Global Strategy and

Sustainability

Strategic Purpose – Ethics and CSR

 Today’s Agenda
• Quick Recap of Previous Week’s Topic (Sustainability and Corporate Performance)
• Ethics in business
• Activity 1: Individual - CASE STUDY: Making ethical decisions
• Ethical environment in the organisation
• BREAK
• The concept of Corporate Social Responsibility
• Activity 2 Group – CASE STUDY: Ethical decisions in practice: United Airlines case
• Ethical challenges faced by global firms
• Activity 3: Group - CASE STUDY – Application of Carroll’s model: Ferrero, KLM and Bacardi
• Review of Apply Activity
• Recap, Q&A, Discussion
• Module summary and summative assessment
• Next steps
Previous Week Recap – Sustainability and
Corporate Performance
Recognise the concept of sustainable development

Analyse the three main pillars of sustainability, profit people,

planet

Assess the relationship between stakeholder management

and corporate performance

Evaluate the various governance mechanisms used to align

stakeholder interests
Today’s Learning Outcomes

Explore the main ethical issues that arise in business

Critically assess how managers can improve the ethical

climate of their organisation

Analyse the concept of CSR

Apply key theoretical models to assess issues that are faced

by global entities
Ethics in Business
What is Business Ethics?

Does Frito-Lay (a subsidiary of

PepsiCo) have any ethical
issues with the way it deals
with the two geographic areas?

Controversial chemical
compounds like 'Red 40,
This is where ethics in Blue 1 and Yellow 5'
business comes in.

Source: https://www.dailymail.co.uk/femail/article-7508903/Food-activist-shows-comparisons-U-S-U-K-ingredients-lists-products.html
What is Business Ethics?

Business
ethics is the
application of
ethical values
to business
behaviour.

It applies to any and all aspects of business conduct.

Ethiscore’s scoring system. Source: Ethiscore (2021)
Ethics Principles for Business
Ethical principles in business refer to the moral
standards set by a company.
Pay fair wages
• Honesty (fairness)
• Integrity
• Loyalty Reduce workforce
without layoffs
• Fairness
(loyalty, respect)
• Respect Good for customers
• Trustworthiness (social consciousness)

• Responsibility
• Accountability
• Social and environmental consciousness Political support
• Transparency (honesty, integrity)
Ethical Dilemmas

It is through an ethical dilemma that most businesses and employees

experience business ethics.

Ignorance
What’s the 'right' thing to do?
Discrimination
Sometimes decision between
right and wrong Management pressure
Personal ambition
Ethical Dilemmas
Business areas facing
ethical dilemmas

Ethical issues from the Ethical issues between

nature of business business and society
Client exploitation
Donations

Child labour

Animal testing

Total price
Staff ethics

Deceptive advertising

Ethical dilemmas in Intracompany

business marketing ethics
Importance of Ethics for Business: When It Goes
Wrong
Unethical behaviour constitutes
a business risk and can lead to
significant costs

• Legal sanctions Investments in subprime mortgage-backed

• Commercial consequences
• Damage to brand reputation
• Employee dissatisfaction
• Staff absenteeism and retention
• Lower level of customer retention
• Negative reactions from the community
securities notoriously misrated as "secure" by
rating companies.
Confirmed its systems had fallen to hackers with
some 148 million consumers around the world
were affected.
Importance of Ethics for Business: When It Goes
Right
Ethical business practices can
bring about tangible business
advantages

• access to opportunities
• assignment of preferential conditions
• improved market access Ethical companies out-performed a
comparable index of large cap companies
• higher reputation
More employees would vote with
• customer loyalty
their feet if their organisation was
• increased attractiveness to talented involved in a major fraud, bribery or
corruption scandal.
employees
 Individual Activity: CASE STUDY
Making Ethical Decisions

This Photo by Unknown Author is licensed under CC BY-SA This Photo by Unknown Author is licensed under CC BY-SA
Ethical Environment
in the Organisation
Promoting Ethical Conduct Within The Organisation
The organisational environment plays a critical role in
encouraging ethical conduct.
Ethical leaders
Moral people
Moral managers
Ethical practices
Recruitment and Selection
Orientation and Training
Policies and Codes
Reward and Punishment Systems
Accountability and Responsibility
Decision-Making

Ethical climate
Explicit values
Incentives and recognition
Cultural norms
Examples: Create The Right Ethical Environment
Benefits Example
• The attention to the health and welfare of the surrounding community.
• Company leadership works to ensure that the company is an active member of
the community and supports the most vulnerable.
• CEO's focus on social justice issues.
• Furloughing or letting go of some of the team members, all the actions were
accompanied by tremendous hospitality, dignity and compassion.
• During COVID-19 pandemic, enhancing their communications, showing support
and empathy and not being shy about being vulnerable in front of others.
• The CEO has taken a clear stance to champion inclusion and diversity.
• Staff being encouraged and able to implement change in business units, speak
up, and provide opinions.
• Announced early on that there wouldn't be COVID-related layoffs in 2020.

• Adobe has halted hiring to avoid layoffs during COVID-19 and that gives
employees a sense of security.
• All the trainings on emotional wellbeing and coping during this time show that
Adobe cares about staff mental health.
• The timely messages from the CEO regarding current COVID-19 events and
how to react and behave.
Break Time – 15 Minutes
The Concept of Corporate
Social Responsibility
Corporate Social Responsibility (CSR)

A self-regulating business model that helps

a company to be socially accountable — to
itself, its stakeholders and the public.

Different
stances
on CSR

Source: Johnson 2017

CSR and Competitiveness: Creating Shared Value

Shared Value: policies and

operating practices that
enhance the competitiveness of
a company while
simultaneously advancing the
economic and social conditions
in the communities in which it
operates.

Source: Porter and Kramer, 2011

Ethical Challenges
Faced By Global
Firms
The Pressure To Bend The Rules

The pressure employees

may experience to
compromise their
organisation’s ethics
standards, policies or the
law is linked with an
increased likelihood
observing misconduct.

Source: Ethics & Compliance Initiative (2020)

The Pressure To Bend The Rules: Who and Where?

• meeting performance goals

• attempting to save one’s own and others’ jobs
The pressure to • supervisory pressure
bend the rules • advancing one’s career or financial interests
• demands from people who support or invest in the
organisation.
Managing Profit / Responsibility: Creating Shared
Value

The public perceives the

pressure to bend the rules
in business.

Attitudes of the British public to business ethics

 Group Activity: Case Study
Ethical Decisions In Practice: United Airlines Case

This Photo by Unknown Author is licensed under CC BY-SA

Models to Assess Firms’ CSR Efforts

Some corporations use recyclable materials, whereas others

contribute their profits to charity. Some pay incentives to workers for
working in dangerous environments, whereas others establish charity
programs.

The question is, how do we measure these different approaches?

Carroll’s Model For CSR

Carroll’s model outlines four

essential areas of a company’s
corporate social responsibility.
These elements are organised
in order of importance and
presented visually in what is
now known as the Pyramid of
Corporate Social Responsibility.

This Photo by Unknown Author is licensed under CC BY-SA-NC

Carroll’s Pyramid: Examples

• Help fund the education and advancement of our

neighbours.
Philanthropic • Projects focusing on education, the environment,
children, the disabled and youth activities.

• 30% of all new positions in the U.S. would be filled

with Black and Latino people.
Ethical • Committed to finance 50 university scholarships for
Black students each year for the next five years.

• 97% of managers are trained to the Principles of

Legal Conduct and Action.
• 96% of managers are trained on competition rules.

• Bank or America committed $1 billion

Economic to help tackle the country’s racial and
economic injustices.
 Corporate Social Responsibility: Reporting

The purpose of a CSR report is to improve the transparency of organisations’

activities. The goal is twofold:

• to measure the impact of a firm’s activities on the environment, on society and on the
economy (the famous triple-bottom-line).

• to externally communicate with their stakeholders what their short, medium and long-term
goals are regarding sustainable development and CSR.

• ISO 26000
• the Global Reporting Initiative (GRI)
Link CSR initiatives to UN’s
• the Integrated Reporting
• the B-Corp Certification or the Sustainable Development Goals
• FTSE4GOOD Index
Corporate Social Responsibility: Reporting

Danone’s 2030
Goals aligned with
the 2030 United
Nations SDGs, thus
adopting a language
that is universally
understood.

Source: https://www.danone.com/content/dam/danone-corp/danone-com/rai/2019/pdf/un-sdgs-danone-contribution-2019.pdf
 Group Activity: Case Study
Application of Carroll’s Model

This Photo by Unknown Author is licensed under CC BY-SA

Review of Apply
Activity
Apply Activity Instructions
Discussion Forum (100 words)

1. Why is sustainability a critical element for a firm’s strategy?

(max 50 words)

2. Why do businesses have an important role in tackling global issues?

(max 50 words)
Assessment Instructions
For this assessment, in the role of a Management Consultant, you are required to undertake an overall strategy
review of Zara and provide a business report and a PowerPoint presentation to the CEO on further growth
opportunities using the techniques and concepts you have covered in the module. Background reading has
been provided for the case study which you can access via links on the HUB and via the core textbook also.
The business report comprises of four tasks (this task is part of the summative assessment):

LO4: Assess and apply suitable frameworks and ideas to formulate and control sustainability for organisations in
a global context.

Task 4 – Strategic Purpose – Ethics and CSR (15 Marks; LO4) Course Work 1 CW 1 & Course
Work 3 CW 3
• Using a relevant theoretical model, analyse and evaluate Zara’s CSR strategy.
• Using theories, identify and critically discuss the main ethical issues which Zara currently faces
and provide recommendations as to how they can address these.
Support your arguments with academic literature and references to other similar real companies.
Recap, Q&A,
Discussion
Key Takeaways
You should now be able to:

• Explore the main ethical issues that arise in business

• Critically assess how managers can improve the

ethical climate of their organisation

• Analyse the concept of CSR

• Apply key theoretical models to assess issues that

are faced by global entities
Module Summary and Summative Assessment
Topic 4
Global Topic 7
strategy Ethics and
Internalisations strategies
CSR
Entry modes Carroll’s model
Topic 2 SDGs
External Global
analysis strategy CSR
Sustainability
PESTEL
Analysis, analysis strategy
5 Forces Corporate analysis
evaluation & analysis
ILC strategy
Strategic Group Competitive
analysis
Advantage
SWOT Topic 6
Topic 3 Competitive
Sustainability
Internal Advantage Topic 5
analysis Corporate Triple Bottom Line 3Ps
Value Chain
strategy
VRIO - RBV Vertical/horizontal integration
Building Blocks Diversification
Task 1 Task 2 Task 3 Task 4 Presentation
Summative assessment
Next Steps

• Review this topic

• Go through the Preparation and Apply part of this week (if

not done yet)

• Go through the Consolidation part of this week

• Write and submit your Summative Assessment