Sustaining a Business
Every business exists for one primary reason: to make money. However, a business model should not be just focusing on the financial performance of the company. There is an increasing expectation of organization to be socially responsible, caring for its environment and acting in accordance to the interest of their stakeholders (Dess, Lumpkin and Taylor 2004). Stakeholders are any individuals related to the business either directly or indirectly (BBC 2014). They are broadly categorized in two groups: Internal stakeholders (for example, shareholders, employees, suppliers) and external stakeholders (for example, consumers, government and the community). In order to sustain a business, it is increasingly known that every corporate should practice and be involved in Corporate Social Responsibility (CSR) activities (Uddin, Hassan and Tarique 2008). CSR is defined as to how “companies manage their businesses to produce an overall positive impact on society through economic, environmental and social actions”(IBM 2014). This is especially important for big global brands, as it has been proven to generate significant returns to the businesses (Saeed and Arshad 2012).
Three aspects of CSR (CSR watch jordan 2014)
This paper will review and look into the performance of the World’s largest organization that owns more than 50 international luxury brands, LVMH (Moët Hennessy-Louis Vuitton) Group and in particular, its most profitable brand – Louis Vuitton (LV) – which has been the World’s Most Powerful Luxury brand since 2008, achieving a brand value of $22,719 million in 2013 (Roye 2013). A discussion of both the positive and negative impacts it has towards the society, environment and its stakeholders will be highlighted.
The case for LVMH/LV
Achieving sustainability, through social, economic and environmental responsibility acts, is the key to long-time improvement in corporate competitiveness (Husser et al. 2012). The LVMH Group agrees and believes that “Sustainable development is inseparable from LVMH’s strategy” (LVMH 2012 annual report 2012) and it will inevitably affect the business’s performance. The company (including the brands it owns) has been highly involved in various CSR activities and committed to benefit the society, environment and its stakeholders; Among 100 global companies, it has been ranked as the 58th company with the best CSR reputation (Smith 2013). Environment
LVMH and LV emphasize on working with the right partners to conserve and safeguard the natural resources on Earth and develop innovative and eco-friendly products that do not cause irreversible harm to the Environment (LVMH 2012 annual report 2012). Their commitment to the environment is made known to their stakeholders, particularly their employees and suppliers. For example, employees are educated and trained to be environmentally responsible. And awareness programmes with suppliers have been conducted to encourage environment practices such as reducing carbon emission (LVMH Code of Conduct 2014). Employees
LV is known as one of the few globally established brands that did not exploit lowly paid workers (Tungate 2008). Both LVMH and LV value their employees and see each individual as an asset, taking efforts in encouraging and developing strengths. LVMH respects individual rights and makes sure that everyone is working in a safe and healthy condition. LVMH’s efforts in highlighting this area of importance have not only received positive coverage from the media, it also gained itself worldwide recognition - nominated as one of the ‘preferred employers’ from a survey conducted in 12 countries (LVMH 2012 annual report 2012).
Being proactive and integrating environmental practices into the operation of the business and empowering the employees are some of the CSR activities that LVMH and LV have been doing to gain and maintain its favourable reputation among its stakeholders. Ultimately, it all boils down...
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