The Printer Cartridges Apparatus Ltd, Case Study

Introduction

Printer Cartridges Apparatus Ltd, (PCA) is located in New York City. It is a manufacturer and full- service supplier of electronic equipment, mechanical apparatus, devises, cartridges and spares for printers. PCA provides technology solutions to consumers and businesses all over the world and in 2008 was the world’s most comprehensive manufacturer and provider of full range products for the major global firms in the office equipment industry such as HP, Brother, Dell, Xerox, Samsung etc. (Key financials in table A)

PCA in early 2008, introduced its “collection and recycling program” which seeks to reduce the environmental impact of its products throughout their life cycles’, minimize waste going to landfills by helping customers discard products conveniently in an environmentally sound manner. Recovered materials, after recycling, have been used to make products, including auto body parts, clothes hangers, plastic toys, fence posts, and roof tiles.

Company Background

Before 2008, PCA had more than 70 operating companies competing in consumer and professional business segments. It had been organized around its operating companies established mostly on a country level, without disregarding its scope to move towards a regional and global approach, in an effort to streamline activities and reduce costs.

This shift to global markets included shared marketing functions within geographic regions, consolidated production, and streamlined product offerings to eliminate cost duplication. Furthermore, the decision to go global was enormously facilitated from PCA’s continuous search for technological Excellency and sustainable society. This in turn allowed PCA to enjoy- amongst its competitors and stakeholders- recognition and acceptance as the company which provides society with new advances.

With the ongoing globalization of PCA businesses, its human resources management function had also become increasingly global. This transformation of HRM was critical to the company’s efforts to develop leadership capabilities and secure its legacy of honorably and ethically conducting business worldwide necessary to implement its global strategy.

PCA’s Corporate Philosophy

Specifically, PCA’s corporate philosophy conveys its dedication to accept and treat all people, regardless of culture, customs, language or race, harmoniously living and working together in happiness into the future. Moreover its goal is to contribute to global prosperity and the well- being of mankind.

Behind PCA’s 30-plus-year history and development, is found its respect for humanity, an emphasis on technology, and an enterprising spirit that the company has consistently passed on since its foundation. The enterprising motives, on which PCA based its business and the guiding principles that have been passed down since its foundation, are self-motivation, self- management and self-awareness.

PCA is well known to have an extensive code of ethics and a set of corporate values that defined the company’s responsibility to customers, company employees, communities, and shareholders. These values are deeply imbedded in the company’s culture, business practices, and decision-making.

But, with over 40,000 employees scattered across company operations in nearly 35 countries, PCA was encountering a variety of challenges in applying its code of ethics to situations in countries where ethical standards and business practices differed substantially from those in the U.S. and several other major regions.

Challenges faced in year 2008

In fact in early 2008 the company was confronted with a mismatch between the values inherent in its code of ethics and the level of service provided by its employees in several countries of a region PCA was active in. PCA’s top management in NY became aware that customer service fell below the standards from the complaint letters received from strategic customers and a recent survey that pointed to poor service in most countries in that region, which might cause a loss in the group’s profits more than two ($2) million USD annually.

Being a global corporation leader in most international markets, bad news travel fast and sell easily. All these criticisms found place in the world media and PCA became one of the most criticized companies for treating its customers unfairly, offering bad services by delaying deliveries, reduce standards of quality controls thus causing mal-function to the printers marketed by reputable multinationals like HP, Samsung etc.

Criticism was further extended to reveal the total failure of the companies in the region to comply with PCA’s recycling program. Local management was accused for refusing to accept used cartridges for refill and/or recycling. In fact, practically all companies in this region do not have suitably operating departments to deal exclusively with the collection and recycling their own products.

Furthermore, PCA was accused that in some of these countries in the region, local management procures repair business and is outsourcing repairs to local “unethically operating workshops”. Those workshops have been the targets of attacks on policies, including child labor, low and unjust workers’ pay as well as working conditions in the majority of them to be bad and unsafe.

Next in the row, PCA was confronted with anti-globalization criticism from local
ecological organizations and green peace activists claiming that PCA is a non-friendly environmental multinational corporation as most of its operating companies in this region, do not use the raw materials which are degradable and recyclable.

All these negative remarks were founding their way to the international media, and The Printer Cartridges Apparatus Ltd, had quarterly 2008 reports showing a sharp reduction in its international sales, its profits for the first time were below industry averages and share prices were down by 15%.

International analysts were predicting further deterioration, unless the management of PCA takes immediate actions to improve the situation and pay serious attention to its social responsibilities towards the societies and communities in the countries of this region.

Other analysts stressed the need that PCA must make sure that the implementation of all relevant corporate governance issues of the company will be enforced in all countries of this region, and will become part of their managerial processes, with zero tolerance for deviations.

In light of these developments, and due to the urgency of the matter, the top executive committee of PCA was asked to meet and deal with the situation seeking immediate actions to improve CSR performance and corporate governance practices in these countries in order to protect the interests of their key stakeholders.

In the informal meeting that followed, HR director and the Compliance Officer agree on actions which favor focusing on improving service offered to existing customers, either by changing top management in these countries or empowerment of the local compliance officers to secure that corporate citizenship rules and directives are followed. The director of operations & Finance worries about the financial implications of employee empowerment necessary for speedy resolutions to breakdowns in customer service. The marketing manager on the other hand advocates that priority should be given to targeting new market segments, to make up the losses from order intakes due to poor customer service.

As this informal meeting comes to a close, PCA’s general manager has considered the views of his top management team and prepares for the regional meeting with the country management in the countries caused the CSR problems.

The regional meeting

During the regional meeting PCA general manager, in his opening statement informed participants about the negative implications on PCA’s group economic results and reputation had due to their failure to comply with the Company’s corporate citizenship values.

He continued saying that his expectations from each one is to see, with immediate effect, necessary action plans which at large will correct the situation and protect decisively the interests of their shareholders. He emphasized PCA’s belief that compliance with high ethical standards has a positive effect on the company’s performance, without causing any harm to society. Their job and careers were in line.

He concluded his speech saying that; specifically such plans should contain corrective actions to restore in these countries PCA’s corporate image with its customers, as well as actions to enhance in their organizations PCA’s culture and management style, PCA’s key values and beliefs, its ethical standards, and the company’s approaches to instilling ethics-based practices and gaining employee compliance with ethical standards.

At this point the regional manager asked the permission to express his views on the matter which, as he made clear, were not entirely in line with the essence of the general manager’s views.

He started saying that, no country manager in the region sees CSR as a positive influence on business. Rather they see it as ‘a concept which in recent years has been forced up boardroom agendas by an alliance of government meddlers and do-gooders’. Alternatively they feel it is too broad term, covering as diverse issues as pollution, relations with society in general, fair trade and charitable donations; transparency of bank charges and labeling on food packets. Most of all they are angry that, ‘like it or not, you can’t ignore it’.

Given the fashionable emphasis on political correctness, no business can survive without a ‘token salute to CSR’. The Governments of most countries, they say, are complicit in this, moving business away from its original and legitimate goal of achieving returns for investors towards ‘the community’.

However few, if any, critics of CSR deny that some regulation is necessary. For example, antipollution laws, they admit, benefit nearly everyone. But some businesses, they remind us, ‘green-wash’ themselves going along with a pretense of engaging in CSR, simply to ward off criticism. In short, CSR is, for many of its adherents, simply an excuse to blame somebody, anybody, but themselves. Our bad diet is the fault of the evil food companies who sell us unhealthy food. If we are in debt, it’s the credit card companies and banks that are to blame…anybody but ourselves.

The meeting ended at this point, with the general manager saying that he is not willing to accept any further delays in the implementation by each company in the region of the PCA’s directives and policies on CSR with emphasis on the immediate implementation of establishing a center to handle recycling in accordance with PCA’s “collection and recycling program” as well as to bring service in house.

The region, said, is well behind the rest of the organization in mastering the company’s ethical values and there is going to be zero tolerance for further unjustified delays. Delaying to comply with PCA’s ethical standards neither serves the profitability, growth and sustainability targets nor add value to the entire PCA group in many respects and many areas.

Concluding remark

The General Manager on the plane taking him back to New York concluded with the strategy he will follow in the forthcoming board meeting of the PCA group to be held in the NY HQ offices. The focal point will be to present an action plan where much of his arguments should be targeted on the challenges posed by cross-country cultural diversity and cross-country ethical differences and what PCA is doing to meet these challenges. In many respects, the company enjoys a reputation of being a “pioneer” for how global companies can display high ethical standards.

TABLE A: Financial Highlights (2008 End Year Projections*)

*Net sales, Assets and employee numbers are based on projected financial statements for the fiscal year ended December 31, 2008.

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QUESTIONS


The Printer Cartridges Apparatus Ltd, Case Study

Q1: Why do large companies like PCA go to so much trouble to invest in CSR?

Q2: Why do you think PCA became the target of so strong anti-globalization criticism from the local ecological organizations and green peace activists?

Q3: Why do you think PCA’s top management goes to so much effort to promote its “collection and recycling program” for all companies in the region?

Q4: Do you agree with PCA’s General Manager views quoted in the case that PCA’s strong emphasis on high ethical standards has a positive effect on the company’s performance? Why or why not?

Q5: What problems and challenges confront PCA in getting the company’s 40,000-plus employees to conduct business honorably and ethically in nearly 70 different countries and how PCA should cope with them?

Q6: Is PCA an ethical company? Is the company’s top management genuinely sincere about the importance of conducting business in an ethical and honorable manner? How can you tell?

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