A Sample Project Paper - Business Ethics
As a person with knowledge of business ethics, the author has always brought up to his superiors the viability of strategy formation regarding the analysis of this topic and at times fails to understand the reasons or logic behind certain strategic implementations imposed on it.
By delving into this project paper, the author intends to have better insights into how business ethics between producers and consumers is thought up, formulated and then imparted down. The author hopes to have an in-depth understanding as to how the examination and implementation of business ethics enable companies and organizations to compete effectively and profitably in this era of internationalization where competition is extremely intense.
In order to reinforce the learning objectives, two key focal issues were focused upon i.e. innovation and diversity. Innovation was discussed with regards to business ethics where it was renowned for its developmental capabilities to constantly innovate. Diversity came under strategic thinking and formation as the author considered the diverse culture, political climate, economic surroundings, social environment, technological settings, government policies and legal systems in order to better understand the issues being discussed.
This essay utilized the business ethics in the procurement function as the model theory to review its present value-added elements and how it dealt with critical situations. From the analysis, key trends in the business ethics in the procurement function were then identified, how it worked and its effectiveness in dealing with critical situations was ascertained. The paper then moved on to assess the business ethics in the procurement function with regards to its suitability to critical situations, during which the internal capabilities of the procurement function in relation to the strategy being followed was determined also. An overall analysis of the performance and effectiveness of the procurement function was also conducted to assess and compare its capabilities with those of others. Gaps in the capabilities and environment were then identified.
Finally, several choices of strategies to improve the business ethics in the procurement function as effective means in critical situations were recommended and evaluated in terms of appropriateness to the issues reviewed, feasibility in carrying out the options and acceptability within the key stakeholders and decision makers. Several key implementation issues related in managing strategic change were also addressed as well.
Procurement can be defined as the efficient and effective implementation of the policies and tasks necessary to acquire the essential goods or services at the best possible total cost of ownership, leading to the overall satisfaction of a firm's customers, employees, and management. The procurement function focuses on the careful management of the processes involved in the examination and acquisition of products and services (Chase, 1998).
More often than not, small companies don't really have the capabilities to implement efficient procurement processes. Instead, these companies engage in activities that various schools of management typically associate with the procurement function. These activities include the scouting of products, product development, production and distribution.
However, the procurement function deals with all operations done within companies and organizations. Activities such as the management of purchases, the control of inventories, logistics and evaluations are often related with the procurement function. A great deal of emphasis lies on the efficiency and effectiveness of processes. Therefore, the procurement function includes the analysis and management of internal processes.
BUSINESS ETHICS in the PROCUREMENT PROCESS
A. Purchasing and Buying Agents
Buyers and purchasing agents are tasked to evaluate suppliers on the basis of price, quality and service support. They review catalogs as well as industry and company publications in order to help them in their search for the right suppliers. Fortunately for them, a majority of this information can be easily accessed in the Internet. They also do some researching about the reputation and background of the suppliers and may also do some advertisements regarding the foreseen purchase actions in the hope of soliciting bids. At meetings and conferences, they perform the examination of products and services, the evaluation of the productive and distributive capabilities of suppliers, and the discussion of business considerations that have the possibility of influencing the purchasing decision. As soon as all valuable information about the suppliers is gathered, the placement of orders and contracts are started to be awarded to those suppliers who are able to meet the needs of the purchasers. The typical contracts range for several years and may even have the stipulations of the range of prices, which would allow the purchasers to reorder whenever necessary (Schmenner, 1989).
Sometimes, however, there exists a clear distinction between the work of a buyer and that of a purchasing manager. Purchasing agents and buyers focus mainly on the daily purchasing tasks. Purchasing agents perform the tracking of the conditions of the markets, trends in prices, as well as the future of the markets. Purchasing managers, on the other hand, are in charge of more complex and critical purchases and handles a team of purchasing agents.
Planning is a necessary ingredient within the procurement function. In manufacturing companies this process is often very difficult because of the fast rate of change and the occurrences of unplanned events. Most companies use several methodologies depending on the rate of demand of the customer and the price of the product. Nevertheless, the objectives of every company for every procurement transaction do not change: efficiency and effectiveness.
Planning is being implemented by companies and organizations in order for their procurement activities and resources to be coordinated over time. This enables the companies and organizations to achieve their procurement goals with minimal resource utilization. Planning also enables companies and organizations to monitor the progress of their procurement plans at regular intervals and maintain their control over operations. Planning within the procurement function involves four elements: scheduling, labor planning, financial planning, and cost planning (Krajewski, 1999).
- Scheduling involves the specification of the beginning, the length or the duration, and end of the planned procurement activities.
- Labor planning involves allocating the necessary personnel and delegation of responsibilities and resources for the procurement process
- Financial planning involves identifying the types and needs in terms of budget.
- Cost planning involves determining the costs and the possibility of their occurrence.
C. Supply Chain Analysis
Supply Chain analysis in the procurement function involves working across multiple enterprises in an effort to limit the supply chain time in the procurement function.
The uncertainty of demands in supply chains within industries is easily solved through the implementation of faster response times. Some product supply chains have the luxury of longer lead times in terms of batch production of products in order to meet the demands. Most supply chains are moving in a position to support faster changes of demand by the consumers (Chopra, 2001).
Because of the agile supply chain of most companies and organizations, they are able to enjoy so many advantages. As mentioned above, the supply chain analysis tends to shorten the supply chain itself. Also, this will significantly reduce company inventories. Forecasting, scheduling and planning, on the other hand, will significantly improve.
D. Research Analysis
The occurrence of research within the procurement function reflects the growing difficulty in the management of the procurement function that requires the effective use of valuable resources such as money, materials, equipments, and people. And even reputable organizations and companies are no exception to these. This is the reason why research analysis is being done by organizations and companies in order to determine the most effective ways to coordinate these resources in an effort to obtain and efficient procurement process through the application of analytical methods derived from fields of studies such as mathematics, science, and engineering (Nahmias, 1997).
Through this process, procurement problems are solved in different ways and alternative solutions are then relayed to the management of organizations and companies. The management then selects the appropriate course of action in line with the procurement goals. More often than not, research analysis in the procurement function is concerned with complicated issues such as top-level strategy, resource allocation, designing of production facilities and systems, pricing and the analysis of large databases.
Research analysis within the procurement function actually may vary according to the structures and philosophy of the company or organization. But in most cases, companies and organizations centralize research analysis in one department. Research analysis may also have the possibility of working closely with top level managers in order to identify and solve a variety of procurement problems.
No matter what the type or structure the company is, research analysis within the procurement function operates under similar sets of methodologies in order to carry out the analysis to support the company’s goal to improve its overall performance. The process is started by the description of the details of a product or service being planned to be procured, followed by the formal definition of the procurement. For example, a research analyst might have questions regarding the most effective inventory level for every needed part on a production line. Also, the analyst might be asked to determine the optimal number of products needed to be kept in inventory.
Critical Procurement Improvement Factors
For companies and organizations to become a viable player in the industry, the following procurement improvement factors are critical:
· Financial Stability
Financial stability is crucial especially in the pursuit of procurement and development activities. In any industry, it is important to remain updated with the latest developments to be able to stay competitive in the market.
· Product Performance and Price
The acquisition of the best products and services comes as a result of well-funded and planned procurement and development activities. The strong performance of acquired products in the market could also be linked to their cost-effectiveness. However, companies and organizations have to be aware in positioning the process in terms of maintaining satisfactory profits margin and remain competitive in the market.
· Marketing Strategy and Distribution
High brand awareness among the buyers has created the need for aggressive marketing, and access to strong distribution channels is critical for the introduction of new models.
Benefits of Efficient Procurement Function
· Economies of Scale and Scope in manufacturing and operations management and development.
· Unique Quality Technology Owing to Heavy Emphasis on Efficient Procurement Function
A company’s commitment to efficient procurement & development activities has always been one of the top strategies to remain competitive in the market.
· Differentiated Products
Through the acquisition of differentiated products originating from the efficient procurement and development activities, the company is able to create its own firm-specific advantages. The continuous pursuit of efficient procurement and development processes enables the company to produce a steady stream of originally differentiated products which makes it difficult for competitors to find substitutes. Because of this differentiated approach, the company is able to market their acquired products worldwide, which enables them in turn to maximize the returns on operations management and development expenditures.
The results of the analysis carried out on the business ethics within the procurement function of most companies and organizations indicated very significant effects, even amidst the threats of unrest. Therefore, we could conclude that the business ethics within the procurement function could still be expected to improve faster than average.
The review of the procurement function’s capabilities and resources revealed very little inconsistencies regarding its strategies. This is coherent with its traditional inside-out approach. However, the need to reconcile both the inside-out and outside-in approaches becomes imperative now for companies and organizations.
The analysis among the business ethics as well as the capabilities of the procurement function revealed certain gaps, most of which are biased towards the environment. However, these gaps paved the way towards determining a number of recommended strategic options to secure the competitiveness of the business ethics within the procurement function.
Also, companies and organizations have to find a balance between adherence to internal forces within the management and to the changing forces of the environment in order to implement such strategic options
Chase, R 1998, Production and Operations Management; Manufacturing and Services, Richard D. Irwin, Inc., USA.
Chopra, S 2001, Supply Chain Management, Prentice Hall, USA.
Krajewski, J 1999, Operations Management: Strategy and Analysis, Addison-Wesley, USA
Nahmias, S 1997, Production and Operations Analysis, McGraw-Hill International Editions, USA.
Schmenner, R 1989, Production/Operations Management; Concepts and Situations. MacMillan, USA.
Schonberger, D 1994, Operations Management. Continuous Improvement, Irwin, USA.