CODE: BUGEN 5930
Task Description: Identify and briefly describe the two companies you have researched and then provide responses to the following questions.
i. What differences are evident between the two companies in terms of the range of issues dealt with in the reports and the depth of coverage on specific issues?
ii. To what extent can these differences be explained by the country or industry differences? What other explanations might there be?
iii. Assess the apparent quality of the social accounting approach utilized by each company according to Zadek et al.’s (1997) criteria.
iv. Discuss the extent to which the social reports reflect the values of your selected companies.
v. Briefly reflect on your groups’ discussions of these companies. In what ways did the ideas presented by your group confirm your own conclusions or present another perspective to you?
The business organizations these days are going through a high level of competition in the global market. Therefore, according to Jeston & Nelis (2014), it is very much essential for them to have a proper look at their different organization related reports. In order to complete the study, two different organizations has been chosen from the same industry and different countries. One of the organizations is Mahindra & Mahindra that is from India and the other one is Volkswagen from Australia.
The main aim of this particular study is to evaluate the importance of the different business reports and based on that how the organizations take certain amount of decisions regarding their organizational growth. Along with that, the study also aims to satisfy the fact that how the different business reports helps them to mitigate the different kind of issues that are associated with the business functionalities. In addition to that, the study also provides a brief description regarding the fact that how the chosen organizations are different in terms of their mode of operations being in the same sector or industry.
i. Description of the selected organizations
Mahindra and Mahindra
It is an Indian multinational car manufacturing organization has headquarters in Maharashtra. The organization is considered as one of the leading car manufactures in the country. The organization was founded in 1945, near about 72 years ago. The organization has reached at the top of the table of the competitors by having a set of good quality products. When it comes to the strength of the employees, currently the organization has 39,276 employees working for them (Mahindra.com | Rise. 2017). They have implemented new and innovative technologies into their vehicles that make them far ahead from their competitors such as Maruti Suzuki, Ashok Leyland and the others. Over the recent years, the organization has showed their interest in the new industries in the foreign market. They have put a step in the two-wheeler industry by taking over the Kinetic motors. When it comes to naming their vehicles, the organization follows an invisible rule of ending their vehicle names with “O” like Verito, Scorpio. The net revenue generation of the organization is of 83,773 crore as of 2017.
Volkswagen in Australia
Volkswagen in Australia has been chosen as another organization in order to complete the study. The organization was started in 1953. They have acquired the vehicle assembly facilities of Martin & King at Victoria. That particular site is now used for the local assembly of the Volkswagen Beetle. In 1967, the organization developed a unique model, namely Country Buggy. The model used the components of both Beetle and Kombi. Beetle is the first model of Volkswagen in Australia that hits the road. The organization has provided a new look to the model in 2000 and then they have sold near about 60k vehicles all over the country (Volkswagen Passenger and Commercial Vehicles. 2017).
ii. Difference in between the selected organizations in terms of range of issues
The organization Volkswagen is very much committed to provide sustainable along with the transparent and responsible corporate governance. One of the biggest challenges that the organization face in order to implement this strategy is their value chain. As the organization is dealing with large number of brands along with employees, therefore it is tough for them to handle the value chain. In order to mitigate this kind of issues the organization tries to follow the German Corporate Governance Code and try to coordinate their sustainability issues with the entire group. Along with that, the organization is also looking to have the proper risk management system along with a proper framework that can handle the different environmental factors. One of the major key issues in 2017 will not the challenge regarding the carbon emissions, rather than the process of transformation of the organization is one of them. The organization is initially providing €20 million funding in order to complete the different projects that are running or proposed (Volkswagen Konzern - AR 2016 - Sustainability. 2017).
Figure 1: Key action areas of Volkswagen group
(Source: Volkswagen Konzern - AR 2016 – Sustainability, 2017)
Mahindra & Mahindra implements such kind of processes that can easily enhance their business performance in the global field. The organization has different policies that help them to have a proper control over their organizational structure. The organization has divided the responsibilities to each of their employees and they just monitor the fact that whether the employees are accountable or not. Along with that, according to Rosemann & vom Brocke (2015), when it comes to the different CSR activities the organization mainly try to focus on the environment by reducing the greenhouse gas emissions. The organization has different sustainability measures in their plants such as green buildings along with the water efficient plants.
Figure 2: Sustainability graph of Mahindra and Mahindra
(Source: mahindra.com, 2017)
iii. Differences in terms of country or industry
The different countries have their own way to carry out the business process. Therefore, it would not be same that the different organisations belonging to the same sector take the same step to handle any kind of issues that arise in their organization. It is because the cultural difference of the people and the mindset of the organization. It has been found that, when it comes to the CSR related expenditure, the foreign organizations are far behind from the domestic organizations until 2013 (iosrjournals.org, 2017).
Figure 3: CSR expenditure by the firms
(Source: iosrjournals.org, 2017)
However, earlier the foreign firms are ahead from the domestic firms because of certain factors. These are the anticipated pressure from the customer and different NGOs. Along with that, the different investors in the foreign firms are Indians; therefore, they also act as the driving force for the foreign organization to invest in the CSR activities.
On the other hand, according to Fleischmann, Schmidt, Stary, Obermeier & Brger (2014), when it comes to the different risk factors for both the organization, they also take different steps in order to mitigate those risks. This is because the business processes of the organizations are not same. Therefore, it is not possible for the organizations to adapt the same technique in order to mitigate the risk factors though they belong to the same industry. The country in which the organizations operate plays a vital role in this aspect. The management needs to cope up with the employees.
iv. Assessment of the social accounting approach of the organizations
According to Chang (2016), the social accounting approach is considered as the process of communication with the social and environmental effects of an organization’s actions that are related to the economy. The term is used in the business context such as the CSR activities. In addition to that, it provides more focus on the corporate accountability.
When it comes to the organization Mahindra & Mahindra, they implement different CSR activities. They provide an ample amount of focus over the different environmental initiatives such as the air pollution along with water pollution. In addition to that, the organization also focuses over the different initiatives regarding the education. They have an education trust that has provided near about 13.80 crore that is nearly US $3 million to the grants.
The organization Volkswagen Australia also has adopted some different CSR activities in order to sustain in the global market. They also try to focus on the different environmental factors so that it can reduce the amount of pollution from the society. Along with that, the organization also has built some trust that provides education to those children who are not able to have the proper amount of education.
v. Reflection of the values by the given reports
After going through the annual reports of both the organizations it can be said that, the reports are the reflection of their values. Harmon (2014) said that, every organization has their own value that derives them to the exact path through which they can operate their business operations. The annual reports or the other reports of the organizations provide the actual scenario of the organizations. Therefore, by going through the reports it can be evaluated that whether the organizations are able to stand in the value statement or not. The organization Volkswagen is not just an employer for their employees. They are also responsible for the entire economy along with the people, environment, and the society. Along with that, the employees at Volkswagen also take an ample amount of responsibility by getting involved in the different voluntary work. Moreover, every performance of the organization reflects the sustainable, responsible, and collaborative thinking of the management and the employees.
Figure 4: Sales reduction of Mahindra & Mahindra
(Source: mahindra.com, 2017)
On the other hand, when it comes to the Mahindra & Mahindra group, their value statement derives the fact that they are basically focused over their employees. They try to make their employees skillful enough so that they become able to handle any kind of issues that may arise due to their business operations. The social reports of the organization also derive the fact the sales percentage has reduced to overall 7%. Therefore, it can be said that the value statement of the organization do not match with the social report of the organization. They need to implement such steps that can enhance their business operations.
After having a proper communication with my group members I have found that, some of them have clear idea regarding the different reports of the organization. However, some of them are still in confusion. The main confusion arises regarding the sustainability. The sustainability report of Volkswagen said that their main aim is to have a proper strategic idea regarding the different products and services until 2025. However, they have not defined the fact that how they will manage this aspect without having a proper value chain. I have found the thing that they have some issues regarding their value chain as they are handling an ample amount of brands and employees, therefore it is tough for me to find out the fact that how will they become successful in their mission 2025.
Along with that when I come to the reports of Mahindra & Mahindra, they provide suitable value to their shareholders. After going through their reports I have analyzed one particular thing that the engagement with the stakeholders is not only up to sharing the profit, they also have them in their decision-making process. Therefore, my group and I think that the organization is taking a good step to engage their stakeholders in the decision-making process. That can in turn enhance the business development of the organization. Along with that, we have also find another thing that the organizations resolve their issues in different ways. This is because the cultural differences of the organization. However, it is clear for us that both the organizations are trying to have a proper mark at the global market by implementing such processes that can make their reports adaptive towards the customers and the society.
After summing up the study, it can be said that the business organizations regardless of their sector or industries need to pay an ample amount of attention to the business processes in order to sustain in the global world. In addition to that, it can also be evaluated that the organizations that has been chosen for the study use different processes in order to sustain in the global platform. This is basically because of their social nature and the type of customers that both the organizations have. The set of customers are considered as the most valuable asset of an organization, therefore both the organizations provide a proper amount of value to their customer feedbacks.
Along with that, the study also evaluated one important thing that the organizations also need to put focus over their stakeholders. The different kind of business decision can be taken after having a proper discussion with the stakeholders. That can easily enhance the overall relationship with the stakeholders of the organization and the management of the organization may have an ample amount of choices regarding the maintenance of the business processes.