Business ethics - Nu Skin Faces Pyramid-Scheme Allegations in China - Free Essay Example

Sample details Pages: 10 Words: 2850 Downloads: 6 Date added: 2017/06/26 Category Business Essay Type Analytical essay Did you like this example? Business ethics Nu Skin Faces Pyramid-Scheme Allegations in China Overview of the company Nu Skin is a company that sells personal care products and nutritional supplements. Nu skin is an international company that operates in five continents, and is based in over 50 different countries. Nu Skin was established in the united stated in the year 1984. After a few years, the company had a massive growth and started expanding globally. A couple of years after that their first operation in Asia opened. The firm became a publicly traded when it issued its first offerings publically in 1996. The same year Nu skin bought the pharmaceutical company pharmanex , from then on their product offerings were sold under both brand names. One of their new products called Lifepak a supplement that the company markets as being able to balance the perfect level of minerals, antioxidants and vitamins in the human body. LifePak now makes up about fifteen percent of the sales the company makes. Although Nu Skin is a relatively new company with barely 30 years of history, it has grown to become one of the top direct selling companies in the world. In 2013 Nu Skin generated a revenue close to 4 billion dollars. Nu Skin uses multilevel marketing to perform their operation. Multilevel marketing means that the company hires independent contractors to sell and distribute their products, the independent contractors can market the product any way they want, meaning there are multilevel marketing in the way that every contractor markets the product in a different way. The independent contractors can be seen as being owner of the company, and having the sole proprietorship in the way that they are buying products from Nu Skin and reselling by the same name. Nu Skin can be seen as a supplier to many companies, but in reality all the independent contractors all go under the same company. The independent contractors can also recruit other independent contractors, whenever they recruit a new contractor they earn a bonus and also gain some percentage of the sales made from their new re cruits. This is how the independent contractors earn bonuses and upgrade in the ladder of the company. After achieving a specified amount of sales, and recruiting a certain amount of new independent contractors, the contractor can become an executive leader and earn a much higher percentage of commissions. The company describes itself of providing opportunities to entrepreneurs from all sorts of interests especially since there is no risk like there is from starting your own business. The independent contractors’ only liabilities are the products they buy, and there is a buy back guarantee for unused resell able products that can be used after 12 months from the time the products were purchased. Over forty percent of the company’s profits are paid to the independent contractors as compensation. The multi layers of marketing happens because there are many levels of contractors, and the multiple ways of marketing come from the fact that every contractor markets the produ cts their own way. Nu skin is famous for their products having anti aging properties, and for their products to slow down the aging process. In total Nu Skin has a product line of over 200 anti aging personal care products and supplements. The Asian market is huge for Nu Skin, especially china. Nu Skins operation in china has proven to be very successful and profitable. Around one third of the revenues are being generated in china with Over 400,000 independent contractors in the Chinese market. The company now was a strategic planning to make their overall profits reach 10 billion dollars by the year 2020 mostly due to their success in china. In china they have laws to prevent direct selling companies such as Nu Skin to use multi level marketing, for this reason they run the business differently in china. In dependent contractors cannot recruit, therefore they will not earn any commissions, instead they sell to local retail stores. Although the company has had great success in China , there have been some accusations that the company operates an illegal pyramid scheme. The company denies all of these claims of an illegal pyramid scheme, but the company has been under investigation and faces challenges due to these allegations. The current chief executive officer M. Truman Hunt has been with the company for three years, and in those three years he has lead the company to reach worldwide expansion. Nu skin now trades shared over their IPO price, and there has been a 500 percent increase in the stock price after M. Truman Hunt became the Chief executive officer. M. Truman Hunt became known as the chief executive officer of the year by Utah business magazine in 2012. Two years later he got the direct selling award and became a chairman of the association of U.S direct selling. Nu skin was awarded a A+ with the bureau of better business and still keeps that rating, meaning that the company conducts business in a ethical way. Don’t waste time! Our writers will create an original "Business ethics Nu Skin Faces Pyramid-Scheme Allegations in China" essay for you Create order Social responsibility Being socially responsible is important to Nu Skin. The company now has a taken use of the for profit initiative called Nourish the Children. Nourish the children produces the product called VitaMeal . VitaMeal, this is a food supplement that is equal to thirty child portion meals. The local population gets hired in the production factories, this provides jobs for many locals. Independent contractors can also gain from this entrepreneurial opportunity by purchasing products and donating them to charities that will give the products to children in places where they have a high rate for malnourishment. Over three hounded and forty million meals have been distributed around the world via this initiative. Nu Skin gained the bravo humanitarian award in 2011 for their very positive influence on the society. In 1996 the company created another initiative called the Nu skin force for good. This foundation has helped many people all over the world. They built a village that could be used as a living classroom, to educate the local farmers and to help them acquire new agricultural skills. The company donates 25 cents from every epoch baobab body butter products to the Malawi hope for seeds project. The project is to purchase seeds and plant the trees in places where deforestation has occurred and also for farmers that live in poverty to grow plants and trees that can become a source of earnings. Fruit trees are particularly good, also when planting more trees the quality of the soil increases. The company raised over two million dollars at their thirtieth anniversary party, and the money they raised was used to supply school supplies and children’s books to educational facilities in rural areas. The company also raised money for children in Asia that were in need of different types of surgeries and for the refurbishment of orphanages. The Force for Good Foundation would like for their contractors to help out in their local communities as well. The companyâ€℠¢s headquarters have a day where all of the workforce can donate kits to their communities. They donate to a number of charities including charities that provide food for those stricken by poverty and charities that provide day care for children. Nu Skin is now on Forbes list of the most trustworthy companies and has been since 2010. China allegations There has been a lot of work for the independent contractors working in the big Chinese market, and a lot of revenues generated there. However there have been some ethical matters regarding the company and their independent contractors. Since every contractor is marketing differently and on their own terms it is difficult for the company to monitor all of them. Some of the independent contractors working in china have marketing their products with medicinal properties that are not correct such as being a cure for cancer and other illnesses. Many also claim that the contractors are using the direct selling as a way of building their pyramid scheme empires and deceiving the government and the public. There have been many researches published about the company’s alleged illegal acts of multilevel marketing in china, pyramid schemes and exaggerated advertisement of their products and lying about their business. There have also been some claims that the company has brainwashed th eir independent contractors to make them sell more than they are allowed. Right after these allegations an investigation into the operations of nu skin was announced by the industry and commerce’s administration in china. At the same time another report was released by people’s daily that stated the company was doing multilevel marketing. In china being part of a multilevel marketing for direct selling companies is very negative, and it was even illegal in china to operate a direct selling business before 2006. The government still does not allow multilevel marketing in direct selling companies, and if any company is found to be using this system they will be shut down and fined. The reason it’s illegal is because in china they believe multilevel marketing is too close to a pyramid scheme, to make sure that direct selling companies are not operating by using a pyramid scheme the Chinese government monitors these companies and certain professions are not allowed to be part in direct selling. The government in china also put a limit to the percentage the independent contractors are getting from commissions from their recruits. It is also mandatory that these types of companies provide a return and refund policy for their contractors. The company’s stock price decreased with thirty eight percent in two days after the release of the accusations. The Chinese market is very important for Nu Skins profit, considering the elderly population is dominant and is expected to increase to about seventy million in the next ten years. This represents a lucrative market for their anti aging products. If the company was found to be doing illegal acts it would harm and handicap the growth of the company in the Chinese market. The company fights back the allegations and state the reporters are merely writing rumors and not trying to investigate the whole story. The reporters again say that they believe Nu Skin is taking part in unethical acts although the company denies being part of any pyramid scheme. Under the company’s first review there were some direct sellers that were found to have gone against the selling guidelines made by the company, because they are not under supervision on a day to day basis, there will always be independent contractors that will misrepresent the company’s products. The Chief executive officer of Nu Skin M. Truman Hunt believes that there needs to be a strong code of ethics to prevent the independent contractors from doing unethical acts. He also blames the fast growth of the company to them not being able to monitor their sellers better, leading them to violate the guidelines made by Nu Skin. The company did write a letter that stated they would review their selling practices and train the employees and new recruits to ensure that they are educated about the company’s selling practices. Nu Skin promised to work with the investigators that had doubts about the company’s a cts, although Nu Skin made these assurances some of the shareholders still filed a lawsuit against the company claiming that they engaged in acts that could harm the overall good of the company and lead to the loss of money for the shareholders. Stock prices fell continuously but have increased again since that time. Eight analysts foresaw that the company would only get a small fine for the lawsuit filed against them, and that made the other shareholders and investors sure that the fall in stock prices was going to be short term. The CEO plays a key role in speaking for the company’s ethical or unethical acts as the leader of the company, and having his named mentioned in the lawsuit. The Chinese government fined the company for five hundred and forty thousand dollars in 2014, this was for direct selling some of the products that only retail stores were approved to sell, also for exaggerating their products without proper evidence. Six other independent contractors were fine d with two hundred and forty one thousand dollars for promotion products although there were not authorized to do so. Ethical and unethical acts made by the company In this case study about the company Nu Skin and the problems it faced in their operations in china, there have been some ethical issues that can be explained using multiple theories. We will look at how ethical or unethical the company is according to each theory. The first theory is the deontological theory, if we follow this theory the ethical acts are the once that go with your duties and maxims. In this theory whatever you do is considered to be ethical as long as it’s your right to perform those actions, there is no regard for the aftermath of the consequences that happen as long as what you do is your right. According to the deontological theory the independent contractors are behaving ethically, because it is their right to market the products. When an independent contractor is requited, that person is considered to be the owner of his own business and can sell the company’s products and market them anyway they please because it’s their right to do so. There are two types of deontological theories, those are the agent centered theory of deontology and the patient centered theory. According to the agent centered theory the ethical acts are those that you have a personal obligation to different from other people, meaning that the independent contractors are being ethical because they have a obligation towards themselves to act in their own best interest to generate more profits, even if it means over exaggerating the product line and selling products although only retail stores are authorized to do so in china. In the patient centered theory on the other hand deals with others rights rather than your own, meaning they have the right to know exactly what products they are getting without being fooled by marketing tools, so according to this theory the independent contractors are behaving unethically. The second theory is consequentialism, according to this theory the act that has the most positive effect or consequence is the most et hical one. If we follow this theory as long as the customers don’t know that the products are not as good as marketed the independent contractors are acting ethically because the effect would be negative for the business if sales went down which would happen if customers didn’t believe the products were effective. There are two types consequentialism theory and those are egoism and utilitarianism. In egoism the ethical act is the act that maximizes one’s self interest, the independent contractors are thinking about their own personal wealth when marketing these products and over selling, so according to egoism they are acting ethically. In utilitarianism the ethical act is the one that give the greatest good or happiness to the greatest amount of people, it is concerned with collective happiness and not individual happiness. The public are not goint to be happy if their products are not as good as they expected them to be, and when this happens the public will n ot buy any more products from Nu Skin leading in the fall of their stock price that will in return not please investors, the independent contractors are mainly thinking about their own personal good, and the greatest amount will suffer, so according to utilitarianism they are acting unethically. The third theory is the shareholder theory and here the ethical act depends solely on the interests of the company’s shareholders, the ethical acts are those that are the most profitable for the company so that the shareholders can gain more. If a company is socially responsible, this promotes the shareholder theory. When businesses are socially responsible more people are going to want their products making the shareholders better off. As soon as the reports of Nu Skins allegations were published the stock price for the company fell down drastically, and shareholders even sued the company for allowing their independent contractors to violate company policy. According to shareholder t heory the independent contractors acted unethically. The final theory is stakeholder theory and in this theory the ethical act a company does should be the act that serves the interests of its stakeholders. Stakeholders include employees, customers, suppliers and investors. The over exaggerated marketing is not in the best interest of the customers, they are getting their hopes up, the investors also suffer when the public realizes the products are not as good as they are advertized as, then stock prices fall. The employees also suffer because now the company will be stricter with recruitment and employment, whoever wants to become an independent contractor will have to go through a training period and once they become employed the company will monitor them more often. For the reasons above the acts of the company is unethical according to stakeholder theory.

Essay on Teamwork and Bureaucracy - 1115 Words

According to Webster’s New World Dictionary (Agnes, 2003, p. 662), one definition of teamwork is â€Å"joint action by a group of people.† I believe this is accurate, especially since every member of a marching band has some higher goal to work for. If the band works well together, the final performance might have fewer mistakes. The dictionary (Agnes, 2003, p. 88) also says that one definition of bureaucracy is â€Å"the concentration of authority in administrative bureaus.† Starting in my freshman year of high school, I was part of the marching band. We learned how to do the drills, and play the music. We also learned how to rely on our squad members to find our positions on the field. As an individual, I learned that there is a type of†¦show more content†¦In the article Teamwork in Multiteam Systems (Marks, DeChurch, Mathieu, Panzer, Alonso, 2005, p. 962), the authors say that some researchers feel that teamwork could negatively affect the experience that different workers gain. 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Analysis of the Case Oticon Using the Political Metaphor Essay Sample free essay sample

1. IntroductionThe metaphors of organisations and direction have been discussed by Gareth Morgan in his book â€Å"Images of Organizations† ( Morgan. 2006 ) . Morgan exposed eight metaphorical images of organisations including machine. being. encephalon. civilization. political system. psychic prison. flux and transmutation. and instrument of domination. Each one of these metaphors creates insight. but besides obscures some corners. They have both pros and cons. They enable seeing. but besides non seeing. No 1 of them is said to be right and right. 2. BackgroundChattanooga Ice Cream Division is one of three major incorporated industries to CFC. Chattanooga Food Corporation. The division lost third-largest client for no logical grounds. Charles Moore. the president and general director of the division conducted a direction meeting to discourse current state of affairss. look into the root causes. and happen out proper solutions. Many struggles occurred during the meeting. The actions and reactions can be projected to reflect how the division maps as one of metaphorical images. In this study. the instance is analyzed utilizing the political system metaphor. In other words. it discusses what we could see and reflect when projecting the division’s behaviour on the rules and attacks of the political system metaphor. 3. TheoryAn organization’s political relations is most clearly manifest in the struggles and power dramas that sometimes occupy halfway phase. and in the infinite interpersonal machinations that provide recreations in the flow of organisational activity. More basically. nevertheless. political relations occurs on an on-going footing. frequently in a manner that is unseeable to all but those straight involved ( Bacharach A ; Lawler. 2000 ) . There are three relationships to be considered when speech production of organisations the systems of political activities. which are involvements. struggle and power ( Morgan. 2006 ) . Politics accepts the world of multilateralism. Therefore. the construct of political relations is strongly connected with the diverseness of involvements. Projecting that on organisations by and large. they could be regarded as spheres for accommodating different involvements ( Culbert A ; McDonough. 1980 ) . Different involvements are natural and must be handled. For that intent. the general involvements are analyzed as single involvements. There are three types of single involvements including undertaking. calling. and extramural involvements. Undertaking involvements are connected with the work one time has to execute. while calling involvements are connected to what the individual want to accomplish with the work. The extramural involvements are connected what we want to accomplish as a private self’s. There is a structural diverseness of involvements in organisations. That could be bounded by two extremes along hierarchal graduated tables. where bureaucrats’ inclination represents the upper portion. and professionals’ inclination dominates the lower broad countries ( Benson. 1973 ) . When involvements collide. struggles arise. The political position admits the presence of struggles. There are three major signifiers of struggles including. struggles between individual. groups/departments. and value systems/structures ( Brown. 1983 ) . There are five chief attacks for struggle declaration. including avoiding. viing. suiting. compromising and collaborating manners ( Burrell A ; Morgan. 1979 ) . Power is the medium through which struggles are resolved ( Bacharach A ; Lawler. 1980 ) . There are two relevant positions of power signifiers including resources and societal relation or dependence. Furthermore. there are 14 beginnings of power. That may affect formal authorization ; control of scarce resources ; usage of organisational construction. regulations. and ordinances ; control of determination procedures ; control of cognition and information ; control of boundaries ; ability to get by with uncertainness ; control of engineering ; interpersonal confederations. webs. and control of informal organisation ; control of counterorganizations ; symbolism the direction of significance ; gender and the direction gender dealingss ; structural factors that define the phases of action ; and the power one already has ( Morgan. 2006 ) . 4. Analysis4. 1. InterestsWhen looking through the instance of Chattanooga Ice Cream Division. many manifestations and contemplation could be analyzed from the political system metaphor position. One of the worlds that political relations accept is that all political systems embrace different involvements ( Culbert A ; McDonough. 1980 ) . The meeting Moore conducted reflects this world every bit good. As we noticed. many frailty presidents of the division’s sections tried to depict and analyse the job the division experienced in a manner that made their sections out of lending causes. For case. Billy Fale. the frailty president of production. tried to justify his section by explicating their immense attempt to acquire stock lists manageable despite the limited efficiency the division’s information systems had. Whereas. Stephanie Krane. the division’s accountant. blamed the complexness of the information systems that required long clip to develop. trial. and put in. Furthermore. for forcing herself off of the causation factors. Krane explained her experience to retrieve old problems. The other frailty presidents manipulated the description of the state of affairs so that the possible solutions go in their departments’ favours or involvements so to talk. Barry Walkins. the frailty president of selling. attributed the job to the disregard of his recommendations. He asked sing mixed-ins in the division’s production program. establishing that on his selling research. He might be seen as a director who wanted to enter a triumph for his manner of thought. researches. or departmental sphere. Another contemplation could be built on the reaction of Les Holly. the division’s gross revenues director. He tried to drive the sentiments judgmentally. Holly started reflect the root causes of the job from the sense that the remainder of directors didn’t have the broad image he had. since he used to pass most of the clip in the shops. He focused on operational lacks. such as stockouts and back orders. to do it rational to counterbalance that with the promotional allowances. irrespective any other conducive factors. Moore has accepted the difference of involvements of the directors. This is evident from the manner he dealt with their sentiments. He considered all solutions in malice of his familiarity to the background of motivations for each director. The single involvements could be classified into undertaking involvement. calling involvements. and extramural involvements ( Culbert A ; McDonough. 1980 ) . Fale showed his involvements of maintaining everything under control by rejecting the alteration Walkins proposed. All his reactions during the meeting seemed to be operational and numerical contemplations. That sort of involvements could be seen as undertaking involvements. The same is to be said for Krane. Her remarks reflect her involvement of lodging to certainty and non doing mistakes. On the other manus. Holly’s involvements may be classified as calling involvements. as he emphasized on the promotional allowances many times. Possibly. he wanted to better his external personal relationships utilizing such allotments. In the same context. we think that Walkin’s involvements could be classified as extram ural involvements. since he wanted to turn out his endowment of marketing research practically. His proposal was rational and strongly relevant to the job. He tried to demo his trueness through his honest efforts to do the division changes positively. This manner of categorization doesn’t needfully mean that this categorization is an absolute affair. All of them may hold overlapped involvements that belong to each class. ConflictsAnother common facet of the political system is struggles. Conflict will ever be present every bit long as the involvements collide. That may include struggles between individuals. sections. and constructions ( Coser. 1956 ) . In Chattanooga. the struggle arose between Fale and Walkins were more personal. Walkins criticized Fale’s disregard to his suggestion. and Fale in bend criticized Walkins’ thoughts. Both reviews were directed to the personal behavior. Additionally. Holly criticized the policy concerned with cost decrease at the disbursal of gross revenues section. The struggle arose between him and Krane could be seen as departmental struggle. There are five common manners of struggle declaration including avoiding. via media. competition. adjustment. and coaction ( Burrell A ; Morgan. 1979 ) . For Chattanooga. and before the age of Charlie Moore. his male parent led the show wholly. He was the first responsible for about everything. while Charlie wanted to travel the division toward the collaborative manner. During the meeting. he gave manner for everybody to demo their contemplations. But they were still unfamiliar with this sort of communicating. When struggles arose. Moore played the function of moderator. which was doing certain that everybody would show about their ideas and sentiments reasonably. However. he kept the concluding determination to himself. We find the behavior Moore showed in struggle declaration is more like the adjustment manner. PowerPower is a really important histrion in the political systems. It is the medium through which struggles are resolved. There are 14 beginnings of power ( Morgan. 2006 ) . many of them could be projected on the instance. One of that is control of scarce resources including money. stuff. forces. and engineering ( Emerson. 1962 ) . Krane. as the division’s accountant. had the control to apportion resources including wages. disbursals. and information systems. She had extra beginning of power that represents a structural factor that defines the phase of histrions ( Bachrach A ; Baratz. 1962. 1970 ) . This beginning of power came from her being monitored. non merely by Moore. but besides by Arthur Silver. the main fiscal officer. Therefore. she had more considerable power to accept or reject any thought. which interprets her confident reactions during the meeting. Fale. as the frailty president of production. had besides the power of engineering ( Child. 1985 ) . boundaries ( Millar A ; Rice. 1967 ) and resources control ( Emerson. 1962 ) . He had besides the ability to ge t by with uncertainnesss ( Hickson et al. . 1971 ) . His contemplations were cardinal and referral. since he managed the production procedures and could judge any suggestion wanted to be implemented. Fale had extra power of interpersonal confederations ( Pfeffer A ; Salancik. 1978 ) . which is represented by his friendly relationship with Frank O’Brien. the frailty president of forces. They used to hang out with each other for angling. When Frank changed his place during the meeting. Fale became more flexible to accommodate with Walkins’ proposal. That reflects a serious impact of interpersonal confederations within the organisation ( Pfeffer A ; Salancik. 1978 ) . Krane and Fale had the power of Moore’s trust in run intoing their promises ( Bachrach A ; Baratz. 1962. 1970 ) . In the same context. Walkins had besides the power of information and cognition ( Crozier. 1964 ) . which is represented by his familiarity to the market tendencies and competitory advantages. Moore admitted his endowment and that was besides extra credits for Walkins. Bing the division’s gross revenues director. Holly had besides the power of cognition and networking ( Pfeffe r A ; Salancik. 1978 ) . He could lend in the solution by happening new clients. His direct exposure to the market added more power to him. In general and as a direction squad. all directors had the power of the usage of organisational construction. regulations. and ordinances ( Crozier. 1964 ) . But Moore might hold the biggest portion of power. non merely due to him being a general director. but besides as a descendent of the household to the full owned the division ( Kanter. 1977 ) . He controlled the determination doing procedure wholly ( Bachrach A ; Baratz. 1962. 1970 ) . He started that by analysing the job. Then. he motivated the directors to portion their ideas. Finally. he ended up with choosing the most efficient solution that might accommodate the client orientation and budget. 5. CONCLUSIONSEven though the organisational political relations may be recognizable by everybody within any organisation. it is really rare to discourse it openly ( Morgan. 2006 ) . The instance of Chattanooga shows clear illustrations of subjects discussed in private. as we found when the caputs of sections questioned the competency and trustiness of each other. As discussed before. we can acknowledge that it is necessarily that political relations is indispensable characteristic of organisational life. The political metaphor emphasizes that the usage of power is cardinal of organisational analysis. The metaphor helps to better understand organizations’ reason. as it enforces the thought that actions within organisations are more political than rational ( Morgan. 2006 ) . In Chattanooga. each director suggested solutions so that to increase the benefits for his/her section instead than the benefit for the division as a whole. Furthermore. the political metaphor helps to happ en solutions to the thought that organisations are incorporate constructions. which is non ever the instance ( Morgan. 2006 ) . Moore failed to merely use the collaborative values of squad work in Chattanooga. while that worked successfully when he worked at National Geographic. The political metaphor focuses on involvements. struggles and beginnings of power in order to understand and pull off them ( Morgan. 2006 ) . That besides helped Moore to understand the force drivers within the division. Finally. the metaphor has great influence to actuate persons to move politically. The chief drawback of utilizing the political metaphor is frights of change overing every activity within organisations into political Acts of the Apostless. This may sometimes make ambiance of uncertainness and misgiving ( Morgan. 2006 ) . That appears in the Chattanooga instance when most of troughs reflected negative feelings about each other. Another restriction is that the coevals of penetrations through different involvements possibly misused to accomplish personal ends. Last. but non least. it is complex to cover with pluralism’s inquiry. As a consequence. the political metaphor must be used carefully ( Morgan. 2006 ) . 6. Reference Bachrach. P. and Baratz. M. S. ( 1962 ) . †Two Faces of Power. † American Political Science Review. Bachrach. P. and Baratz. M. S. ( 1970 ) . Power and Poverty. New York: Oxford University Press. Bacharach. S. B. and Lawler. E. I. ( 1980 ) . Power and Politics in Organizations. San Francisco: Iossey-Bass. Bacharach. S. B. and Lawler. E. I. 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