Strategic Management and Corporate Social Responsibility

This paper discusses the current CSR policies at Giordano and analyzes how CSR may contribute to the success of a company from the perspective of different stakeholders. It also explores the challenges and advantages of moving manufacturing to an emerging market.

Running head: STRATEGIC MANAGEMENT AND CORPORATE SOCIAL
RESPONSIBILITY
Strategic Management and Corporate Social Responsibility
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Giordano International Limited is an international retailing company based in Hong-
Kong. It retails women’s, men’s and children’s accessories and apparel. It was established in
the year 1981 by Peter Lau and is headquartered in Hong-Kong (Giordano, 2019). The
company has world-wide existence including China, Thailand, Australia, Japan, Singapore,
South Korea, Philippines etc. and employs more than 8000 staffs in its more than 2400 shops
spread in more than thirty nations and regions all around the world. This paper shall elaborate
on discussing about the current CSR policies at Giordano and analyse how CSR may aid to
the success of a company from the perspective of various stakeholders. With the same, it
would also shed light on the challenges and advantage of moving the manufacturing to a
developing market. Lastly, based on the discussion, the paper shall conclude with critically
evaluating whether or not the firm should pursue the proposal that it got from the finance
Director to move manufacturing to an emerging market.
Financial stability and CSR policies of Giordano
Giordano is an International retailer of apparel and it earns a total revenue of 54.5
billion dollars as per the year 2014. Its total profit has increased about 15.2% in 2017 for its
higher e-business sales According to the recent reports, the total profit for 12 months ended
31st December was 500 million dollars HK, compared to 434 million dollars HK within 2016
and 2017. However, is to note that the CSR statement of this company is a very simple and
short statement that demonstrates its expectations, values and intentions (Kung & Markets,
2018). The company is committed towards beings a successful and widely recognised
responsible corporate citizen. It simply means that it Giordano is not only committed towards
delivering strong and sustainable financial performance to its shareholders along with
delivering quality service and products to its customers, but at the same time, is also focused
at creating a positive influence in the communities where it conducts its business. It is also to
note that as per Jin and Chung (2016), Giordano is aiming to achieve this objective by means

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of supporting several charitable organisations and causes around the world and by means of
ensuring that all its staffs and workers who are producing the products and services are
treated with fair and respectful manner, and at all the times, they are achieving this goals by
means of environmentally friendly means. In terms of non-discrimination, the CSR statement
of the Giordano is indicated that it is committed towards treating its employees with respect
and fairness. It believe in co-operation, trust and team working. The company also hires on
the basis of the merit and ability of the candidates and then rewards its staffs and promote
them on the basis of their work performance. Furthermore, in terms of health and safety, the
company is also committed towards ensuring that a safe, secure and healthy working
environment is provided to both its employees and customers for eliminating the risk of
preventable health hazards and accidents at its business locations (Hill, 2017).
With the same, it is also to note that Giordano seeks for ensuring that the business
operations of it are environmental and community friendly. It works to make sure that its
business activities are all complying and adhering to the applicable environmental standards,
laws, legislations, rules and regulations of the country where is conducts its business
operations. Moreover, it is to mention in this context that Giordano also aims at having a
productive and positive impact in the communities where it works. It is therefore, it supports
and volunteers with the chosen local organisations and charities, especially the ones
associated with children, poverty, underprivileged and education. Moreover, it is also to note
that the company aims towards doing its business with only the suppliers who it believes that
share similar principles and values as specified in the CSR statements of the company.
Giordano always intend to buy from the suppliers who meet its requirements of core ethical
sourcing and who demonstrate commitment to improve and enhance their standards on
health, safety, environmental and labour practices.

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How CSR may contribute to a company’s success from the perspective of different
stakeholders
According to what claimed by Davies (2016), the success of survival of a company
relies on the potential of its leaders and managers to develop ample of wealth and satisfaction
for its primary stakeholders. The term “Stakeholders” can be defined as “all individuals and
constituencies that contribute, either voluntarily or involuntarily, to its wealth-creating
capacity and activities, and are therefore its potential beneficiaries and/or risk bearers”
(Colvin, Witt & Lacey, 2016). On the basis of this definition that stakeholders can be
differentiated among four categories and they are- benefit-providers/receivers and/or risk-
providers/bearers. Such a comprehensive perspective of stakeholder not only take into
consideration the resource based and the market based stakeholders but also the political and
the social stakeholders. However, as per what opined by Gonzalez-Zapata and Heeks (2015),
stakeholders can be either primary or secondary. The groups of primary stakeholders
comprise of the investors, customers, suppliers, community, employees and government with
whom the corporation might have an official, formal or anyone who has been regarded on the
company’s even though it is not notable. They comprise of both the external and the internal
groups of stakeholders. It is to note that the internal stakeholders include of the employees
and the investors who are bondholder or shareholder. On the other hand, external
stakeholders are the ones who are customers, suppliers, governmental bodies and
communities. On the contrary, the secondary stakeholders are the media, the special interest
groups towards a company where they did not have any contact with the company. They just
act like the spectators.
As stated above, the success of survival of a company relies on the potential of its
leaders and managers to develop ample of wealth and satisfaction for the primary
stakeholders. If the primary stakeholders withdraw its support from the firm, the operations

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of the firm then is affected in adverse ways. This is why the company need to identify and
then merge the important social issues, which is particular to each and every primary
stakeholder with the organisational practices and policies. For each and every category of
stakeholder, there need to be a dyadic ties among the company and the group of stakeholder.
According to Wickert, Vaccaro and Cornelissen (2017), CSR refers to the policies, practises
and processes of the organisations towards the group of stakeholder. Voegtlin and
Greenwood (2016) in this context have claimed that in terms of CSR towards the employees,
the favourable organisational practices and policies towards the employees are regarded as
better CSR indicators towards the employees. Any employee-oriented firm would commit the
resources for promoting the employee welfare. At a very minimum level, the organisational
managers and employers are expected to respect the rights of the employees and must
consider their health and safety. As per the study conducted by Jones, Willness and Glavas
(2017), if an employer treat his employees in better ways, it is an indicator of corporate
citizenship. Notwithstanding this fact, it is to note that the workplace issues like lack of equal
opportunity, child labour and poor labour conditions have often caught the attention of the
media, public and regulators. Catering to these issues enhance the Corporate Social
Responsibility towards the employees.
Furthermore, in terms of CSR towards the customers, it has been claimed by
Karaosmanoglu, Altinigne and Isiksal (2016) that higher CSR towards the customers are
often considered in terms of the ability of the company for providing better services and
products while maintaining right price and quality of the product. Addressing these issues
such as by curbing the unhealthy patterns of consumption among the customers, considering
their safety during the product use and the ethical promoting and advertising enhance the
CSR towards the customers. Moreover, in terms of CSR towards the investors, in outlines
that of towards community, environment and suppliers. It is to note that the investors always

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want to be associated with the socially responsible companies. There are several communities
like Cadbury committee, the SEBI (security and Exchange Board of India), the OECD
guidelines etc. have been developed or established for strengthening the codes and standards
of corporate governance. According to Andrade and De Oliveira (2015), the strengthened
practices of governance improve the CSR towards the investors. It is to mention that with a
recent focus on the triple bottom line- people, planet and profit, the ideas such as deepening
and strengthening the relationship and partnership in between the community and business
are gaining currency. The companies should require to develop a social contract with their
community and their corporate citizenship behaviour need to be assessed. Addressing all the
issues like public private partnerships, the philanthropic giving, and the economic and social
development of the surrounding community showcase the CSR towards the community.
In terms of CSR towards environment, the earth summit in the year 1992 and the
following the focus on the climate change have raised the awareness of the people and
companies regarding environmental issues on a global level. The international standards such
as OHSAS 18000, ISO 14000, EMA and different other environmental legislations in
different nations have been established. The researches have highlighted the vitality of the
environmentally sensitive productions and operations by the firms. Emphasis on the issues
like responsible disposal of waste, the standards of emission, conserving green resources and
environmental training etc. gives positive signal about the CSR responsibility and practices
towards the environment. Lastly, in terms of CSR towards the suppliers, it is to mention that
in the recent years, there has been a notable growth in the level of awareness among the
people about the issues in relation to the social responsibility audit of the suppliers. By means
of ensuring that there is ethical procurement of the raw materials by the suppliers, the ethical
transactions with the suppliers and the depletion of the human rights and child labour

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violation at the locations of the suppliers, a firm could easily improve and enhance its CSR
towards its suppliers.
Challenges and advantage of moving manufacturing to an emerging market
The emerging markets are the nations that are investing in more productive capacity
and are also known as emerging economies and developing countries. Examples of emerging
markets include Brazil. Argentina. South Africa, Indonesia, China, Nigeria, India, Saudi
Arabia, Russia, Thailand, Pakistan, Russia, Egypt, Iran, Poland, Mexico and Taiwan (King,
2018). Some of potential challenges for Giordano for moving the manufacturing to such
emerging markets employee attrition, change in government regulations for the foreign
companies, legal issues, cultural barriers and the risks of intellectual property. In the
emerging markets today, the triple bottom line or say, the total returns on capital—economic,
social, or environmental—are now tracked with increasing regularity. As per the recent
researches, there has been a notable pressure of economic changes, an increase in the interest
in CSR activities in the contemporary world and a necessity of acknowledgement of it as a
critical research topic has brought in a wider effort for building a comprehensive framework
(Hill, 2017). In the emerging markets, there has been an increased attention on the triple
bottom line as it has the potential of providing both direct and indirect benefits in terms of
efficiency, security risks, corporate image and productivity. It considers people, planet and
profit by emphasising on the ideas such as deepening and strengthening the relationship and
partnership in between the community and business are gaining currency. The companies
therefore require to develop a social contract with their society and their corporate citizenship
behaviour need to be assessed. According to Kossek (2016), by means of “assessing and
improving the triple bottom line, companies benefit from increased operational efficiency,
cleaner production, improved relations with stakeholders and increased access to new
business opportunities”. It is also to mention that as per Karaosmanoglu, Altinigne and

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Isiksal (2016), in the context of emerging markets such as China and Indonesia, prior
Corporate Social Responsibility studies merely explored the content of the CSR activities in
the annual reports of the companies and the motivation of why the managers are engaged in
it. Even though there are some significant pressure from the parts of stakeholders towards the
firms who are engaged actively in the CSR activities in emerging marketing, the total number
of companies that are involved in the disclosures of CSR is still low.
Some of the potential benefits that Giordano would get from moving the
manufacturing to such emerging markets are proximity to its customers, attracting in new
customer base, enhancing the interest of the existing customer and expansion in its market
size. Locating its manufacturing operation to emerging market would help it in being close to
its market. The existing customers of Giordano are highly demanding and they too seek the
company to establish its operations in the new market. For example, if the chosen emerging
market is China, the company can invite its other Asian customers to its facility and this will
further have a positive impact on its sales and building brand awareness. According to
Wickert, Vaccaro and Cornelissen (2017), the population in the emerging markets are very
high. Due to this reason, expanding the manufacturing in these nations would help the
company in finding good range of potential market. Furthermore, one of the significant
factors to consider in this context about the advantage of moving manufacturing to an
emerging market is that of operational costs. It is a factor that is typically publicised when a
discussion of manufacturing in emerging country like china is the topic. There can be several
cost elements like skilled labour, equipment and resources, taxes, raw materials and supplies
and environmental costs that have the potential of adding up to the total manufacturing costs
of Giordano (Davies, 2016). The company is likely to save some notable costs of equipment
and resources in the emerging market. Also the taxation in emerging nations is complicated.
There are several options for the foreign firms to invest in emerging countries like China and

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India and the methods that they can make use of for reporting the taxable income is beyond
the scope.
Hence, from the above analysis it is to state that Giordano should pursue the proposal
that it got from the finance Director to move manufacturing to an emerging market. It is a
leading international fashion apparel retailer brand and is actively engaged in CSR activities.
It is committed towards communicating with its customers, suppliers and investors in both
informative and transparent way. Moving its manufacturing department to an emerging
market would possess great benefits for the company. It would help it in being close to its
market. The existing customers of Giordano are highly demanding and they too seek the
company to establish its operations in the new market. With the same, it would also help it in
finding good range of potential market. Furthermore, considering the triple bottom line
approach while conducting business in the emerging market will be benefitting Giordano in
terms of increased operational efficiency, improved relations with stakeholders, cleaner
production and increased access to the new business opportunities there. This will also ensure
that the company gain strong brand reputation and awareness in the market which will bring
in more investors for the company as the investors always want to be associated with the
socially responsible companies.

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