Harvard Case - Alisha Bhandari and Laxar Industries
"Alisha Bhandari and Laxar Industries" Harvard business case study is written by Bidhan L Parmar, Jenny Mead. It deals with the challenges in the field of Business Ethics. The case study is 3 page(s) long and it was first published on : Sep 28, 2020
At Fern Fort University, we recommend that Alisha Bhandari, the CEO of Laxar Industries, take a proactive and transparent approach to address the ethical and legal issues surrounding the company's operations. This involves implementing a comprehensive plan that prioritizes corporate social responsibility, ethical leadership, and stakeholder engagement.
2. Background
Laxar Industries, a family-owned business specializing in manufacturing and exporting handcrafted furniture, faces a significant ethical dilemma. The company, operating in a highly competitive global market, has been accused of engaging in unethical practices, including:
- Exploitation of workers: Laxar's reliance on subcontractors in developing countries raises concerns about potential violations of labor rights, including unfair wages, unsafe working conditions, and lack of worker protections.
- Environmental concerns: The company's production processes, particularly the use of wood and finishes, may contribute to deforestation and environmental pollution.
- Potential corruption: Alisha's father, the founder of Laxar, has a history of engaging in questionable business practices, including bribery and tax evasion.
Alisha, committed to transforming the company's image and ensuring ethical operations, faces a critical decision: to maintain the status quo or implement significant changes.
3. Analysis of the Case Study
The case study presents a complex situation with multiple stakeholders and competing interests. To analyze it effectively, we can use the Stakeholder Theory framework, which emphasizes the importance of considering the needs and expectations of all stakeholders, including:
- Internal stakeholders: Employees, management, and the Bhandari family.
- External stakeholders: Customers, suppliers, investors, the community, and government agencies.
Applying this framework, we can identify the following key issues:
- Ethical leadership: Alisha's decision-making will be crucial in establishing a culture of ethical conduct within Laxar. Her commitment to transparency and accountability will be critical in rebuilding trust with stakeholders.
- Corporate governance: Laxar needs to implement robust governance mechanisms to prevent future ethical lapses. This includes establishing a strong code of conduct, implementing anti-corruption measures, and ensuring regulatory compliance.
- Sustainability: Laxar must adopt green business practices, including responsible sourcing of materials, reducing environmental impact, and promoting environmental stewardship.
- Stakeholder engagement: Alisha needs to engage with all stakeholders, including employees, suppliers, and customers, to address their concerns and build trust. This includes fostering diversity and inclusion within the organization.
- Reputation management: Laxar needs to proactively manage its reputation by addressing the accusations of unethical practices and communicating its commitment to ethical operations.
4. Recommendations
Alisha should implement the following recommendations to address the challenges facing Laxar:
- Establish a clear ethical framework: Develop a comprehensive code of conduct that outlines ethical principles and expectations for all employees, including subcontractors. This code should address issues such as labor rights, environmental sustainability, and anti-corruption.
- Implement robust governance mechanisms: Establish an independent ethics committee to oversee ethical compliance and provide guidance to management. Implement a whistleblowing system to encourage employees to report any unethical behavior.
- Embrace sustainability: Implement sustainable practices throughout the supply chain, including sourcing wood from certified sustainable forests, reducing waste, and using eco-friendly finishes.
- Engage with stakeholders: Establish open communication channels with all stakeholders, including employees, suppliers, customers, and the community. Conduct regular stakeholder engagement activities to address concerns and build trust.
- Embrace transparency: Be transparent with stakeholders about the company's operations, including its sourcing practices, labor standards, and environmental impact. Publish annual sustainability reports to demonstrate progress.
- Invest in employee training: Provide employees with training on ethical decision-making, corporate social responsibility, and relevant regulations.
- Seek external expertise: Engage with external consultants to provide guidance on ethical practices, sustainability, and risk management.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: The recommendations align with Laxar's core competencies in craftsmanship and design while promoting ethical and sustainable practices.
- External customers and internal clients: The recommendations address the concerns of both external customers seeking ethical products and internal employees seeking a fair and safe work environment.
- Competitors: By embracing ethical and sustainable practices, Laxar can differentiate itself from competitors and attract customers who value these principles.
- Attractiveness: The recommendations are likely to enhance Laxar's long-term profitability by reducing risks, improving brand reputation, and attracting ethical investors.
6. Conclusion
Alisha Bhandari has a unique opportunity to transform Laxar Industries into a leading example of ethical and sustainable business practices. By embracing corporate social responsibility, ethical leadership, and stakeholder engagement, she can build a company that is respected and trusted by all stakeholders.
7. Discussion
Alternative approaches include:
- Maintaining the status quo: This option carries significant risks, including reputational damage, legal liabilities, and potential loss of customers and investors.
- Partial implementation: Implementing only some of the recommendations may not be sufficient to address the underlying ethical issues and could lead to inconsistencies and confusion.
Key assumptions:
- Alisha is committed to implementing the recommendations and has the support of the Bhandari family.
- Laxar has the resources to implement the necessary changes.
- Stakeholders are willing to engage with the company and provide feedback.
8. Next Steps
Alisha should implement the recommendations in a phased approach, starting with:
- Developing a comprehensive code of conduct: This should be completed within 3 months.
- Establishing an ethics committee: This should be completed within 6 months.
- Conducting stakeholder engagement activities: This should be an ongoing process.
By taking these steps, Alisha can transform Laxar Industries into a company that is both profitable and ethical, setting a positive example for other businesses in the global market.
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Case Description
Alisha Bhandari, vice president of operations at a successful and well-respected global supplier of paints, coatings, specialty materials, and optical products, had watched during her 10 years at the company a subtle disintegration of workplace culture. Her own observations, coupled with a recent employee survey, had revealed an overall mindset of complacency, lack of motivation, inflexibility, and a general malaise and unwillingness to be flexible to new ideas in the company. Some managers admitted to being fearful of suggesting changes and a distaste for deviating from the normal routine or even considering embracing anything innovative. Bhandari had also noticed greater stress and tension in various departments, and believed that this was already affecting company performance. She worried that the more motivated employees might be lured away by competitors and general malaise would grow larger and more problematic. For the sake of workplace efficiency, employee mental health, and the future success of the company, Bhandari knew that things needed to change, but she was uncertain what steps to take and strategies to put into place.
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