Corporate Social Responsibility Analysis - J Crew Group Inc - Case Study Example

Corporate Social Responsibility Analysis Student’s Name Institutional Affiliation A. Introduction The concept of corporate social responsibility has continued to attract enormous level of attention in the last couple of decades. Nowadays, research indicates that almost more than half of Fortune 1000 companies avail CSR-related reports (Margarita, 2004). In fact, more than before, a good number of firms are now directly involved in an extensive degree of efforts that is focused on defining and integration of corporate social responsibility into most, if not all, of business operations. There is a definite increase in the number of stakeholders that include; employees, community organisations; labour unions and suppliers that have now resorted to requesting firms to ensure that they are accountable for the current ever-changing aspects related to corporate social responsibility issues (Margarita, 2004). CRS has resulted to improved transparency and growth of expectations that firms can now effectively measure; report and thereafter, continuously enhance social; environmental and economic performances. Following this line of reasoning, this paper examines the different competing views on aspects related to adoption of corporate social responsibility. B. Arguments For & Against CSR Related Concerns It is important to note that different firms engage corporate social responsibility in their day-to-day operations in a quite different ways. These set of differences are directly related to such important factors as the particular size of a company’s operations, the industry for which it operates on, its organisational culture; stakeholders’ demands as well as historical overview of their progress in adopting CSR (Margarita, 2004). It is quite clear that some of these firms might only focus on a single area of operations that they deem to be more important or when they identify this sphere to be having the highest impact or even vulnerability while other companies might make it their priority to incorporate CSR in all of their operations. To ensure that implementation of corporate social responsibility attain high degree of success, then they should be fairly integrated within the underlying corporate values as well as strategic planning while still emphasising on the need for both management team and employees commitment to the concept altogether (Margarita, 2004). In essence, it is crucial that CSR strategy conforms to the particular set of company objectives and competencies. Of particular interest to note, companies engage in corporate social responsibility in order to enhance aspects related to profit and value maximisation for which they desire to improve and increase on their profit levels for both short and long term periods. However, they still have a responsibility of stakeholdership, which defines the capacity to satisfy stakeholders and thus, engage their resources in practicing corporate social responsibility. The following section provides discussion of different sets of arguments that relate to the legitimacy of corporate social responsibility. First, there is an underlying prolonged debate that seeks to recognise the legitimacy and, also the value of different sets of corporate responses on aspects related to corporate social responsibility concerns. It is argued that as the concept of CSR is now being closely aligned with most issues that were previously addressed by government there is still a strong degree of criticism that societal issues are thus perfectly solved by governments in place (McWilliams, Siegel, & Wright, 2006). The opponents of CSR argue that the underlying resources of a given firm are unfairly positioned to address such aforementioned issues human rights and community concerns hence there is no need to have them misallocated in any given manner. Numerous arguments put forth by Friedman ascertain that within a given free society platform, the responsibility of a given business is focused on utilising its underlying resources and thereby engage them in those activities that are designed to improving on the level of its profits. In doing so, business should just stay within the already laid-out rules and regulations that govern entities from engaging in unfair competition that is marred with intense levels of deception or even fraud (McWilliams, Siegel, & Wright, 2006). In this regard, this argument is of the opinion that the underlying governments should make efforts to address possible underlying social problems since compelling organisations to do so; only means that money and resources that would have otherwise been directed towards benefitting the owners; employees and suppliers fails to serve this imminent interest. In fact, following this line of argument, it can be seen that by having firms engage in CSR limits the sole objective of business operations that is; maximisation of shareholders’ wealth by imposition of tax on their earnings and spending these proceeds into solving different societal problems; a factor that is deemed to be intolerable since there are no justification for management team to engage in such undertakings in the first place. During the time of recession, most of the companies abandoned or even restricted the degree for which they could engage in corporate social responsibility since it was perceived to be significantly costly to sustain and continue with the CSR-related programs. Secondly, research into the rationale behind the adoption of CSR by firms indicates that they directly engage in these concerns with an aim of being recognised by the underlying public as a legitimate company (McWilliams, Siegel, & Wright, 2006). It is important to understand the fact that in addition to having acquired recognition most of the companies are of the opinion that engaging in CSR is linked to both social and financial performance. The argument here is that in the event that a company is socially responsible then there is a high possibility that it will also perform fairly well financially. Considering the fact that CSR is now becoming an imminent trend in the business sphere, most of the companies are making stringent efforts to catch up and attain a socially responsible status (McWilliams, Siegel, & Wright, 2006). In consequence, CSR is not only a requirement by the society but also it is perceived to be an essential element in the overall company’s immediate portfolio since it will result to good reputation and thereby attract even more investments and resources for an entity. Lauring and Thomsen (2009) have all agreed that the decision by most entities to incorporate CSR-related aspects focuses on highlighting their relative level of strength within the industry and, also strive to even strengthen their immediate set of relationship with surrounding communities, which includes partnering with numerous non-profit organisations as well as government-based agencies. For most cases, consumers are mostly attracted to brands and companies that portray good reputations in CSR-related concerns. An entity that is deemed to be socially responsible is set to benefit from its overall reputation within the overall business community by way of improving its underlying capacity to draw even more capital and trading partners in the future. The aspect of reputation indeed poses a challenge to quantify and measure; and sometimes it is even harder to determine the level of increase it has on a company’s immediate value. However, recently companies formulated tools to measure the level of perfect reputation and the benefits therein of their advertisement campaigns. Consequently, companies that engage in corporate social responsibility directly enjoy lesser risks attributed to suffering negative rare events. according to Munilla and Miles(2005, p. 374) notes that the capacity to overlook negative social and environmental uncertainties in the course of valuing a given entity could possibly result to significantly ignoring the level of tail risk involved. It is crucial to note that the underlying level of risks that are related to CSR is grouped into three levels that include; corporate governance; environmental aspects as well as social-related concerns. In this regards, companies that adopt CSR-related principles directly are deemed to be more transparent and do not suffer from possible risks attributed to both bribery and corruption. In truth, these companies might go even further to formulate and implement more stringent policies; and therefore, more costly quality and environmental controls but all in all, they are less exposed to risks that relate to recall of defective product lines that might even translate to payment of enormous amounts of fines for excessive pollution of the environment (Vilanova, Lozano, & Arenas, 2009). BP Oil spill case is one such company that suffered this level of risk due to its redundancy in adopting effective and up-to-date CSR-related concerns that relate to environmental risks. As a result of the Deepwater Horizon oil spill in the Gulf of Mexico, BP suffered immense amounts of losses as well as suffered from more risks of negative social events that exceedingly damaged their reputation level and cost them millions of dollars in paying for fines as well as advertising campaigns. Given the fact that entities that adopt CSR-related principles carry less level of risk, and then whenever valuing these companies; a much lower discount rate should be imposed. Most notably, there are also a significant number of cases where engaging in CSR programs resulted to a tremendous reduction of operation costs. A good example is ascertained whenever reducing the packaging materials or even coming up with an optimal channel for delivery vehicles; a decision that is assumed for purposes of reducing the overall environmental impact of a company’s immediate operation as well as its costs. As will be seen in J. Crew Group Incorporated case below, the adoption of CSR goes beyond profit and shareholders’ wealth maximisation and in fact, ascertains that companies that have a stronger CSR will likely benefit from improved capacity to attract and even retain employee-base. This is likely to reduce employee turnover rates, as well as recruitment and training-related expenses. In most cases, employees will actually go on fact finding mission to ascertain their companies CSR performances in order to establish whether their personal values conflict with those relate to the business for which they work with. There are many cases for which most employees can relate with whereby they asked, under undue influence and pressure from their respective seniors, to ignore written policies and regulations for purposes of attaining a much higher profits and therefore, shareholders’ wealth. It is worth to note that these level of practices goes ahead to develop into a culture of fear within the workplace and thus, harm the employees’ immediate trust and commitment to working with the firm. Similarly, it is argued that companies that make stringent efforts to improve on the underlying working conditions and labor policies results to an imminent increase in the level of productivity and reduced errors (Vilanova, Lozano, & Arenas, 2009). Notably, the possible regulatory controls that is witnessed in the production facilities throughout the globe is an effort meant to ensure that all workers are able to execute their duties in perfectly good conditions and earn equally fair salaries and wages. Despite the fact that these policies are deemed to be even more costly; possible increase in the productivity aspect of workers as well as enhanced quality of products is able to generate intense level of cash flows that will counter possible associated level of expenses. In these regards, companies will likely benefit from socially responsible actions in relation to employee morale and productivity at all times. Another fundamental reason for companies engaging in corporate social responsibility rests with the capacity and willingness to try and improve on the corporate and brand image as well as for purposes of branding and innovation. It is ascertained that most firms will mostly focus on developing their immediate brand and image and thus, formulate ways of creating a positive reputation since this forms the fundamental objective in sustaining and ensuring the well-being of an entity in the long term period (Vilanova, Lozano, & Arenas, 2009). It is worth to understand that a company that enjoys a positive brand reputation is likely to enjoy better performance; attract even more amounts of resources and still; maintain a competitive advantage over the others. In regards to developing their brand image, companies are perceived to come up with way of conducting advertisement and promoting to customers and therefore, goes ahead to integrate a cause-related marketing development within their overall CSR practices. J. Crew Group Inc Case Analysis J Crew Group Inc is analysed for the CSR-related aspects since it has been successful in the business model. The firm’s social behaviours; values as well as actions are evaluated in order to ascertain how it has made efforts to sustain CSR. For instance, the company’s mission statement notes: “We believe that we have a responsibility to operate our business with sensitivity to the world around us. We seek to incorporate sustainable business practices into all of our operations, improve our environmental impact and support social responsibility and community involvement. As part of our long-standing commitment to service, we hope to inspire our associates, customers and partners to protect the environment and promote social responsibility” (J. Crew Group, Inc. n.d). The company is located in New York City is engaged in apparel retailing business since 1983. It is one of the multi-branded and channelled specialty retailers that has been directly involved with the marketing and selling of top notch clothing for both adults and children as well. In their production process, the company uses high quality and luxurious materials together with the finest fabric mills that are sourced from across the globe. As at 2011, the company had more than 12,700 employees for whom 3,800 were full-time employed. In the course of the high and peak season, there are more than 3000 employees that were assimilated in order to help with the increase in the level of demand for products (J. Crew Group, Inc. n.d). Despite the fact that employees are not represented in any way by union but still the firm strives to maintain a good rapport with all of its workers regardless of their employment status since they lack labour-related work stoppages. In essence, it offers an all-inclusive benefits package that is made up of competitive salaries; bonuses and store discounts. Notably, it presents itself as an “Equal Opportunity Employer” given that they directly adopt aspects related to diversity and this clearly portrayed in the company’s actions and work environment. In addition to a competitive package of $51,000 p.a for each employee, the firm further offers medical life insurance covers, paid vacation and 30% store discount. Customer satisfaction is one of the company’s top priorities given that they offer a significant number of services and promotions for its clients. It also offers personal shopper services to its underlying clients while still ensuring to sustain a professional advice and opinions for all of its products. Another area of concern for the company lies in its willingness to demand that its suppliers sustain a social responsible relationship. This has been achieved through constant supervision of foreign suppliers operations like the factories in Saipan. Suppliers are expected to adhere to all rules and regulations in order to continue with operations. Recently, J Crew made stringent efforts to attain a socially responsible that related to environmental aspect and thus, developed fundamental areas that are deemed to be earth-friendly. Conclusion To sum up the discussion above, it can be seen that as much as companies’ core objective in engaging in CSR rests with profit maximisation and improve on shareholder’s wealth; still the engagement is directed towards attaining a positive brand and corporate image; for purpose of recognising the legitimacy of operations and attract and even retain employee-base. In my opinion, CSR should be adhered at all times for purposes of ensuring that a company maintains a positive relationship with its stakeholders apart from only owners since they also have imminent level of influence on its success of operations. References List J. Crew Group, Inc. n.d. Social responsibility. Retrieved from http://www.madewell.com/footer/socialresponsibility.jsp Lauring, J., & Thomsen, C. 2009. Collective ideals and practices in sustainable development: Managing corporate identity. Corporate Social Responsibility and Environmental Management, vol.16, pp.38-47 Margarita, T.2004. Corporate Social Responsibility and Financial Performance” Center for Responsible Business, pp.1-29 McWilliams, A., Siegel, D.S. & Wright, P.M., 2006. Corporate social responsibility: Strategic implications. Journal of management studies, vol.43, no.1, pp.1-18 Munilla, L.S. & Miles, M.P., 2005. The corporate social responsibility continuum as a component of stakeholder theory. Business and society review, vol.110, no.4, pp.371-387. Vilanova, M., Lozano, J.M. & Arenas, D., 2009. Exploring the nature of the relationship between CSR and competitiveness. Journal of Business Ethics, vol.87, no.1, pp.57-69. Read More