HC2121: Comparative Business Ethics - Comparative Business Ethics and Social Responsibility- Assessment Answer

January 03, 2019
Author : Sara Lanning

Solution Code: 1AJBD

Question: Comparative Business Ethics Case Study

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Comparative Business Ethics Case Study Assignment

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Solution:  Comparative Business Ethics

New Belgium Brewery Company (NBB) is a brewery focused on craft brewing and is located in Fort Collins, Colorado. The company was founded in 1991 by Jeff Lebesch as well as Kim Jordan. In 2011, the company was reported to produce 712, 800 barrels of the various labels of the company. The company was the third largest craft brewery and further reported as the eighth largest brewery in the United States (Ferrell, Fredrich, Ferrell, 2015). The company’s major flagship beer is Fat Tire, amber ale. The company currently has two brew houses, four quality assurances labs, a water treatment facility, a bottling and canning line and various technological innovations for which the NBB has become nationally recognised as a benchmark for environmental efficiencies.  The company has a number of products such as ales and pilsners with its standard line including products such as Sunshine Wheat, 1554, Abby, Rampany, Snapshot and Shift among others. The company interacts with other craft brewers in developing new and innovative products (Ferrell, Fredrich, Ferrell, 2015). As the company expansions continues in different parts of the country, it has invested in CSR issues both locally and nationally in its bid to become an environmentally conscious company.

An increasing number of consumers, employees as well as managers have expectations for companies to go past their traditional responsibilities of producing and selling for a profit. In the view of the public, creation of jobs and paying taxes is no longer sufficient in the role of the private sector in contributing to the society (Jo & Harjoto, 2012).  The increased rates of socially responsible investments product is a measurement of this trend as various stakeholders express their concerns and made their ethical stands known in regards to the companies and firms they associate with. Socially responsible investors include universities, hospital foundations, insurance companies, corporations, individuals, pension funds and churches among others (Luo et al., 2015).  Investors may decide to exclude companies which they feel are not adopting sound policies with regards to environmental protection, fair employment practices as well as community relations.

Having a well planned and managed programs and strategies ranging from protecting the environment to helping the disadvantages in the community in the name of corporate social responsibility (CSR) has become a necessary tool and element in every company’s business strategy and business plan (Kim & Bettis, 2014). NBB like other companies have also invested hugely on various CSR initiatives and programs. As illustrated by Ferrell, Fredrich and Ferrell (2015), small businesses such as NBB, their social responsibility initiatives have the greatest impact on local communities with such business creating jobs, provide goods and services for smaller markets and contribute money and volunteer time to local courses. As a result, the CSR of small companies such as NBB cannot be ignored and a need to understand the various issues they focus to address (Harrison & Bosse, 2013). Further, there is a need to understand whether their efforts result to a competitive edge and further evaluate whether their actions and initiatives are indicative of a socially responsible company.

Section Two: Discussion

2.1 NBB’s Strategies in addressing Environmental issues

2.1.1 Environmental Issues

NBB has focused its efforts on a number of environmental issues. The company has done this through creating a link between the quality of the products it produces and its brand to its philosophy of environmental friendliness (Ferrell, Fredrich, Ferrell, 2015). One of the environmental issues which the company has undertaken is energy conservation whereby the company has adopted a number of cost effective energy saving alternatives in its operations. As illustrated and mentioned by  Flammer (2015), energy consumptions is one of the most critical environmental issues facing the modern world with pollution from particular energy use as well as depletion of non renewable resources such as oil in the increase. The use of renewable energy by NBB as illustrated by Ferrell, Fredrich and Ferrell (2015) has resulted to not only cost saving for the company but for the reduction of the impacts of the environment.  The company has invested in renewable energy for instance the use of wind turbine.

Other alternatives include a smart grid installation which enables the company to conserve energy in collaborations with its electricity providers, the use of a 20 kilowatt photovoltaic array which produces 3% of the company’s electricity, a brew kettler, steam condenser and sun tubes.  The company also engages in recycling whereby waste water for instance is recycled by extracting methane from it which further provide energy for the company and also reduce the starting in the water treatment facility in the area (Ferrell, Fredrich, Ferrell, 2015). The company further provide support for clean water whereby the company in 2014supported the EPA clean water rule. Cheng et al., (2014) illustrates that water pollution is a critical environmental issues which need to be death with.

The company further as illustrated earlier on is a champion in reducing waste through recycling as well as creative reuse strategies. Kim & Bettis (2014) argues that reduction of waste is an effort every company and firm should invest in and ensure that it contributes to the management of the waste it produces to the enviroment.NBB is following with this approach whereby it aims to recycle as many supplies as possible. The brewery stores already used barley and hop grains inviting the local farmers to get the grains free to feed their pigs. This approach not only helps in its waste reduction and recycling strategies but also develop lasting bonds with the local communities.  The company further collaborates with partners whereby the bacteria used to create methane from the NBB wastewater is converted into high protein fish food (Ferrell, Fredrich, Ferrell, 2015). As advocated by Luo et al., (2015), the company follow the three R's of environmental stewardships, Reduce, Reuse, and Recycle. Further, the company participate in green building techniques whereby they incorporate new technologies in their buildings and structures. As such in conclusion, NBB has undertaken significant effort and initiatives in environmental sustainability.

2.1.2 Strategic Approach in Management of Environmental Issues

By focusing on these environmental issues, NBB has developed a strategic approach in ensuring that the above discussed environmental issues are being addressed. NBB social responsibility and its 100% employee’s ownership are clearly having an impact on its overall performance. First, by recognising the critical role played by employees in the company’s success have been incorporated into the ownership of the company (Ferrell, Fredrich, Ferrell, 2015).  The company provides a 100 percent employee ownership which results to employees benefitting from the company’s success. This is highly motivational for the employees as their success is also impacted by the success of the company. Kruger (2015) argues that investing in employees and involving them in the company’s decision making enables them to be motivated and thus performance is improved.

The company has developed strategies which ensure that the employees are not only motivated but that they are involved in the various strategies undertaken by the company with regards to social responsibility in the areas and communities they serve. For instance, in addition to the usual benefits, employees are celebrated on their birthdays, given free massages once a year and are allowed to bring their children to work (Ferrell, Fredrich, Ferrell, 2015). Further, in order to increase the company’s employee retention rates, the employees who have stayed with the company for more than five years are given an all expenses paid trip to Belgium to learn about beer culture.

The company in their initiatives to be socially responsible reimburse employees for a paid hour for every two hours of volunteer work.  Further, after one year in employment at the company, they are given a bike to ride to work instead of driving. These strategies have enables the company to acquire a highly motivated workforce whereby they have embodied employee benefits to socially responsible programs such as the free bike. As a result of these benefits, the employees are highly motivated and this increases their performance and as a result a highly performing NBB (Ferrell, Fredrich, Ferrell, 2015). This definitely improves the competitive advantage of the company. Through involving employees in its CSR efforts, an ethical culture is created in addition to the improved company performance. The company in its efforts to conserve energy and protect the environment has undertaken cost efficient energy saving alternatives in its operations and this has reduced its impact on the environment (Kruger, 2015). For instance, the company operates on a fully wind powered brewery. This has greatly reduced its costs thus enabling the company to produce at reduced costs not only to the environment but also in its operations (Zhang et al., 2010). Further, from the use of such energy saving alternatives, the company has gained favour from its clients and have acquired a loyal customer base.

2.1.3 Reasons for Strong Stance on Sustainability

NBB like many other companies globally, have taken a strong stance in undertaking a sustainable approach in its management of environment issues as well as with the rest of the organisational issues (Ferrell, Fredrich, Ferrell, 2015). Various stakeholders such as corporate boards, CEOs and customers among others are interested in the CSR initiatives of a company. Corporate boards and CEOs for instance are guardians of their company’s financial welfare and as such bear responsibility of the impact that CSR has on this performance (Surroca et al., 2010).  In different levels, CEOs and board members are required to justify that the CSR initiatives are consistent with the firm's strategies (Minor & Morgan, 2011). As such, the management of NBB is of course interested with CSR in making sure that its CSR efforts are in line with the company’s business plans.

Shareholders are also very interested the performance of the company and are concerned about possible threats to the priorities of the management (Servaes & Tamayo, 2013). For instance the shareholders are concerned whether a company’s policies on energy may result to fines from regulatory authorities.  Government cares in ensuring that companies are able to deliver social as well as environmental benefits which are effective through regulatory effects (Oikonomou et al., 2014). Consumers also care as they want to leave a world which is better for their children and children’s children and as such they purchase in companies which are reflective of their values (Surroca et al., 2010). As a result of these demands from the various major stakeholders, NBB has taken a strong stance on environmental issues. Further, there is a business case for social responsibility which has been developed.  

2.2 Impact of NBB's Social Responsibility on Competitive Advantage

Minor & Morgan (2011) argues that having a strong focus on social responsibility provides firms with a competitive advantage over other firms. NBB in focusing on social responsibility has acquired huge competitive advantages over its competitors ensuring its survival over time. As illustrated by Ferrell, Fredrich and Ferrell (2015), NBB gives importance and focus on having an ethical culture as a crucial marketing tool. The company believes that embracing citizenship in the communities that it operates in and serve will enable it to develop enduring bonds with its customers.  The company’s ethical culture began in its incorporation back in 1991 when the founders of the company made a decision on what its core purpose would be. NBB adopts a triple bottom line approach to its business whereby it incorporates economic, social as well as environmental elements. This approach provides the company with a basis and backbone of a CSR approach in the management of its business.

As illustrated by Zhang et al., (2010) businesses operating in the modern world need to realise that customers and other major stakeholders re invested in a company which is adhering to social corporate responsibility principles. Zadek (2000) argue that defining their reputations, justifications of benefits over costs, integration with broader strategies and management of risks are the reasons business engage in CSR strategies. Kurucz et al., (2008) supported this and argued that cost and risk reduction, acquiring competitive advantage, managing reputation and seeking win win outcomes was the reasons for CSR startegies.NBB promotes its brand and company image as a environmentally conscious firm and as such follow CSR initiatives to promote and defend its reputations. Further, the company follows CSR strategies and initiatives as justifications of the benefits accrued over the costs of certain programs. For instance, the company has invested heavily in renewable energy as well as cost saving energy policies such as the smart installation which enable the company in collaboration with their electricity provider to note those activities which are using electricity unnecessarily (Ferrell, Fredrich, Ferrell, 2015). This enables the company to adopt cost effective energy policies and thus reduce costs. Further, CSR also enable the company to acquire a competitive edge as well as it is able to meet the demand of its stakeholders.

2.3 Is NBB a Socially Responsible Corporation?

As illustrated by Oberseder et al., (2013) there are some individuals who hold that companies which are involved in selling alcoholic beverages as well as tobacco products are not fit to be categorised as socially responsible organisations. Individuals who hold this school of through are of the opinions that as a result of the nature of the primary products which are produced by these companies, they are not social responsible. This is because the products provided by these companies can be illustrated to be harmful particularly when misused. Zhang et al., (2010) argues that such companies cannot argue to be socially responsible yet; they are producing products which are of harm to the society.

In determining whether a company is socially responsible, it is crucial to understand the principles which underpin CSR. These include sustainability, accountability and transparency. Sustainability involves the impact of the action taken currently on the options which will be available in the future. For instance, if the resources which are used today are not available for use in the future, then this is an unsustainable approach to resource use. NBB can be argued to be sustainable as it does not use more of resources which can be regenerated.  For instance NBB has adopted the use of wind powered brewery and other energy saving options such as the use of a brew kettle which wheat wort sheets rather than the whole kettle resulting to conservation of energy (Ferrell, Fredrich, Ferrell, 2015). Luo et al., (2015) argues that measures of sustainable can consider the resources which are utilised by organisations in regards to the rate at which resources which can be regenerated. NBB has taken the practice of less unsustainability elements to increase efficiency in the manner in which resources are utilise. As such, it can be concluded that NBB ahs meet the sustainability principle of CSR.

The second element is accountability and involves the organisations realising that its actions impact the external environment and as such a need to assume responsibility for the effects of its actions. Kruger (2015) accountability means that a firm need to report quantifications of the impact of actions taken both internally and externally to all the parties which are affected by these actions. The company has met this measure through a number of actions. For instance, the company adopts an open book management whereby the employees who own 100 percent of the company are able to evaluate and see the performance of the company by analysing its annual reports.

The company further goes a step further, by training its employees in understanding its financial reports and the various operations it undertakes. Accountability further needs the development of appropriate measures in environmental performance as well as reporting the various actions undertaken by the company. NBB for instance is involved as a chair of a sustainability sub committee for Brewers Association. Further, the company in addition to various environmental sustainability strategies, is involves in an environmental group, Business for Innovative Climate & Energy Policy and is a signatory of BICPE's Climate Declaration in 2013.The declaration call for American businesses as well as other stakeholders to address climate change. NBB as such is accountable to the BICEP Climate Declaration as well as reporting the company’s efforts to its various stakeholders (Ferrell, Fredrich, Ferrell, 2015).  

The third principle is transparency whereby the external influence of the actions undertaken by the firm can be ascertained from the company’s reports and pertinent facts not excluded from the company (Minor & Morgan, 2011). NBB can be argued to be transparent as it provides details of the operations it has undertaken, its use of renewable energy and having an open book management approach. This means that the stakehodler can easily follow on what the company is about and the influence that these actions have.

Section Three: Conclusion

3.1 Conclusion

The competition and consumption of scarce resources within the global and local markets have increased the pressure of companies to achieve desirable ends which goes beyond maximising the value of the shareholder. There is due to the increased demands from stakehodler to hold the companies accountable for their social and environmental issues. Majority of companies for instance NBB has responded positively to this increased stakehodler interests in CSR. However, there are those who see a conflict between CSR and value maximisation approach of the firms as they are concerned with the corporate involvement legitimacy in social affairs and the possibility of misusing resources.  

NBB has taken a serious stance in CSR whereby it has embedded CSR initiatives and activities in its business strategies. The various environmental issues which the company has focused on include energy saving, waste reduction and clean water initiatives. Further, the company has embedded its CSR initiatives in its business strategy whereby the company engages and involves its employee to participate in these ventures not only to the benefit of the company but also for the benefit of the environment and the society. For instance, it has program whereby by volunteering for two hours, employees are paid for an hour. This not only motivates employees but also help them to practitioners in helping the society. The company engaged in CSR for a number of reasons among them competitive advantage it acquires. As illustrated there is a business case for CSR whereby companies are able to reduce costs and also to acquire an edge over their competitors. Finally, the actions and initiatives undertaken by NBB are illustrative of a socially responsible corporation as the company follows and adheres to the three major principles of CSR; accountability, transparency and sustainability. NBB as such has taken considerable efforts in using that it’s socially sustainable and in return has benefited from it through acquiring a competitive edge over other firms in the market. Other companies need to take a benchmarked from NBB in undertaking CSR activities whereby employees and other major stakeholders are involved in CSR activities actively.

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