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Jextra Neighborhood Stores in Malaysia (Case Study Sample)

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Case Study: JEXTRA NEIGHBORHOOD STORES IN MALAYSIA

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JEXTRA NEIGHBORHOOD STORES IN MALAYSIA
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(October 23, 2012)
Jextra Neighborhood Stores in Malaysia
Introduction
The presence of a multinational in new markets poses a lot of challenges, in view of the fact that, the management does not understand the new markets adequately. However, this does not limit them to operate and make profits. In such a case, they should always make sure that they stay within the limits of business codes of conduct, i.e. legally, socially and ethically. Indeed, business code of conduct requires that any business remains within the limits of good business operations and ensure practice the best that gives a healthy competitive environment. For Jextra Stores, its international presence and reputation could be largely dented if unethical business codes of behavior are detected in their operations. As a country manager Tom Chong is bestowed with the responsibility of maximizing the profits through right and correct business conduct code without compromises. This can be established from the company’s goal of “continually seeking to deliver the best results for the company, the highest return to our shareholders and the most beneficial service to our customers”. Despite the situations Chong must identify a very strategic way to handle the dilemma facing the stores; this is because it can lead to losses from a tainted image. This paper takes a look at the major issues in business conduct code that Tom Chong faces as the country manager of Jextra Stores operating in Malaysia.
Summary
Jextra stores operating as Neighborhood Markets in Malaysia is headed by Tom Chong; who recognizes various unethical conducts in the business. In the first instant, the stores identify a potential site for investment in Klang it is located 30 km west of the capital city of Malaysia Kuala Lumpur. The stores intend to expand with a branch in this town due to its growth potential. However, the mayor has other intentions and demands to allow the stores establish in the town. He wants the stores to provide 350,000 ringgit to cover a budget for a school required for the communities settling in the town. For Chong he is surprised how the mayor wants the store to provide the budget deficit while the mayor should be doing so. On further investigations, Chong realizes that the mayor sister sits on the school board and was in favor of the establishment of the new school at Kling; indeed, if Chong did not accept to the 350,000 ringgit deal the zoning would be canceled by the mayor and probably issued to a competitor. On the other hand the deal was not very clear as he was not sure whether he was to pay to the city or the contractor or before or after the school was built.
Secondly, the other major issue is facing the employees in the category management department; who link with suppliers for their products to be sold by the company. The category managers are responsible to ensure contacts, equipment, financial and logistics plans, rebates, incentives, and placements are negotiated. On their part some of the category managers have misused the system for personal gains. Chong suspects that Arif Alam is one of the category managers misusing the system by taking bribes and accepting gifts from suppliers in addition to awarding family members contracts in the company. Despite these grave allegations, Chong does not have concrete evidence and is in a dilemma on what to do to ensure sanity and proper code of ethics yet guarantee high profits.
Solutions
Chong has only one option in making decision, he must make sound and objective decision that portrays good sense of judgment that is rational. Moreover, everything must be established within the law to ensure the brand image is not tainted. His first responsibility would be to lead by example; though he is new in the Malaysian market ethical issues remain same everywhere, only that they are overlook in other places. By maintaining high standards of behavior, those under him will emulate the example and form a positive work culture. He must remain stern and prompt in enforcing the code of ethics and especially when it comes to the company laws, policies, and regulations.
For the mayor case, Chong should work out the terms and conditions of the 350,000 ringgit deal; if he sees that it is a corrupt deal he should find a way to come out clean. For instance, if he is to pay the 350,000 ringgit to the mayor instead of the project and has no other option then he should quit. This is because he is obligated by the company rules and conducts not to issue or receive bribes. Indeed, it is very clear that no asset or funds of the company can be given to any officer, agent or government official to influence a decision to the company’s favor. On the other hand, re-negotiating the deal would guarantee that he wins the zoning. The company has a corporate social responsibility strategy, this is where the company will invest in social projects to earn the public trust and maintain customer loyalty. Chong should talk to the mayor and plan to fund the new primary school as a partnership with the city; this will give an avenue for the school to be built and hence a new Neighborhood store established in Klang. Without a doubt, corporate social responsibility acts as a perfect way for the company to reinvest in society and win their trust.
Chong should exploit this avenue as the company has already had other corporate sponsorships from the Jextra Social Fund that funds social programs such as education. Though the fund is more significant in Hong Kong (the Headquarters of the stores) Chong can adopt the same in Malaysia to support the building of the school. To avoid the money being spent by the mayor and his goons, Chong should work out a deal to be included in the implementation team or a member of the company to be included in the team. In addition, he can insist on an audit report on all the stages of the project and threaten to withdraw funding if there were issues of embezzlement. This must be done wisely as the mayor could deny the zoning. For instance, ensuring that there is enough public awareness on the deal and the establishment of the school will allow public participation and hence less avenues for the mayor to embezzle the funds. In reality, the public awareness will make the mayor allow the zoning deal as a development strategy in the town. In this case the mayor would be required to grant the permit for the store to be built so that the company evades the perception that it was an exchange deal between the funding and the school.
To prove it, the company will provide the investment surveys done prior to the school, and prove that they acted in good faith to support the locals. This would be within the law as it would be a corporate social responsibility of a company to identify the problems of the society they are operating in and provide the best solutions. Further plans should be made for the Neighborhood stores to be the main sponsor of the school as a sustainable project to show their commitment to supporting the community.
In the second case, there are suspicions of gross misconduct of Mr Alam, and as such Mr. Chong should initiate ways to find out the truth. “Letting sleeping dogs lie” as he puts it would be a dangerous strategy as it may lead to more category managers adopting the bad habits. To create a good organizational culture should be his priority as it will creat...
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