Jextra Neighborhood Stores in Malaysia Jextra Stores Case Study

Excerpt from Case Study :

Jextra Neighborhood Stores in Malaysia:

Jextra stores in Malaysia is a large Asia retailer based in Hong Kong and owned by SIM Lim Holdings, which is a large publicly traded industrial group. In addition to operating supermarkets, convenience stores, and hypermarkets, Jextra stores also operated stores in various countries like Philippines, Malaysia, Singapore, China, Thailand, Hong Kong, and Viet Nam. Following its entry to the Malaysia market in 2005, Jextra mainly operated using the name Neighborhood Markets, which has been characterized by rapid achievement of breakeven. The company's operations in Malaysia are headed by Tom Chong, the country manager from Hong Kong. At a time when Jextra was doing well in its Malaysian operations and actively seeking to expand, the management team identified a possible site in Klang for a new Neighborhood Market. However, the country manager was faced with two major dilemmas with the first one involving the offer by the mayor to assist with land zoning if the company could help fund a new primary school. Secondly, there were bribery concerns involving the company's top-performing buyer, Arif Alam.

Social, Ethical and Legal Challenges:

The rise of globalization has contributed to cross-cultural exchange that has continued to flourish to an extent that businesses are now conducting more production and trade overseas than in the past (Wolfe, n.d.). However, the new business practices contribute to a number of various issues that are related to the varying cultural laws and norms across various societies. For business and organizations alike, skillful navigation of these issues is critical for success in global business. In most cases, organizations face major issues and challenges related to the social, ethical, and legal challenges or problems in a foreign country. The other challenges that a business is likely to face include language, religious practices, gender, and human rights issues.

In conducting business in Malaysia, there are some prevailing attitudes regarding social and ethical responsibility considerations. Ethical considerations are mainly classified into concern for ethical practices, maintenance of integrity and honesty, and being accountable and taking responsibility. On the other hand, the significant socially responsible behaviors are responsibility towards the society, staff, customers, and entrepreneurship (Ahmad & Seet, 2009). Business owners and managers need to consider each of these significant clusters while conducting their operations in Malaysia. Furthermore, there is need for the organizations and businesses to consider the legal framework of a foreign country, especially legislations that have direct impacts on their business operations overseas.

Jextra Neighborhood Stores faces some major social, legal, and ethical challenges in its operations in Malaysia. Most of these challenges or problems were realized at a time when the company was actively seeking to expand into new regions in Malaysia, particularly Klang. The ethical challenges can be regarded as the things to be done and those not to be done in the daily business operations. In contrast, the social challenges revolve around the positive activities that the company should undertake within the society it operates. The legal challenges are the legislative policies adopted by the specific government to govern business operations.

In this case, the major legal challenge that Jextra faces in its operations in Malaysia is the bribery claims surrounding its top-performing buyer, Arif Alam. The firm's country manager had heard rumors that its top-performing buyer was taking bribes or accepting gifts as part of a scheme between him and his father-in-law. Even though Chong did not have any real evidence regarding kickbacks or bribery, the claims about Alam's involvement in dirty buying was extremely troubling.

The bribery claims could also be considered as an ethical challenge to the firm since they presented an ethical dilemma to the country manager. The first ethical dilemma was how the alleged bribery and kickbacks could be identified given that the buyer's lifestyle did not appear to be out of the ordinary. Secondly, the company's staffs could have also been involved in similar activities since they knew what was happening. Third, if the claims were investigated and nothing was found, the country manager could not only distance his people but could also lose personal credibility.

The offer from the mayor regarding the primary school contribution was a major legal, social, and ethical challenge. Corporate contribution and alleged bribes had become a major concern for the Malaysian public since it recent retirement of some elected officials in the country. The country was increasingly adopting strict policies against such practices as the state and federal politicians were using this as their political platforms. The offer was a social challenge because the firm had a significant responsibility towards the public in its operations. On the other hand, it was an ethical challenge since the manager needed to deal with the proposal appropriately while ensuring that the firm did not lose the site for its expansion strategy.

The previously discussed social, legal, and ethical challenges are issues that Chong should have anticipated as a country manager of Jextra Neighborhood Stores in Malaysia. This is primarily because these challenges revolve around the most common issues in international business. Generally, the most common issues in international business include corruption, employment practices, environmental regulations, human rights, and moral obligation of multinational companies ("Ethical Issues in International Business," n.d.). As an international business manager, Chong should have anticipated and prepared to handle such issues since they are likely to occur in normal business operations in a foreign country. The main reason for the occurrence for such challenges is attributed to the different laws and cultural laws in different countries.

Similar to Jextra Neighborhood Stores in Malaysia, nearly every company despite of its industry, size and country of operation is exposed to certain degree of corruption risk. As a result, companies are increasingly focusing on corruption risk to prevent damages to their reputation and image. In most cases, the measures for dealing with the risk of corruption are usually accompanied by the development and establishment of socially responsible business models that are expected by investors and other stakeholders (Ishak, n.d.). The major reason for the increased establishment of measures to deal with the risk of corruption originates from the significant negative impacts of such practices.

While individuals in an organization are responsible for their own standards of conduct, the top managers are responsible when corruption is afoot. This is because the top managers are responsible for developing and establishing company ethics that the organization's employees should strictly comply with. The possibility of a company not to have any corruption issues is dependent on the strength of the established company ethics that are developed by top managers.

The two major factors that could have contributed to the alleged bribery and kickbacks at Jextra Neighborhood Stores in Malaysia are the lack of stringiest company ethics that could help in detecting such practices and the possibility that the firm's management and staff condoned such practices. In order to deal with the rumors of bribery and corruption, Chong should establish necessary opportunities for these employees to report their claims. This could involve conducting anti-corruption training programs for employees in which the firm's staff s are encouraged to share or report possible corrupt practices.

As part of dealing with any legal, social, and ethical challenge, Jextra Neighborhood Stores has developed a Business Conduct Code that demonstrates the company's commitment to carry out its business operations lawfully and ethically. However, the Business Conduct Code does not entirely help the country manager to resolve the outstanding issues that the Jextra faces. This is because the conduct code does not stipulate measures that could be undertaking in resolving such issues. The code mainly lists the prohibited business practices to be avoided but does not state the appropriate measures for resolving these issues in case they occur.

In attempts to resolve these issues, Chong should recommend several steps to Jextra that could help…

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