Legal and Ethics Aspects - Home Depot - Case Study Example

SSIGNMЕNT 4 LЕGАL АND ЕTHIСS АSРЕСTS Case Study on Home Depot Submitted By: NAME: INSTITUTION: COURSE: INSTRUCTOR: DATE: © 2015 1. The attributes of this stakeholder Over the last two decades, environmental issues have become broadly regarded as a ‘vital business stakeholder’ by a number of stakeholders of the organization. This emergency of environmental stakeholder as common interest of businesses implies that marketing and organization as a whole has a responsibility in the broader societal good. Ferrell and Ferrell (2013) assert that, as customers become increasingly aware of environmental problems as a result of consumption, they put more consideration on the environmental and social performance of products they buy. A proper understanding of this customer and environmental stakeholders should influence the marketing planning of businesses seeking to make improved decisions about environmental effect. A recent study by Ferrell and Ferrell (2013) found that nearly 70 per cent of the companies studied have increased their commitment to environmental issues and more are expected to increase this commitment in the coming years. Companies are increasingly examining the value their consumers place on environmental issues. Whereas in the past companies frequently insulated customers from topics such as environmental conservation, food, energy and climate change, currently they are engaging them in a more open debate, often informing customers on how they can influence change with their buying choices (UNEP, 2005). This rising awareness together with increased pressure on companies to take action around environmental issues requires firms to be ready to carry out radical transformation in how they do business. Environmental issues are influencing companies to create and implement new products and processes in order to properly respond to the needs and concerns raised by their consumers and stakeholder groups. Environmental concerns have forced businesses to generate and implement new innovation that integrates a common concern on environmental integrity, without sacrificing financial prosperity. Company’s strategy and performance Home Depot has initiated various projects that are geared towards addressing environmental issues. The company is committed to improving the environment by selling of products that are produced, packaged and labeled in a manner that put environment in consideration. The company has initiated programs that reduce the firm’s and its customers’ effects on environment. In 1991 for example, the company started using stores and offices supplies, advertising, signs and packing bags manufactured with recycled materials (Miller et al, 1998). Similarly in 1992, the Company started a program to recycle wood board shipping packaging that was ‘a first’ in the industry. Additionally, Home Depot sells wood products from tropical and temperate forests that are certified as “well managed” (Miller et al, 1998). Moreover, the corporation has started to use reusable “slip sheets” instead of “hardwood shipping pallets” to minimize waste and energy usages in order reduce pressure on hardwood forests (Miller et al, 1998). The above measures and the many awards the company has received in recognition to its environmental conservation efforts reveal that the company is performing well in regard to environmental stakeholder. The company strives to apply social responsibility to its employment practices, with an aim of assembling a diverse workforce that take into consideration the markets it serves. The company provides opportunities to all its employees to develop their carrier, regardless of gender differences. 2. Home Depot’s budgeting justification Home Depot is using so much money for philanthropy in order to raise public awareness of a social need and promoting the good deeds of the corporation. It uses philanthropy strategically so as to demonstrate to the public that it recognizes the significance of working for a better society. Philanthropy for instance when used to address a societal problem elicits media attention, hence resulting to the mentioning of the corporation’s products in news coverage leading to free marketing. Strategic philanthropy for Home Depot Home Depot has used philanthropy as a means of marketing in a number ways which has eventually increased its reputation. Firstly, the corporation provides financial support to a reputable charitable firm that will help it to attain the societal benefit it is seeking. Consequently, Home Depot allows this ‘non-profit organization’ to vault for its good deeds instead of the company praising them. Secondly, Home Depot can use philanthropy to encourage its customers and employees to help a good cause by offering to donate a part of its income. A case in point is resides in the fact that Home Depot promises to donate 5 dollars to a charity for every television set sold (Miller et al, 1998). This promotional campaign is used by the Company to increase awareness of the charity’s needs while increasing its sales simultaneously. Finally, Home Depot has used philanthropy to back a long term societal cause as observed by Ferrell and Ferrell (2013). In fact, Companies have become famous many a time for their long-standing support of a specific charity or community cause. 3. Home depot’s recessionary strategy I would say that Home depot’s recessionary strategy of eliminating debt and halting growth is wise. It is therefore recommend that the CEO should adopt this strategy as it will allow the corporation to minimize capital spending and suspend a stock ‘buyback program’ which helped the corporation to avoid losses and prevent it from having to borrow in order to support its expansion efforts (UNEP, 2005). This will in essence give the corporation the needed financial strength of paying all its expenses from its revenues and hence prevent future losses and reduce risk associated with recessing economy. However, the CEO should be cautioned that this strategy will limit the organization’s ability to grow and adapt to ever changing business environment. The corporation needs to adopt other strategies if the revenues continue to fall. This strategy puts the corporation at a disadvantage in relation to its rivals such Lowe, which continued to expand by taking advantage of low costs of land and building materials as well as cheap labor. In conclusion, Home Depot is in an industry that has been adversely affected during this recession, so it would be wise for the corporation to be increasingly fiscally conservative in their expansion strategy. And since corporation is being conservative, it would be better for them to minimize debt as the corporation is in a standing where it can get a good return on the loan they are borrowing because the corporation is being conservative and not buying stock, constructing new stores or penetrating new markets. REFERENCES Ferrell, O. C & Ferrell, J. F (2013). Business Ethics – Ethical Decision Making Cases Miller, R., Michalski, W & Stevens, B (1998). 21st Century Technologies: Promises and Perils of a Dynamic Future. Organization for Economic Co-operation and Development (OECD) UNEP (2005). Environment and Trade – A Handbook, 2nd Edition. The International Institute for Sustainable Development (IISD) Read More