Deck 9: Ethics, Corporate Social Responsibility, Environmental Sustainability, and Strategy

Question 1

Ikea is widely known for its commitment to business ethics and environmental sustainability. After reviewing the About Ikea section of its website (www.ikea.com/ms/en_US/about_ikea/index.html), prepare a list of 10 specific policies and programs that help the company achieve its vision of creating a better everyday life for people around the world.

Answer 1

Business ethics is the phenomenon in which the moral principles and standards are applied in the decision making process and other business related activities. There is no specified rule to be ethical in business, any dishonest activity can be considered as unethical and immoral. Business people should also be aware of their social responsibility and environmental sustainability.
Company I is well known for its ethical behavior and environmental sustainability in its business. Its vision is to create a better future and present for the people around the world with its policies and programs being reviewed and listed below:
• It asked all its customers to use energy saving bulb instead of ordinary bulb. This shows the company's commitment towards natural sources of energy and environmental sustainability.
• It supported several programs which were intended to improve the life style of the children who are in need in terms of health, human rights and education.
• It conducted annual soft toys campaign through which the customers contributed their share to improve the education of millions of children in Asia and Africa.
• It made partnership with corporate like WF, SV so that it could accomplish more on social and environmental improvements.
• It donated thousands of solar lamps which enabled children to do homework even if they don't have electricity.
• It wanted to offer good quality products for the money its customers pay and to be moral in its business activities. For example it sold coffee in its stores which is quality certified and will meet quality and social standards.
• It developed environmental policies which stated that it will be concerned about the environment. It will stop doing all activities which cause damage to the environment. As per its policy it banned the usage of tropical woods so as to prevent deforestation.
• It announced that its long term ambition is to make of renewable energy for all its firms and to become an energy efficient organization.
• IT launched supplier code of conduct which covered both environmental and social standards. It involved a children's rights project which provided quality education to children in India.
• It took efforts to minimize child labor and asked all its suppliers contractors to stick on to ILO standards.

Question 2

Is your company's strategy ethical? Why or why not? Is there anything that your company has done or is now doing that could legitimately be considered as "shady" by your competitors?

Answer 2

Ethical strategy of the Company
For a company to be ethical it needs to conduct a moral behavior to its customers, suppliers, employees, shareholders etc. Managers must adhere to some general norms which are right so as to execute ethical strategy. Let us consider a company HW and analyze whether its strategy is ethical.
Company HW is a popular retailer which deals with trendy clothing, jewelers, apparels etc. It has its own principles, strong values and policies in business. So as to establish its principles and policies it introduced a code of conduct and instructed all employees, suppliers, distributers to adhere with it.
It wanted to provide good quality products to the customers for the money they give. For this it became very selective in choosing the manufacturers and designers. It provided training to its employees to keep them updated about the product it offer and also it was keen in the health care of the employees.
It believed that only if it could make its employee satisfied it can make its customers too. If a company deals with unethical practices and stakeholders will be the sufferers. So it was also committed to its stake holders.
Ethics maintained during business Operations
In the competitive market competitors are looking for a small chance to overtake the other company. So controversies occur immediately if any lapse happens for our side. These controversies may lead to a negative impact on the company and others will take it as competitive advantage.
Company HW didn't dealt with any such activities which make the competitors to take advantage. Some of the small issues like insufficient staffing during festival seasons, wage problems etc have certainly occurred. The company also took action to rectify these problems as soon as it became aware of it. It didn't want anyone to suffer because of its unethical activities.
Competitors will spread such problems as big controversies which is always a part of business. The company also took some steps to tackle these false controversies through arranging press meet etc.

Question 3

Prepare a one- to two-page analysis of a recent ethics scandal using your university library's access to LexisNexis or other Internet resources. Your report should (a) discuss the conditions that gave rise to unethical business strategies and behavior and (b) provide an overview of the costs resulting from the company's business ethics failure.

Answer 3

Some of the situations that lead or drive the managers or business people to do unethical behavior are selfish interests, desire to make money, when heavy pressure is put on managers to meet organization goals, when a company give importance to profitability and business performance rather than ethical behavior. The cost of ethical misconduct will be huge; it may be visible costs or invisible costs. Some of the costs for immoral conducts are Government may impose penalty for its misconduct, company can lose its reputation, employee productivity may get lower etc.
Some of the recent ethical scandals are considered and the reason for unethical behavior and its costs are discussed.
An executive of retailer WM used company's money and gift cards and purchased personal items. He also performed unethical activities by filing false tax returns. These unethical activities are the result of his selfishness and greediness. The costs of his unethical activities were very high. He was sentenced to five years imprisonment and also sentenced to pay penalty which was not affordable. In 2001 some women filed case against WM for showing discrimination in the payment to its employees. When court got significant proof for its discrimination it ordered WM to pay compensation. Here WM filed to behave ethically by showing discrimination in its payment because of some personal interests. As a result of this unethical behavior the company lost its employee productivity and also a negative image in the market.
Some of the executives of a financial company A made some manipulations in the company's financial statements and artificially boosted company's stock price. This unethical activity was because of two reasons. One is company's pressure on the executives to gain more market share and the second one is their personal interest to make more profits. It made them to be in imprisonment for years and had to pay huge amount as penalty. The CEO of BCS tampered the financial records of stock options that the company offered. He was also sentenced to imprisonment and to pay penalty for his immoral activity.
From the above cases it has been clear that immoral activates or unethical behavior in business may gain profit in the beginning but it will cost higher if it gained public notice and can affect company adversely.

Question 4

In what ways, if any, is your company exercising corporate social responsibility? What are the elements of your company's CSR strategy? What changes to this strategy would you suggest?

Question 5

Based on the information provided in Concepts Connections 9.2, explain how Burt's Bees' CSR strategy has contributed to its success in the marketplace. How are its various stakeholder groups affected by its commitment to social responsibility? How would you evaluate its triple-bottom-line performance?

Question 6

If some shareholders complained that you and your co-managers have been spending too little or too much on corporate social responsibility, what would you tell them?

Question 7

Go to www.nestle.com and read the company's latest sustainability report. What are Nestlé's key environmental sustainability policies? How do these initiatives relate to the company's principles, values, and culture? How do these initiatives help build competitive advantage in the food industry?

Question 8

Is your company striving to conduct its business in an environmentally sustainable manner? What specific additional actions could your company take that would make an even greater contribution to environmental sustainability?

Question 9

In what ways is your company's environmental sustainability strategy in the best longterm interest of shareholders? Does it contribute to your company's competitive advantage or profitability?