William Hooper Case Study 2

William Hooper
Case Study 2 - Lululemon
1. If tracking employees through technology is not illegal, why should Megan be
concerned if she is not involved in any misconduct?
In chapter two, the book defines social responsibility as “an organization’s obligation
to maximize its positive impact on stakeholders and minimize its negative impact.”
(Pg:36) Therefore, if Megan believes tracking employees could have negative impact on
the firm she should speak up. In the book it states “secondary stakeholders do not
typically engage directly in transactions with a company and are therefore not essential to
its survival.” (Pg:32) While Megan may be a secondary stakeholder as an employee the
book also states, “stakeholders provide resources critical for a firms long-term success.”
(Pg:32) Furthermore, the controversial information Megan has is a type of resource
critical to the firm’s success and has the implication to ruin the firms’ reputation.
2. At this point, what are Megan’s alternatives to resolve her current dilemma about
her involvement and knowledge about GAC’s tracking of employees?
In order for Megan to handle her ethical dilemma, she must ask to do another job. If
Megan cannot reprimand employees for breaking rules she does not agree with ethically.
As an employee Megan could also bring her dilemma to the board of directors as it states
in the book “In theory, the board of directors provides oversight for all decisions and use
of resources.” (Pg:30).
3. Who should have a stake or an interest in how GAC tracks and monitors its
employees?
Both the primary and secondary stakeholder should have an interest in how GAC
tracks and monitors its employees. As the book states “external control of the corporation
resides not only with the government regulators but also with key stakeholder including
employees, consumers, and communities, which exert pressure for responsible
conduct.”(Pg:41) Therefore, all stakeholders should take interest in company rules and
understand the importance for responsible conduct.
1. How should Demarco approach this issue when he meets with the tribal leaders?
The book states, “In a business context, customers, shareholders, employees,
suppliers, government agencies, communities, and many others who have a “stake” or
claim in some aspect of a company’s products, operations, markets, industry, and
outcomes are known as stakeholders”. (Pg: 30) Under the definition provided, Demarco
must understand that he and the tribe are both stakeholders. Therefore, Demarco should
approach the issue with business ethics. Business ethics is defined in the book as,
“comprises principles and values that meet the expectations of stakeholders”.(pg:37)
Furthermore, Demarco should stay very ethical and honest with both stakeholders in the
situation.
2. What should be the priorities in balancing the various stakeholder interests?
The priorities in balancing the various stakeholders’ interests should start with the
primary stakeholders. The book defines primary stakeholders as, “those who’s continued
association and resources are absolutely necessary for a firms survival.” (Pg:32)
Therefore, the priorities should be balanced among the primary stakeholders.
3. Can the CEO and board of directors of Xeon continue operations and maintain a
stakeholder orientation?
Yes a company CEO and Board of Directors can continue operations and maintain a
stakeholder orientation. The book states a stakeholder orientation involves “activities and
processes within a system of social institutions that facilitate and maintain value through
exchange relationships with multiple stakeholders.” (Pg:33) Therefore, the
responsibilities that fall on the CEO and Board of Directors would certainly include
continuing stakeholder orientation.
1. How has Lululemon handled various ethical issues that it has faced over the last
few years?
Lululemon has handled various ethical issues with a very proactive mindset. For
example the recall of “sheer yoga pants” which according to the book “the company lost
$2 billion in market value.” (Pg:512) The company has also handled ethical issues by
referring to its seven core values “quality, product, integrity, balance, entrepreneurship,
fun, and greatness.” (Pg:510). Lululemon’s ability to act ethically will continue to serve
them well in the long run.
2. How has the ethical culture of Lululemon impacted its relationship with
customers and employees?
The book states, “The stakeholder model of corporate governance adopts a
broader view of the purpose of business. Although a company certainly has a
responsibility for economic success and viability to satisfy its stockholders, it must also
answer to other stockholders, including employees, suppliers, government regulators,
communities, and the special interest groups with which it interacts.” (Pg:45) The
commitment to this approach is exemplified in the book where it says, “Lululemon
recognizes that customer satisfaction is only as good as the employees that provide it.”
Therefore, the company has statistics to back it up. In the book it states “In exit
interviews, 90 percent of employees claim they would recommend for their friends to
work at Lululemon”. (Pg:514) Therefore, Lululemon’s approach maintains a strong
ethical environment among both employees and customers.
3. To avoid negative publicity and ethical challenges, what steps should Lululemon
take to improve its stakeholder’s relationship?
To avoid negative publicity and ethical challenges corporate governance is critical.
The book states, “Corporate governance involves the development of formal systems of
accountability, oversight, and control. Strong corporate governance mechanisms remove
the opportunity for employees to make unethical decisions.”(Pg:39) In the past
Lululemon has struggled with controversial comments made by upper level management
however, implementing and maintaining corporate governance will continue to point
them in the right direction.

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William Hooper

Case Study 2 - Lululemon

1. If tracking employees through technology is not illegal, why should Megan be

concerned if she is not involved in any misconduct?

(Pg:32) Furthermore, the controversial information Megan has is a type of resource

her involvement and knowledge about GAC’s tracking of employees?

employees, consumers, and communities, which exert pressure for responsible

understand the importance for responsible conduct.

The book states, “In a business context, customers, shareholders, employees,

claim in some aspect of a company’s products, operations, markets, industry, and

“comprises principles and values that meet the expectations of stakeholders”.(pg:37)

2. What should be the priorities in balancing the various stakeholder interests?

Therefore, the priorities should be balanced among the primary stakeholders.

exchange relationships with multiple stakeholders.” (Pg:33) Therefore, the

continuing stakeholder orientation.

them well in the long run.

customers and employees?

The book states, “The stakeholder model of corporate governance adopts a

broader view of the purpose of business. Although a company certainly has a

answer to other stockholders, including employees, suppliers, government regulators,

commitment to this approach is exemplified in the book where it says, “Lululemon

work at Lululemon”. (Pg:514) Therefore, Lululemon’s approach maintains a strong

ethical environment among both employees and customers.

take to improve its stakeholder’s relationship?

To avoid negative publicity and ethical challenges corporate governance is critical.

accountability, oversight, and control. Strong corporate governance mechanisms remove

the opportunity for employees to make unethical decisions.”(Pg:39) In the past

however, implementing and maintaining corporate governance will continue to point

them in the right direction.

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