John Staples is the Finance Director of Nadir Products, a UK-based company which manufactures and sells bathroom products - baths, sinks and toilets - to the UK market. These products are sold through a selection of specialist shops and through larger 'do-it-yourself' stores. Customers include professional plumbers and also ordinary householders who are renovating their houses themselves. The company operates at the lower end of the market and does not have a strong reputation for service. Sales have been slowly declining whereas those of competitors have been improving. In order to encourage increased sales the Board of Directors have decided to pay senior staff a bonus if certain targets are achieved. The two main targets are based on profit levels and annual sales. Two months before the end of the financial year the Finance Director asks one of his staff to check through the orders and accounts to assess the current situation. He is informed that without a sudden improvement in sales before the year end the important sales targets will not be met and so bonuses will be adversely affected.
The Finance Director has proposed to other senior staff that this shortfall in sales can be corrected by taking one of the following decisions.
a) A significant discount can be offered to any retail outlet which takes delivery of additional products prior to the end of the financial year.
b) Scheduled orders due to be delivered at the beginning of the next financial year can be brought forward and billed before the end of this year.
c) Distributors can be told that there is a risk of price increases in the future and that it will be advisable to order early so as to circumvent this possibility.
The Board is not sure of the implications associated with such decisions.
Required
a) As a consultant, prepare a report for the Board of Nadir Products examining the commercial and ethical implications associated with each of the proposed options mentioned above.
b) Assess the significance of the corporate social responsibility model for Nadir Products.