Managing Environmental Impact: Stakeholder Theory And Unilever Case Study

Questions:

In the contemporary globalized world of today, the competition between the private players have reached an all-time high. The private businesses are all vying to establish their dominance over the market and control a large database. In order to do this, they are trying to lower the prices of their products. However, an important drawback is that these companies are using harmful cheap products which poses an adverse effect on the environment (Kates, 2018). This paper discusses the Stakeholder Theory and analyzes the market operation of Unilever Company. It talks about the harmful effects of the use of plastic material in its products. The paper presents several important alternatives which can act as substitutes for the plastic material. The paper concludes with the significance of conserving the environment by the way of using sustainable products. 

The organization of Unilever has its modest beginning in the nineteenth century within the country of Britain (“Unilever global company website | Unilever Global”, 2018). It is a British-Dutch Company. From there, it has now spread to the entire world and almost all the people of the world use its products on a daily basis. The main purpose of the Company is to provide new products to the people which they have not experienced before (“Unilever global company website | Unilever Global”, 2018). The Company claims that the products manufactured by them are free of any harmful substances which might adversely affect the health of the people and of the environment consequently. However, in the recent times, it has been found out that the there is a substantial presence of tiny plastic materials within the body scrubs and face masks used by the people. This has caused an uproar among the public as these products are a part of daily lives and they are used very frequently (Hák, Janoušková & Moldan, 2016). Unilever is now facing the challenge of retaining its customers as people are eyeing the various chemically produced beauty products with suspicions, instead choosing to switch over to the use of herbal products.

A theory has been formulated to take into consideration the various ethical issues concerning the activities of a particular business. For this purpose the Stakeholder Theory was formulated by a person named Ian Mitroff. It is mainly a theory about the management of the organization and values and morals in a business that manages the ethical considerations in the organizations (Welford, 2016). It is primarily a guideline to see if the concerned business is following the ethical considerations in consonance with the society. The earlier view of organizational management held that the primary stakeholders of a company are only those who form the management and the shareholders. It did not give the due recognition to the other members of the society who had an equally important part to play in the development of the product. However, the new Stakeholder Theory states that it is not only the management who has a part in the business. It opines that there are other stakeholders in the development of the product such as those who are purchasing the product, the various competitors of the concerned business and the public in general as they are also indirectly affected by the product (Kolk, 2016).

Answers:

The Stakeholder Theory thus has both an organizational view and a socio-political view. In the context of the organization, the Stakeholder Theory gives due recognition to everyone who are associated with the product. Thus, the liability of the product is shared by all those who have an important part to play in its development (Bendell, 2017). The social aspect of the Stakeholder Theory provides that the society will be held responsible if they purchase a product which has the potential to cause adverse effect to the environment at large and to individuals in particular. The social aspect inevitably raises a political concern since it is the duty and obligation of the politicians to work for the welfare of the people. Thus, if the public disapproves the purchase and use of any particular products based on ethical and sustainable lines, then it becomes the responsibility of the politicians to ensure that the concerned product is no longer manufactured in the society (Ghai & Vivian, 2014). The Stakeholder Theory thus assign equal responsibility to everyone in the society.

An analysis of the report published in the ABC News points out severe concern towards ethics and sustainability aspects of the product strategies which the multinational companies like Unilever adopts which can also be interpreted as breach of stakeholder interests. A brief analysis of the article shows that Unilever has exhibited a gross breach in the stakeholders’ interests by using mirobeads in its products. The following sections would analyse this action of Unilever using the stakeholders’ theory.

The stakeholders play very significant roles in ensuring the sustainability and business growth of multinational corporate organisations. Vargas-Hernandez and Gonzalez (2018) that multinational organisations like Unilever are ethically responsible to ensure betterment of stakeholders in order to ensure their own business growth. Strand and Freeman (2015) mention that business organisations like Unilever are public limited companies listed on different stiock exchanges in their home as well as host countries. These companies are able to generate immense capital from their global investors’ base and should seek to give them high positive returns to ensure capital maximisation. It can further be pointed out that inability to meet the shareholders’ expectations would lead the company to lose its investors’ base which would ultimately hit the capital base of the company. Tantalo and Priem (2016) point out in this respect that going by the opinion of the previous authors, it appears that shareholders’ interest hold more important position in the sustainability of the company. In reality it can be pointed out that the interest of the other stakeholder groups like customers and government hold equally important position in ensuring the sustenance of the Unilever. Flammer (2015) strengthens this view of the previous authors and points out that multinational companies serve their consumers who are primary stakeholders. The consumers generate revenue for the companies like Unilever a part of which is channelized to give high returns investments to inventors. Thus it can be inferred from the protection of the interests of the consumers paves ways to protect interests of investors. As far as the government is concerned, Mishra and Modi (2016) point out both and host governments play very important role. This is because the governments form laws companies Unilever have comply with while operating in the market. The society provides the company with both consumers and employees which means that company is obliged to benefit the society which high quality products. However, the case study reveals a picture contrary to the ethical standards Unilever boasts of. The company as pointed out by the Australian daily, used micro beads of plastic as cleansing agents in skincare products like face washes (Abc.net.au. 2018). The microbeads are harmful for the environment and harm marine life. Moreover, as Mishra and Dubey (2015) point out that plastic enters the marine food chain and ultimately reaches man when the latter ingests plastic. Thus, it can be pointed out that Unilever by its behaviour has exhibited gross lack of environmental awareness among the global giant. Thus, it can be pointed out that Unilever should aim to ensure removal of plastic from its products in order to ensure reduction of marine pollution, thus ensuring strengthening of brand management.

Summary of Scenario

The case can also be viewed as contradiction of two apparently polar concepts, sustaibailty and profitability. Hidayat, Offermans and Glasbergen (2016) points out that business organisations in order to retain their positions in the global market have to sell goods in the goods in large quantities. Moreover, the management and the shareholders of business organisation necessitate them to minimise the costs of production by using local raw material and maximize. However, it can be pointed out that mere profitability is not directly connected to sustainability. Gandy (2015) contradicts this view and mention that actually sustainability boosts profitability. Holmes and Jian (2018) contract this theory and point out business companies can also strengthen their revenue generation by operating in sustainable ways by removing plastic beads fron its skincare products. Thus, it can be pointed out that in reality sustainability enforces profitability. The strong brand value which Unilever acquires due to sustainable operations enables it to attract more customers to buy to products and generate immense revenue. This means that the management of the company needs to take into consideration three alternatives to ensure both sustainability and profitable. 

Unilever should consider the following three alternatives to meet sustainability as well as generate high profit in the global market:

Unilever should introduce new range of products which would not contain plastic microbeads. The company should release products which are made up of natural cleansers like clay and fruit extracts. This would enable Unilever to generate high revenue in the market and yet embrace sustainability.

The British multinational company should withdraw products containing micro beads. The company by withdrawal of products containing microbeads can actually embrace sustainability to a larger extent and avoid penal actions by governments. This strategy would also enable Unilever to strengthen its products among consumers.

Unilever can acquire a firm manufacturing herbal and organic skincare products. This would enable the company to smaller companies and enable the latter to generate higher revenue. This would also strengthen the corporate image of the company.

The primary aim of the organization is to manufacture products which do not contain any harmful products and are along the along the lines of sustainable use. One of the recommendations is to use organic materials, replacing the harmful plastic materials (“Act on microbeads or I’ll ban them, Greg Hunt warns cosmetic companies”, 2018). Clay has a long standing reputation of exfoliating the body and hence, will prove to be an effective substitute to the various chemical body scrubs. Another important recommendation is to replace the plastic face masks with the use of the paper masks. Paper has the ability to soak the oil and dirt from the face and body very effectively. Both of these will help to drastically reduce the use of the harmful plastic materials in the beauty products.

Description of the Stakeholder Theory

Conclusion

To conclude, it is observed that the organizations have the utmost responsibility to protect the environment. The rising concern with environmental degradation has necessitated the participation of the society as well in ensuring the conservation and protection of the environment. The use of plastics pose a grave threat to the environment which calls for the drastic reduction in its usage. This is only possible when the society, along with the private players, keep a vigilant tab ensuring that no harmful products are used. 

References:

Abc.net.au. (2018). Retrieved from https://www.abc.net.au/news/2016-02-29/microbeads-ban-voluntary-environment-greg-hunt/7207482

Act on microbeads or I’ll ban them, Greg Hunt warns cosmetic companies. (2018). ABC News.

Bendell, J. (2017). Terms for endearment: Business, NGOs and sustainable development. Routledge.

Flammer, C. (2015). Does product market competition foster corporate social responsibility? Evidence from trade liberalization. Strategic Management Journal, 36(10), 1469-1485.

Gandy, D. L. (2015). Small business strategies for company profitability and sustainability.

Ghai, D., & Vivian, J. M. (2014). Grassroots environmental action: people’s participation in sustainable development. Routledge.

Hák, T., Janoušková, S., & Moldan, B. (2016). Sustainable Development Goals: A need for relevant indicators. Ecological Indicators, 60, 565-573.

Hidayat, N. K., Offermans, A., & Glasbergen, P. (2016). On the profitability of sustainability certification: An analysis among Indonesian palm oil smallholders. Journal of economics and sustainable development, 7(18), 45-62.

Holmes, A., & Jiang, G. (2018). Increasing Profitability & Sustainability of Maize using Site-Specific Crop Management in New Zealand.

Kates, R. W. (2018). What is sustainable development?.

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.

Mishra, R. K., & Dubey, S. C. (2015). Fresh Water Availability and it’s Global Challenge. International Journal of Engineering Sicence Invention Research & Development, 2, 351-407.

Mishra, S., & Modi, S. B. (2016). Corporate social responsibility and shareholder wealth: The role of marketing capability. Journal of Marketing, 80(1), 26-46.

Strand, R., & Freeman, R. E. (2015). Scandinavian cooperative advantage: The theory and practice of stakeholder engagement in Scandinavia. Journal of business ethics, 127(1), 65-85.

Tantalo, C., & Priem, R. L. (2016). Value creation through stakeholder synergy. Strategic Management Journal, 37(2), 314-329.

Unilever global company website | Unilever Global. (2018). Unilever global company website.

Vargas-Hernandez, J. G., & Gonzalez, D. C. (2018). The Discussion on Stakeholders in Contrast with the Shareholders Theory: Reconciliation to a Conscious Capitalism. SAMVAD, 14, 55-57.

Welford, R. (2016). Corporate environmental management 3: Towards sustainable development. Routledge.