Reference no: EM133212998

Question:

CASE STUDY

NALEDI BRANDS - BUSINESS ETHICS

Naledi Brands is a fast-moving consumer goods (FMCG) company, producing and distributing wheat and maize products in bulk to wholesalers and retailers. The business operates primarily in southern African countries including Namibia, Botswana, Zambia, Mozambique, and Swaziland.

The chief executive officer (CEO) of Naledi Brands recently appointed a chief operating officer (COO) responsible for the general management of all southern African operations.

In an urgent meeting, the group marketing director brought it to the attention of the COO that wholesalers in both Swaziland and Botswana were accusing the business of manipulating prices. The COO launched an internal investigation immediately and involved an internal auditing, compliance, and risk team.

Early into the investigation, the head of the auditing committee came across numerous issues related to dubious business practices. She decided to report without delay to the COO. A serious concern was that a prospective customer overheard a marketing manager of Naledi Brands' Botswana operation talking to his peer in a competitive company. He disclosed that Naledi Brands was launching a big promotion of a popular maize brand in Botswana and discounted prices. He requested the competitor not to respond with a so-called price 'war'. In exchange, he undertook to react in the same manner if the competitor were to do a similar promotion in the future. An agreement was reached.

Many other non-compliance issues surfaced:

• Contracts were given to distributors in return for personal favours.

• Sales representatives negotiated with customers to order large quantities of products.

This would result in good commission earnings for the reps to be shared with the procurement managers of the customers.

• Credit notes were issued to customers for damaged packaging. Packaging was in reality never damaged. The sales reps would receive shopping vouchers.

• Company vehicles were used as taxis for extra income.

• Suppliers were 'forced' to provide feedstock at ridiculous discounts in exchange for single-source contracts.

• Traditional leaders were offered the usage of company resources for personal gain for distribution storage to be erected in communities.

The CEO was shocked and very upset. He retained an external forensic firm to investigate further as he was of the opinion that only the surface was scratched by the internal audit.

Source: Erasmus, B., Rudansky-Kloppers, S., Strydom, J. (Eds.) (2019). Introduction to

Business Management. 11th edition. Oxford University Press: Cape Town.

1.1. In developing a business ethics and code of conduct policy for Naledi Brands, state what elements you would include. (10)

1.2. Identify and state the potential pitfalls and myths in developing a code of conduct policy. (10)