According to Schermerhorn (2012), Corporate Social Responsibility (CSR) is an organisation’s obligation to act in ways that serve both its own interests and the interests of stakeholders, representing society at large. Sustainability is an important social responsibility goal.
Discuss this statement using an organisation to illustrate CSR practices. To do this you should describe, apply and critically evaluate the applicability of relevant theoretical concepts in influencing sustainability practices in your chosen organisation.
Corporate Social Responsibility (CSR) is defined as a business approach that focuses towards sustainable development of various stakeholders of a company by delivering social, economic and environmental benefits. The role of CSR approach has grown substantially between modern corporations, and they implement this approach to increase their brand reputation and sustain their future growth. CSR policies provide guidelines for corporations in order to perform their duties in an ethical manner which assists in the development of employees and society. This report will analyse the CSR activities of ‘Woolworths Limited’ which is an Australian supermarket chain that offers high-quality products to its customers based on their requirements. Modern corporations focus towards needs of consumers and offer products based on their requirements; the firms primary motive is customer satisfaction rather than increasing profitability. This report will focus on analysing whether sustainability is a significant social responsibility objective for ‘Woolworths’ by evaluating various management theories. Further, the report will examine the CSR framework of ‘Woolworths’ and evaluate the organisational theories in the context of society and social values.
Woolworths operates in the retailing industry, and it is Australia’s largest supermarket chain with services in 995 locations (Woolworths Group, 2017a). The company was founded in 1924, and it operates in multiple locations of Australia, New Zealand and India. The firm is known for offering high-quality products to its customers throughout its stores based on their preferences. The corporation has implemented an effective CSR model which focuses on sustainable development of its stakeholders. The firm generated revenue of AU$55 billion in 2017 financial year (Woolworths Group, 2017b). The stakeholders in the company include customers, employees, suppliers, shareholders, environment, and local communities.
Effective CSR model allows the corporation to perform sustainable practices that improve its brand image and enhance market share. Woolworths Limited has implemented ‘Triple bottom line’ CSR theory which focuses on sustainable development three main parts including social, environmental and financial (Solomon, 2016). Organisations implement this framework to evaluate their performance in a broader perspective in order to create better and greater business value. The CSR report of Woolworths provides that it has established an effective CSR framework that focuses on sustainable development of people, planet and prosperity.
Traditionally, the primary objective of companies was to increase shareholders value at any costs. In case of ‘Shareholder Theory’, shareholders were considered as owners of the corporation since they take the risk of investing in firm’s operations, therefore, company give preference to their interest and every other stakeholders’ interest were considered as secondary (Tse, 2011). In recent years, companies focus on sustainable stakeholders’ development rather than shareholders’ value maximisation approach. The corporations ethically perform their activities to ensure that they are fulfilling stakeholders’ interest while at the same time contributing to the development of local communities which sustain their future growth. Leading organisations adopt stakeholder development approach because customers prefer to buy products from corporations that are performing their duties in an ethical manner (Dos Santos, Svensson & Padin, 2013).
As per the 2015 Global CSR study of Cone Communications, more than 91 percent customers expect companies to be more socially responsible, 84 percent provided they seek responsible products and 90 percent stated that they boycott an irresponsible corporation’s products (Cone Communications, 2015). Woolworths has implemented stakeholder approach to fulfil their corporate responsibilities ethically. The company offer high-quality products to its customers based on their requirements and focus on reducing its carbon footprint. This approach creates a positive brand image of the enterprise which assists in the sustainable development of the firm.
In Stakeholder approach, company focus towards fulfilling the interest of each stakeholder but several times executives faces the problem when one’s gain is another’s loss. For example, shareholders might not prefer that company invest heavily on environmental factors such as recycling instead of shareholder’s value maximisation. Owners generally seek higher profits which mean corporation have to reduce its staff salary (Carney, Gedajlovic & Sur, 2011). The decision of outsourcing secondary activities can result in substantially reducing company’s expenses, but it is not in the interest of employees since they will losses their jobs. Therefore, executive of Woolworths has to ensure that company is considering the interest of each stakeholder while taking an important business decision to avoid taking actions that are detrimental to their growth.
Woolworths has adopted ‘triple bottom line’ approach to fulfil its corporate responsibilities which focus on the interest of people, planet and prosperity. The Annual CSR Report of Woolworths provides that corporation perform following activities to ensure that it is fulfilling stakeholders’ interest which assists in sustainable development (Woolworths Group, 2017c).
People
Planet
Prosperity
Woolworths Limited has implemented an effective CSR framework that focuses on the development of different stakeholders. Sustainable development is one of the primary objectives of the enterprise and top-level management ensure that they are implementing policies to promote sustainability. Organisation offers high-quality fresh products to its customers throughout its stores and promotes diversity in its workforce. The firm ensures that it is not polluting the environment and implemented effective recycle programs that reduce food waste and energy consumption (Orlitzky, Siegel & Waldman, 2011).
The company maintain a positive relationship with suppliers and local community and implement policies for their development. All these factors assist Woolworths in maintaining a positive brand image. Customers prefer to buy products from the company because it ethically performs its duties and contributes to society’s development (Carroll & Shabana, 2010). It provides a competitive advantage to Woolworths and assists them in becoming Australia’s largest retailer. Effective CSR structure provides company loyal customer base that increases its sales. The commitment of corporation towards CSR practices assists them in gaining competitive advantage and sustains its future growth.
Conclusion
Conclusively, Woolworths has implemented an effective CSR framework by implementing ‘triple bottom line’ theory which assists in ethically fulfilling its corporate responsibilities. The top-level executives of the company consider the interest of each stakeholder while taking a significant business decision which increases firm’s brand image. The corporation promotes employee diversity, equal pay, better working conditions, equal growth opportunities and engagement programs. The firm also takes appropriate actions to reduce environmental pollution, increase energy consumption, and promote recycling. These factors assist the corporation in maintaining a positive brand image which increases company’s sales and market share which assist in sustainable development. The growth of Woolworths proves that effective compliance with CSR policies assists corporations in achieving sustainable development
References
Australian Food News. (2017). Woolworths sets 2020 corporate responsibility strategy. Retrieved from https://www.ausfoodnews.com.au/2017/02/13/woolworths-sets-2020-corporate-responsibility-strategy.html
Carney, M., Gedajlovic, E., & Sur, S. (2011). Corporate governance and stakeholder conflict. Journal of Management & Governance, 15(3), 483-507.
Carroll, A. B., & Shabana, K. M. (2010). The business case for corporate social responsibility: A review of concepts, research and practice. International journal of management reviews, 12(1), 85-105.
Cone Communications. (2015). 2015 Cone Communications/Ebiquity Global CSR Study. Retrieved from https://www.conecomm.com/research-blog/2015-cone-communications-ebiquity-global-csr-study
Diversity Dimension. (2016). Woolworths. Retrieved from https://diversity-dimensions.com.au/woolworths/
Dos Santos, M. A. (2011). Minimizing the business impact on the natural environment: a case study of Woolworths South Africa. European Business Review, 23(4), 384-391.
Dos Santos, M.A., Svensson, G. and Padin, C., 2013. Indicators of sustainable business practices: Woolworths in South Africa. Supply Chain Management: An International Journal, 18(1), pp.104-108.
Orlitzky, M., Siegel, D. S., & Waldman, D. A. (2011). Strategic corporate social responsibility and environmental sustainability. Business & society, 50(1), 6-27.
Solomon, D. (2016). Analysis of Woolworths CSR strategy. Retrieved from https://devsolomon.com/analysis-of-woolworths-csr-strategy/
Tse, T. (2011). Shareholder and stakeholder theory: after the financial crisis. Qualitative Research in Financial Markets, 3(1), 51-63.
Woolworth Limited. (2008). The Facts About Grocery Retailing at Woolworths. Retrieved from https://library.corporate-ir.net/library/14/144/144044/items/287977/FactsAboutGroceRetailingatWoolworths.pdf
Woolworths Group. (2017a). Woolworths Supermarkets. Retrieved from https://www.woolworthsgroup.com.au/page/about-us/our-brands/supermarkets/Woolworths/
Woolworths Group. (2017b). Annual Reports. Retrieved from https://www.woolworthsgroup.com.au/page/investors/our-performance/reports/Reports/Annual_Reports
Woolworths Group. (2017c). 2017 Corporate Responsibility Report. Retrieved from https://www.woolworthsgroup.com.au/icms_docs/189425_corporate-responsibility-report-2017.pdf
Woolworths Group. (2017d). Encouraging Diversity. Retrieved from https://crs.woolworthsgroup.com.au/page/people/
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