Corporate Social Responsibilities - an Examination of the Performance of Louis Vuitton - Case Study Example

Your Name here Corporate Social Responsibilities: An Examination of the Performance of Louis Vuitton Professor’s Name Date Here Introduction Despite the recent global financial meltdown, luxury brands like Luis Vuitton are growing. According to a global survey on luxury goods, luxury spending in 2012 rose 12% to $US298 billion1 (Holmes 2011). Brands like Luis Vuitton have become synonymous with wealth and accomplishments. However, they have also fallen prey to criticism for being overpriced, exaggerated, wasteful, and taking advantage of third world underpaid labourers. Some of these global brands have started to increase the range in which Corporate Social Responsibility (CSR) and sustainability concerns overtly feature in their normal daily business practices as they continue marketing and promoting their goods globally. In the proceeding parts, the main objective of this essay will be to look at the performance of Luis Vuitton (LV) from its CSR perspective. To begin with, this essay will look at LV background to give an overview of its operations, also, with three examples, this essay will analyse how the company deals with CSR and business communications and then assess their impacts. Additionally, this essay will look at impact and implications of LV’s actions on the society and the pertinent stakeholders. Background of Louis Vuitton Luis Vuitton is a famous French fashion house established in 1854 and it is famed for its luxury goods. Currently, Luis Vuitton is owned and ran by LVMH Moët Hennessy Louis Vuitton with its headquarters in Paris, France. Arguably, it is the world’s largest luxury goods conglomerate in terms of assets base. It deals in luxury clothes, cosmetics, fashion accessories, jewellery, and perfumes. For seven successive years, LV has been identified as the world most valuable luxury goods brand and in 2013, it was valued at 27.8 billion USD.2 The Case for Louis Vuitton CSR Performance The effectiveness of Corporate Social Responsibility (CSR) performances can be looked upon as one key positive factor to benefit the majority of stakeholders including employees, customers, suppliers, investors and government. According to the Luis Vuitton (2011) Corporate Social Responsibility (CSR) Report, the company has initiated various activities and events aimed at strengthening its CSR activities. To be specific, the company not only treats its employees better by respecting their human rights and enhancing their working conditions but also the rewards the greater society by fostering good relations with third parties and the environment. To show that it is committed to upholding human rights, the company ensures that it pays above the ‘living wage.’ Living wage means a company pays employees just enough to ensure that they are able to buy and provide for all their basic needs but nothing more. This turns employees into slaves because they will not be able to survive without the meagre pay so they continue to toil away in the sweatshops. In the Cosmetics and Perfumes sector, Louis Vuitton trains all new suppliers on all the internal in-house policies such as the basic ethical behaviours that pertain to human rights behaviours. To add to that, the company is committed to reducing incidences of work place hazards, to this effect, the company has implemented various methods aimed at reducing work place hazards to with an aim of giving employees the best possible comfortable working environment. For example, the company has established a series of trainings for the current employees to increase their awareness of their safety and their environment. It is expensive in the short-term for the company to conduct all these training aimed at improving the working conditions of the employees but in the end, it will pay off because a healthy and happy work force will translate to increased productivity3. From the external environment perspective, Louis Vuitton has a commitment to the public and the governments in all the places where their factories are located. The company regularly funds and supports a couple of not-for-profit organisations for the protection of children and the environment. The SOS Children’s village signed a Global Agreement with Louis Vuitton signed a five year program called Partnership for Children’s Futures. Geren (2010) noted that the objective of this partnership was to help develop the future of children and the youth across the globe who are disadvantaged: a future that is founded on education, learning and security. For over 60 years, this Children’s Village has accommodated children across the world that have been abandoned, orphaned, or those families that are not in a position to take of them. The SOS mothers’ take care of these children and they live in these villages. Here, they receive access to education and security and love of these homes until they are independent4. The company ensures that it takes care of the immediate environment in the regions where the company has factories. It renovates and builds community centres and promotes mainly the arts. For example in partnership with the Pacific Rehabilitation Hospital, Louis Vuitton developed the Creative Art Program in 1994 as a therapeutic art studio. Since 1994, this program with the pre-existing programmes have treated and made a major impact on over 700 patients. In addition, the company has on several occasions donated money to disaster struck countries. Case in point would be Haiti. During the recent catastrophic earthquake, the company donated substantial funds towards the rehabilitation of the country. The donated funds were aimed at helping the country get back to its feet quickly by ensuring that the youths and the young adults in the country have community arts centres where they can go to learn about the various forms of arts with an aim of building and sharpening the artistic skills and talents5. From an internal management perspective, the company ensures that all the employees are treated equally and fairly and that all the employees are given the same opportunities to progress up the corporate ladder. The communication with internal stakeholders is equally treated as important as the communication with external stakeholders. The company takes great importance in integrating new employees. The managers themselves take pride in personally welcoming new employees. With their roots in traditional craftsmanship, the company maintains a basic principle of apprenticeship and dedicates itself to continually imparting employees with new skills as well as perfecting those that they already have. There are some fourth generation employees at Louis Vuitton. The company also fosters links with new students and it welcomes fresh graduates as they are perceived to come with fresh and new ideas that might beneficial to the company. To ensure proper internal communication with its internal stakeholders, the company ensures clear and personal communication with its internal stakeholders. THE CASE AGAINST LUIS VUITTON Luis Vuitton has in the past fallen prey to the Animal Rights Activists and Animal Protection Organizations. Some of the shoes and bags are made of premium quality calf and lamb leather. Human rights activists consider this inhuman and want the company amongst others to stop this practice. These downbeat issues are synonymous across the entire fashion industry and the common idea behind it is that fashion should not be propagated at the expense of poor innocent animals. As a way of countering this, animal rights activists’ advice people not to purchase Luis Vuitton products. However, Laszslo (2008) argues that this is a type of publicity that the company certainly doesn’t want. In turn, it would hurt their sales which will chip at their profit margins and some of their staff may be laid off6. Louis Vuitton has been accused in the past of paying workers cents in wages in third world countries compared to what they would have been paid in the Western Nations. It has been accused of paying working workers pennies in their third world sweatshops, which is way below minimum wages even in third world standards. When a company fails its employees adequately for a 60-hour week, the implications are grievous, the employees fail to satisfy both their basic non-food needs and basic food needs. Doing so impedes the employees from ensuring their independence and physical well-being and lack of necessities impedes the development of rational capacities. This culminates in lack of self-esteem. It is internationally accepted that a 48-hour week is the reasonable compromise that accords employees enough time to cultivate their rational capacity while at the same time providing employers with adequate productivity. However, Louis Vuitton has been accused of imposing 60-hour per week schedule at less than minimum pay7. Luis Vuitton has been accused of being excessively high handed when dealing with people who uses its images or close likeness of its products in their works of arts. This is paradoxical because in the first place Louis Vuitton promotes several community centres around the world where it promotes the community members to discover their artistic talents. Luis Vuitton sued Nadia Plesner, an obscure artist who used images that bore semblance to Luis Vuitton checkered trademarks on T-shirts. Her aim of making the t-shirts was to raise money in order to raise awareness on the massacres at the Darfur region in Sudan East Africa. Plesner fought back, however, she lost the suit. It was the view of many that what she did didn’t violate trademark laws but instead was a political statement. She later changed the images on the t-shirt slightly and the company went for her and sued her again and this time round she was forced to pay a fine of 5000 Euros. In this case Kotler and Nancy (2004 argued that the court was protecting the intellectual property rights of a company more than the excessive rights of an individual. The freedom of expression and speech concept is not finding the weakest offensive to express the point but rather the most understandable and loud way to receive attention. Furthermore Plesners paintings were not targeting Louis Vuitton’s trademark laws in anyway. They were in contrary trying to raise funds by educating the public about the inhumanity and cruelty in Darfur by using T-shirts. Conclusion In conclusion, Luis Vuitton CSR is satisfactory especially keeping in mind where giving back to the community is concerned. We have seen that they support a number of community projects as well as providing scholarships as well as internships to the needy and deserving students. However, Luis Vuitton has also fallen prey to the same problem that has afflicted most of the top global fashion houses; animal rights. Luis Vuitton has often been accused and rightfully so for using endangering and driving some animals almost to near extinction for their fur. However, stopping this practice and some efficient and effective strategies can be employed to counter the negatives effects. Moreover, corporate social responsibility is considered as part of the public relations and marketing because they are both aimed at achieving similar objections like reinforcing the brands credibility and good image. However, unlike public relations, corporate social responsibility involves provision of infrastructure development, financial help such as scholarships and social improvement programs. This creates long-lasting positive impacts to the consumers. However, negative corporate social responsibility can seriously impact an organization in various areas from lawsuits, brand names to loosing consumers. Bibliography Agrawal, A. & Chadha, S. 2005, ‘Corporate Governance and Accounting Scandals’, Journal of Law and Economics, 10(8), 371-406 Brickley, J. & Clifford, S. 2003, ‘Corporate Governance, Ethics and Organizational Architecture’, Journal of Applied Corporate Finance, 15(3). 34-45 Dess, Gregory and Alan Eisner. Strategic Management. Boston: McGraw-Hill/Irwin, 2006. Gasparina, Jill. (2009). Louis Vuitton: Art, Fashion and Architecture. New Jersey. Rizolli Publishers Geren, B. 2010, ‘The work ethic: is it universal?’, Journal of International Business and Cultural Studies, 3(2). 23-35 Kotler, Philip. & Lee, Nancy. (2004). Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause. New York. Witley Lydenberg, Steven. 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