(Tiểu luận) business ethicsindividual assignment case study 08 zappos deliveringconsumer satisfaction

MINISTRY OF EDUCATION AND TRAINING NATIONAL ECONOMICS UNIVERSITY BUSINESS ETHICS INDIVIDUAL ASSIGNMENT Lecturer: Nguyen Bich Ngoc CASE STUDY 08: ZAPPOS DELIVERING CONSUMER SATISFACTION Student : Tran Tra Giang Student’s ID : 11221844 Class: International Business Management (64A) School of Advanced Education Programs ( AEP) 000 TABLE OF CONTENTS A DISCUSSION INTRODUCTION HISTORY 3 CORE VALUES .4 ZAPPOS’ CUSTOMER-FOCUSED BUSINESS MODEL .4 4.1 SHOPPING AND SHIPPING 4.2 CUSTOMER SERVICE 4.3 TRANSPARENCY .5 4.4 ZAPPOS INSIGHTS 4.5 CORPORATE CULTURE 4.6 WORK ENVIRONMENT CORPORATE SOCIAL RESPONSIBILITY 5.1 PHILANTHROPY 5.2 SUSTAINABILITY 5.3 RECOGNITION ETHICAL CHALLENGES FOR ZAPPOS .7 6.1 2008 LAYOFFS 6.2 ACQUISITION BY AMAZON 6.3 MORE THAN SHOES CAMPAIGN 6.4 TECHNICAL DIFFICULTIES 6.5 THEFT OF CUSTOMER INFORMATION THE FUTURE OF ZAPPOS B QUESTIONS .9 QUESTION 1: QUESTION 2: 11 QUESTION 11 A DISCUSSION INTRODUCTION Can a company focused on happiness be successful? Zappos, an online retailer, is proving it can The company’s revenue grew from $ 1.6 million in 2000 to $ 1.64 billion a decade later Tony Hsieh, Zappos’ CEO says, “It’s a brand about happiness, whether to customers or employees or even vendors.” Zappos’ zany corporate culture and focus on customer satisfaction has made it both successful and a model for other companies This case examines how Zappos’ focus on stakeholder happiness contributed to its success First, we examine the history of Zappos, its core values, and unique business model Next, we analyze the company’s corporate culture and how it influences its relationships with employees, customers, the environment, and communities We then look at some of the challenges the company faced and how it plans to move into the future HISTORY 2003 2010 2000 1999 In 1999, Nick Swinmurn founded Zappos after a fruitless day spent shopping for shoes in San Francisco After looking online, Swinmurn decided to quit his job and start a shoe website that offered the best selection and best service Originally called ShoeSite.com, the website was soon renamed Zappos, after the Spanish word for shoes (zapatos) In 2000, entrepreneur Tony Hsieh became the company’s CEO After becoming CEO, Hsieh made an unconventional decision to keep Zappos going, even selling his San Francisco loft to pay for a new warehouse and once setting his salary at just $ 24 In 2003, the company decided in order to offer the best customer service, it had to control the whole value chain – from order to fulfillment to delivery – and began holding its entire inventory In 2010, Amazon bought the company for $1.2 billion Amazon agreed to let Zappos operate independently and keep Hsieh as CEO (at his current $ 36,000 annual salary) Hsieh made $ 214 million from the acquisition, and Amazon set aside $ 40 million for distribution to Zappos employees After the acquisition, the company restructured into 10 separate companies organized under the Zappos Family CORE VALUES Zappos has ten core values: They differ from those of other companies The core values create a framework for the company’s actions This is exemplified in the company’s commitment to their customers’ and employees’ well-being and satisfaction ZAPPOS’ CUSTOMER-FOCUSED BUSINESS MODEL The Zappos business model is built around developing long-term customer relationships Zappos does not compete on price because it believes customers want to buy from the store with the best service and selection The company strives to create a unique and addicting shopping experience, offering a wide selection of shoes, apparel, accessories, and home products, free shipping to the customer, free shipping and full refunds on returns, and great customer service 4.1 SHOPPING AND SHIPPING Zappos strives to make the shopping experience enjoyable The website is streamlined for an easy shopping experience Its customized information systems and warehouses operating around the clock enable fast shipping, creating instant gratification for customers Unlike most companies, Zappos sees returns as an opportunity to maintain customer relationships and increase its profits The company offers a 100% satisfaction guaranteed return policy, allowing customers to return items within 365 days for a full refund Zappos provides customers with pre-paid shipping labels, allowing domestic customers to return items for free This return policy encourages customers to order multiple styles or sizes and return the items that don't work out This may seem expensive, but it actually works to Zappos' advantage as their most profitable customers tend to return 50% of what they purchase These customers are the most profitable because they've experienced Zappos' customer service and return policy, which creates loyalty to the company 4.2 CUSTOMER SERVICE What makes the Zappos business model unique is the company’s focus on customer service The company established a method of serving customers and handling their issues distinctive from the rest of the industry Zappos believes great customer service is an opportunity to make the customer happy Another key aspect of Zappos’ customer service model is that nothing is scripted Employees have free reign in their decision-making and are expected to spend as much time as they need to “wow” customers They help customers shop, even on their competitors’ websites, encourage them to buy multiple sizes or colors to try (since return shipping is free), and anything it takes to make the shopping experience memorable The company considers word-of-mouth marketing to be the best way to reach new customers With over 75 percent of purchases made by repeat customers, it is evident Zappos’ mission to “provide the best customer service possible” works well for the company 4.3 TRANSPARENCY Zappos values transparency and encourages open communication among stakeholders, including employees and customers CEO Tony Hsieh uses social media to share information with followers and was open about the company's layoff decision Zappos is not afraid of public criticism and has a positive reputation among customers on social media 4.4 ZAPPOS INSIGHTS Zappos offers tours and workshops at their headquarters, as well as an online service called Zappos Insights, which allows subscribers to learn about the company's business practices through blogs and videos These programs have high profit potential for the company 4.5 CORPORATE CULTURE The corporate culture at Zappos is unique and sets the company apart from others, attracting the attention of Amazon CEO Jeff Bezos CEO Tony Hsieh built the culture on the idea that attracting talented people who enjoy their work leads to great service and brand power 4.6 WORK ENVIRONMENT Zappos' corporate culture is known for its relaxed and unconventional atmosphere, featuring activities such as office parades, ugly sweater days, and employee nap rooms The company believes that creating a fun environment leads to more engaged employees and fosters innovation 4.6.1 Hiring and Training Zappos believes that creating a fun and engaging work environment starts with hiring the right people, and the application process reflects this New employees attend a five-week training program and are offered $2,000 to leave the company after the training Zappos also invests in ongoing employee education, offering 200 hours of classes and requiring the reading of at least business books a year 4.6.2 Benefits Zappos' corporate culture is focused on creating a positive and engaging work environment for its employees The company believes that by treating employees well and fostering a fun and relaxed atmosphere, employees will be more engaged, motivated, and loyal, which translates into better customer service and brand power Zappos' unique approach includes hiring people with a sense of humor and conducting extensive training and ongoing education for employees The company provides a comprehensive benefits package and a compensation model that incentivizes personal growth and development Additionally, Zappos encourages work-life integration by fostering friendships and socializing outside of work, and promoting trust and transparency in the workplace However, the company also has high expectations for employees, who are evaluated on their alignment with the organization's core values and vision, and who may be let go if they not fit with the company's culture CORPORATE SOCIAL RESPONSIBILITY 5.1 PHILANTHROPY Zappos is involved in a variety of philanthropic efforts Programs include donating shoes and gifts as well as giving gift cards to elementary school students Zappos donates money to organizations such as the Shade Tree, a non-profit that provides shelter to women and children, and the Nevada Childhood Cancer Foundation Zappos also has a donation request application available on its website Document continues below Discover more Law on from: Enforcement of… Đại học Kinh tế Quố… 99 documents Go to 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It focuses on several environmental efforts,Enforcement including a new program, community gardens, and getting LEED certification for the company One recent effort was Zappos Recycles Day, an event to raise awareness on recycling and other ways the company can reduce its carbon footprint Like the rest of the company, L.E.A.F is open, with its progress posted on its Twitter account and blog Another area on the company’s blog is a section on “Eco-friendly Products.” Here, the company highlights new products that are organic or manufactured using environmentally friendly procedures The postings also list ways customers can live more sustainable lifestyles, including tips on how to throw an eco-friendly party and green product recommendations 5.3 RECOGNITION Zappos has been recognized for its innovative business practices and has appeared on prestigious lists such as Fortune's "Best Companies to Work For," Fast Company's "50 Most Innovative Companies," BusinessWeek's "Top 25 Customer Service Champs," and Ethisphere's "World's Most Ethical Companies." The company's efforts to create an environment and business model that encourages transparency and strong relationships among all stakeholders continue to be recognized ETHICAL CHALLENGES FOR ZAPPOS Like any company, Zappos faced some challenging business and ethical issues in the past When these issues occur, Zappos handles situations in a professional and efficient manner 6.1 2008 LAYOFFS In October 2008,Sequoia Capital instructed Zappos to cut expenses and make the cash flow positive As a result Hsieh made the difficult decision to lay off percent of Zappos’ employees Zappos strived to handle the layoffs in a respectful and kind manner 6.2 ACQUISITION BY AMAZON In 2009 Zappos was acquired by e-comerce giant Amazon.com Shorly after the acquisition, Hsieh issued a statement about why he sold Zappos to Amazon In the statement, Hsieh discussed the disagreement between Zappos and Sequoia Capital over management styles and company focus Hsieh decided the best way to resolve these issues was to buy out the board, but he could not this on his own After meeting with Amazon CEO Jeff Bezos, Hsieh committed to a full acquisition, as long as Zappos could operate independently and continue to focus on building its culture and customer service 6.3 MORE THAN SHOES CAMPAIGN To bring awareness to the fact Zappos sells more than just shoes, Zappos created a marketing campaign in 2011 designed to catch people’s attention The creative advertisements had certain parts of models’ bodies blocked off with a box with a box that said “ more than shoes ” 6.4 TECHNICAL DIFFICULTIES In October 2011, Zappos experienced some technical difficulties that resulted in delays and problems in customers’ orders and shipments Zappos upgraded one of its processing systems, and in the process many orders were deleted or delayed Some orders had the incorrect shipping information, and products were shipped to the wrong location Another problem Zappos encountered was that every item from 6pm.com, one of its websites, was priced at $49.95 for six hours in 2010 The company shut down the website for a few hours to solve the problem Zappos honored all the orders from the pricing mistake, which resulted in a $1.6 million loss 6.5 THEFT OF CUSTOMER INFORMATION In January 2012 hackers broke into Zappos’ computer system and the company had to respond to the theft of 24 million customers’ critical personal information The stolen data included customers’ names, email addresses, shipping and billing addressed, phone numbers, and the last four digits of their credit cards Zappos immediately addressed the situation by sending an email to customers notifying them of the security breach Zappos assured customers the servers containing their full credit card information were not hacked Zappos’ next move was to disconnect its call center, reasoning that the expected amount of calls would overload their system THE FUTURE OF ZAPPOS Zappos remains commiteed to serving its customers and employees So far, the company has retained its unique culture and continues to expand into new product categories In recent interview, Hsieh talked about the growth of Zappos and how he believes expanding into the clothing and merchandise market will help the company to grow Hsieh says “ the sky is the limit for Zappos”, and growing and expanding into many different types of business is Zappos’ future Ultimately, Zappos intends to continuw to deliver happiness to its stakeholders Hsieh says, “ At Zappos, our higher purpose is delivering happiness Whether it’s the happiness our customers receive when they get a new pair of shoes or the perfect piece of clothing, or the happiness they get when dealing with a friendly customer rep over the phone, or the happiness our employees feel about being part of a culture that celebrates their individuality, these are all ways we bring happiness to people’s lives B QUESTIONS Question 1: Does Zappos effectively focus on stakeholder happiness, and how does this approach affect the ethical culture ? Yes, Zappos effectively focused on stakeholder happiness Zappos is the online retailer of various kinds of shoes and its brand is linked in making people satisfied and happy The stakeholders of the company are given priority and their interest and expectations are met The company primarily focus on the happiness of its stakeholders as it realises that stakeholders are the main driving force of the business It makes every effort to understand the need of the stakeholders and tries to provide every opportunity to keep them happy Its effectiveness have been shown in : Customer reviews and testimonials: Zappos has a strong reputation for providing exceptional customer service and going above and beyond to ensure customer satisfaction Numerous customer reviews and testimonials attest to the positive experiences and happiness that Zappos' customers have had These reviews often highlight the personalized attention, helpfulness of customer service representatives, and overall positive shopping experiences 2 Employee engagement and satisfaction: Zappos places a significant emphasis on employee happiness and creating a positive work environment The company has consistently been featured on lists such as Fortune's "Best Companies to Work For," indicating high levels of employee engagement and satisfaction Zappos invests in employee training and development, encourages a fun and collaborative culture, and offers various benefits and perks to enhance employee well-being Company culture and values: Zappos' core values revolve around delivering happiness, including not only to customers but also to employees and other stakeholders The company's commitment to transparency, open communication, and creating a supportive and inclusive work environment is evident in its organizational culture Zappos encourages employees to take ownership of customer service and empowers them to make decisions that prioritize stakeholder happiness Social media presence and customer interactions: Zappos actively engages with its customers through social media platforms like Twitter and Facebook Customers often share positive experiences and interactions with Zappos' customer service representatives on these platforms, showcasing the company's commitment to stakeholder happiness and its responsiveness to customer needs Recognition and awards: Zappos has received numerous accolades and recognition for its customer-centric approach and commitment to stakeholder happiness These include being named to lists such as Forbes' "Customer Service Hall of Fame" and Ethisphere's "World's Most Ethical Companies." Such recognition indicates that Zappos' efforts to focus on stakeholder happiness are not only effective but also acknowledged by industry experts This approach creates effective relationship with stakeholders and brings positive ethical culture 1 Strong ethical values: Zappos places a strong emphasis on ethical behavior and values The company's core values, such as "Deliver WOW through service" and "Build a positive team and family spirit," reflect its commitment to ethical conduct and creating a positive work environment This commitment to ethical values influences the behavior and decision-making of employees, promoting a culture of integrity and ethical conduct Transparency and open communication: Zappos' approach to stakeholder happiness includes a transparent and open communication style The company encourages employees to openly discuss issues and concerns, both internally and externally This transparency fosters trust and accountability, which are essential elements of an ethical culture Employee empowerment: Zappos empowers its employees to make decisions and take ownership of customer service By giving employees the autonomy to act in the best interest of stakeholders, including customers, the company fosters a culture of responsibility and ethical decision-making Ethical leadership: Zappos' leadership, particularly CEO Tony Hsieh, sets an example of ethical behavior and values Hsieh is known for his emphasis on creating a positive work culture and his commitment to stakeholder happiness Ethical leadership at the top influences the behavior and actions of employees throughout the organization Recognition and external validation: Zappos has been recognized for its ethical practices by reputable organizations such as Ethisphere, which named it one of the "World's Most Ethical Companies." Such external validation indicates that Zappos' approach to stakeholder happiness aligns with ethical standards and principles Question 2: Has Zappos developed long-term relationships with customers and employees that provide a competitive advantage in the purchase of shoes or other products ? Yes, Zappos has developed long relationships with customers and staff that have given a competitive benefit in buying shoes and various products Customer loyalty: Zappos has a strong focus on customer service and satisfaction The company has implemented policies such as free shipping and a 365-day return policy, which aim to create a positive customer experience and build loyalty As a result, Zappos has a significant number of repeat customers who choose to purchase from them again and again, indicating the strength of their customer relationships High customer satisfaction: Zappos consistently ranks highly in customer satisfaction surveys and receives positive reviews from customers Their commitment to providing excellent service and going above and beyond customer expectations has contributed to a positive reputation and strong customer loyalty 3 Employee engagement and retention: Zappos' unique company culture and emphasis on employee satisfaction have resulted in high employee engagement and retention rates The company invests in employee development and provides various benefits, creating a positive work environment This, in turn, translates into better customer service and contributes to long-term relationships with customers Positive word-of-mouth and referrals: Satisfied customers and engaged employees often become brand advocates, spreading positive word-of-mouth about Zappos This organic promotion helps attract new customers and provides a competitive advantage over other retailers Additionally, Zappos has a referral program where customers can earn rewards by referring friends and family, further incentivizing positive recommendations Financial success: Zappos' success as a company is a testament to the effectiveness of its customer and employee relationships The company has achieved significant growth and profitability, demonstrating that their focus on long-term relationships contributes to their competitive advantage in the market Question How has Zappos managed ethical risk, and what are potential ethical risks in the future ? Zappos has effectively managed their ethical risk in the past by: Transparency and Open Communication: Zappos maintains a culture of transparency and encourages open communication at all levels of the organization This helps to identify and address ethical concerns or risks early on Zappos handles situations in a professional and the most ethical manner CEO Tony Hsieh, for instance, actively engages with employees and stakeholders through social media platforms like Twitter, fostering a culture of open dialogue Employee Empowerment and Engagement: Zappos focuses on creating an inclusive and engaging work environment where employees feel empowered to raise ethical concerns The company's Core Values and Culture Book provide guidelines and expectations for ethical behavior, enabling employees to understand and uphold the organization's ethical standards Strong Ethical Leadership: Zappos' leadership, particularly CEO Tony Hsieh, plays a pivotal role in setting the ethical tone and values of the organization Hsieh is known for his emphasis on core values and the company's commitment to stakeholder happiness This leadership commitment helps guide decision-making and ensures ethical considerations are at the forefront of business practices Vendor and Supplier Partnerships: Zappos actively evaluates its vendors and suppliers to ensure ethical business practices throughout its supply chain The company seeks partnerships with suppliers who share similar values and standards, such as fair labor practices and environmental sustainability By vetting its partners, Zappos aims to mitigate the risk of unethical practices within its supply chain Customer-centric Approach: Zappos places a strong emphasis on customer satisfaction and loyalty By prioritizing exceptional customer service and ensuring transparency in its interactions with customers, the company builds trust and reduces the risk of ethical issues arising from misleading or deceptive practices To illustrate :  The 2008 layoffs The year 2008 was a difficult year for all businesses When the venture capital firm SC, instructed the Z company to cut expenses, the CEO should have convinced the VC company that employee layoffs are not the answer He succumbed to the pressure and as a result, 8% of the employees were laid off This would have affected somewhat the morale of the other employees in the company The CEO’s transparent and honest communication minimized the negative impact  Amazon acquisition When a behemoth like Amazon acquires the Z company, there is a danger that there will be difficulties in maintaining the unique culture of the Z company Despite the CEO being honest about the pressure from the venture capital company SC which nudged him towards Amazon, there is a risk that it may be difficult to maintain the ethical culture which contributed to the success of the Z company in the past  More than shoes advertisement The advertisement may have gotten noticed by many potential customers due to the amount of skin displayed It is debatable whether the advertisement was able to convert the potential customers to actual buyers On the contrary, the Z company’s image was dented by the advertisement campaign  Theft of customer information The knee jerk reaction of the Z company regarding the theft of customer information by disconnecting its call center, only tarnished its record of customer service For potential ethical risks in the future: Data Privacy and Security: As a retailer that handles customer data, Zappos must prioritize data privacy and security The risk of data breaches and unauthorized access to customer information is an ongoing concern for any company operating in the digital realm Zappos must ensure robust security measures to protect customer data and maintain trust Supply Chain Management: Zappos sources its products from various suppliers and manufacturers Ensuring ethical practices throughout the supply chain, such as fair labor conditions and environmental sustainability, can be challenging Zappos needs to carefully vet and monitor its suppliers to mitigate the risk of unethical practices within the supply chain Workplace Diversity and Inclusion: Maintaining a diverse and inclusive workplace is crucial for ethical and fair business practices Zappos should continually strive to promote diversity, equity, and inclusion in its workforce, ensuring equal opportunities for employees regardless of their background Failure to address diversity and inclusion issues may result in reputational damage and legal consequences Consumer Protection: Zappos must adhere to consumer protection laws and regulations, ensuring transparency in its marketing practices, accurate product information, and fair pricing Any misleading or deceptive practices can harm consumer trust and lead to legal and reputational repercussions 5 Environmental Sustainability: With increasing awareness of environmental issues, consumers expect companies to adopt sustainable practices Zappos should continue to assess and improve its environmental impact, such as reducing carbon emissions, implementing sustainable packaging solutions, and promoting eco-friendly products Ethical Use of Artificial Intelligence (AI): Zappos may utilize AI and machine learning technologies for various purposes, including customer service and personalization However, ethical risks can arise concerning privacy, bias, and the responsible use of AI algorithms Zappos must ensure that AI systems are transparent, unbiased, and respect user privacy