Ethical and Socially Responsible Decisions - Case Study Example

Harrison Company Case Rubric Question # 2 – Ethical and Socially Responsible Decisions It is important to highlight that the company faces multiple social and ethical issues. The issues are being identified and discussed in the table below: Issue Description about the issue Association in terms of outsourcing with a Honduran company that engages unethical manufacturing practices in its units The issue of unethical manufacturing practices engaged by a Honduran company came into focus when one of the ex employees of the company spread the word in the media that the company share a buyer relationship with the Honduran company that follows slave like working conditions for its employees. The ex employee brought the accusation that Harrison Company engage in buying inexpensive clothing from the Honduran company. Lack of whistle blowing policy It can be assumed that the claim by the ex employee that he was fired because he tried to generate awareness among the top management about the unethical practices of the Honduran company as true. The reason behind considering this incident as a true one is because there is no possible documentation of this incident, which further reveals that the top management did not want to keep a record of this incident and preferred to keep it hidden from the employee view. The lack of a whistle policy within the organization and the option of protecting an employee who engages in whistle blowing activity for the welfare of the organization perceived as a very serious ethical issue. Lack of ability to form a union The company’s focus on restricting the freedom of the employees to form a union has to be considered seriously from the ethical angles. The inability to form a union by the company’s employees will keep themselves vulnerable to the whims and fancies of the top managements. The top management has the ability to make certain changes in regards to pay as well as working conditions which may not be on the employees’ collective favour. The lack of ability to form an union by the employees will lead to the loss of the power of the employees to engage in collective bargaining, which has the potential to develop a sustainable and healthy work environment within the company. Significant amount of donation to the charity It has been identified that the company makes a huge amount of contribution to the favourite charity of the previous president, which is located very close to the company headquarters. Since the company is facing financial difficulties in the current times, the large contributions to the charity become an indirect social issue. The reason this can be a social issue for the company is because the company is focusing on generating profits by relying on part time workers, thereby reducing the chances of full time employment for the potential employees. Significant amount of contribution to the various communities It has also been found that the company makes a considerable amount of contribution to various community specific endeavours. Since the company is facing financial difficulties in the current times, the large contributions to the community endeavours become an indirect social issue. The reason this can be a social issue for the company is because the company is focusing on generating profits by relying on part time workers, thereby reducing the chances of full time employment for the potential employees. Talking in regards to a factor of environmental stability, the issue of unethical slave like manufacturing conditions within the Honduran company needs to be taken into focus. This particular issue has been considered since it has the ability to trigger a threatening situation in terms of political as well as social environment stability in the host country. It needs to be considered that the continued engagement and association of Harrison Company with the Honduran company, which already has developed a notorious reputation for slave type manufacturing conditions, will have a strong negative impact on the company’s image and will thereby impact the company’s marketing environment in a very negative manner. One different ethical dilemma that has been selected from the company’s current range of issues is the factor of significant contributions made to the charity located near the company headquarters. Since the company is facing financial challenges in the current times, the dilemma of ethical nature is to curtail down the financial contributions to the charity made by the company. The main stakeholders for the ethical dilemma are the owners and members of the charity, the benefitting recipients of the various activities of the charity as well as the local population at large. The people who can influence the decision either in favour of the charity or against them are the three directors, who are present in board of directors of the company and hold a majority share of the company. The three possible responses to the ethical dilemma and their possible consequences on the various stakeholders are given below The first response can be to curtail down the large amount of contributions to the charity in a phase by phase manner. This step will impact the capital raising capacity of the owners and members of the charity from the organization and will lead them to look for other major contributors. The second response can be to stop all contributions to the charity completely. This will provide a huge blow to the fund generating capabilities of the charity’s owners and members. The people who are getting benefits from the activities of the charity are also bound to feel the impact since the charity will have increasingly lower amount of funds to manage its charitable activities. The third response can be to continue with the existing amount of contributions to the charity. It needs to be stated that this response will not create any impact on any of the stakeholders of the charity since they will feel no impact at all. As a recommendation, it can be stated that the company can look forward to reducing the amount of contributions to the charity in a phase by phase manner. The action plan will be as follows: Step 1: Reduce the contributions to the charity and get it approved by the board of directors. Step 2: Communicate about the financial difficulty of the company to the charity and state about the company’s plans to reduce financial expenditure. Step 3: Make low amount of contributions to the charity on a quarterly basis. This action plan can be considered an ethical and a socially responsible one, since it has communicated the reasons of curtailing the financial expenses of the company and also tried to minimize the impact on the funding and other activities supported by the charity. It can be expected that the successful implementation of the action plan will help the company to curtail down on the expenses and as a result will help in arresting the decline in revenue for the company. Rubric Question #3: a. . c. For the purpose of identifying the issues of supply chain and the related areas for improvement, the focus needs to be given on the multiple factors of logistics. While studying the position of the company’s stores as well as the distribution centres from the map, it was found that a number of stores of the company were located in the regions where there has been a decline in population. To tackle this particular factor, the company will focus on opening 3 new stores in the region of West Virginia i. The first factor that needs to be addressed is the supplier transportation to the distribution centres. With the opening of the new stores as well as the planned change in the inventory management process, the frequency of delivery from the suppliers needs to increase. The suppliers need to make the delivery of shipments once a week. ii. The second factor that needs to be addressed is the method of inventory management at the distribution centres. Since there will be a change in the process of order procurement from the stores, the new kind of arrangement will help in better demand forecasting for every store. The new arrangement will require weekly shipments from the suppliers and as a result will lead to a need of better inventory management in the distribution centres. It can be assumed that the better demand forecasting and more frequent shipments from the suppliers as per the store demand will help in the process of increasing the efficiency in the inventory management for the distribution centres. iii. The third and the most important factor is the issue of transportation from the distribution centres to the stores. It has to be considered that the factor of transportation has a direct involvement in the financial expenses of the company. Efficiency in the transportation process will help in the reduction of financial expenses for the company. For increasing the efficiency of fuel, the price of which is supposed to rise in the upcoming days, proper route plan for the company’s trucks needs to be planned. 6 trucks will be used to transport the merchandise orders from the Massachusetts distribution centre to the stores present in Massachusetts, Connecticut, Maine, New Hampshire, New York. The remaining stores will be supplied with the merchandise by 3 trucks from the distribution centre present in Pennsylvania. iv. In discussing about the inventory management for the stores, it can be stated that the new inventory management system that will be applied in the stores will help in the better demand forecasting for the individual stores. The better demand forecasting will help in the reduction of the storage space for the stores from the current 20 square feet to 10 square feet. This will provide the scope for increasing the entire store area for displaying merchandise. It can be expected that the change in the store layout and the increase in display area will play a positive role in boosting the sales of the store merchandise. v. The process of information gathering in regards to the merchandise needs to be completely overhauled by implementing a new edge retail inventory management system. The new system will be installed in every store of the company that are present in various geographical locations. The new systems will have the ability to track the merchandise movement in the various junctions of the logistic movement. Also, it should have the ability to provide real time information about the amount of sales happening in each store to the company headquarters. By analyzing the demand from the various stores, the company headquarters should focus on generating a specific inventory threshold for every store. A fall in the inventory level below the store specific threshold will automatically trigger an alert for fresh delivery of merchandise. The operating analysis table given below highlights the factors of number of employees, total working hours per year, work load per employee as well as financial aspects per individual of the store on annual basis. For every store, the number of temporary employees is estimated at 4 while the number of store manager is estimated at 1. The total working hours for a store is 6500 hours and the stores remain open for 6 days a week for a period of around 10 hours. It has been assumed that the store manager is present all the time in a store. Assuming that there is 52 weeks in a year, it has been estimated that the store manager works for around (6*10) * 52 or 3120 hours per year. Thus the total working hours for the temporary employees is estimated at around (6500 - 3120) or 3380 hours per year. Since there are 4 temporary employees, it can be stated that the total working hours per year for a single employee stands at around 845 hours. On a weekly basis, it comes to around 845 / 52 or 16.25 hours. Hence, roughly the work load per employee stands at around 2.5 hours on a daily basis. Since the store manager earns $35,000 on an annual basis, so naturally his earnings per month come to around $35,000/12 or $2916.66. This again comes to around $2916.66 /4 or $730 (approx) on a weekly basis. Now estimating that the temporary employee earns around $350 on a weekly basis, the financial expenses for a temporary employee on an annual basis comes to around $350 *52 or $18,200.   Temporary Employee Store Manager No. of employee 4 1 Total Working Hours/ Yr 3380 3120 Work Load/ Employee 2.5 hrs 10hrs Financial Expenses/ Individual/ Yr $18,200 $35,000 It is important to highlight that during the process of the calculations, it has been considered that all the four part time employees including the store manager will be present in the stores for 6 days a week. In discussing the importance of an effective sales forecast in connection to the logistics and operations for the company, it can be said that the proper sales forecast helps in understanding the amount of merchandise required for every store. It also help in understanding the urgency of the merchandise requirements and as a result will lead to the process of better route planning of the company trucks. The better route planning of the company trucks automatically increases the efficiency in fuel consumption and thereby helps in reducing the operating expenses for the company. Also, the process of staffing the stores through four temporary employees also helps in greatly reducing the store operating costs for the company. Read More