H&M And The Rana Plaza Incident: Stakeholder Analysis

H&M is a Swedish multinational company that is involved in retail clothing. The company is well- known all over the world for its fast- fashion clothes. H&M sells trendy clothes in more than 62 countries. H&M has more than 4500 stores across the globe. The company holds the second position among the largest clothing retailer in the world. H&M provides trendy clothes for men, women and children of all age groups. The company also has its online presence that has made shopping convenient for its customers. H&M has its huge presence in Australia and the Australians form a huge customer base for the company. The apparels available at H&M are of good quality and lower prices, which is affordable by a large population of Australia (“H&M Offers Fashion And Quality At The Best Price” 2017).

My role in the organization is of a PR counselor. A public relations counselor is responsible for creating a positive brand image in the eyes of the public. A PR counselor is responsible for overcoming and solving the issues of a company that is related to its brand image. It is the duty of a PR counselor to improve the degraded image of an organization and helping the organization recover its bad phase.

H&M has faced several issues related to its deteriorating brand image when the Bangladesh factory that manufactured its clothes caught fire that injured several factory workers. The Bangladesh garment factories have often into limelight for its poor working conditions, exploitation of workers, low living wages and improper facilities (Sinkovics, Hoque and Sinkovics 2016). A majority of the Australian retailers and wholesalers purchase apparels from the Bangladesh garment factories. The big companies like H&M and Woolworths place their orders with the Bangladesh garment suppliers in order to take the advantage of cheap labor and lower taxes. The labors in the Bangladesh garment factories are paid very less especially the female workers that enable these factories to sell their garments at the cheapest rate in the world (Murshed, Islam, and Sarder 2016). The Australian’s love for cheap clothes have left the Bangladesh garment factories in financial crisis due to which they are neither able to pay sufficient wages to the labors nor are they able to improve their working conditions. On the other hand, these factory owners are violent with their labors when they miss the deadline provided by these companies. Other issues faced by these factories are long working hours, sexual harassment, underpayment, miserable working conditions and improper fire exit facilities.

H&M has been associated with the issue because the Bangladesh garment factory in Rana Plaza that supplied garments to the company caught fire that injured several workers. The media brought this issue into the limelight blaming H&M for the poor working conditions in the factory that defamed the public image of the company (Boudreau, Makioka, and Tanaka 2015). H&M was blamed that the company did not ensure the safety of the factories from where it purchased the garments and paid such less price for the products that degraded the working environment of the factories. It was found that the suppliers of H&M lacked the basic fire exit facilities that led to injury in the factories. The company was blamed for not having taken any steps for improving the safety standards in the factories.    

Stakeholders involved in the issue

Stakeholders refer to an individual, group of individuals or any organization or group of organizations that have their interest in some organization. The major stakeholders involve directors, employees, suppliers, shareholders, Government, unions and the community. Stakeholders are those whose actions affect the functioning of a business. The stakeholders invest their time, effort or money within an organization (Barua, and Ansary 2016).

The key stakeholders involved in this issue are the Bangladeshi suppliers, Bangladeshi workers, Bangladesh Government, Australian Government, unions, NGO’s, shareholders, board of directors, media, competitors and the customers. The following table shows the list of primary and secondary stakeholders:

Primary stakeholders	Secondary stakeholders
Shareholders	Australian Government
Employees	Bangladeshi  Government
Board of directors	Bangladeshi workers
Customers	Competitors: Woolworths
Suppliers	Clothing industry
	NGO’s
	Media
	Australian clothing wholesalers and retailers
	Global clothing brands
	Bangladeshi suppliers
	Departmental stores in Australia
	Bangladeshi factory unions
	Bangladeshi public
	Australian public
	Prospective customers
	Fire safety organizations in Bangladesh

Table 1: Primary and secondary stakeholders

(Source: Author’s work)

The following table shows the stakeholders using situational theory:

Stakeholders	Situational
Board of directors	Active
Customers	Active
Media	Active
Bangladeshi factory union	Active
NGO’s	Active
Fire safety organizations in Bangladesh	Active
Bangladeshi suppliers	Aware
Australian public	Aware
Shareholders	Aware
Australian Government	Aware
Bangladeshi Government	Aware
Bangladeshi workers	Latent
Employees	Latent

Table 2: Stakeholders according to situational theory

(Source: Author’s work)

Keep satisfied Board of directors Customers Employees Shareholders	Manage closely Bangladeshi workers Bangladeshi suppliers Bangladeshi factory union
Monitor (Minimum effort) NGO’s Fire safety in Bangladesh	Keep informed Media Australian Government Bangladeshi Government Australian public

Table 3: Power- interest matrix

(Source: Author’s work)

Stakeholder identification refers to the determination of the key stakeholders and their appropriate grouping. Stakeholder analysis is an in- depth vision of the interests of the stakeholder groups as to the impacts on them and their impact on the project or organization. The stakeholders identification and analysis helps in the construction of a stakeholder engagement strategy. All the stakeholders do not have similar powers and do not hold the same interests (Wang, Liu and Mingers 2015). Therefore, it is necessary to prioritize the stakeholder groups and group them accordingly. The following are the approaches to identify, analyze and prioritize the stakeholders:

• Develop a strategy: This step involves reviewing the previous engagements of the stakeholders, determining the organization’s motivation for stakeholder engagement and clearly defining the objectives.
• Map the stakeholders: This step involves clearly identifying the stakeholders and prioritizing them accordingly. This step involves utilizing the appropriate engagement mechanism such as social media, meeting and stakeholder panel.
• Prepare for engagement: This step involves defining goals and setting rules for the engagement.
• Engage stakeholder: This step involves focusing upon the communication among the stakeholders and arranging engagement sessions between them.
• Establish action plans: This step involves obtaining feedback from the stakeholders for improving the strategies and operations, planning for future engagements and building relationships with the stakeholders.  

Salience model is an effective method that aids in grouping the stakeholders and prioritize them accordingly. The project managers usually face the issue of classifying the stakeholders and prioritizing their needs. The salience model helps in identifying the prominent stakeholders that helps the project managers in prioritizing them. The model determines the prominent stakeholders in terms of power, urgency and legitimacy. Power refers to the capability of a stakeholder to force their opinions (Thijssens, Bollen and Hassink 2015). Urgency refers to the requirement for instant action. Legitimacy refers to ensuring that the involvement of the stakeholders is appropriate. The model divides the stakeholder groups into the following types:

• Dormant stakeholder: These stakeholders possess power but have neither urgency nor legitimacy. Therefore, no planning is required to meet their communication needs.
• Discretionary stakeholders: These stakeholders neither have power nor do they have urgency but they are legitimate. Therefore, they do not require much attention.
• Demanding stakeholders: These stakeholders have urgency and their needs are to be on an urgent basis.
• Dominant stakeholders: They have power and legitimacy and it is necessary to meet their communication needs.
• Dangerous stakeholder: These stakeholders have a combination of power and urgency and they are essential for the project or organization.
• Dependent stakeholders: They do not possess any power but have both urgency and legitimacy. These stakeholders are required to be kept informed as they can be useful in future.
• Definitive stakeholders: These are the most important stakeholders who have power, urgency and are legitimate. They are required to be satisfied and informed.

The stakeholder model and theory help in identifying the groups that have interest in the organization and helps in understanding their requirements and expectations. Stakeholders are an essential part of an organization and the success or failure of an organization is highly dependent upon the stakeholders. The companies are considered to be successful, which have been able to satisfy its stakeholders (Harrison and Wicks 2013).

The stakeholder theory is highly relevant to the public relations practices as PR practitioners are able to communicate the right information to the right person only when he or she knows about the stakeholder groups and their classifications. Classification of the stakeholders according to the salience model helps the PR practitioners to identify the stakeholders that have power, urgency and legitimacy and emphasize upon keeping them satisfied. The stakeholder theories and model also help the PR practitioners to identify the stakeholder that are to be either informed or monitored. The power, urgency and legitimacy of the stakeholders help the PR practitioners to design appropriate PR strategies (Cooper 2017).

Power-interest matrix

The company should have compensated to the families of the dead and injured workers. The company must spread awareness regarding the poor working conditions in the Bangladeshi garment factories and must encourage the other brands such as Walmart to contribute towards improving the working conditions of the factories by increasing the payments given to the suppliers and personally ensuring the security measures within the factories. This can help the company in improving its brand image and winning the support of the people. Nowadays, people prefer to associate with those companies and purchase goods and services from those companies that work for the betterment of the society and environment. Therefore, H&M can extend its Corporate Social Responsibility (CSR) activities in order to win the confidence of the people and become sustainable (McWilliams 2014). The company must make strict rules and regulations for its suppliers and specify the terms of contract so that the suppliers ensure that they meet the basic working condition requirements. This shall help in reducing the exploitation of the workers and harassment during the working hours and shall also improve the quality of products.

After the incident of Rana Plaza collapse, H&M used Facebook to get the signatures of thousands of people and finally became the first recognized brand to sign the ‘Accord on Fire and Building Safety’ in Bangladesh. The agreement shall compel the company to ensure safe working conditions within the Bangladeshi garment factories. H&M has taken several steps in order to strengthen the Bangladeshi textile factory workers. The company emphasized upon sustainable development of its business by developing several programs that support the suppliers (Reinecke and Donaghey 2015).

H&M must maintain ethical PR relations by ensuring that the messages provided by the company are true and the company shall adhere to all the promises made by it. The company must ensure the authenticity of the person who is involved in the public relations activities in order to avoid any confusions and misleading. The company must ensure that the public relations activities do not cause any harm to the stakeholders involved and their respect is maintained. The company must ensure that it works for the betterment of the society on a whole (Parsons 2016).

Apple Inc is one such company that has been successfully utilizing its PR practices for becoming successful. The PR practices of Apple have shown that the company has emphasized much upon communication and has been successful in keeping its customers engaged with the brand. The company has been efficiently utilizing press release and has valued the feedback obtained from the customers. The company has emphasized upon culture marketing and has designed its PR activities according to the changes in the culture and trends. The company has outsourced its manufacturing in various countries and has ensured that the factories have proper working conditions (Swann 2014).   

Conclusion:

The case study of Rana Plaza collapse has been studied to understand the role of H&M in the incident and its ethical implications. The report mentioned the various stakeholders that were affected by the Rana Plaza Collapse in Bangladesh. The stakeholders were classified in primary and secondary groups and the advantages of the stakeholder model were specified. The report included recommendation on the H&M’s public relations practices after the incident. Further, the report mentioned the ethical considerations that the company must follow. Lastly the report mentioned Apple Inc as the company with excellent PR practices and a role model for other organizations.

References:

“H&M Offers Fashion And Quality At The Best Price”. 2017. Hm.Com. https://www.hm.com/au.

Barua, Uttama, and Mehedi Ahmed Ansary. “Workplace safety in Bangladesh ready-made garment sector: 3 years after the Rana Plaza collapse.” International Journal of Occupational Safety and Ergonomics (2016): 1-6.

Boudreau, Laura, Ryo Makioka, and Mari Tanaka. “The Impact of the Rana Plaza Collapse on Global Retailers.” URL: https://goo. gl/b7CRTH (2015).

Cooper, Stuart. Corporate social performance: A stakeholder approach. Taylor & Francis, 2017.

Harrison, Jeffrey S., and Andrew C. Wicks. “Stakeholder theory, value, and firm performance.” Business ethics quarterly 23, no. 1 (2013): 97-124.

McWilliams, Abagail. Economics of Corporate Social Responsibility. Edward Elgar Publishing, 2014.

Murshed, Hasan, Atiqul Islam, and Atiqul Hoque Sarder. “Mass Casualty in A Building Collapse: Techniques of Anaesthesia in Mass Casualty Management (Rana Plaza Collapse at Savar, Bangladesh).” Journal of the Bangladesh Society of Anaesthesiologists 27, no. 1 (2016): 12-16.

Parsons, Patricia J. Ethics in public relations: A guide to best practice. Kogan Page Publishers, 2016.

Reinecke, Juliane, and Jimmy Donaghey. “The ‘Accord for Fire and Building Safety in Bangladesh’in response to the Rana Plaza disaster.” (2015).

Sinkovics, Noemi, Samia Ferdous Hoque, and Rudolf R. Sinkovics. “Rana Plaza collapse aftermath: are CSR compliance and auditing pressures effective?.” Accounting, Auditing & Accountability Journal 29, no. 4 (2016): 617-649.

Swann, Patricia. Cases in public relations management: The rise of social media and activism. Routledge, 2014.

Thijssens, Thomas, Laury Bollen, and Harold Hassink. “Secondary stakeholder influence on CSR disclosure: An application of stakeholder salience theory.” Journal of Business Ethics 132, no. 4 (2015): 873-891.

Wang, Wei, Wenbin Liu, and John Mingers. “A systemic method for organisational stakeholder identification and analysis using Soft Systems Methodology (SSM).” European Journal of Operational Research 246, no. 2 (2015): 562-574.