The purpose of this report is to explain the relation among development, trade, liberalization and sustainability through empirical analysis of a company named Shangtex Holding Corporation. Moreover, it also proposes its sustainability agenda and the position of the company in the next decade.
Shangtex Holding Corporation locates in Shanghai which is mainly produce household and sport goods. It focuses on the concept of Hi-Tech & Fashion and has established its high-end segment of the textile industry. The total asset of Shangtex Holding Corporation has arrival RMB 20.6 billion with 22 import & export companies. Its customers are from more than 100 countries and areas in the world. The company has witnessed a great number of challenges from external environment in the past one year. It is worth its weight in gold for it to exert more attention to the sustainability aspects of international trade. To develop with sustainability, the company needs to take more responsibility not only for stakeholders, but also for employees, customers, environment and even the public. This report will present you a briefing on sustainability aspects in the international trade performance in the company.
Having achieved a better performance in international trade and business development, the company needs to be more active to respond to sustainability issues, as more pressure has come from competitors and global economic depression. The company could not purely focus on the revenue created each year, but also needs to pay much more heed to the interest related to the growth and development of communities and society. Making money at the cost of polluting the environment has not been a wise and acceptable way in running business. Company’s consideration of public interest needs to pay more attention to several parties, such as employees, environment, customers, shareholders and the public who seem to have no direct relationship with the business performance.
This report will firstly briefly introduce the external and internal environment for the company. Secondly, it will introduce the advantages of making decisions with consideration of the relationships among the development, trade liberalization and sustainability. Thirdly, it will discuss that it is necessary for the company to carry out practices with accountability for people and environment while caring the profit it would make. Fourthly, regarding the situation the company is in, the report proposes certain suggestion to improve the balance between company’s interest and the public’s. Finally, it will reach a conclusion that sustainability is necessary and good for the company, medium-size with a variety of household and sports goods.
2.0 Company’s Current Development in Spotlight
The company is becoming more specific in international trade, while the last year has seen a steady and quick development in making profits for shareholders and managerial levels. The various household and sports goods produced in factories located in Asian countries have been widely welcomed and sold in most countries in the world. There are around 8000 employees in the factories, while most of the work is not automatically. The factories are mainly located in China, and two in India. Producing sports and household goods, the company set the attractive mission to help the society become better and to make customers healthy.
2.1 Internal Factors
The development of the company has focused solely on how much revenue it could create and how much profits it will bring to the stakeholders as well as the senior levels. It was widely believed that the company has created profit for human beings at the cost of polluting the environment and even influencing on the public. Never has the company considered more about the sustainability. Mainly evaluating the performance of the development, the company has overlooked the real meaning of trade liberalization and has even never wanted to help to achieve sustainability.
Misunderstandings of the development, trade liberalization and sustainability have put the company in dilemmas. There are not too many restricted policies to restrain the company from polluting the environment, since more factories are located and run in Asian countries, such as China and India. In the past years, the company has mainly thought that to achieve development was to make more money and successfully compete with business rivals; that the trade liberalization should be totally and thoroughly liberal for international trade communication; and that sustainability should be the name for the continuous existence of the company. It mostly has neglected whether the employees are still in hot water or even the factories have made the environment and employees’ health in danger. The current development for the company is not welcomed by employees or even the public but only highly appraised by the stakeholders, as their interests have been achieved without losing money-related things. However, as a matter of fact, the ignorance of sustainability has reflected the self-finish consideration and improper business practices of the company. The company might lose not profit-related things, while the public or even the next generation has to pay for it.
2.2 External Challenges
External changes have faced the current development of the company. Firstly, the external challenges are mainly that more attention is paid to environment protection and customers’ safety while using the goods (Michaely, 2004). The challenges for entering the well-off countries have become as fierce as developing the impoverished countries. The well-off countries, such as European countries, have set higher requirements for the quality and safety of products which are to be sold there (Kutz, 2007). For example, the Restriction of Hazardous Substances Directive (RoHS) have become a barrier for our household appliances to be sold in European markets (Bhamra & Lofthouse, 2007), while the recent Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) has also made more restrictions to the use of chemical substances in goods, such as paint and plastic substances in goods. Secondly, the business rivals have become realized the advantages of sustainability. For example, they have developed their CSR practices by readjusting the care for employees, customers as well as the public. More attention from our critical customers has turned to them.
3.0 Advantages of Development, Trade Liberalization and Sustainability
Sustainability become tightly connected with development of the company and reflected in the trade liberalization context. Business activities have covered more areas towards society, the public and the planet. Companies are mainly run to earn as much profits as possible in legal and proper ways, while they are yearning for support from their customers and the society. Infusing the sustainability into decision-making process in business practices, the company could make certain contribution to the society and help people to achieve better life.
Firstly, sustainability helps to reshape corporate culture, business practices and ideologies cherished by the company. It helps to create healthy and comfortable life for the people in the society, as it pays more extra attention to its customers, employees and the society. For example, CSR activities and strategies are vital for companies which are eager for development with certain contribution to the society. Such activities will help to improve the impacts on employees within the company as well as customers and the society outside of it (Chai, 2002).
Secondly, development refers not simply to the progress the company makes in a short term, but also to a continuous one (Adam et al., 2000). Making contribution to sustainable development, the company would redefine its development. The development will last with sustainability with benefits created not only for the stakeholders, leaders, but also for employees, customers and the communities. Such a development would create great impact on rival inside or outside the industry. The sustainability applied in development would help to keep employees healthy. The care for employees will help to earn more support from them in return. The development cannot exist without support from human resources (Chai, 2002), while trust between employer and employees could also be established by CSR practices.
Thirdly, on one hand, the activities concerning with sustainability will help the company to achieve esteem from the public, customers, business partners or also the stakeholders. On the other hand, such activities could also help to create self-esteem for the company. This is also one of the drivers to motivate companies to make more efforts to improve the CSR practices (Adam et al., 2000). Activities of sustainability will also help to develop and secure more business opportunities as the loyalty of the customers are increased. The international trading cooperation is not simply a relationship of money-related factors. Its success might rely on the trust established between both parties. In addition, trust would be achieved while both parties present attractive responsibility and accountability to each other (Liu & Diamond, 2005). However, the trust could be easily created while the company even takes responsibilities towards the planet, such as the public, customers and the environmental protection. Focusing too much on money-related profits, the company would be easily regarded as a selfish organization. The business practices with sustainability consideration will help to better company’s image in the public, especially among the customers, or potential customers and business partners. Esteem in business operation process could be cultivated while trust would also be established because of the company’s effort to show responsibility to the environment.
Fourthly, embedding the sustainability into development could help to encounter the challenges from trade liberalization which can not exist without certain requirements. The aims at achieving trade liberalization need suppliers to ensure goods with good and safe quality. The mutual profits between both business partners could only be achieved by abiding the laws and regulations of safety. The demand and supply relationship will not be established by simple resource re-allocation. The international trading of goods without taxes and other barriers do not mean the markets are open to products with possibility to threaten the safety of the society (Tisdell, C. & Sen, 2004). It is true that under free trade term, the “trade-distorting” policies, namely laws or taxes regulations, could help companies to have more advantages to enter certain markets (Tisdell, C. & Sen, 2004). However, the goods still need to be sold after obtaining the entrance right, while those embedded with sustainability consideration become more attractive among customers. For example, the application of CSR requires companies to care more about the employees and have activities among the communities. Such activities would easily raise the frequent presence for them, which help to create impression to consumers’ mind as well as arousing attention from potential customers.
Finally, in the wave of competitive international trade, more consideration towards the development with sustainability could help to meet the challenges from the government and the society. Governments in most countries have made certain amendments to the production-related regulations, customs policies, environmental protection policies and laboring regulations. More environmental related factors have been applied to protect the laborers as well as the customers. For example, the lead free regulations are adopted to mainly protect the next generation and help to create safety environment for them. The REACH regulation framework has required suppliers to make their goods free of hazardous substances while supplying them to EU countries. The production of goods with such chemical substances is also bringing harm to the employees at the workshop. Companies attach more attention to ethical issues will help them to easily meet the needs from such regulations and feel confident while exporting goods. For example, by applying the CSR methodologies in business practices, companies could sustain the consolidate advantages, as they could ensure safe goods and better images while carrying out advertising strategies (Doppelt, 2003).
4.0 Necessary to Apply Business Practices with Sustainability
The goal of development has been deeply embedded with mission of the company. Various measures and marketing strategies have been applied to ensure a development of the company. More have also been emphasized on the revenue the company would earn or has earned. However, less has been focused on sustainability. Infusing sustainability into the business practices under the international trade background could help the company to achieve more benefits. The CSR is essential for the company at present. To apply or not to apply it is not a question, but a must.
4.1 Sustaining Development with Support from Employees
Development could not be independent from employees. The company, with factories located and operated in China and India, is aiming to make good use of the competitive human resource. The comparative low cost in laboring is an advantage for the company to supply goods to advanced markets, such as European and American. Employees work to have certain needs satisfied. According to Argyle (1972), employee motivation will mainly be reflected on economic motivation, intrinsic motivation and social motivation. In China, more employees have shifted to work to achieve satisfaction with intrinsic needs and social connection (Daily & Huang, 2001). The CSR cares for the safety and development of employees, which would help to improve job satisfaction. Maslow’s hierarchy of needs theory states that each individual will yearn for five needs that are psychological needs, safety needs, social needs, esteem needs, and self actualization needs (Doyle, 2003). In addition, the CSR is also aiding to recruit more employees with competitive professional skills and technologies, which the company can offer a comprehensive policy showing the responsibilities to parties inside or outside of the company. The CSR activities could help employees to realize their accountability for themselves (Spangenberg & Bonniot, 1998), the company as well as the society through getting involved into fundraising activities, donation to groups in need, or community volunteering.
4.2 Sustaining Development with Cultivating Better Corporate Culture
The company has spent less attention to cultivating corporate culture in the past few years. The sustainability embedded in development agenda will help to better the corporate culture by generating employees’ commitment to the company. The responsibility for environmental protection is not only related to the leaders of the company, but also to all employees. There are over 8000 employees at the company, and most of them need to share certain responsibility for making contribute to sustainability. The sustaining development is not a pure name for the company, but also for the society (Ward, 2006).
The money-related benefits attraction. Without responsibility to employees and the society, the company might use chemical substances which will bring danger or harm to consumers, or even would manufacture products by polluting the environment. The CSR practices could help the company to realize the responsibility for the sustainability development, which will also arouse employees’ attention to pay more responsibility for the company (Ward, 2006). The corporate culture embedded with meaning of sustainability will help employees to get involved in making the company better and make them respected by companies in the same industries. The trust between employees and the company will be also cultivated because of the responsibility shown to the society by the company.
4.3 Sustaining Development to Meet Challenges in International Trading Practices
Infusing sustainability into development will help to meet challenges from the international business communication.
Firstly, it helps to create product differentiation. The company feels great pressure from the marketing performance while facing crowded marketplaces. Consumers are striving to select the suitable products with best prices but without bringing them harm. The ways in differentiating their products from crowded ones could be labeling more corporate culture on them (Doppelt, 2003). For example, the CSR practices are good to achieve such goals. Community activities and volunteering donations to people in need could help to increase the frequent presence in certain regions. The current news about the CSR activities in the company would help people to have deeper understanding of the products. The company is specific in producing products, mostly OEM, but could not “make” with creation. The marketing strategies of the non-OEM products are weak. The brand image is not quite good or still unknown to the public (Liu & Diamond, 2005). Though it has factories in different locations in two different countries, it still cannot achieve the effective brand building performance. Actually, the CSR practices to be carried out in the company will help to increase the presence in the public with environment and society consideration ideology. Those products embedded with responsibilities for the society arouse more interests from consumers as well as our potential business partners (Copeland & Taylor, 2003), as its products are defined to help people to keep healthy, sports and household goods.
Secondly, the international trade performance of the company is highly related to risk management. The industry of sports and household goods in China has brought certain environmental harms. Our company needs to lessen unwanted attention related to brand and corporate image. In most manufactories in China, factories will make more or less harms to the environment. The scandals, such as bringing environmental pollution or accidents occurring will seriously impact on the reputation of the company (Chai, 2002). The frequent CSR activities with highly presence will help to offset the risks towards the ruining the image. The business cooperation opportunities could still continue. In another word, development with thoughts of sustainability will help the company to stand pressure from the environmental protection and achieve better risks management (Adam et al., 2000).
5.0 Suggestions to Embed Sustainability into Development
Under the pressure of international trade with challenges from trade liberalization, the company with factories operated in different Asian countries could embed sustainability into development. The suggestions for the company to help sustainability while striving for development are as follow:
Firstly, the company needs to understand that it is necessary to make it clear that development is not a name purely related to making as more money as possible. Instead, it is a progress of creating more benefits for the company as well as the employees, customers and also the society without bringing harms to the environment. It will be better for the company to embed the sustainability into the product values as well, as the products are created and produced to help to keep consumer healthy.
Secondly, applying CSR practices and making CSR reports be published online. This will help to improve the brand image as well as making employees to achieve commitment to the company and the society.
In conclusion, the report aims at picturing the needs for the company to striving for development with goal of achieving sustainability. With challenges from international trade and pressure from local government regulations, the company needs to exert more efforts to show responsible for making the society better by bringing the lest pollution to the environment.
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