SC Johnson: A in Successful Corporate Structure - Case Study Example

S.C. Johnson SC Johnson has been a family-run company since 1886. The beginning philosophies and corporate structure has remained the same for 120 years. Continually ranked as one of the best company's to work for in the United States and abroad SC Johnson is evidence that SC Johnson's guiding philosophies remain relevant in today's market. Companies striving to sustain profitability can look to SC Johnson's corporate principles and philosophies and adapt them to their own corporate structure on the road to success. SC Johnson 2 SC Johnson A Study in Successful Corporate Structure Corporate giant SC Johnson and Son opened for business 120 years ago in Racine, Wisconsin. In 1914, just 28 years after its, owner Samuel C. Johnson opened its first subsidiary in Great Britain and became what is now known as a multi-national corporation. Currently, SC Johnson operates subsidiaries in over 70 countries internationally. Although the SC Johnson has been a multi-national corporation since 1914, over the past 10 years the global economy has been expanding at an unprecedented rate. Large economies such as those of the United States and Great Britain are transitioning from a predominately manufacturing or production based economy to a technology and service-based economy. Historically, the number of people employed in the manufacturing industry has been steadily dropping in developed nations and rising in less developed nations such as Mexico in favor of lower labor costs. Although this mass exodus of manufacturing in the U.S. to Mexico has been a relatively recent phenomenon, SC Johnson opened its facilities in Bosque de Chapultepec, Mexico in 1954. Lower labor costs, as well as, relatively lower operating costs are the main comparative advantages for operating in Mexico. Mexico also has a comparative advantage over other host countries due to its proximity to the United States and the adoption North American Free Trade Agreement. The North American Free Trade Agreement has effectively eliminated tariffs and barriers on trade between the countries of Mexico, Canada and the United States. Tariffs that were not immediately eliminated are scheduled to phase out over the course of the next 5 to 15 years (NAFTA 2006). Faced with the possibility of increased pollution due to often less stringent environmental regulations in many developing nations, environmental concerns regarding NAFTA were addressed in 1993. As a result, the North American Agreement on Environmental SC Johnson 3 Cooperation was developed. Even with the NAAEC pact, free trade is still not without fault. In the ever-increasing global economy further environmental protection issues must continue to be addressed. While free trade does not necessarily promote pollution, it does place environmental strains on local communities. As manufacturing communities grow at an explosive rate, waste water and water treatment plants are over burdened not only from the dramatic increase in residential growth, but by the negative environmental by-products of the manufacturing plants. Additional agreements must continue to be drafted and implemented to help curb pollution attributed to expanding multi-national corporations. Especially so in less developed nations where environmental policies may be lacking. Environmental issues have been of great concern to SC Johnson since 1935 when H.F. Johnson traveled to Brazil to explore less devastating ways to harvest wax from the Carnauba Palm. In 1955, the corporation introduced water based aerosol sprays and in 1975 eliminated the use of chlorofluorocarbons ("Protecting the Environment," 2005). Dedicated to corporate social responsibility, SC Johnson currently has tools and guidelines for the reduction of green house gas emissions. Beginning with its largest production plants, the corporation has reduced its green house gas emissions by 30 percent worldwide ("Sustaining Values," 2005). SC Johnson is not only dedicated to environmental issues in host communities, but social issues as well. In a 1927 profit sharing speech H.F. Johnson Sr., reiterated these philosophies in the following statement, "The goodwill of the people is the only enduring thing in any business. Its sole substancethe rest is shadow" ("Philosophy"). These philosophies not only apply to operations in its native United States, but operations in all host countries as well. SC Johnson 4 Historically an advocate for corporate social responsibility, SC Johnson's philosophy of giving back to its' host communities is unparelleled. The corporations' good works in Mexico include programs that help improve qualities of living for poor and impoverished workers, a rehabilitation center for children with disabilities, programs toward the preservation of local wetlands and numerous foster homes that provide support and education for homeless girls ("SC Johnson Mexico," 2006). Finally, the corporation donates an average of 2 percent of pre-tax profits to further higher standards of living and better quality of life ("Social Value," 2005). Due to these and other accomplishments, the corporation has been the recipient of the Socially Responsible Enterprise Award from the Mexican Center for Philanthropy since 2002 ("SC Johnson Mexico," 2006). By adhering to the corporations social and environmental philosophies developed at the corporation's inception, SC Johnson and Son established positive relationships with its' host communities and the residents within those communities. This is evident in the corporations employee turn over rate of just 2 percent and its many accolades and awards regarding environmental and social stewardship. Unlike many other corporations, SC Johnson addressed environmental and social concerns from the beginning. Long and short term costs are offset by the realized savings of low employee turn over rate and energy efficient buildings which use an average of 60 percent less energy than similar buildings at a projected per year saving of $100,000 USD (Bibb, 2000). SC Johnson is one of the largest and most profitable multi-national corporations in the world. Its corporate philosophies and guiding principles can be used as a blue print for other multi national corporations that find themselves struggling toward sustained profitability. SC Johnson 5 Currently, Acme Automotives' Laredo Nuevo facility is in crisis. The present low employee morale decreases productivity; thereby decreasing cost effectiveness and profitability. Without implementing positive changes, it is unsure whether the company will be able to sustain profitability and increase stakeholder wealth. Therefore, it is critical that low employee morale is addressed first due to its' negative ripple effect. To begin, the corporate environment is in great need of reexamination and changes must be implemented from the top down. Using SC Johnson's corporate philosophies as a basis, Acme Automotives should explore what responsibilities we have as an employer to our employees' well being. The first issue that should be addressed in this matter is the manner in which foremen speak to employees. The disconcerting complaints regarding this subject may be avoided in the future by the retraining of shift foremen that includes team building and sensitivity exercises. Lines of division between laborers and management must be erased so that we may move forward as one cohesive unit. The next issue to be addressed is that of employee health and safety. There are inherent dangers to working in a production plant. Air quality inside the building is often poor and repetitive stress injuries are commonplace. When an employee comes to a supervisor with health related issues, they should be handled in a respectable and thoughtful manner. The injuries and health problems employees experience due to the hard work we ask them to perform on a daily basis is not just the individual employees problem, but Acme Automotives' problem as well. This brings up the issue of employee benefits. Benefits packages for corporations are often expensive, but the cost of employee turnover is even more detrimental to corporate profitability. The time and man-hours it takes to continually hire and train new employees can be astronomical in terms of cost. Employee SC Johnson 6 benefits such as health plans, sick leave, vacation days and shift premiums help to lower turnover rates while boosting morale. The nature of the manufacturing industry is that it has the tendency to ebb and flow dramatically depending and economic outlooks, competition and consumer demand. It is not uncommon that longer hours are mandated to accommodate these market fluctuations. Management, working together with employees should develop a mutually beneficial program that addresses the issue of overtime hours. For example, employees can be placed a rotating schedule to ensure that no one is over worked. This would also have the beneficial effect of less on the job accidents attributed to employee exhaustion. Other incentives such as one paid day off or extra vacation days for a certain number of over time hours accrued are other possibilities. Finally, Tamaulipas and its' residents are our hosts and we should treat them as such. Acme Automotives would do well to implement acts of corporate social responsibility by giving back to the community in which it exists, beginning with the its' public transportation system. With the existing system, employees find themselves paying large percentages of their take home pay in order to get to and from the plant. These busses also operate on a time schedule that is not consistent with employees work schedule. Employees whose shifts end early in the morning often have to wait hours for the public bus. While Acme Automotives will not likely be able to reform the public transportation system, other options for employee transportation should be explored such as discounted bus passes or shuttles for those whose shifts end before the busses begin running. The possibilities of boosting employee morale are endless and rewards from doing so are realized in the long and short term. As the global economy continues to grow at an exponential rate, so too does competition. The corporate structure at Acme Automotives must continue to advance and evolve in order to remain competitive and sustain profitability. SC Johnson 7 References Bibb, D. (Apr. 2000). Real Property Sustainable Development Guide. Retrieved 21 April 2006 from http://www.gsa.gov/gsa/cm_attachments/GSA_DOCUMENT Martin, F. (Apr., 2003). Moving toward Sustainability: Household Product Research, Development and Engineering. Retrieved 20 Apr. 2006 from http://www.scjohnson.com/community/pdf/Geenlist_Case_Study.pdf McFayden, J. (n.d.). NAFTA Supplemental Agreements 4-Year Review. Retrieved 20 Apr. 2006 from http://www.iie.com/publications/wp/wp.cfmResearchID=145 Murphy, C. (19 Sept. 2005). SC Johnson Does More Than Talk. Retrieved 20 Apr. 2006 from http://www.informationweek.com/story/showArticle.jhtmlarticleID=170703512 Rosen, D.H. (2003). How China is eating Mexico's Lunch: The Maquiladora systems Comparative Advantage is being Challenged Head on-China. Retrieved 20 Apr. 2006 from http://www.findarticles.com/p/articles/mi_m2633/is_2_17/ai_100545301 United States Department of Agriculture (March 2006). North American Free Trade Agreement Fact Sheet. Retrieved 20 Apr., 2006 from http://www.fas.usda.gov/info/factsheets/NAFTA.asp Continuous Progress Toward Sustainability. (n.d.). Retrieved 20 Apr. 2006 from http://www.scjohnson.com/community/tenyears.asp Our Philosophy. (n.d.). Retrieved 20 Apr. 2006 from http://www.scjohnson.com/family/fam_com_phi.asp Protecting the Environment. (2005). Retrieved 21 Apr. 2006 from http://www.scjohnson.com/community/environment.asp SC Johnson Again Named a Top 10 Best Company to Work for in the U.S. (9 Jan., 2006). Retrieved 20 Apr. 2006 from http://www.csrwire.com/article.cgi/4876.html SC Johnson 7 SC Johnson Mexico Receives Socially Responsible Enterprise Award for Sixth Consecutive Year. (13 March 2006). Retrieved 20 Apr. 2006 from http://www.scjohnson.com/family/fam_pre_pre_news.aspart_id=236 Is the International Monetary Fund a Catalyst for the Reduction of World Poverty or an Unwitting Accomplice IMF 1 Abstract Then International Monetary Fund was created out of a need to aid countries in the midst of economic crises. Over the years it has had it's share of supporters as well as detractors. With the recent explosion in the growth of the global economy, countries in economic crisis, developing and emerging market countries may find themselves with formidable barriers to entry. Though the IMF is not without its faults, it was created for the overall good of the world economy with its goals to increase economic growth and eliminate poverty, a formidable task in and of itself. IMF 2 Is the IMF a Catalyst for the Reduction of World Poverty or an Unwitting Accomplice In the 62 years that the International Monetary Fund has existed, it has faced some harsh criticisms. The fund was created to aid countries whose fiscal policies are in dire straits and often when the country is near economic meltdown. Contrary to popular belief, the IMF's purpose is not to effectively bail these countries out of their financial difficulties. According to the International Monetary Fund website, the IMF has three main functions, the first function is to keep a close watch on economic and financial policies of its member countries. This can range from monetary exchange rates to economic structural policies. Second, is providing loans to countries that are finding it difficult or near impossible to pay off its debt due to its' current or impending economic crisis. Third, the IMF provides technical assistance in the subjects of tax policies, macroeconomic policies and revenue administration, among others (IMF 2005). The fundamental goals of the IMF to provide a balance of international trade and ease debt burdens for countries with collapsing economies are admirable. Given the current hyper-competitive state of the global economy, the IMF exists to aid in the entrance of less developed countries the world market in order to build economic growth and ease poverty. That being said, the IMF is not without its criticisms. One of the most highly criticized programs of the IMF is its' Austerity programs, these programs were developed by the IMF as condition to the granting of loans. These "conditionalities", as they are often called, involve the cutting of government spending in the interest of the debtor country repaying its' loan provided by the IMF. These cuts include cutting social spending such as welfare or community development projects, enacting fee for service polices in areas such as basic health care and education and reducing the value or devaluing the national currency ("Structural Adjustment Program," Wikipedia 2006). Opponents claim that the Austerity and Structural Adjustment IMF 3 programs exacerbate poverty and encourage the widening of the gap between the wealthy and poor. On 15 April 2006, Venezuela began its' Austerity plan mandated by the IMF. Critics claim if the country is to go forward with this plan, gas prices will increase 400%, interest rates will skyrocket by 20% and the Bolivar will be devalued by 60% ("Austerity Plan," 2006). If these predictions bear fruit, the Venezuelan economy will in fact be in a worse position than it was before it accepted loans from the IMF. Another IMF Austerity program that came under fire was the country of Thailand's, during the Asian economic crisis of 1997. Faced with economic collapse, the IMF offered a $17.2 billion dollar financial aid package to aid Thailand during the country's regional economic crisis of 1997. Of the total package amount, the country utilized $14.1 billion and in September of 1999, the Thai officials announced that they were no longer planning on using the fund ("Debt Crisis"). Thailand officials adhered strictly to the IMF's policies and on 31 July 2003, Prime Minister Shinawatra announced that Thailand had successfully paid off its' debt to the IMF two years ahead of schedule. The country continues on the road to recovery and economic soveirgnty. Just as the cultures differ from one country to another, so do their economic needs and capabilities in a time of crisis. Some of the IMF's policies on aid are detrimental to the countries in which it is trying to help. Some policies however, like those regarding political and financial corruption are much needed. Overall, the IMF is unfortunately necessary but policies should be monitored more frequently so changes can be made in a timely and relevant matter. The IMF's goal of reducing poverty is universal and as long as it continues on that path the beleaguered Fund will continue to gain support. IMF 4 References Common Criticisms of the IMF: Some Responses. (16 Feb. 2006). Retrieved 21 Apr. 2006 from http://www.imf.org/external/np/exr/ccrit/eng/crans.htm#q01 The IMF at Work. (n.d.). Retrieved 21 Apr. 2006 from http://www.imf.org/external/work.htm IMF Austerity Plan Begins. (21 Apr. 2006). Retrieved 21 Apr. 2006 from http://www.americas.org/item_12594 Kuvetakis, E. (n.d.). Trade, Banking and International Aid in Thailand. Retrieved 21 Apr. 2006 from http://sociology.ucdavis.edu/djkyle/soc145a/thai-trade.htm Sussangkran, C. (16 Jan. 1998). Thailand's Debt Crisis and Economic Outlook. Retrieved 21 Apr. 2006 from http://www.nectec.or.th/bureaux/tdri/mep_fore.htm Wikipedia. (10 Apr. 2006). Structural Adjustment Program. Retrieved 21 Apr. 2006 from http://en.wikipedia.org/wiki/Structural_adjustment_program Read More