Unit VIII Journal

BUS 6320, Global Strategic Management 1

Course Learning Outcomes for Unit VII Upon completion of this unit, students should be able to:

5. Explain implementation, control, and measurement in overall evaluation of business strategies. 5.1 Discuss the importance of benchmarking and key performance indicators (KPIs).

6. Assess the ethical parameters of strategic business models.

6.1 Discuss the importance of ethics within the scope of corporate entrepreneurship and strategic planning.

7. Discuss an effective global business strategy for an organization.

7.1 Examine the relationship between strategic planning and business ethics. Required Unit Resources Chapter 12: Corporate Governance and Business Ethics MiniCase 12: Uber: Ethically Most Challenged Tech Company?, pp. 511–514 Unit Lesson Ethics is a topic that is discussed extensively in and out of the boardroom. Ferrell et al. (2019) define ethics as the behavior made within a group’s values. In the case of business ethics, the group’s values are represented by groups within the business organization. In order for businesses to survive, they must earn a profit, which does not need to compromise the ethical integrity of the organization. Case in point are Hilton, Hewlett-Packard Enterprise, Kimberly-Clark, Visa, and Allstate, which were rated as several of the 2019 World’s Most Ethical Companies. Each of these companies maintains a significant profit margin while advancing corporate citizenship, transparency, and the standards of equity (Ethisphere, n.d.). Take a look at The 2019 World’s Most Ethical Companies Honoree List to view all 128 global companies honored by Ethisphere.com. From your perspective, do you see any surprises? Is it important to you personally to deal with a company that represents ethical integrity? Generally speaking, business ethics have been scrutinized by a variety of stakeholders, not only by the employer, but also by consumers, employees, special interest groups, investors, and government regulators. Because of this concern, the Ethics Resource Center (ERC) has been established to examine risk and the promotion of workplace integrity. They use a survey called the Global Business Ethics Survey (GBES) that measures compliance on workplace integrity including observed misconduct, abusive behavior, lying to stakeholders, conflict of interest, and pressure to compromise standards. Leaders within organizations look to establish appropriate core values and conduct through an established set of ethics initiatives within the company. The goal of most organizations is to maintain an ethical culture throughout the organization without having to enforce compliance. At its very core, ethics contribute to a company in a variety of ways. Employee commitment tends to be stronger in organizations with higher levels of ethical integrity. The rationale behind this is that the employee feels a connection with an employer that is behaving ethically. The employee then connects their future to the organization and feels confident in the organization’s sustainability. This leads to a greater level of passion and personal sacrifice for the good of the organization. As an organization takes care of its employees, the employees are more willing to take care of the organization. Characteristics of an organization taking care of its employees include a safe work environment, strong organizational culture with work-life balance,

UNIT VII STUDY GUIDE Strategic Business Ethics

BUS 6320, Global Strategic Management 2

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competitive salaries and career development, strong leadership, and a reputation of following through with contractual obligations. Another contribution of ethics is that of investor loyalty. Investors are intrinsically interested in the financial performance of the organization. Because of this, investors realize that an ethical culture accomplishes greater returns through greater efficiencies, productivity, and profits. Looking at this from the negative side, unethical behavior produces fines and litigation that can lead to negative publicity that ultimately results in lower stock prices, reductions in customer loyalty, and a decrease in long-term sustainability. A third contribution is that of customer satisfaction. Through the learning in this course, it is clear that customer satisfaction is one of the most important factors in a successful business strategy. The development of a reputation of high ethical standards is preferred by most customers. This increases customer trust and respect, leading to a greater level of customer satisfaction. There are several areas of regulation that provide direction and protection for employees as well as the company with respect to ethical standards. The Sarbanes-Oxley Act of 2002 utilizes whistleblower protection that enables employees within an organization to report any unlawful acts they might witness. This protects the employee from having action taken against him or her by the employer. The Dodd-Frank Wall Street Reform and Consumer Protection Act reviews the financial regulatory system. This act was comprised of 16 provisions that provide for the accountability of financial institutions including regulation of complex derivatives that could potentially confuse consumers. It also attempts to educate consumers with respect to the financial industry and protect them from deceptive claims. Through these and other regulatory agencies, seven core best practices for ethical organizational development have been brought forward (Ferrell et al., 2019):

1. A code of conduct identifying ethical standards to be upheld within the organization should be compiled and communicated. Most companies today include this on their website to ensure that all stakeholders understand their diligence.

2. Oversight of the ethical standards should be supervised by high-ranking leaders within the organization. This demonstrates a sense of importance of the program and ethical standards.

3. All organizational leaders (particularly those in executive positions) should demonstrate the highest level of behavior. Role modeling and setting an example are some of the best methods of leadership.

4. A thorough communications method should be employed to distribute not only the code of ethics but also detailed expectations of ethical behavior. Additionally, a training session should be instituted and required for all employees within the organization ensuring a solid line of communication.

5. Corporate governance should include an easy method for employees to report violations. Organizational systems should also be in place to automatically detect violations.

6. If violations occur, the organization needs to take appropriate actions toward the individuals that were responsible. Appropriate internal communication needs to be conducted in order to ensure that all employees understand the actions taken. This will reinforce the expected ethical standards within the organization.

7. After violators have been reprimanded, systems need to be modified to ensure that the violation will not be repeated. Organization-wide communication of new and updated procedures and standards needs to reinforce the expected ethical culture.

BUS 6320, Global Strategic Management 3

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One issue affecting ethics that can arise is groupthink. Groupthink is an organizational issue that most companies have to overcome at some point in time. Groupthink happens when individuals within a group are discouraged from voicing thoughts that conflict with others and encouraged to conform to group thought. This sometimes leads to unpredictable and irrational behaviors potentially leading to unethical decision-making and behavior. Frequently, groupthink is fueled by the idea that the end justifies the means, which is many times tied to greed. Historically, groupthink has been used as a crutch for organizations that have been accused of unethical practices. For example, Walmart, Coca Cola, and Nike have all been accused at one point in time of unethical treatment of their employees. Volkswagen was accused of cheating on emissions tests. This is clearly an unethical action, but a significant number of employees

were involved with this unethical behavior. Toshiba was involved with an accounting fiasco when certain employees altered the financial results in order to meet financial targets. While these organizations have remained profitable, analysis of groupthink practices within each of these companies were inevitably a part of the reaction within the company after the accusations. Altering the culture away from groupthink practices is in the best interests of all concerned as it simply leads to bad decisions. Ethical leadership is of the utmost importance in maintaining an ethically sound culture within the organization. Beginning with solid character and competence, leaders also need the ability to lead and guide. Through honesty and integrity, as well as commitment and passion, ethical leadership will best be executed by leaders who have effective communication skills and the ability to inspire. Demonstrating strong ethical standards and practices everyday as a role model within the organization can be one of the most powerful influencers. The ability to model organizational values with a positive yet realistic view on the organization is a highly proactive characteristic of ethical leadership. Through the execution of ethical standards within an organization, corporate governance emergences. This can be defined as mechanisms to direct and control an enterprise in order to ensure that it pursues its strategic goals successfully, ethically, and legally (Rothaermel, 2019). In the most basic sense, this is a system to ensure that the organization is running effectively and ethically aligning with the strategic plan and mission of the organization. One method of checking the interests of the organization is a board of directors. Two unique types of boards can be implemented, including an internal board of directors consisting of the company’s senior management team. These individuals have a good understanding of the internal workings of the organization, which provides valuable insights into the challenges within the business environment. The other type of board would be an outside board consisting of senior executives from other organizations. While this group does not have the internal operations expertise, they provide a fresh perspective from outside the organization and are most likely to keep shareholder’s interests at the forefront. In conclusion, strong ethical leadership and corporate governance are absolutely critical in maintaining a competitive advantage and long-term sustainability of an organization. Having a strong allegiance to the code of conduct and organizational values will ensure an ethical culture aligns with the stakeholder’s preference. Through this, an effective global business strategy will be compiled and ultimately, a profitable business structure will be established.

With groupthink, employees feel pressure to act or think a certain way. (Andrewgenn, n.d.)

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References Andrewgenn. (n.d.). GroupThink (ID 71039997) [Image]. Dreamstime. https://www.dreamstime.com/stock-

photo-groupthink-business-cartoon-team-looks-thinks-exactly-alike-image71039997 Ethisphere. (n.d.). The 2019 world’s most ethical companies honoree list.

https://www.worldsmostethicalcompanies.com/honorees/ Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2019). Business ethics: Ethical decision making and cases (12th

ed.). Cengage Learning. Rothaermel, F. T. (2019). Strategic management: Concepts (4th ed.). McGraw-Hill Education.