create a report to the CEO of NOG and addresses the following issues:

• Section I: Briefly identify at least three specific ethical failures that came up in the video and the factual context in which they arose.
• Section II: For each failure, identify at least one specific policy, procedure, program, or action that NOG can take to prevent a recurrence of this kind of ethical problem.
• Section III: Evaluate the overall business and ethical culture of GGF and whether it meets the core values of NOG. If not, make specific recommendations of the steps that should be taken to ensure GGF operates in accordance with NOG's core values.

Assignment Description:

View Video 15.5 on the previous page before beginning this assignment (transcript below).

You are a senior vice president for National Organics Groceries, Inc. (NOG), which has just completed a strategic acquisition of Grow Greener Foods (GGF) based on its location and customer base. You have reviewed the video and studied the transcript. You are preparing a report to the CEO of NOG on how to integrate GGF into the business culture of NOG.

NOG and its senior management are committed to creating and sustaining a business culture consistent with its Statement of Corporate Purpose & Core Values.

Case Study Transcript

[SCENE: Staff is gathering in a meeting room]

BOSS: All right. Why don't we go ahead and get started. Sarah, would you please present the secretary's report?

SARAH: At the last board meeting, it was agreed that the new product to be introduced into the business was going to be organic salsa. Farms were selected that could provide produce that's approved through the certified organic process. Production is to begin in the first quarter of the new year. And in personnel, we discussed the need to free up time for James Green to concentrate on the finances for the company, and in order to facilitate that, new employees Gretchen Banks and Robert Walker were recently interviewed for the human resources department to handle staffing and benefits respectively.

STEPHEN: How did their interviews go?

JAMES: Well, I interviewed both of them personally, and they're both well qualified with eight to ten years of experience. They're both married, which Sam, I know is important to you because you like stable employees. In fact, Gretchen's husband works at a local accounting firm that we use, and Robert's wife is a stay-at-home mom.

JANE: How did you know all that?

JAMES: It all came up in the interview.

BOSS: Okay. If you think they're a good fit, hire them. Okay, let's keep things moving. I like a motion to approve the secretary's report.

JAMES: Here.

TEAM MEMBER: Second.

BOSS: Good. Okay. James, let's have the treasurer's report.

JAMES: Well, the fourth quarter profits were up again last year, and we expect that trend to continue. The business is strong, and the market is especially good for organic foods. So if you'll look at your handouts, the first one here shows our profit history, and the second one shows the share of organic foods in the market last year as well as the predictions for this upcoming year. So taking all of that into account, we expect profits to continue to rise for the next year.

BOSS: You know, we may need to take a look at increasing production and warehouse space, but we'll wait and see how things go. We're excited about this coming year, and the roll out of the organic salsa line is going to be our top priority.

SAM: I agree. The more organic product we can get out there, the better. It's healthier, better for the environment, plus we keep the local farms working.

BOSS: Okay, why don't we move on to our marketing and promotion efforts for the coming year. Pat, would you give us an update?

[MEETING ENDS]

JANE [IN HALLWAY]: Hey, Stephen. How do you think the marital status of those two new HR employees came up in the interviews? I thought you weren't supposed to ask questions like that. I'll bet he asked them.

STEPHEN: I have no idea, but you know how clever James can be. He probably got them to bring it out without even asking the question. They're both in HR, so if it was inappropriate, they would have said something, right?

TEAM MEMBER: Maybe.

[ON-SCREEN TEXT: Six months later]

BOSS: So any way, Bill, what I really need to know is, why are the salsa sales so low?

BILL: Well, we are making progress, but not as fast as we would like. The retailers feel that the price point is just a bit too high. Is there any way we could lower the price point?

BOSS: As a matter of fact, James just walked in. I'll ask him about it. Talk to you later.

BILL: Okay, thanks.

BOSS: Uh huh. How are our second quarter profits looking?

JAMES: We're down.

BOSS: Why is that? I thought we were doing well and increasing our retail presence.

JAMES: We were, but the salsa product's run into some issues. The cost for produce is higher than we thought. Apparently, there was a tomato blight and it caught a hold of the crops, and our suppliers can't deliver on what they promised. We needed to go out and find other certified providers, and since we're negotiating prices in the middle of the growing season, we're just paying more than we had thought.

BOSS: I just got off the phone with Bill in sales. He says the retailers are saying that the price point is too high for the product.

JAMES: The price point had to adjust to account for the produce costs.

BOSS: I understand. We need to figure out a way to lower the price, or this is going to be a problem.

JAMES: Well, we could go out and find other providers, but --

BOSS: No buts. Find a lower cost alternative and do it now.

[SCENE CHANGE: JAMES IN HIS OFFICE MAKING A CALL.]

WALTER: Hello?

JAMES: Hello, Walter. James Freen [assumed spelling] of Grow Greener Foods in Pennsylvania.

WALTER: Nice to meet you.

JAMES: Hey, nice to meet you too. I know that Sam's worked with you in the past, but he's on vacation in Hawaii for a couple weeks with his family, so I thought I'd give you a call.

WALTER: Oh, wow, I always wanted to go to Hawaii. But hey, what can I do for you, James?

JAMES: Well, I'm sure you've heard we've dealing with the tomato blight here in Pennsylvania. It's been pretty bad, so we're looking for some other cost-effective tomatoes for our new salsa.

WALTER: Yeah, I heard about that blight. That's a shame. We're here to help. I mean, I've got plenty of tomatoes. I'm sure I can get you a great price.

JAMES: That's great. Now, I've been looking at our records, and I see it's been a couple of years since we've used your produce. So is there anything we need to know about?

WALTER: No. Sam was just doing the local thing, trying to keep all the suppliers in state. You know, I told him we were here, and he said he'd be in touch if he needed anything.

JAMES: Okay. Sounds good. What kind of price can you offer on the tomatoes?

WALTER I think I could offer 30 cents a pound if that will work for you.

JAMES: That's great, Walter, thanks. Hey, so we'll be in touch with contracts and amounts. It's great talking to you.

WALTER: Look forward to hearing from you.

JAMES: All right. Bye.

[SCENE CHANGE: JAMES GOES TO JANE'S OFFICE]

JAMES: Hey, you got a minute?

JANE: Hey, James, we rarely see you down here in production. What's up?

JAMES: I just wanted to let you know that we'll be getting a large shipment of tomatoes in from New York. With Sam out on vacation, I was able to arrange for another supplier to get us the tomatoes at a lower cost, so we can hit the lower price point for the salsa.

JANE: All right. So when will I get the certification paperwork?

JAMES: The certification paperwork?

JANE: Yeah. It tells us that the farm is certified organic. We can't produce and label the product as certified organic without it. We need if for federal regulations. Everything was all in place before we started production. But if we have a new supplier, I'll need the new paperwork.

JAMES: All right, I'll get it for you, but just accept the shipment when it gets here. We need to get this production moving.

JANE: Sure thing, James.

[ON-SCREEN TEXT: Two weeks later]

[SCENE CHANGE: JANE IS WALKING BY SAM'S OFFICE]

SAM: Jane. How's production?

JANE: Great. And good news on the salsa too. James found a supplier out of New York to provide the tomatoes because the local farmers have tomato blight, and he got a good price.

SAM: James did that?

JANE: Uh-huh.

SAM: When?

JANE: When you were on vacation. It's a supplier we haven't used for a couple of years, but I guess it worked out.

SAM: Well, as long as he didn't use Walter Burns. We stopped using him because he lost his certification, and I'm not sure if he got it back.

JANE: All he said is he'll get me the certification paperwork for our files.

[JANE WALKS AWAY AND SAM SHAKES HIS HEAD]

[ON-SCREEN TEXT: Three months later]

[SCENE: Meeting room]

BOSS, TO JAMES, SARAH, AND SAM: Hi, everybody. James and I were going over our third quarter, so we thought we'd call this meeting and get your perspective. Bottom line, profits are still down, and we need to make some changes.

SAM: What kind of changes?

BOSS: We need to reduce our overhead costs. One of James' ideas was that we take a look at staffing.

SAM: Well, we can't cut production and warehouse staff. We're running thin already.

JAMES: Actually, I was looking at the HR positions. As you all know, we hired two people in HR to free up some of my time. And I'm thinking only one is necessary. So the question is, which one do we let go?

SARAH: That's such a shame. I really like both of them, and I know everyone here really appreciates all the work that they've been doing. James, you work with them the most. What do you think?

JAMES: Gretchen's really got everybody working well together, and she's even done some things to increase morale around here. She's been getting the annual reviews done so everybody gets their raises and promotions in a timely fashion, and she's developed a majority of the policy manual along with some help from Robert. And Robert, I mean, he's gotten our benefits coordinated which has resulted in our healthcare insurance costs going down, a feat which I thought we would never accomplish. So, I mean, it's just really difficult to figure out which one we need to let go.

BOSS: Well, you know, Gretchen does have a spouse that works. Robert is the sole bread winner for his family. And hey, Sarah, didn't you tell me that he has a child with a health issue?

SARAH: Yes, it's some kind of a hearing problem. I mean, it's going to require surgery, and it's going to be quite serious.

SAM: So Gretchen provides a secondary income for her family, and Robert is the primary -- well, the only income source for his family.

BOSS: That's right. Well, I think it's clear that we can make a call here. They're both doing great work, but given their personal situations, I think we need to keep Robert and let Gretchen go. Any objections?

SAM: No.

SARAH: It just doesn't seem fair, but okay.

BOSS: Good. That's settled. Well, let's move along and look at some other --

[FADE TO BLACK]

NOG Statement of Corporate Purpose & Core Values

Purpose: NOG is an organic groceries company. We work collaboratively to supply sustainable organic groceries and provide healthy choices for people in the communities we serve over the long term.

Core Values: NOG's core values are who we are, and they guide us in all our day-to-day operations and business decisions. These core values are as follows:

• Highest Ethical Standards
• NOG seeks to operate with the highest ethical standards. We comply with all applicable laws and always strive to be an honest and responsible corporate citizen acting for the benefit of all of our stakeholders.
• Respect and Inclusion for All People
• We treat our employees, customers, suppliers, and all our business partners with honesty, dignity, equity, and respect. We foster an open and inclusive work environment where people from all backgrounds are embraced fully and provided opportunities to contribute and excel.
• Sustainable Organic Products and Environmental Stewardship
• We find sustainable organic products for our customers, always managing our businesses to protect the environment and provide healthy organic products.