Photo AI
Assess the likely consequences for Sports Direct of its corporate culture. - Edexcel - A-Level Business - Question 2 - 2022 - Paper 2
Question 2
Assess the likely consequences for Sports Direct of its corporate culture.
Worked Solution & Example Answer:Assess the likely consequences for Sports Direct of its corporate culture. - Edexcel - A-Level Business - Question 2 - 2022 - Paper 2
Step 1
Corporate culture is the unwritten code that affects the attitudes and behaviour of employees
Answer
Corporate culture plays a pivotal role in shaping employee attitudes and behaviors. In Sports Direct's case, the culture has been described as reminiscent of a 'modern-day Victorian workplace'. This culture can lead to low morale among workers due to factors such as being paid below minimum wage and facing undue pressure at work.
The consequences of such a negative environment include:
- Low morale: Workers may feel demotivated, especially if they are not adequately compensated. This can result in lower productivity levels.
- High turnover: Employees may leave the organization in search of better working conditions, leading to higher recruitment and training costs for the business.
- Public image issues: Negative media coverage regarding working conditions can tarnish Sports Direct’s reputation.
Step 2
Possible consequences outlined
Answer
Due to the identified issues, several specific consequences may arise:
-
Reduced Productivity: Workers forced to work under poor conditions may become less productive, as they are likely to feel undervalued and unhappy in their roles.
-
Public Relations Backlash: Negative press from sources like the Guardian can damage brand loyalty and consumer trust, reducing sales.
-
Financial Implications: With lower productivity and potential loss of consumer trust, Sports Direct may experience a significant financial impact, given the dependency on high sales volume to maintain profitability.
Step 3
Counterbalance to negative consequences
Answer
While the negative implications can be severe, there are also potential counterbalancing factors:
- Increased Productivity Through Fear: The 'six strikes' system may encourage workers to perform better, as they fear job loss. This could lead to improved short-term productivity.
- Consumer Loyalty: Despite negative press, there may still be consumers drawn to Sports Direct due to their low prices, which could mitigate the impact of bad publicity.
Step 4
Potential judgement and concluding thoughts
Answer
Sports Direct is currently reviewing its Human Resource strategies to address these concerns. This indicates a willingness to adapt and potentially change its corporate culture for the better.
- Long-term viability: Ignoring the corporate culture could have severe long-term consequences. Nevertheless, addressing these issues may result in a more sustainable business model that could foster employee satisfaction and mitigate negative media attention.
- Efficiency Arguments: Sports Direct may argue that their existing culture has contributed to their operational success, especially in terms of maintaining low costs and competitive prices. However, this argument may fall short in the face of growing consumer awareness about ethical business practices.