BUS305 Importance of Corporate Social Responsibility

1.1 Background of the research

Corporate social responsibility (CSR) defines as the self-regulating business model, which supports an organisation to remain socially accountable for its stakeholders, itself, as well as the public (Crane, Matten and Spence,2019) It involves a set of activities performed by an organisation that brings up a positive impact on the social, economic, and environmental factors. The CSR practices play a significant role within the growth, and the success of an organisation as a socially responsible company become able to gain the trust of its stakeholder in a significant manner which in turn influence their decision in a positive way for contributing towards organisation growth as well as success (Amini and Bienstock, 2014). On the other hand, supply chain management refers to the process of managing the flow of raw material, work-in-progress, inventory, goods, or services from the place of its origin to final consumption (Daniel, 2020). Effective supply chain practices supports an organisation to effectively manage the demand, deal with disruption, meeting customer demand, carrying the right amount of inventory, etc. (Bostrom, 2014).The CSR practices not performed individually by the owners of an organisation instead, it requires the involvement of all its stakeholders for implementing practices related to social responsibility (Bernstein 2020). Hence an organisation must focus on involving its close stakeholders in CSR practices for bringing up positive responses.

The current report is based on the topic “Importance of Corporate Social Responsibility in shaping supply chain management: The case of sportswear apparel Nike and Puma” and for conducting this study Nike and Puma is taken into consideration, which are both large multinational organisations and deals in offering products or services related with footwear and apparels along with the accessories in sports category. Both the organisations are proliferating by providing a variety of products or services associated with sports and other divisions by maintaining a range of physical as well as online channels for offering its commodities to customers (Gualandris and Kalchschmidt, 2014). To protect its brand, in 2004, Nike became active and acknowledging human rights and increased their monitoring efforts on their plants and factories (Nisen, 2013). As a result of that, in 2005, Nike became the first company in its industry to provide a thorough list of the factories they worked with and the revealed working conditions and wages (Poker, 2016).

This success becomes possible due to the effective management of the supply chain, but it is not remaining enough to sustain in the market. As companies related with apparels as well as accessories involve tremendous amount of wastage or a manufacturing process that directly harms the environment, therefore, to deal with this issue majority of organizations started getting involved in CSR practices, Nike and Puma are two among them by putting more emphases toward the set of activities performed by the suppliers. Majority of organisations putting emphasis on encouraging the supplier towards achieving eco-friendly activities by reducing wastage, pollution, controlling gas emissions, and encouraging them to comply with government regulation and policies (Ayers and Odegaard, 2017). So that they can contribute towards the safety and welfare of environment by getting involved in several CSR practices and at the same time maintain profitability. Therefore, nowadays, CSR practices are also involved by the organisations in its supply chain management which helps them in increasing their profitability while reducing the cost as well as wastage. This is so because while supplying the raw material and other things through different channels, there is a more substantial number of issues that may get arises at a different end of the supply chain cycle, which leads to an increase in wastage. These waste materials usually aren’t properly disposed of by the channel members and as a result of which it directly harms the environment. These things are especially prevalent in the footwear sector, where the organisation is using such material for manufacturing that can't get adequately disposed of, such as plastic, rubber, etc. (Tippayawong and Tippayawong, 2017). Hence the waste material from all these do not get disposed of fully, and on the other side also brings a huge influence over the environment. Therefore, it can be said that CSR helps in shaping up the supply chain management as CSR practices involve making use of raw material that is eco-friendly and does not harm the environment (Chkanikova and Mont, 2015). Despite this, it also consists in using raw material in an efficient manner so that wastage can be minimized which in turn brings efficiency in supply chain management and when the activities are governed as per the government regulations and practices then it generates fewer chances of legal compliances which ensure smooth flow of operations (Collier, 2018).

Pressure groups find it challenging to get the attention of global brands, so they now look into where brands like Nike and Puma source their products. (Amaneshi et al. 2008). The rise of multimedia communication makes it easier for any unethical practices by their suppliers to be brought to the public’s attention.

A perfect example is Nike's, case which brought them negative attention as a company. Their production sites were making use of child labour and poor wages (Teather, 2005). Even though Nike wasn’t directly doing this, they were forced to take responsibility for the impudent behaviours of their suppliers to protect their brand.

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