The Coffee Bean & Tea Leaf(CBTL), Business strategy case study
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Harish Dunakhe- Assignments- Business Ethics & Corporate Governance
1. HARISH DUNAKHE
Roll No. 33310 Business Ethics & Corporate Governance May 27th 2012
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Assignment in
Business Ethics & Corporate Governance
Q1: What are the factors affecting Business Ethics. Explain with
examples.
Though there are many factors which affect Business Ethics, a few are mentioned below:
⢠Corporate culture
⢠Existence of written Code
⢠Norms of acceptable behavior
⢠System of recognition of accomplishments
⢠Company attitude towards employees
⢠Hiring policy
⢠Companyâs decision making process
⢠Financial rewards system
Letâs groups above factors in to 4 factors and discuss those in detail.
1. Behavior: Personal code of conduct
2. Policies & Framework
3. Ethical standards of top management
4. Ethical climate of the country
I believe the above-mentioned factors are mutually exclusive and collectively exhaustive. Letâs look at
them one by one.
Assignment Confidential SIBM, Pune Exec. MBA 2010-13
2. HARISH DUNAKHE
Roll No. 33310 Business Ethics & Corporate Governance May 27th 2012
1. Behavior: Personal Code of Conduct
As we know, the boundaries of legally acceptable behavior Unethical behavior is any action
are wider than those of Ethical Behavior. A personâs behavior that does not conform to the
may be legally correct however it may not necessarily be standards of conduct established
ethically appropriate. by the organization.
e.g. Ă
⢠Disclosing commercial details of a competitor to a potential customer. While this is quite
rampant in the business world, it is not ethical.
Inappropriate Computer Use:
⢠Employees may use company computers to engage in unethical behavior. For example, an
employee who is not permitted to use the Internet for personal reasons commits an unethical
act by shopping online while at work. Random Internet surfing takes away from the time he/ she
spend on work-related activities. Employees sometimes use company email to spread
inappropriate websites or videos to co-workers, some of which could be deemed offensive by
the recipients.
Time Misuse
⢠Unethical behavior can include stealing time from the company, as the company is
compensating employees and receiving no productivity in return. In addition to time spent on
aimless Internet surfing, time misuse can consist of extending breaks beyond the allotted time,
congregating around the water cooler or engaging in lengthy gossip sessions during working
time, falsifying time sheets, coming into work late or leaving early and running personal errands
while traveling on company business.
Sexual Harassment and Bullying
⢠An employee could commit unethical behavior by sexually harassing co-workers. This could
involve making lewd comments, touching inappropriately or making unwanted sexual advances.
Bullying typically involves attempting to intimidate a co-worker by making demeaning
comments about him, spreading gossip or even making verbal or physical threats. In general, a
bully attempts to make the workplace as uncomfortable as possible for a co -worker. In some
cases, ongoing bullying can escalate into violence in the workplace.
Assignment Confidential SIBM, Pune Exec. MBA 2010-13
3. HARISH DUNAKHE
Roll No. 33310 Business Ethics & Corporate Governance May 27th 2012
Illegal Acts
Legally
⢠Some unethical acts can also be illegal. For example, Acceptable
an employee who has access to a company's financial Behavior
records, such as a bookkeeper or accountant, could
use his/her access and expertise to misuse company
funds. An HR representative could commit identity
Ethical
theft or sell personal data to other companies. Behavior
2. Policies & Framework
Organizational policies & available framework to deal with ethical issues / cases affect ethical
behavior of an employee. The policies and framework decide how committed a company is to
implement ethical practices.
Policies mean:
1. List down what is ethical behavior and what is unethical behavior
2. Enforce upon employees to comply with the expected behavior.
3. Link their performance appraisal / confirmation / survival in the company with their ethical
behavior.
Framework necessarily means
1. Ombudsman process in case of a situation.
e.g. Ă Large IT companies and a few business houses (such as Tata Sons, Wipro, Infosys) are particular
about their employees adhering to the Policies & Framework available. Wipro has a COBC Certification
course, which is mandatory for every employee to pass. Secondly Wipro has Ombudsman in place and
employees undergo routine training on ethical & unethical cases which have happened in recent times.
2. Fair Trial (Unethical behavior)
In case an employee crosses the boundaries of ethical behavior, he / she shouldbe provided with a fair
trial. Wiproâs Ombudsman process provides the accused and victim fair chance to put forth his/her
point.
3. Ethical Standards of Top Management
Employees follow Top Managementâs behavior without expressing. If the Chief of the company behaves
unethically ill-treats his female colleagues, misuses company funds, then the employees are more likely
to be unethical & corrupt.
e.g. Ă Many example can be citedâŚ. Satyam Computersâ CEO Ramalinga Rajuâs behavior was a classical
case. Enronâs CEO and Chairman were at the peak of unethical practices which led Enron down the
drain.
Assignment Confidential SIBM, Pune Exec. MBA 2010-13
4. HARISH DUNAKHE
Roll No. 33310 Business Ethics & Corporate Governance May 27th 2012
4. Ethical climate of the country
Actually Ethical Climate of the company is resultant of the above 3 parameters. Nevertheless, Ethical
Climate is essential for the companyâs survival and growth in ethical manner. Companies may have
ethical people at top leading the company in right direction, it may also have Policies & Framework in
place at the same time it may also have ethical employees⌠even after this, the company may get
caught in the web of unethical business practices. Climate also gets affected by the Financial Reward
system of the company. If company is able to investigate and pick out unethical behavior and punish
accordingly it passes a a strong message to its employees. Similarly if the company rewards ethical
behavior regardless of the amount of commercial success this behavior has brought, it creates ethical
climate and encourages people to behave ethically.
e.g. Ă Many examples can be cited again here. Letâs look at Coca Cola India and Pespsico India⌠while
itâs not clear whether the top management was involved in the pesticide case or not, the climate
definitely was not promoting ethical practices.
Other examples could be: Dow Chemicals in Dehu Road, Union Carbideâs Bhopal Gas Tragedy and post
gas leak. Everything points to the ethical climate of a company.
Summary:
The above mentioned factors, if managed well can create highly ethical work environment. Ethical
behavior is a less understood area. Companies need to spend time, money and energy in communicating
their expectations to their employees. Top Managementâs behavior is watched and emulated by others.
Hence big bosses must behave in ethical & legally acceptable manner.
Q2: What are the principles of admirable Business Ethics? What are
the common excuses given by the people to rationalize unethical
behavior?
Following are the Principles of Admirable Business Ethics.
⢠Trustful
⢠Open mind
⢠Meet obligations
⢠Clear document
⢠Enforcement of commitment
⢠Maintain accountable conduct
⢠Be respectful
Assignment Confidential SIBM, Pune Exec. MBA 2010-13
5. HARISH DUNAKHE
Roll No. 33310 Business Ethics & Corporate Governance May 27th 2012
The above principles are like guiding lighthouse for an individual as well as for a company. While an
employee may try to act as ethical as possible a few of the above principles are a must to be admired in
the business environment.
Trustful: Employees, shareholders, customers, suppliers & other
Trust is the foundation of ethical
stake-holders must trust the individual running the show. When
customers want a supplier for long-term they essentially look at business.
trustworthiness of that supplier. Being trusted is also emotionally
satisfying. It increases our self-esteem and validates our good
character. In professional affairs trust is a valuable asset.
e.g. Ă Toyota / Maruti Suzuki look for trustworthy suppliers. They are concerned about their supplierâs
background, financial strength and ethical standards.
Open Mind: Learning can happen from anywhere. Though companies try to demarcate Ethical &
Unethical behavior itâs difficult to pen-down everything. Besides, employees can also make mistakes
unknowingly. Open mind is needed to learn this time & again. Looking for suggestions, feedback and
improving is essential for the survival & growth of the company.
e.g. Ă Classic example can be SONY WalkmanâŚ. Suggestions, feedback said, unsaid was picked up by
-
SONY to create a Walkman.
Meet Obligations: Organizations should take efforts to satisfy customer expectations⌠One must think
before committing something to his/her customer⌠However once given a commitment, regardless of
the circumstances, do everything in your power to honor that commitment. The cost of acquiring new
customers is fairly high. Hence take efforts and gain the trust of past customers and clients, particularly
if something has gone wrong. Maintain customer satisfaction.
e.g. Ă Wipro takes sincere efforts to listen to customerâs voice and take necessary actions. Itâs quite
common in service industry that customers will have ever increasing wish-list. Managing customer
expectation is a huge task. Through its quarterly customer feedback system Wipro tries to meet
customer obligations and commitments.
Have Clear Documents: Re-evaluate all print materials including small business advertising, brochures,
and other business documents making sure they are clear, precise and professional. Most important,
make sure they do not misrepresent or misinterpret.
e.g. Ă HUL takes efforts in maintaining synergy in the message they pass to market.
Become Community Involved: Remain involved in community-related issues and activities, thereby
demonstrating that your business is a responsible community contributor. In other words, stay involved.
Assignment Confidential SIBM, Pune Exec. MBA 2010-13
6. HARISH DUNAKHE
Roll No. 33310 Business Ethics & Corporate Governance May 27th 2012
e.g. Ă Wiproâs involvement in primary education through Azim Premji Foundation or Tataâs community
involvement through its various initiatives in well-known.
Maintain Accounting Control: Take a hands-on approach to accounting and record keeping, not only as
a means of gaining a better feel for the progress of your company, but as a resource for any
"questionableâ activities. Gaining control of accounting and record keeping allows you to end any
dubious activities promptly.
e.g. Ă Lately most of the well-known companies (known for their ethical business practices) have
started complying to GAAP, IFRS, SOX and various other international accounting standards. Third party
audit by internationally reputed audit firms is a norm. Many examples can be cited. KPMG, PWC, E&Y,
Botliboy & Co. etc. are well-known audit firms which are known for their Accounting Control standards.
Be Respectful: Treat others with the utmost of respect. Regardless of differences, positions, titles, ages,
or other types of distinctions, always treat others with professional respect and courtesy.
Recognizing the significance of business ethics as a tool for achieving your desired outcome is only the
beginning. A business that instills a deep-seated theme of business ethics within its strategies and
policies will be evident among customers. Its overall influence will lead to a profitable, successful
company.
e.g. Ă American professionals walk up to the doorway when the visitor is about to leave. This is out of
respect for the person. Also they find it highly unethical if someone doesnât respect their time.
Excuses given by people for not conforming to Admirable Business Ethics:
1. A belief that it is in realm of legal ethical limits.
As explained earlier, sometimes a particular behavior may be legal but may not necessarily be ethical.
For example driving a car is legally allowed but it increases pollution. Hence in some countries where
good quality public transport is available driving a car is considered as unethical. Another example could
be smoking. The passive smokers are at no fault than being in the company of smokers. One more
example can be using official software programs for personal use. We rationalize saying it might
increase productivity it actually is depriving the software company of sale of a license copy.
2. It is in the best interest of company/stake-holders
Rationalizing unethical behavior as itâs in the best interest of company is another form of justification for
unethical behavior.
e.g. Ă CEOs generally show non-performing assets as part of another subsidiary so that their books are
âcleanâ. What they actually do is just remove the dirt from one location and put it at another. This way
they do âgoodâ to the company.
Assignment Confidential SIBM, Pune Exec. MBA 2010-13
7. HARISH DUNAKHE
Roll No. 33310 Business Ethics & Corporate Governance May 27th 2012
3. It is safe because it will be never publicized.
This is another form of rationalization. Generally this kind of behavior is seen in people associated with
Sales & Marketing, R & D etc. Letâs look at following examples.
e.g. Ă
Product Representations â The salesman told me it would outperform the competition but he didnât tell
me that was only under limited conditions.
Product Quality â We needed to meet our delivery schedule so we sent the product out and planned to
send a patch for that bug later.
Sales Dealings â She is a good customer so of course I gave her a 5% discount because I knew we had
raised our prices by 10% just before advertising the sale.
4. The company will condone it.
Many employees who know that their CEO/ MD or even share-holders, government is âokâ with some
kind of behavior if that behavior brings in benefit to the company, will cross the borders of ethical
behavior.
e.g. Ă The company will condone it was conspicuous in Enronâs case.
Mr. Jeffry Skilling - COO & President and Mr. Kenneth Lay- CEO of Enron committed financial fraud,
misrepresented their numbers and enticed their staff to outperform Enronâs competitors. Back of their
mind they knew they were being smart, they are making money for the company ⌠Sinc the money
e
they will make was for the company they knew the company will overlook their behavior(in case of any
issue).
Summary:
Employees should be taught to question their decisions by
asking; âAm I rationalizing unethical behavior?â Businesses Businesses need to reinforce
need to reinforce their ethics policy by instructing employees, their ethics policy by instructing
when there is doubt; âTake the high roadâ. When followed, employees, when there is a
this simple rule will help employees avoid unethical behavior. doubt âTake the high Roadâ.
Unethical behavior creates a victim who is negatively
impacted by the employeeâs actions. If there is a victim then
the employees behavior is likely unethical.
Assignment Confidential SIBM, Pune Exec. MBA 2010-13
8. HARISH DUNAKHE
Roll No. 33310 Business Ethics & Corporate Governance May 27th 2012
Q3: âWhile resolving the defining moments, the successful managers
undertake introspection of their core values and principles, which
leads them to take shrewd, pragmatic, politically astute action.â Prof
Joseph Badaracco of Harvard Business School. Explain the defining
moments for the individuals, managers and company with suitable
examples.
Defining moment is that one moment in a personâs life which alters course of his life.
Defining Moment for Individual:
I think for an individual the ethical dilemma he/she faces while performing his/her duties can create a
defining moment. Not everybody will be exposed to the âgreater greyâ area of ethical behavior.
Generally sales & marketing professionals operate in that area. They have to deal with government
officials, purchase staff of a company and various other people who can influence a deal.
My defining moment was when I turned down a bribery demand from a government official. He asked
money for some work⌠I politely refused. It was a tough discussion but I did it.
I agree with Prof Joseph Badaracco of Harvard Business School when he says, âWhile resolving the
defining moments, the successful managers undertake introspection of their core values and principles,
which leads them to take shrewd, pragmatic, politically astute actionâ. Indeed, I had to be politically
correct when I was dealing with that guy⌠a little difficult stand could have turned that âsmall talkâ in to
an argument. We got to be seasoned and politically mature to handle such scenario.
Defining Moments for Managers:
Managers face ethical issues quite often⌠They need to clear travel claims, approve leaves, work with
difficult colleagues, also need to work with cross-functional teams etc. Defining moment for any
manager may not be any different than that for an individual. Considering the sphere of influence he /
she need to take a decision.
e.g Ă I know a case when a senior manager at one of the major IT company in India asked one of his
colleagues to leave. This colleague was an extraordinary person with very high business acumen.
However he was asked to leave due to the breach of Code of Business Conduct (COBC) at this company.
A lady colleague had complained of unethical behavior against this colleague.
The manager had tough mental battle. The manager immediately referred it to the Ombudsman. He
looked at the guidelines available at this company and also asked for expert opinion in this scenario.
Post that they gave an opportunity to explain his stand to this colleague. After hearing his views and
considering the plea from this lady colleague the manager asked this colleague to resign.
Assignment Confidential SIBM, Pune Exec. MBA 2010-13
9. HARISH DUNAKHE
Roll No. 33310 Business Ethics & Corporate Governance May 27th 2012
Defining Moments for company:
Companies face such scenarios once in a while. Cases where employees behave unethically, suppliers do
short supply or try to influence their purchase staff and many other examples.
Tata Power Co Ltd had such an experience recently. The purchase manager came across a supplier who
tried to influence him. He referred this case immediately to his manager. The top boss and this purchase
manager referred to Tata Code of Conduct and (TCOC) decided to blacklist this supplier.
Umpteen examples can be cited for companies to mention their defining moments. Companies need to
take tough, politically correct and astute decisions to remain morally and ethically correct.
Q4: For ensuring achievement of long term goals it is sometimes
prudent to act like a fox rather than a lion. This may be more
pragmatic approach. Discuss this with known cases.
How praiseworthy it is for a person to keep good faith and live with integrity, and not with astuteness?
Still the experience shows that those people to have done great things who have had little regard for
good faith, and have been able by astuteness to confuse men's brains, and who have ultimately
overcome those who have made loyalty their foundation.
We know that there are two methods of fighting, the one by law, the other by force: the first method is
that of men, the second of beasts. But as the first method is often insufficient, one must have recourse
to the second. It is therefore necessary to know well how to use both the beast and the man. A manager
must know how to use both natures, and that the one without the other is not durable. A manager,
being obliged to know well how to act as a beast must imitate the fox and the lion. The lion cannot
protect himself from traps, and the fox cannot defend himself from wolves. One must therefore be a fox
to recognize traps, and a lion to frighten wolves.
Those that wish to be only lions do not understand this. Therefore, a prudent manager ought not to
keep faith when by so doing it would be against his interest, and when the reasons which made him
bind him no longer exist. Not all men are good⌠a few are good and a few badâŚ. Since some of them are
bad, and would not observe their faith with you, so you are not bound to keep faith with them.
The fox and lion analogy is about faith and integrity. One needs to understand that if we live with our
integrity all the while and are not vigilant of ulterior motives of other people, we are bound to get
trapped in issues⌠Just the way a lion gets trapped in a cage. On the other hand, if fox cannot fight
against wolves⌠this necessarily means regardless of how clever & astute you are, you must keep your
Assignment Confidential SIBM, Pune Exec. MBA 2010-13
10. HARISH DUNAKHE
Roll No. 33310 Business Ethics & Corporate Governance May 27th 2012
faith & integrity intact. They are your forces, which protect you from the temptation of unethical
behavior.
e.g. Ă Companies have loyal as well as astute employees. A manager must be both. He needs to know
what is right and âwhereâ it is right. While dealing with some of our colleagues my manager considers
loyalty as well as astute behavior from his employees.
Thank you.
Harish Dunakhe
Roll No. 33310
SIBM Exec MBA 2010-13
Assignment Confidential SIBM, Pune Exec. MBA 2010-13