This document is intended for students studying the BTEC Level 3 Extended Diploma and need help on their 1st assignment in Unit 20 - Investigating Corporate Social Responsibility (CSR). The grade received on this essay was D* and students may copy this document if they wish. Teachers are also welc...
Unit 20: Assignment 1 - Current CSR issues facing
large private sector businesses
1
,Assignment 1 of 3: Current CSR issues facing large private sector businesses
Company background
Starbucks is a multinational company owned coffee shop that was first founded on March
30th, 1971 by three people who originally met at the University of Chicago whilst undergoing
their studies. They had the collective idea to produce and sell coffee and they slowly
continued to grow their company over the years until it was purchased by Howard Schultz in
1987 and the company began to rapidly grow from there. Now Starbucks is one of the
largest and well-known companies across the globe pulling in a total of “$26.51 billion” in
2019 alone with over “300,000” employees according to sources 1 . Apart from its impressive
annual revenue, Starbucks has also been a very open company when it comes to showing
off how it has dealt with major world issues such as climate change, deforestation and the
rights of its workers overseas. It has made sure that the media and the public are fully aware
of its efforts in order to remain a strong and responsible company by consistently providing
all its annual figures on the official website and even on social media platforms such as
Instagram and Facebook.
Moving on, H&M is a multinational Swedish based retail company that specialises in selling
clothes to its customers. The company first started off in 1947 by Swedish entrepreneur
Erling Persson after he toured the United States and noticed the growing fashion in selling
women’s clothing especially in the larger cities such as New York. The original company
name was “Hennes” a Swedish meaning for “her”, since that is what the company was
based around, would later be changed to H&M once Hennes gained ownership of a
company called Mauritz therefore making it Hennes & Mauritz (H&M). This larger company
expanded into the male and children’s clothing industry from 1968 onwards and has
continued to provide clothing globally ever since2. H&M was able to generate an incredible
$24.3 billion in 2019 which is a £1 billion increase from the previous year 3 and it has
approximately 180,000 employees across 74 total markets4.
What is CSR?
Before addressing the effects, CSR issues have had upon the two large private sector
businesses I have chosen (Starbucks and H&M), I think we need to understand why CSR is
such a huge problem for companies. Corporate social responsibility (CSR) is a key aspect in
the success or failure of many business organisations today. It covers the responsibility
company’s uptake not just because they themselves feel like it is something they should do
1
https://www.statista.com/statistics/266466/net-revenue-of-the-starbucks-corporation-worldwide/
2
https://hmgroup.com/about-us/history.html
3
https://www.statista.com/statistics/252190/gross-sales-of-the-h-und-m-group-worldwide/#:~:text=In%20fiscal%20year%202019%2C
%20global,about%2024.3%20billion%20U.S.%20dollars.&text=H%26M%20is%20a%20leading%20global,and%20a%20clear%20business%20concept.
4
https://career.hm.com/content/hmcareer/en_gb/workingathm/get-to-know-us/our-workplace.html#:~:text=Today%2C%20H%26M%20employs
%20around%20179%2C000,out%20are%20our%20remarkable%20employees.
2
, be obliged to do, but to please the many stakeholders inside and outside of the company. It
is a mutual benefit between communities and the company itself for both to gain what they
want from each other. Some of the most relevant and important areas of CSR involve the
responsibilities concerning the environment and the company’s chain of production. The
reason why this is such a relevant area is down to the fact that there is a demand within the
market for companies to take more responsibility within their affairs and if businesses don’t
align with their consumers wishes, it could drive them to large losses in profit or possible
bankruptcy. Additionally, if CSR issues are dealt with, it can massively improve customer
loyalty and possible media attention attracting a higher volume of consumers.
What are stakeholders?
All companies across the world have stakeholders within the business but many people are
led to assume stakeholders are only people who operate within the business. However, this
is not the case. The term stakeholder simply means anyone who has an interest within a
business therefore, consumers are also a part of a company’s stakeholders and are in fact
one of the largest and most influential stakeholders. A stakeholder is often confused with
the word “shareholder” and although a shareholder is a stakeholder of a large business, a
stakeholder doesn’t have to have any of the company’s shares.
How are these stakeholders affected by CSR?
Each stakeholder of a business will obviously have different sorts of impacts upon the
business depending on how they are affected by company affairs.
As previously mentioned, the customer is a very influential stakeholder since they are the
ones who provide a company with its source of income and depending on whether they
want to purchase a company will decide if the company succeeds or doesn’t. The CSR of a
company can have a large impact on whether consumers feel inclined to purchase from
them or go to a market rival due to CSR becoming a more important factor in people’s
overall opinion of a company. So, if companies like Starbucks and H&M are careful about
their CSR image, then there is a higher probability that new and old customers will decide to
purchase from them.
Employees are also important stakeholders since they have the power to decide whether
they want to help produce the company’s products or services it provides and if a company
has no income method because employees refused to work, then they will be forced to
make changes that align with their wishes. An example of this would be if the employees
were unhappy about the chain of productions standards that a company has set out or if
new policies are affecting them or those around them.
Suppliers are also an essential part of businesses since they are the ones who are supplying
the company with all their products which go on to be sold within the market. Suppliers
would most likely be affected by the chain of production CSR since this is the one that deals
with them the most. If a company was to impose or introduce an unfair system or policy
that heavily disrupted the suppliers such as less wages or demanding higher volumes of
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