that there is no unethical practice conducted in the company. Taking regular feedback from the employees and communicating with the employees regularly will help in ensuring that there is no unethical practice conducted in the organisation. According to Gonin 2015, the management of the company should regularly interact with the employees for identifying if the employees are facing any challenges in the organisation. Conducting the business activities and operations ethically helps in making the employees and customers more loyal towards the company and increasing employee and customer satisfaction. It helps in spreading positive word of mouth and reduces the challenges for the business.

Using the strategies will support the multinational companies in the retail sector of the UK to reduce the occurrence of unethical challenges for the business. Implementing the strategies will support the business in reducing the challenges for the business in the local and international market and will help in developing a positive brand image. The people will recognise the brand with its values, and it will have a positive influence on the brand. Implementing the strategies will help in making the employees aware and it will help them to report for the issues faced by them. Taking regular feedback from the employees will help in ensuring that the code of conduct and policies of the organisation are followed effectively, and it will reduce the challenges for the business.

2.8 Aaker’s brand equity model-

Figure 1- Aaker’s brand equity model

Source- (Farjam and Hongyi, 2015)

According to the model mentioned in the study by Farjam and Hongyi 2015, brand equity is the combination of brand loyalty, awareness, and quality. It helps the company in increasing the value of its products and services and helps in influencing the purchase decisions of the customers. It increases customer satisfaction and loyalty and provides various advantages to the business. There are different components of the model like brand awareness that shows the familiarity of the customers with the brand. Brand awareness helps in increasing the familiarity of the customers towards the brand and helps in attracting the customers to purchase the brand.

According to Ogunnaike et al 2017, the next component is brand loyalty it helps in reducing the marketing activities of the company and provides a competitive advantage to the business. The third component is perceived quality, the quality of the products or service also influences the trust of the customers. The fourth component of the model is proprietary assets that include the intangible assets of the brand like copyrights, intellectual property rights etc. the assets provide a competitive advantage to the business. The last component of the model is brand associations it includes the information regarding the brand that the customers collect through different sources like advertisements, the website of the company etc. it has a positive influence on the brand and encourages the customers to buy the product or service.

It is important for the businesses to have a positive brand image for attracting the customers to buy the product or service and to develop trust among the customers. It provides a competitive advantage to the company and increases customer loyalty.

2.9 Summary

Through the literature review, the information regarding the different concepts of the research topic has been collected that improves the understanding of the research topic. The information collected through the literature review will help in achieving the research objectives and promote successful competition of the research. The information in the literature review was collected from different sources like articles, journals, books, online websites etc. the use of different sources helped in collecting a large quantity of data and helped in collecting relevant data for the research.

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