978-0470639948 Cases Cigarettes

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Cigarette Regulation: Who is Responsible for What?

By Ruth T. Norman

Ruth T. Norman is an Assistant Professor and Director of the Doctor of Business

Administration at Wilmington University in Delaware.

I. Introduction

A. Case Synopsis: This case examines the ethical behavior of the U.S. cigarette industry

over the past fifty years. It also explores how ideas about corporate social responsibility change

over time and how laws are created to address gaps between expectations and behavior. The case

provides a forum for discussing the rights and duties of multiple stakeholders, and demonstrates

the potentially dire long-term consequences of making unethical decisions. Lastly, the case can

serve as a springboard for evaluating cigarette company behavior in developing countries and/or

the behavior of companies that provide offerings which might have negative health effects, such

as soft drinks, snack foods, and fast food.

There are a number of possible key decisions depending on how the instructor wants to

use the case. Several possibilities are:

Should cigarettes be illegal?

What ethical guidelines should companies use to guide product design and marketing?

What should cigarette companies do in the U.S.?

What should cigarette companies do in developing countries?

B. Case Objectives:

To understand how expectations about corporate social responsibility change

To understand how laws change in response to gaps between expectations and behavior

To understand the dire consequences of not behaving in a socially responsible manner

To develop guidelines for ethical product design and marketing

II. Classroom Management

A. Outline for handling this case in a 1-hour class period:

Possible introductory topics (10 minutes):

Ask students whether they have seen old movies or TV shows where the stars were

smoking, and smoking appeared to be glamorous. Is the portrayal of smokers

different in today’s movies? If it has changed, why?

Discuss a recent court case, law, or event relating to cigarettes.

Discuss a recent event in which a company has been blamed for causing childhood

obesity or some other health problem. How is this similar/different from the

cigarette case?

Setting context for the case (10 minutes) – Class discussion

Who is primarily responsible for a teenager’s decision to smoke – the individual

teen, peers, parents, school, church, government, cigarette companies, or retailers?

Why?

Discussion should lead to an appreciation that the individual teen is primarily responsible, but

How ethical or unethical are the actions and behaviors of the following parties in

this case study: cigarette companies, antismoking activists, smokers, politicians,

retailers. Provide examples to support your position.

The cigarette companies will come out as being most unethical, but politicians were influenced

by lobbying money and passed weak laws, retailers sold to minors, and smokers were

Discussion on rights and duties (20 minutes) – full class, small groups, or a combination

Who are the stakeholders in this case?

What are the rights and duties of each?

Who has more important rights – smokers or nonsmokers? Why?

What could the cigarette companies have done to be socially responsible and still

remain profitable?

Now everyone knows that cigarettes are unhealthy. Should people who start

smoking now and get sick be able to sue cigarette companies? Shouldn’t an

individual be responsible for foreseeable consequences of such actions?

OR a combination of these discussions with a 10 minute lecture or discussion on law-making and

Looking forward (15 minutes) – full class discussion on one or more of the following:

Should cigarettes be illegal? Which stakeholders would be impacted by such a law?

What rights must be weighed?

Discussions should include the rights of smokers and the potential impact on government

Identify a consumer product that can cause physical, economic, or social harm.

What marketing constraints should be in place? Should these be voluntary or

regulated? Should some consumer segments receive more protection?

Discussions should probably arrive at a conclusion that some combination of voluntary and

regulated constraints is best. The degree of constraint should be influenced by factors such as the

Should governments levy excise taxes on other products that can have negative

health impacts, such as soft drinks? Why? If so, what products should be taxed

and how high should the tax be?

There are no “right” answers on this one, but it should be interesting. Do we want government to

Concluding questions (5 minutes):

What did you learn from this case?

How might you apply these insights to the business world?

Another option in teaching this case is a more in-depth stakeholder analysis of the issue’s

evolution.

Mitchell, Agle, and Wood (1997) [Ronald K. Mitchell, Bradley R. Agle and Donna J.

Wood, 1997, Towards a theory of stakeholder identification: defining the principle of who and

all three of the following attributes: power to influence, legitimacy of their claim and urgency of

their claim.

Stakeholder analysis:

Was the cigarette industry considered to be a normal business in 1963?

For the most part, yes.

Small excise taxes.

Truth in advertising restrictions similar to other businesses.

In 1963, what position did government hold as a tobacco/cigarette industry stakeholder?

Government is not a unilateral entity with homogeneous stakes.

Mostly dormant or nonstakeholder.

What parts of government had limited legitimacy in 1963?

FTC – truth in advertising.

State & fed – small excise taxes.

What parts of government had urgency, but limited legitimacy & power in 1963?

What changed in 1964?

Legitimacy & urgency increased due to the Report of the Surgeon General.

Evidence, living longer, smoked long enough to see effects.

Industry response? How ethical?

Filters; low tar & nicotine.

A new stakeholder group: Nonsmokers

Did people view themselves as nonsmokers? Was this an important part of people’s

identity? (Do we generally define ourselves by the things we don’t do? i.e. – I’m not a bungee

cord jumper.)

Potentially very large group, but did they perceive themselves as a group and were they

organized?

What are some examples of Nonsmokers gaining power?

Smoking restrictions by FAA, public transportation, government as employer, some

states.

How did anti-smoking activists gain enough power & legitimacy to reduce or eliminate

smoker rights?

1) Evidence of harm to nonsmokers (built on public awareness of harm to smokers & harm

from air pollution; evidence somewhat weak).

2) Cumulative construction of the smoker as deviant

B. Other References and Resources

Web sites

Campaign for Tobacco-Free Kids: http://www.tobaccofreekids.org/index.php, accessed

8/31/10

World Health Organization, Tobacco Free Initiative: http://www.who.int/tobacco/en/

WHO Report on the Global Tobacco Epidemic, 2009 (Geneva, Switzerland: World Health

Organization, 2009), available at

http://whqlibdoc.who.int/publications/2009/9789241563918_eng_full.pdf, accessed 8/31/10.

World Health Organization’s Smoking factsheet:

http://www.who.int/mediacentre/factsheets/fs339/en/index.html, accessed 8/31/10.

The Master Settlement Agreement: http://www.ag.ca.gov/tobacco/pdf/1msa.pdf, accessed

8/31/10.

Newspaper Articles

N. Gregory Mankiw, “Can a Soda Tax Save Us From Ourselves?”, New York Times, June

6, 2010.

Roni Caryn Rabin, “Should Your Neighbor Be Banned From Smoking?”, New York

Times, June 22, 2010.

Duff Wilson, “Goal for High School Smoking is Unmet,” New York Times, July 9, 2010.

Duff Wilson, “Flavored Pellets Are Denounced As a Lure to Young Users,” New York

Times, April 19, 2010.

Duff Wilson, “F.D.A. Panel Will Examine Menthol Cigarettes,” New York Times, March

30, 2010.

Duff Wilson and Julie Creswell, “Where There’s No Smoke, Altria Hopes There’s Fire,”

New York Times, January 31, 2010.