Case Study

The purpose of this assignment is for you to think critically about ethics and social responsibility for a business. Case studies typically include a case to read, followed by students writing a brief paper in response to the case. This particular case study provides the critical-thinking questions.

See Chapter 3&4 outline below the case study!

Case: Zappos Employees Do More than Sell Shoes

It’s hard to imagine not being able to buy a pair of shoes online. It’s even harder to imagine not owning a pair of shoes at all. The founders and employees at Zappos are familiar with both situations. Co-founder and CEO Tony Hsieh got Zappos off the ground in 1999 when he and other investors realized that nowhere on the Internet could consumers find a real selection of shoes. You know how successful Zappos has become since then, despite subsequent competition—but you might not be aware of the company’s efforts to give back to its community, including giving shoes away to children in need.

Zappos engages in social responsibility initiatives because “we feel that it’s the right thing to do,” explains Shannon Roy, the company’s Happiness Hippie (her job title). The company develops relationships with charitable organizations that are similar to those it builds with customers and vendors, looking for ways that employees can interact directly with the community through these organizations. Some of the broad areas in which Zappos offers assistance are poverty and education, cancer research and care, and pets and nature. Specific efforts include partnerships with charitable organizations, such as Goodie Two Shoes, a foundation that provides new shoes and socks to children in crisis or need. Through its Goodie Two Shoes Giveaway each year, the organization teams up with Zappos and other firms to donate and distribute thousands of footwear products to children who need them. “It’s giving back to the community,” says Shannon Roy, who adds that Zappos employees feel driven to participate. “It’s part of our being, part of our culture, it’s very inherent in what Zappos is all about.” Working at Zappos is “grander than the 9 to 5 job. It’s doing something for the greater good.”

It would be easy for an online retailer like Zappos to set up shop anywhere and ignore its surroundings. But that’s not Zappos. Instead, the firm made a deal to renovate the vacant Las Vegas City Hall for $40 million, bringing about 2,000 employees to downtown Las Vegas—an area that could use an economic and social boost. CEO Tony Hsieh admits that originally he thought about building a “dream corporate campus,” much like those of Apple, Google, and Nike. But when the Las Vegas opportunity came along, Hsieh and other Zappos managers thought: “Let’s not be like the other companies. Let’s not be insular and only care about our employees. We want to help contribute and help build a community and really integrate into a community around our campus.” City officials predicted that the economic impact to the downtown area could top $336 million, bolstering real estate, health care, restaurants and hotels, retailers, and other businesses. “I think this is part of what our brand is about,” observes Matt Burchard, senior director of marketing, photo, and video. “We’ve added a core tenet of what we stand for, and that’s community.”

Burchard notes that Zappos is committed to investing in things beyond its core business, like the infrastructure of downtown Las Vegas. Recently, The Downtown Project (founded by Hsieh and others) partnered with Venture for America to attract new college graduates for two-year stints to help startup businesses get off the ground in Las Vegas. In addition, The Downtown Project has bought up Las Vegas properties, such as an old Motel 6, a 7-Eleven building, and numerous condominiums for demolition or renovation. The idea is to revitalize the entire area—both economically and socially.

Zappos fulfills the four levels of the social responsibility pyramid: economic, legal, ethical, and philanthropic. The company is stable and profitable, giving it a solid platform from which to launch social responsibility initiatives. It operates with a strong legal and ethical base. Recently, when Zappos became the target of a cyber attack that gained access to its internal network (and the accounts of 24 million users), the firm acted fast, putting nearly every employee to work assisting in its response to the breach. Even though the breach did not reach complete credit card numbers or other critical data, the company notified its customers and reset all of their passwords. Zappos also warned customers to be on the lookout for phishing emails and other scams. Finally, Zappos is generous in its philanthropic efforts, donating money, shoes, and employee time to its various causes. “We don’t overanalyze it,” says Rob Siefker, director of the customer loyalty team. “We just know who we are and who we want to be. We act on that.

Sources: Company website, www.zappos.com, accessed June 27, 2012; Goodie Two Shoes Foundation, www.goodietwoshoes.org, accessed June 27, 2012; Joe Schoenmann, “Zappos CEO Buys Motel, Strikes Deal to Bring Young Talent Downtown,” Las Vegas Sun, March 27, 2012, www.lasvegassun.com; Dave Toplikar, “Las Vegas City Council Approves Final Deal Bringing Zappos Downtown,” Las Vegas Sun, February 1, 2012, www.lasvegassun.com; “100 Best Companies to Work For,” CNN Money, January 19, 2012, http://money.cnn.com; Andy Greenberg, “Zappos Says Hackers Accessed 24 Million Customers’ Account Details,” Forbes, January 15, 2012, www.forbes.com.

© Cengage Learning

Critical Thinking Questions

Using information from the case, answer the following questions (1 & 2). (Be sure you read and understand the concepts in Chapters 3 & 4 to answer the following questions.)

1. Briefly explain how Zappos has implemented social responsibility programs into its business. (Include at least a 50-word response)

2. How have charitable giving and volunteer engagement programs helped Zappos foster social responsibility? (Include at least a 100-word response)

Chapter 3: The World Marketplace:

Business without Borders There are advantages for businesses to produce, buy, and sell products and services in a global market. Businesses can have a competitive advantage, attain opportunity cost, and even have an absolute advantage with some products. This means that when you talk about clothing, you may think of China, or when you think about high performance cars, Germany comes to mind. Some countries have restrictions that deter free trade. Businesses need to hurtle over barriers. Some of the barriers fall into socio-cultural differences, economic differences, and/or legal/political barriers. The best way to alleviate these disparities is to do some homework. There are alternative ways to break down these barriers that businesses need to consider, such as joint ventures, partnerships, and strategic alliances. Businesses need to analyze economic differences such as a country’s infrastructure, transportation, communications, energy, and finances. The country’s laws and regulations have a large impact on how to do business. The political climate sets the stage for stability. Of course, trade restrictions impact a business expansion. Many countries use tariffs, quotas, and voluntary export restraints to restrict trade. These restrictions protect domestic industries and jobs. On the bright side, free trade is growing and opening the doors for business opportunity.

Chapter 4: Business Ethics and Social Responsibility:

Doing Well by Doing Good Business ethics also plays a major role in a company’s success. The goal is to follow the law and be ethical at the same time. This can be a challenge for some. For example, a business can produce a product in a foreign country using child labor, while adhering to the law in that country. Using child labor allows the company to increase their profit, be more competitive, and grow their business. The company is now doing what is best for the shareholders, but not following the company code of ethics, which likely dictate that it is unethical to use child labor. Most organizations will use the law as a guideline, therefore allowing a place for an ethical decision. There are also many organizational situations that may lead to an ethical dilemma. For example, a company has a major project that must be completed in two weeks. The project requires a salaried employee, who typically works Monday through Friday (5 days a week), to also work on Saturday and Sunday (7 days a week). The company expects the employee to rise to the occasion and receive no additional income or days off. Clearly, ethical dilemmas present challenges to do what must be done but also what is right and fair. An organization’s code of ethics helps guide a person to make the best ethical decisions that meet the values of the organization. In order for this code of ethics to have a positive impact on the company, there needs to be leadership, clear vision for ethical behavior, workshops or training on an annual basis, maintenance of a global ethical presence, support for a clear and trusted reporting system, and an enforceable ethical code in order to establish accountability. Many organizations that hold ethical behavior as a top priority will hold a yearly workshop. The objective is to review the company policies and make it very clear what is the expected ethical behavior. To hold its employees accountable and make sure there is no question about what is ethical behavior, an organization may require all employees to sign an agreement of understanding, which is placed in the employee’s personnel files. Recall how bad ethical behavior of a few employees at Enron resulted in consequences for all stakeholders. Clearly, organizations must invest time and resources to maximize good ethical behavior. Most organizations maintain a commitment toward social responsibility. There are many ways a corporation can contribute to society. One way is corporate philanthropy, such as giving money to a university. Another means of supporting communities is by direct corporate responsibility. For example, Cisco has developed relations to recruit and hire disabled veterans. Also, many companies are concerned about our environment and have taken steps to improve the earth. UPS uses electric vehicles in many metropolitan cities as their way to help improve the environment. Many organizations are also using sustainability as a social and economic practice. For example, a sustainable organization might use “Backcasting,” which is a strategy that examines the past in order to try and predict the future (Hartman & DesJardins, 2008, p. 387). One additional strategy—the Triple Bottom Line approach—demonstrates how “sustainable business and sustainable economic development seek to create new ways of doing business in which business success is measured in terms of economic, ethical, and environmental sustainability” (Hartman & DesJardins, 2008, p. 372). The apparent objective is that companies become environmentally and fiscally responsible for the overall good of society. With certainty, corporate responsibility indirectly adds to the bottom line. About 80% of Americans consider corporate citizenship when purchasing products and services. In a capitalistic society, the number one objective is to earn a profit. Yet today, an organization must be an ethical organization, while also a good corporate citizen