Business Case Analysis
Business Case Analysis
Starbucks Corporation: Fighting Racial Bias
Soomaya Rahim Baccus - 301140705
Sunny
Mandeep
Rushabh -
Tatiana Fernandez 301167630
MGMT 703, Ethics and Stakeholder Management
Prof. Byron G. Tobar
Centennial College
June 9, 2022
Table of Contents
Executive Summary................................................................................................................................................1
TOC o "1-3" h z uIntroductionPAGEREF _Toc1823117021 h2Stakeholder AnalysisPAGEREF _Toc192341310 h2Internal Stake Holders:PAGEREF _Toc1882301967 h3External Stakeholders:PAGEREF _Toc1487402005 h3Problem StatementPAGEREF _Toc360941642 h3SWOT ANALYSISPAGEREF _Toc244717097 h4Fish Bone analysis..Identification of AlternativesPAGEREF _Toc1792290641 h7Implementation PlanPAGEREF _Toc1887805528 h10Immediate ActionsPAGEREF _Toc2134852388 h10Short-term actionsPAGEREF _Toc1950259507 h11Long-term actionsPAGEREF _Toc584115344 h12ConclusionPAGEREF _Toc1496633683 h13ReferencesPAGEREF _Toc342168 h16
IntroductionThe case Starbucks Corporation: Fighting a Racial Bias talks about what happened in a Starbucks store in 2018. The situation was mainly about how employees of the store dealt with two black men that tried to use the bathroom without having any consumption at the store. This led to a big misunderstanding when the manager of the store called the police, and the two men were arrested for trespassing. The video of the arrest went viral, and it raised the concern of how these kinds of situations were being managed.
Starbucks CEO had to give a public apologize, and the company reached a financial settlement with the two men for the incident. Moreover, Starbucks decided to train all its USA employees on this matter; they closed all their stores on May 29, 2018, to give a half-day training on racial bias. According to some employees, the training was not that effective, it had some critics such as: 1) it was not inclusive, 2) it was an African American history class, 3) they showed general police videos and did not reflect on the actual situation.
Stakeholder AnalysisA stakeholder is defined as an individual or a group that has one or more than one stake in a company. They are directly affected by the actions, decisions, and culture of a business and vice versa, the stakeholder can in turn affect the business as well. Marc Benioff, CEO of Salesforce.com, recently said "My customers are my stakeholders. My partners are my stakeholders. My employees are my stakeholders. I have other stakeholders, too. I even consider the communities that we live in our stakeholders. The environment is a stakeholder. We cannot do our business without that." (Benoff, October 2015)
In the case study, we have various stakeholders that can be further divided into internal and external.
Internal Stake Holders:Employees: These are the stakeholder that works for the company and has direct contact with the customers. They are the ones responsible for providing good customer service through their products and customer service skills.
CEO: Mr. Kevin Johnson is the representative of Starbuck as a whole as well as the spokesperson who apologized publicly. He also facilitated the four hours after noon training on the racial topics so that they are more versed in dealing with such situations again.
Store Managers: Each outlet have store managers who are responsible for the operation of the shop as well manage the employees along with the unforeseen event, in this case, the store manager went and dealt with the two black men asking them if they want to order drinks and then they refused, he decided to ask them to leave and when refused, he called the cops.
Customers: The one that purchases the products in the outlet and mostly the one that promotes or demotes the company's goodwill through the product and services they are being offered. When the company closed down the stores one after for 4 hours, the customer was angry.
External Stakeholders:Media: When the internet of the arrestation was posted online, it attracted a lot of people and created a buzz. After the incident. The media played a role in communicating to the audience about the case.
Police: When the two black men refused to leave the premises, the store manager contacted the police filing a trespassing case. They arrested the two men even if the reason was not justified.
Competitor: The competitors are taking advantage of this situation by commenting on their thoughts on Starbucks.
Problem StatementProblem Statement
Problem Statement 1 Providing a four-hour training will not eradicate the racism within the workforce, this approach should be an informative session rather than a time-consuming mandatory training.
Problem Statement 2: Risk of reverse racism. A customer of color should not require special attention. All customers should be treated equally irrespective of their race.
Problem Statement 3 Opening restrooms to the public may cause hindrance to the Starbucks employees in terms of abuse of the infrastructures provided. Therefore, workload on employee will increase, unless additional resources are recruited.
Problem Statement 4 The police have arrested two men without proper proof which shows an abuse of power encouraging racism. The officers should properly assess the situation before make the right call.
SWOT ANALYSISA SWOT analysis will enable us to understand Starbucks in terms of its internal and external factors affecting the business. The internal will revolve around its strengths and weaknesses while the external factors will cover the opportunities and threats.
Even though Starbucks have strengths such as attracting more customers to its outlet when it will open free washroom, most of the advertising was a negative one because of its racism goodwill it displayed within the society. There are also opportunities for Starbucks to expand in its diverse workforce therefore attracting even more customers that will support their cause. But the bad reputation it has gained for the racism case will also cause controversies for them especially with competitors trying to use this situation against them therefore causing threats to the business.
Starbucks has attempted to solve this issue by apologizing to the public and by providing training to the workforce to educate them about fairness in dealing with customers equally.
Once a proper process is settled, Starbucks will no longer face these types of issues that would lead to their bad reputation within the society but this will involve a long-term plan as well high investment cost in order to train all employees, hire security staffs or even opening washroom to the public.
STRENGTH WEAKNESS OPPORTUNITIES THREATS
1 Starbucks Corporation is the most popular and strongest brand in the food and beverage industry (Win et al., 2022).
It is a big international company with more than 17,133 stores across the world and is an embedded part of many people's lives globally. The company culture should mirror its current status in the market. Therefore, treating everyone the same should have never been an issue. Starbucks workforce has opportunity to address this issue all while by strengthening their companys culture. Therefore, expanding their customer base. The negative marketing and backlash Starbucks has faced was unavoidable due to its current position in the market. Furthermore, the racism workplace incident infused distrust in its customer service.
2 Starbucks has shown accountability by investing in a 4-hour intensive training for all the staffs in America and opted to close the stores on that specific day. This shows that Starbucks cares about its harmony about its customers and employees.
Despite being such an impactful and successful business, it is surprising that their staffs lacked proper skills and training to handle this situation. However, this training does not guarantee that this situation will not repeat itself. Starbucks cannot fully control a persons personal bias which influence how they behave. Starbucks can invest in proper training and onboarding plans to better equip the staffs onto how to deal with different situations at work. This is will ensure that the right people are recruited.
The threat regarding having trained staffs will be an even worst marketing strategy if such situation arises again. Since the behavior is not fully in control of the company but rather on an individual basis, the company can experience more severe backlash if this happens again.
3 Starbucks has experienced a stable revenue with a growth over the past years, resulting in the strong financial position with an annual revenue of $29 billion and profit of $5.4 Billion in fiscal year 2022. Despite being such a financially stable company, it failed to invest into its security to handle such situations. Instead, a third party, (the police) had to involved which created more publicity within the society. Since the company is well established, they can open more stores within a more diverse location. This is an opportunity for Starbucks to expand beyond those illusionary barriers. This alternative can also put the company at risk of reverse racism where the focus is too concentrated on a certain community. The company might overdo and over justify the situation which can create expectations of favoritism from the society.
4 Starbucks provide a wide range of innovative products and has the capacity (resources) to expand even further in terms of their products and services.
If they try to innovate through the same marketing strategy. This can affect the originality and authenticity of the company.
Starbucks can opt for price differentiation based on the originality of the product (newer trendy product cost more) to grow their customer base by offering premium, student packages all the way to cater for all ages, race, preferences and class. There are currently a lot of competitors in in that field, therefore Starbucks must prove themselves in terms of their products and services especially in their new innovation.
5 Adequate training has been provided with the intent to help employees to have better understanding how to deal with certain unforeseen situations. The fact that training was only made available in US and not in other countries where the Starbucks outlets exists, it has raised a lot of questions within the society therefore endangering its approach to racism. (Did they mean that racism only exist in America)
Starbucks has coffeehouses mainly in the US. Global expansion in emerging economies such as India, China and few regions of Africa. Promoting the same training everywhere can represent a great opportunity to boost the companys goodwill globally. There can be risks of culture differences within the workforce as well as the customer base Therefore Starbucks will require to provide tailor made training to the different outlet in every country it expands to.
Identification of AlternativesProblem 1: Providing a four-hour training will not eradicate the racism within the workforce, this approach should be an informative session rather than a time-consuming mandatory training.
No Alternatives Pros Cons
1 Encourage inclusive culture (employ more black people, etc.).
This alternative will help avoid similar situations and also encourage customers to feel more welcome with a diverse employee workforce.
The fact that diversity should be implemented in a 4-hour training affects the goodwill of the company It took this event for the company to realize the need to emphasize racial inclusivity talks.
2 When onboarding new people, Starbucks should emphasize how employees should treat all customers equally.
Employees will have the right expectation from day regarding the importance of treating everyone the same.
These pieces of training should not be piled on only during the onboarding phase but should rather be regular communicated (through 1-2-1, performance reviews, policy notices, etc.)
3 During interview screening, the interviewer needs to make sure that the interviewees attitude towards racism is in check. Employing the right people and recruits will fit into the company's new and improved culture. This interview process can become uncomfortable during this type of screening.
Problem 2: Risk of reverse racism. A customer of color should not require special attention. All customers should be treated equally irrespective of their race.
No Alternatives Pros Cons
1 The proper process in place to carry out our activities such as providing access to restrooms (giving the keys), should be clear that it applies to all customers. Building these infrastructures can cost up to 400,000 CAD
Employees will have a better guideline on how to deal with situations. Expectations for the company will be clearer. In addition, this can be added as other milestones for employees' performance as a clearer expectation between the employee and employer. Makes guidelines bulky and confusing for employees when this instruction should have been a general behavior. (Everyone is the same)
2 Employees of all races and colors should be employed as well as put at a high level of hierarchy in the store. For example, the company should employ black store managers as well to promote inclusivity. This will project a good image of the company where all employees, as well as customers, are treated fairly While addressing this problem, we should ensure that the company does not fall prey to anti-white. For example, if there is a better-experienced candidate, race should not be a factor just because the company has to fill a quota of colored people. Equal opportunities should be provided on a merit basis rather than race.
Problem 3: Opening restrooms to the public may cause hindrance to the Starbucks employees in terms of abuse of the infrastructures provided. Therefore, workload on employee will increase, unless additional resources are recruited.
No Alternative Pros Cons
1 The company can provide a separate restroom facility for the public and employees.
Better management of the restroom and maintenance of the public so that there is no abuse of the facilities provided.
Additional cost for the company in terms of security and cleaning.
2 The security of the employee is compromised with the public restroom. This will attract more customers as they will be inclined to buy from the company as they will be exposed to the services being provided. Following this change, a prospective customer has the right of service from these employees but now, this can put the employees as well as the consumers in a mix-up.
Problem 4: The police have arrested two men without proper proof which shows an abuse of power encouraging racism. The officers should properly assess the situation before make the right call.
No Alternative Pros Cons
1 Each Starbucks store should employ security staff. The average cost of employing one security guard would be around $16.50 per hour. Police will not be involved as the matter will be settled internally therefore avoiding negative media limelight. The security might be biased in favor of Starbucks which might make things even worse.
2 The police should have a set of criteria before arresting anyone in public. This will guide officers in making better decision without unforeseen consequences. Going through a set of criteria may delay proper action and therefore increase the danger in certain cases.
Fish Bone Analysis
Problem statement 1. Providing a four-hour training will not eradicate the racism within the workforce, this approach should be an informative session rather than a time-consuming mandatory training
1817914152399Closure of store for a full noon
00Closure of store for a full noon
-216625222159No proper facility for washrooms
No proper facility for washrooms
544104205831002717619750210045937711360711.Providing a four-hour training will not eradicate the racism within the workforce, this approach should be an informative session rather than a time-consuming mandatory training.
001.Providing a four-hour training will not eradicate the racism within the workforce, this approach should be an informative session rather than a time-consuming mandatory training.
Profit and goodwill loss
198664320320
56061418360600265611419385600-25527017725500
Not aware about the real reason
1665514179161 About the Training
3009265204470 No proper feedback
-86813125004No policy for training on different ethical issues
00No policy for training on different ethical issues
184512927940 Lack of knowledge
00 Lack of knowledge
Problem Statement 2. Risk of reverse racism. A customer of colour should not require special attention. All customers should be treated equally irrespective of their race.
544104205831002717619750210045937711360712. Risk of reverse racism. A customer of colour should not require special attention. All customers should be treated equally irrespective of their race.
002. Risk of reverse racism. A customer of colour should not require special attention. All customers should be treated equally irrespective of their race.
24982711944910044631318360600-25527017725500
-195943197575Written statement or rules not issued to employees
0Written statement or rules not issued to employees
200841437646Employees were not trained to value their each and every customer
0Employees were not trained to value their each and every customer
Problem Statement 3. Opening restrooms to the public may cause hindrance to the Starbucks employees in terms of abuse of the infrastructures provided. Therefore, workload on employee will increase, unless additional resources are recruited.
-217714314234People may take it as for granted. There is also such example available .
0People may take it as for granted. There is also such example available .
18179146713If no proper security is available at store .
00If no proper security is available at store .
544285203290002715985726610045937711360713. Opening restrooms to the public may cause hindrance to the Starbucks employees in terms of abuse of the infrastructures provided. Therefore, workload on employee will increase, unless additional resources are recruited.
003. Opening restrooms to the public may cause hindrance to the Starbucks employees in terms of abuse of the infrastructures provided. Therefore, workload on employee will increase, unless additional resources are recruited.
154032997155No cameras are not installed on store
00No cameras are not installed on store
-435429303984More Importance to customer cause reverse, they
00More Importance to customer cause reverse, they
186145719068000
268877119168000-25527017725500
113755721072800 Everyone has the access to the store
2008414185148Employees feel insure specially during night
0Employees feel insure specially during night
Problem Statement 4. The police have arrested two men without proper proof which shows an abuse of power encouraging racism. The officers should properly assess the situation before make the right call
-468086108857Lack of the coordination Between the staff and police
0Lack of the coordination Between the staff and police
1883229136071Lack of communication between the two men and the police
0Lack of communication between the two men and the police
544104205831002717619750210045937711360714.The police have arrested two men without proper proof which shows an abuse of power encouraging racism. The officers should properly assess the situation before make the right call
004.The police have arrested two men without proper proof which shows an abuse of power encouraging racism. The officers should properly assess the situation before make the right call
Police didnt rely on the
1981199267335 customer statement
24982711944910044631318360600-25527017725500
-57912099695Police did not do any investigation , just act on the call of the manager
00Police did not do any investigation , just act on the call of the manager
142602925436300 People lose trust on police
-195943197575Not lead to proper investigation , no proper rules were followed
0Not lead to proper investigation , no proper rules were followed
200841437646Bad image of police in this whole case
0Bad image of police in this whole case
Implementation PlanImmediate Actions Action Who When Impact
r4r4r4r41.All top managers at Starbuck should have an urgent meeting to address the issue of racism. They should focus on deciding what actions should be taken immediately and how to train employees in this matter.
1.Human Resources managers should oversee this meeting, because they are responsible of dealing with the behaviour of people within the organization. 1.This action should be taken immediately to have a proper plan that involves recognizing the problem and taking corrective actions. 1.This will have a huge impact in the organization because employees at all levels will have more resources and knowledge to learn how to deal with different kind of people. Even though this will not guarantee that his will not happen again, this will help employees to have a broader view on how to deal with people.
Short-term actionsAction Who When Impact
1.Implement personality tests in the interview process, so the company can assure the managers at stores have traits such as empathy and emotional intelligence. These traits are important when dealing with people to know how to treat them properly.
2.Training should be provided to employees all around the world, several times a year. This should be part of the organizational culture of Starbucks. 1.This action should be implemented by Human Resources department because they know how to manage people.
2.This action should also be implemented by Human Resources department. 1.It should be implemented after the first 2 months of the incident, so managers should have enough time to decide what tests to use during the hiring process.
2.This should be implemented in the first 3 months. HR department would have to decide which topics to teach employees and would have to hire the people who are going to give the lectures. 1.We think this would have a positive impact within the organization, because even though when behavior is very unpredictable, personality traits can at least assure and predict certain behaviours and reactions people would have in different situations.
2.This will have a positive impact within the organization and with other stakeholders. This action will present Starbucks as a company that cares about people and that is implementing important actions to fight against it.
Long-term actionsAction Who When Impact
1.Create a centralized phone line for store managers to communicate when having problems with people.
2.Create follow-up programs to measure the corrective actions that were taken. 1.Human Resource department should be in charge of this phone line, to provide support to store managers in situations that are out of their control.
2.The regional manager together with Human Resource manager should be responsible for measuring the results. 1.This should be done within the first year.
2. The first year of the implementation of the corrective actions this should be measured. 1.This will allow the organization to have centralized decisions and to narrow the different alternatives that can be taken when dealing with problematic people.
2.This will have a great impact on the organization, because what is measured can be managed. With this action, managers can recognize what is going well and what can still have to be worked on to improve processes.
ConclusionIt is very important to know how to address ethical problems within organizations, because as it was seen in this particular case, ethical issues have a huge impact for all the stakeholders related to the company.
Starbucks should learn from this experience and pay more attention to how is the relationship with its stakeholders, because nowadays they are more connected and aware of what an organization does. Starbucks should implement the stakeholder thinking, which basically means to think and reasoning in stakeholder terms (Carrol, et al 2016). This could be achieved through a good management team and management process.
Moreover, Starbucks must address ethical issues carefully, because it is one of the most important companies in the world, and everything they do would have an impact locally and globally. These kinds of issues would certainly affect their image and therefore their finances, which is something that any company would like to avoid. They should always aim to focusing on taking care of their profits, the planet, and the people.
Finally, Starbucks should take this problem as an opportunity and start implementing different strategies that improve processes within the company. They can start improving their customer service, their training program and their relation with their stakeholders.
ReferencesAgnihotri, A., & Bhattacharya, S. (2020). STARBUCKS CORPORATION: FIGHTING RACIAL BIAS. STARBUCKS CORPORATION: FIGHTING RACIAL BIAS. Ivey Business School Foundation.
Island, C. T. V. N. V. (2022, March 9). Victoria considers installing a $400K public washroom. Vancouver Island. Retrieved June 2, 2022, from https://vancouverisland.ctvnews.ca/victoria-considers-installing-400k-public-washroom-1.5812366Carrol, A. B., Brown, J. A., & Buchholtz, A. K. (2016). 3.2 Who Are Businesss Stakeholders? Business & Society Ethics, Sustainability, and Stakeholder Management (10th ed., pp. 7378). Chapter, Cengage Learning.
Security+Guard salary in Canada - average salary. Talent.com. (n.d.). Retrieved June 2, 2022, from https://ca.talent.com/salary?job=security%2Bguard#:~:text=The%20average%20security%20guard%20salary%20in%20Canada%20is%20%2432%2C175%20per,up%20to%20%2440%2C987%20per%20yearWin, D. H. H., Gupta, S. K., Weisser, S., & Jeff. (2022, June 2). Starbucks SWOT 2022: SWOT analysis of Starbucks. Business Strategy Hub. Retrieved June 8, 2022, from https://bstrategyhub.com/swot-analysis-of-starbucks-starbucks-swot/
Group Business Case Analysis 1
ORANGEWERKS: A QUESTION OF ETHICS
Eva Capistrano - 301107453
Marigold Frimpong - 301106709
Darryl Chiu - 301115401
David Machigua - 301111288
MGMT 703, Ethics and Stakeholder Management
Prof. Byron G. Tobar
Centennial College, Progress Campus
February 19, 2021
Executive Summary
Ottawa-based OrangeWerks is a company dedicated to software development. It was founded in 2010, and its business stream orbited around the development of an application that its founders called OAC (OrangeWerks Application Creator). The OAC is a tool that allowed independent developers to create applications around Apple's operating system iOS. The case is developed from the perspective of David Samarin, one of the first OrangeWerks employees and a personal friend of the founders who has faced ethical situations in several instances that have put his conscience and integrity to the test. Samarin has seen how the founders' eagerness to grow and the scarcity of resources led the company to opt for unorthodox actions of doing business.
Since his first projects, Samarin faced ethical dilemmas. The company had gotten new equipment, but the founders told him that there were no funds to buy software licenses for the equipment. His friendship with the founders pushed him to seek an unethical solution, using his network of acquaintances in the industry to get cracked software (Warez) for OrangeWerks. This manages to solve the problem, however, internally Samarin knows that it is illegal and unethical to get software without paying for licenses.
Even after getting Cdn $ 3 million from investors, the founders had no intention of acquiring the licenses fair and square, instead hiring 45 new employees and 8 engineers to fuel their ambitions of keep working on the paid version of OAC. Something seems to be very wrong with the priorities, and with the morale of the founders, and Samarin knows it.
The work environment does not seem to be the best in OrangeWerks. The engineers of the development team cannot agree, and this delays the launch of version 1 of OAC. The founders had to intervene by firing a part of the engineers to save the project. To make the situation more complex, the discoveries made by Samarin in the emails in which a founder admits creating false accounts to favor OrangeWerks. It is also evident from these emails that the firm is not registered in the WSIB leaving their employees adrift. These are clear signs that the company is not on the right track.
Four problems can be clearly identified in this case: 1. Willful use of illegal actions by OrangeWerks, 2. Mismanagement, 3. The crossroads facing David Samarin and 4. Neglect of the founders regarding the employees safety and wellbeing.
A SWOT analysis helps to see the big picture of OrangeWerks' situation both internally (strengths and weaknesses) and externally (opportunities and threats). Despite having strengths such as its success in securing investors and the ambitious vision of the founders, the weaknesses are the ones that stand out the most. For example, poor planning, disinterest in the well-being of employees and a penchant for unethical actions to achieve results. It cannot be hidden that there are good opportunities for OrangeWerks. They are in the technology industry that is currently booming, and that is estimated to continue growing. However, the unethical actions of the founders have created new threats of a legal nature for the business.
Among the main causes for these ethical failures by Orangewerks are mismanagement, time constraints, misdirected priorities, lack of planning and weak corporate structure.
In order to solve the problem, there are many alternatives for Samarin. However, the most logical course of action is to talk with the founders and make them see the consequences that unethical behaviors and decisions will bring to the future of the company so that they can make decisions and act promptly. Mending mistakes without expecting costs and impacts is like throwing a rock into the water and hoping that you won't hear it break. In the long run, the company needs to develop a proper corporate and HR structure to prevent similar incidents.
For each action that the founders of OrangeWerks or David Samarin decide on taking, whether immediate, short, or long term, they will bring costs and impacts to the company. However, there is no turning point and the ethical problem must be addressed, even if the future of the business is compromised, since the consequences of inaction are worse.
Contents
TOC o "1-3" h z u Introduction PAGEREF _Toc64449177 h 5Problem Statements PAGEREF _Toc64449178 h 6Problem Analysis PAGEREF _Toc64449179 h 7Identification and Evaluation of Alternatives PAGEREF _Toc64449180 h 16Recommended Course of Action PAGEREF _Toc64449181 h 18Implementation Plan PAGEREF _Toc64449182 h 19Conclusion PAGEREF _Toc64449183 h 24References PAGEREF _Toc64449184 h 25
IntroductionThe case, OrangeWerks: A Question of Ethics, centers on the story of OrangeWerks and one of its network administrators, David Samarin. The company focused on creating applications that can be used on Apples iOS platform which was in high demand at the time it was founded in 2010. The company developed the OrangeWerks App Center (OAC) as a platform for consumers to create applications that will be compatible with Apples iOS system. The company was able to gain investments from outside the company and has attracted further attention from investors as well as the media. However, Samarin noticed that there were several legal and ethical breaches that were happening in the company during the development of OAC, one of which he was involved in creating. He also noticed that the organizational structure within the company was not well-defined. Thus, Samarin is faced with a decision regarding the best steps forward.
There are numerous stakeholders that are affected by the companys operations. These can either be internal to the company or external stakeholders. The stakeholders involved in this case are as follows:
David Samarin His interest is to decide on what course of action he should take after discovering further ethical and legal lapses in OrangeWerks.
The founders of OrangeWerks Their interest is making sure that they can attract more investors and positive media attention to their company and their OAC platform.
The media Its interest is to cover the new company emerging in the technology industry, OrangeWerks.
The Ontario provincial government Its interest is to make sure all businesses, such as OrangeWerks, is operating in a legally-compliant manner.
OAC users Their interest is to be provided with a platform that would be easy to use and inexpensive.
Other employees Their interest is to work in an environment that values their well-being and promotes a harmonious working atmosphere.
Angel and Future Investors of OrangeWerks Their interest is to make sure that their investment will be profitable and will go into a company that will be able to provide them a good return and that will not harm their reputations.
Apple Their interest is to make sure that any application that will be created and placed on their platform is compliant with their regulations.
Owners of the software that was cracked by OrangeWerks Their interest is to make sure that they are properly compensated for the commercial use of their software.
Problem StatementsProblem 1: Willful use of illegal actions by OrangeWerks to develop their product. Management is willing to resort to illegal means to launch products and achieve growth and profit.
Problem 2: Mismanagement is occurring within the organization. Top executives are not clear on the structure of the company.
Problem 3: David Samarin is faced with the issue of the ethical stances of OrangeWerks and does not have a clear plan on what to do.
Problem 4: Management has little regard for employees. OrangeWerks is failing to comply with the legal regulatory framework for the workplace safety of their employees and not providing a proper working environment.
Problem AnalysisSWOT Analysis
STRENGTH WEAKNESS OPPORTUNITIES THREATS
OrangeWerks has a broad market base. The company was able to create a software development product that both technical and non-technical people can use.
There is role ambiguity and lack of structure in the company which is causing conflicts among the employees. David Samarin himself was supposedly hired as the chief developer at first but ended up doing hardware and software setup and even office maintenance tasks. Their market base has the potential to grow. Targeting both developers and non-developers broadens the reach of the application development software, which is usually just confined to technical people.
Legal and regulatory consequences are imminent. One workplace accident can reveal their lack of WSIB registration. An audit can uncover the use of unlicensed software and fake accounts.
The company appeared to be a good start-up investment as they were able to attract funding from angel investors just 2 months after starting the company.
The company is displaying poor financial management and lack of check and balance in decision making. This is apparent when they opted to spend the budget on unnecessary expenses / fringe benefits instead of more important expenditures. Further expansion opportunities for the company looks strong. They can venture into related software products that could supplement their Apple developer platform.
Lawsuits may be filed by the owner/s of the software that was pirated, plunging the company into an expensive legal battle.
The vision of the founders was very ambitious, they wanted the company to grow and become a bigger corporation, the hunger of success of the upper management is a remarkable internal strength in the company. OrangeWerks also has poor people management. The company is not responsive to issues within the team and only stepped in at the last minute to settle the situation and avoid further delay. The company has the choice of expanding their market segment to cater to Android application development as well.
OrangeWerks relies entirely on Apple. The company seems to be focused on designing products to take advantage only of Apple products and technology, however, by that time (2010) there was an imminent threat from Google products and its ecosystem of applications such as Android and Google Services that became products. and very popular services.
Fringe benefits of the company was attractive as they gave their team the latest iPhones and travel budgets.
The company has no regard for their employees health and well-being since the management did not register with WSIB despite the high stress nature of their industry.
They have the potential to expand their core business, from being a provider of an iOS developer platform to providing actual business suite software that is accessible from Windows, iOS, and Android operating systems. There are currently a lot of competitors in the software industry. OrangeWerks must prove that their developer application is better and more user friendly than others in order to secure a market share.
The remaining development team was resilient as it was able to refocus and meet new targets on short notice to finish the softwares beta version. The management lacks long term planning. Their actions and decisions only serve the short-term goals.
Opportunities to gain investment are still strong. Media attention could turn negative due to the issues that can be uncovered.
They also have good marketing focus since they already prepared their fall marketing campaign as early as May.
Fish Bone Analysis
Problem 1: Willful use of illegal actions by OrangeWerks to develop their product. Management is willing to resort to illegal means to launch products and achieve growth and profit.
Problem 2: Mismanagement is occurring within the organization. Top executives are not clear on the structure of the company.
Problem 3: David Samarin is faced with the issue of the ethical stances of OrangeWerks and does not have a clear plan on what to do.
Problem 4: Management has little regard for employees. OrangeWerks is failing to comply with the legal regulatory framework for the workplace safety of their employees and not providing a proper working environment.
Identification and Evaluation of AlternativesAlternative 1 Confronting the co-founders Alternative 2 Confronting the employees. Alternative 3 Reporting to authorities (WSIB). Alternative 4 Ignoring and continuing to work. Alternative 5 Resigning from the job
Pros:
It will prompt the conscience of the co-founders to fix their ethical issues
Pros:
This may lead to the ethical issues being resolved since it will be in the best interest of the organization not to cause further damages to the firms reputation. Pros:
The organization will be forced to comply with the requirements of WSIB.
This will also give protection to employees in the event of workplace mishaps
Pros:
He will still have his job and his relationship with his friends will not be affected. Pros:
Resigning from the job would mean he could start somewhere new and put it all behind him and can restore some of his reputation by taking responsibility for his actions.
Cons:
Doing this would mean he will not only make himself liable for the part he played in obtaining the pirated software which may negatively affect his reputation and his relationship with his colleagues.
Cons:
These employees may also have no idea about the companys mishaps. This alternative may cause misunderstanding, scare and panic amongst employees. It may also lead to the spread of rumors and untruths causing more damage to the companys reputation and of Davids. Cons:
If David is wrong with the details, he may blow things out of proportion and ruin the companys future. This would mean people would lose this job, a potentially IT company may be ruined in the process. It doesnt give the co-founders and David himself to right the wrongs.
Cons:
This does not immediately affect his reputation. However, he becomes an accomplice to the actions of the cofounders. This alternative does not address the ethical issues in the company. This may affect work negatively as he will constantly wonder about other ethical violations that founders may have made even if there is no obvious evidence. This would cause skepticism between the company and David. Cons:
There may be some who will assume that he will do the same unethical actions in other companies as he already has prior reputation from his stint at OrangeWerks.
Recommended Course of ActionRecommendation Rational Explanation
Alternative 1 Confronting the co-founders Confronting the co-founders about the information he found will be the best alternative. This alternative may however go either way. That is, it will either prompt the conscience of the co-founders to fix their ethical issues or cover their tracks and terminate his employment.
Alternative 3 Reporting to authorities (WSIB) However, in confronting the co-founders he must involve the WBIS. This would mean the co-founders will have no choice than to fix all ethical issues according to the required standards. It would also probe further audits into the company which will allow them to identify any further mishaps.
Alternative 5
Resigning from the organisation Thereafter, David should resign after fixing the issue providing him the opportunity to start a fresh and find a new organization that hold their ethical standards high esteem.
Implementation Plan
Immediate Actions
ACTION
What actions would be taken? WHO
Who will implement it? WHEN
When will it be implemented? COST/IMPACT
What could be the repercussions generated?
1. Set up an urgent meeting summoning the Founders (Owners) of OrangeWerks to discuss with them the ethical conflicts produced during the development of the OAC like the illegal use of Warez, and the use of fake accounts to promote the Beta version of the application just to accelerate the release of the paid version. Mr. David Samarin is the one to take a step forward and take this action since he was the one who made the discoveries and who in some way participated in unethical actions such as the use of the Warez. This action must be implemented in the shortest possible time. Continuing to ignore this problem would have adverse legal and economic implications for the company and the reputation of its founders and employees. There are two ways here. If the founders decide to solve the problem and correct past mistakes, this will cost time, money, and effort, but the result is promising as the reputation of the company will be saved.
On the other hand, if the founders decide to hide the facts, in the long term they are exposed to serious legal problems that can destroy the company and their own patrimony and careers.
2. Fill out the forms and register OrangeWerks under the Ontario Workplace Safety and Insurance Board (WSIB) to ensure legal compliance and for the good of employees. The founders (owners) of Orangewerks are indicated to carry out this action. As promptly as possible. Employee safety is a top priority and should be addressed as such. OrangeWerks would classify as E6-Computers, Technology, and Electronics under the Ontario WSIB rate system. A rate of $ 0.28 for every $100 of payroll must be applied to guarantee compliance with the WSIB. The impact this would have on the welfare and protection of employees is invaluable (WSIB, n,d,).
Short-Term Actions
ACTION
What actions would be taken? WHO
Who will implement it? WHEN
When will it be implemented? COST/IMPACT
What could be the repercussions generated?
1. Deciding whether the situation of ethical misconduct in the development of the OrangeWerks App Creator (OAC) will be communicated to the Angel Investors who provided OrangeWerks with a capital of Cdn $ 3,000,000 to finance the business venture. The founders of OrangeWerks are responsible for making this decision. The founders must do this in a period not exceeding 1 month, to anticipate any information leakage that first reaches the ears of Angel Investors in the United States and Canada. There is an imminent danger of loss of credibility on the part of the founders, who were trusted by the Angel Investors, who financed their business venture.
If investors consider these unethical behaviors as very serious, they are fully entitled to demand full repayment that allows them to not only recover the invested capital but also to collect interest for damages caused by the mishandling of the funds.
2. Samarin could resign from the company of his own accord. David has a share of guilt since he was the one who decided to use the Warez (Cracked software).
Acknowledging his mistake and amending it is the healthiest thing to do to protect or in some way try to repair the damage to his career caused by this unethical decision.
It is an internal decision of David Samarin. This is very subjective and depends a lot on the thought and ethical and moral values of Mr. Samarin, however, we consider that it should not be immediate, but a decision that is made in more or less 2 months. Since this term would serve David to help the Founders of OrangeWerks to solve the problems in which he participated, let us remember that Samarin is a personal friend of the founders and there is a moral responsibility that goes beyond the labor factor. The implications of resignation after an unethical act are not pleasant. They damage a persons credibility and reputation in the industry, however, it is the best option, since it is evident that there is an awareness on the part of the offender and a willingness to correct his mistakes (Lurie and Albin, 2007).
Long-Term Actions
ACTION
What actions would be taken? WHO
Who will implement it? WHEN
When will it be implemented? COST/IMPACT
What could be the repercussions generated?
1. Improve the structure of the company and the way of doing business. The founders of OrangeWerks are responsible for doing this action. 2 to 3 months. After amending the ethical issues conceived in the development of OAC. In case credibility is not lost by investors and OrangeWerks survive the scandal, the founders must rethink the structure of the company. They must create an organizational culture based on shared ethical values and align their strategic objectives with this new culture of order and morality (Priem and Shaffer, 2001).
2. Hire a Human Resources manager and improve the job structure, to clearly define roles and functions.
Rationale:
One of the causes of the ethical and organizational problems found in the Ishikawa diagrams show that Samarin did not have a clear role or position and he also had a conflict of interest because he was a friend of the founders, this denotes the clear lack of formality of the company. The founders of OrangeWerks. Again, this could be done in 2 to 3 months. After amending the ethical issues conceived in the development of OAC. A person in charge of human resources would help the founders and owners to design the structure of the company and the jobs, aligning the roles and functions to the strategic objectives of the business.
ConclusionAfter analyzing the complex situation of OrangeWerks, the business case clearly exemplifies how difficult it is to deal with a company that has committed ethical-related mistakes in the past. Trying to amend them is not easy; unethical actions threatens the credibility and public reputation of companies and reduces the opportunities to continue doing business (Frank, 2004).
Based on the action plan with immediate, short, and long-term actions, in which the implications, costs and impact of each of them are detailed, David Samarin and the founders of OrangeWerks need to take steps to resolve these problems. Without a doubt, the first step is to recognize the mistakes, from this an attitude of change must be born inside the founders and David himself.
What has led us to act like this? Why have we sacrificed our integrity? Where are our ethical values? Where is our morale? Are we proud of the way we have conducted our business? These are the type of questions that should resonate in their heads. After that, the action must begin.
According to an article written by Melissa Horton in 2020, there is a direct link between the ethics of a firm and its financial success in both the short and the long run. (Horton, 2020)
OrangeWerks founders must make a commitment to operate the company on ethical foundation to guarantee the success of the company, the consistent ethical behaviour will have a positive impact in public image of the company and the interaction between OrangeWerks and its stakeholders will be conducted under the light of trust and respect.
ReferencesFrank, R. H. (2004). What price the moral high ground?: Ethical dilemmas in competitive environments (p. 203). Princeton, NJ: Princeton University Press.
Horton, M. (2020, July 1). Why are business ethics important? Retrieved February 17, 2021, from https://www.investopedia.com/ask/answers/040815/why-are-business-ethics-important.asp
Lurie, Y., & Albin, R. (2007). Moral dilemmas in business ethics: From decision procedures to edifying perspectives. Journal of Business Ethics, 71(2), 195-207.
Priem, R. L., & Shaffer, M. (2001). Resolving moral dilemmas in business: a multicountry study. Business & Society, 40(2), 197-219.
Workplace Safety and Insurance Board [WSIB]. (n.d.). 2020 premium rates. Retrieved February 17, 2021, from https://www.wsib.ca/en/2020premiumrates#:~:text=The%20average%20premium%20rate%20has,2016%20is%2047.1%20per%20cent.
