Discuss the extent to which the stakeholders of a large clothing retailer might want the business to become more ethical and socially responsible.
CAMBRIDGE
A level and AS level
Year Examined
October/November 2018
Topic
Ethics & Corporate Social Responsibility
👑Complete Model Essay
Stakeholder Perspectives on Ethical and Socially Responsible Practices in a Large Clothing Retailer
The call for businesses to operate ethically and responsibly has never been louder. This essay will explore the extent to which stakeholders of a large clothing retailer might want the business to embrace ethical and socially responsible practices, recognizing that their perspectives are often diverse and potentially conflicting.
Customers: Increasingly, customers are concerned about the origins of their clothing. They want assurance that workers are treated fairly and that environmental impacts are minimized. This consumer awareness has fueled demand for transparency and ethical sourcing. A retailer ignoring these desires risks alienating a growing segment of conscientious shoppers. For instance, the public outcry against fast fashion giant Boohoo in 2020, following revelations of worker exploitation in their UK supply chain, demonstrated the tangible damage unethical practices can inflict on brand image.
Suppliers and Employees: Ethical behavior resonates deeply with suppliers and employees. Suppliers, particularly in developing countries, prefer partnerships with businesses committed to fair wages, safe working conditions, and long-term contracts. This fosters trust and stability, crucial for sustainable supply chains. Similarly, employees are more likely to be motivated and loyal when working for a company that aligns with their values. A 2018 study by Cone Communications found that 76% of millennials consider a company's social and environmental commitments when deciding where to work.
Managers and Owners: While some managers and owners might prioritize profit maximization above all else, many understand the long-term benefits of ethical conduct. A strong ethical reputation can serve as a competitive advantage, attracting customers and investors. Furthermore, ethical sourcing can lead to greater supply chain resilience and reduced risks of reputational damage. The growth of ethical investment funds, which prioritize companies with strong environmental, social, and governance (ESG) credentials, further underscores the financial incentive for ethical business practices.
Shareholders: Shareholders are traditionally concerned with financial returns. However, there's a growing awareness that unethical practices present significant financial risks. Reputational damage, legal battles, and consumer boycotts can significantly impact shareholder value. The increased scrutiny from ethical investment funds is prompting more shareholders to push for responsible business practices.
Communities: Local and global communities are stakeholders impacted by a retailer's operations. Ethical sourcing can contribute to economic development and poverty reduction in supplier communities. Environmentally responsible practices, such as reducing waste and minimizing pollution, benefit communities by protecting natural resources and public health. The Rana Plaza disaster in Bangladesh (2013), which killed over 1,100 garment workers, tragically highlighted the devastating consequences of neglecting community well-being in the pursuit of cheap production.
Conflicting Objectives: It is important to acknowledge that there can be conflicts. For instance, while consumers demand lower prices, ensuring fair wages and sustainable practices often increases production costs. Balancing these competing interests requires businesses to adopt a nuanced approach, potentially accepting slightly lower profit margins to prioritize ethical considerations.
Conclusion:
The pressure for large clothing retailers to become more ethical and socially responsible is undeniable. Stakeholders, including customers, suppliers, employees, and communities, increasingly demand transparency, fairness, and sustainability. While short-term profit motives might tempt some businesses to prioritize cost-cutting over ethics, the long-term benefits of responsible practices – including enhanced brand reputation, improved employee morale, and reduced risks – are increasingly evident. To remain competitive and relevant in a world demanding ethical conduct, large clothing retailers must embrace their responsibility to people and the planet.
Discuss the extent to which the stakeholders of a large clothing retailer might want the business to become more ethical and socially responsible.
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A-Level Business Studies Essay Guide: Ethical and Socially Responsible Large Clothing Retailers
This essay explores the extent to which stakeholders of a large clothing retailer might want the business to become more ethical and socially responsible. You will need to analyze the various stakeholders, their objectives, and the potential conflicts that might arise when pursuing ethical and socially responsible practices.
Understanding the Stakeholders
A large clothing retailer has numerous stakeholders, each with distinct interests and objectives.
- Customers: Want high-quality, affordable clothing, ethical sourcing, environmental sustainability, and fair labor practices.
- Suppliers: Seek fair prices, timely payments, and long-term relationships.
- Employees: Desire fair wages, safe working conditions, career development opportunities, and work-life balance.
- Managers: Focus on profitability, meeting stakeholder expectations, and maintaining a positive brand image.
- Owners/Shareholders: Prioritize profit maximization, return on investment, and long-term business success.
- Communities: Expect responsible environmental practices, support for local businesses, and fair treatment of workers.
Analyzing Stakeholder Objectives
Stakeholders' objectives may be aligned or conflicting.
- Profit Maximization: Owners and shareholders may prioritize profit above all else, potentially leading to cost-cutting measures that compromise ethics and social responsibility.
- Cost Reduction: Lowering production costs by outsourcing to countries with low wages or weak labor regulations might be seen as necessary for profitability by managers, but conflict with ethical concerns.
- Social Responsibility and Ethical Practices: Customers, employees, and communities may demand businesses to prioritize ethical sourcing, fair labor practices, and environmental sustainability.
- Long-Term Sustainability: Businesses with a long-term focus may prioritize sustainability, fair trade, and ethical practices to build a positive brand image and attract loyal customers.
- Short-Term Profitability: Businesses may prioritize short-term gains by cutting corners on ethical practices, potentially impacting long-term sustainability and stakeholder trust.
- Reputation: Ethical and socially responsible practices can enhance a company's reputation, attract talent, and increase brand loyalty.
- Competitive Advantage: Ethical practices can create a competitive advantage, differentiating a business from competitors and appealing to socially conscious consumers.
Analyzing the Conflict
The pursuit of ethical and socially responsible practices can create conflicts between stakeholders' objectives. For example,
- Customers may want lower prices, but ethical production often increases costs.
- Suppliers might struggle to meet ethical standards while maintaining profitability.
- Investors may prioritize short-term profits over long-term sustainability investments.
Evaluating the Impact of Stakeholder Influence
Consider the following when evaluating the extent to which stakeholders influence ethical and socially responsible practices:
- Dominant Stakeholders: Identifying the stakeholders with the most influence over business decisions is crucial. Owners and shareholders typically have a significant influence, but the power of customers, employees, and community groups is growing due to social media and activism.
- Social and Political Pressure: Increased public awareness and scrutiny of corporate practices can lead to calls for more ethical and socially responsible behavior.
- Business Culture: Corporate culture plays a significant role in shaping ethical behavior. Organizations with a strong ethical culture are more likely to prioritize ethical conduct and social responsibility.
- Stage of Economic Development: The stage of economic development in different countries can influence ethical standards and stakeholder expectations. In developing countries, lower wages and weaker labor laws may present challenges for businesses seeking to be ethical.
Essay Structure and Writing Tips
A well-structured essay will present a clear argument and support it with evidence. Here's a suggested structure:
- Introduction: Define ethical and socially responsible business practices, introduce the main stakeholders and their objectives, and state your argument about the extent to which stakeholders want ethical and socially responsible practices.
- Body Paragraphs: Discuss each stakeholder individually, outlining their objectives and how their interests might align or conflict with ethical and socially responsible practices. Use examples to support your points.
- Evaluation: Analyze the influence of stakeholders and the factors that might encourage or hinder ethical and socially responsible behavior.
- Conclusion: Summarize your argument and offer a balanced conclusion about the extent to which stakeholders influence ethical and socially responsible practices, acknowledging both the positive and negative aspects. Include a final reflection on the overall importance of ethical and socially responsible practices within the large clothing retail industry.
Remember to:
- Use relevant business terminology.
- Provide clear and concise explanations.
- Develop your arguments thoughtfully and logically.
- Support your points with evidence and examples.
- Engage in critical analysis and evaluation.
- Proofread carefully for grammar and spelling errors.
Conclusion
This essay guide provides a framework for writing a thoughtful and insightful A-Level Business Studies essay on the extent to which stakeholders of a large clothing retailer might want the business to become more ethical and socially responsible. By understanding stakeholder objectives, analyzing conflicts and influences, and providing a balanced evaluation, you can demonstrate your understanding of ethical and socially responsible business practices and their impact on stakeholders.
Extracts from Mark Schemes
Discuss the extent to which the stakeholders of a large clothing retailer might want the business to become more ethical and socially responsible. [20]
Answers may include: Candidates may well recognise that such a business will have different stakeholders – customers, suppliers, employees, managers, owners, shareholders, communities, who may well have different and possibly conflicting objectives / ideals.
• There are opportunities for a business to focus only on making profits and this could lead to unethical and socially irresponsible behaviour, e.g. exploiting low wage / child labour clothing production.
• The main objectives of the business may be – Profit maximisation – Being socially responsible and ethically minded – Cost reduction e.g. cheap clothing production – Short-term profitability – Long-term sustainability – Building reputation – Establishing a competitive advantage through ethics and social responsibility
20 9609/12 Cambridge International AS/A Level – Mark Scheme PUBLISHED October/November 2018 © UCLES 2018 Page 11 of 14
Question Answer Marks 6
Evaluative comments might discuss questions such as who the dominant stakeholders are and what the dominant business objectives are. The answer may well depend on stakeholder perceptions of what is best for the business / society in short and long term.
Stronger evaluation may mention the influence of social/political pressure for more ethical and socially responsible business activity, which could give stakeholders little choice in the matter, or the influence of the business cultures in individual countries, or the stage of economic development in different countries.