Developing and implementing a strategic approach to ethics

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 Ethics and business aims

Vodafone has grown rapidly since it was originally formed in 1984. It has responsibilities to its 60,000 staff and 151 million customers and shareholders. It also believes it has a responsibility to society. The company aims to continue to grow. Economies of scale improve efficiencies, enhancing the company's performance. This increases returns to shareholders and makes money available to improve services to customers. In order to grow, Vodafone must attract new customers and retain those it currently has. Serving customers well relies on the ability to attract and retain good quality staff. Both these stakeholder groups care about the company's ethics.

Vodafone has carried out extensive research which confirms what the company believed - operating ethically generates clear benefits. The results showed that customers are loyal to companies they trust. They also favour companies that operate in a responsible manner. Vodafone operates in a competitive market; its competitors also want to grow. In order to achieve competitive advantage, Vodafone must understand its position relative to its competitors. Research below shows the company's strong position.

Companies' actions are influenced by other stakeholders including pressure groups and government regulators. A business that did not care about ethics would simply seek to maximise revenues regardless of how its products affected society. It is unlikely that such a business would continue to grow because, for example:

  • regulators would punish their actions e.g. imposing fines and revoking operating licences
  • pressure groups would highlight unethical actions, adversely affecting what customers think.

Ethical companies do the right thing and concern themselves with the long term. This may damage financial performance in the short term. Ethics guide decisions. When Vodafone first included moderators into young people's chat rooms to create a safe environment for chat, the number of users dropped significantly. This led to reduced revenues for the company. However, the company believed that this was the right thing to do. The growing esteem in which the company is held by the wider public justifies this approach.

 Ethics, strategy and values

Vodafone takes a strategic approach to its ethics and business decisions. This involves managers considering the impact of important decisions in the long-term. By discussing options managers are more likely to achieve agreement. Goals that are agreed are more likely to be met.

Vodafone has six global goals. One of these is 'to be a responsible business'. This includes the issues of ethics. Companies develop strategies to meet their goals. Vodafone has eight key Corporate Social Responsibility (CSR) strategies. These form part of the companies approach to meeting its global goal of being a responsible business. One of these is responsible marketing: an example would be the company's decision not to send bulk unsolicited (i.e. un-requested) emails or SMS messages to its customers, they have to choose to opt- in to receive communications.

Vodafone's employees implement company strategies in a fast changing competitive environment. They have to make effective tactical decisions. To do this they need a consistent and shared set of values. The company's values are driven by its four passions.

Customers

  • marketing products and services responsibly
  • communicating openly and honestly
  • protecting customers.

People

  • recruiting and retaining the best people
  • investing in improving skills
  • involving and motivating employees.

Results

  • setting clear goals
  • focussing on achieving goals
  • rewarding staff for achievements.

The world around the company

  • investing in local and national charities via The Vodafone UK Foundation
  • monitoring and actively reducing the impact of the business on the environment e.g. recycling mobile phones, reducing waste, energy reduction activities
  • listening to any concerns local communities, pressure groups, customers and other interested parties may have about the company's impacts, and working to address these concerns.
  • Vodafone's staff are empowered and ethical. They share these passions. This helps them make better decisions when reacting to changes.

 The external environment

Ethics guide companies in reacting to changes in the environment. Managers can use a number of different tools to understand the environment. This understanding is important. It helps managers to make better decisions. SLEPT analysis is one of these tools and which looks at changes in five areas:

Social - trends in society

Legal - legal restrictions and considerations

Economic - the health of the economy, inflation, etc

Political - government policy

Technological - developments in computing, etc.

The following sections provide some examples of each factor, which are relevant to Vodafone.

Social factors

Society is concerned about under 18s being at risk. Parents may have concerns about their children being contacted (using mobile phones) by paedophiles or other adults. Society is also concerned about adult content being available via mobile phones to under 18s. Adult content includes gambling, violent games, erotic material etc. Further issues related to 'social' include the rise of mobile phone theft.

Legal factors

Some laws regulate all businesses e.g. The Sale of Goods Act 1974 stating all products must be fit for the purpose they are intended. A mobile phone must therefore work. Certain laws are created to regulate particular industries. Examples include the ban on using holding a phone while driving introduced in 2003.

Independent industry regulatory body:

OFCOM - the Office of Communications. OFCOM is the independent body for regulating the communication industry - www.ofcom.org.uk.

Vodafone goes beyond government regulation, working with its competitors in self-regulation. However to retain its leading position in the industry Vodafone believes it must exceed both legal regulations and industry self-regulation.

Economic factors

The state of the economy, for example levels of growth can impact companies. Companies' activities also contribute to the overall economy. Companies should remain true to their ethical values. If they do not, customers may question the company's beliefs.

Political factors

Government policy indicates that it wants the mobile phone industry to create self-regulating controls in relation to content. The government also shares public concern about unwanted contact and content.

Technological factors

The mobile phone industry has seen a great deal of technological change and will continue to do so. Mobile phones were originally used for telephone conversations. Text messaging became available and usage has increased dramatically. However, most of the texts were between people who already knew each other and had swapped contact numbers. In other words the users were happy to communicate with each other.

As technology developed, it has become possible to swap information between mobiles and other devices via Bluetooth technology. This can be used inappropriately to send anonymous and unwanted texts. This practice is known as Bluejacking and can be distressing particularly if the recipient is a child or young person.

The advent of 3rd generation (3G) mobile phone technology is bringing with it a richer mix of content and providing more services. This further raises the issue of ethics as Vodafone (and other suppliers) can now offer a wide variety of content to mobile phones with this new technology. Naturally, 3G will help the companies to increase their sales revenues. However, Vodafone recognises that it brings additional responsibility. This includes the need to protect young people from inappropriate contact, including violent games, gambling and erotic material.

 Ethical responses

Vodafone's ethical approach drives its response to changes in the environment. Whilst described above in self-contained sections, many issues crossover, e.g. the advent of 3G technology and video content is related to society's concern about adult material reaching under 18s.

Vodafone UK's research has revealed that parents do not know the types of content available via mobile phones. A survey of all adults showed, however, that they believed restricting access to adult content on mobile phones was very important. Together with other UK mobile phone operators, in July 2004 Vodafone UK launched a joint Code of Practice for self-regulation. The Code requires operators to stop under 18s from accessing commercial content classified as being unsuitable for them. Operators must also offer parents the opportunity to apply a filter to Internet access services. When developing this Code of Practice for content, Vodafone gave phones to researchers working for children's charities. The charities could see the sort of content available. They could also check that the restrictions were effective.

Vodafone was the first company in the UK to introduce a network bar that effectively blocks access to all forms of content that has been rated as 18. This bar, called Content Control, was introduced in 2004. This prevents access to 18 rated content for children and young people. It is automatic and the bar is lifted only if customers can demonstrate they are 18 or over.

Vodafone led the UK mobile industry in ensuring that proper restrictions and controls are in place for its customers to prevent access to adult content by under 18s.

While working on the Code of Practice, which is self-regulatory, Vodafone had the opportunity to consider what its ethical stance should be. It could interpret the requirement to block access as having either an:

  • opt in policy - i.e. everyone would be barred from accessing over 18 material and would have to make a conscious choice to receive this content or
  • opt out policy - everyone could access the material and request to have the bar applied to 18 rated content.

Vodafone, through its work with the children's charities determined that an opt in policy was the more appropriate and responsible position to take in the UK. Vodafone seeks to reduce spam text messages by locating their source. Its customers can help by sending these messages to Vodafone on the company's VSpam service. Vodafone also watches network traffic for the sources of unwanted messages. The efforts in this area have led to a very significant fall in customer complaints.

In the UK Vodafone works in partnership with the government, police and others in the industry to help combat mobile phone crime. It also advises customers and the broader community on how to protect their phones and prevent fraudulent use. Actions taken include setting up a register of equipment to block stolen phones. For a number of years, prior to the ban on holding a phone while driving, Vodafone UK has strongly discouraged this practice. The company devised practical actions to help its customers, which included discounts on car kits to allow them to use their phones legally and clear advice on the research relating to the use of mobile phones in cars.

 Conclusion

The mobile telecommunication industry is relatively young, compared to industries such as oil and manufacturing. Vodafone is a leading player in this sector and has grown quickly, like the industry itself. Such a growth presents challenges and the company's approach to ethics guides its continued growth. Ethics are central to the company's development. They guide staff through change.