Tài liệu A study on incorporating corporate social responsibility in a tea manufacturing company a case study on hung cuong trading limited company

A STUDY ON INCORPORATING CORPORATE SOCIAL RESPONSIBILITY IN A TEA MANUFACTURING COMPANY: A CASE STUDY ON HUNG CUONG TRADING LIMITED COMPANY BY DO XUAN TRUONG Graduation Project Submitted to the Department of Business Studies, HELP University College, in Partial Fulfillment of the Requirements for the Degree of Bachelor of Business (Accounting) Hons i MARCH 2011 Declaration of Originality and Word Count DECLARATION I here by declare that this graduation project is based on my original work except for quotations and citation which have been duly acknowledged. I also declare that it has not been previously or concurrently submitted for any other courses/degrees at HELP University College or other institutions. The word Count is 10,065 words. DO XUAN TRUONG 28 March, 2011 ii Acknowledgement To accomplish this research, I have received help from many people. I extend my sincere thanks to several people the following: Firstly, I would like to deeply thank to my supervisor Dr. Le Van Lien, International School. He helped me to develop the research and support me in analyzing the results. Secondly, I also would like to express my thanks to Ms. Sumathi, Help University College, who initiated the project and give me so much instruction and support. Lastly, I would like to express my gratitude to managers and employees of Hung Cuong Trading Limited Company. DO XUAN TRUONG iii Abstract A STUDY ON INCORPORATING CORPORATE SOCIAL RESPONSIBILITY IN A TEA MANUFACTURING COMPANY: A CASE STUDY ON HUNG CUONG TRADING LIMITED COMPANY BY DO XUAN TRUONG March 2011 Supervisor: Le Van Lien Corporate Social Responsibility (CSR) is a trend in the world today, but it is still relative new in Vietnam. Companies want to compete, to grow, they need to implement CSR. CSR is a competitive tool for them. The main aim of this research is to find the level of awareness and the implementation of CSR of a tea company. Researcher will use both of primary and secondary data to achieve this aim. In the primary data, researcher uses questionnaire sample to collect data from managers and employees of the company. After the analyzing of the results, researcher also gives some recommendations for the company. iv TABLE OF CONTENT Declaration of Originality and Word Count .............................................................ii DECLARATION..........................................................................................................ii Acknowledgement .......................................................................................................iii Abstract ........................................................................................................................ iv TABLE OF CONTENT............................................................................................... v LIST OF FIGURRES AND TABLE .......................................................................viii LIST OF ABBREVIATIONS .................................................................................... ix CHAPTER 1: INTRODUCTION ............................................................................... 1 1.1 Research background ....................................................................................... 2 1.1.1 CSR in the world........................................................................................ 2 1.1.2 CSR in Viet Nam........................................................................................ 3 1.1.3 CSR in the tea industry ............................................................................. 4 1.2 Problem Statement ............................................................................................ 5 1.3 Objective and Sphere of Research ................................................................... 6 1.3.1 Objective of Research ................................................................................ 6 1.3.2 Sphere of Research .................................................................................... 6 1.4 Research methods .............................................................................................. 7 CHAPTER 2: LITERATURE REVIEW .................................................................. 8 2.1 Definition of CSR .............................................................................................. 9 2.2 Pyramid Concept of CSR ............................................................................... 11 2.3 The Concepts Related to CSR ........................................................................ 12 2.3.1 Stakeholder Theory ................................................................................. 12 2.3.2 Tripple Bottom Line ................................................................................ 13 2.3.3 Business Ethic .......................................................................................... 14 v 2.3.4 Sustainable Development ........................................................................ 14 2.3.5 Investment Decision ................................................................................. 15 2.3.6 Responsible Investment ........................................................................... 15 2.3.7 CSR Reporting ......................................................................................... 16 CHAPTER 3: RESEARCH METHODOLOGY .................................................... 17 3.1 Research Objective .......................................................................................... 18 3.2 Theoretical Framework and Measurement .................................................. 18 3.2.1 Managers .................................................................................................. 18 3.2.1.1 Level of Awareness .......................................................................... 18 3.2.1.2 Implementation ................................................................................ 19 3.2.2 Employees ................................................................................................. 19 3.2.2.1 Level of Awareness .......................................................................... 19 3.2.2.2 Implementation ................................................................................ 20 3.3 Research Methodology .................................................................................... 20 3.4 Data Source ...................................................................................................... 20 3.4.1 Primary Data............................................................................................ 20 3.4.2 Secondary Data ........................................................................................ 21 3.5 Research Method ............................................................................................. 21 3.6 Research tool .................................................................................................... 21 3.7 Sampling........................................................................................................... 22 3.7.1 Sample Population ................................................................................... 22 3.7.2 Sample Frame .......................................................................................... 22 3.7.3 Sample Size ............................................................................................... 22 3.8 Limitations ....................................................................................................... 22 3.9 Hypothesis Statement...................................................................................... 22 vi CHAPTER 4: ANALYSIS ........................................................................................ 24 4.1 Collection of Questionnaires .......................................................................... 25 4.2 Description of Result ....................................................................................... 25 4.2.1 Age............................................................................................................. 25 4.2.2 Gender ...................................................................................................... 26 4.2.3 Managers .................................................................................................. 27 4.2.3.1 Level of Awareness .......................................................................... 27 4.2.3.2 CSR Implementation ....................................................................... 31 4.2.4 Employees ................................................................................................. 35 4.2.4.1 Level of Awareness .......................................................................... 35 4.2.4.2 CSR Implementation ....................................................................... 38 4.3 Result Analysis ................................................................................................ 42 4.3.1 Level of Awareness of CSR ..................................................................... 42 CHAPTER 5: CONCLUSION AND RECOMMENDATION .............................. 47 5.1 Conclusion ........................................................................................................ 48 5.2 Recommendation ............................................................................................. 49 5.3 Limitation of Study ......................................................................................... 50 5.4 Suggestion for Future Research ..................................................................... 50 REFERENCE (Harvard referencing system) ......................................................... 51 APPENDICES ............................................................................................................ 53 Appendix A: Questionnaire Sample .................................................................... 53 vii LIST OF FIGURRES AND TABLE Table 1: Elements and its items related to CSR ...................................................... 10 Figure 2.2: Pyramid model of CSR (Archie. B Carroll, 1979) ............................... 11 Figure 2.3: The relationship between firm and its stakeholders ........................... 13 Table 2: Age ................................................................................................................ 25 Table 3: Gender.......................................................................................................... 26 Table 4: Question 1 - Description of Result ............................................................. 27 Table 5: Question 2 - Description of Result ............................................................. 28 Table 6: Question 3 - Description of Result ............................................................. 29 Table 7: Question 4 - Description of Result ............................................................. 30 Table 8: Question 5 - Description of Result ............................................................. 31 Table 9: Question 6 - Description of Result ............................................................. 32 Table 10: Question 7 - Description of Result ........................................................... 33 Table 11: Question 8 - Description of Result ........................................................... 34 Table 12: Question 1 - Description of Result ........................................................... 35 Table 13: Question 2 - Description of Result ........................................................... 36 Table 14: Question 3 - Description of Result ........................................................... 37 Table 15: Question 4 - Description of Result ........................................................... 38 Table 16: Question 5 - Description of Result ........................................................... 39 Table 17: Question 6 - Description of Result ........................................................... 40 Table 18: Question 7 - Description of Result ........................................................... 41 viii LIST OF ABBREVIATIONS CSR Corporate Social Responsibility VND Viet Nam Dong TBL Tripple Bottom Line RI Responsible Investment SNV Netherlands Development Organization ADB Asian Development Bank CoC Code of Conduct ISO International Organization for Standardization OHSAS Occupational Health & Safety Advisory Services ix x CHAPTER 1: INTRODUCTION 1.1 Research background 1.1.1 CSR in the world 1.1.2 CSR in Viet Nam 1.1.3 CSR in the tea industry 1.2 Problem Statement 1.3 Objective and Sphere of Research 1.3.1 Objective of Research 1.3.2 Sphere of Research 1.4 Research methods 1 1.1 Research background 1.1.1 CSR in the world Nowadays, Corporate Social Responsibilities is one of the hottest topics in the world. CSR is the relationship between business and stakeholders. It affects directly on reputation of businesses. Objectives of the business activity are not limited to profits. Measure of business success is the impact that business creates for society. In addition, long-term benefits of CSR are largely internal to the enterprise such as improving relationships at work, reduce accidents, and reduce the rate of employee severance, increased labor productivity. CSR will also help improve the reputation of the business relationship with customers and partners, creating a competitive advantage and facilitate the call for investment, especially foreign investment. CSR focuses on society and the environment. The expectations of stakeholders are economic benefits, environmental protection and social impact. The purpose of businesses is that to meet expectations above to satisfy them. If they can do it, their businesses will have a sustainable development. Sustainable development must incorporate and harmony between the three aspects: economic development, social development and environmental protection. Knowing this, multinational companies have operations to towards the goal of sustainable development in many countries. For example, some companies in automotive industry (Volvo); garment (Nike, Addidas) and dairy industry (Friesland foods)… have CSR report annually. They produce high quality product, sponsor for many programs that related to children or construct wastewater treatment systems to protect environment. On the other hand, some companies are still not aware of the importance of CSR; they have caused damage to the environment, clients and themselves (effect on their reputation). For instance, BP is one of the biggest oil companies in the world. However, BP has 2 encountered a problem that is serious oil spill in the Gulf of Mexico. The cause of this incident is due to the lack of supervision, poor safety... Living environment is threatened seriously have caused more sickness, poverty for the people. In addition, marine organisms can not survive, caused ecological imbalance. 1.1.2 CSR in Viet Nam In fact, CSR is still a new field in Vietnam, but particularly important for the sustainable development of enterprises. Restriction to implement CSR in Vietnam may be due to the perception of business about CSR, or because limited financial and technical to implement CSR...In Vietnam, success in accelerating economic growth is putting the country on environmental issues and pressing social. The main issues that are demanding the economic entities, including businesses, should have the responsibility to contribute to reduce problems or make better. Enterprises are only interested with profits while the environment and society face with damages caused by them. To reduce this problem, government has some activities to encourage businesses such as CSR awards, organize seminars on CSR and sustainable development to increase the level of awareness about CSR of businesses. Evidence that, from 2005, Chamber of Commerce and Industry of Vietnam, Ministry of Labour, Invalids and Social Affairs, Ministry of Trade and Industry along with Association Footwear, Textiles awarded “the Corporate Social Responsibility towards sustainable development” to honor the small business which implemented social responsibility in the context of enterprise integration. Currently, many large enterprises in Vietnam have found that social responsibility of enterprises has become one of the indispensable requirements for enterprises, because, in the context of globalization and international integration, if the business does not comply with social responsibilities, they will not be able to gain access to world markets. 3 Many businesses when implementing social responsibility has brought practical results in the production. Results of a recent survey by the Institute of Labor Studies that conducted over 24 social enterprises of the two industries (Shoes and Textiles) showed that: by the implementation of social responsibility programs, turnover of business has increased 25%, labor productivity has increased from 34.2 million VND to 35.8 million VND per worker per year and the ratio of exports increased from 94% to 97%. Besides economic efficiency, these enterprises want to strengthen its reputation with customers, create the closeness and satisfaction of employees for enterprises, and attract labor force with highly specialized (Duc. P V, 2010). 1.1.3 CSR in the tea industry As we know, tea production and processing are closely related to many issues such as social, workers, ecology ... In the past, when looking at labor, social, ecology, we see only violation of international standards in the tea industry. To solve these problems, a number of initiatives have been introduced. Firstly, Unilever launched an initiative for sustainable tea, it means that create sustainable agriculture initiatives for tea. For example, Unilever will collaborate with the Ministry of Agriculture and Rural Development to help the tea growers in Vietnam to build tea farms for sustainable development and increase exports of "green and clean" tea. Secondly, according to the Dutch tea initiative, this civil society initiative calls upon companies selling tea in the global market to assume their responsibility for sustainable production and trade. Companies focused improving human resources, quality products and services to consumers. Simultaneously they have interested to community issues, and reduce environmental degradation (Sandun, 2010). In addition, they have given the Code of Conduct (CoC) of tea industry to increase the awareness and understanding of CSR for all tea companies. From all initiatives above, we can see that, CSR issues in the 4 tea industry is being interested and conducted by concerned parties, doing this to create a good picture of the tea industry, issues such as hygiene and food safety, consumer interests, health and safety of workers, environmental concerns are the top interested of tea enterprises. 1.2 Problem Statement In recent years, companies in Vietnam have caused serious impacts on the environment while environmental protection is an aspect of CSR. For example, Vedan discharges untreated waste into the environment, affecting nearly 2.700ha farming area along the Thi Vai River basin. Level of pollution was 90% with the range of about 10km affected along the river (Dantri, 2009). Another example is that a Taiwan company, namely Tung kuang, was caught because it discharging untreated waste water directly into the environment, concentrations of hazardous substances exceeding specified thresholds. These are two typical examples of serious violations to the environment, as well as a lack of understanding, poor awareness about the harm caused by environmental pollution. The enterprises need to put CSR into their strategies. Vinamilk is an example; they have some programs related to CSR such as “milk fund”. The biggest success of this fund is to ensure that drinking milk per day is right of poor children of Vietnam to they have developed a comprehensive physical and spiritual (Vuoncaovietnam, 2010). This action will also improve the image and reputation of the company, many Vietnamese people buy Vinamilk’s products because they know that Vinamilk has interested to their children. From all cases above, we can see that the important of CSR for both company and stakeholders. CSR will help to increase the reputation of the company, to bring more profit for shareholders, to ensure the fresh environment for society and so on. Do be aware of the importance and benefits of implementing social responsibility in the context of 5 globalization and international integration, a number of large enterprises in Vietnam has made social responsibility in the form of commitment to society in protecting the environment, local communities and the workers. In the tea industry, although no action was striking about CSR, but the companies had many attempts to meet the maximum requirements of customers, employees, communities and society. 1.3 Objective and Sphere of Research 1.3.1 Objective of Research In order to do this research, there are some main objectives of research: - The first objective is to provide a framework about CSR, including the definition, concepts related to CSR. - The second objective is to find the level of awareness of CSR in a tea manufacturing company (Hung Cuong). - The third objective is to present the benefits that CSR can bring to company and stakeholders. - The next objective is to show the implementation of CSR of the tea company. - The last objective is to recommend a CSR framework for the company. 1.3.2 Sphere of Research In this research, the researcher examines the level of awareness and implementation of CSR of managers and employees in Hung Cuong Company. Hung Cuong trading limited company is one of top tea exporting company in Vietnam. Hung Cuong was established in 1998. Headquarter is an area of two hectares in Ha Giang province. Company has five plants and a warehouse which are located in Ha Giang province for the production. Branch is in charge of market development, businessoriented and sales in Hanoi. Warehouse is used to store tea products and prior packaging to shipment in Hung Yen province. Hung Cuong has 500 employees and 6 1500 farmers. Leadership of the company including CEO and vice presidents, they are the ones who graduated from the University of National Economics, Foreign Trade University and has years of experience in working and managing. In addition, company also regularly organizes training courses and training for staff and workers who directly produce or those responsible for production technology. In recent years, Hung Cuong Trading Co., Ltd has a special emphasis on quality, food hygiene and safety, the environment, looking for export markets, customer choice, and expand plant processing, always create regular jobs for hundreds of workers, tea growers. Along with the development of the tea industry in general, Hung Cuong has tried its best, put the company growing. By doing this, Hung Cuong has received several environmental awards from the government (vea, 2010). 1.4 Research methods In order to do this research, the researcher is used survey method to collect information from managers and employees. The researcher send questionnaire to managers and employees of Hung Cuong trading limited company. Because Hung Cuong has many employees, researcher can collect result easily. After that, researcher was use the Microsoft Excel to analyze and checks the result collected. 7 CHAPTER 2: LITERATURE REVIEW 2.1 Definition of CSR 2.2 Pyramid Concept of CSR 2.3 The Concepts Related to CSR 2.3.1 Stakeholder Theory 2.3.2 Tripple Bottom Line 2.3.3 Business Ethic 2.3.4 Sustainable Development 2.3.5 Investment Decision 2.3.6 Responsible Investment 2.3.7 CSR Reporting 8 2.1 Definition of CSR CSR is one of the most concerned issues today; there are many definitions of CSR in the world. From 50 years ago, H.R. Bowen published his book entitled "Social Responsibility of Businessmen" with propaganda purposes and called the property managers do not harm the rights and interests of others, calling charity to compensate for damage caused by the enterprise for social harm. However, since then, the term social responsibilities of enterprises are being interpreted in different ways. Some people define "social responsibility implies improving the behavior of enterprises to a level consistent with the norms, values and social expectations are common" (Prakash, Sethi, 1975). Some people understand "social responsibility of enterprises, including the expectations of society on economic, legal, ethical and charity organizations for a certain time" (Archie. B Carroll, 1979), or the definition comes from Business for Social Responsibility: “CSR is defined as operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business. CSR is seen by leadership companies as more than a collection of discrete practices or occasional gestures, or initiatives motivated by marketing, public relations or other business benefits. Rather, it is viewed as a comprehensive set of policies, practices and programs that are integrated throughout business operations, and decision-making processes that are supported and rewarded by top management”. Lord Holme and Richard Watts said that “Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”. From all definitions above, we know that businesses want to sustainable development, they must always abide by the standards of environmental protection, gender equality, 9 labor safety, labor rights, fair pay, training and staff development and development community. Corporate social responsibility is expressed specifically on the elements, such as market, environment, employee, local community. The table 1 below shows some items that businesses need to do when they do CSR: Market Environment Employee Local community - Product quality - Climate protection - Compatibility of - Company - Product - Consumption of family & occupation donations information resources - Advanced training - Sponsoring - Consumer - Renewable & - Awarding of protection energies qualification contracts - Excluded - Environmental - Equal opportunities to social customer effects & organizations segments on the location diversity - Charities - Suppliers & - Environmental - Job security - Voluntary purchasing awareness of the - Employee commitment - Fair dealings with employees contribution of employees business partners - ... - Environmental Management Table 1: Elements and its items related to CSR With specific content of social responsibility above, the implementation of social responsibility of enterprises not only makes business sustainable development, but also contributes to the sustainable development of society in general. 10