Cost management 7th edition ch 1,,

Strategy; an ethical issue

Frank Sill the CEO and founder of environ wearies facing the first big challenge of his young company. Frank began the company on the principle of environmental consciousness in the manufacture of sport s and recreation wear. His idea was develop clothing that would appeal to active people who were concerned about quality, waste in manufacturing and packaging, and the environmental impact of the manufacture of the goods they purchase. Starting with a small shop in Zebulon, North Carolina frank was able to develop his small business through strategic alliances with mail order merchandisers and by effective public relation about his environemintly concerned process. Special advantage for the young firm was frank knowledge of accounting and his prior experience as a CPA in a major public accounting firm and as a controller of a small manufacturing firm.

Enviro wear had reached $25000000 in sales in its year when a disaster set of events put the firm and its prospects in tail spin. One of the key sales managers was overheard by a news reporter telling jokes about the poor quality of the firms clothing, and the news of it spread quickly. Also rumors spread at the same time that the firm was not really as environmentally conscious in its manufacturing and packaging as it claimed. The result was an immediate falloff in sales, and some retailers were returning the goods.

Frank intends to fire the manager and deny publicly any association with the manager’s comments, as well as to defend to the firm environmental record.

REQUIRED:

1) On the basis of porters analysis of strategic competitive advantage, what type of competitive strategy has ENVIRO-WEAR followed? What type of strategy should it follow in the future?

2) What are the ethical issues involved in the case, and how would you resolve them?