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Instructor’s Notes on Text Cases
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World Health Organization estimates of HIV/AIDS prevalence (2017)
Country % adult number
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Case 4-6 Making Social Responsibly and Ethical Marketing Decisions: Selling Tobacco to Third-
World Countries
This case is designed to provide the student with real world situations that require corporate strategic
solutions. The case is presented in an international context so students can experience the complexity and
succumb to the seduction of bribery or kickbacks that may go on in international competition, but to
conduct business without resorting to payoffs. There is a price to be paid for this societal mandate,
whether in losses of business opportunities, in allegations of naiveté, or losses to competitors. But this is
the standard set and required of American business standard of honesty (with a known price to be paid for
integrity) that is known to the entire world. The USA has mandated that businesses will engage in free
market competition freely and honestly—and not by the exigencies of expediency. U.S. society has
Instructor’s Notes on Text Cases
The case involves the exportation of cigarettes to Third World countries or LDCs. This is an ethical as
well as economic issue. The case depicts how the more developed and enlightened countries are
CUTTING BACK on cigarette consumption—and finding that there are CLEARLY DOCUMENTED
To capitalize on the opening of markets in Eastern Europe, China, and the potential growth elsewhere,
multinational tobacco companies are investing heavily in the developing world. For example, Philip
Morris has signed an agreement with Russia to help modernize its cigarette industry—$100 million in a
new factory near St. Petersburg with an annual output of 10 billion cigarettes. The company has bought a
factory in Hungary and has licensing deals with state producers in Poland and Bulgaria. In the Czech
Republic, the company has acquired the entire state industry—five factories, 56% of the market and
valued at $400 million. RJ. Reynolds is building a $33 million plant in Warsaw. Similar investments are
being made in China and elsewhere by the major tobacco companies. To fully capitalize on the potential
Western developed world and in many countries in the developing world? Is it ethical and socially
responsible for tobacco companies to expand their reach throughout the world? There is no simple
Instructor’s Notes on Text Cases
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to conclusions with an understanding of the moral implications or consequences of their decisions. The
purpose of the exercise is to ASK STUDENTS TO ARTICULATE WHY THEY HAVE DECIDED AS
THEY HAVE—TO ARTICULATE THE ASSUMPTIONS AND GROUND RULES BEHIND THEIR
STRATEGIC CHOICES.
POSTSCRIPT
The Instructor may want to have the students read: --Bert van de Ven and Ronald Jeurissen,
“Competing Responsibly,” Business Ethics Quarterly, Volume 15, Issue 2, 2005—in preparation for
the case discussion. An excerpt from this article may be interesting to use as a basis for discussion of
the case. “Other ethicists, writing on corporate social responsibility, suggest that intensity of
united against the tobacco industry, and that other countries can also stand up to them,” said Amanda
Sandford, spokeswoman for a British antismoking group, Action on Smoking and Health, in London.
Under European Union rules, the legislation must be formally adopted by EU ministers and will take
effect three years from its publication in the EU’s Official Journal, which is expected in the next few
months. But the law allows further delays of one year for the ban on ads in the press—or until about
Instructor’s Notes on Text Cases
Under the EU directive, any “commercial communication,” direct or indirect, that promotes tobacco
would be illegal. The only exceptions would be so-called point-of-sale displays in places where
tobacco products are sold; publications brought into the EU; and tobacco-trade publications.
Advertising Agencies. Instead, the association says voluntary agreements and self-regulation are the
best way to reach the EU’s health objectives of reducing tobacco consumption. In the U.K., for
example, ads aren’t allowed to feature attractive models, be humorous or show cheerful scenes or
landscapes that imply fresh air. A spokeswoman for the EU’s social-affairs commissioner, Padraig
Flynn, rejected suggestions that the measure would have a domino effect and lead to advertising curbs
and sponsorship.” But the use of internal-market laws, which aren’t subject to unanimity by EU
ministers, has always been controversial. For its part, the tobacco industry contends that advertising is
used to maintain or increase brand market share—not to lure new smokers—and that ads are aimed at
adult smokers only. There is evidence to support the claim that advertising’s impact is mixed. In
Britain, smoking levels have fallen continuously over the past 20 years, although advertising has been
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Tiffany Hsu, Lego Goes to the Girls, Los Angeles Times, August 31, 012, online.
For an update, also see https://www.theguardian.com/lifeandstyle/2018/mar/06/lego-sales-fall-growth-
job-cuts
Case 4-8 Mary Kay in India
This case was written just before the publication of the 16th edition in 2013. In July of that year Mary Kay
1. A useful opening question to students is: “Are any of you familiar with Mary Kay, Inc. and its
products?”
2. Assuming some students say “yes”, then these students might be asked: “Does Mary Kay do
business in India like it does in the United States?”
Questions and Answers
1. What information should be included in a written positioning statement for Mary Kay?
2. How would you draft a formal, written positioning statement for Mary Kay using the information
detailed in question #1?
Answer:
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3. Is Mary Kay a global brand? Why or why not?
“Mary Kay Quits India,” BusinessLine, www.thehindubusinessline.com
Decision will affect 4,500 distributors of the direct selling company
New Delhi, July 24:
Direct selling brand Mary Kay India has wound up its Indian operations citing regulatory concerns and
Instructor’s Notes on Text Cases
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international story.
Case 4-9 Noland Stores Cleans Up its Act
Case Overview
Noland Stores, a large multinational retailer of active-wear for men and women, was currently
embroiled in a dispute as to whether or not it had fulfilled its commitments to a victims of a fire in a
factory of a Chinese-owned supplier, Burka, in Indonesia, Questions of responsibility for subcontractors,
labor conditions in low-wage countries and the “sweatshop” debate all impact the decision the company
must make.
Teaching Objectives
• Examine global supply chain issues of subcontractor responsibility by companies that carry worldwide
brand recognition.
• Explore the possibilities and consequences of multinationals staying or leaving in the face of labor
misconduct allegations in low-wage supplier countries.
• Consider the points and counterpoints in the “sweatshop” debate, helping students to see multiple
sides of this complex issue.
• Analyze Noland’s response to date to the allegations, whether it is likely to be effective.
Study Questions
Q1. What are some points and counterpoints in the debate over “sweatshops?” That is, should manufacturers
A1. The objective of this first question is to generate discussion, but instructor-as-moderator must take care
to not let get out of hand or get too personal to people’s belief systems. Nonetheless, a lively point-
counterpoint discussion would be instructional. For example, one side may point out that closing a
