business ethics groupassignment case study hm and ethical issues

Business ethics is now a major topic in contemporary society and the corporate world.. CORPORATE SUSTAINABILITY IN THE FAST FASHION INDUSTRY; CASE OF H&MThe Brundtland report''''s notion of

MINISTRY OF EDUCATION AND TRAININGNATIONAL ECONOMICS UNIVERSITY

-BUSINESS ETHICSGROUP ASSIGNMENT

Lecturer: Nguyen Bich Ngoc

CASE STUDY: H&M and Ethical Issues

Class: International Business Administration 64B

Nguyen Minh Thanh - 11225823Nguyen Thi Quynh Anh - 11220472Nguyen Van Ha - 11224388Nguyen Nam Son - 11225635Nguyen Doan Huy Hung - 11222570

NATIONAL ECONOMICS UNIVERSITY

-BUSINESS ETHICSGROUP ASSIGNMENT

Lecturer: Nguyen Bich Ngoc

CASE STUDY: H&M and Ethical Issues

Class: International Business Administration 64B

Nguyen Minh Thanh - 11225823Nguyen Thi Quynh Anh - 11220472Nguyen Van Ha - 11224388Nguyen Nam Son - 11225635Nguyen Doan Huy Hung - 11222570

What do we know about the ethics of business? Have we ever faced a challenging ethical situation when we needed to decide what was right or wholly incorrect? Business ethics is now a major topic in contemporary society and the corporate world Five words that are frequently associated with the word ethics include virtues, morality, values, and principles To the untrained eye, these terms appear tobe interchangeable; yet, each phrase builds upon the others in order to produce excellent ethics The main objective of any firm is to increase its value and profit The longer a company is in operation, the more money it will generate, and if it generates profits dishonestly, the longer it will be in operation One can shorten business Both business organizations and individuals need uphold strong morals inorder to develop strong ethical values Businesses must strike a balance between their goals of rising earnings and societal needs Because of the financial and legal repercussions of their poor business ethics, many firms have failed Businesses must maintain a healthy balance that frequently entails sacrificing revenues to meetsocietal demands and requirements.

This particular project report will take a closer look at H&M Actually, we chose H&M brand which has managed to observe ethics in its operation This claim is based on how successfully the company ensures that its personnel abide by the established code of ethics Additionally, the company enhances its efforts to represent itself as an ethical corporation by working with other stakeholders including suppliers and customers.

ABOUT H&M

1 Overview

The well-known apparel company H&M has been around for 67 years However, the company has roughly 800 facilities and 3500 outlets spread across60 different nations Additionally, the brand's headquarters are in Sweden, where significant distribution choices are made, production planning is completed, and designs are finalized It is important to emphasize that the business was formerly known as “Hennes” in 1946, however, the brad only offered clothing and accessories for women Additionally, the company's brand name was altered again in 1968, when it first began operating under the name of“Hennes & Mauritz” As a result, along with the brand name change came the addition of men's items to the business (About H&M Group, 2016)

Additionally, we discovered that the H&M brand consistently had distinct products above other brands in the market, according to the largest fashion database in the world (Fashion model directory, 2016) The business has also always taken a strong interest in charitable causes and environmentally friendly projects A broad and diverse selection of inspired clothes, from the newest trends to sustainable classics to wear season after season, also contributed to thebrand's slow but steady growth in the market

H&M has continuously grown its customer base by opening more

outlets.Additionally, the number of countries in which each store operated and its sales also increased rapidly Additionally, the H&M brand's most notable traits, which rank it among the market leaders Firstly, because the brand's

business approach is transparent, straightforward, and unpretentious, H&M's operations have a beneficial influence on customers' impressions and purchasing intentions Additionally, the company provides quality and fashion at the lowest possible prices Additionally, because the brand consistently produces high-quality goods and essentially adheres to its core values, word-of-mouth in this instance has a significant impact on how much the market talks about the brand (About H&M Group, 2016) Second, H&M's products have been promoted depending on various market demands However, tailoring advertising for various markets aids in the brand's ability to build a solid bond with its audience Models from various racial, cultural, and physical origins frequently appear in H&M advertisements The brand emphasizes inclusion in order to increase demand for its products from a variety of market consumers around the globe (Fashion model directory, 2016)

BUSINESS SCALE

A FACTORS AFFECTING H&M

Pestle analysis of H&M (Hennes Mauritz AB) H&M is a fast-fashion clothing Swedish multinational retail brand The founder of the company was Erling Persson, and he established H&M on Oct 04, 1947 The fashion brand’s headquarter is in Stockholm, Sweden.

Today, we’ll study the pestle analysis of H&M It would analyze the environmental factors of the world’s leading fashion brand For internal factors, check out the swot analysis of H&M Here’s the pestle analysis of H&M as follows;

macro-1.1.Economical Factors Affecting H&M

a Annual Revenue

H&M's annual revenue in 2020 was 20.726 billion US dollars, a decrease of 15.42%, according to a financial report Out of which, the business's net income, which was worth 0.344 billion US dollars, fell by 75.12%.The covid-19 epidemic has decreased the company's overall sales, annual revenue, and net profits.

b Economies of Scale

The global customer base for H&M is fairly sizable The clothing line produces large quantities of its goods The corporation is able to lower the cost of the product per unit thanks to the economies of scale The company's in-house designers, effective production methods, and inventory control system are of utmost importance These elements complement economies of scale.

c Global Economic Recession

The COVID-19 epidemic, the global lockdown, the closure of stores, social withdrawal, the air ban, and numerous other issues have led to an unstable climate, a higher unemployment rate, and weaker consumer spending power.H&M is a high-end fashion company, but people are now more interested in the needs of life.

1.2.Social Factors Impacting H&M

a Trends

Customers' attitudes and the way they shop are also evolving The opinions of the clients and emerging trends are known to H&M Because of this, the fashion industry makes use of sites like Facebook, Instagram, Twitter, TikTok, and others to spread the word about the newest trends Customers are drawn to it, and they make the same demand.

b Empowering Women

By producing more women, H&M has significantly contributed to the empowerment of women In actuality, the clothing company employs more women than men On the other side, many conservative detractors contend that the clothing line objectsifies women while passing itself off as empowering them.

c Better Wages & Safety Standards\

H&M has been collaborating with the International Labor Organizations to promote clean workplaces, fair pay, and safe working conditions

everywhere In order to stop employee exploitation, the corporation is also attempting to mechanize and modernize the workplaces.

d Clean Dringking Water

H&M is an organization that is socially engaged, as is well known For instance, the UN and its relevant agency are collaborating with the fashion industry to provide clean water to developing nations like Bangladesh, India,and Pakistan The lack of clean drinking water in some nations is a serious problem.

1.3.Technological Factors Affecting H&M

a E-Commerce & Tech

We currently live in a world dominated by technology, smartphones, the internet, and knowledge The majority of people on earth use smartphones and the internet The culture of online purchasing via smartphone, desktop browser, or laptop has been pushed by the epidemic Anything may be purchased online.

Additionally, H&M offers an online store where customers can acquire their preferred goods The business has established connections between its onlinestore and a number of regional wholesalers and transportation hubs Customers can purchase the merchandise thanks to them.

1.4.Legal Factors Affecting H&M

a Laws & Regulations

H&M is a global multinational firm that runs its fashion division in numerous nations across the world In nations including the UAE, Kuwait, Oman, and others, the fashion label has franchising partners Intellectual property rights, however, are a major problem in the fashion sector Fashion producers and designers frequently plagiarize the ideas and creations of other artists It jeopardizes the company's designs and products.

1.5.Enviromental Factors Impacting H&M

a High Pollution

A study indicates that after oil and petroleum, the textile industry is the second most polluting sector in the world It wastes and contaminates an abundance of water As a result, it puts the lives of people who reside close to polluted places in jeopardy.

Conversely, the air is also contaminated by the cotton production facilities Regarding the amount of air pollution, several governments have rules H&M is aiming to produce recyclable materials and use clean energy in its factories, though.

In conclusion: We have come to the conclusion that H&M is the top

Swedish multinational fashion brand in the world after carefully examining the pestle analysis of the company Among the most pressing problems are environmental challenges like rising pollution levels, the global economic downturn, and rising production prices H&M should use its power and resources to tackle these issues.

B CORPORATE SUSTAINABILITY IN THE FAST FASHION INDUSTRY; CASE OF H&M

The Brundtland report's notion of "sustainable development" serves as the primary source for the idea of business sustainability The Brundtland Report, the original document to introduce the idea of "sustainable development," asserts that businesses play a critical role in managing the effects of population growth on ecosystems, ecosystem resources, food security, and sustainable economies to lessen societal pressure

Peter Drucker made reference to the topic of corporate responsibility in the middle of the 20th century by using the analogy of the necessity to "tame the beast" (referring to the corporation) To preserve a balance between the businessand the many social groups, society must place restrictions on the dynamism and strength of this mode of production (Raufflet, 2010).

Corporate sustainability refers to sustainable development that has been adoptedby an organization and shares the same three fundamental pillars as sustainable development: economic, ecological, and social (Baumgartner, Ebner, 2010) Some academics only consider the environmental aspect of business sustainability when defining the word Social and environmental issues are mentioned by other scholars The concept that encompasses the economic, social, and environmental components is accepted by a great majority of scholars (Montiel, Delgado-Ceballos, 2014)

As we indicated in the previous section, the element of corporate environmentalsustainability will be the main emphasis of this study.

An intriguing description of a "ideal" sustainable company from a systems perspective states that the organization should not consume natural resources more quickly than the rates at which they are replenished, recycled, or renewed (Marshall and Brown 2003) The environmental aspect of corporate

sustainability deals with the effects that business activities have on the environment The consumption of resources, emissions into the air, water, or

land, as well as hazardous waste, are the main causes of these effects Additionally, the product's effects on biodiversity and environmental issues throughout its life cycle are significant (Baumgartner, Ebner, 2010).

The connections between a firm and its surroundings are being discussed more and more in modern times Companies now possess tremendous power, but this strength also carries responsibilities (Raufflet, 2010).

It should be mentioned that the corporation is one of the social entities with the greatest ability to impact the economic, social, and environmental systems—both favorably and unfavorably This entails that they are more accountable for the present and future health of the physical and social system in which they function Society expects them to act in accordance with this obligation and to design their strategies and policies in a way that balances corporate prosperity with a sustainable standard of living on a global scale Organizations must take on this duty and start acting as "corporate citizens" (Olcese, 2008) The traditional corporation must transition to a new business paradigm, and in order to do so, they must change and adapt how they interact with society and the environment.A business is sustainable if it is viable over the short and long terms for its contribution to the sustainable development of its environment and our planet while fully upholding individual and collective human rights, in addition to achieving a satisfactory economic performance account and maximizing its value (Arteche, 2002).

When everything is focused solely on making money, a reality is created that has an impact on the environment and other factors (Morgan, 2015) A significant portion of the populace thinks that society and business have drifted apart and that commercial goals no longer coincide with those of society Companies must take the initiative and reinvent themselves as contributing members of society in order to stem this new wave of anti-business sentiment (Raufflet, 2010).

Being sustainable is therefore a method for businesses to demonstrate their commitment to society and the environment while gaining a competitive edge in the marketplace Businesses frequently use third parties to verify sustainable manufacturing procedures in order to demonstrate their accomplishments in

environmental management and sustainability By implementing sustainable practices like the ISO 14000 standard in their supply chain, several fashion companies have differentiated their products and boosted their brand image A company's operations connected to the environment and workflows in their manufacturing processes are implied by the verification of ISO 14000 certification (Shen, 2014).

On the one hand, it is essential that we get married in order for the economy to function On the other hand, because of such consideration of employment, the citizen has money to cover his consumption But since the biological cycles of resource production cannot keep up with our monetary system, some fundamental and essential requirements must be met for the system as a whole to continue operating That is to say, it is our decision to go from the current paradigm of consumption to one that emphasizes more responsible consumption.

A company's business model must be reviewed in light of the uncertain state of the climate in order to address the environmental effects of its operations (Daz-Correa, López-Navarro, 2018) The company has a fantastic potential to establish cutting-edge techniques in the design, manufacture, and marketing of its products as a result of this requirement According to Singh, Cooper, Cole, Gnanapragasam, and Shapley (2019), the business model is "a conceptual tool that contains a set of elements and their relationships and allows expressing the business logic of a specific company." According to Morgan (2015), nothing can be changed if the business model is not altered.

A number of guidelines must be followed in order to incorporate sustainability into the business (Salcedo, 2014):

 Recognize sustainability as a philosophical concept.

 Don't just use it to satisfy legal or commercial requirements; also use it tocreate new opportunities.

 Possess a long-term outlook

 Have all of the corporate management teams and their respective departments.

 Avoid being duped by "greenwashing"

When sustainability is included into business strategy, a number of outcomes can be anticipated:

 Efficient use of resources (such as water, electricity, and packaging). Possibilities for creativity and entry into new markets.

 A rise in sales and higher levels of client loyalty. Better value chain management.

 Employee satisfaction.

 Increased allure for investors and open competitions.

The majority of businesses that attempt to integrate sustainable practices throughout their supply chain do so during the production stage; they are less involved in the consumption phase.

We are currently starting to search for a modification to the productive and consumption paradigm that entirely eliminates waste The circular economy concept provides a new framework for managing waste and resources to change the prevalent linear systems of production and consumption into more circular systems

By striving to limit product substitution and close material cycles, innovations in business models motivated by sustainability play a critical role in altering present and unsustainable patterns of production and consumption.

The following figure will then be used as a guide later on in the task From the standpoint of production and consumption, we can see a number of steps that businesses must do to try to solve the planet's unsustainable state and advance sustainable business models.

A system of sustainable production and consumption is shown in Figure 3 where natural resources (materials and energy) are managed through sustainable business models (focused on the design of sustainable products and multi-product life cycles) and the management of products at the end of their useful lives (focused onthe recovery of parts / components and materials) So, through the promotion of product offerings that acknowledge and address social, economic, and ecological concerns, business models play a critical role in the transformation or remodeling of material cycles (i.e slowing and/or closure).