This simply couldn't be worse news for two multinational giants in the global chocolate product market. Authorities in Canada have charged the food giants Nestle and Mars, together with a network of independent wholesale distributors, in an alleged conspiracy to fix prices of chocolates. Hershey is also involved - but they appear to have confessed to the illegal price-fixing activities and will be hoping for relatively lenient treatment in return for cooperating with the Canadian authorities.
Price-fixing is illegal - plain and simple. But it's also unethical. To be caught out price-fixing is to be caught acting against the interests of consumers. Not a good place to be if you are a global brand that values its reputation.
Nestle and Mars have both denied the alleged behaviour and have vowed to fight the legal action:
Nestlé said in a statement:
“Nestlé Canada will vigorously defend these charges. At Nestlé Canada, we pride ourselves on operating with the highest ethical business standards.”
Mars issued a similar promise to fight the allegations.
Time will tell whether price fixing has actually taken place.
But what is price-fixing?read more...»
The Co-Op has keen to highlight their ethical credentials as a key part of its marketing and positioning strategies. Supporters claimed that its mutuality was a more desirable form of ownership than PLCs.
The Banking Division has run into difficulties, and there have been significant changes in personnel within the last few weeks, in part as a response to major financial problems. On Friday there were reports that it had stopped offering loans to new business customers, and today The Independent on Sunday reported that The Co-Op Group's Finance Director Steve Humes had resigned. This followed the recent resignation of Brian Tootell after Moody's downgraded the Bank's bonds.
Mr Humes The Group Finance Director for the last two years, had been involved in managing the Co-Ops food operations, and may have had insufficient experience of its banking operations. Euan Sutherland the Co-Op's new CEO who was appointed in May, could be about to make significant changes in other key management positions.
The decision to stop lending to new business customer may imply that the there may be insufficient capital to support current obligations let alone new loans. The ethical bank may be about to meet its most serious crisis.
One of the strengths and a key component in the Co-Op Bank's USP after recent banking problems - sub-prime lending, collapse of Northern Rock and LIBOR rate fixing, was its emphasis of ethical banking.
Students attending our BUSS4 exam coaching workshops on Organisational Culture will be familiar with Jeff Skilling - the former CEO of Enron which collapsed so spectacularly over a decade ago.
The Enron collapse was closely linked to a strong, through ultimately toxic organisational culture that developed at Enron, which was an online energy trading business that rose quickly to become the 7th most valuable firm in the US.
The culture at Enron, described so powerfully in the film The Smartest Guys in the Room (and Broadway play of the same name) was a tough culture - a VERY tough culture. Students may recall the infamous policy of "rank and yank" in which 15% of Enron staff were dismissed each year as a result of Jeff Skilling's PRC (Performance Review Committee).
Skilling rose to the position of CEO in 2001 only to abruptly resign six months later. Soon after that, Enron collapsed in one of the most notorious corporate scandals of all time.
Jeff Skilling was sentenced to 24 years imprisonment back in May 2006 after he was found guilty on 19 counts of securities fraud, conspiracy, insider trading and lying to auditors.
However, it now looks likely that Skilling will end up serving only 10-11 years of his sentence. The news clip below explains why in more detail as does this news article from the BBC.read more...»
The horrific Bangladesh factory disaster has highlighted a number of business issues and proved a stark reminder of the global effects our purchasing decisions may or may not have on people halfway around the world. Tom White has already put up a blog with some initial thoughts; I thought I’d pose some further questions and examine some of the issues raised in that post.
A great starting point would be to listen to the ever-reliable Business Daily, from the BBC World Service. Their programme In the Balance invites guests to debate a topical business issue, and this week, the Rana Plaza disaster was under discussion.
One of the first questions to ask is to examine the extent to which firms which are supplied by such factories are responsible. There were more immediate causes, of course, such as the owner’s actions and the culpability of local regulation and enforcement (or lack of). But this is not the first time there have been such disasters, nor are the poor conditions in such factories surprising. So is it right that chains such as Primark continue to use such suppliers? Isn’t it their fault, with their demands for low prices and increased flexibility to meet the needs of the fast fashion market? Do they have a responsibility to ensure fair and safe working practices in factories they don’t own and which they are merely customers of? A lot of people would argue that yes, they do. But isn’t that the same as arguing we as consumers should audit the supply chains of the shops which we buy from? Primark is as much a customer as we are.
This is a really useful two-minute video snippet of a conference presentation by Procter & Gamble's CEO Bob McDonald.
He explains that the aim of Procter & Gamble is to move to a zero waste production environment. He makes a clear link between sustainability and productivity. If P&G's factories can operate more efficiently with substantially reduced waste, then it ought to be a win-win arrangement for both shareholders and society stakeholders.
P&G is a multinational manufacturer of a diverse portfolio of product ranges including personal care, household cleaning, laundry detergents, prescription drugs and disposable nappies.read more...»
You may not want to dwell on this topic, which is so terrible that I am sure your first reaction to what has happened will have been highly emotionally charged. The scale of the tragedy only seems to grow, with the situation perhaps made worse by the realisation that these events are very typical of working conditions in many countries.
I've been putting together some links to encourage a bit of reflection on what, if anything, we can learn.read more...»
Lots of great information from Schultz here and insights into his business strategy. Many insights too into Schultz's personal background and his views on what it takes to be a successful entrepreneur.
Put simply, this interview has everything! Organisational culture; entrepreneurship; CSR; emerging markets; retrenchment; ethics.read more...»
Terrific insights here from Andy Street, the CEO of John Lewis Partnership, about how the concept of trust is so important in business success. Some short, sharp points here which help identify elements of the organisational culture at John Lewis Partnership and perhaps point to some of the reasons why JLP has been so successful in recent years despite the economic downturn. Essentially Andy Street sees trust as a source of competitive advantage. But it is hard won, and easily lost! Businesses - take note!read more...»
An interesting, though obviously positive perspective here on Starbucks' approach to corporate social responsibility in urban America. CEO Howard Schultz also features - as you might expect.read more...»
Teachers who remember CSR as the research theme for Section A will remember Unilever's Project Shakhti as one of the key examples for that research. At the current round of tutor2u BUSS4 Revision Workshops, one suggestion for Section B is that students might research Unilever again to get some WOW examples for essays about CSR.
Students may not be familiar with the Unilever name at first, but will soon find that they are very familiar with many of the vast range of brands in the Unilever portfolio. They will also find that a Sustainable Living Plan is a core part of the Unilever culture, and applies to every stage of their supply chain; I know from one of my former students who is currently on an industrial placement with Unilever during his Business degree, that this starts at the heart of the business by establishing processes and habits in their offices and factories which reduce environmental impact, getting all staff to focus on reducing waste and recycling as much as possible.
Students of corporate social responsibility will come across the concept of philanthropy as a powerful example of businesses and entrepreneurs "doing good" for society.
Perhaps the most significant recent example of philanthropy is the Giving Pledge, which was an initiative launched by Microsoft founder Bill Gates and his wife Melinda.
The Giving Pledge is a commitment by the world's wealthiest individuals and families to dedicate the majority of their wealth to philanthropy. Contributors already include Mark Zuckerberg (Facebook), Larry Ellison (Oracle), Warren Buffett (Berkshire Hathaway)
And now Sir Richard Branson has joined the club, stating his intention to donate half of his fortune to environmental causes based around the social enterprise model.read more...»
I am regular listener to Cambridgeshire’s Star FM Business Hub, which covers some amazing topics for small businesses and is a regular feature of my BTEC lessons. This week's episode however contained a large segment on the importance of culture in a business' success, which is particularly pertinent for BUSS4.
The interview with William Rogers, CEO of UKRD group (owner of Star Radio), gives a fantastic insight into how leaders can create the right culture for a business to succeed. It can be found here and starts 27 minutes in.read more...»
Barclays new CEO Antony Jenkins has announced details of his strategic review in the wake of Libor-rigging, the bank's role in PPI mis-selling and other scandals.
Jenkins has pledged to rebuild the bank's reputation by fundamentally changing the culture under which its traders operate, including changes to payment protection insurance selling and staff bonuses.read more...»
The discovery of horse meat - disguised as beef - in burgers and lasagnes has kicked off a crisis which illustrates lot of key business studies concepts.
At the heart of the issue is trust. Can consumers trust what retailers sell to them?
From the consumer perspective, if a product is labelled "Beef Lasagne", is it too much to ask that the ingredients for the lasagne include beef rather than horse or donkey?
From the retailers perspective, can they trust that the products they source from their supply chains are as described? What checks and controls do they need to have in place to ensure that suppliers deliver what they promise?
Lots of other concepts are relevant to the developing story. For example, what contingency planning is in place to deal with the media storm and consumer reaction to further revelations.
In this video, the FT's Hannah Kuchler reports on how food companies now have to rebuild trust, without pushing prices too high.
FT publishes a great report on the culture at Amazon's Rugeley distribution centre. An interesting insight into the culture of a cost focussed and highly effiecient business that is described by founder Jeff Bezos as: "Our culture is friendly and intense but if push comes to shove, we'll settle for intense."
The banking sector has come under intense scrutiny in recent years as a result of a series of scandals which have lifted the lid on excessive risk-taking, illegal and unethical behaviour. Corporate culture has been blamed for many of the issues that have come to light.
In this article in the Guardian, five "experts" are asked for their views on how banks can change their culture.read more...»
Some great business studies in this short video about the emerging horse meat scandal.
Channel4 New Science reporter Asha Tanna takes a look at the process that delivers food to our tables, and examines what it is we're really eating.
The lid is being lifted off many aspects of the food production industry and as this video suggests, consumers may be about to discover more than they bargained for!read more...»
If you had lasagne last night you might be wondering if it was the last remains of the non-running hurdler "100% Pure Beef". Findus have a major problem to resolve after tests showed that their lasagne had been made from horsemeat.
The Royal Bank of Scotland has fined been fined £390m for attempting to rig Libor, the inter bank lending rate. The Financial Services Authority says wrongdoing was taking place two years after it was bailed out by the tax payer.
Stephen Hester, chief executive at RBS, said after the settlement: "Libor manipulation is an extreme example of a selfish and self-serving culture that took hold in parts of the banking industry during the financial boom."
The corporate culture inside RBS during the financial boom has certainly been laid bare by the Libor rate-fixing scandal.read more...»
What a powerful but also distressing story this is. The loss of so many lives because of a failed organisational culture at the Mid-Staffordshire NHS Trust.
The news has been packed with reactions to the findings of a public inquiry into the failings of Stafford Hospital. The Francis Report has called for sweeping changes (290 recommendations in total) to the culture and regulation of the NHS in England.
The Mid-Staff scandal illustrates so explicitly the link between organisational culture and leadership - they are two sides of the same coin.
Below are some resources which help students understand the background to the Francis Report and also gather evidence on the reasons for, and effects of the inadequate organisational culture at Mid-Staffs.read more...»
Selecting a memorable brand name for a product is fraught with linguistic and cultural difficulties. A week ago, Pret A Manger had launched a spicy tomato flavoured crisp " Virgin Mary", based on the non-alcoholic version of a Bloody Mary cocktail.
After complaints from members of Protect The Pope, a Roman Catholic presure group; Pret A Manger’s CEO Clive Schlee removed the product from sale and apologised to The Church, he announced that the unsold packets of crisps will be offered to the homeless. Although no laws were broken, and no politician had expressed concern, it highlights difficulties associated with a firm's ethical behaviour - whose ethics, whose values drive what is acceptable to society.
The new product drew attention to the brand, but it
illustrates the importance of PEST analysis and Delphi techniques before a
product is launched, it also indicates the influence of new media and blogs used by pressure groups to influence opinion and commercial decisions.
Is it possible for a new CEO to achieve significant change in the culture of an organisation? Managers and employees at Barclays are about to find out!read more...»
Global multinationals like Starbucks, Amazon and Google have faced intensive pressure in recent months for their perceived tax avoidance activities. Why has this become such a big issue? What are the implications for those businesses and what should government do?
This boardroom discussion from Reuters is well worth watching to enable students to update their understanding of the commercial, legal and ethical issues raised by corporate tax avoidance.read more...»
A directive from The US Federal Aviation Administration has stopped flights of the Boeing 787 Dreamliner, until the plane maker has satisfied the regulator that it has resolved problems with the aircraft’s battery systems. Boeing’s shares had dropped by 2% $72.80 (£45.50) after the announcement. The share price of GS Yuasa the Japanese battery maker had fallen 11% since 7 January when an electrical fire broke out on a JAL 787 at Logan International Airport in Boston.
You may have read about the company Teapigs, which presents itself as a quirky small upstart company, when it began its life under the close support of a much bigger business. Here’s another example: Harris and Hoole - a coffee shop that presents itself as an independent chain but is in fact 49% owned by…read more...»
As reported in Private Eye, when is a small business not a small business? At first glance, Teapigs looks like a small company on a mission to introduce quirky, premium teas to the mid-market segment. The company’s website tells a reassuring story of Nick and Louise who “met while working for a really big tea company”. What you won’t find out by reading the website is that the really big company is in fact…read more...»
Markets for ethical goods and services have remained resilient throughout the economic downturn as a progressive core of retailers and producers continue to factor sustainability such as Fairtrade ingredients into their products and services.
That is the conclusion of The Co-operative’s annual Ethical Consumer Markets Report (pdf) which shows that since the onset of the recession five years ago the total value of ethical markets has gone from £35.5bn to £47.2bn.
Acting as a barometer of green markets since 1999 when annual ethical sales were just £13.5bn, the report analyses sales data for various sectors including food, household goods, eco-travel and ethical finance.
Amongst the biggest growing categories during the recession are sustainable fish up 323 per cent from £69m to £292m, Fairtrade which has increased 176 per cent from £458m to £1,262m and free range eggs sales up 78 per cent from £444m to £792m.
However, sales of organic produce, although now stabilised at £1.5bn, have declined from a high of £1.9bn in 2008.
In 2011, ethical food and drink markets increased 7.8 per cent per cent to reach £6.9bn. Markets for green home products were up 10.6 per cent to £8.4bn and ethical personal products were up 4.3 per cent to £1.8bn
Compare and contrast should be the mantra for A2 business students looking for real-life business examples to deepen their understanding. Here are two news stories which related to the broad topic of CSR which provide quite a vivid contrast.read more...»
Twenty years ago the Co-op had a share of the grocery market similar to Tesco’s. Then Tesco took off and left it behind. This isn’t so much a blog on the rise of Tesco, but picks up on a few ideas about where the Co-op may have gone wrong, and some indications that the co-operative ‘movement’ is fighting back.read more...»
Last night DigitalDonut hosted a debate in London discussing the view of Kevin Roberts, CEO of Saatchi and Saatchi, that Marketing is Dead. He has said that "Creative leaders should go for getting lots and lots of small ideas out there. Stop beating yourself up searching for the one big idea. Get lots of ideas out there and then let the people you interact with feed those ideas and they will make it big.”
Roberts' view was contrasted with the belief of David Ogilvy, hailed as the 'father of advertising', that "You will never win fame and fortune unless you invent big ideas. It takes a big idea to attract the attention of consumers and get them to buy your product. Unless your advertising contains a big idea, it will pass like a ship in the night."
Many Business students get round to considering the importance of research and development (R+D) and innovation to firms. To many, it’s seen as a crucial component to business success. Firms often keep all kinds of secrets and guard them jealously. Now a story has emerged of a possible spy at Dyson, long seen as a key UK-based innovator.read more...»
Reuters have uncovered some interesting figures relating to Starbuck's UK operation - is it making a profit or not?read more...»
Newcastle United’s £24million sponsorship-deal with Wonga the high-interest, short term "payday" loan company, has generated a great deal of opposing comments from both supporters of, and opposition, to the new sponsors. Business students may consider this alongside the role of sponsorship within the context of marketing – is any publicity good publicity? Or will this debate simply harm the fortunes of (my beloved) NUFC and/or wonga.com?read more...»
Sustainability is a great business topic for discussion. It’s a notoriously slippery and difficult term to define, as the idea means different things to different people. It’s also a concept that has been much refined since it appeared on Business Studies specifications about 10 years ago. When firms talk about environmental sustainability today, they tend to be more focused than just pursuing a vague notion of being ‘environmentally friendly’. Business activity is rarely friendly to the environment. Instead, businesses now talk more about ‘reducing resource use’, from energy to packaging, and water to widgets.
This has really pushed the sustainability concept into the mainstream. Now being ‘Green’ doesn’t have to be purely seen as an ethical or marketing position. Firms increasingly sell it to their shareholders as a way of cutting costs, and therefore boosting profit margins. Justin King, the boss of Sainsbury's, is determined to make the company Britain's most sustainable grocer. This could be a good start point into finding where the debate stands today.read more...»
Quite a lot of coverage in the media today looking back at the first year of the Occupy Movement - a series of protests that started in Wall Street NYC and spread widely in certain developed economies. The Occupy campaign has changed and evolved during the year and has certainly attracted much less media attention in recent months. So has it worked? Is Occupy a significant external influence on the actions of big business? This BBC video provides a useful, brief retrospective on Occupy.read more...»
If you want to show students an example of how even the worst of economic downturns can still present an opportunity for some businesses then you could do worse than show them this article from the BBC about the net profit figures from pay-day loan specialists Wonga.com. The article reports that Wonga have seen a trebling of their profits during 2011 as customers feel the pinch of the recession and look for a quick way to raise cash.
The article strays a little into negative reporting but it reminded me of a lesson I observed last year where the interest rate charged by Wonga was used as an example for students who were calculating compound interest using spreadsheets (you're not a true teacher of business studies until you've attempted to deliver a lesson on compound interest!). Given the APR levels set by the company, students were calculating that a £100 loan that was not paid back for 4 years would accrue a debt of £315 million!
The scandals of LIBOR fixing and mis-selling afflicting Barclays has brought the concept of corporate culture to the forefront of media coverage of business. I’m sure this will be a fruitful source of exam questions in the coming years as students are encouraged to consider the role business culture plays in business activities that are proved to be illegal or considered unethical.
This excellent short video from the FT has some useful insights into the specific issues raised by the Barclays scandal and also considers some broader issues about how positive corporate culture can be encouraged. Some really interesting points made about cultural values that firms have and also about how to identify what the prevailing culture is.
Could the furore over the behaviour and culture of the UK’s largest banks be just the thing that the Co-op needs to build the scale of its banking division?
This useful article in the Guardian analyses whether recent events might combine to make the upcoming growth in the Co-op’s network really well timed.read more...»
The allegations of price fixing of Barclay’s LIBOR rates have led to the resignation of The Chairman Marcus Aegis on Sunday night, politicians, and journalists wondered if Bob Diamond, The Chief Executive ought to be on his way out instead.read more...»
The provenance of the timber used by IKEA when manufacturing their self-assemble furniture is of importance to some but not all customers. The giant company has come under criticism for the logging practices of one of the leading timber suppliers from Russia as this news story reports. What systems must a business such as IKEA have in place to minimise the risks of these controversies?read more...»
Barclays have been fined for fixing prices or interest rates. The London Interbank Offered Rate (Libor) interest rate is used to price loans and savings rates.
Savers might have received lower interest on their deposits from 2005, and borrowers may have been forced to pay more on their loans.read more...»
Our BUSS4 blog has a series of streamed revision presentations which students may find helpful in supporting their studies ahead of the exam. They are listed below:read more...»
A fascinating story has appeared on the BBC News website featuring Jerry (of Ben & Jerry’s) as he explains the extent to which, after being taken over by Unliever in 2000, they have been able to bring their values to the vast conglomerate.read more...»
Two themes wrapped up together here.
Firstly, you will be sure to have noticed references to a ‘Shareholder Spring’ in which normally quiet and docile shareholders have been increasingly resistant to executives’ claims for ever higher rewards. There’s a link to a very handy summary below.
Secondly, this serves as a reminder of one of the several ways in which you can boost the evaluative component of your answers.
Some evidence here of increasing shareholder activism which illustrates the pressure now being placed on the Boards of some quoted firms.
The revolt by Barclays shareholders (almost one third of them voted against the proposed remuneration packages for senior management) didn’t stop the deals being approved. However, this is a good example of shareholders expressing their anger at the activities of firms whose pay packages for top directors seem to fit uncomfortably in this period of prolonged austerity.read more...»
A fascinating and detailed look here at working conditions at Apple’s main supplier in China. This 15 minute video raises a lot of issues which students can develop; particularly useful for any discussion around CSR, but also excellent for operations and HRM. In the video, ABC News Nightline goes behind the scenes of the FoxConn factory - the operation which makes iPads and iPhones.read more...»
A great example here of the role of competition legislation and regulation here - which involves everyone’s favourite A2 case study - Apple…read more...»
On the face of it, the findings of the Independent newspaper’s investigations into the sourcing of the official London Olympics GB team kit are very damaging for both LOCOG and the supplier - Adidas. You can read the full report here.read more...»