Ethical Issues Affecting Suppliers-Belinda Lee, the CEO, has requested that your team investigate and report back to her about a recent dispute between three of her direct reports: the VP of manufacturing, the VP of marketing and the VP of product design.

Belinda has asked you to write a memo with your findings and recommendations for how Phone and Build should handle this situation.Gather information about the cultural factors that are in play in this situation, including Managing in a Global Environment and Cross-Cultural Ethical Business Decision Making. You will need to research cross-cultural differences in decision making and recommend a course of action to the CEO. You should start in the UMUC Library.

Ethical Issues Affecting Suppliers-Back up your responses with information about relevant differences in cultural expectations in China, South Africa, and the United States. In order to support your views, it will be useful to conduct some additional research on cultural differences and their impact on global business transactions.

Belinda has asked you to write a memo with your findings and recommendations for how Phone and Build should handle this situation.  Take notes and create an outline for your memo as you consider each of the following questions:

• Was the Chinese supplier ethical in shipping more than 300,000 cases made of real leather instead of the requested faux leather material, even though the supplier was not charging Phone and Build anything extra for the higher cost of real leather? Explain why or why not.
• When the manufacturing VP contacted the Chinese supplier to complain, the supplier could not understand why Phone and Build was not pleased about receiving a real leather case, given that Phone and Build was still paying for the less expensive faux leather one. Is there a cultural difference between customer expectations and business transactions in the West and in Asia? Explain.
• The decision of the manufacturing VP to accept the shipment containing real leather cases without first consulting the marketing VP is also somewhat problematic. By the time the marketing VP received the memo, it was too late for the cases to be returned. If you were the marketing VP and received the same memo, would you do anything different? Why?
• All the senior personnel at Phone and Build should have been well aware that a significant proportion of their African and Asian customers were very sensitive about using phone cases made of pig leather. As an organization, what strategic errors did you observe in the decision making by various individuals in this situation? By the design VP? By the manufacturing VP? By the marketing VP? Could more training in ethical decision making and cultural sensitivity for senior management have helped in this situation? Why or why not?

Managing in a global environment presents particularly difficult challenges as well as the potential for significant rewards. A manager must be acutely aware of all possible cultural, linguistic, legal, and ethical issues when managing a diversified workforce. There are many tools available to the international manager for engaging stakeholders, strategizing, and learning about how different cultures do business.

Gather information about the cultural factors that are in play in this situation, including Managing in a Global Environment and Cross-Cultural Ethical Business Decision Making. You will need to research cross-cultural differences in decision making and recommend a course of action to the CEO. You should start in the UMUC Library.

Ethical Issues Affecting Suppliers-Back up your responses with information about relevant differences in cultural expectations in China, South Africa, and the United States and supplier ethics . In order to support your views, it will be useful to conduct some additional research on cultural differences and their impact on global business transactions.

Recent Dispute

The dispute revolves around the ethical issues that suppliers should address. The design vice president’s staff originally proposed two alternative materials for phone cases that are packaged and sold with certain high-end phones manufactured by Phone and Build: real leather (pig skin) and faux leather made from a synthetic material (polyurethane). Both cases were very similar in appearance, although the real leather case was a little heavier than the faux leather case. Both cases could be sourced from an established supplier in China, with whom the design VP had a long-term relationship. The marketing VP evaluated the cost of the two cases from this Chinese supplier, and decided that he would go with the faux leather case because it was available at a 20 percent lower cost in comparison to the real leather case.

An initial order of 500,000 faux leather cases was placed with the Chinese supplier and within about a month, the shipment of cases arrived at Phone and Build’s South African facility, where the phones were assembled and packaged for sale all over the world. When the newly delivered cases were inspected by Phone and Build’s product team in South Africa, they discovered that more than two-thirds of the cases were actually made of real leather. After Phone and Build’s VP of manufacturing contacted the Chinese supplier to complain about the cases being “out of spec,” he was told that it was not an error—the supplier was aware of the fact that over 300,000 cases in the shipment were made out of real leather. After some persistent questioning, the supplier revealed that as a result of an order cancellation from another customer, they had suddenly found themselves overstocked with an inventory of pig leather. Rather than let this extra inventory go to waste, the Chinese supplier decided to use up that inventory towards fulfilling a major part of Phone and Build’s order!

The Chinese supplier was not willing to apologize for their decision to ship over 300,000 real leather cases to Phone and Build without first obtaining approval for the switch. In fact, the supplier did not feel that Phone and Build had any grounds to complain because the supplier was willing to accept the lower payment as per Phone and Build’s original order of faux leather cases. Instead of insisting that the supplier take back the 300,000 or so cases that were out of spec, the manufacturing VP accepted the entire shipment and then conveyed this news to the Marketing VP in an internal company memo.

Upon receiving the memo, the Marketing VP realized it was too late for the real leather cases to be returned to the supplier in China, and he would have to make the best of out of an undesirable situation. He made a decision that the faux leather cases would be packaged for phones shipped to Europe and North America, given that they were lighter in weight. The real leather cases would be used for phones packaged and sold in Africa and Asia. Previous marketing surveys conducted by Phone and Build had revealed that consumers in the West preferred lighter phone cases, while consumers in Africa and Asia equated heavier cases with better quality and longer life. Of course, the Marketing VP conveniently forgot that the advertising materials and product inserts for the phone had already been printed in multiple languages and all of this product literature stated that the phone case was made of synthetic material.

The phone cases were shipped to retail outlets, and within a couple of weeks, the marketing VP had a potential crisis on his hands. Tech writers and product reviewers from two well-known South African and Kenyan newspapers had called and e-mailed to inquire about what they rightly suspected was a pig leather case and not the synthetic material that was specified in Phone and Build’s product literature. They informed the marketing VP that if they revealed the truth about the origins of the case material in their reviews, it would have a tremendously negative impact on Phone and Build’s sales in Africa and Asia, where a significant number of consumers practiced the Muslim and Hindu religions. They wanted to know how the company was going to resolve this issue before they went to press.

The marketing VP contacted the manufacturing and design VPs to find out what they should do to get the company out of this potential crisis. After a lot of finger pointing and talking past each other, the three individuals arranged a conference call with Belinda Lee and brought her up to date. Belinda Lee promised the three VPs that she would let them know how she planned to resolve the matter in the next couple of days.

Using your outline and research notes, write a memo for the Belinda, the CEO. Be sure to meet the following requirements:

• Format your memo following the example linked above, including APA-formatted in-text citations and an APA-formatted reference list (do not format the body of the memo using APA style, just the reference list). See references and citations for details.
• Include a specific recommendation on what action, if any, the CEO should take based on your analysis and conclusions.
• Support your conclusion with references to legal principles and laws.
• The memo should be 1 full  page only

ANSWER: Ethics of Chinese Supplier

Was the Chinese supplier ethical in shipping more than 300,000 cases made of real leather instead of the requested faux leather material, even though the supplier was not charging Phone and Build anything extra for the higher cost of real leather? Explain why or why not.

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