These notes may be removed from the main body of this text and put to one side to be referred to after you have tackled the questions. (In more formal educational settings, tutors might choose to remove these notes before handing out the module document to students.) Once the questions have been addressed the guidance offered here may be useful in confirming that you are on the right track and/or hinting at ways in which your answers may be more fully developed.
Question One
Trace the history of the Co-operative movement from the start of the 18th century until the present day. Highlight the mistakes, the successes, and the lessons learned.
This question focuses mainly on the descriptive narrative of the case, especially the historical context which it establishes. You will be able to see that a developmental process was, and still is, at work with all the associated ups, downs, twists and turns. You should try to think critically about how rational this process is and how the dominant influences on this process have ebbed and flowed over the last three centuries, for instance, the increasing opportunities for the working classes to receive an education in business methods and its influence on the Rochdale Pioneers, and the focus on quality products as a reaction against the ‘adulterated’ foodstuffs sold in the ‘Tommy Shops’.
Question Two
Articulate the underpinning philosophy of The Co-operative Bank.
The value of looking at a business’s historical context for revealing its underpinning philosophy should become clear as you tackle this question. The original Rochdale Principles, as well as the current formulation of the Principles of Co-operation might be used in order to form a basis from which to make comparisons with the position of the bank. For example, sustainable community development, transparency and accountability of governance, shared profits, democratic decision making.
Also, the operation of the bank can be considered for the evidence it provides about moral and political ideas such as democracy, human rights, etc. You should also seek out, and try to put an interpretation on, additional evidence by researching into available documentary sources relating to the bank, such as its web site, Ethical Policy and Partnership Report. For example, the focus which the bank has placed on human and animal rights as evidenced by its policies, advertising and campaigns.
Question Three
Does anything in the Co-operative Bank’s story surprise you or challenge your assumptions about the ways in which businesses operate and their legal forms? Articulate your reflections and anything you may have learned from them.
This question moves to a higher conceptual level than the previous two descriptive ones and challenges any narrow, preconceived ideas about what a business is, e.g. the assumption that plcs (public limited corporations) are the only ‘real’ form of business and its only responsibility is to make profit. Here you should be researching into the different legal forms of business including sole traders, partnerships, limited partnerships, companies limited by guarantee, mutuals, joint stock companies, as well as plcs and co-operatives.
This examination should also highlight the extent to which values and principles underpin different legal forms of business and you should be able to attempt to articulate what these differences are and how they might impact on the structure and organisation of the various types of business. This flags up ideas and issues, which are developed in more depth in the next question.
Question Four
What are ‘stakeholders’? Who do The Co-operative Bank regard as their stakeholders? What is their view of stakeholder relationships? What changes would you make to their stakeholder analysis and why?
This question starts to move you towards thinking about business ethics and CSR through consideration of the Co-operative Bank’s distinctive position on stakeholders. The term ‘stakeholder’ is probably a familiar one but definitions are often only partial and vague e.g. ‘stakeholder’ is often used synonymously with ‘shareholder’, or taken to apply only to those groups of people who have a first-hand involvement in the business (shareholders, customers, suppliers, employees).
The broader stakeholder models, which include anyone who is affected by the business’s activities or who can influence them, are much more subtle, complex and acknowledging of conflict than the narrow stakeholder approaches. Issues such as the distinction between customers and consumers, and the relationship between business and government at the UK and EU levels now become available for discussion. The bank’s own particular list of stakeholders includes ‘past and future generations’ – a challenging notion which you might want to explore for the light it sheds on current norms, and on your own assumptions, regarding the social responsibilities of business.
This leads on to an examination of the nature of the relationship between a business and its stakeholders and the different strategies of response which businesses operate in relation to stakeholder issues: inactive, reactive, proactive and interactive. The partnership approach adopted by the bank clearly aims at an interactive strategy which accepts that the business organisation and its environment are constantly changing and an effort needs to be expended in order to ensure that the needs of the business and those of the stakeholders are carefully balanced.
In the light of relevant background reading, re-think the bank’s stakeholders in the current social, political and economic context and consider the nature of the relationship each stakeholder has with the bank.
Question Five
How does The Co-operative Bank assure society that it is as ethically responsible as it says it is? Evaluate the extent to which the Bank does indeed evidence its integrity.
The issue here is one of how a business might make itself publicly accountable and open up its activities to scrutiny from outside. The notion of social and environmental reporting has been adopted by the bank as part of its drive towards accountability. The range of activities which is subjected to scrutiny has broadened from the purely financial to include the social and environmental aspects of business as well as The Co-operative Bank’s partnership approach to stakeholder relationships. You might like to look at other ways in which the bank makes itself open and accountable, e.g through relationships with ethically-oriented interest groups and through its partnership dialogues. You could also consider the kind of culture which supports accountability and the extent to which total openness is possible in a competitive market.
Question Six
Explore the notion of CSR in relation to the use of advertising as described in the case study. Draw your own conclusions about the bank’s awareness of, and commitment to, CSR. What are the problems in distinguishing between pure business self-interest and genuine CSR?
This question narrows the focus to consideration of the bank’s decision to advertise whilst at the same time introducing the general notion of Corporate Social Responsibility (CSR). You may find it surprising that such a taken-for-granted matter as advertising was controversial for the bank, although it is likely that you have already considered the need for ethical concern over the actual nature of the advertisements.
Before tackling this question in its specific formulation, you will need to clarify your thinking about what CSR means. There is much current debate about what CSR actually entails and many possible definitions are available for consideration. One common thread seems to revolve around a movement away from acting simply so as to meet the business end of maximising profit without concern with the means used to do so – the pursuit of business self-interest. The Co-operative Bank can be used as a resource to explore one approach to CSR.
The final part of this question points to the conundrum that the bank has been successful in economic terms through its application of CSR and can be said, therefore, to have ultimately pursued self-interest. When looking at this, or any other business, how can we tell which came first: the chicken of CSR or the egg of business self-interest. Does motive matter?
Question Seven
Research, outline and evaluate the following issues with respect to one organisation of your choice:
Legal forms of business;
History, culture and philosophy;
Stakeholder relationships;
Accountability;
The role of marketing.
Compare and contrast the information you have gathered with the case of The Co-operative Bank.
Draw conclusions in the light of your findings.
You are being invited to engage with the topics covered so far at a practical level by investigating an organisation of your choice. This activity calls for an integration of your research findings with the material and ideas encountered during consideration of the previous questions.
Question Eight
Should society regulate socially responsible business or should this be left to business itself? What are the issues raised in attempting to define CSR?
This question builds on the previous exercise and develops the train of thought begun at the end of question six. You are encouraged to take a conceptual approach and also to reflect further on what you have learnt from your experiences of moving beyond the case study material alone.
CSR entails a recognition that business exists in a relationship with society and that this relationship brings with it responsibilities towards that society (and vice versa). However, the issue this leaves us with is one of competing ideas about what those responsibilities actually are and how we might ensure that they are discharged. The traditional debate has been between government who want to regulate business, allegedly ‘in the public interest’, and business which seeks to regulate itself and complains of being hamstrung by government controls.
The charity and stewardship principles have been cited by some businesses as evidence of their social responsibility and ethical motivation. However, recent forms of CSR have, at their heart, the idea of a more even-handed collaboration between business and interest groups from society, making issues of regulation and control less clear.
Question Nine
Does ethics underpin good business or are strategic management and business ethics separate and competing activities?
Here you are being encouraged to adopt a realistic approach and consider the potential conflicts and difficulties faced by management when practising business ethics. A number of pertinent questions arise here: Is it necessary to insist on pure moral motivation to drive ethical business? Is it acceptable that a business has mixed motivation to pursue both the interests of society and its own at the same time? If mixed motivation is acceptable, where should the balance of interests lie? Do we need a moral authority to regulate and ensure fair play? If so, who could credibly be established as that moral authority? Should interest group/stakeholder politics be allowed to regulate themselves?
Question Ten
What are the implications of what you have learnt from this case study for management practice, now and for the future? If you are working for an organisation, explore these issues in relation to your own experiences.
This question aims as a final integration of all the learning objectives and complements the practical stance of question seven. You are invited to think about the ‘so what?’ issues raised by the case study and apply your understanding to management practice and to your own workplace.
In the preparation of this case study the authors have gratefully drawn on material from interviews and documentary sources provided by The Co-operative Bank. In particular we would like to acknowledge the contributions of Simon Williams, Director of Corporate Affairs. Thanks also go to Jayne Beer, Partnership Adviser; Barry Clavin, Ethical Policy Manager; Chris Smith, Group Corporate Affairs Manager; and Jon Lee, Ecological and Social Development Manager for their focus group participation; and to Chris Mills, Ethical Policy Manager, for his individual contribution. Our gratitude also goes to Bill Shannon, previously Head of Corporate Affairs, the Co-operative Group; Dr. Andrew Walker, Lecturer and Historian; Mrs Christine Allison, Historian and Museum Curator; and Dr. Howard Kalin, Director of Research Social Enterprise Institute, Heriot Watt University; for their substantial and valuable feedback on the drafts of the text of the case study.
