University of Canterbury: Mondragon Corporation Case Study - Analysis

This case study examines the Mondragon Corporation, a worker cooperative based in the Basque region of Spain, founded on cooperative principles. The report delves into the corporation's unique characteristics, including its strong global presence, solidarity among workers, and commitment to community development. It identifies key challenges, such as balancing business and social concerns, the roles of workers and co-owners, and the interplay between collective and individual interests. The study explores the corporation's responses to these challenges, including strategies for maintaining a balance between financial and social needs, promoting worker participation, and aligning individual and organizational goals. Furthermore, it provides recommendations from ethical, diverse, critical, and indigenous perspectives for addressing the challenges, emphasizing the importance of ethical conduct and fair treatment of employees. The case study concludes by summarizing Mondragon's achievements and the ongoing need for ethical practices to ensure its continued success.

CASE STUDY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
REPORT..........................................................................................................................................1
Key characteristic of organisation making it unique. .................................................................1
Key Challenges emerging from the key characteristics...............................................................1
How organisation is responding to the challenges.......................................................................2
Recommendations from ethical diverse critical and indigenous perspectives for addressing the
challenges. ...................................................................................................................................3
CONCLUSION ...............................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Mondragon is federation and corporation of the worker cooperatives which is based in
Basque region of Spain. Company was founded by the graduates of local technical college in
Mondragon. First product of company were paraffin heaters. In asset turnover it is 10th largest
company of Spain and leading business group of Basque Country. Company operates in
accordance with statement on co-operative identity that is maintained by international co-
operative alliance. Report will provide the unique characteristic and challenges faced by the
organisation. It will also provides solution to respond to the various challenges.
REPORT
Key characteristic of organisation making it unique.
Main characteristic of Mondragon cooperatives in industrial sector is the strong global
presence. It is having 143 number of production subsidiaries abroad and the international sales
accounts for around 70% of the total sales. Solidarity among the workers across corporation. In
economic recession system guarantees supports between the cooperatives in number of ways.
Mechanism establishing solidarity which is the characteristic of the Mondragon is mutual
economic cooperation between the cooperatives and policy of reallocation of the workers.
Worker reallocation has already established the ways of responding the economic crises (Carisse,
2019). It also established technical college for contributing community at time of massive crisis
& also for resistance of fascism of whole of the country. Mondragon prepared for globalisation
when Spain was preparing to join EU. It expands cooperative of the workers to US and shows
resilience over financial crisis.
Key Challenges emerging from the key characteristics
Every company faces some or the other challenges while operating in the business environment.
Mondragon faced various challenges during its growth phase.
Business & Social balance
Competition is indispensable and it is essential for the organisation to balance it by
focusing over job creation, sharing wealth, strengthening participation and respecting
environment. The intensity of running businesses in the competitive global market has made the
companies to lose social concerns.
Workers and Co-owners balance
1

Co-owners are having ownership rights in the governance and distribution of profits.
Workers and owners have the rights of leadership accountability by democratic governance
institutions and participation in the process for decision making for company policy, rules and
strategies. Rights are exercised in cooperative general assembly which is highest authority of the
firm (Challenges, 2019). Board members are also selected by workers as governing council that
appoints chief executives. Owner workers have defined ownership rights and also have the
responsibilities of workers which is the responsibilities of accepting different roles in enterprise,
respecting expertise and playing by rules.
Collective and Individual balance
Organisation is facing the issues of collective interest. Company belong to the founders
and the current generations but is required to survive for belonging to future generations. For
addressing the collective side company has the policy of taking half of after tax profits and
reinvesting them in business and are not distributed (Uzuriaga, Freundlich and Gago, 2018). The
other half of the retained earnings are allocated to the people and is not take out in cash. Policy
of the company is to keep it invested in enterprise until they retire. The policy is not accepted by
many of the individuals working with the company which becomes a become a challenge to
convince the workers regarding the norms.
How organisation is responding to the challenges
For the growth and success organisation is responding to these challenges effectively using
various strategies and policies.
Business & social Imbalance
To reduce the imbalance between the social and business by paying more attention over
the workers or employees to take care. As implementation and innovation could not happen
themselves on business side, social concerns are also required to be treated strategically and
consciously. It has developed wide network governance policies and bodies for providing the
company about social root as well as priorities and helping them in turn in practical realities.
Workers and Co-owners imbalance
Owner and worker roles are somewhat complementary. Co-owners at many of the times
acting as workers for accepting expertise as they are having ownership right which could be
exercised for assuring fairness and accountability. It helps the company in keeping up balance.
Balanced rights & responsibilities helps in promoting participation over the operational
2

decisions. Company emphasizes over the practices encouraging self management and increased
participation.
Collective and Individual imbalance
Most of the organisation face the issue of imbalance between individual and
organisational goals. Company for balancing the collective interest is understanding the
individual interests. Individual are earning salaries and remuneration on the basis of their
competitiveness (Bonache and Zárraga-Oberty, 2018). Company is making the individual
interest align with the organisational objective by paying interest over their retained earnings and
are paid over retirements.
Recommendations from ethical diverse critical and indigenous perspectives for addressing the
challenges.
Aim of all the morality is same but the ways to get there are different. Companies have to
undertake ethical perspectives that are formulated over the work and life of the people. Company
is required to ensure that the knowledge of the workers related with the production or technology
is used in an ethical way for promoting and achieving the goals and success for the organisation.
Company should establish policies where workers are not facing discrimination going to other
countries. It requires the company to ensure that the ethical approach is followed in the
organisation and employees are treated fairly and rights of no employee are exploited.
CONCLUSION
From the above it could be summarised that the Mondragon has achieved considerable
growth over the years due to its unique characteristics. The characteristic has made it different
from the other private companies. Organisation is facing challenges of imbalance between
financial and social needs, imbalance between the workers and co-workers and the imbalance
between individual and collective interest. To overcome these challenges effectively company
has framed different strategies and policies that is helping to reduce the imbalance between
different factors. It is also required to ensure that the growth of the organisation is achieved
following ethical code of conduct.
3

REFERENCES
Books and Journals
Carisse, K., 2019. Towards More Ethical Futures: Workplace Cooperative Practices'
Contributions as Demonstrated by the Mondragon Corporation (Doctoral dissertation,
Carleton University).
Uzuriaga, A.A., Freundlich, F. and Gago, M., 2018. ULMA ARCHITECTURAL SOLUTIONS:
A CASE FROM THE MONDRAGON COOPERATIVE GROUP. Employee Ownership
and Employee Involvement at Work: Case Studies, p.37.
Bonache, J. and Zárraga-Oberty, C., 2018. Compensating international mobility in a workers’
cooperative: An interpretive study. Journal of World Business, p.100975.
Online
Challenges. 2019. [Online]. Available through :
<https://www.managementexchange.com/story/mondragon-cooperative-experience-humanity-
work?csort=replies>.
4