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In the assignment, we will undertake the sustainability analysis of Coffee Queen. Coffee Queen is an international privately owned company that develops, produces and markets coffee machines for mostly gastronomic purposes. The biggest part of Coffee QueensÂ´ product selection is coffee machines and automats for the business-to-business market. Their customers, reached by retailers, are mainly restaurants, hotels and other enterprises. Georg Moller is the founder of coffee queen.
A growing segment of consumers, investors, employees, communities and nongovernmental organizations is developing a new ecological view of society. Stakeholders- groups and individuals who can affect or are affected by the organization's purpose- are more aware of corporate actions affecting society, the economy and the ecology and demand corporate responsibility especially from large international enterprises. This is why companies try to create stakeholder value and to gain trust and legitimacy in accordance with sustainable development.
What Bowen demanded in 1953 has become a more and more important concept and discussed subject. From 1987 the social and environmental responsibility of business was fit in the name "sustainable development" by Brundtland's UN-report "Our Common Future".
"Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs." (WCED 1987-2)
Sustainability thinking is based on the demand by the society to distribute the risks, losses and gains from a company doing business more fairly. It is a business view where corporate decisions do not only impact other businesses but also other sectors that comprise society, political and civil society.
Sustainable development aims at finding a balance between social-wellbeing, ecological quality and economic prosperity. This balance of economic environmental and social responsibility in an integrated management concept is called triple bottom line (Panwar et al. 2006).
Economic values are related to quality, price and cost (that is, value for money)
Environmental values that are related to ecological protections, improvements and responsibility
Social values are related to ethical and community responsibility and benefits.
Panwar et al. (2006) present different approaches how to see the triple bottom line in different concepts. One common view is to see economic, environmental and social dimensions as interdependent.
Figure: The multi-dimensional construct of CR (Panwar et al. 2006, p.6)
Corporate Responsibility Concept:
Talking about sustainable development, there are many similar concepts that have different emphasis on and different depth within the economic, environmental or social aspects of the concept. "Corporate Social Responsibility" may be the most commonly known conceptualization, used by the EU Green Paper and others. Other concepts are the term "Social Responsibility" used by the International Organization for Standardization (ISO). The United Nations provides a concept called "UN Global Compact Standard", while the Global Reporting Initiative (GRI) is setting a standard by a so-called "Sustainability Reporting Framework". "Corporate Responsibility", "Sustainable entrepreneurship", "Corporate Citizenship", "Corporate Governance", "Codes of Conduct" and "Business Ethics" are other conceptualizations that are often used synonymously for the integration of a triple bottom line approach. The huge amount of standards, labels and certification schemes presented here can cause confusion for business, customers, investors, other stakeholders and the public (EC 2002). But, basically, they have the idea of responsibility of the corporation and the accountability of the triple bottom line in common.
Values-based value creation in networks:
Value creation in a stakeholder perspective:
According to Waddock (2006), companies have power because of their command for significant resources. That means that they have to "recognize the importance of maintaining good relationships with their stakeholders to experience outstanding long-term performance". The relationships between a firm and its suppliers and other stakeholders are latent and do always exist. Maintaining positive stakeholder relationships involves the establishment of constructive and positive relationships with stakeholders.
Donaldson & Preston (1995) presents a stakeholder model which shows different sorts of possible stakeholders, voluntarily or not, contractually or not, that can have an interdependent relationship with the firm.
The Stakeholder model of the corporation (Donaldson & Preston 1995, p.69)
To create value for an organization in a long-term perspective, it is therefore necessary to build relationships and to address the interest of several constituents in society, including any group who can affect or is affected by the organizations business activities.
Service Brands and Quality:
Values, quality and branding are closely linked in service management. While service quality is strongly related to the subjective experience of the customer, a values-based brand is a strong filter for the customer expectations and perceptions of the service. Values-based service quality includes sustainable thinking on basis of a stakeholder view on leadership, responsibility and ethics. Edvardsson et al. (2006) suggest that sustainable development can be used as a driving force for value creation as a part of service quality improvement. Values connected to sustainability can be used for building meaning into ideas so that employees are able to base their all-day activities on value communicated by a brand and to "live the brand". That is especially important in a service management perspective; there the human performance is seen as a critical role in securing quality and building a brand.
The functions of a stakeholder oriented and values-based brand are:
Differentiation: The most important role of a brand is to differentiate a product or service from other similar ones.
Concentration of information: The identification of products, services and businesses is the second role of a brand. The identification helps to increase the information efficiency on what the product represents and what the customer can expect from a product. The informative part of a brand concept contains even a promise of performance (Ind 2004).
Help for decision making: A brand helps to reduce people's anxiety to make choices by its content of information and values. The more a customer feels about a product, the more secure he feels about buying it. On the basis of "corporate messages and experiences we believe that we will receive a certain experience of a brand" (Ind 2004, p.20). This is also because a brand incorporates some sort of consistent performance.
Gronroos (2007) presents the triangle of the service brand-relationship-value as follows:
The service brand-relationship-value triangle (Grönroos 2007, p.337)
To fulfill the values and promises made by the company in an "external" perspective, the company has to take "internal" actions and make sure that that the values and promises that are communicated through the brand, agree with the internal values in the company and the values of the employees.
Basic economic responsibility of the company:
Panwar et al. (2006) name 3 stages of progress from financial benefit to sustainable management: "profit maximization management", "trusteeship management" and "quality of life management".
Profit maximization management views shareholder value as the sole objective of a company, the focus lies on profit maximization and creation of wealth. In the more stakeholder oriented world view of trusteeship management, the satisfaction of the shareholder comes in the long run as the consequence of good management and satisfied stakeholders. The "quality of life" management starts from a point where a company first serves the society. The inclusion of responsibilities beyond economic considerations leads, in this management view, to sustainable development. Profit maximization is not the focus of a company in quality life management.
According to Hellsten & Klefsjö (2000), total Quality Management is one of the strategic economic responsibilities of the firm. It is a "management philosophy" that includes different core values. The values of Total Quality Management are "customer focus", "continuous improvement", "process orientation", "everybody's commitment", "result orientation" and "learning from each other". Combined they are the prerequisites for quality management.
The cornerstones of TQM (Hellsten & Klefsjö 2000, p.240)
The systematic approach to quality management defines that the core values of the organization have to be set first. On basis of values, one chooses the techniques that support the aim of the system and finally, the tools that are suitable to reach the set goals in a Plan-Do-Act-Control circle (Hellsten & Klefsjö 2000).
To achieve an effective quality management, the company needs to get insight into its processes and combine processes that interact with each other. The systematic management idea of Plan-Do-Act-Control is also part of the ISO 9000 quality management system. Top management plays an important role when working according to the Plan-Do-Act-Control systematic. According to the ISO 9000 quality standard, top managers should, for example, define the company's policy and communicate the new system through the whole company.
Environmental engagement can rely on different reasons and have various shapes, mostly related to a need for internal control in relation to the environment.
The environmental standards of ISO 14000 are based on the ISO 9000 series and came into work in 1996. The standards apply to all types and sizes of organizations and are designed to encompass diverse geographical, cultural and social conditions. Ammenberg (2003) presents four principal motives for supporting the development of ISO 14000:
To promote sustainable development;
To harmonize standards and procedures worldwide.
To promote a new paradigm of self-management as an alternative to traditional regulation.
To forestall further government regulation, especially at the international level.
Environmental Management System:
A successful environmental work requires aids and tools given by an environmental management system. An EMS establishes procedures, work instructions and controls to guarantee that the implementation of an environmental policy, set up by the organization, and the achievement of targets can become reality.
Environmental Management Standards can either be based on a company's own requirements or by following the guidelines and requirements of an ISO 14000 certification, respectively an EMAS registration. All organization levels should be aware of their responsibilities, be aware of the objectives of the scheme, and be able to contribute to its success. This is why communication of values plays such an important role for the maintenance of an Environmental Management System (quality.co.uk 2007)
The third bottom line is the organizations' social responsibility: Social responsibility is about human and social capital which includes both- the individual worker's health, skills and education and the society's health and wealth creation potential. The degree of trust between an organization and their external stakeholders is a key factor in case of long and sustainable co-operations. To guide board members, managers and employees, many organizations develop or implement behavioral codes. These codes work as an addition to national and international law and are usually called Corporate Governance, Business Ethics or Code of Corporate Ethics.
Codes of Conduct and Human Rights:
A Code of Conduct is a helping tool for companies to set up standards about child labor, forced labor, working hours, discrimination, and freedom of association, health and safety. While a set of ethical guidelines are human rights policies. Human rights policies focus often on nationality, gender, race, economic status or religion. (bsr.org 2011)