Discussion Questions (2)

Let’s Be Honest (mini case study)

The Honest Company is a consumer-goods business that sells nontoxic, eco-friendly items for baby and personal care, household cleaning, and a healthy lifestyle. Cofounded by actress Jessica Alba a little more than six years ago, Honest Co. is built on the promise of “telling all and doing our best to live up to your expectations.”

Over the years the company has received high praise and media buzz about its ethical approach to making products that are not only good for people but good for the environment. On its website, Honest Co. goes to great lengths to share with consumers its guiding principles that products are made without harming people or the planet.

A little over two years ago, however, the company experienced some bad press when The Wall Street Journal reported that two independent lab tests found samples of Honest laundry detergent contained a cleaning agent on the list of chemicals the company pledged to avoid. At first, pushback from company officials was loud and clear: they denied their products were anything but eco-friendly and safe for consumers and went as far as calling the report “false” and “junk science.”

Unfortunately, the reports about Honest products and their harmful ingredients didn’t go away. After the laundry detergent story faded, the company quietly reconfigured the ingredients that went into the detergent as well as other products. But that wasn’t the end of the story. Several months later, Honest Co. voluntarily recalled organic baby powder that might cause infections and more recently recalled diaper wipes that appeared discolored.

Despite these recent challenges, Honest Co. continues to be successful and was rumored to be on the short list of possible acquisitions for global conglomerates such as Procter & Gamble, Johnson & Johnson, and Unilever. These consumer-good giants are snapping up smaller, eco-friendly firms that have blossomed into full-fledged ethically and environmentally conscious organizations with strong sales and solid reputations among consumers. Recently, however, Unilever acquired one of Honest Co.’s biggest rivals, Seventh Generation, Inc., leaving Honest Co. to again rethink its business strategies, including hiring a new CEO.

Using a web search tool, locate information about this topic and then write responses to the following questions. Be sure to support your arguments and cite your sources.

• Do you think the company’s reaction to reports of hazardous ingredients hurt its reputation for honesty and ethical behavior? Do you think the company’s missteps caused Unilever to shy away from acquiring the company? Or, do you take the stance that Alba’s entertainment background played a part in the press going after the company? If you were an advisor to the new CEO, what suggestions would you give him for getting the company back on track, especially when it comes to corporate social responsibility?

Discussion Questions (2) Answer

The reaction of the company to reports of hazardous ingredients may have affected its image as a firm that anchors its business on honesty and transparency. The company has endeavored to inform the public of its processes and outsourcing of some of the same. It has also professed that its products are organic. Hence, the reports on the use of chemicals in some products that the firm has committed to not be using tarnish the reputation of the firm. It discounted the WSJ report about the use of chemicals as false, but the backlash remained