Lean Six Sigma: Combining proven methodologies for strategic advantage. Russian scientists about the breakthrough of Lockheed Martin: their achievement is a fiction Siemens plant in Germany

Ozhiganov Edward Nikolaevich, Doctor of Philosophy, Professor, Head of the Department of Foreign Economic Activity of the Institute of Applied Technical and Economic Research and Expertise, Peoples' Friendship University of Russia, Moscow, Russia

As technology is constantly changing, corporations in the industry are looking for new ways to improve their products to gain a competitive advantage.

A corporation can be chosen as a "model" organization for comparing indicators of different classes.Lockheed Martin Corp. diversifiedthe production of which includes four main sectors: 1) aeronautics, 2) space systems, 3) technological systems and 4) electronic systems. Lockheed martin is the owner of 50 joint ventures on equal shares with Boeing co mpany, which are part of the United Space Launch Alliance ( United Launch Alliance). 84% of Lockheed Martin's revenues come from orders from various departments and organizations of the US government, of which the Department of Defense (64% of revenues) and NASA (20% of revenues) are the largest.

The corporation's products and services have military, civil and commercial applications, and serve both internal and external customers. SWOT activity analysis Lockheed martin refers to its strengths as diversified production and business operations (fig. 2).

Figure 2. SWOT -analysis of the corporation's activities Lockheed martin

A source: Sell Report - Lockheed Martin FIN 573

Key indicators of diversified production Lockheed martin and competing US aerospace companies by sector represented on table 1.

Table 1

Key indicators of competitiveness LockheedMartinvs. Leading US Aerospace Companies by Manufacturing Sector

Company	Sector	Gross income	Total income	Market share
LOCKHEED MARTIN	Aeronautics	31.79 %	27.5 %	35.69 %
NORTHROP GRUMMAN	General aerospace activities	41.38 %	42.8 %	25.51 %
BOEING	Precision Instruments & Mobile systems	16.88 %	15.3 %	36.45 %
LOCKHEED MARTIN	Space systems	17.46 %	17.77 %	11.94 %
RAYTHEON	Missile systems	27.9 %	26.14 %	10.52 %
BOEING	Networked systems	9.16 %	7.74 %	12.05 %
LOCKHEED MARTIN	Technological systems	17.93 %	12.18 %	10.55 %
BOEING	Networked systems	9.16 %	7.74 %	10.36 %
RAYTHEON	Intelligence and Information Systems	24.84 %	15.73 %	8.05 %
NORTHROP	Information Technology	26.97 %	21.4 %	8.71 %
LOCKHEED MARTIN	Electronic systems	32.82 %	42.55 %	12.56 %
BOEING	Networked systems	9.16 %	7.74 %	6.74 %
NORTHROP GRUMMAN	Electronic systems	28.11 %	35.4 %	5.91 %
RAYTHEON		26.73 %	31.34 %	5.64 %
RAYTHEON	Networked systems
NORTHROP GRUMMAN	Information Technology	26.97 %	21.4 %	5.67 %
LOCKHEED MARTIN	System integration
BOEING	Support systems	11.23 %	12.81 %	29.64 %
RAYTHEON	Integrated defense systems	26.73 %	31.34 %	20.23 %

A source: CSIMarket Inc.

The production diversification strategy is based on identifying and implementing innovative approaches to such aspects of aerospace enterprise management as 1) organizational design, 2) project management, 3) cost management, 4) human capital management, and 5) application of accurate performance measurement methods. For vertically integrated enterprises, implementing these approaches is challenging because in practice there is no single strategy on which to optimize productivity and achieve competitive product prices.

Comparative analysis and assessment of functional, matrix and system models of organizational design of diversified companies in modern economic science is carried out in the context of the processes of strategic management, competitiveness and innovation management in the face of risks and instability. The general position is expressed by the rule of “fit”, according to which, in order for a company's strategy to be realizable and successful, there must be a correspondence between its organizational model and the environment.

Modern dynamic and competitive environment characterized by an interplay of increasing complexity and interdependence, and creates a continuing demand for organizational structures that can accommodate new and more powerful coordination mechanisms. Modern organizations must be efficient, flexible, innovative, adaptable and responsive to change. They should focus on increasing existing resources and reducing costs as a complementary strategy to meet resource requirements. Such organizational goals require significant systemic efforts and the implementation of numerous organizational interventions, differentiation and integration of activities and are recognized by foreign analysts as one of the most important priorities of organizational design.

Depending on the stage of development of the corporation - formation, development, stabilization or crisis situation- different approaches are required to build its organizational structure, while it is especially important to control changes in the organizational structure at the stage of active growth and development of the corporation and in the process of transition from one stage to another,

The most effective organizational structure is determined by the global strategy of the corporation, the characteristics of its activities in world markets versus internal operations, as well as the characteristics of the markets in which the corporation competes. For example, Lockheed martin Corp. presented on international markets 11 subsidiaries including Lockheed Martin Global, Beontra, Lockheed Martin Australia, Lockheed Martin Canada and Lockheed Martin UK, in which it competes with 511 companies such as Thales, Airbus Group and etc.

Accordingly, a diversification strategy requires such organizational structures, which can provide both the usual business functions for external economic activities (finance, marketing, R&D, manufacturing, etc.), and the functions necessary for success in the domestic market. The main categories or building units of their structures - the international department, the global product division, the global area and the matrix principle - can be used as the basis for their typology. Each of these types has strengths and weaknesses. In practice, certain properties of these four types can be used simultaneously, in fact, forming a fifth - hybrid - type, since in large corporations, which must provide some autonomy for their production units, leaving the development strategy, research, financial and investment policies and etc., it is necessary to combine centralized coordination and decentralized management.

There are two dimensions of organizational design - structural, which shows how companies are differentiated into specialized, autonomous units, and process, which shows the flows of information and resources, uniting and coordinating their activities into a single whole. As a result of focusing on the process dimension, traditional functional barriers disappear, and the activities of companies become more complex, which allows you to save time, resources, Money, fulfillment of orders, etc.

Many attempts to implement matrix models fall short, however, while a number of companies have failed despite their elaborate strategies, many leaders of the most important industry segments dominate global markets using precisely this model(IBM, Toyota, General Dynamics, Lockheed Martin Corp., Boeing Company, etc.). It is obvious that any organizational innovations associated with a change in the organizational design model will be superimposed on the managerial, industrial and social relations that have developed over a relatively long period of time.

The diversification strategy should provide a flexible approach to cost and value estimation of diversified products, which should draw on the existing in-house project management expertise of aerospace enterprises, relevant product specification and procurement market knowledge. This approach can be integrated into a general methodology that assimilates any relevant information and knowledge.

Leading companies create value and receive competitive advantages through supply markets by focusing on four key areas: 1) innovation and growth; 2) optimization of value chains (supply chains); 3) advanced methods of cost management; 4) risk management and continuity of supply. It is clear that the improved value of supply chains has made purchasing a strategic function and cost management and valuation a critical job for space companies.

It is understood that the increased importance of supply chains has made cost management and valuation a strategic function of aerospace companies, and increased emphasis on cost management is a critical factor for operational control and sustained improvement of the function, providing a measurable basis against which the associated operations can be judged.

According to NASA experts, estimates of the costs of developing and implementing projects remain a mixture of experience (or intuition) and science ( computer models, statistics, analysis). Directory NASA according to the cost estimate, it divides all methods into parametric and analog, having at the same time an impressive list of regulatory documents and research papers on their application. Each of these methods has its own advantages and limitations.

The "traditional" planning process, used, for example, for evaluating long-term investment projects, implements methods for calculating indicators such as the rate of return, net present value, profitability index, and others, where a numerical value of a certain indicator is calculated for each investment project. Other processes are calculated in a similar way, for example, the procurement of materials and components.

The main disadvantages of these techniques are as follows:

- comparing projects with only one numerical indicator unnecessarily simplifies the situation;

- the dynamics of each project over time is not clear, since the development scenarios along the time axis are not determined, although noticeably different scenarios may have almost identical indicators;

- the analysis of the sensitivity of factors to changes is difficult, since the volatility of each of the calculated indicators is not taken into account (it is known that even minor changes in some data or assumptions can lead to completely different calculated values of indicators and, accordingly, to different investment decisions);

- both negative and positive external factors and their changes (fluctuations in the value of natural resources, the impact of economic sanctions, geopolitical situation, etc.) cannot be included in these methods, although it is obvious that they should be taken into account.

In "traditional" approaches that use regression methods, the analysis of causal relationships between factors in comparative periods is not taken into account, both in planning and in determining how they affect various elements of the plan.

These shortcomings are made up by system-dynamic modeling, which allows you to build scenarios, create models of competition processes, define strategies and levers for change management, experiment with future scenarios, and, on this basis, formulate the best diversification strategies. At the same time, it is possible to optimize models and analyze risks to find solutions for a number of values of variables.

On Figure 3 presents a graphical diagram of a project management model in terms of budget adjustments, changes in work schedules and expected project implementation. The advantage of this model is the ability to identify and analyze changes caused by the systemic interdependencies of all variables in the model, and make qualitative conclusions about the best strategies in the given conditions.

Figure 3.Project management

in the context of significant changes in their implementation

The American aircraft manufacturer Lockheed Martin, which has been developing for more than a decade in order to tame thermonuclear fusion, recently published sensational information about its achievements in this field. According to the information provided by scientists from Lockheed Martin, they are ready to create a compact version of a 100 MW thermonuclear reactor, an experimental image of which can be demonstrated to the world community within a year. In addition, in just 10 years, this fusion reactor with dimensions of 2 × 3 meters should already become a real, commercially successful project.

At the same time, it is understood that with this kind of energy source, the world community will almost completely disappear from its current dependence on hydrocarbon fuels, which, against the background of slowly but surely depleting oil reserves, seems a very bright and hopeful prospect. And given the compact size of the installation, it will not be difficult to equip with a thermonuclear reactor manufactured by Lockheed Martin both cargo ships and trains, as well as aircraft, ground military and even civilian equipment.

In addition to Lockheed Martin, thermonuclear fusion research and work in the same direction are carried out within the framework of the International Thermonuclear Experimental Reactor (ITER / ITER) international project. However, the results of their activities are still far from the successes announced by the representative of the aircraft building company, the veracity of information about which is very much questioned and causes a lot of controversy.

So, the head of the Russian ITER agency, Anatoly Krasilnikov, has publicly stated that the scientific breakthrough voiced by Lockheed Martin is in fact empty words and has nothing to do with reality. And the fact that the Americans are supposedly ready to start creating a prototype of a reactor with the declared dimensions seems to Mr. Krasilnikov as ordinary PR. In his opinion, modern science is not yet ready to design a fully functioning safe thermonuclear reactor of such a small size in the next few years.

As arguments, Krasilnikov noted that honored nuclear physicists of China are working on the ITER international project, South Korea, India, the USA, Japan, Russia and the European Union countries, however, even the best minds of our time, gathered together, hope to receive only the first plasma from ITER, at best by 2023. At the same time, there is no question of any compactness of the prototype.

Implementation of the joint project ITER

Of course, the possibility of creating a small-sized installation in the future will become obvious, but not in the next few years, despite the statement by Lockheed Martin to show a real model in a year. And, of course, not on condition that they work on a project of this level in isolation from the rest, as, according to them, American engineers of even such a large company with all the necessary resources were able to do it. Therefore, the promises of Lockheed Martin to demonstrate a prototype, Anatoly Krasilnikov is sure, will remain promises.

Leading engineers have been working on the creation of a thermonuclear reactor for more than a dozen years, while this process is necessarily accompanied by the exchange of experience, and promising developments become open to other specialists. The breakthrough of scientists, the details of which no one knows, seems to be greatly exaggerated and does not pursue scientific goals at all.

Tokamak reactor - toroidal device for magnetic plasma confinement

In turn, Evgeny Velikhov, President of the Kurchatov Institute Research Institute, commented on this news as "Lockheed Martin's fantasies." Velikhov himself is not aware of any real-life successes in the creation of a compact thermonuclear reactor by specialists from an American company. Actually, no one in the world is aware of the invention, as noted above, except for Lockheed Martin itself. And she only loudly announced her intentions, but did not disclose any technical details project. The reason for this is the banal absence of those very real achievements and really revolutionary and sensational developments, which are now being discussed in the media.

Lockheed Martin transnational corporation is the world's leading developer and manufacturer of military aviation and space technology, ballistic missiles, fire control systems, and cyber security elements. The company also provides a wide range of management, engineering, technical, scientific and logistics services.

Description

Lockheed Martin Corporation was formed on March 15, 1995 through the merger of two technology leaders in the United States aerospace industry - Martin Marietta (specialized in the design of satellites and space rockets) and Lockheed Corporation (the main manufacturer of military aircraft in the United States). The small town of Bethesda in the suburbs of Washington was chosen as the headquarters. Key management roles are played by CEO Marilyn Hewson and Vice President Bruce Tanner.

The corporation is engaged in research, design, development, production, integration and support technological systems, products and services. The company operates in four main areas: aeronautics; space; rocketry and fire control systems (FCS); electronics and Information Security.

Other Space Systems programs include:

space-based infrared missile early detection system (SBIRS);
Advanced Extremely High Defense Satellite Communication System (AEHF);
system (GPS III) and others.

LM Space also ensures awareness of the command and special services about the situation in near-earth space, collects and integrates into a single information network reconnaissance data on the ground and airspace, analyzes the data and ensures its safe transfer to interested agencies.

Electronic, information and global systems

Rotary and Mission Systems (LM RMS) is the Lockheed Martin business segment headquartered in Washington, DC. The RMS segment provides design, manufacturing, service and support for:

a range of military and commercial helicopter models;
combat systems for the fleet, aviation, air defense;
radar complexes;
littoral (coastal) warships of the LCS series;
unmanned systems and technology;
training simulators.

In addition, RMS addresses the cybersecurity needs of government customers.

Lockheed Martin is involved in development programs for the CH-53K heavy helicopter for the United States Marine Corps, the VH-92A transporter, the Aegis Combat System integrated missile defense systems, the LCS ships for operation in shallow water and open ocean, the Hawkeye advanced radar system ... Together with Sikorsky Aircraft Corporation, the division produces Black Hawk and Seahawk helicopters.

The ambitious project to create compact safe fusion reactors looks truly revolutionary. The company promises to present a finished commercial product in 7-10 years. If this happens (and many scientists doubt it will succeed), the dependence on hydrocarbons and nuclear power plants will be significantly reduced. Harmful emissions will decrease, the ecological situation on the planet will improve.

The industrial revolution is bearing fruit: swords turn into guns, people change from horses to cars, robots start to work in factories, and we are gradually entering the era of high-tech business. The development of the Internet of Things has made it possible to modernize many factories, add automation and deep control of production to them. Environment and efficiency, speed and millions of responsive sensors - these are the priorities of today's large plant owners. We will tell you about them. Here are ten of the most advanced factories and factories in the world.

In 2015, Sheffield opened “one of the most advanced factories in the world,” as the project leaders described it. The Advanced Manufacturing Research Center has partnered with Boeing to unveil Factory 2050, a glass-walled convertible plant at the center of a new advanced campus in Sheffield Business Park at the University of Sheffield. AMRC's Executive Dean, Professor Keith Ridgway, noted that Factory 2050 is set to become the most high-tech factory in the world.

It will be home to the Integrated Manufacturing Group and will use advanced assembly and manufacturing technologies, advanced robots, flexible automation, next-generation human-machine interfaces, and new programming and learning tools.

The main SpaceX factory, which also houses the company's offices, with an area of 50,000 square meters. m. in a three-story building, originally built by Northtop to assemble the 747 fuselages. This plant now houses areas for assembling avionics, missiles, capsules, quality control installations, as well as a control center behind a glass wall that monitors and controls the Dragon capsule in flight ... Dragon is the first private spacecraft to orbit Earth and return safe and sound. In one of the most advanced factories in the world, SpaceX is testing various elements of its Falcon 9 rockets, Dragon capsules and Merlin engines.

SpaceX's headquarters, in the Los Angeles suburbs, in Hawthorne, where the company assembles its rockets, is in a place with a high concentration of aerospace manufacturers: Boeing, Raytheon, NASA, Lockheed Martin, BAE Systems, Northrop Grumann, AECOM and others are also working here. ... Most notably, SpaceX uses vertical integration and builds virtually every element of the rocket, along with software, at its Hawthorne plant.

Tesla

Tesla's factory is one of the most high-tech in the world. At Tesla's factory in Fremont, California, nearly 500,000 sq. m. dedicated to production and offices. Everywhere you look, robots are everywhere, which synchronously process cars and produce about 100,000 cars a year. Tesla owner Elon Musk does not particularly like to talk about what is happening behind the closed door of the factory, but time passes, and the world gradually learns about its filling.

Especially surprising is the efficiency and sterile conditions in which Tesla operates. It is in these concentrated and high-tech conditions that an AI-based autopilot is being developed that will independently control the company's electric vehicles.

Siemens plant in Germany

Modeling, 3D printing, lightweight robots are just a few of the innovative technologies that are driving the fourth industrial revolution - Industry 4.0. And they are already working at the Siemens electronics factory in Erlangen, Germany. One of the main reasons for the success of this plant is that people and machines work hand in hand.

Manfred Kirchberger, plant manager, says its efficiency is unique: “We manufacture industrial drives and controllers for production equipment. In our customers' factories, numbers often exceed millions. It would be too expensive to manufacture all of this equipment by hand. In addition, customer requirements are changing faster than ever, so production lines must be flexible. "

Permanent and fast adaptation is only possible if work force ready to accept changes in combination with modern technologies.

United Launch Alliance

You don't need to be an engineer to understand how important rockets are to us. More than a thousand satellites are currently operating around the Earth, which provide us with navigation, communication, security and Scientific research... The United Launch Alliance - a joint venture between Boeing and Lockheed - builds rockets that put satellites into orbit. And it does it efficiently and inexpensively, thanks to the competent management of enterprise resources.

The alliance supports program management, engineering, testing, and mission control from headquarters in Centennial, Colorado. Assembly, assembly and production take place in Decater and Harlingen. Obviously, in order to ensure high quality and high-tech assembly lines, ULA not only uses advanced technology, but also an ERP system.

Lockheed Martin at US Air Force Base Plant 4 in Fort Worth

No list of the coolest factories in the world would be complete without Plant 4. Dozens of next-generation fighters are scattered throughout the facility at various stages of assembly. The latest weapons and high-tech design of aerospace technology are reminiscent of the Second World War. This plant currently produces the F-35, the most advanced fighter in the world. The plant is self-sufficient and assembles and assembles almost independently.

Boeing manufacturing facility in Everett, Washington

Everyone knows that Boeing makes the largest, most reliable and most famous passenger airliners in the world. The place of their assembly is a labyrinth of moving parts and workers, in the center of which a massive frame of one aircraft, known to all "Boeing".

During World War II, B-17s were assembled at this plant. In 2005-2009, the Everett facility began the Future Factory project to create a new, enjoyable work area in the main factory building. The goal was to encourage cooperation among people, improve the quality of employees' work and, in general, production efficiency. Approximately 4,000 people moved to 55,700 sq. m. of renovated space in five office buildings. In fact, the Everett plant is the main representative of Boeing in our world.

Intel Fab32 Semiconductor Factory

100,000 sq. m. area and a thousand employees on one floor alone - this is the Intel Fab32 plant in Arizona and at the same time the headquarters of the technology giant. The main floor contains 17,000 sq. m. of clean rooms, in which tens of millions of energy-efficient processors are created.

The most distinctive feature of the plant is not striking. It has been assigned a “cleanliness class 10”, which means there are ten or fewer particles of 0.5 microns or less per cubic foot of air (approximately 28 liters). Human hair is about 80 microns thick. For comparison, in operating rooms of hospitals, a cleanliness class of 10,000 is allowed: the air in the Fab32 room is a thousand times cleaner than the air in the operating room. The air outside is class 3 million.

McLaren Technology Center in Walking, UK

In general, this plant is beautiful in itself: it is located on the shore of a lake and resembles a long letter S. The height of the plant was deliberately limited in order to reduce the visual impact of this structure on environment: A person passing by will see trees towering over the top of the building.

The McLaren Group has one goal: to win. And any Formula 1 fan knows that the McLaren team has not only held an excellent share of checkered flags over the past four decades, but also benefited from the company's technological advancements. Such a company simply must have a cool factory.

eBay

The last item on our list is not really a factory. And in general, the very word "factory" has recently lost its old meaning - a noisy object, smelling of oil, where powerful, heavy, steel-making pieces of iron are assembled. eBay is working in a slightly different area: trying to understand the principles of buying and selling the millions of goods that pass through its networks every day. It is one of the largest online stores in the world and needs a fast, effective method comb through 50 petabytes of data to separate the wheat from the chaff and highlight real market signals from the noise.

Daily successful analysis of tens of thousands of variables and millions of transactions requires the use of the latest equipment and the most high-tech approaches. If eBay has used Excel charts to classify trends, and then passed them on to teams e-mail, then today there is no need for such complex chains: everything is done by the ERP system. Along with the development of the Internet of Things, the very existence of such objects became possible.

Of course, there are many more amazing factories, factories and manufacturing facilities in our world. But it was impossible to fit them all into a list of ten, so if we undeservedly forgot someone - write in the comments.

Board of Directors Lockheed Martin has decided to release a booklet titled "Setting the Standard" - corporate code ethics and conduct in business. It emphasizes that ethical behavior requires much more than compliance with laws and regulations. Each employee received this booklet along with a letter that reads:
“Lockheed Martin strives to accommodate the diverse social and cultural dimensions of the environment in which we operate, while striving to establish ethical standards for our operations around the world. Honesty, integrity, respect, trust, responsibility and civic duty must be the hallmarks of our members' conduct. Honesty: truthfulness in all endeavors, honesty and frankness in relations with each other and with customers, suppliers, shareholders, society. Integrity: say what you think, keep what you promise, stand up for what is right. Respect: treat each other with dignity and fairness, respect the demographic diversity of our workforce and the uniqueness of each employee. Trust: Develop confidence in each other through teamwork and open, respectful communication. Responsibility: To speak out fearlessly about problems in the workplace, including violations of laws, regulations and company policies; in case of doubt, seek clarification and help. Civic duty: to abide by the laws of the countries in which we do business, to serve the good of the communities in which we live and work.
We understand how difficult it can be to carry out work duties within the above framework and offer numerous support resources ...
We are proud of our people and the leading role that we play in the development of the world. Thank you for your contribution to developing and maintaining an ethical work environment ... and for helping to set standards. ”7
V international companies the problem of the moral code is compounded by the need to respect human rights. In response to the "sweat squeezing system" used in many textile enterprises, one of the New York public organizations together with a number influential companies has developed a set of global labor standards (child labor, low wage, hazardous working conditions). The resulting document was named Social Responsibility 8000, or SA 8000. In essence, it is intended to play the same role as the ISO 9000 quality assessment system of the International Organization for Standardization. SA 8000 is the world's first social standard to be audited. It has been introduced, for example, in factories that make clothes for fashion designer Eileen Fisher (annual turnover exceeds $ 100 million). In the process of “social standardization” of her company, E. Fischer prepared suppliers for certification and even paid for the audit of their enterprises. Companies such as Avon and Toys "R" Us followed suit.
Ethical structures. Ethical structures include the various systems, roles and programs through which a company seeks to promote ethical behavior among its employees. The ethics committee of a company is usually formed by a group of senior management charged with overseeing employee ethical compliance and making decisions if any controversial situations... In addition, the committee is responsible for punishing those who violate the rules of ethics, which is important if the organization seeks to directly influence the behavior of employees. For example, the Motorola Ethics Committee has the power to interpret and amend key provisions of the Code of Ethics, report changes to employees, and make decisions about violating employees. In addition, many companies, such as Sears, Northup Grumman, and Columbia / HCA Healthcare, have full-time ethics and ethics departments. These departments are headed by the Commissioner, or Director of Ethics, who is one of the top managers of the company who ensures that the organization's legal and ethical standards are respected. He defines communication standards, oversees ethics training, solves problems and various difficult situations, and advises managers on ethical aspects of decisions. Ten years ago, such a position did not exist in principle, but during this time in American companies there have been so many scandals on ethical and legal grounds that today the need for an ethics director is of little doubt to anyone. There is even an Association of Ethics Directors, whose members are representatives of more than 700 companies (in 1992 there were only 12). Employees can report dubious behavior, possible fraud, losses, unfair treatment of managers and various conflict situations using free confidential " hotline". In addition, they have the opportunity to receive personal advice from the representatives of the Association.
To reduce such situations, and the provisions written in the code of ethics exist not only in words, but also in deeds, training programs on ethics are conducted. All Boeing employees, for example, are required to devote at least one hour a year to such training, and senior managers five hours. At Murray Publishing, employees participate in weekly working ethics workshops. At these seminars, they discuss possible solutions to certain ethical dilemmas and possible actions in the event of a conflict of interest.
However, even the strongest ethical support program does not guarantee employees possible mistakes... Dow Coming, whose problem with imperfect silicone implants rocked the entire business community, was the first (mid-1970s) to develop what was considered an exemplary ethical program. The program included the creation of an ethics committee, courses for employees, periodic reviews and reports from managers to the committee. What was the mistake? The program took into account only the environment as a whole, and its individual elements, such as product safety, were regulated by standard methods. In the case of Dow Coming, it was about the US National Council of Medicine, in which research work takes a very long time. Dow Coming's troubles have been a signal to many other industries. It is not enough for a company to have an impressive ethics program. It should be present in all daily operations, encouraging workers to make morally correct decisions in any situation.
Ethics and the new workplace
Today, many leading companies understand that their performance is measured by more than just financial performance. Ethical issues, the impact of social events on economic indicators companies care about both managers and scientists; there is a lively debate around this topic. The most pressing question is whether “diligent behavior” will harm a firm's bottom line, after all, ethical programs cost money. Several studies have been devoted to this problem. The results obtained by scientists are mixed, but they confirm that there is a small but positive relationship between social responsibility and financial performance. For example, the Domini Social Index, developed in 1989, shows that such firms perform as well or more efficiently than “irresponsible” organizations. An analysis of the results of a study by Walker Research suggests that, given equal prices and quality, two-thirds of consumers are willing to switch to products from an ethical or socially responsible company. While the results of these studies have not yet received adequate confirmation, they demonstrate that the company's funding for ethical issues and development social responsibility does not have a negative impact on financial performance. The management of leading firms realizes that honesty and trust are essential to maintaining a successful, profitable business... For example, the Davenport Works division of the world's largest aluminum producer, Alcoa, uses its own funds to attract students to clean up trash off the Mississippi coast. A student named Chad Pregracke, named "Ecologist of the Year" by the Illinois Wildlife Federation, removed 12 tons of debris from the river banks, including 92 metal drums, 153 tires, 3 refrigerators, a stove and a TV. By funding the program, Alcoa enhances its reputation as a socially responsible company. In the short term, socially useful activities may be associated with additional costs, but only they are able to establish a relationship of trust between the company and society, which, as you know, cannot be bought for any money. In the end, good deeds are good for the company in one way or another.
In the era of rapid development of e-business, ethical issues sometimes fade into the background: managers and ordinary employees strive to earn the maximum possible money as quickly as possible. However, the most perspicacious leaders

know the results of good old-fashioned honesty. The managers of the newly formed Silicon Valley company CenterBeam, Inc. put honesty at the forefront of their corporate culture and employees now have many stories to tell about how their company keeps its word. In accordance with one of them, one of the applicants for a job in the company received a promise from the management of a worthy job. But shortly thereafter, the company received a resume from an even more promising candidate. At another fast-growing company, the first applicant, despite promises, would have been turned down, but not at CenterBeam. Once a promise is made, it must be kept. Keeping a preliminary promise to one of the company's suppliers cost her several thousand dollars, but the managers kept their word. Both cases ultimately benefited CenterBeam itself, strengthening the credibility of its employees, suppliers, partners and buyers. We will discuss the role that trust plays in the activities of Internet companies in the next chapter.
Changes in working conditions create new ethical issues. Remote access, work in virtual teams, flexible schedule- all this creates conditions for abuse of freedom by workers. The success of new ways of organizing work will depend on mutual trust. From the point of view of managers, new technologies provide an opportunity to tighten control over personnel (tracking the time an employee enters the local network, using a computer, searching for information on the Internet). A survey conducted by the American Management Association on this topic showed that about 74% of large US firms in one way or another register the activities and communications of their employees in the workplace, and between 1997 and 2000 this figure almost doubled. It is common in most companies to notify employees that they are being monitored, but not all follow this rule. In addition, some managers ethically believe that such total control is not only ineffective in terms of money and time costs, but in principle is incorrect, since it is an invasion of the employee's personal life.
We've raised some tough questions modern ethics working relationship. The processes of globalization of companies' activities only complicate them. We are confident that strong management support for high standards of ethics and social responsibility will benefit both the companies themselves and society as a whole.
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There seems to be no clear-cut (or wrong) solution to the dilemma faced by pharmaceutical companies. Protecting intellectual property rights (drug patents) is their legal right and duty to employees, shareholders and customers. Managers who take a utilitarian approach to ethics will say that protecting patents is most beneficial to as many people as possible, as companies develop new drugs based on the decisions they make. But equity advocates may call this approach unfair to AIDS victims in the world's poorest countries. It should be noted that many pharmaceutical companies are responding to negative media coverage by lowering prices for drugs for AIDS patients in developing countries. Merck, for example, states that it does not knowingly make any profit from the supply of these drugs to developing countries. The leadership of Médecins Sans Frontières welcomed the decision, but noted that for many AIDS patients, the prices of the necessary medicines are still prohibitively high. Most in the public would like to see pharmaceutical companies take on additional responsibility and make AIDS drugs available to all who need them.8
Questions Dr. Martin Luther King said: “As long as there are poor people in the world, I cannot be rich ... the way you want. " Discuss this quote in the context of this chapter. Does it apply to corporations? The Greens advocate the need to enact laws that impose on oil companies in the event of a spill of oil products the obligation to fully compensate for damage to the environment, which will deal a serious blow to their financial well-being. Do you think the adoption of such a law will lead to an increase in corporate social responsibility? Compare the advantages and disadvantages of utilitarian and moral and legal approaches to making ethically correct decisions. Which one do you think managers should stick to? Why? Imagine yourself in a situation where you are being asked to "inflate a little" your business expenses. What will influence your decision: your level of moral development or the cultural values of the company you work for? Explain. Do you think it is socially acceptable for the company to conduct its political activities or to establish alliances with other organizations aimed at influencing the authorities? Discuss. In decreasing order of importance, the criteria for assessing the company's social responsibility are arranged in the following order: economic, legal, ethical and assumed obligations. How do they all relate to dealing with ethical dilemmas within companies? What ethical issues are on the agenda now? Name one company problem solving from the standpoint of ethics and social responsibility, and unethical and irresponsible. Do you consider it ethical to collect personal information about website visitors without their knowledge? Control over the actions of employees on the Internet? Discuss. What do you think is more effective in terms of developing sustainable ethical behavior in the organization: a code of ethics coupled with training programs or developed ethical leadership? Why? At Lincoln Electric, customers and employees are considered more important stakeholder groups than shareholders. Is it possible for the management to divide the interest groups into more and less important ones? Is it legitimate to treat them as equals?

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