NBD Norms and Nations Report
Supply chains (SC) strategic significance in the business has increased since the mid-1990s (Hakim et al., 2017). SC results in large amounts of money in an organization, thus, they have significant influence on an organizational competitive advantage. Adopting ethics in SC give an organization a unique position as well as adding value to its products and services (Hakim et al., 2017).
Ethical dilemmas, such as in the case of NBD Norms and Nations, results to problems within the organization. While the transaction between the Chinese supplier and NBD was cross-cultural and intercultural, it was important that both maintained ethical conduct and respect of each other’s culture.
NBD Norms and Nations: Ethical Theory and Principles
Numerous authors have discussed the nature of ethical theory. As a result, there are five major ethical theories, namely universalism, utilitarianism, justice, rights, and natural law (Saine et al., 2019).These theories provide a foundation for making decisions. Each of them emphasizes a different point, style, or decision rule. Notably, people make decisions in the same situation, but differently because of the principles that they have namely; least harm, justice, beneficence, and respect for autonomy (Saine et al., 2019).
The principle of beneficence guides a person to make a decision based on what is good and right. Least harm comes in when no choice is beneficial; thus, the decision maker chooses the one that is likely to produce the least harm towards others. The principle of respect for autonomy gives individuals a chance to remain autonomous, giving them control over their lives. Finally, the principle of justices requires individuals to be fair to the other individuals (Saine et al., 2019).The Chinese supplier was obligated to ensure that they caused the least harm, ensured NBD respect for autonomy, justice, and beneficence.
In NBD Norms and Nations case, the Chinese supplier was not ethical by shipping 300,000 cases of real leather instead of the faux leather material requested by the supplier even though the company was going to sell low for the real leather.Ethics are simply the moral principles governing the conduct of individuals and businesses. Ethics in business is related to principles such as transparency, integrity, and fairness while doing business (Saine et al., 2019).
The professional business ethical conduct standards require all types of organizations to have typical business characteristics and commitments such as behaving honorably, maintain confidence, and trust. Additionally, businesses or individuals should avoid activities that are “clever” such as the case of the Chinese supplier of taking undue advantage of others. In this case, the Chinese supplier should implement utilitarian ethical theory and act for the benefit of majority regardless of their personal losses (Saine et al., 2019).
Cultural Differences in Different Countries
Based on NBD Norms and Nations case, there is a difference between consumer expectations and business transactions in the West and Asia. In Western Countries such as the USA, they use the slogan “customer is always right” to show the client’s significance in business (Mann& Sahni, 2019).Asia has a diverse culture with each country having one. The Chinese consumers prefer excellent services and similar to other Asians they will demand the highest customer experience.
With increased globalization of businesses, some business people tend to think that culture does not affect the business. Nevertheless, there are still wide cultural differences that determine how people behave in business. Culture determines the business pace, protocols, negotiating, decision making, employee management, risk taking propensity, sales, distribution, and marketing. Culture determines partnership and people work with the people they understand, trust, and like (Mann & Sahni, 2019).
Using the Hofstede national culture model, there are the following cultural differences between South Africa, China, and USA (Mann & Sahni, 2019).
Indulgence vs. Restraint. Asian countries, including China believe in family and honor. Contrarily, the Western countries including USA believe in self-concept. Similar to the USA, South Africa has an indulgent community, which makes them clash with the Chinese restrained culture when it comes to consumer expectations.
Long-term orientation vs. short-term normative orientation (LTO). South African and USA cultures are normative and strive to establish absolute truth. Contrarily, China has a pragmatic culture and believes that the truth depends with immediate time, context, and situation. Therefore, they adapt to situations and would mind leaving out details if the situation favors them.
Masculinity vs. Feminist. The Chinese are a masculine society, which, means they are success driven and oriented. Although China has a high level of masculinity, South Africa and USA are also masculine societies.
Uncertainty avoidance index (UAI). China is ranked amongst the countries with low uncertainty avoidance, that is, why the Chinese supplier opts to sell the real leather at a cheaper price than wait for uncertain future to sell it. On the other hand, South Africa and USA have a higher dimension of avoiding risks than China, which explains why NBD is devastated by getting the wrong materials.
Power Distance. People in South Africa accept the hierarchical order and their place within the firm and society. South Africa power distance ranks higher than the USA. Nevertheless, China ranks highest; the inequalities in the subordinate-superior relationships and power abuse are acceptable.
Individualism vs. Collectivism. China is a highly collectivist culture where people act in the interests of the group while South Africa and USA are highly individualistic countries with USA leading. The difference can explain why Chinese supplier sent the products for the good of all the involved parties.
Strategic errors are an integral part of an organization, and it leads to a decline in the revenue-generating capability of the firm (Zsambok, 2014). In the case of NBD Norms and Nations, the design vice president (VP), manufacturing VP and marketing VP, were all involved in making poor decisions. The initial mistake was less than effective communication. The mistake of the manufacturing VP was to accept the order and not cancel the request of the items. Even with the time constraint, the manufacturing VP should have been inclined towards changing the supplier rather than accepting orders.
The mistake of the marketing VP was in promoting the real leather as faux leather. It was also a poor strategy sending the cases made of leather to the Asian and African regions where people are inclined towards resisting products made of animal skin on a large scale. Therefore, all the decision-making constraints led to the disruption in the reputation of the entity and ultimately led to the decline of sales of the company’s products in Asia and Africa (as excerpted from the case study).
Recommendations for New Strategy
The supply of leather cases made of pigskin affected the revenue generation capability and reputation of NBD. The issues in communication between the managers of the organization affected the decision-making process of the entity. After the adverse situation, the managers decided to communicate with each other and figure out a solution to the potential crisis. The SWOT analysis, which is used to identify the competitive position of the company, would be used to assess the internal and external factors (Helms & Nixon, 2010).
The significant strengths of NBD are the brand equity of the company and designing electronic goods according to the needs of the customers. However, the company is engaged in shipping many electronics goods regularly. Therefore, in order to come out of the crisis, there is a need for it to utilize the brand equity of the firm to reinstate the faith in the minds of the customers.
One of the weaknesses that led to the decline of NBD is that the company develops electronic goods but attains the cases from the suppliers. Therefore, a new department should be introduced that would be involved in designing the accessories of the electronic products manufactured by the entity.
The vast capital structure of NBD would allow the company to lower the cost of its products and promoting the new faux leather cases to be launched by the company over digital and social media sites.
The biggest threat for NBD would be the decline in the loyalty of customers that are against the use of products made of pigskin due to religious beliefs. The mistake of the company affected the sentiments of the individuals.
The PESTLE Analysis would provide insights regarding the markets of Africa and Asia and the strategies that should be devised by NBD in order to improve its reputation and ensure sustainability within the regions.
|The government of Asia and Africa might be reluctant in allowing trade activities as the company hurts the religious beliefs of the people of the region. Therefore, providing products at lower prices by NBD and free samples made of faux leather would enhance the acceptance probability of the company.
|The local suppliers would gain market control with the decline in the reputation of NBD. However, the brand equity of the firm can be used as a strategic weapon.
|NBD needs to apologize for hurting the religious sentiments of the locals and provide additional discounts and cases made of faux leather in the future.
|Investments in research and development from the capital structure of NBD would contribute to the manufacture of cases in-house.
|NBD can further organize environmental campaigns towards animal rights in order to improve its reputation within the countries.
|The testing of new cases of the raw materials would allow NBD for the unethical use of materials in the future.
Hakim, R. A., Taib, C. A. B., Hossain, M. T. B., & Naim, M. J. (2017). Social responsibility in global supply chain: Research trend from 1999 to 2014. Int. J Sup. Chain. Mgt Vol, 6(4), 146.
Mann, B. J. S., & Sahni, S. K. (2019). Identifying the relationship between cultural dimensions and consumer decision making styles. Business & Social Sciences Journal, 4(1), 31-69.
Saine, R., Kull, A. J., Besharat, A., & Varki, S. (2019). I see me: The role of observer imagery in reducing consumer transgressions. Journal of Business Ethics, 1-12.