BUSINESS READING TEXTS

1 Ann-Marie Campbell of Home Depot

Starting a new job isn’t easy. With many things to learn and people to meet, even experienced workers can get overwhelmed on their first day at work on a new job.  So imagine how Ann-Marie Campbell must have felt more than 30 years ago, when as a new immigrant with a thick Jamaican accent, she walked into Home Depot for her first shift. But thanks to her hard work and committed attitude, Campbell rose up the ranks at Home Depot. Now as executive vice presi-dent of stores, she oversees the operation of more than 2,000 locations.
Campbell was born in the Jamaican capital of Kingston to a successful couple with four children. But this happy childhood took a tragic turn when her father died in a car accident. Camp-bell and her siblings spent the rest of their youth being raised mainly by their grandmother, an intensely driven woman with no fear of hard work. “My grandmother was divorced and she had 10 children herself,” said Campbell. “She started selling lace on the side of the road and then grew that into a multimillion-dollar business—a retail store selling mostly furniture and appliances.” This store became Campbell’s second home when she had time off from the strict boarding school she attended. Help-ing her grandmother with day-to-day duties taught her many important lessons about how to do business. Her grandmother’s advice and the discipline she learned at school helped Camp-bell enormously when she made the move to Miami as a teen-ager and got a job as a part-time sales associate at Home Depot to help pay her college tuition. While Campbell’s experience and dedication helped her excel at the job quickly, she still faced a number of challenges in this new environment. “I was really the only woman on the sales floor back then, and when custom-ers would come in with an issue, they’d demand to speak to, you know, a guy,” said Campbell. Rather than lose her temper, though, she developed a clever response to this demand. “I’d pick the guy who knew the least to come help. The man would always have to kick the question back to me.” A similarly bold move brought Campbell to the attention of Home Depot’s upper management. One day, a company execu-tive visited the store and asked a big group of employees a question. None of her co-workers responded, but Campbell confidently answered the executive’s inquiry. “Later, when he was walking out of the store, he asked the manager who I was,” said Campbell. “That’s how I got on the radar.” This boost gave her the confidence and the connections to pursue promotions within the company. Her first advanced post was as head of the paint department, followed eventually by her appointment as manager of the entire store.
Campbell earned a Master of Business Administration in 2005 that allowed her to climb even higher up the corporate ladder. By 2016 she became executive vice president of U.S. stores, a position that places her in charge of Home Depot’s more than 400,000 employees. Every day Campbell works to provide these employ-ees with the same opportunities for advancement that she received, which is a duty she does not take lightly. “It’s only when you develop others that you permanently succeed,” said Campbell. “When I do have opportunities to speak to students, or even to my kids, that’s the type of value that I instill in them.
It’s not just about you. The world is a community. Everyone has their part, so let’s go out and make sure everyone is able to do it successfully.” The business environment is constantly changing, and along with those changes come opportunities. The purpose of this chapter, and this textbook, is to introduce you to the dynamic world of business and to some of the people who thrive in it.
Businesspeople like Ann-Marie Campbell contribute much to the communities they serve, and they also make a good living doing so. That’s what business is all about.

2 ADAPTING TO CHANGE: Up, Up, and Away

Sure drones can deliver a wide variety of things — everything from your Amazon order to a precisely targeted bomb. But they can also help businesses be more productive and efficient. Drones can scan, map, and gather data, tasks that used to require satellites, planes, and helicopters that only the deepest-pocketed companies could afford. Today even small businesses can pick up a drone for a few hundred dollars.
Construction companies can use drones to collect data far more frequently and accurately than they can with manned aircraft and human surveyors. Farmers can sur-vey their fields of crops. Communi-cation companies can inspect lofty cell towers. Property inspectors can inspect buildings. And this can all be done at much lower costs than traditional methods. For example, building inspectors usually charge $200–$300 for a typical home roof inspection that can take six hours.  However, if the inspector uses a drone, the cost is $10 and takes only an hour. And piloting a drone is much less risky than climbing lad-ders or cell towers.
Of course, there are many con-cerns about the use of drones.  Drones have been used to buzz planes, endanger military aircraft, and spy on neighbors’ property with tiny video cameras. To com-bat these threats, Congress has proposed giving the Federal Avia-tion Administration (FAA) more authority to regulate the use of drones. The drone industry is concerned that the lawmak-ers will inhibit the development and use of drones in their effort to rein in the people who misuse  them. What do you think the government should do to regulate drones?

3 REACHING BEYOND OUR BORDERS: Hollywood Climbs the Great Wall

In late 2016, the producers of the remake of the movie Jumanji put out a casting call to talent agen-cies across Hollywood. Their quest was to find a Chinese actor to play a major role in the film.
Like many others, this casting of Chinese actors in U.S. films was an obvious effort to appeal to audiences in China. Today, China is the world’s second-largest movie market, with over $5 billion in ticket sales in 2016. It is expected to surpass the world leader, the United States, in the next few years. Studios also note that even though China limits the number of foreign films that can be shown in the country, more than half of the top 10 gross-ing films in China are from Hollywood.
Chinese investors today are not just interested in distributing Hollywood films in their country. They intend to become major players in the entire film industry. For example, Wang Jian-lin, the wealthiest man in China, is a major buyer in Hollywood. His Dalian Wanda Group has interests in every stage of the entertainment industry including ownership of the theater chain AMC Entertainment Holdings, which he purchased in 2012 for $1 billion. He intends to make AMC the largest theater chain in the United States. Wang also actively sought to buy a stake in Paramount Pictures until the company decided not to sell. Wang promises to pursue his goal of being a key part of the movie business and has a personal goal to make China a moviemaking power in its own right.

4 ADAPTING TO CHANGE: Services Expand the Circular Economy

When is the last time you bought a movie on DVD? Today most of us watch movies on Netflix or some other on-demand service.
Same with music — why store stacks of CDs when you can use services like Spotify? All sorts of products are becoming services. For example, you store files in the cloud instead of your computer.
You can take Ubers or Lyfts instead of owning a car. Businesses can rent office carpets by the month, rent lighting, or print by the page.
Technology enables a large variety of products to be offered as services. The Internet of Things (IoT, see Bonus Chapter B) put sensors on all sorts of things that allow companies to track usage, measure performance, and develop new business models. For example, GPS enables car companies to provide “mobility services” (such as BMW’s ReachNow, Gen-eral Motor’s Maven, and Zipcar’s car-sharing services). Some ride-sharing services are beginning to use technology called telematics to track drivers’ performance. Sensors in the drivers’ cell phones can track when they speed, cut corners, brake suddenly, or send texts while driving.
The product-as-service model is one way to move away from a “take-make-dispose” economy (i.e., take raw materials, make a product, and dispose of it when you’re finished with it) toward a more circular economy that reduces waste. Companies that retain ownership of their products maintain them and extend their life cycles. Instead of planning for obsolescence so we buy new versions of the products more often, companies that provide products as services have an incentive to make products that last as long as possible and that can be repaired easily and cheaply. Think of all the landfill space that would save.

5 VIDEO CASE: Grubhub and the Dynamic Business Environment

Every night, people all across America ask the same thing: “What’s for dinner?” Entrepreneurs Matt Maloney and Mike Evans realized how common this question can be and decided to do something about it. The pair developed and founded Grubhub, an online and mobile takeout food ordering company. Today, hungry customers can use the company’s digital platform to order meals directly from more than 50,000 take-out restaurants in 1,100 cities throughout the United States.
Like other successful entrepreneurs, Matt and Mike were able to start Grubhub and expand it rapidly thanks to the business environment in the United States. To be successful, businesses must navigate factors that impact the five key business environments: the economic and legal environment, technological environment, competitive environment, social environment, and global environment.
Even though businesses cannot control these environments, they must be quick to adapt to changes that affect them.
For instance, the social environment in the United States has undergone many changes since Grubhub’s launch in 2004. At first the company focused on serving students and young professionals. But in response to demographic changes and other trends, Grubhub soon expanded its target market beyond students toward families, working moms, and people in smaller cities and suburbs. Grubhub’s restaurant network has grown to provide a vast array of food options beyond traditional takeout foods like pizza and burgers.
Customers today can order low-fat or vegan food as easy as ordering a pepperoni pizza. Businesses can cater a lunch or order donuts for a morning meeting with just a few clicks.
The economic and legal environment in the United States is very favorable for businesses. The government sup-ports private ownership of businesses by providing a stable currency and a legal system that enforces contracts, keeps regulations to a minimum, and avoids bureaucratic road-blocks that hinder businesses. However, companies like Grubhub must follow any laws and regulations that apply to their industry.
The expanding technological environment has been a key reason for the success of Grubhub. The vibrant mobile platform developed by Grubhub allows customers to place orders or schedule future deliveries with ease.
When the company first entered the market, competition was very slim. That’s not the case today, with com-petitors such as Postmates and DoorDash providing daily challenges to Grubhub. The competitive environment in the United States has also opened the door to giant firms such as Amazon and Uber to enter the food delivery business.
Even though Grubhub holds the advantage of being in business the longest, the company must still work hard every day to keep its 50,000 restaurant customers. The company’s policy of “no menu markup” helps keep it unique among competitors.
In business today, every company needs to consider the global environment. Advances in communication and the Internet make it possible for companies like Grubhub to build a business overseas.
In the years since its founding, Grubhub has had a tremendous impact on the restaurant industry and has been very profitable. For example, the company was responsible for $3 billion in restaurant food sales in 2016. Further research showed that revenue growth in restaurants that used the firm’s platform was six times greater than restaurants that didn’t use it. Going forward, the company will remain committed to connecting diners and restaurants.
By responding to the challenges of the business environment and improving the experience for diners, drivers, and restaurants, Grubhub plans to be part of the U.S. business landscape for the long term.

6 GETTING TO KNOW: Thomas Piketty, Economist

At nearly 700 pages, Thomas Piketty’s book Capital in the Twenty-First Century is an unlikely blockbuster to say the least. Despite its length and scholarly subject matter, the book climbed to the top of the New York Times Best Seller list in 2014 and became an instant classic among academics and casual readers alike. Thomas Piketty (pronounced Tome-ah Peek-et-ee) went from being a respected but little-known economist to an internationally renowned scholar on income inequality. As the years go by, his insights could have a major effect on economic policies around the globe.
Piketty was born in 1971 to politically minded parents living in the suburbs of Paris. His parents participated in the massive socialist protests of 1968 that nearly brought France’s economy to a standstill. By the time Thomas was born, his parents had left their radical days behind them. Politics were never discussed in their household. Instead, they taught their son to trust his judg-ment and form his own opinions.
These lessons gave Piketty the confidence to become a top student. His academic success gained him admittance to one of the most prestigious higher education institutions in France, the École Normale Supérieure, when he was just 18. Piketty earned his PhD four years later with a dissertation that focused on wealth redistribution. During these years Piketty took a trip that would shape his view of the world. Traveling to Romania shortly after the nation had gained independence from the Soviet Union in 1990, he was shocked by the sorry state of the former communist republic. “This sort of vaccinated me for life against lazy, anticapitalist rhetoric, because when you see these empty shops, you see these people queuing for nothing in the street,” Piketty said, “it became clear to me that we need private property and market institutions, not just for economic efficiency but for personal freedom.” Still, not every aspect of the capitalist free market pleased Piketty. After earning his doctorate, he became a profes-sor and researcher at the Massachusetts Institute of Technology. He went back to France two years later, however, disillusioned with American economists. In his mind, the economists had failed to address one of the major issues of the modern age: income inequality.
Piketty set out to correct this when he returned to Paris in the mid-1990s. He spent the next two decades at various French institutions researching the accumula-tion of private wealth and how it related to overall income growth. But unlike many scholars, Piketty didn’t want his findings to be accessible only to the academic elite. He chose instead to write an absorbing book that uses data to paint a vivid picture of the last 100 years of economic activity.
According to his analysis, the richest 1 percent of Americans now earn almost a quarter of the nation’s income, the highest total since 1928. What’s more, while gains on capital currently increase by about 5 percent annually, the overall rate of economic growth rests at just 1.5 percent per year. Piketty concludes that this ever-expanding concentration of wealth is unsustainable for a healthy world economy. This message resonated across the globe, push-ing sales of Capital past 1.5 million copies so far. And while some of Piketty’s proposals for solving income inequality have been disputed, few professionals can argue with the power of his data.
As you’ll find out in this chapter, economics is all about data.
You will also learn about different economic systems, especially the free-market structure that the United States depends on.
And you will learn more about what makes some countries rich and others poor. By the end of the chapter, you should under-stand the direct effect economic systems have on the wealth and happiness of communities throughout the world.

7 ADAPTING TO CHANGE: World Population Is Popping

Population forecasts from the United Nations estimate that by the year 2050, global population will increase to 9.7 billion people. Understanding where this number comes from may be surprising.
More than half of the world’s population growth will come from Africa, where the continent’s population will double to 2.5 billion. Nigeria will experience the world’s fastest-growing population. It is expected to grow to 413 million people by 2050, making it the third-largest country in the world, surpassing the United States.
China and India will remain the most populated countries, with almost 38 percent of the world’s people. India will be the world’s most populated nation by 2022. The largest decline in population will be in Europe, which will see a decrease of 4.3 percent. Over one-third of the population in Europe will be over age 60 by 2050.
The predicted increase in population in what are some of the world’s poorest countries will present significant economic challenges. Combatting hunger and malnutrition, expanding education, providing adequate health care, and eradicating poverty will not be easy tasks. Fortunately, the 21st century has been good for Africa. The continent boasts three of the fastest-growing economies in the world and has the world’s fastest-growing middle class. India has also made significant strides in growing its economy and is expected to be a strong global competitor. With an expanding population, economic development is the key to prosperity.

8 MAKING ETHICAL DECISIONS: Bad Medicine for Consumers?

Your company, a large pharma-ceutical firm, acquired a drug called Relivoform when it bought a generic drugmaker. The purchased company was the market’s leading supplier of the drug, and it was by far its most profitable product.  Relivoform is a major chemotherapy drug important in the treatment of liver cancer. It cost $300 per treatment, and many patients rely on it to control the spread of their cancer.
Currently, your company has many new drugs in development costing the company millions in research and testing. It may be years before the Food and Drug Administration approves the new drugs and you can get them into the market. Your finance commit-tee has recom-mended increasing the price of Relivoform to $3,000 per treat-ment to help alleviate the development costs of new drugs.
Since your company now controls the distribution of the drug (even though it’s a generic), you doubt any competitors could immediately impact your market. When word leaked out that Relivoform’s price may increase 10-fold, the public reacted with a rage, accusing your firm of favoring profits over patients’ needs. Will you follow your committee’s recommendation and raise the price? What are your alternatives? What might be the consequences of each?

9 REACHING BEYOND OUR BORDERS: Inflation at the Speed of Sound

If you are familiar with the Rule of 72, you know it’s a simple way to measure how long it would take for prices to double at a given rate of inflation. For example, if inflation is growing at 6 percent a year, prices would double in 12 years (6 divided into 72).
This would be an unacceptable inflation rate in the United States, where the Federal Reserve targets keeping price increases at  2 percent (or less) a year. Well, what if prices went up 221 percent in one month? Impossible? Unfortunately, not in Venezuela, which is the most recent example of hyperinflation.
Hyperinflation is when the price of goods and services rises by 50 percent a month. It often starts when a country’s government prints more money to pay for excess spending. In Venezuela, prices increased by 63 percent in 2014, 121 percent in 2015, and 481 percent in 2016. Expectations are that prices will increase by 1,600 percent in 2017. In fact, things got so bad that Venezuela’s currency, the Bolivar, collapsed so low that cash to pay for goods and services was being weighed instead of counted. The country is now facing shortages of food and medicine, with children being affected harshly.
Venezuela is not the first country to suffer the ravages of hyperinflation. German hyperinflation was a classic example after World War I, when prices were doubling every three days. Pictures of Germans pushing wheelbarrows full of marks (German currency) to buy a loaf of bread were common. Zimbabwe had hyperinflation from 2004 to 2009. Its economy faced an infla-tion rate of 98 percent a day, with prices doubling every 24 hours.
The price of a Big Mac or cup of Starbucks coffee doubling every day doesn’t sound great to us. Let’s hope the Federal Reserve stays vigilant against inflation and keeps our rate at or below  2 percent.

10 GETTING TO KNOW: Indra Krishnamurthy Nooyi, CEO of PepsiCo

Indra Nooyi grew up in southeast India, the daughter of an accountant and a stay-at-home mother. Every night at dinner her mom would present a world problem to Indra and her sister, and they would compete to solve it as if they were prime minister or president. As a schoolgirl, she was on the debate team, played cricket, and was part of an all-girl rock band in which she played guitar (an instrument she still enjoys.) She earned a bachelor’s degree in physics, chemistry, and mathematics before receiving master’s degrees in business from the Indian School of Management in Calcutta and the Yale School of Management in Connecticut. After completing graduate school, Nooyi worked for the Boston Consulting Group before moving on to a strategic-planning position at Motorola.
She was prepared to move on to a management position with General Electric in 1994 when PepsiCo was able to lure her away. By 1996, Pepsi’s sales had slowed and the company was losing the global market to competitor Coca-Cola big time.
Coca-Cola was earning over 70 percent of its revenue from global sales while Pepsi generated only 29 percent. As strategy chief and head of mergers and acquisitions, Nooyi advised the company to buy Tropicana and Quaker Oats (which would bring Gatorade to Pepsi) and to sell company restaurant subsidiaries Pizza Hut, Taco Bell, and KFC. Her goal was to increase global sales.
In 2001, Nooyi became CFO of PepsiCo. Five years later she became PepsiCo’s first female CEO, as well as its first CEO not born in the United States. As CEO, she proclaimed a new theme of “Performance with purpose,” Pepsi’s promise to do what’s right for the business by doing what’s right for people and the planet.
She reclassified the company’s products into three categories: “fun for you” (such as potato chips and regular sodas), “better for you” (diet or low-fat versions of snacks and sodas), and “good for you” (products such as oatmeal). She put a good deal of Pepsi’s money behind the effort to help global customers develop healthier lifestyles. The company has made some progress in making unhealthy products less so by removing 400,000 tons of sugar from its drinks over the past 10 years and reducing salt and saturated fats from Lay’s and Ruffles chips. PepsiCo has grown substantially under Nooyi’s leadership.
Today, PepsiCo is a $66 billion global company that boasts 22 brands that generate over $1 billion each. The company has over 264,000 employees worldwide and is sold in more than 200 countries and territories around the globe. Nooyi recently announced the company would expand the corporate global agenda she promised, emphasizing health and social accountability. She pledged PepsiCo would continue to focus on making its products healthier, empowering the company’s global employees, and encouraging environmental responsibility.
Indra Nooyi is an example of a successful global business-person who’s proved it doesn’t matter who you are or where you came from if you have the will and determination to suc-ceed. She understands cultural and economic differences, and knows how to adapt her company to global changes successfully. This chapter explains the opportunities and challenges businesspeople like Indra Nooyi face every day in dealing with the dynamic environment of global business.

11 CONNECTING THROUGH SOCIAL MEDIA: My Home Is Your Home

Share your homes, but also share your world.” This short statement formed the mission statement of Airbnb’s founder Brian Chesky. He started Airbnb in San Francisco, targeting customers wanting to list or book accommodations as part of the growing sharing economy that allows owners to rent their homes or rooms to strangers.
He believed his competitors in the travel industry had lost touch with their customers by providing only “cookie cutter” rooms in downtown areas. He felt such accommodations didn’t allow travelers a real chance to “experience” the cities they visited. Today, Airbnb has 2 million listings across the globe with a company valuation of $25.5 billion, making it (on paper) the largest hotel chain in the world.
The company initially did extensive research to test if its “don’t just go there, live there” message would resonate with potential users. The “live there” campaign focused on encouraging travelers to live like locals and experience the cities they visit like local residents. A social media marketing campaign using 3D technology delivered a new style of visual advertising.
The video received 11 million views on Facebook, 56,000 “likes” and 5,200 comments. The company also made effective use of Instagram by partnering with professional photographers to create images that had a smart design and message that clearly spoke to its target customers.
This year, Airbnb is on track to book almost $1 billion in revenue, with projections rising to $10 billion per year by 2020. If you haven’t already, check out Airbnb promotions and offers on its website.

12 ADAPTING TO CHANGE: Many Flags Fly over the Golden Arches

For decades McDonald’s has been the undisputed king of global food franchising. With almost 39,000 restaurants in 120 countries, Mickey D’s serves more than 68 million customers every day.
So how did McDonald’s become such a global powerhouse? It certainly didn’t get there through hamburgers alone. Since it first began expanding overseas, McDonald’s has been careful to include regional tastes on its menus along with the usual Big Mac and french fries.
For instance, in Thailand patrons can order the Samurai Burger, a pork-patty sandwich marinated in teriyaki sauce and topped with mayonnaise and a pickle and salmon rice. In Germany, a McNurn-burger is three bratwurst served on a bun with mustard and onions. Japanese customers can have their famous fries drizzled with pumpkin and chocolate sauces.
McDonald’s is also careful to adapt its menus to local customs and culture. In India, the company pays respect to religious sentiments by not including any beef or pork on its menu. Mickey D’s recently launched a meatless Big Mac for India’s many vegetarian customers, using two corn and cheese patties. This complements its best-selling Maharaja Mac, a chicken patty with jalapenos and habanero sauce. In Israel, all meat served in the chain’s restaurants is 100 percent kosher beef. The company also closes many of its restaurants on the Sabbath and religious holidays. For more examples, go to www.mcdonalds.com and explore the various McDonald’s international franchises websites. Notice how the company blends the culture of each country into the restaurant’s image.
McDonald’s is also determined to stay on top as the premier global franchisor. Starting in 1961, McDonald’s became the first restaurant company in the world to develop a training center, Hamburger University. Today, McDonald’s has campuses in Oak Brook, Illinois, Tokyo, London, Sydney, Munich, Sao Paolo, Moscow, and Shanghai. Globally, over 275,000 students have graduated. In Shanghai the company’s Hamburger University attracts top-level college graduates to be trained for management positions. Only about 8 out of every 1,000 applicants makes it into the program, an acceptance rate even lower than Harvard University’s. Today, over  40 percent of the senior managers  at McDonald’s are graduates of Hamburger University.
By successfully mixing its image with many cultures, McDonald’s has woven itself into the world’s fabric. Going forward, McDonald’s remains dedicated to quality as it continues adapting and expanding further into the global market.

13 GETTING TO KNOW: Aaron and Evan Steed, Co-Founders of Meathead Movers

Being a mover seems like a fairly straightforward job: carry someone’s stuff out to a truck, then drive to his or her new place and unload. But this simple process is more personal than you might think. After all, movers spend large amounts of time in the homes of strangers. As a result, they get brief but intimate looks into the lives of their customers, and sometimes the view is not pleasant.
Aaron Steed found himself in a dangerous situation while working as a mover in high school. He had been carrying a young woman’s stuff to his truck when the customer’s abusive boyfriend showed up in a rage. The man accused Aaron of stealing his possessions and soon became violent. “He threw a toaster oven. Police were called,” said Aaron. He returned to work once the authorities removed the abuser, but the memory stuck with him for a long time afterward.
The intensity of the event also made Aaron think about other women that he moved out of similar circumstances. He and his brother Evan received numerous calls from survivors of domestic abuse after the pair placed their first ad in a local paper. Several of these customers offered to give the guys furniture and other belongings in exchange for their services. “I remember the conversations pretty vividly and feeling a tremendous amount of panic and sadness,” said Aaron. “Handling those phone calls made it very real very quick. As the jobs went on, we realized we were potentially saving lives.” Matters became even clearer after Aaron witnessed the horrors of domestic abuse firsthand. Knowing they could do more to help, he and Evan agreed that their new company, Meathead Movers, would relocate survivors of domestic violence for free.
The decision was a big one for two young entrepreneurs who had only recently stopped accepting pizza as payment for their services. Still, the brothers recognized they had a unique opportunity to help people escape from their horrible home lives. “It was easy for us to conclude that there’s no more valuable way a moving company can utilize their services than help move domestic violence victims,” said Aaron.
What’s more, this charitable policy didn’t damage the company’s growth. As the years went on Meathead Movers expanded beyond the Steeds’ hometown of San Luis Obispo, California, to branches located throughout the state. Along with its philanthropic aims, the company won over customers with a business plan centered on hiring student athletes. Not only could these burly individuals carry boxes and furniture with ease, but they also knew how to treat customers with respect.
For Aaron Steed, that made all the difference. “It wasn’t so much about how we moved furniture,” said Steed. “It was about how we made our clients feel. We really care about the custom-ers’ experience. Because we hire clean-cut, drug-free student athletes, our customers can just tell the caliber of individual that we employ.” This courtesy is key when Meathead Movers receives a call from a survivor of domestic abuse. So along with standard customer service training, local domestic violence centers provide additional instruction for the company’s employees. This has led to rave reviews of Meathead Movers’ staff from people involved in nonprofits. “They’re wonderful, sensitive, caring and enthusiastic,” said Kathleen Buczko, executive director of the Los  Angeles–based Good Shepherd Shelter. “They help turn something that had been associated with something that was so incredibly traumatic into a celebration of moving to their new homes and to a new life.” For ethical entrepreneurs like Aaron and Evan Steed, receiving feedback like this is one of the best parts about business. In this chapter, we explore the responsibility of businesses to their stakeholders: customers, investors, employees, and society.
We look at the responsibilities of individuals as well. After all, companies like Meathead Movers depend on the responsible behavior of everyone involved in the business.

14 REACHING BEYOND OUR BORDERS: Ethical Culture Clash

The extension of corpora-tions’ reach into communities across the globe has led to many questions: For which communities are the companies responsible? Are domestic operations more important than foreign ones? Should the interests of employees be put first, or is the company’s image the main priority?
Here’s an example of how corporate ethics can clash with cultural ethics. Joe, the oldest son of a poor South American cloth peddler, managed to move to the United States, earn an engineering degree, and get a job with a large telecommunications company. After five years, Joe seemed to have bought into the company culture and was happy to be granted a transfer back to his home country.
He was told that the company expected him to live there in a safe and presentable home of his choice. To help him afford such a residence, his employer agreed to reimburse him a maximum of $2,000 a month for the cost of his rent and servants. Each month Joe submitted rental receipts for exactly $2,000. The company later found out that Joe was living in what was, by Western standards, a shack in a dangerous area of town. Such a humble home could not have cost more than $200 a month. The company was concerned for Joe’s safety as well as for the effect his residence would have on its image.
The human resource manager was also worried about Joe’s lack of integrity, given he had submitted false receipts for reimbursement. Joe was upset with what he considered the company’s invasion of his privacy. He argued he should receive the full $2,000 monthly reimbursement all employees received. He explained his choice of housing by saying he was making sacrifices so he could send the extra money to his family and put his younger siblings through school.
This was especially important since his father had died and his family had no one else to depend on. “Look, my family is poor,” Joe said. “So poor that most Westerners wouldn’t believe our poverty even if they saw it. This money means the difference between hope and despair for all of us. For me to do anything less for my family would be to defile the honor of my late father. Can’t you understand?” Often it is difficult to understand what others perceive as ethical. Different situations often turn the clear waters of “rightness” downright muddy. Joe was trying to do the honorable thing for his family. Yet the company’s wish to have its higher-level people live in safe housing is not unreasonable, given the dangerous conditions of the city in which Joe lived. The policy of housing reimbursement supports the company’s intent to make its employees’ stay in the country reasonably comfortable and safe, not to increase their salaries. If Joe worked in the United States, where he would not receive a housing supplement, it would be unethical for him to falsify expense reports in order to receive more money to send to his family. In South America, though, the issue is not so clear.

15 GETTING TO KNOW: Peter Cancro, Founder  of Jersey Mike’s Subs

From major battles in the Revolutionary War to the inventions of Thomas Edison to the music of Bruce Springs-teen, few states have a richer history than New Jersey.
For Peter Cancro, there’s another thing that deserves to stand alongside these landmarks of New Jersey culture: the submarine sandwich. “Some foods just become linked with a region,” said Cancro. “The sub sandwich is a way of life here in New Jersey.” And as the founder of Jersey Mike’s Subs, these sandwiches have been a major part of Cancro’s way of life for more than 40 years. Starting out as an employee at a small sub shop on the Jersey Shore, he eventually bought the shop and expanded the brand to more than 1,500 locations across the nation. Altogether, this franchise empire earns nearly $700 million in annual sales. Cancro never dreamed that sandwiches could bring in that much money when he first got a job at Mike’s Subs in 1971.
Although Cancros was only 14 years old when he started, the two brothers who owned the shop treated him like an adult from day one. Not only did this make Cancro feel like a colleague rather than a kid, but it also helped him adapt to the pressure of the perpetually packed store. The prime beachside location of Mike’s Subs ensured that customers kept the place busy all day long. “We probably made 1,000 subs a day in that 1,000-square-foot store,” said Cancro. With so many people coming and going, he learned how to assemble sandwiches quickly while also mak-ing friendly conversation with waiting customers.
After working at Mike’s Subs for three years, Cancro heard that the brothers were planning to sell the store. Sensing a big opportunity, he made an offer to buy the place. The owners accepted but told the teenaged Cancro that he would need to raise $125,000 (about $500,000 in today’s dollars) in a few days or else they’d go with another buyer. He immediately began knocking on doors asking for cash. One person offered to finance 100 percent of the venture if he and Cancro became partners. “I declined,” said Cancro. “It wasn’t the way I wanted to go.” His break finally came when he contacted his old football coach who also happened to be a banker. With his help, Cancro secured a loan to buy Mike’s Subs as a sole proprietor.
Customers started to ask Cancro if he ever considered open-ing a location outside of New Jersey. After all, many of his customers visited the state only in the summer. So Cancro began to research the possible benefits of franchising. Although he bought the sub shop as a sole proprietor, he learned how franchising could provide a big boost to well-branded businesses such as his.
The first franchise of the newly named Jersey Mike’s Subs opened in 1987, followed by dozens more in the next four years. Then the company’s expansion hit a snag in 1991 as the U.S. economy slid into a recession. The dramatic drop in sales caused major setbacks both for Cancro and his franchisees. “I didn’t declare bankruptcy, but I was negative $2 million to $5 million,” said Cancro. “That’s when I buttoned the chinstrap.
I visited every single owner.” With the help of his franchisees, Cancro fixed Jersey Mike’s business model by focusing on store profitability and returning to basics. “We also went after more franchisees with cash reserves,” said Cancro. “By making existing franchisees as strong as possible, we were poised for growth once things started to turn around.” And things certainly did turn around: Jersey Mike’s Subs currently has locations in  44 states and is adding more each year.
Just like Peter Cancro, all business owners must decide for themselves which form of business is best for them. Whether you dream of starting a business for yourself, going into business with a partner, forming a corporation, or someday being a leading franchisor, it’s important to know that each form of ownership has its advantages and disadvantages. You will learn about them all in this chapter.

16 SPOTLIGHT ON SMALL BUSINESS: Unlocking a Growing Franchise

Have you ever locked your keys in your car? Whom did you call? Chances are you called a locksmith you didn’t know. Pop-A-Lock, one of the fastest-growing franchises in the country, provides trusted locksmiths 24 hours a day. Although it started out specializing in opening car doors, it has grown into a security firm that works on electronic access to buildings, closed circuit TVs, smart key rekeying, commercial automotive security, and more. Pop-A-Lock believes that it is critical to support franchisees. It provides a 24/7 hotline for any tech who runs into problems.
The in-house marketing team keeps the buzz going through social media. And CEO Don Marks makes twice-a-month calls in which he coaches franchisees on how to grow their businesses.
Pop-A-Lock supports the community as well as its franchises by offering free school security  auditing. In addition, through its PALSavesKids program, it directs techs immediately to kids left unattended in locked cars. It plans to add  150 units to its 500-unit system in the next two years. Could you hold the keys to one of them?