In one of our commerce lectures we were introduced to an organization called Zappos, an online shoe and clothing shop based in Las Vegas. What was rather intriguing and peculiar was the organizations culture. Zappos has implemented a decentralized decision making system where the control and activity is not under a single authority.The business environment, beliefs and values of the company are rather interesting, the company is very family oriented and employees hold frequent parties. In addition, there is no hierarchy in the company.

It was very fascinating because I hadn’t imagined that a company which operated in such a way would be successful. However, Zappos is a very successful company that Amazon acquired for about 1.2 billion dollars. Even though Zappos’ accomplishments are evident, the disadvantages when companies decentralize outweigh the benefits in my opinion. The organization may become fragmented and stray away from the company’s vision and mission statement and having many diverse outlooks and perspectives can harm the company. Decentralized units may put their interests first ahead of the interests of the business. There is a risk associated with granting employees with the power to do as they please and may abuse this autonomy. Another key disadvantage when it comes to decentralization like in the case of Zappos is that the business ultimately lacks uniformity. Each manager possesses differing policies and this usually tends to lead to a lack of cooperation and coordination.

Lastly, decentralization could harm a business and its activities by being the catalyst to interdepartmental conflicts, this is because authority has been delegated to various people and therefore one governing body that controls and regulates policies within the working environment does not exist. These are the various reasons why I believe that a decentralized organization can rarely perform well in today’s ruthless business world with the exception of Zappos.

I still believe that decentralization can work with a certain degree of authority, where there can still be that liberating atmosphere that exists in the case of a decentralized organization but simultaneously with a sense of direction derived from a body of authority. It is all about balance.

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http://smallbusiness.chron.com/advantages-disadvantages-companies-decentralize-11938.html

https://www.thebalance.com/zappos-company-culture-1918813

Many companies nowadays have employed the active use of corporate social responsibility, being the voluntary activities performed by a company to operate in a social, economic and environmentally sustainable manner. One can beg the question whether the reasons behind CSR are truly out of ethical principle or merely just long term self-interest and profit.

The above motion centred around the implementation of CSR and the intention behind it has been long debated in the business world. In my opinion, CSR is almost always driven by a long term benefit and with increased profits in mind. My conclusion has stemmed from many reasons and examples that I have witnessed. For instance, when companies comply with environmental laws and emission regulations they are usually trying to avoid heavy long term fines. In addition, for a long time companies and businesses have supported local educational institutions bearing in mind that they would eventually benefit from doing so as these students will comprise of the business workforce. Lastly companies always conduct social and charitable programs in order to boost their public image and become more reputable so as to attract a larger consumer base. Businesses always excel and thrive in an environmental situation that is socially, environmentally and economically stable, therefore it is in their best interest to implement CSR in order to make this happen. Hence one can suggest that all of their undertakings towards this is all out of pure self- interest. But that is just my view, however, I’m sure there are companies out there that execute corporate social responsibility solely because it is the right thing to do and there is no monetary gain in mind associated with its implementation. One thing I have noticed is that It is a very difficult task to distinguish between a company utilizing CSR for money or out of pure ethical concern as the lines that separate them are very very thin.

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In order to have a strong business model it is imperative to supplement it with an equally strong understanding and knowledge of the factors that may affect a business from the outside world. A business must be fully aware of its external environment and must anticipate and be ready for any future problems they may encounter.

A vital and beneficial tool for a company to know its outside environment is through a PEST analysis, an analytical tool that provides companies with ability to audit factors such political, economic, socio cultural and technology to gain insights about a company’s environment.

Coca Cola is a multinational cooperation that has actively used the PEST analysis to place them in the dominant financial position they are currently in.

The political analysis of Coca Cola are mostly taxation requirements; the political stability of countries they operate and the environmental laws they have to abide in foreign and domestic markets. In addition, the company must also anticipate for civil conflict and this allows them to initiate strategic business planning.

Sales in the company are largely impacted by economic factors in which they have no control over such as the differentiating labor costs, interest rates, exchange rates and economic growth of the countries they operate in. The Social Aspect is also an essential factor that needs consideration, with more people opting for a healthier lifestyle, coca cola zero sales have increased. The demand for healthier drink alternatives has also been increasing as more and more people are concerned with their nutrition. Media perception and demographic changes also play a role in the social aspect Coca Cola is concerned with.  Lastly technological factors need to be assessed, such as advancing equipment for product manufacturing and design. The company has switched from glass bottles to concentrating production on plastic and cans due to how easy it is to dispose. Also, the promotional side of the company, advertising through social media as a more effective way.

Coca Cola has implemented the PEST analysis in a very effectual manner and is central to their business which has enabled them to gain knowledge to the outside world. This goes to show how the PEST analysis is useful to evaluate the variables outside of the business in which a company has no control. It allows a business to avoid actions that are likely to fail and also seek out potential opportunities.

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References 

https://toughnickel.com/industries/PEST-Analysis-Coca-Cola

In the business world today, there is an occasional tradeoff between businesses achieving their main objective being to generate capital and conducting business activity in an ethical manner.

In order for a business to be operating ethically, it is essential for the business to balance corporate interests and aims with societal welfare. Businesses that embrace ethical behavior in their business objectives are said to practice corporate social responsibility, being the voluntary activities undertaken by a business to operate in a social, economic and environmentally sustainable manner.

Indofood, is a major Indonesian company involved in the food industry. The business is widely recognized as a large producer of instant noodles. In June of 2016, Indofood had been reported to be violating the fundamental rights of its workers, thus operating in an unethical fashion. Investigations conveyed that Indofood, actively uses child labor, practices worker intimidation and exploitation and workers receive low wages. Indofood refused to comment on these findings and have stated that they have abided and complied by the regulations and laws of Indonesia. In addition, these child workers have no job security as they are offered limited duration contracts.

This is a clear depiction of a company that does not take corporate social responsibility into consideration when manufacturing its products as they have significantly violated workers’ rights. Stake holder theory states that a business is performing ethically when all stakeholders in a business, being any party with a direct interest in a company’s activity is satisfied. Therefore, Indofood, has diverted from this as the company’s worker’s interests, being job security, adequate safety and a sufficient salary has not been met.

Statistics show that businesses concerned with corporate social responsibility will have success in the long term and can attract more potential customers that have noticed its efforts to do so.

An argument frequently brought up against businesses performing ethically, is that people may suggest that the ultimate purpose of a business should be to make a profit and therefore corporate social responsibility should be left to nonprofit organizations. In addition, Corporate social responsibility is expensive and businesses may be reluctant to invest.

Ultimately, when businesses opt to practice ethically, they may have success in the long term and attract more consumers and avoid future altercations with the law. However, in undertaking ethical business activity it can be quite expensive and stray the company away from its primary objective which is to make a profit.

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References

Shah, Vaidehi. “Indofood Accused of Child Labour Violations.” Eco-business. N.p., 10 June 2016. Web. 8 Sept. 2016.

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