Schulich school of business |
Making Strategic Decision for SmartMart |
A Reflection on Ethics-LX Simulation Exercise |
Binoy Das (211137007) |
Winter-2011, Section-F |
This document is my personal reflection on the business simulation on ethics-lx, where I had to take three strategic decision choices for specialty grocery retailer – SmartMart, with an aim to retain their market leadership position as retail supplier of sustainable food products, while at the same time being true to their mission statement of total stakeholder management. | Contents
SmartMart Simulation – The Main Content 3
Reflection on Decision Making 3
Changing Store Format 3
Adopting Bio-Fuel 4
Pursuing Organics 2.0 Standard 5
Certificate of Completion – SmartMart Simulation on Ethic-LXTM 7 SmartMart Simulation – The Main Content
The simulation exercise puts the incumbent in the shoes of a leadership trainee at Corporate Strategy division of SmartMart, a retail grocery chain that combines the mission of environmental stewardship with entrepreneurial spirit in an effort to add value to all their stakeholders. SmartMart is going through a watershed moment where mass market adoption of organic products has set them up against price-leader competitors, eroding their margin and exclusivity of their organic products. In an effort to utilize their core competence to maintain market leadership, SmartMart has thrown their business model up for questioning and challenging, and the incumbent has to make three key strategic decisions around the topics of change in store-format, adoption of bio-fuel and pursuing a new organics label with stricter compliance criteria. The decisions made have to be in alignment with what SmartMart believes to be the “secret sauce” of their mission – to work well with others and delivering outstanding value for customers and for all other stakeholders. In face of considerable uncertainty and incomplete information on about future developments and conflicting stakeholder interest, the decision making gets complex and provides real challenge, which can only be overcome through successful stakeholder management in decision making. Reflection on Decision Making
Each of the three decision making steps involved not only the criterion of increasing firm’s market share or shareholder value, but each decisions made also has to reinstate firm’s values statement, making it necessary to take a stakeholder view of the firm. (Carroll & Buchholtz, 2009) Also while dealing with stakeholders, using synthetic approach to stakeholder management (Goodpaster, 1991) was prudent, because SmartMart doesn’t view its stakeholders as groups whose interests might only affect firm’s pursuit of profit. Nor does SmartMart aim to create economic value to all stakeholders, in equal footings as shareholders. Instead, SmartMart believes it has the responsibility to make immediate lives of their stakeholders better by supplying them with organic food grown without genetic modification or chemical pesticides and fertilizers in a sustainable way, but also to make a long lasting positive impact on the environment by reducing its operational footprint. Changing Store Format
In deciding on whether SmartMart should scale up to compete with big-box retailers at a national level, I did not only consider the operational efficiency and improved financial profit margin thus attainable. Instead I took into consideration the best interest of their suppliers and overall environmental impact. Growing to be a big-box retailer would result in centralizing operation in large warehouses, and procurement has to be made from strategic partner firms in order to ensure efficient low-cost supply to stores across the country. This, if successfully implemented would increase the profit margin for sure, but existing suppliers operating at a local and regional level might get hurt, since they do not have the capacity to scale up to meet...
Bibliography: Carroll, A. B., & Buchholtz, A. K. (2009). Business and Society: Ethics and Stakeholder Mangement. South-Western CENGAGE Learning.
Goodpaster, K. E. (1991). Business Ethics and Stakeholder Analysis. Business Ethics Quarterly , 1 (1), 53-73.
Mitchell, R. K., Agle, B. R., & Wood, D. J. (1997, October). Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What Really Counts. Academy of Management Review , 853-886.
Certificate of Completion – SmartMart Simulation on Ethic-LXTM
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