Creating Shared Value And Implementing Integrated Reporting At Marks And Spencer: A Study Essay.

The report prepared by the researcher tries to garner knowledge on the risk involved in carrying out the business operations of Marks and Spencer. It deals with different forms of problems that the company faces in the recent times.

The report has aimed on finding out the ways in which Marks and Spencer create shared value in its business. The researcher has also researched on how the company has implemented the Integrated Report of 2011 and how it practices ethics in business.

The induction of the Integrated Report has contributed to the overall development of the report and it will surely be a valuable source of information for other researchers who will prepare a similar report. A thorough analysis of the report points to the steps taken by the firm to be future ready and avoid any risks.

Primary source of information forms the main structure of the report. The information was collected from the corporate office of the company and from the annual sustainability index of the company. Porter and Kramer model followed by the mentioned organization has lead to the success of the company.

Though, the organization has lived up to its expectations it still needs to effectively use the model in an effective manner to achieve success.  

Shared Value Creation

Marks and Spencer is a multinational retail company based in the royal state of England. The company came into existence in the year 1884 and has expanded to a large number of countries since then. It is operational in countries like India, Greece, Turkey and many more different countries worldwide. The competitive business world that is present nowadays is a challenge to the company to develop a proper planning to sustain itself in the future. The company must implement an effective plan to adapt to the changing demands of the people. The report is important because no other such work has been done earlier in such context. The researcher completed the project within a short span of time. The aims of the report are to find out the main threats that the company might face to carry on smooth operations. The report has concentrated on the strategies that the company has put in place to create a shared value. The researcher has used primary sources of information that was collected from the top brass of the company management. The report has been able to attain its objective as all the topics related to the issues and the plans to develop a sustainable environment are discussed in detail in the report.

Researchers have identified that creating a shared value helps the business to succeed in the future. Rather than creating short-term success goal the business must concentrate on creating long-term goals that are achievable and help the business to make profit as well as satisfy the customer. Generally, Shared Value creation works in three different levels, which includes the creation of innovative technologies that serve the needs of the people, ensuring different productivity models like use of modern sources of energy creation and lastly developing smart clusters of logistics that will considerably reduce the amount of carbon footprints. Marks and Spencer have tried to implement Porter’s theory by formulating such plans that have helped them to grow into such a large organization. The organization discovered a shared value creation in the urban market of India. They carried out a detailed market research before starting their operations in the nation. The report pointed out that the targeted group of customers was reluctant to buy the products, as they were not aware of the retail-marketing sector. The company used this opportunity and hired many retail experts to carry out an extensive training cum promotion program for the urban population. The company was eventually successful in creating the desired awareness and thus was able to garner huge profits from its stores in the following years. Shared value creation of the organization is not only limited to such promotional activities rather it also helps to fulfill its social responsibilities.

Marks and Spencer have applied the Porters model effectively to attain success in the long run. Primarily the company scrutinizes the market under the lens every now and then to get the idea of the market and the new products and accordingly fix their strategy. Shared value promoted by the organization helps to improve education among the underprivileged children, increase the employment opportunities for people and act as a shield to the nature. Before entering any new market, the organization ensures that there is a societal harmony in the area. Absence of harmony can lead to the failure of the company. Thus, they try to implement innovative ideas to get rid of such social evils. Marks and Spencer vehemently opposes the publication of short-term reports like half-yearly or quarterly reports, which they believe damages the economic growth of the company. They set up long term goals that are the real force behind the success of the company. The mentioned organization has been successful to implement strategies that help to keep a perfect balance between the different departments like manufacturing, processing, logistics as well as keeping a perfect collaboration with the employees, shareholders, government and the other players in the market.

Sustainable Growth Model

The mentioned organization uses a sustainable growth model to meet the needs of the customers and does not over exploit resources. Important steps taken up by the company to improve the sustainable growth plan includes reduction of carbon emissions, waste recycling and use of renewable sources of energy to transform itself to a green company. The integration of latest technologies and rapid urbanisation has helped the company to connect to a large number of people overall the world. Employing large number of people in areas with extreme poverty has contributed to the CSR initiatives of the company.  The main strategy of the company to create a sustainable growth is thus well defined.

figure 1- sustainability and business model

source- (wilson 2015)

  Integrated Reporting promises to make a better, secure and sustainable future of every business. It helps the business houses to formulate the exact ways to create the source of capitals needed for the business to expand. Marks and Spencer have been instrumental in implementing this report as it has helped them to manage capitals, communicate with consumers, create ethical values and prepare a proper strategy to attain success. The retail giants have collaborated with professionals of Webtrends digital and have successfully created a new model to carry on its operations more effectively. The strategy involved a training program that incorporated the employees with the strength of the companies and accordingly carry out the plan. M&S leads the charts of being a global company in terms of sustainability management as it takes different steps to ensure better capital management for its stakeholders and customers. The organization has used its capitals to create environmental friendly measures like using renewable source of energy in its stores and offices, providing green solutions in its logistics operation, reducing water consumption, promoting use of recycle products and many more as such. The company keeps a constant watch over its competitors to ensure that they are the best in effectively managing capitals. The Mentioned organization inducted itself into the integrated pilot program in 2011. Marks and Spencer became the member of the integrated network of business after three years of its induction in the year 2014. The membership of integrated reporting meant the company to provide an annual report, which judged its performance index based on the aims and objectives that it targeted in the following year. The company has formed an internal group to meet the annual target of the organization. They have appointed a consulting company named Deloitte for framing the best practice models to be followed to achieve success. The company is always in search of new and innovative approaches to integrated reporting. The innovative ways help the company to explore new networks in business, which gives birth, to new ideas. Marks and Spencer considers the IR principles as a perfect structure rather than some set of rules that help the company to be coherent. The company has been able to integrate the framework into their own business to maintain proper communication with the different shareholders of the organization. The following framework on IR principles has helped the company to save time and money on any other forms of reporting and inventing different ideas. The annual report published at the end of each financial year also shows the risks that are associated with the company and the CSR undertaken by them. The report constitutes the various points that clearly differentiate the business strategies followed by the organization. The long term strategy taken up by the management of the company follows the Government rules of UK which makes the report more compact.

Integrated Reporting

Though Integrated Reporting has been a boon for the organization, a section of people within the company terms it to be problematic. Critics in United Kingdom have marked the membership status of the company to be a wrong step towards sustainability. The employees argue that Integrated Reporting for a MNC like Marks and Spencer is very much complex and difficult to understand.

The people against the reporting say that the company has not the required amount of information needed for preparing such a detailed analysis. The absence of data that is required to prepare the report makes it meaningless for the company to have a membership of IIRC.

The Integrated Report is seen to be much complex and the value chain assessment does not pass the legal boundaries. Both the G4 models as well as the G3 models fail to meet their demands and are thus rendered helpless to prepare the reports.

One of the main issues that have been assessed from the report is that, Marks and Spencer incurs huge amount to publish the sustainability report. It is surprising to see the company spends millions of rupees to estimate its longevity in the market and innovate new values of creation.

 Last but not the least in importance the mentioned organization struggles to estimate the approx report because of the presence of a large number of different indicators that is mentioned in the IIRC guidelines.

A number of issues has bothered the company and has hampered its business. Primarily the changing market scenario has acted as a great problem to the expansion of the business as because globalization have ushered in a change in the minds of the people and consumers are in search of latest trends every now and then. Secondly, there has been huge competition in the market from other operators that have been evident from the dip in sales of clothing items in the European market. The competitors are adapting unfair means to capture the market. Recently strict penal action was taken against online clothing giant in India for violating the copyright rules of Marks and Spencer.  

Tackling sustainability is one of the huge challenges faced by the company in the highly competitive market that exists in the modern days. Some main issues cope up while maintaining longevity.

  First of all the abnormal change of the climate in the world is a serious issue that needs to be treated as because the change directly affects the economic conditions of the country, which in turn leads to change in the needs of the consumers. The change in the needs of the consumers is so much drastic that the company hardly gets any time to adapt to the changes.

The second cause that affects the organization is maintaining a perfect balance between the shareholders and the management of the company. Marks and Spencer face huge challenge to cope up with the different needs of the shareholders. The top brass of the company must arrange meetings and conferences with the shareholders to let them share their views, which may lead to the progress of the company.

The organization generally follows the culture and rules of the area where it starts its operations. It does not follow the same style of marketing in Turkey, which is followed by them in UK. Similarly, it launches its products in India and other countries based on the local culture of the given country. This is a complex process altogether as because the company have to invest lots of amount to study the market at first and then address the cultures of the following group.

Every business organization feels hard to present a detailed report on sustainability, as it cannot be measured just on mere assumptions. The report prepared thus has very less reliability, which makes the company hard to assess the original sustainability of the firm.

The report prepared by the researcher also points out to a shocking fact about sustainability of the company. Though the company has a number of Strategies to maintain sustainability it is seen that they are not applied practically. Thus, the non-integration of the strategies makes the organization vulnerable to external and internal threats.

Customers generally prefer normal products to sustainable products, which makes the company difficult to sell such innovative products. Thus, they have to organize training cum promotion programs to make the customers aware of the products. This leads to wastage of money and time for the organization.

Marks and Spencer have a long-term goal in place to attain shared value but achieving the goal is a huge challenge for the company as because the demands of the customers, the condition of the market changes every now and then which makes it difficult for the company to implement the IR report.

Conclusion

The report has been prepared to get an idea about the problems that Marks and Spencer face while carrying out its operations. It can be concluded that the company is gradually starting to apply innovative technologies to get rid of such problems and practice ethical business. The application of the integrated reporting has changed the way of the approach of the company towards meeting the sustainable goals. It can be concluded that Marks and Spencer is on the right path to create sustainable value and will soon formulate a perfect strategy that will be imitated by the other organizations. The company must not take any hasty decisions to attain sustainability as such steps can lead to disaster. It should aim to slowly progress on the right path based on specific strategies.

References

Adams, C.A. and Adams, C.A., 2017. Conceptualising the contemporary corporate value creation process. Accounting, Auditing & Accountability Journal, 30(4), pp.906-931.

Adams, C.A., 2015. The international integrated reporting council: a call to action. Critical Perspectives on Accounting, 27, pp.23-28.

Aziz, N.A.A., Manab, N.A. and Othman, S.N., 2015. Exploring the Perspectives of Corporate Governance and Theories on Sustainability Risk Management (SRM). Asian Economic and Financial Review, 5(10), p.1148.

Crane, A., Palazzo, G., Spence, L.J. and Matten, D., 2014. Contesting the value of “creating shared value”. California management review, 56(2), pp.130-153.

Crowther, D., 2016. A social critique of corporate reporting: Semiotics and web-based integrated reporting. Routledge.

de Villiers, C., Rinaldi, L. and Unerman, J., 2014. Integrated Reporting: Insights, gaps and an agenda for future research. Accounting, Auditing & Accountability Journal, 27(7), pp.1042-1067.

Faris, C., Gilbert, B., LeBlanc, B., Ballou, B. and Heitger, D.L., 2013. Risk Reward: Demistifying Sustainability Risk: Integrating the Triple Bottom Line Into an Enterprise Risk Management Program. COSO.

Frias?Aceituno, J.V., Rodríguez?Ariza, L. and Garcia?Sánchez, I.M., 2014. Explanatory factors of integrated sustainability and financial reporting. Business strategy and the environment, 23(1), pp.56-72.

Høvring, C.M. and Høvring, C.M., 2017. Corporate social responsibility as shared value creation: toward a communicative approach. Corporate Communications: An International Journal, 22(2), pp.239-256.

Jones, P., Hillier, D. and Comfort, D., 2014. Assurance of the leading UK food retailers' corporate social responsibility/sustainability reports. Corporate Governance, 14(1), pp.130-138.

Kramer, M.R. and Porter, M., 2011. Creating shared value. Harvard business review, 89(1/2), pp.62-77.

Lee, K.H. and Vachon, S., 2016. Supply Chain Sustainability Risk. In Business Value and Sustainability (pp. 245-280). Palgrave Macmillan UK.

Lehner, M. and Halliday, S.V., 2014. Branding sustainability: Opportunity and risk behind a brand-based approach to sustainable markets. Ephemera, 14(1), p.13.

Lenssen, J.J., A. Dentchev, N. and Roger, L., 2014. Sustainability, risk management and governance: towards an integrative approach. Corporate Governance, 14(5), pp.670-684.

Mihelcic, J.R. and Zimmerman, J.B., 2014. Environmental engineering: Fundamentals, sustainability, design. Wiley Global Education. (Mihelcic and Zimmerman 2014)

Olson, D.L. and Wu, D.D., 2017. Sustainability and Enterprise Risk Management. In Enterprise Risk Management Models (pp. 193-204). Springer Berlin Heidelberg.

Salvioni, D.M. and Bosetti, L., 2015. Sustainable development and corporate communication in global markets.

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

Wilson, J.P., 2015. The triple bottom line: undertaking an economic, social, and environmental retail sustainability strategy. International Journal of Retail & Distribution Management, 43(4/5), pp.432-447.