SRI BALAJI SOCIETY (SBS)

CASE STUDY
SEMESTER –IV- BATCH: 2018 – 2020
BUSINESS ETHICS AND CORPORATE GOVERNANCE

Unit - 1
Mr. Saran is a resident of Punjab, India. He is in the business of manufacturing washing
soap and edible mustard oil. Both are sold in the market through their own retail stores and
through distributor network. Their products are well known in the market for their quality.
Their retail stores was started by his grandfather. Subsequently his father also managed the
same business which is now 30 years old. The brand name of washing soap is “Bright”.
Washing soap business is doing well. There are two brands in mustard oil viz., “Krishna”
and “Rama”. Krishna brand is more popular as compared to Rama. It is in the mustard oil
business, Mr. Prasad is facing an ethical dilemma.
Mr. Saran produces oil from the mustard seeds . The local seeds this year are yielding
greenish / blackish oil, resulting in loss of demand from the market. Procurement of
mustard oil seeds from states like Rajasthan and processing them is a costlier option. The
production is affected by the power situation. Production capacity of the unit is 15 tins /
day but due to power shedding it is reduced to even 5 to 7 tins sometimes. Production is
proving to be costlier than trading. The brands produced by them do not have standardised
mark. The tins in local market are sold for $30 with standardised mark and $25 without
standardised mark. Entire production is consumed within district and customers also come
to unit to purchase loose oil. The oil from tankers (30 drums / 5 tons) is tested manually by
the supplier. In the absence of laboratory the testing of oil from tanker is not done again.
The nearest oil testing facility is 140 kilometres away. Lately, the margins are increasing
on the sale of oil from tankers than their own production facility. There are many
manufacturing units of Mustard oil in that district. They all blend mustard oil to reduce
cost. The soybean oil from USA which is yellow and odour less is imported and is mixed
with mustard oil. All the units in that area are following this practice. This blending of oils
reduces the production cost. Some units also do not do billing properly. This results in
avoidance of VAT. The dilemma faced by Mr. Saran is whether he also should stop billing
and start blending mustard oil like everybody else?

Question

Describe Mr Saran actions and practices from his personal and Professional ethics. What
kind of value based management can he introduce for maintain the brand reputation.
 Unit - 2
Case Study

Patagonia is a recreational apparel and gear company. Its ethical values align closely with
those if its consumers. Patagonia is referred to as the “world’s greenest company,” with its
mission statement promising “maximum transparency.” When Patagonia is faced with a
dilemma that goes against its values, it often elects to make the issue public through
environmental impact studies. When Patagonia made the decision to switch from tradit-
ionally sourced cotton to 100 percent organic cotton, they soon realized that there was a
shortage of the material to meet demand. Patagonia worked closely with producers and
suppliers to encourage organic farming. Eventually, there was enough organic cotton
available to meet its needs, and Patagonia made the change to all-organic cotton. Despite
the good intentions behind this decision, Patagonia saw an initial decrease in sales by 20
percent. Patagonia did not back down from their ethical decision and continued to produce
clothing using only organic cotton. Over time, as customers became more educated
regarding the negative impacts of non-organic cotton, sales returned to normal.
Furthermore, this radical change pressured competitors to follow its lead as consumers
began demanding the more environmentally friendly option The efforts of Patagonia can
be seen as a footprint for other corporations looking to operate with transparency and high
moral standards. When an issue arises within a company, it is best to be completely
transparent with consumers and get ahead of the problem – preferably before it becomes a
crisis. Furthermore, when the public does not initially respond positively to a major change,
organizations should not abandon their morals. Sometimes, it is best to wait for the public
to catch up. Sticking to the company’s mission leads to long-term success, as opposed to
short term gains.

Question
Critically appraise Patagonia’s Approach from deontological ethics and elaborate on the
same

Case Study 1: Unit 3

In May 2001, a class action lawsuit was filed against the world's largest fast-food chain
McDonald's, in Seattle, US. The lawsuit alleged that the company had, for over a decade,
duped vegetarian customers into eating French fries that contained beef extracts. The
lawsuit followed a spate of media reports detailing how the French fries served at
McDonald's were falsely promoted as being '100% vegetarian.'

Although McDonald's initially declined to comment on the issue, the company issued a
'conditional apology,' admitting to using beef flavouring in the fries.

McDonald's has had a long history of lawsuits being filed against it. It had been frequently
accused of resorting to unfair and unethical business practices - October 16th is even
observed as a 'World anti-McDonald's day.' In the late 1990s, the company had to settle
over 700 incidents of scalding coffee burns.

Reportedly, McDonald's kept the coffee at 185° - approximately 20° hotter than the
standard temperature at other restaurants - which could cause third degree burns in just 2-
 7 seconds. An 81-year old woman suffered third degree burns on her lower body that
required skin grafts and hospitalisation for a week...

With an overwhelming majority of the people in the West being non-vegetarian, products
often contain hidden animal-based ingredients. Incidents of vegetarians finding non-
vegetarian food items in their food abound throughout the world. Whether a person has
chosen to be a vegetarian for religious, health, ethical or philosophical reasons, it is not
easy to get vegetarian food in public restaurants....

The Aftermath

Questions:
a) What do you think McDonald’s did?
b) How did they handle this case?
c) Did they hurt (or rather betray) the sentiments of vegetarians?
d) Any possible furore back in India?

Case Study 2: Unit 3

On June 13, 1999, Coca-Cola (Coke) recalled over 15 million cans and bottles after the
Belgian Health Ministry announced a ban on Coke's drinks, which were suspected of making
more than 100 school children ill in the preceding six days.

This recall was in addition to the 2.5 million bottles that had already been recalled in the
previous week.

The company's products namely Coke, Diet Coke and Fanta had been bottled in Antwerp,
Ghent and Wilrijk, Belgium while some batches of Coke, Diet Coke, Fanta and Sprite were
also produced in Dunkirk, France.

Children at six schools in Belgium had complained of headache, nausea, vomiting and
shivering which ultimately led to hospitalization after drinking Coke's beverages.

Most of them reported an 'unusual odor' and an 'off-taste' in the drink.

In a statement to Reuters, Marc Pattin, a spokesman for the Belgian Health Ministry
explained the seriousness of the issue: "Another 44 children had become ill with stomach
pains, 42 of them at a school in Lochristi, near Ghent, northwest Belgium.

We have had five or six cases of poisoning of young people who had stomach pain after
drinking (the suspect beverages).

In the same week, the governments of France, Spain and Luxembourg also banned Coke's
products while Coke's Dutch arm recalled all products that had come from its Belgium plant.

The entire episode left more than 200 Belgians and French, mostly school children, ill after
drinking the Coke produced at Antwerp and Dunkirk.

Questions
 1. What in your opinion were some of the actions taken by Coke?

2. Impact on sale and thereby on financial performance

3. Compensation to children who fell ill

Case Study 3: Unit 3

Students to search for ‘Code of Business Conduct’ document in the net for a popular
organization, say Wipro. They should frame 4-5 questions and discuss the same. Questions
can be:

1. How employees are supposed to act on a day-to-day basis?

2. Importance of code of conduct
3. What could be repercussion if employees violate code of conduct?

Note: While this is NOT a case study per se, code of business conduct is a topic in unit 3.
Students will be forced to understand what it contains. Also, when they join corporate, they
are likely to learn about it.

Case Study 4: Unit 5

When you search the net for “famous whistleblower in india”, you get the following:

Shanmugam Manjunath, Death of Shehla Masood, Lalit Mehta, Shashidhar Mishra, Avijit
Misra.

Students can pick a couple of them and talk about what the case was all about

Case Study 5: Unit 4

The Johnson & Johnson's Tylenol Controversies

Bhopal Gas Tragedy

Microsoft Antitrust case

T-Series story

Students should find out about the above case/controversy/tragedy and discuss the same in
class.