AB Sugar Business Environment - Essay Example

ISSUE MANAGEMENT Identify the issue define the issue a. do you accept the way in which it is presented (frame) b. if not, what is a more useful way to define/frame the issue – after explaining WHY this is more useful, use this definition for the rest of the issue management exercise An issue refers to a situation that needs addressing and that raises concern ( Project Mnagement Advisor, p1). AB sugar, a principal subsidiary of (Assorted British Foods) ABF, is a major contributor to the obesity epidemic. Issue management is all about strategy. It is in this way that issues will be resolved timely to prevent the issues from growing out of proportion ( Project Mnagement Advisor, p1). The ever-changing business environment has rendered the traditional methods of planning used by organizations to be obsolete and ineffective. Now continuous strategic planning has replaced annual planning previously used (Albrecht, p2). For example with the development of the recent accusations against AB sugar, there is a need to strategize. Strategizing will involve analyzing the eight business environments in which the company operates. 2. Analyze the issue a. Diagram its causal sequence b. Describe the context i. Review the eight ‘environments of business.’ 1. Customer 5. social 2. Competitive 6. Political 3. Economic 7. Legal 4. Technological 8 geophysical Customer environment Here we analyze the people who are the end users of the product or the people we do business. Their identities, consumption behaviors, habits, needs and even their situation in life. The company AB sugar deals with a complex customer environment that includes other businesses, the government, groups, and even the individual himself (Albrecht, p6). All these people represent AB sugar’s patrons. Analysis of the consumer environment may be demographically in terms of gender, age, and their buying habits. How health conscious are they and what is their attitude towards institutions and companies like AB sugar (Albrecht, p5). Competitive environment Here the issue of the customer also comes up. Whom are we competing? We should aim at identifying their weaknesses, their current and previous behaviors and get to know their motives. Interaction between the potential competitor and the customer you are both aiming to do business with is an issue to look at. What are the products they are bringing into the market (Albrecht, p6)? For example, the players, in this case may be other companies in the same line of business, sugar, and who may be influencing the customer to do less business with you (Albrecht, p6). Economic Environment The economic environment is complex and volatile. In this case, we look mainly at the market itself. What are the latest trends, prices, and even costs? What is the market dynamics generally? AB sugar needs to be up to date with the changes taking place in the market in order to identify changes it may benefit from or those it needs to change for it to benefit (Albrecht, p6-p7). Technological Environment What are the new technologies developed, what are the trends in technology for example in production or marketing or what are developers introducing. The technological environment cuts across the larger business environment affecting the customer, the competitor, and even the economic environment. Which new products are developing and how are they affecting our business (Albrecht, p7). Social Environment In this environment, the main players are culture, beliefs, preferences that affect behavior. How do these social issues affect the consumption of AB sugar products? What is the attitude towards sugar? What is the role of the media and the various groups who have an interest such as the medical practitioners? Analysis of the Corporate Social Responsibility of the company is done here. That is how do people feel about our products (Albrecht, p7)? Political Environment The government is the big player here and how its activities and processes influence the operations of ten company. For example, they may be taxes, policies, or expenditure on certain things such as medical care (Albrecht, p8). Legal Environment Laws that govern the field in which the company operates are analyzed. These may influence filing of lawsuits against AB sugar by those affected by obesity (Albrecht, p8). Geophysical Environment The geophysical environment refers to an environment where the business operates. Location and access to the customer and resources available to the company are critical here. For example, the environment in which AB sugar operates in consists of health conscious individuals and a society alarmed by the increasing occurrences of obesity. The environment is critical to the survival of the business (Albrecht, p8). ii. Which ones of the above appears to be the most appropriate for understanding the issue? Why? 1. HINT: There is never just one business environment that is acting on an issue and because all these business settings are interrelated, they are all affected. BUT two or three situations will appear especially relevant or problematic – they are the appropriate context for understanding the issue To appreciate the framework of the issue that AB sugar is facing we focus on the larger scopes of the business environment that AB operates in and that are critical to accepting the problem. These are the economic, social, competitive, customer and the legal environment. The economic environment in which AB sugar operates is the key factor to understand recent losses, as well as falling share price. This is because of changes in the economic environment. This is because of a pound that is getting robust and the flagging sugar prices in the EU that have fallen by over 40% (Denton, p1). The other area of concern is the social and customer environment. Concern is growing over people in the US who are obese. According to research data, for example, one out of every three adults is obese and one in every six adolescents is overweight ( National Institutes of Health, p1). The social environment comes to play in the form of alarms raised in the social circles. The low cost of food, marketing trends, and even income of the household are involved in causing obesity. The competitive and legal environments are the other two situations of importance. Lawsuits against AB sugar as the cause of obesity or even individuals blaming AB sugar for their obesity may file lawsuits. The competitive environment may include the other competitors in the sugar industry being the orchestrators of the recent allegations. 3. Identify HOW the each of stakeholders will be affected by this issue and identify what each group wants the company to do about it 4. Will any of these groups seek to form a coalition with each other to act against the company a. Which ones with group together b. For each, what will they want the company to do HINT: For most issues there are multiple coalitions, not just one, so you will probably have 2 or 3 coalitions for any given issue Stakeholders make seek and make alliances with several coalitions A coalition as discussed in the book organizational behavior describes a situation where like-minded parties come together to pursue common interests (Hitt et al, p390). In the case of AB Sugar, coalitions are a most likely situation. For example, the shareholders may enter into a coalition with the employees to change the management as in the case of Morgan Stanley firm (Hitt et al, p390). They may want to change the management to improve on the value of their shares or to grow the company instead of downsizing. The customers may also enter into a coalition with the local community and the civic societies. They may want the company to lobby against products from the company that causes obesity. The national and local government may also form a coalition. The creditors and the suppliers may also form a coalition. The shareholders employees and the customer who may want the company to continue production for consumption on the part of the customer and continuity and profit on the part of the employees may also form an alliance. The next stakeholder is the Sugar industry itself, and the next follows the clients and the civic societies. 5. Rank order the importance of each stakeholder group and coalition in terms of whether the company needs to consider that stakeholder and stakeholder needs when addressing the issue a. HINT: Rank each stakeholder group separately and then add the coalitions into the ranking – the company may want to ‘divide and conquer’ so it needs to know where to divide In terms of stakeholders, the shareholders come first. Shareholders are affected by both the reduced share price and profit as well as an accusation that the company is the lead cause of obesity. The next shareholders who rank in terms of importance are the employees who stand to lose in both situations followed by the creditors and suppliers. The local community also ranks here followed by the local and national government and lastly the planet itself. In terms of coalitions, the coalition between the shareholders and the employees requires most attention. These two joined have a lot of power in deciding the future of the company. The customer the civic society and the local community come second with the potential to influence the company through product sales. They may come together to curtail the influence consumption of the company’s products that may eventually drive the company out of business. The creditors and suppliers’ coalition comes almost last with little influence followed by the local and national government. 6. Generate at least three VIABLE business options that address the issue AB sugar may decide to venture into artificial sweeteners and other sugar substitutes to replace sugar. AB sugar should take the initiative to outlay the harm that sugar in their products may cause. An example is “Excessive consumption of sugar is harmful to your health.” AB sugar should join hands with other stakeholders in the campaigning and educating the people on the various side effects of excessive sugar consumptions such as obesity and diabetes. 7. Generate consequences for each option - MUST generate consequences for company and industry (industry includes competitors). Then generate options for the top 4 in your rankings – if coalitions were named in your top 4 rankings, then you must look at each member of the coalition separately and collectively – coalitions fall apart if individual needs are not met, even if the group’s needs are met Option 1 Option 2 Option 3 Short term consequences for the company Change in taste and quality of their products hence hesitation when buying the products. Reduced profits Increased production cost that will affect the profits Operation cost that will be an added expense Long term consequences for the company More demand for their products hence improved profits. Same graph of continued profit. Consumer appreciation and support for their products. Short term consequences for customers Change in the taste of the products Customers will shun the product. Customers will take it as a marketing strategy. Long term consequences for customers Appreciation of the products because of the health precautions taken There will be an appreciation for the valuable health information. They will come to appreciate the valuable health lessons. Short term consequences for Shareholders The short-term losses by the company after change to artificial sweeteners Hesitation of the customer in purchase leading to losses Critiques by the public and stakeholders as a marketing strategy Long term consequences for Shareholders Profits that the company will make, in the long run Continued profit making. Appreciation of the products hence continued purchase resulting in benefits. Option 1 Option 2 Option 3 Short term consequences for the industry (includes current & potential competitors) Demand of their products Critiques by stakeholders for lack of cautionary information on products Critiques from the public and stakeholders on their lack of participation Long term consequences for the industry High demand for AB products because of their healthiness A shift towards artificial sweeteners A change towards the display of the cautionary information, which will benefit them Participate in the campaigns hence support from the public, which will help the company. Short term consequences for Employees Training on the use of artificial sweeteners and change in their normal production process Salary cuts to cater for the increased operating expenses. More work which will be hectic and requiring more time. Long term consequences for Employees They get to keep their jobs after the company remains in business. Job safety and better compensation Job security and pride in working for a corporation appreciated by the public. Short term consequences for Creditors The company may take longer to pay back. More demand for loans to cater for increased expense More demand for loans to cater for the campaigns. Long term consequences for Creditors More loans to cater for the shift hence higher returns in terms of interest rates. The lenders will earn more interest Higher interest rates Short term consequences for Suppliers Segmented demand for products as the company adjusts. Inconsistent demand for products Inconsistent demand for various products supplied Long term consequences for Suppliers Continued supply of products Continued supply of products More consistent demand for products Short term consequences for The Planet A change in taste of the product Hesitation or fear in purchasing the product. They will think that it is a marketing strategy Long term consequences for The Planet Healthier population Reduced consumption leading to a healthier population Benefit from the information supplied. Option 1 Option 2 Option 3 Short term consequences for Local Community Change in the taste of the product. Hesitation in the purchase of the products They will think it is a marketing strategy. Long term consequences for Local Community An improved state of health Appreciation for the cautionary measures taken Long-term satisfaction and a healthier community Short term consequences for Local Gov. Reduced revenue Reduced revenue due to reduced profits Criticism from the public for involvement in marketing strategies Long term consequences for Local Gov. Increased and constant revenue stream. Enhanced and stable revenues Revenue in the long term in form of taxes Short term consequences for Nat’l Gov. Reduced revenue Reduced revenue Critiques from the public on involvement Long term consequences for Nat’l Gov. Increased revenue and a healthier population Better health due to information supplied and stable revenue streams. More revenue from taxes and a community benefit. Short term consequences for Civic Societies Improved health and productivity An improved health of the population Critiques by the society for supposed involved in marketing strategies Long term consequences for Civic Societies A healthier population, in the long run Reduced obesity claims. The created awareness of the public 8. Based on your analysis of the short and long-term consequences for your company, which option is the company MOST LIKELY to select? Explain why. Option 2 is the most likely to be chosen which will be to outlay some information on the harmful effects that may come with the excessive consumption of sugar and other products. Support for this option is evident by the direction that AB sugar has already taken of fighting sugar critics who blame the rise in obesity on sugar. According to Dr. Julian Cooper, the head of science at AB sugar, the targeting of sugar as the sole source of calories is not correct. Calories come from a wide array of foods consumed. The result was a launch in their ‘Making sense of sugar’ website to debunk myths surrounding sugar health and obesity (Pendrous, p1). Choosing to venture into artificial sweeteners would not solve the problems due to environmental concerns that raised because of their production. These artificial sweeteners have adverse health effects on pregnant women too (Scientific American :Sugar vs. Artificial Sweeteners, p2). 9. Using the option you believe your company is most likely to select a. Define the moral problem that might arise from implementing this option – the moral problem usually starts with BUT IS NOT LIMITED TO the impact the selected option will have on each stakeholder group and/or coalitions Selection of the option to print cautionary information will affect differently across the shareholders. The customer, for example, will benefit from access to information that excessive consumption of sugar is not good for the health. If appreciated, this information will go a long way in reducing the cases of obesity and promoting a healthy population. The shareholders will benefit from continuity and returns on their investments. Printing this information on the company’s products will mean more appreciation for the products and an improved customer confidence in their products, which consequently results in profits. The coalition between the creditors and suppliers will also benefit. For example, restoration and even a potential improvement of their revenue streams. The local and national government will also benefit in terms of revenue. They will also benefit from a more productive workforce that is healthy, and they will benefit from reduced costs of health care provision. The employees will also benefit in terms of employment as opposed to shutting down the company or downsizing. b. Using the option you believe your company is most likely to select, thoroughly explore the option from three of the following ethical principles (refer to the assigned reading about ethical reasoning to make sure you are using the principle correctly (HINT: you will need to include a citation, including page number in your answer) i. Categorical imperative v. Might equals right ix. The Rights Ethic ii. Conventionalist ethic vi. The Organization ethic x. The Theory of Justice iii. Disclosure rule vii. The Principle of Equal Freedom iv. Doctrine of the mean viii. The Proportionality Ethic Disclosure Rule This rule requires that the decision maker in this case AB sugar to evaluate his feeling if there was a broadcast of the decision to print cautionary information to the people. This option would be welcome on the part of the civic societies the local, national government, even the employees, customers, and the industry at large. This would portray the company as a transparent company that has put the interests of the customer and the planet before its profits. This would boost customer confidence and boost its image (Mcgill, p5). Categorical Imperative This concept developed by Emmanuel Kant requires that when an individual makes a decision it should be suitable and acceptable to all parties who face the same situation. If universally applied then it meets the requirement of a categorical imperative. In AB sugars case, the decision to print cautionary information on all of its sugar products meets the requirement of a categorical imperative. Other companies in the sugar and related industries should adopt the same decision. This decision would remove the blame from the manufacturing process to the excessive consumption process that is the cause of obesity (Mcgill, 4). The Organizational ethic This principle emphasizes loyalty to the organization. In this case the that the decision that an individual representative of the company takes be subordinate or represent the interest of the organization itself and its values (John F steiner, p10). In this case, AB sugar has been in the sugar industry since 1861, therefore an exit from the industry is not an option (AB Sugar). Printing of the cautionary information would be in line with keeping the company in the sugar industry. 10. Based on your assessment of these ethical ramifications of the most likely option – ethically, is it the right thing to do? Why? Yes, ethically this is the right thing to do. Basis of ethics is on the principles of doing what is right or good (Hitt et al, p92). The decision to print cautionary information is ethically correct. To all stakeholders and especially the customers who are most affected. 11. What do you believe will be the financial implications of implementing this option? a. What are the costs incurred by the implementation of this option? b. What are the intended benefits of this option? c. How will this option affect profit margins in the next year d. How will this option affect profit margins in the next three years? The cost implication will be twofold. First, the company will have to change their packaging to incorporate the cautionary message. Second, the company will have to incur expenses in the marketing to spread the sugar awareness information. The option intends to debunk myths that sugar is the cause of diabetes and improve the image of the company by portraying it as a transparent company. The other benefit is to keep the company afloat and prevent losses. Margins after implementation of this option will drop further due to the added expense. Margins will improve in the end. This increase in margins will be because of the regained confidence in the company. References National Institutes of Health. Overweight and Obesity Statistics. October 2012. 13 may 2015. Project Mnagement Advisor. What it is: Develop Issue Management Strategy . 15th march 2007. http://www.pma.doit.wisc.edu/initiate/6-3/what.html. 13 may 2015. AB Sugar. About Us. 2012. http://www.absugar.com/About-Us/Sugar. 14 May 2015. Albrecht, Dr. Karl. The Future isNo Place for Sissies: Eight Super Trends You Must Master to Suceed in Business. Karl Albrecht International, 2011. Denton, Jane. "Primark sees sales rise by 15% as it prepares for US expansion but owner AB Foods hit by weak sugar prices." 21 April 2015. This is Money. 13 may 2015. John F steiner, George A steiner. Business, Society and Society : A Managerial Perspective. 2013. Document. Mcgill, Michelle A. Ethical Theories: Consequentialism, Deontology, and Virtue Ethics. 2011. Document. Michael A. Hitt,C Chet Miller, Adrienne Collela. Organizational Behavior. n.d. Pendrous, Rick. Sugar Not The Sole Cause of Obesity:AB Sugar. 17 Sep 2014. http://www.foodmanufacture.co.uk/Ingredients/AB-Sugar-launches-campaign-to-address-sugar-myths. 14 may 2015. Scientific American :Sugar vs. Artificial Sweeteners . 16 Jan 2014. http://www.scientificamerican.com/article/sugar-vs-artificial-sweeteners/. 14 May 2015. Read More