Boycotts and their Economic Consequences

economic boycotts

A quick note on boycotts. As a source of consumer power and a mechanism for social control over companies, boycotts have the ability to alter the behavior of companies on how they execute their manufacturing processes.

In recent years, there has been a proliferation of greater public attention in corporate social responsibility. For example, the NAACP recently accused American Airlines of racially discriminating against African American passengers. Immediately, AA called a meeting with the NAACP.

With users constantly connected to social networks and a dynamic news flow, boycotts have a greater capacity for coordination and propagation for the general public to influence the value of a particular brand.

Boycott, objectives and economic consequences

Boycotts have gained presence as an effective protest action, by organized consumers, to penalize one of the most important elements for any company, the income generated by sales.

They are an extreme case of a wider category of consumer behavior, in which the quality/ price ratio of a product is not judged against the competition. In this case, social and ethical issues prevail and influence individual purchasing decisions through collective coordination.

A boycott generates a direct victim, the company itself. However, there are also collateral victims of the boycott of the company such as supplier companies, and the direct and indirect jobs that derive from the economic activity of the entire manufacturing process.

Consumers are also hurt. By prioritizing an ethical question or origin related to the process of manufacturing a product, they must exercise a substitution action in the choice of a new product that may not fully satisfy the needs in terms of quality/price as the product they reject.



Boycott the product by its origin

One of the most curious cause of boycotts is that they can occur because of the origin of the product. In this case, the productive process, the quality of the product, or the actions of its managers are not being punished, but consumers are organized to punish a brand for their country or territory of origin.

In this case, the company offering the product or service can not immediately meet the demands of an unhappy and organized public that is punishing their sales. The only decision that can be undertaken is the transfer of the productive process and the head office, decisions with a high cost that has a difficult execution in the short or medium term.

This is a particularly particular case since consumers try to discriminate a product or service due to the political context of their territory or their origin.

The boycott for the origin of the product leads to the stigmatization of the brand, for actions that have nothing to do with the product. I say all this to say: the strongest weapon that the people have against companies is hit their bottom line.

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