How Does The World Leading Companies Interact with Society: An investigation into the performance of Louis Vuitton Essay
How Does The World Leading Companies Interact with Society: An investigation into the performance of Louis Vuitton
Founded in 1854, Louis Vuitton Moët Hennessy (LVMH) had become the world’s largest luxury fashion house brand group and manage to gain sales revenue of 20,320 million euros in 2010 to 23, 659 million Euro in 2011 and 28, 103 million Euro in 2012 (Jin, 2012). Nowadays in business world, the survivability of business depends on how it interact with the society. The way of a company behave toward the society and environment is the key for a company to achieve profitability and maintain good reputation as small action give a big impact (Hartman, 2005). In this case, a company good intention will frequently shadowed by it bad steps in damaging society even it is unintentionally done.
In contrast for that, Louis Vuitton had practiced their good intention by launching environmental department in 1992 in order to preserve the nature thus helping Louis Vuitton to produce high quality product (LVMH launches its own Green Week, 2012). Behind the scene, Louis Vuitton also increases their carbon emission by 25% in 2012 while manage to increases their revenue by 19% in 2012 (LVMH, 2012). In the same time, Louis Vuitton keep telling the society about their policy of not allowing child labor (LVMH: Supplier’s Code Of conduct, 2014) but unfortunately, it just another spin doctoring to hide another mistake they had done. This would remark that Louis Vuitton secretly brings the negative impact to environment and to the community around them. This paper will assessed the truth about the real contribution of LVMH towards society. In spite of that, there are still other stakeholders that are not being discussed thorough this investigation.
The case against Louis Vuitton
For a luxury brand to be judge as very successful company, the indicator is not about how popular the company but it is decided on how timeless, modern, fast-growing and highly profitable they are (LVMH brand for success, 2002). Indeed, the way of the company interact with the society still will be take into the consideration as it such inappropriate for a company to have high profit by ‘taking down’ people who are also the customers (Hartman, 2005, 53). To conclude the performance of LVMH, it is really important to jot down their contribution in making the world a better place. In this context, it is a need to study how well is a company in reducing carbon dioxide emission in reducing dire climate change level today (Antonio, 2009, 15).
Carbon dioxide (CO2) is one of greenhouse gas released by human activities including the production processes of goods in LVMH. Industrial activities contribute 11% of carbon emission in the atmosphere that is a main factor of global warming (EPA 2013). Global warming should not be underestimated as it would lead to varies bad effects to world such as increase the sea level that cause by melting of the Arctic sea ice and glaciers. It was reported by The Intergovernmental Panel on Climate Change (IPCC) that there was a 22cm rise in sea level in the 20th century and 22cm rise in sea level in the 20th century due to carbon emission. Year by year, Louis Vuitton is increasing its carbon emission. The paradox here is Louis Vuitton should give effort to improve the lifestyle of its stakeholders which is the society but in the same time Louis Vuitton is slowly ‘killing’ the world. What a meaning of wearing very stylish outfit but at the end people got no place as their home.
The record explicitly show that LVMH was releasing 193,371 tons of (CO2) of carbon emission in 2012 which is really bad for environment (LVMH 2012). In 2011, Louis Vuitton recorded 155,362 tons of (CO2) carbon emission which is lesser than in 2012. It was believed that the carbon emission rose due to alliance of LVMH with Murakami in producing new design and pattern (Riot, 2013). Despite of that, Louis Vuitton should care about alliance of several products if they do really want to minimize the carbon emission. Louis Vuitton had declared that it is one of their policy to compensate the carbon emission but unfortunately in the production of fashion and leather goods, carbon emissions had rose by 71% in 2012 (55,978 metric tonnes) compared to 2011 (32,714 metric tonnes) which is due to this alliance (LVMH, 2012).
Louis Vuitton seems to only expects their supplier to be committed in mitigate with carbon emission generated from the supply chain which is beyond their control (LVMH 2011). This would remark that it is impossible for LVMH to promote a better environment without any clear measures taken in overcome this problem. Is Louis Vuitton really aware that due to their incentives of inventing new products cause increase in carbon emission spasmodically. What can be concluded from this situation, LVMH is trying to spin doctoring by only telling their incentives in improving their stakeholders lifestyles but at the same time they are not really determined and care about their stakeholders’ future.
The case for Louis Vuitton
Instead of those issues that already discussed above, it is undeniable that Louis Vuitton is aware of those problem happened and do really give effort to overcome the carbon emission issue. It is true that LVMH really practicing a policy in order to support the environmental protection that illustrate them as a party that willing to reduce the negative impact of their activities to environment by limiting the carbon emission (Louis Vuitton 2012). In 2006, Louis Vuitton had carried out a few training programmes in encouraging their workers to protect the environment by carefully using natural resources, minimize the energy and water consumption and reducing waste (UNGC 2006). Louis Vuitton also had established Environment department since 1992 to preserve the nature. One of the functions of the environment department is to promotes each employees to practice the right attitudes thus ensuring their commitment in preserving the environment.
In instance, Louis Vuitton was organized two seminars on “ISO 14001” and “Carbon footprint” to increase the understanding of how important of a company in ensuring the environment is safety for mankind (LVMH 2012). Consequently, in this effort, Louis Vuitton was conducting more 700 training hours in promoting awareness to their regular employee at Sainte-Florence workshop and 111 training hours at the Barbera workshop (LVMH 2012). Louis Vuitton tried to spread the importance of preserving the nature to their employee’s stakeholders and not only to their employees. Unfortunately, this storyline happened before the incidents of carbon emission happened. From what can be inferred is, Louis Vuitton probably reducing their efforts in mitigating carbon emission after their stakeholders already view Louis Vuitton as a really determined party in promoting better environment. Get down to the concept of a successful company, the effort of Louis Vuitton in performing the alliance with Murakami is also fair as making the company highly profitable. In simple word, it is also unfair to judge Louis Vuitton as the bad one in increasing the carbon emission as every single action have their own trade-offs.
From past events, it was really shown how determine Louis Vuitton in promoting better lifestyles to their stakeholders. For example, in celebrating Lantern Festival in China, they had invented a lantern collection and a mahjong set for Chinese people (Chan, 2011, 101). In this case, it is not really a need for Louis Vuitton to do that as they already manage to make high profit from other product but due to their spirit to improve people lifestyles, they really give an effort for a part of world population in China. Furthermore, Louis Vuitton is also really aware of workers’ right. As the world was shocked by usage of child labor by Nike in 2001, Louis Vuitton never involved in such issues. It can be seen that Louis Vuitton is really determined with their policy of not using child labor in their production. In addition of that, Louis Vuitton also stated in their policy that they will give appropriate wages to their workers and will really take care of them as the company assets (LVMH: Supplier’s Code Of conduct, 2014). Thus, Louis Vuitton contributions in promoting better society also should not be avoided due to their few mistakes in conducting their business as they may have no intention to make things become severely worsen.
Louis Vuitton is interacting with the society in both positive and negative ways. Louis Vuitton had gave their best to give a better products that would satisfied their stakeholders. They had inventing a lot of new design to suit with the stakeholders’ wants. This would illustrated how well Louis Vuitton response to society is. In spite of that, Louis Vuitton biggest harm to society which is carbon emission is also the main issue that should not be avoided as Louis Vuitton is manufacturing, transporting and packaging their products. It is aware that carbon emission released by Louis Vuitton would bring bad impact for global community especially the next generation of human in future. Instead of making policies, Louis Vuitton is really giving effort in practicing those policies even though sometimes they failed to do so. In conclusion, Louis Vuitton needs to have a good relationship with the society by fulfilling not only the needs of their shareholders and community but also their needs.
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Riot, Elen. 2013. “Murakami on the bag: Louis Vuitton’s decommoditization strategy”. International Journal of Retail & Distribution Management 41(11/12). doi: 10.1108/IJRDM-01-2013-0010
UNGC (United Nations Global Compact). Accessed March 27, 2014. http://www.unglobalcompact.org/system/attachments/2897/original/COP.pdf?1262614359.
University/College: University of California
Type of paper: Thesis/Dissertation Chapter
Date: 28 March 2016
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