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Business Ethics Case Study
Business Ethics Case Study
Ivan Ivanovich knew that something has to be done, which will make people choose his place and stay loyal for a long time. The decision came about soon and from a very unexpected direction. He had his usual Sunday dinner with his wife and daughter, and after that he offered them to go to the cafeteria and have some ice cream. To his surprise, both of them rejected his idea explaining that they care about their bodies, and his ice-cream, is "a dreadful destroyer of waistlines", being a source of extra fat and calories. Ivan Ivanovich was ready to scream of joy! His long searched for "distinctive feature" was found. He knew for sure that "those who care about waistlines" constitute a huge segment of a market, and being influences by images of models in mass media it is likely to grow. Several weeks he devoted to the search of supplier who could provide fat-free and low-calorie ice cream. Naturally, he wanted this supplier to be close enough so that the price stays real, but far and concealed enough to keep it in secret to offer competitive advantage. To his surprise, he wasn't the first to come up with such an idea: several other ice cream stores in other cities already had fat-free/low-calorie ice cream. Making use of his old contacts he founded out that the one who provided supply of this type of ice cream was one of his "good old friends" who used to help him and his co-speculators in their affairs. Alexander Sergeevich was now supplying exclusive ice cream from Poland and Hungary to several ice cream stores and cafeterias in Western Ukraine. One of the exclusive items was this greatly desired fat-free/low-calorie ice cream. On his little freezer truck he was easily crossing borders of Poland and Hungary and bringing back products making use of his numerous "friends" and "god-parents" of his children.
Ivan Ivanovich was delighted—Alexander Sergeevich easily agreed to add him to his list of customers. The only problem was that no official contract was signed to stipulate the rights and responsibilities of two sides. All the commitments and negotiations were only verbal, just a "gentlemen agreement". However, being used to this type of cooperation no one expected problems, it was a natural state of affairs for them. Anyway, inspired by the perspective of huge sales Ivan Ivanovich started an aggressive promotional campaign. The city was filled with pictures of pretty thin girls eating huge portions of fat-free ice cream and drinking "super-size" milkshakes. Local radio stations and hundreds of flyers actively promoted the idea of how eating ice cream can make you beautiful and happy. No wonder that the majority of women of all ages became loyal customers of cafeteria. Gradually omnipotent advertising of "healthy choice" convinced men and even parents purchasing ice cream for children. Competitors were shocked, popularity and sales soared.
About six months before that Ivan Ivanovich hired a manager, university graduate, whose personality was highly influenced by free market ideas and modern approaches of business education. Despite her young age Alice was a skillful manager and easily built good relationships with workers and Ivan Ivanovich. Her personal devotion to work provided an example to all workers and encouraged them to do their best in serving customers. No wonder that quite soon cafeteria became popular for its attentive, courteous and smiling personnel, which was not yet casual thing for provincial city, and therefore highly appreciated.
The problem came unexpectedly, and posed a significant threat to the business. It was further increased because it happened on the eve of Independence Day, and that's when many people go out and sales of restaurant, bars, and cafeterias "hit the sky". Alice was accepting a delivery from Alexander Sergeevich, and she would never realize that there was a problem unless she was really attentive when looking at the packages and spoke English. The supplying ice cream company was the same as usual, and the package was the same, however, in the list of nutritional facts the percentage of fat was 10%, and there were no marks about reduced calories. She immediately pointed out this fact to Alexander Sergeevich, who told her not to mess up in the business and to continue accepting the delivery, since he was in a hurry. However, Alice was not willing to accept the delivery of regular ice cream instead of fat free/low calorie. Not only it was the wrong item, it also should have cost less, because there was nothing "special" about it, and this type of ice cream was easily available from Ukrainian suppliers. Alice decided to call Ivan Ivanovich and told him about the situation. He got to the store about fifteen minutes later. Alexander Sergeevich was still there, angry and nervous because his fraud was revealed, and because he was wasting his time. When Ivan Ivanovich told him to take back the ice cream and to deliver the one he ordered and paid for, Alexander Sergeevich laughed at him and said that the firm was temporarily out of that ice cream because of huge unexpected demand, and that he would take it back but without any refunds. Moreover, Alexander Sergeevich made it clear that if discussions proceed, he would go away and never supply this cafeteria anymore. To her surprise, Ivan Ivanovich said that all the newly delivered ice cream should be sold as if it were fat free/reduced calorie, because many flavors were duplicated as regular and special (vanilla, chocolate, strawberry, etc.). Naturally, being a strong supporter of ethical principles in business, Alice responded that this is unacceptable to deceive customers in such sensitive area and continue getting competitive advantage when there is actually none. Moreover, she made a point that it would destroy trust among employees and image of the business they have. Ivan Ivanovich only smiled and added that she'd better stop teaching him what to do and be silent about that if she doesn't want to loose her job. And Alice was silent, because she knew how hard it was for a young specialist to find a well-paid job in her provincial city.
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