Mng81001 Management Communication- Corporate Social Assessment Answers

1. You will be assigned to a group of four students and will randomly be given one organization out of 2016 CSR RepTrak 100 report. Internal students will be given the name of the company in the tutorial; external students will be notified via email. 

2. The purpose of this assessment is for you to engage in web-based research. It is widely understood that there are four general types of CSR: economic responsibilities; legal responsibilities; ethical responsibilities; and, philanthropic responsibilities. Each student in your group needs to select one of the four themes and illustrate how your company's CSR's policies and practices are sustainable. Also discuss the implications for global SCR practice. 

3. Start your web-based research by finding the company's 2016 Annual Report. Then do a search of popular business publications for any information about this company's CSR policies and practices.

Answer:

Introduction

Corporate social responsibility is the way by the company balances the social, economic and the environmental responsibilities. There are four types of corporate social responsibilities, which a company has to maintain, and they are economic, ethical, legal and philanthropic (Khan et al. 2012). The initial CSR responsibility of any company is their economic responsibility. The company will have to earn profits initially so that it can sustain. When a company does not make profit, the employees suffer as most of them lose their jobs. Thus a company will have to first think about being profitable and then about its social responsibilities as a corporate citizen (Frederick, 2016). This is a report, which shares a light on the economic responsibility of a company in respect to corporate social responsibility. The company chosen for this report is Ralph Lauren Corporation, which is an American Multinational company. The company headquarters are in New York City, New York and the company deals with marketing, clothing and distribution of products in categories such as home, accessories, apparel and fragrances.

Discussion

Policies and Practices

Ralph Lauren Corporation is one of the global leaders in the field of marketing, design and distribution of premium lifestyle merchandise. The company has reported that the earnings per diluted share are $2.48 and $0.89 if adjusted basis is considered (lauren, 2017). However, this does not include restructuring and other miscellaneous charges that were related to Company’s Way Forward plan, for the last quarter in the fiscal year 2017. The earnings have increased when compared to the earnings of the last quarter in the fiscal year of 2016. The earnings per diluted share were $0.49 and $0.88 when adjusted basis is considered (Baumgartner, 2014).

The overall earnings per diluted share in the fiscal year of 2017 was $1.20  and $5.71 when adjusted basis is considered, leaving out the miscellaneous charges which is quite high when  compared to earnings per diluted share of the whole fiscal year of 2016. The company has strengthened its foundation the fiscal year of 2017. The company has increased the productivity of the products by increasing the operational efficiency (Kolk, 2016). Thus, the quality of sales has also increased significantly. The quality of sales has also been increased by the increase in the discount levels. The inventory turns have been improved by lowering the inventory levels to 30% and the productivity has increased by having a streamline focus. The lead times has been shortened and the company has reached the goal of 50% of the business in the 9 month lead time and is right on track to reach the estimated goal of 90% by the end of the fiscal year of 2018. The company has also optimized the store fleet by closing the stores, which were under performing. The company has started its own e-commerce platform which is more cost effective and flexible. The company has also hired a Chief Marketing officer and President for the men’s Brand, which helped in strengthening the global organization by creating a single global organization under the influence of a single efficient leadership (Steenkamp, 2017).

Income and Expenses in the fiscal year of 2017

The company has announced income diminished 16% to $1.6 billion; barring the effect of foreign currency, income was down 12% when compared to last year. The Company's final quarter in the last year had an additional week, which contributed approximately $72 million of income. The final quarter income decrease was in accordance with the direction of mid-high schoolers decay. The decline was driven by our drives to enhance nature of offers and decrease abundance stock, and additionally difficult activity patterns (Diddi, & Niehm, 2017). The International income in the final quarter declined 9% while North America revenue was down 21% when compared to the last year. The global income was down 2% with negative cash effect of 300 basis points when the impact of foreign currency is considered. The Wholesale revenue in the final quarter diminished 17% to $777 million when foreign currency impact is concerned and the discount income was down 15% when compared to the last year.North America was the main cause of the decline as shipments were deliberately lessened to build nature of offers, better line up with request and decrease overabundance stock. Retail income in the final quarter diminished 16% to $745 million when impact of foreign currency is considered and  retail income was down 9% when compared to the last year. There was decrease in the retail outlets sales because of the challenges faced due to the traffic and the trends in the average transaction size. The sales in the other retail outlets also decreased 11% in the last quarter. The revenue in the field of licensing increased 8%, which amounts to $43 million.

The revenue decreased 10% which amounts to $6.7 billion in the fiscal year of 2017.The wholesale revenue decreased 15% which amounts to $2.8 billion when compared to the fiscal year of 2016 because of the decrease in sales in North America. The retail revenue for the year of 2017 decreased by 6%, which amounts to $3.7 billion, compared to the revenue generated in the previous year. The retail store sales decreased 7% when analyzed over 52 week of currency basis. The revenue in licensing decreased $173 million in fiscal year of 2017, which was 1%, less than in the fiscal year of 2016. The gross profit in the final quarter of the fiscal year 2017 was $819 million which include $48 million of non cash inventory. The gross profit was $868 million when adjusted basis in considered and the gross margin was 55.4%, which are 90 basis points above than in the fiscal year of 2016. This increase in the gross margin is due to the decrease in the cost of promotion and products, and improvements in the quality of sales. The gross profit for the fiscal year of 2017 was $3.7 billion, which included the non-cash inventory of $198 million. The gross profit margin was 57.9%, which amounts to $3.8 billion when adjusted basis is considered. The gross margin is 110 basis points higher when compared to the year of 2016 (Torugsa, O’Donohue & Hecker, 2013).

The operating expenses in the year of the 2017 was $3.7 billion which included the expenses for restructuring and that amounts to $572. The adjusted operating expenses were $3.2 billion, which is a 7% decrease when compared to the fiscal year of 2016. The rate of the operating expense was 160 points higher than in the year of 2016, which is 47.7%.

Predicted Income and the policies in the fiscal year of 2018

The net revenue for the fiscal year of 2018 is anticipated to decrease by 8-9% leaving out the impact foreign currency exchange rates. The foreign currency exchange rate has been forecasted to be decreased by 150 basis points and this assumption is made on the basis of the current rate of exchange (?migielska, & Oczkowska, 2017). The exchange rates will have a negative impact on the revenue generated in the fiscal year of 2018. The operating margin for the year of 2018 has been anticipated to be around 9-10.5% and when the impact of the currency exchange rate is considered there will be a pressure of about 75 basis points. The revenue in the first quarter of the fiscal year of 2018 has been forecasted to be below double digits and when foreign currency exchange is considered, it will have a negative impact of 225 basis points on the growth in the revenue. The company is adapting to a new system of accounting, which has been issued by the Financial Accounting standard Board (FASB) for the payments of the employees. This change will affect the tax rate of the company and will increase the volatility when the stock prices are concerned (Loureiro, 2017). The fiscal tax rate will change from 25% to 28% due to the inclusion of the new accounting standards prescribed by the FASB. The impact of the Accounting Standard Update (ASU) will last at least for the first two quarters. The overall tax rate due to the inclusion of the ASU will be 33% in the first quarter of the fiscal year of 2018. The capital expenditure of the company for the fiscal year of 2018 is estimated to be $300-320 million.

The company has made progress in restructuring the company in lot of aspects and so this phenomenon has affected the revenue generated to a great extent. Moreover, the volatility in the exchange rates of the foreign currency has also hampered the revenue.  

Conclusion

There has been fundamental transformation in the global business trends and the companies have changed their strategies and policies, which help them in achieving their goal. The international trade and technological progress has limited the opportunities for the companies in achieving sustainable development. The industrialization in the 19th and the 20th century has increased the pollution level all over the world and this has caused an uncontrolled use of natural resources that are non-renewable in nature. The multinational companies started paying more attention to sustainability after there was a increase in the pollution level in the world. The companies started taking initiatives, which would help them in achieving sustainability. The company has been affected due to various reasons, which has hampered the revenue generation. Thus, it can be concluded that the company will have to improve their revenue generation for the upcoming year in order to maintain the sustainability.

References

Baumgartner, R. J. (2014). Managing corporate sustainability and CSR: A conceptual framework combining values, strategies and instruments contributing to sustainable development. Corporate Social Responsibility and Environmental Management, 21(5), 258-271.

Diddi, S., & Niehm, L. S. (2017). Exploring the role of values and norms towards consumers’ intentions to patronize retail apparel brands engaged in corporate social responsibility (CSR). Fashion and Textiles, 4(1), 5.

Frederick, W. C. (2016). Commentary: Corporate Social Responsibility: Deep Roots, Flourishing Growth, Promising Future. Frontiers in psychology, 7.

Khan, M. T., Khan, N. A., Ahmed, S., & Ali, M. (2012). Corporate Social Responsibility (CSR)–Definition, Concepts and Scope. Universal Journal of Management and Social Sciences, 2(7), 41-52.

Kolk, A. (2016). The social responsibility of international business: From ethics and the environment to CSR and sustainable development. Journal of World Business, 51(1), 23-34.

lauren, r. (2017). Press Releases - Press Releases - Ralph Lauren Investor Relations. Investor.ralphlauren.com. Retrieved 3 June 2017, from https://investor.ralphlauren.com/phoenix.zhtml?c=65933&p=irol-newsArticle&ID=2273938

Loureiro, S. M. C. (2017). Fashion Luxury Brands: Bridging the Gaps Between Cutting-Edge Fashion and Corporate Social Responsibility Concerns. In Luxury Fashion Retail Management (pp. 185-198). Springer Singapore.

?migielska, G., & Oczkowska, R. (2017). Retailers’ Responsibility towards Consumers and Key Drivers of Their Development in Poland. Administrative Sciences, 7(1), 3.

Steenkamp, J. B. (2017). Corporate Social Responsibility. In Global Brand Strategy (pp. 209-238). Palgrave Macmillan UK.

Torugsa, N. A., O’Donohue, W., & Hecker, R. (2013). Proactive CSR: An empirical analysis of the role of its economic, social and environmental dimensions on the association between capabilities and performance. Journal of Business Ethics, 115(2), 383-402.