Chapter 4: Explain the effect these trends have on international business

4.1.      Value proposition

Before you begin

Before you begin reading, check your understanding of some of the key terms you will read in this chapter:

 

Value Propositions

Individual buyers and organizational buyers both evaluate products and services to see if they provide desired benefits. For example, when you are exploring your vacation options, know the benefits of each destination and the value you get by going to each place. Before you (or a firm) can develop a strategy or create a strategic plan, you first must develop a value proposition. A value proposition is a 30-second “elevator speech” stating the specific benefits a product or service offering provides a buyer. It shows why the product or service is superior to competing offers. The value proposition answers the questions, “Why should I buy from you or why should I hire you?” The value proposition becomes critical in shaping strategy.

The following is an example of a value proposition developed by a sales consulting firm: “Our clients grow their business, large or small, typically by a minimum of 30% to 50% over the previous year. They accomplish this without working 80-hour weeks and sacrificing their personal lives” (Lake, 2009).

Note that although a value proposition will hopefully lead to profits for a firm, when the firm presents its value proposition to its customers, it does not mention its own profits. The goal is to focus on the external market or what customers want. For instance, Beaches, an all-inclusive chain of resorts for families, must explain what its value proposition is to customers. Why does a Beaches resort provide more value to vacationing families?

Firms typically segment markets and then identify different target markets, or groups of customers, they want to reach when they are developing their value propositions. Be aware that companies sometimes develop unique value propositions for different target markets just as individuals may develop a unique value proposition for different employers. The value proposition tells each group of customers (or potential employers) why they should buy a product or service, vacation to a particular destination, donate to an organization, hire you, and so forth.

Once the benefits of a product or service are clear, the firm must develop strategies that support the value proposition. The value proposition serves as a guide for this process. With our sales consulting firm, the strategies it develops must help clients improve their sales by 30% to 50%. Likewise, if a company’s value proposition states that the firm is the largest retailer in the region with the most stores and best product selection, opening stores or increasing the firm’s inventory might be a key part of the company’s strategy. Looking at Amazon’s value proposition, “Low price, wide selection with added convenience anytime, anywhere,” one can easily see how Amazon has been so successful.

Individuals and students should also develop their own personal value propositions. Tell companies why they should hire you or why a graduate school should accept you. Show the value you bring to the situation. A value proposition will help you in different situations. Think about how your internship experience and/or study abroad experience may help a future employer. For example, explain to the employer the benefits and value of going abroad. Perhaps your study abroad experience helped you understand customers that buy from Company X and your customer service experience during your internship increased your ability to generate sales, which improved your employer’s profit margin. Thus, you may quickly contribute to Company X, something that they might value.

Value Proposition Canvas

The Value Proposition Canvas (see Figure below) is a tool focusing on what the customer values and needs regarding a product or service that was developed by Dr Alexander Osterwalder explains:

  • Gain Creators: How can you improve the lives of your customers?
  • Pain Relievers: How can you help relieve customer barriers/issues?
  • Products & Services: What products or services can you offer to help customers satisfy a need, want, or desire?
  • Customer Jobs: What are your customer’s needs, wants, or desires (emotional and/or personal)?
  • Gains: How will your customers benefit? (Expectations, social benefits, functional, and financial gains).
  • Pains: Are your customers experiencing barriers to basic activities?
This image illustrates value proposition section on the left side and customer profile section on the right side. Value proposition section ncludes: gain creators, products and services, pain relievers. Customer Profile section includes: gains, customer jobs, pains. Value proposition canvas circle is in the middle.
Image by Matthew Pauley (CC BY 4.0), 2021

Source:

Pauley M., (2023). Business Startup and Entrepreneurship Canada – Chapter 5: Value Prepositions. University of Prince Edward Island.

4.2.      Ethics

Ethics definition

What is Business Ethics?

person with a nice suit standing near the stairs
Image by Hunters Race from Unsplash

It is in the best interest of a company to operate ethically. Trustworthy companies are better at attracting and keeping customers, talented employees, and capital. Those tainted by questionable ethics suffer from dwindling customer bases, employee turnover, and investor mistrust.

Let us address this question: What can individuals, organizations, and government agencies do to foster an environment of ethical behaviour in business? First, of course, we need to define the term.

What Is Ethics?

You probably already know what it means to be ethical: to know right from wrong and to know when you are practicing one instead of the other. Business ethics is the application of ethical behaviour in a business context. Acting ethically in business means more than simply obeying applicable laws and regulations. It also means being honest, doing no harm to others, competing fairly, and declining to put your own interests above those of your company, its owners, and its workers. In business, you need a strong sense of right and wrong. You need the conviction to do what is right, even if it means doing something that is difficult or personally disadvantageous.

Why Study Ethics?

Ideally, prison terms, heavy fines, and civil suits would discourage corporate misconduct, but, unfortunately, many experts suspect this assumption is optimistic. Whatever the condition of the ethical environment soon, one thing seems clear: the next generation entering business (which includes most of you) will find a world much different from the one that waited for the previous generation. Recent history tells us in no uncertain terms that today’s business students, many of whom are tomorrow’s business leaders, need a much sharper understanding of the difference between what is and is not ethically acceptable. As a business student, one of your key tasks is learning how to recognize and deal with the ethical challenges that will confront you. Asked what he looked for in a new hire, Warren Buffett, the world’s most successful investor looks for three things, personal integrity, intelligence, and a high energy level, but admits without integrity the others are irrelevant.

Identifying Ethical Issues and Dilemmas

road sign that displays 2 options: "right" and "wrong"
Image by Tumisu from Pixabay

Ethical issues are the difficult social questions that involve some level of controversy over what the right thing is to do. Environmental protection is an example of a commonly discussed ethical issue because there can be trade-offs between environmental and economic factors.

Tips to maintain honesty and integrity

  • Follow your own code of personal conduct; act according to your own convictions rather than doing what is convenient (or profitable).
  • While at work, focus on your job, not on non-work-related activities, such as emails and personal phone calls.
  • Do not appropriate office supplies or products or other company resources for your own use.
  • Be honest with customer, management, coworkers, competitors, and the public.
  • Remember that it is the small seemingly trivial, day-to-day activities and gestures that build your character.

When you enter the business world, you will find yourself in situations in which you will have to choose the behaviour. How would you answer the following questions?

  • Is it OK to accept a pair of sports tickets from a supplier?
  • Can I buy office supplies from my brother-in-law?
  • Is it appropriate to donate company funds to a local charity?
  • If I find out that a friend is about to be fired, can I warn her?

Obviously, the situations are many and varied. Fortunately, we can break them down into a few basic categories: issues of honesty and integrity, conflicts of interest and loyalty, bribes versus gifts, and whistleblowing. Let us look a little more closely at each of these categories.

Ethical Organizations

One goal of anyone engaged in business should be to foster ethical behaviour in the organizational environment. How do we know when an organization is behaving ethically? Most lists of ethical organizational activities include the following criteria:

  • Treating employees, customers, investors, and the public fairly
  • Holding every member personally accountable for his or her action
  • Communicating core values and principles to all members
  • Demanding and rewarding integrity from all members in all situations

Employees at companies that consistently make Business Ethics magazine’s list of the “100 Best Corporate Citizens” regard the items on the previous list as business as usual in the workplace. Companies at the top of the 2016 list include Microsoft, Hasbro, Ecolab, Bristol-Myers-Squibb, and Lockheed Martin.

  • Employees with the following attitudes tend to suspect that their employers are not as ethical as they should be:
  • Consistently feel uneasy about the work they do.
  • Object to the way they are treated.
  • Are uncomfortable about the way coworkers are treated.
  • Question the appropriateness of management directives and policies.

Issues of Honesty and Integrity

Master investor Warren Buffett once told a group of business students:

“I cannot tell you that honesty is the best policy. I cannot tell you that if you behave with perfect honesty and integrity somebody somewhere won’t behave the other way and make more money. But honesty is a good policy. You’ll do fine, you’ll sleep well at night and you’ll feel good about the example you are setting for your coworkers and the other people who care about you”.[1]

If you work for a company that settles for its employees’ merely obeying the law and following a few internal regulations, you might think about moving on. If you are being asked to deceive customers about the quality or value of your product, you’re in an ethically unhealthy environment.

Think about this story:

“A chef put two frogs in a pot of warm soup water. The first frog smelled the onions, recognized the danger, and immediately jumped out. The second frog hesitated: The water felt good, and he decided to stay and relax for a minute. After all, he could always jump out when things got too hot (so to speak). As the water got hotter, however, the frog adapted to it, hardly noticing the change. Before long, of course, he was the main ingredient in frog-leg soup.”[2]

What is the moral of the story? Do not sit around in an ethically toxic environment and lose your integrity a little at a time; get out before the water gets too hot and your options have evaporated.

Conflicts of Interest

conflict of interest text from wooden blocks on desk
Image by Piotrekswat from iStock

Conflicts of interest occur when individuals must choose between taking actions that promote their personal interests over the interests of others or taking actions that do not. A conflict can exist, for example, when an employee’s own interests interfere with, or have the potential to interfere with, the best interests of the company’s stakeholders (management, customers, and owners). Let us say that you work for a company with a contract to cater events at your college and that your uncle owns a local bakery. Obviously, this situation could create a conflict of interest (or at least give the appearance of one, which is a problem). When you are called on to furnish desserts for a luncheon, you might be tempted to send some business your uncle’s way even if it is not in the best interest of your employer. What should you do? You should disclose the connection to your boss, who can then arrange things so that your personal interests do not conflict with the company’s.

The same principle holds that an employee should not use private information about an employer for personal financial benefit. Say that you learn from a coworker at your pharmaceutical company that one of its most profitable drugs will be pulled off the market because of dangerous side effects. The recall will severely hurt the company’s financial performance and cause its stock price to plummet. Before the news becomes public, you sell all the stock you own in the company. What you have done is called insider trading, acting on information that is not available to the public, either by trading on it or providing it to others who trade on it. Insider trading is illegal, and you could go to jail for it.

Conflicts of Loyalty

You may one day find yourself in a bind between being loyal either to your employer or to a friend or family member. Perhaps you just learned that a coworker, a friend of yours, is about to be downsized out of his job. You also know that he and his wife are getting ready to make a deposit on a house near the company headquarters. From a work standpoint, you know you should not divulge the information. From a friendship standpoint, though, you feel it is your duty to tell your friend. Wouldn’t he tell you if the situation were reversed? What do you do? As tempting as it is to be loyal to your friend, you should not tell. As an employee, your primary responsibility is to your employer. You might soften your dilemma by convincing a manager with the authority to tell your friend the bad news before he puts down his deposit.

Bribes Versus Gifts

Refusal of gift. No corruption concept. Rejecting proposal. Man holding in hand gift box with ribbon. Gesture rejects the proposal. Vector illustration flat design. Isolated on white background.
Image by Anastasiia_New from iStock

It is not uncommon in business to give and receive small gifts of appreciation, but when is a gift unacceptable? When is it really a bribe?

There is often a fine line between a gift and a bribe. The following information may help in drawing it, because it raises key issues in determining how a gesture should be interpreted: the cost of the item, the timing of the gift, the type of gift, and the connection between the giver and the receiver. If you are on the receiving end, it’s a good idea to refuse any item that’s overly generous or given to influence a decision. Because accepting even small gifts may violate company rules, always check on company policy.

Source:

Fundamentals of Business: Canadian Edition by Business Faculty from Ontario Colleges and eCampusOntario Program Managers. Licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

Read this excerpt from the Bell’s Code of Business Conduct (2023)

2.4.1 Loans from Bell

  • We do not accept, whether directly or indirectly, any loan or guarantee of obligations from Bell that are for our personal benefit.

2.4.2 Business Gifts & Entertainment

  • Under no circumstances are you to solicit, accept, offer or give bribes, kickbacks or facilitation payments, either directly or indirectly (including for example through a contractor or consultant acting on Bell’s behalf).
  • Do not solicit, accept, offer or give gifts, gratuities, favours or hospitality from or to suppliers or customers, which may compromise – or appear to compromise – our ability to make fair, objective, business decisions or may unfairly influence a business interaction.
  • Do not solicit or encourage gifts, hospitality, entertainment or any other thing for personal use.
  • Do not accept gifts having a monetary value; for example, gift certificates, cash, services, discounts or loans.
  • These guidelines do not change during traditional gift giving season. We recognize, however, that building relationships with customers and suppliers is an integral part of doing business. You may offer reasonable hospitality and entertainment to private sector suppliers or customers as described in this section. You should consult your manager or contact the Business Conduct Help Line when in doubt about the appropriateness of a particular situation.
  • You may accept and participate in unsolicited business hospitality or entertainment with private sector suppliers or customers depending on the function or services you perform for Bell and if the hospitality or entertainment is clearly intended to facilitate business goals and is reasonable.
  • You may sponsor events/activities for private sector customers or potential customers where the purpose is to strengthen business relationships; however it is your responsibility to inform yourself and be sensitive to the customer’s own code of conduct on these issues.
  • You may accept unsolicited, nominal value hospitality, gifts or mementos from private sector suppliers or customers that are customary or business related.
  • You may accept business entertainment from private sector suppliers or customers in the form of meals as long as it is modest, infrequent, and as far as possible on a reciprocal basis.
  • You may solicit modest gifts or prizes for Bell sponsored events from private sector suppliers or customers, which provide clear benefits to the sponsor and/or charitable organization, upon approval by your manager.
  • Note: All hospitality and entertainment offers using Bell company-owned tickets, including those made to domestic public officials, must be made in accordance with the Bell National Hosting Suites and Ticketing Policy. Do not solicit, accept, offer or give gifts, gratuities, favours or hospitality from or to domestic public officials or sponsor public sector events/activities without first consulting with the Regulatory and Government Affairs Team, complying with any applicable process or policy, for example, the Bell National Hosting Suites and Ticketing Policy, in the case of hospitality requiring Bell company owned tickets and obtaining their express prior consent where required. Questions should be directed to the Regulatory and Government Affairs Team.
  •  Do not solicit, accept, offer or give gifts, gratuities, favours or hospitality from or to foreign public officials, sponsor foreign public sector events/activities or otherwise engage foreign public officials without obtaining the express prior consent of the Regulatory and Government Affairs Team.

Bell Canada’s Code of Business Conduct in full is available from their website.

Source: Bell (2022)

 

Whistleblowing

Whistleblower employee concept and whistle blower symbol representing a person in society or a company exposing corruption as a red whistle shaped as a human head in a 3D illustration style.
Image by wildpixel from iStock

Whistleblowing was defined in 1972 by Ralph Nader as

“An act of a man or a woman who, believing in the public interest overrides the interest of the organization he serves, publicly blows the whistle if the organization is involved in corrupt, illegal, fraudulent or harmful activity.”[3]

While there are increasing incentives from governments and regulators for whistleblowers to go public about corporate misconduct, protections for whistleblowers are still very limited. Few Canadian laws pertain directly to whistleblowing and therefore whistleblowers are mostly unprotected by statute.

There is a patchwork of protection provisions under the Canadian Criminal Code, Public Servants Disclosure Protection Act (PSDPA), the Public Service of Ontario Act, 2006 as well as the Securities Act. Section 425.1 of the Criminal Code, states that employers may not threaten or take disciplinary action against, demote or end an employee in order to deter her/him from reporting.

Corporate Social Responsibility

Corporate Social Responsibility (CSR) refers to a company’s commitment to conducting its business in an ethical and sustainable manner while considering the impact of its actions on society, the environment, and various stakeholders. It involves integrating social and environmental concerns into a company’s operations and interactions with its stakeholders, going beyond mere profit-making activities.
CSR encompasses a wide range of responsibilities and initiatives that a company can undertake to contribute positively to society. Here are some key aspects of corporate social responsibility:
  1. CSR promotes the responsible use of resources, encouraging companies to minimize waste, adopt efficient practices, and support initiatives that benefit the environment.
  2. By prioritizing CSR, companies can build stronger relationships with customers, who are increasingly seeking products and services from socially and environmentally responsible brands.
  3. CSR initiatives often lead to increased employee engagement and satisfaction, as employees feel proud to work for a company that demonstrates a commitment to making a positive impact.
  4. Engaging in CSR can also help companies attract and retain top talent, as job seekers increasingly prioritize working for organizations that align with their values and have a positive societal impact.
  5. Through CSR, companies can contribute to the development and well-being of the communities in which they operate, fostering goodwill and long-term sustainability.

Source:

Fernando, J. (2023, April 23). Corporate Social Responsibility (CSR) explained with examples. Investopedia.


Video: What is Corporate social responsibility (#CSR)? Servier International.

 


  1. Gostick, A., & Telford D. (2003). The Integrity Advantage. Salt Lake City: Gibbs Smith.
  2. Gostick, A., & Telford D. (2003). The Integrity Advantage. Salt Lake City: Gibbs Smith.
  3. KSY At Law, What is Whistleblowing? Guide To Whistleblowing in Canada, (n.d.)

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