Business Values Assessment - Adidas and Timberland - Case Study Example

Adidas and Timberland Name Institution Name Date Introduction The aim of the paper is to discuss social reporting of two companies. These two companies are Timberland and Adidas that operates in similar industries but has headquarters and business frameworks in different jurisdictions. Qi. Description of Adidas and Timberland Companies Overview of Adidas and Timberland Companies Adidas is a German multinational corporation that has its headquarters in Herzogenaurach, Germany. The company deals with the design and production of accessories, clothing, and shoes. However, the company is known more about the sportswear through the production of footwear, sports equipment, sportswear, and toiletries. The company was founded on 18 August 1949 by Adolf Dassler (Adidas Group, 2017). Adidas is also the largest producer of sportswear in Europe. The production is based in 65 countries while the countries with the highest number of Adidas manufactures are located in Mexico, Argentina, Canada, Brazil and the United States. In addition, there are more than 1,000 Adidas stores across the world and it is estimated that Adidas opens two stores monthly in China. Timberland is an American manufacturer and retail of outdoor-focused wear. The company focuses on the production of footwear and currently owned by VF Corporation (Timberland, 2017). In addition to the outdoor focused footwear, the company also produces and markets leather goods, sunglasses, glasses, watches, and clothes. Timberland head office is located in Stratham, New Hampshire and has numerous offices across the world (Timberland, 2017). The company was established in 1918 and Timberland has expanded its operations to more than seven countries. These countries include Argentina, Colombia, Chile, Venezuela, United Kingdom, Canada, and United States. Criticism on Social Reporting/Performance Issues Adidas continues to report in social performance but numerous complaints have been presented. For example, in between 2006 and 2007, Adidas was accused of problems associated with labor rights violations and operating sweatshops (Oxfam Australia, 2016). The problem is traced to the suppliers from the Asian region who did not adhere to the framework and guidelines on labor regulations. Other labor-related issues include long working hour, inadequate pay, wage cheating and discrimination. In addition, sourcing of the raw materials and other production requirements have been criticized. For instance, the company acquires most of its packaging materials from Asia Pulp and Paper, but Asia Pulp and Paper has a negative perception in the environment and society because of the destruction of “precious habitat” and “forest criminal” especially in Indonesia’s rainforest (Oxfam Australia, 2016). Other complaints include the Animal Liberation Victoria street demonstrations urging consumers not to purchase Adidas products because it uses Kangaroo’s products. Nevertheless, Adidas has addressed some of these complaints through canceling their contractual obligations/understanding. Qii - Range of Social, Environmental, and Economic Issues Presentation Adidas and Timberland Social Report’s Style, Content and Presentation Adidas and Timberland report social issues and the companies take a similar approach but the content of reporting differs. For example, Adidas reports on IT environmental footprint, water usage, paper consumption, OH&S training and grievance system that Timberland does not report (Adidas Group, 2015). Conversely, Timberland reports on volunteer hour program, PVC free content, recycled packaging for footwear, volatile organic compounds in production and footwear, and effectiveness of new supplier vetting process (Gerard, 2016). Adidas reports on many initiatives and in depth through the highlighted systems that Timberland lacks and furthers the reporting through reporting on partnerships, programs, and activities. For example, Adidas reports on “Sports Infinity” Program, Maersk Line partnership and Adidas’ refugee support that is lacking in Timberland (Adidas Group, 2015). However, Timberland presents information based defined targets in which each year outcome is compared with what is expected by 2020 (Gerard, 2016). It means that Timberland approach is focused on outcomes and continuous analysis of the outcome to determine the social reporting’ monitoring and auditing objectives. Strengths and Weaknesses of Social Reporting Approaches in the Reports The jurisdictions and operating environment define the approaches of presenting the social information. The Germany approach is more extensive compared with the USA approach: for instances, the Adidas reports are more inclusive compared with the Timberland social reporting (Greiwe & Schönbohm, 2011). The Adidas social reporting focuses more on qualitative reporting while the Timberland reports rely on quantitative reports, which are easier to follow (Timberland, 2017). Adidas and Timberland social reporting documents address the jurisdiction's requirements, cultural and traditional aspirations, and other fundamentals dictating the perception of the society (Adidas Group, 2017). Range and Depth of the Coverage The two companies cover a range of issues in their respective reports and there are some commonalities. Some of the metrics that both companies report include waste reduction and carbon emissions in own buildings, suppliers environment impact, suppliers social footprint, supply tanneries’ environmental ranking and use of sustainable cotton. Qiii: Reasons for Differences in Social Reporting) The social reporting issues are important across the different countries and Germany in regards to Adidas has formulated and implemented measures to support social reporting. For example, the development of German Sustainability Code by the German Council for Sustainable Development forwarded 20 criteria that companies have to adhere incorporating variable from governmental aspects, social and environmental (Federal Ministry of Labor and Social Affairs, 2016). Germany has a culture and tradition of bearing responsibility to the society. Successful companies in German focuses on social partnerships, and the creation of modalities orientated to developing and sustaining work, ecological standards and qualification. It focuses on “Rhenish Capitalism” in which distributive and participates justice guides the societal and economic ideologies. The German government continues to formulate frameworks and guidelines such as the National Strategy for Corporate Social Responsibility to allow analyses of well-defined concrete measures and targets around integrity and visibility of demographic policies, development, and research. Emotive and dynamics within the society also influences the social reporting ideals. For example, Adidas incorporates information on refugees since it is an emotive issue and an emerging issue meaning the reporting mechanism have to be conclusive to present a clear image of the social and environmental obligations. Therefore, the general approach for Adidas and Germany is to encourage voluntary reporting and creating such a tradition and culture means that the companies are ready to present more information on social reporting to gain positive image in the market. Forte (2013) referring to the extensive data and effective reporting in Germany attributes to the social democratic traditions. Bitcha (2003) presents similar views stating the traditions of a region influences the policies and ideological perspective in making decisions. These traditions and perspectives are different in the USA, where Timberland operates and may inform the reasons why the Timberland social reporting is not extensive compared with Adidas. Apart from the social reporting mechanism, former CEO Jeffrey Swartz played an important role in introducing nutritional labeling on the shoes. Jeffrey Swartz contributed to the “Voices of Challenge” in which managers are required to observe social reporting and contributing to the community. USA government lacks extensive frameworks to force or encourage companies to report social information compared with international countries such as UK and Germany. Nevertheless, States such as California provides guidelines on what should be reported, presents legislations that have to be followed, and general directives in presenting of corporate social responsibility information. Hence, the traditions and cultures in the USA do not opportune companies to provide extensive information since these companies focus on information that suffices. The differences in reporting may also be attributed to the nature of the business or targeted customers. Timberland concentrates on the production of outdoor related products while Adidas concentrates in the production of sports wear (Timberland, 2017). The fundamentals of outdoor and sports activities are different meaning the information presented to the targeted customers reflects the vision and mission of the company (Du, Bhattacharya & Sen, 2010). While Timberland focuses on sustaining outdoor activities, Adidas aims to create a comfort and versatile sportswear that creates conducive situation to accomplish the sporting events. Qiv- Analysis of Report based on Zadek et al (1997) Quality of Social Reporting Zadek et al.’s (1997) discuss key principles of quality of social reporting, which are continuous improvement, external verification, disclosure, management policies and systems, evolution, completeness, comparability and inclusivity (Crane & Matten, 2016, p. 216). The following is an analysis of how Timberland and Adidas uphold the quality of social reporting: Inclusivity – inclusivity is important to Timberland and Adidas and these companies rely on reports and engagement with suppliers and sometimes customers (Adidas Group, 2017). These companies also engage the government and related agencies on processes and procedures to improve the production process with a focus on social reporting and implementing measures to champion social activities (Greiwe & Schönbohm, 2011). Comparability – both of the companies produces yearly and sometimes quarterly reports (Timberland) that documents achievements and targeted areas. It indicates the improvements compared with the previous years and it is possible to compare the information presented with other reports within similar jurisdictions (Boone & Kurtz, 2009). Completeness – both reports are complete based on the targeted audiences and traditions of the region (Walker & Parent, 2010). Evolution – the companies embraces change and learning based on the standards and consultations. The reports present on changes and learnings through documenting changes or proposed changes, including the expectations based on long-term strategic implementation (Adidas Group, 2017). Having a vision enables creation and implementation of frameworks and policies, which reflects the situational and environmental obligations. Management policies and systems – the companies have formulated and institutionalized policies and systems that have to be observed. For example, Adidas requires suppliers to observe certain standards and breaking these standards results in termination of contracts (Adidas Group, 2017). Disclosure – all the companies supply extensive reports about social, economic and environmental activities with a focus on improving the social obligations. It sometimes takes the form of social corporate responsibility, the report highlights the achievements in improving the social obligations. External verification – the companies understand the challenges associated with external verification but the companies allow external stakeholders to analyze the documents and processes. For example, the companies rely on Global Reporting Initiative and allow Fair Labor Association to analyze the social reporting. Continuous improvement – Adidas and Timberland produce reports that target different sectors, and utilizes as a basis of improving the reporting process and implementing social related activities (Timberland, 2017). Qv - The Extent Social Reports Reflect the Values of Adidas and Timberland Adidas understand the importance of values and these values are diversity, integrity, passion and performance (Adidas Group, 2017). These values contribute to innovation and creativity, collectivity at the workplace, high standards of corporate responsibility and delivering superior financials in investment returns. The mission statement is “The Adidas Group strives to be the global leader in the sporting goods industry with brands built on a passion for sports” (Adidas Group, 2016). The mission statement and value statements focus on the principle of sustainability and operating responsibility. The fundamentals of sustainability and operating responsibility including making positive different in the society, caring for the development and welfare of the employees, reduction of environmental impacts of processes and improvement of working conditions (Adidas Group, 2017). Therefore, the social reporting reflects and aligns with the mission, values and business principles Adidas communicates. Timberland appreciates the social reporting because it reflects the requirements and expectations of the society and environment. Timberland has four core values, which are humility, excellence, integrity and humanity (Timberland, 2017). To fulfill these core values, Timberland has created numerous corporate social responsibility program and engages with the communities (Borowski, 2013). Timberland mission statement is “Our mission is to equip people to make a difference in their world. We do this by creating outstanding products and by trying to make a difference in the communities where we live and work.” This mission statement affirms the social reporting in illustrating alignment of values and business principles in social, economic and environmental obligations. Qvi - Reflection on Group’s Discussion The team members contributed equally in researching and contributing information towards completion of the assignment. Each of the team members was required to collect independent information on the two companies, and the team members discussed the information before writing the report. Since the sources of most of the information were similar, the disagreement was minimal because the differences were not related to the assignment but the timing of meetings and way forward. However, the team members came to an amicable understanding contributing to the completion of the assignment. The information collected and presented during the team meetings was voluminous and the team members summarized the important information and presented. Contentions and differences existed on the variety and outline of the discussion because of the information, and the amount of information to be included in each of the section. Nevertheless, the completion of the assignment improved our understanding of social reporting and understanding how different jurisdictions in terms of laws, cultures, norms and ideological perspective shapes the decisions on sustainability, social reporting, and corporate responsibilities. References Adidas Group. (2015). Adidas Group Sustainability Progress Report. Retrieved from http://www.adidas-group.com/media/filer_public/9c/f3/9cf3db44-b703-4cd0-98c5-28413f272aac/2015_sustainability_progress_report.pdf Adidas Group. (2016). Vision and values. Retrieved from http://sustainabilityreport.adidas-group.com/en/SER2007/b/b_1.asp Adidas Group. (2017). Homepage. Retrieved from http://www.adidas-group.com/en/ Bichta, C. (2003). Corporate social responsibility: a role in government policy and regulation? Retrieved from http://www.bath.ac.uk/management/cri/pubpdf/Research_Reports/16_Bichta.pdf Boone, L., & Kurtz, D. (2009). Contemporary business 2010 update. London: John Wiley & Sons. Borowski, A. (2013). Adidas marketing strategy - an overview. New York: GRIN Verlag. Crane, A., & Matten, D. (2016). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. London: Oxford University Press. Du, S., Bhattacharya, C. B., & Sen, S. (2010). Maximizing business returns to corporate social responsibility (CSR): The role of CSR communication. International Journal of Management Reviews, 12(1), 8-19. Federal Ministry of Labor and Social Affairs. (2016). CSR: Made in Germany. Retrieved from http://download.diplo.de/New_Delhi/csr-made-in-germany.pdf Forte, A. (2013). Corporate social responsibility in the United States and Europe: How important is it? The future of corporate social responsibility. The International Business & Economics Research Journal (Online), 12(7), 815-823. Gerard, J. (2016). Ethics and values best practices: Timberland. Retrieved from http://i-sight.com/resources/ethics-and-values-timberland/ Greiwe, J., & Schönbohm, A. (2011). A KPI based study on the scope and quality of sustainability reporting by the DAX30 companies (No. 64). Working Papers of the Institute of Management Berlin at the Berlin School of Economics and Law (HWR Berlin). Oxfam Australia. (2016). Adidas. Retrieved from https://www.oxfam.org.au/what-we-do/ethical-trading-and-business/workers-rights-2/adidas/#workers Timberland. (2017). Homepage. Retrieved from https://www.timberland.com/homepage.html Walker, M., & Parent, M. M. (2010). Toward an integrated framework of corporate social responsibility, responsiveness, and citizenship in sport. Sport Management Review, 13(3), 198-213. Read More