New Balance is a large company specialized in manufacturing footwear products at a global level. The case study reveals that New Balance is currently committed to formulating an integrated Cooperate Social Responsibility (CSR), which will enable it to place itself in a good position in a highly competitive market (Veleva, 2010). In 2009, the company was still struggling to build a CSR, which would create a reputable name for its products in the global market. However, as Veleva (2010) illustrates, the firm faced various challenges such as lack of a CSR department, which would foresee the implementation of an integrated CSR.
This calls for the analysis of the various strengths and weaknesses of the company and lay out the steps it should follow in implementing an integrated CSR strategy. New Balance Strengths and Weaknesses
According to Veleva (2010), even before the word CSR became a common word in the global industries. New Balance always insisted on being responsible for all its employees and the communities in which it was operational.
Luo and Bhattacharya (2006) support this argument by explaining that for a company to have an effective CRS, it should start internally before going external. New Balance has strong values and governance system that ensures a commitment to responsibility both for internal and external components of its operations. Despite the fact that New Balance was so much committed to CSR, it left out important segments of corporate responsibility such as openness and accountability (Veleva, 2010). The company’s framework did not provide a basis for its leaders to analyze the risks and opportunities of CSR, and this explains clearly, why it was affected by the economic recession of the year 2007-2009.
From the case study, New Balance had many consumers in the global market. One of its main strengths was the designing and marketing of products. The company ensured that its products met customers’ expectation, and the same time ensured that these products were produced in an environmentally-friendly manner. According to Sen, Bhattacharya, and Korschun (2006), a company should focus on ensuring that its production does not compromise the capability of future generation to get such a product or even a better one. New Balance looked for materials and ensured that its production was socially and environmentally acceptable in order to increase the social benefits of its production. The case study shows that New Balance decided to take a different approach from other footwear companies by concentrating on recycling. This is one of its weaknesses in its production. Veleva argues that the company did not have a framework in place for accessing the impacts of recycled products. Some of the environmentally-friendly materials that the company used for its production did not produce quality and durable products, hence did not attract customers.
New Balance has various strengths in its CSR strategy in terms of its operations (Veleva, 2010). One of the values of this company was to ensure that the working environment was safe for all its employees. By reducing the number of suppliers almost by half, New Balance was able to gain control over all its production, cut down on costs and hence improve efficiency. Another approach employed by New Balance was by getting rid of materials and production methods, which are harmful to the environment. This company focused on recycling most of its waste products. Therefore, it cuts down on waste, hence reducing cost on disposal and at the same time protected the environment from pollution. In 2008, a time when US focused on ensuring nil pollution to its environment, New Balance was among the first companies that adopted the green chemicals to replace the cleaners, which were used in previous years to ensure compliance with the set environmental standards. However, the company experienced a challenge in controlling its suppliers, especially those oversea. Another challenge for the company was to manage its CSR activities overseas and hence, there was a gap between its domestic CSR and oversees CSR.
According to Veleva (2010), New Balance is a company that always supported the communities in which it had operations. New Balance employees took pride in volunteering and helped the surrounding communities. According to Engardio et al. (2007), charity and volunteering are one of the major factors that enable a company to retain and satisfy its employees. Volunteering as a value was steered by the CEOs of the company Anne and Jim Davis, who embraced it and ensured that all their employees were active and valued community work. Volunteering and charity work is a value that improves public relations of an organization, its corporate image, trade name, employee teamwork and skill building (Margolis, Elfenbein & Walsh, 2007. However, despite the great involvement in community support, New Balance community support strategy was not in line with its business strategy. The company mainly focused on the US communities and lacked a proper communication plan to communicate both to its internal and external stakeholders.
From the strengths and weaknesses identified, New Balance should focus on three of the main areas identified with great risks: effective leadership, a structure for recognizing CSR risks and opportunities that are of great importance to the business and aligning of CSR strategy with business strategy. With clear and effective leadership and a CSR that is aligned with a business strategy any company can reach its highest level of production and innovation (Luo & Bhattacharya, 2006).
According to Sen, Bhattacharya and Korschun (2006), for any CSR to be implemented successfully, all stakeholders both internally and externally should be involved. While CSR is mainly steered by leaders, New Balance should at all stages involve its employees. Various studies have shown that employees play a vital role in CSR implementation and making it a success. Suppliers as part of the external stakeholders should also be involved in CSR implementation in order to give their views on whether it is aligned with business strategy or not.
New Balance should adopt a comprehensive communication plan that will effectively communicate its CSR activities internally and externally.
Internally, the company can focus on newsletters, meetings, Internet communication, to ensure that employees are always aware of CSR activities and their progress. According to Engardio et al. (2007), frequent and clear communication on CSR to employees enables them to know that CSR is a priority and hence commits themselves to make it a success. Externally, the company should come up with a communication plan that will identify all external individuals and groups that need to be made aware of the CSR activities and how to reach out to them. External CSR communication channels can consist of awareness campaigns, advertise, speeches, and even sending hard copies of CSR report to the most important external stakeholders (Luo & Bhattacharya, 2006)
New Balance mainly requires human resources in order to implement its new CSR strategy effectively. It should focus on effective leadership apart from Anne and Jim Davis, who are the CEOs. Therefore, it should invest in searching for new and effective leaders internally or externally, who will support the two CEOs in effectively running the business. The company should also focus on coming up with a CSR department consisting of intellectuals who understand what CSR entails in order to effectively identify risks and opportunities and align the CSR activities with the company’s business. According to Margolis, Elfenbein and Walsh (2007), finances are needed in CSR implementation. Therefore, New Balance should form a committee, which will strategize on how the company will get the funds required to finance its CSR implementation.
For any CSR implementation to be successful, it must be time bound (Engardio et al. 2007). The CSR steering team should come up with a timetable clearly showing all the stages of CSR implementation and their time limits. Each stage should be given a time limit and periodically monitored in order to ensure that it is completed within the allocated time. An effective CSR implementation is done during the shortest time possible to cut down on wastage in terms of human resources and finances and hence save cost.
New Balance should come with an approach of measuring its CSR implementation performance. Primarily, it should identify the objectives, fundamental to its CSR commitment and come up with performance indicators, which should be used to measure the results of CSR activities. When the objective has been achieved, it means that the CSR is a success while it is a failure when an objective has not been achieved.
According to Luo and Bhattacharya (2006), a company should ensure that their employees are adequately trained on CSR in order to make its implementation a success. New Balance employees should be properly trained on the importance of CSR and its implementation to ensure it becomes a success. Margolis, Elfenbein and Walsh (2007) point out that in any CSR implementation, there are obstacles such as resistance by some employees and stakeholders. Therefore, it is important that New Balance puts in place mechanisms and strategies of dealing with problematic behavior and resistance to its CSR implementation.
From the analysis, it is clear that New Balance is a company that is devoted to community support and volunteering. Its two CEOs are devoted to ensuring that the company creates a good reputation and markets its brand by embracing CSR. However, various loopholes that have been identified, prevented the company from achieving its CSR objectives and goals. Such loopholes are the lack of an effective leadership body, Lack of aligning CSR with the company’s business among others. Therefore, despite much involved in community support, the company did not achieve the benefits that come along with CSR such as reputation, good corporate image, and good public relations among others.
Implementing an effective CSR will call for New Balance to bring together both human resources and finances. Effective leadership and CSR personnel are needed in order to analyze the various risks and opportunities related to CSR. The company also needs to align its CSR strategy with its business in order to rip all the benefits that come along with it. Every stakeholder, both internal and external should be involved in CSR implementation in order to ensure maximum support and hence make it a success.