UNIVERSITI MALAYSIA TERENGGANU

ANSWER SHEET
FINAL EXAMINATION
SEMESTER III 2020/2021 SESSION

COURSE : BUSINESS ETHIC IN CORPORATE GOVERNANCE

COURSE CODE : MGM5600

MATRIC NO. : P4347

PROGRAMME : Master of Business Administration, Cyberjaya

QUESTION 1 (a)
a) Analyse the ethical and legal issues in business from the case.
(20 marks)

Misleading statement

Companies should eliminate misleading statement or information like Coach has

been brought to face the legal lawsuit.

Statement on the tags of Merchandise offered at a discount from a MFRSP are

misleading because it includes the price of retails.

Creating false impression

The merchandise was sold at COACH’s outlet which is not belong to COACH. In
business that is unethical when providing misleading information which can lead to
false impression.

Intellectual property

The merchandise sold at COACH’s outlet was same quality and workmanship from
MFSRP items and contained a MFSRP on the tag.

Responsible to Stakeholders

Both companies are agreed to settle the dispute and provide an opportunity for
payment and other benefit to customer who has purchased the merchandise from
December 23,2011 to August 24,2020. The stakeholder is very valuable to company
and one of factor will determine the success of company.

Being an ethical entrepreneur

COACH not being an ethical entrepreneur by denies any and all wrongdoing to the
MFSRP. COACH also denies any liability to MFSRP and to the Settlement Class.

Threatening the customer

Customer don’t have any choice whether to accept the settlement or not. If
customer not agreed with the settlement or any part of it, they can submit a written
objection to the court which it will cost customer loss in time and money in order to
hire lawyer at their own expense.

Bullying the customer

Not all customer who agreed on settlement will be paid cash claim. The cash claims
will be paid base on first come, first served basis. This is not fair to others customer
who involved with settlement.

Trademark

There is legal issue regarding trademark. If the item was tag as MFRSP, COACH
outlet does not have the right to sell it.

Contract or MoU

If both companies are agreed to JV for selling the item, it supposed to stated clearly
on contract.

Customer right

Settlement applied to customer who purchased the item from December 23, 2011 to
August 24, 2020, purchased one or more items from COACH’s Coach-branded outlet
stores in the United States offered at a discount from a “MFSRP” and which
contained a “MFSRP” on the tag. It also apllied to customer who dont have proof of
purchase but under the Claimant Tier 1.
b) Evaluate the importance of integrity in the context of the case.
(30 marks)

1. A Stronger Reputation

The importance of reputation in the economic world cannot be underestimated.

Suppliers must have trust in you to pay them for the things they deliver. Investors
must have trust in you to put their money to good use and generate a profitable,
long-term business. Trust is vital for employees, customers, business partners, and
everyone else with whom you interact.

People will believe you if you act with honesty, and news will spread quicker than
any advertising effort you could create. Likewise, a lack of integrity will harm your
reputation. Same thing when the court case against between COACH and Marino, it
will expose both companies’ reputation.

2. Customer Satisfaction

Most customer want to have good product and satisfaction in using or wear it.
Customer do not want to involve with any conflict happened in the company. By
offering settlement, customer can have win-win situation. They get the amount of
compensation and the items can be kept.

3. Quality

Acting with integrity frequently translates into providing a better-quality product or

service to the customer. For example, items sold at COACH outlet was accused the
product from MFRSP, however it was selling like hot cakes. COACH can kept selling it
but that will be on short term as the integrity not applied in their business. Assume
that tests find a severe flaw in your flagship product just as it is selling like hotcakes.
You might be tempted to keep selling it, but doing so would imply shortchanging
your clients by giving a subpar product.

A honest company would explain the issue, correct the problem, and dispatch the
product only when it is of acceptable quality. This is only one example, but in
general, acting with integrity is likely to result in higher-quality products and services
since you are operating in accordance with your values and principles, and few
individuals believe in producing substandard work.

4. Long-Term Outlook

As we have seen, there is an emerging trend in which there is frequently a trade-off

between short-term victories and long-term success, and acting with integrity is
usually linked with the long-term vision.

In business you're in, you're frequently given the opportunity to cut shortcuts or
avoid complications by acting dishonestly. Doing the right thing, on the other hand,
may cause more problems in the beginning, but it usually pays off in the end. The
example as shown in the case between COACH and Marino. When some of party are
dishonest, a lot of problem to face at the end.

Business is a long-term endeavor, and successful businesses typically have a strong

long-term approach and vision. Acting with integrity, on the other hand, can help
company focus on attaining the best results five years from now rather than five
minutes from now.

5. Clearer Focus

Lying and cheating can consume a significant amount of energy and time. You have
to keep track of which tale you've told and how to keep it all consistent, and then
you have to tell additional lies and fabricate more proof to back up your initial lie,
and so on.

Acting with integrity, on the other hand, frees up all that energy and allows you to
concentrate.

Better Company Culture

If company set a good example and conduct with honesty, it will spread across the
industry. If there is no integrity between COACH and Marino, the other company in
the same segment will see this as a part of culture and do the same thing.
If company has an integrity culture, the staff will make better decisions that are in
the long-term interests of your consumers and the company. They'll be able to rely
on one another.

7. Stronger Sales

Many clients these days value ethical considerations. For many customers, they
preferred to spend their money with business company that have ethic and integrity
value.
Question 2

a) Discuss Sseko’s social entrepreneurship model and how it differs from traditional
charitable initiatives that other companies might take.
(20 marks)

Sseko Designs' founder and CEO, Liz Forkin Bohannon, devised a business plan for a
work-study programmed for Ugandan women with college ambitions. Liz would
provide work for women throughout the nine-month period in which they needed to
earn enough money to pay for education. The women would create sandals and
other items that might be sold to American consumers. Ugandan women would not
only learn new talents, but they would also be able to earn enough money to go to
college.

The co-operative business model combines the greatest aspects of owning a small
firm and running a corporation. Like a small business, it frequently incorporates local
income creation and represents community concerns. But, like a corporation, it also
provides control, the potential for longevity, and restricted liability. A cooperative
come together voluntarily to achieve their common economic, social, and cultural
needs and ambitions through a jointly owned and democratically run business. Thus,
Sseko offers the same goods and services as any other similar company. Sseko goal
of a cooperative is to meet the economic, cultural, and social requirements of its
members and the Uganda community in which they live. Cooperatives frequently
have a strong sense of community and a focus on enhancing the communities in
which they operate or serve.

Basically, a social entrepreneur is someone who seeks for new applications with the
potential to tackle community-based issues. These people are willing to take the risk
and put out the effort to make a positive difference in society through their projects,
involved with educational initiatives, offering financial services in neglected
communities, and assisting children orphaned by epidemic sickness are all instances
of social entrepreneurship. The entrepreneur support model of social enterprise sells
business support and financial services to its target population or "clients," self-
employed individuals or firms. Likewise, Sseko, they sell their products and services
in the open market to continue the company’s growth and Shark Tank, a popular
ABC reality show, was used to raise funds as well.

Traditional charitable initiatives concepts can also stem from a social need, but the
difference between Sseko’s social entrepreneurship model and a traditional firm is
the entrepreneur's motivation. As standard entrepreneur's primary motivation is
almost always a desire to generate money, but for Sseko Designs' is motivated first
and foremost by a desire to remedy a social problem. By granting scholarships to
their employees, the company encourages women's education among the potential.
Because the two sorts of entrepreneurs have distinct motives, we must assume that
their businesses will operate differently. In the business sector, we frequently hear
about focusing on bottom-line business strategies that lead to higher monetary
profitability. Traditional charitable initiatives that other companies might take on the
other hand, focus on double – or triple – bottom line business strategies that
contribute to social economy success while Sseko ideas often stem from a desire to
address a social need, similar to how many non-profit and charitable organizations
get their start.

Other organizations are mainly profit-oriented, and from their profits, they give some
little amounts back to society to demonstrate that they are a brand that cares and
has ethical principles, even if it is often only for publicity and CSR done for tax
savings where provided. While other companies would participate in charitable
events as part of their CSR, providing basic human needs, first aid, or even cash for
operating costs to the suffering society, that's only a short-term alternative to the
social dilemma, Sseko has taken a different route, providing poor people with a job
opportunities that helps others to become independent individuals with self-respect.
Besides from that, these people are provided educational opportunities, and the
company offers them with scholarships as well as ongoing incentives can save. All of
these things are done mostly to empower Ugandan women and improve gender
equality in their society. Sseko has a long-term objective for overcoming the
Ugandan community's challenges in order to make them self-sustaining and strong.
Sseko also offers training to its staff so that they can always improve their skills.
Employees who are not interested in furthering their education might use the skills
they learned at Sseko to start their own businesses.

The entrepreneur support model of Sseko’s social enterprise sells business support
and financial services to its target population or "clients," self-employed individuals
or firms. Sseko sell their products and services in the open market. The Bohannons
had to locate buyers as well and spent six months travelling across the country
together and try to persuade stores to stock Sseko Designs sandals. As a low-
income, the market model of social business is a variation on the Fee-for-Service
model in which the target population is recognized. Product sales generate revenue,
which is used to cover operating costs as well as marketing and distribution
expenditures. In Uganda, Sseko employs 65 women and is the country's largest
footwear producer. They obtained the entire investment from the sharks without
having to lower their estimate of their company's value. Sseko in plain terms, is a
business that invests its income in a strong social or environmental objective.

Entrepreneurs in the commercial sector are distinct. As a result, social entrepreneurs

are more concerned than typical entrepreneurs in understanding the social,
economic, political, and cultural background of the problems they are seeking to
solve. They have the ability to be more analytical as they belief many people prefer
to buy from companies that share their values. Sseko ultimate goal is for non-profits
to be able to support themselves financially in new ways rather than relying primarily
on grants and contributions.
b) Ethical decisions are important as they would affect sustainability; explain the
social concerns that are valid for business in the context of the above case.
(16 marks)

The term "ethics" refers to a set of moral ideals. They have an impact on how
people make choices and live their lives. Ethics, often known as moral
philosophy, is concerned with what is beneficial for individuals and society.
Sseko, which means laughter in Luganda, was born from this concept. In
Uganda, the company owns a factory that employs 50 women. Many of them are
working during the nine months between high school and college to help pay for
their education. Each woman puts half of her pay into a college savings account
that isn't accessible until tuition is due.

For Liz Forkin Bohannon, the founder of Sseko was shocked to see the people's
terrible poverty, particularly among the ladies in Kampala, Uganda has led her to
do something big and make changes. Then, she toured around Kampala looking
for supplies while learning how to make sandals from YouTube tutorials.She
came up with a business plan for a work-study programme for Ugandan women
with college ambitions. The women would create sandals and other items that
might be sold to American consumers.
It is not only the world's largest footwear producer, creating more jobs for
Ugandans as well as Ethiopian and Kenyan artisans who create handcrafted
products for Sseko to market, but it also empowers women.The impact of ethical
decision-making on the business it can help you get more business since make
ethical decisions, allowed us to think about other people's feelings and
requirements. Treating clients with respect is an ethical business decision that
helps to develop trust and affect sustainability as well.
The Sseko Fellows programme provides additional cash for these scholarships.
There are 300 Fellows in this programme, which began two years ago. Sseko
Fellows are social entrepreneurs from the United States who sell the company's
products directly to customers. Every Sseko Fellow is paired with a Sole Sister in
Uganda; every dollar of Sseko goods sold in the US by one of these Fellows
provides money for the Fellow and creates revenue for the Sole Sister. Sseko also
employs non-educated women and pays them a steady, dignified, and fair
income.
Sseko provides its fellows with the opportunity to be entrepreneurs and create
their own businesses through direct sales. Unlike other direct sales organisations,
though, Sseko's top sellers don't get a car or a vacation; instead, they get a trip
to Uganda to meet the factory's ladies. People were falling in love with the brand
and emailing the company about being involved at the same time. The team
began to consider how to capitalise on this enthusiasm, eventually settling on
direct sales, in which the company distributes its goods through a network of
partners who sell directly to the public.
The primary goal of Sseko Design is to employ social entrepreneurship to create
a for-profit company that will benefit the lives of women in Uganda, East Africa.
Some of the societal issues include high school students being forced to return to
their village and work in order to save money for tuition. Because the family
required the money, many girls were unable to continue their studies. The
company's objective is to boost more income-generating activities by revealing
why the company was founded in the first place. Sseko Design has discovered
that the younger generation is more likely to support and be interested in
enterprises or brands with a storyline. In this situation, a company was created
for a good cause.
This is entirely consistent with the social enterprise concept, which promotes
revenues put back into the community. Sseko Design also pushes people to be
more creative and to take a more holistic approach to business, and with
inspirational and motivational, women can resume their education while also
supporting their families with their savings.
The goal of Sseko Design is to empower women by assisting them in earning and
continuing their education. This is a social enterprise business that trades to
actively solve social problems, improve communities, and provide people with
access to jobs. It is a business that implements commercial methods to improve
human and environmental well-being. For example, it may include enhancing
social impact in addition to revenues for external shareholders. They make
money by selling goods and services on the open market, but they usually
reinvest their gains in their firm or the local community.
As a result, when they profit, so does society. A successful social enterprise is
one that can manage and maintain the pressure between sustaining their
organization's social goal and maximising the profitability of their business
enterprise to ensure sustainability, and Sseko Design was able to handle that
eventually by continuing to focus on their social responsibility throughout.
When Bonannon visited the community, she discovered that the girls wanted to
work rather than receive charity. She didn't want to change anything, so she
created a plan to give the girls jobs that paid well. She also wanted everybody
else to discover their stories so they might offer assistance, because social issues
cannot be resolved by individuals only.
A sustainable social enterprise is one that can handle and maintain the tension
between keeping their organization's social objective and increasing the
profitability of their business enterprise to long - term sustainable.
c) Justify, using evidence from the case, which corporate social responsibility models
are best described by the comments made by The Sharks and The Bohannons
below:

i. The sharks maintained that was too high a value, especially for a company
that, in their judgment, was too focused on its social mission and
philanthropy and not enough on profitability.

There are other CSR models available, including the Friedman, Ackerman,
and Carroll's pyramid. The sharks referred to the model's economic duty,
which is considered as a business's first responsibility, which is to secure
profitability.
Because without profit, firms would be unable to pay their employees, and
they would be laid off before the company even began CSR operations. The
only way for a firm to survive in the long run and benefit society is to be
profitable in the first place.
This is stated in the case of Sseko, which takes a lot of risks and even
incurs losses and debts in order to achieve their social objective rather
than focusing on profit like other firms.

ii. The Bohannons countered that many of today’s retailers and their
customers value companies with a social mission.

The Bohannons are referring to the model's ethical component, which is

defined as doing the correct way, avoiding harm, and also being honest in
all situations.
A company should not only concentrate on profitability, but also on doing
the right thing. Even though a company is not required to follow this
model, the Bohannons say that it is their most major component, and their
customers agree.
They said that their customers were more concerned with their social
principles than with brand values, which made them more comfortable
buying things from the company. However, their point was confirmed when
their sales climbed by 1,000% immediately following the show as more
customers understood and appreciated their social objective.

(14 marks)