The Strategic Approaches and Corporate Social Responsibility at Hennes and Mauritz - Case Study Example

Executive Summary The report seeks to present an analysis of the various core characteristics of the corporate social responsibility, the theories ofcorporate social responsibility, the strategic approaches currently used by H & M to fulfil its social responsibilities, recommendation of the further strategies the company should implement, the stakeholder management and the role of H & M in enhancing environmental sustainability. The core characteristics of the CSR are voluntary, price and value, beyond philanthropy, internalizing and managing externalities, special and economic alignment, and multiple stakeholder orientation. The theories of CSR discussed are ethical, instrumental, political and integrative. The strategies currently used by the company are categorized under ethical, legal and economic groups. Based on the stakeholder management analysis using salience model, H & M should pay more attention to financiers, shareholders and customers in that sequence, followed by other stakeholders. However, according to freeman stakeholder theory, the interest of all stakeholders should be met in order to ensure sustainable success. The recommendations for H & M to fulfil its social responsibilities are categorized into ecological strategies, social welfare strategies and employee recruitment and retention. Introduction Erling Persson founded Hennes & Mauritz ( H & M) in 1947. It is headquartered in Stockholm, Sweden. H & M is a multinational retail clothing organization, known for its quick mold apparel for men, ladies, youngsters and kids. Besides the continuous efforts to improve the company’s financial performance, it exerts equal effort toward ensuring that the peoples’ well-fare and environmental safety is considered. On that note, the paper seeks to present a report to the Board of Directors of H & M Ltd. The primary focus of the report is on corporate social responsibility strategies to be implemented. The report will analyse how the proposed strategy will assimilate ecological responsibilities, social welfare, and recruitment and retention of employees (Sustainability.hm.com 2015). Corporate Social Responsibility for H&M The idea of social obligation includes putting endeavors to tackle the issues made, by organizations, during the time spent generation of products and administrations. Organizations acquire the generation inputs from the earth. An uncontrolled asset extraction brings about consumption, which contrarily influences nature. For example, exorbitant blundering devastates the downpour catchment ranges. The movement adversely influences nature by diminishing the measure of precipitation. Practically zero precipitation is a negative natural occurance (Mullerat and Brennan 2005). 1. The core characteristics of CSR Figure 1. The core characteristics of CSR The following are the six core characteristics of the corporate social responsibility: voluntary, practice and value, beyond philanthropy, internalizing and managing externalities, special & economic alignment, and multiple stakeholder orientations. Voluntary - Concerning H & M, social responsibility is not considered as a voluntary activity. The company feels responsible for the safety of its stakeholders and the environment at large and therefore, take initiatives to implement strategies that uphold its responsibility to the society (Husted and Allen 2011). Practice and value – In the case of H & M, CSR is perceived as business strategies and practices that take into account the social values. H & M participates in CSR to uphold the welfare of the society, which translate into competitive advantage (Husted and Allen 2011). Beyond philanthropy – At H & M, the CSR is not a philanthropic undertaking. The company understands that its activities pose risks to the society; thus, strategies are put in place to reduce the negative effects of its activities to the society (strategies like emission reduction and chemical management) (Husted and Allen 2011). Internalizing and managing externalities - Concerning H & M, the companies activities emit less CO2 to the environment. However, it will be affected by the high levels of CO2 generated by other companies’ production process. Therefore, H & M has put more efforts to further minimise the emission by shifting to renewable energy (Husted and Allen 2011). Social and economic alignment - H & M implements strategies that uphold the welfare of its stakeholders and in the process create a good reputation that translates into financial benefits (Husted and Allen 2011). Multiple stakeholder orientation – H & M has implemented business processes that reduce the risk to the society from where it gets the resources. For instance, chemical management reduces environmental risks, which in turn increases the safety of the company’s stakeholders (customers, employees, suppliers, etc) (Husted and Allen 2011). 2. Explore the variety of theoretical avenues and the diversity of theoretical concepts in CSR 2.1 Instrumental theories – the theory is based on the assumption that the corporation is wealth-creating tool and that this is its sole social obligation. Just the financial side of the associations between the business and society is considered. So any gathered social action is acknowledged if, and just on the off chance that, it is reliable with wealth creation. The theory comprehends CSR as a means toward profitability. Concerning H & M, CSR is more of a responsibility than it is a means to profitability. The company is more concerned about the impact of its operations on the society. For instance, the company’s initiative to uphold human rights in its countries of operations by ensuring that its activities recognise and respects the primary human rights that could be influenced by its operations (women’s rights, labor condition, and right to water). H & M further ensures that the mentioned human rights are prioritized during decision making processes. It can therefore, be inferred that the company is not socially responsible just to improve ots profitability levels (Garriga and Mele 2004). 2.2 The political theories - affirm that organizations have social force gotten from the general public. The social force is liable to change with changes in different monetary and political variables. Subsequently, the organizations are required to utilize capably their social forces since it can be relinquished over the long haul upon abuse. Then again, the company, as a citizen, ought to act in a way that exhibits social obligation. Hence, as indicated by this hypothesis, organizations are inspired to act in a socially mindful way with a specific end goal to protect their social powers and meet their commitments as nationals. Concerning H & M, growth is one of the objectives. While the company pursues growth, it must utilize its social power and fulfil its responsibility as a citizen by respecting and adhering to the social regulations. For instance, the company has implemented corruption-intolerant policies that ensures that its operations and activities are graft free. In addition, H & M has set up mechanism that oversees its operations in every country and notifies the management of any corruption case. The example clearly shows the level of commitment of the company to restore its social power by practicing social responsibility (Garriga and Mele 2004). 2.3 The integrative theory - affirms that the survival and presence of organizations rely upon the general public. Companies acquire the crude materials and the aptitudes needed in the creation process from the general public. Whats more, the Society gives trusts and funding to the organizations. Subsequently, it ought to be among the enterprises chiefs top need to fuse the societal needs and hobbies by guaranteeing that organizations operations fits in with the built up social values in different territories. H & M, just like other companies obtain raw material necessary for its manufacturing processes (clothes and shoes) from the society. The company relies on supplies for materials. Financiers and shareholders, who are the providers of funds are part of the society. Without funds, the company cannot achieve its primary goals. In response, the company has set up policies that respect and adhere to social values such as (women’s rights, labor condition, and right to water). Adhering to these rights shows the extent to which H & M is willing to uphold social values (Garriga and Mele 2004). 2.4 Ethical theories - assert that a set of ethics defines the premise of relationship between the organizations and the general public. That is, there are different moral guidelines inside which, the corporate exercises are completed. Accordingly, organizations are inspired to act socially dependable because of the set moral principles. H & M works inside of the moral measures of the society such as improving employees’ safety at workplace, reduction of carbon emission, upholding human rights, and combating corruption. Compliance with such regulations improves the association between H & M and the society as the company is perceived to be respectful of the society’s moral standards (Garriga and Mele 2004). H & M should adopt a mainstream marketing. Its products are use by a wide variety of consumers. The company has a large market (Europe, Asia, Africa, and North and South America). In a sense, the company targets a global market. Therefore, its CSR strategies should be suitable for the global audience. H & M has built its fashion brand based on the idea of environmental consciousness. The company uses materials that are safe both to the customers and the environment. Customers prefer to be perceived as conscious consumers. Therefore, the company delivers value, style and uniqueness in a conscious way, which appeals to the consumers thus, create a competitive advantage. 3.Examine strategic approaches used currently by the chosen corporation in fulfilling their community responsibilities The strategies used by H & M to fulfil community responsibility The company uses various strategies to fulfill its social responsibilities. The strategies will be analysed using the three-domain model built by Schwartz and Carroll. The three domains are ethical dimensions, legal dimension, and economic dimension (Schwartz and Carroll 2003). 3.1 Three-Domain Model of CSR Figure 2. Three-domain Approach to CSR Ethical dimensions – the company is in the forefront to minimise corruption by implementing appropriate strategies. The company recognizes the immense challenges arising in its production and sales countries due to corruption. H & M has a mission to formulate zero corruption tolerance policies and take the front line in mitigating corrupt activities. The strategy implemented involves the formulating of a strict code of ethics that regulates the company’s operation in each country of their existence. The company also has an internal whistle blowing team that audits the processes and confidentially report any act of corruption (Schwartz and Carroll 2003). Legal dimensions – each country has laws put in place to uphold human rights. The company has noticed countries where human rights are on the brink of being violated or are already being violated. H & M’s mission is to respect and obey the human rights. The company’s strategy involves the assimilation of the three primary human rights that are of immediate relevance to the industry (women’s rights, labour condition, and right to water), into the business decisions. In addition, the company has developed situation assessment tools and response mechanism to remedy any problem (Schwartz and Carroll 2003). Economic dimensions – the company has established mechanisms to recycle used or old garments. The process reduces the need for new raw materials thus ensure sustainable use of natural resources. In addition, the process reduces raw material expense, thus improve the long-term profitability. The strategy for achieving the responsibility involves partnering with the leading global recycling companies. The company has installed old-garment collection boxes at various locations. The old clothes are in the production of cleaning clothes and new clothes (Schwartz and Carroll 2003). 3.2 Stakeholder management The key stakeholders that H & M is responsible for are customer, employees, suppliers, shareholders, the local communities, and the government. These stakeholders are crucial for the success of the company. For instance, customers provide the revenues, employees provide the production skills and shareholders provide the capital. All the stakeholders are important but there are some, which are more important than others. H & M could use salient model to prioritize its stakeholders as follows: legitimacy, power and urgency. Legitimacy is concerned with whether; H & M’s activities conform to the relevant social norms. It also takes into account funds providers, the controller of the required assets for the project and who is influenced by the project. Financiers should fall under legitimacy since they provide funds. Customers and the society also fall under the category since they are influenced by the project. Power is concerned with the stakeholders who impose their will on others. The financiers and shareholders fall under the category since they demand that managers meet their interests. Last, urgency is concerned with the importance and the urgency of stakeholder’s demands. Financiers, customers and shareholders fall under the category. Therefore, Financiers are the core stakeholders since they fall under all the categories. Shareholders and customers follow in that sequence since they fall under urgency ad legitimate category. Other stakeholders will be priority number three and so forth (Hoque 2006). Freeman stakeholder mapping below give a pictorial explanation that companies should strive to meet the interest of all the stakeholders since their aggregate input is what creates success for the company. Otherwise, the company’s operations will eventually fail. Figure 3. Freeman stakeholder mapping On that note, H & M has made steps to improve the welfare of its employees, customer, shareholders and the society. The effort should extend to all other stakeholders to ensure a sustainable success as point freeman (Freeman 2010). 4. CSR recommendations for H & M 4.1 Ecological responsibility – while the company manufactures its products, it should consider minimizing the impact of its activities on the ecosystem. The objective will ensure that plants, animals, and other organisms are not adversely affected by the company’s activities. The following four strategies are proposed: decline wools from uncertified suppliers, decline down and feathers from uncertified suppliers, recycle waste in the warehouse, and recycle plastic materials. First, when the company declines wool, down or feathers from uncertified suppliers, their supply level will have to decline. Thus, animal safety will be restored. Uncertified suppliers of the mentioned materials are known to apply cruel practices on animals, which pose them to great levels of dangers. Second, recycling of waste and plastic material prevent the dumping of such materials. The mixture of plastic materials and another waste pollutes the land and air (stench smells), which could pose a health risk to different organisms. Therefore, the four strategies mentioned above would protect ecology. 4.2 Enhancing social welfare – the company can incorporate the goal by adopting the following four strategies: sustainable production process, by reducing emissions, use sustainable materials, and use environmentally friendly cotton. First, the company should shift its reliance on fossil fuel powered plants or reduced reliance on electricity and focus on renewable energy. The strategy will ensure the reduction of the CO2 emission in the atmosphere; thus, reduce the level of air pollution. Polluted air causes respiratory complications to the society. That is, the customers, the employees, suppliers and other stakeholders in the company risk getting sick. Emission reduction is a step toward reducing the risks. The strategy shows the company’s effort to improve the social welfare of the society. Second, the use of sustainable materials and environmentally friendly cotton means that H & M should increase the use of recycled fabrics or organic materials. These materials have no adverse effects on the environment thus, ensure sustainable production. In addition, the use organic cotton that are recyclable is a step into sustainable production. The strategy will lead to the production of sustainable products, which are likely to generate high sales due to their brand (environmentally friendly clothes) since customers like to identify themselves with companies that are both environmentally conscious and restore the social welfare of the society. The company will also attract more investors due to the same reasons. In addition, the strategy creates a competitive advantage for H & M. 4.3 Recruitment and retention of employees – potential employees would like to be employed by a company with a healthy working environment. H & M can establish a similar environment using the following four strategies: introduce employee learning program, create a healthy workplace relation and good communication system, improve the safety standards, and implement fair living wage standards. First, H & M should develop a program that allows the employees to improve their knowledge and skills. The system should involve resources such as e-learning. The program will constantly enhance the employee skills and knowledge. The company should also create a culture that cultivates employee unity, openness and freedom of information sharing. In addition, the employees should be fairly represented in the labour unions. Second, H $ M should consider improving the workplace safety standards by installing all the necessary safety equipment in all its stores. Safety regulations should be formulated, implemented and audited. It is also important to train the employees on basic safety procedures. Lastly, the company is required to set a fair salary and wage levels appropriate in different countries. The fair salary and wage should be sufficient to meet all the employee’s basic needs. The mentioned four strategies will deliver employee satisfaction. The company will stand a chance to win highly skilled potential employees. In addition, the existing employees will be pleased to continue working with the company for a long period. 4.4 The role of H & M in addressing environmental sustainability Environmental sustainability is a concept that refers to utilizing the natural resources while at the same time restoring the nature’s capacity to replenish the resources. In addition, it encompasses the idea of preventing the corporations’ activities from adversely affecting the environment. H & M recycles old garments, which are used to produce cleaning yarns and new clothes. The strategy ensures that natural resources are not wasted, but rather used economically. H & M pursues renewable sources of energy in a bid to replace electricity. The strategy will see that carbon emission is minimized. Conclusion The primary objective of H & M is the achievement of growth. The company is one of the leading global producers of clothes. Just like other organizations, H & M’s operations may lead to environmental destruction. Corporate social responsibility, therefore, was introduced to assist in combating the adverse effect on the environment of organizations activities. CSR theories like instrumental theories state that companies engage in social responsibilities just to make more profits. H & M, on the other hand, has proven that its existence goes beyond the pursuit of high profits. First, the company’s initiative to uphold human rights in its countries of operations by ensuring that its activities recognise and respects the primary human rights that could be influenced by its operations (women’s rights, labor condition, and right to water). H & M further ensures that the mentioned human rights are prioritized during decision making processes. Second, the company has implemented corruption-intolerant policies that ensures that its operations and activities are graft free. In addition, H & M has set up mechanism that oversees its operations in every country and notifies the management of any corruption case. Third, the company recycles raw materials in order to reduce the rate of extraction of raw materials from the environment. The strategy ensures economical usage of environmental resources, thus upholds the sustainability of the environment. Therefore, the company is socially responsible except for that other socially responsible strategies need to be added on top of those implemented. They are as follows: First, H & M should adopt strategies that improve the welfare of the society (the implementation of sustainable production process, the reduction of emissions, the usage of sustainable materials, and the usage of environmentally friendly cotton). The strategies will lead to the production of environmentally friendly clothes, thus positively impact the future performance of the company. Second, H & M should adopt policies that lead to employee attraction and retention such as the introduction of employee learning program, creating a healthy workplace relation and good communication system, improving the safety standards, and implementig fair living wage standards. The company will stand a chance to win highly skilled potential employees. In addition, the existing employees will be pleased to continue working with the company for a long period. Last, it is recommended that H & M adopts strategies that improves ecology like decline wools from uncertified suppliers, decline down and feathers from uncertified suppliers, recycle waste in the warehouse, and recycle plastic materials. If the mentioned strategies are well implemented, the socially responsible activities of H & M would be strengthened, thus H & M will be perceived as an ethical company. Read More