BUSINESS ETHICS AND CORPORATE SOCIAL RESPONSIBILITY

Case Study:

Pharma-Centres Limited is a company which operates a chain of 12 pharmacy stores located in

various cities and towns throughout Northern Ireland, each trading under the name of Pharma-
Centre. In addition to prescription drugs, the stores sell a range of health and beauty products,
including perfumes, soaps, toiletries and cosmetics. The business gained a good reputation with
customers since it started trading some years ago, through increasing customer awareness of
its ethical policies and corporate social responsibilities, in the conduct of its business.

Examples of such policies include:

• Sourcing beauty products from suppliers using natural raw materials and herbs.
• Recycling of all packaging throughout the business where possible.
• Sourcing of products consistent with a ‘fair trade’ ethos.
•Use of energy efficient systems in retail outlets.
•Conducting and responding to environmental impact assessments.
•Sourcing perfumes and related products which have not been tested using animals.
• Greater prominence given to organic product lines (e.g. shelf space) in retail outlets.
•Acting in a socially responsible manner.
The relevant stakeholders within the business are confident of Pharma-Centers Limited
continuing profitability into the future.

Activities:

 Explain what is meant by the terms‘business ethics’ and‘corporate social responsibility’.

 With reference to Pharma-Centres Limited, explain how an understanding of various
ethical issues can contribute to the competitive advantage of the business.
 Evaluate the extent to which Pharma-Centres Limited has been successful in meeting it’s
stated ethical and corporate social responsibility objectives.
 Outline the benefits and drawbacks of pursuing an ethical policy.
 ORGANISATION DESIGN

Case Study:

Matt owns 10 mobile phone shops located across Northern Ireland. Although each outlet trades
under the same name, Chatz, they are all very different. This is because Matt has always
allowed the manager within each shop to have complete control over their respective outlet.
Therefore, each of the stores has its own unique character in terms of store layout,
presentation and location. They stock different brands of mobile phone and accessories and
buy from different suppliers. Each of the stores is promoted locally.

Whilst this approach has served the business well in the past, Matt is planning to appoint a
Purchasing Manager to take responsibility for stock purchases for all outlets. Increasing levels of
competition from national supermarkets and changes in consumer tastes have convinced Matt
to centralise the decision-making process within Chatz. It is anticipated that many of the
current responsibilities undertaken by store managers will be transferred to Head Office within
the next 3 months. In considering the appointment of a Purchasing Manager, Matt is conscious
of the need to widen the ‘span of control’ that this individual would have, to include
supervisory duties related to successful management of stocks and the warehouse operations.

Activities:

•Explain what is meant by ‘organisational design’.

• Explain two ways in which Matt could design the organisation structure of Chatz.

•Explain what is meant by the term ‘span of control’.

• Analyse the implications of adopting a ‘flat’organisation structure.

• Evaluate two different types of organisation structure which Matt could adopt within Chatz in

order to ensure the future success of the business.

 POWER AND DISTRIBUTION OF AUTHORITY – CASE STUDY

Summary

Many founders and long-term executive directors find it difficult to move on even when it is
clear that their departure is overdue. This reluctance to surrender leadership is natural when
people invest a substantial amount of time and effort to ensure the organization`s success. Yet,
to survive, an organization`s leaders have no choice but to foster conditions that will enable a
smooth transition when they move on. Perhaps the most vital condition of all is delegating
responsibility to others early in one`s leadership role.

The Background

Let`s see how this might work in practice. Eight years ago, John Davis founded a nonprofit
organization whose mission is to provide discussion forums for environmental leaders. John
operated solo for the first three years, and then received a substantial grant from a local
foundation that enabled him to hire two additional staff members. It soon became evident that
John did not want to share the responsibility of running the organization with these staff
members. Instead, he preferred to view them as administrators who would carry out his
instructions. Over the years, the size of the organization grew to over ten staff members, and
John began to experience fatigue from trying to manage so many staff. As John contemplated
his departure, he faced the sobering realization that there was no-one who could reliably
replace him.

The Solution

When key employees in an organization are not given an opportunity to assume leadership, this
can have a number of negative impacts on the organization. In some cases, it may result in
highly committed and talented employees leaving the organization because they cannot grow
professionally. In other cases, these employees may fall into a rut, and lose their confidence or
ability to show leadership in tough situations. In addition, when the time comes for the
executive director to move on, there is no successive generation of leadership that can take
over his/her responsibilities.

Lessons Learned

One way to prevent these impacts is for the board and executive director to agree on
measurable goals that include staff development and delegation of authority. This ensures that
employees are given increasing responsibility and mentoring to grow into leadership positions
before it is too late.
 TEAM BUILDING – GETTING ON THE SAME PAGE

CASE STUDY:
The Need: A globally-known car maker needed its dealerships to freeze sales during a long
weekend so that the system could be overhauled to meet new tax regulations. The dealerships
met the request with a hostile and angry refusal. The company was facing an impasse on a
national scale, complications on every side, and a non-negotiable deadline for tax compliance.
The Solution: Recognizing that only the senior management saw an urgent need for resolution
of the impasse, Team Results asked the company to send key managers and opinion leaders
from the three most-affected departments – dealerships, finance and I.T. – to a 2½-day
customized program at a neutral location. Focusing on the need to emerge with practical team
strategies for an apparently impossible project, the group managed a simulated project
together which accurately reproduced the challenges of getting a unified result across major
cultural differences and legitimately different business priorities. The goal was to develop a set
of practical, tested and shared strategies to get a complicated job done on time – even when
compromise and sacrifice were required by all.
The Results: Using negotiation strategies developed on the program, the managers and key
opinion leaders returned to work and won support in their work areas for the impasse-solving
strategies also developed on the program. The tax switchover happened on time and without
excessive compliance costs, and the dealerships implemented agreed stop-gap measures which
allowed trading to continue. Though all sides retained their legitimately different business
pressures, their now-unified strategies and practical discoveries about trust and teamwork
enabled this massive tax change to be completed on time and with no loss of goodwill.
 JOHNSON & JOHNSON FINDS THE RIGHT FORMULA – TEAM BUILDING

Johnson & Johnson Finds the Right Formula In September 2002, Team Results began
negotiations with Johnson & Johnson’s China corporate headquarters in Shanghai. The
challenge was to provide significant productivity and leadership benefits for the twenty senior
members of the company’s New Product Development Team. Working as a single unit with its
Asiapacific partner, Pinnacle Associates Asia Pacific (PAAP), Team Results held detailed
discussions with the management of Johnson&Johnson in order to focus on areas of greatest
business benefit. The practical challenge was to find an innovative way to do this that rose
above the usual and the mundane, that delivered real-world results, and that was not based on
theory, the classroom and the whiteboard alone. Negotiations proceeded in both English and
Mandarin, included site visits, and took full advantage of Team Results’/PAAP’s large
permanent staff and fully developed office facilities in downtown Shanghai. Once the planning
was complete, and all participants had also been consulted, Team Results proceeded with a
two-day “Simulation”. Members of the New Product Development Team arrived at a specially
selected venue near Shanghai in the early evening. Starting with very little idea of what to
expect, team members soon discovered that they were engaged in a Simulated, hugely
enjoyable but very demanding project that accurately focused high demand on their abilities to
manage communication and risk with high trust; control diversity and potential conflict; lead
real-world proaction and responsibility in the face of a challenging task; and direct, coach and
motivate high performance. As the Simulation proceeded, team members unified around key
team and leadership strategies that created optimum results in these key business areas, and
then tested and refined these strategies against the project. As the Simulation moved into its
second full day, team members took charge of their own process and used it to make
discoveries about the most effective ways of handling the leadership challenges that faced
them. These discoveries were then refined, tested and documented for use in the business as
the Simulation concluded. “I’ve been delighted by their progress”, comments Assistant
Manager Recruitment and Training, Mr Edward Sun. “This is a much more effective method
than others we have tried before.” Adds another team member, “I was amazed by what we
could do together. It was the best development program I’ve done – I learned so much.”
Follow-up and measurement with Team Result’s proprietary Team Dashboard® instrument
indicate that the immediate benefit of the program has been large, and that business benefits
are likely to continue. “It’s quite clear just from observation that this program has been a huge
success,” concludes Mr Xu Gang, Assistant Director Human Resources. “I have been very
impressed, and would be more than happy to work with Team Results in the future.”
 INTERPERSONAL SKILLS
CASE STUDY:
Jennifer is the Accounting Department manager for a regional chain of convenience stores.
Jennifer is an accounting “superstar.” She has a bachelor’s degree, recently passed her CPA
exam, and is really exceptional in her accounting knowledge.
She was so good, in fact, that she was promoted to department manager in her previous
company after only two years on the job. She has been at her current company for ten months.
She has implemented two accounting procedural changes that have streamlined the work and
resulted in cost savings for the company.
She reports to the CFO, and he is concerned about Jennifer, despite her obvious talents. There
is no denying that she has had a positive impact, but Jennifer is not fitting in so well. Jennifer is
a poor communicator and seems to have alienated quite a few of her peers and her employees.
She is often aloof and distant, and her usual way of motivating performance is to simply dictate
what will be done and expect compliance with her orders. She has good ideas but has little
ability to present them well or to work as part of a team.
You are Jennifer’s CFO, and you believe you can coach Jennifer.
How would you approach her and what would you say?
What issues would you work with her on?
How would you hold Jennifer accountable for improvement on the issues you identified?
The CFO could:
• Make an appointment with Jennifer to talk privately
• Offer specific and detailed feedback and observations about what he/she has seen that is of
concern. Be direct but kind;
• Explain why her methods may be of concern and the impact they are having on others
• Identify a maximum of three change goals to which Jennifer will agree
• Set specific behavioral objectives and ask her to document what she does in regard to each
goal or Agree to meet again (weekly?) to discuss progress
• Consider assigning Jennifer an in-house mentor in another department if available or securing
the services of an outside coach to help train her in and encourage practice of human relations
skills
• Let her know that her performance appraisals will reflect how she is performing in her
leadership role in addition to her accounting role and Be a good role model for building
teamwork and collaboration