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Raluca Butincu

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STUDY SKILLS – Business Report

Greenwich School of Management

Spring 2015

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Let’s Talk Ethical Consumerism

Table of Contents0.0 Cover Page………………………………………………………………………………..1

0.1 Executive Summary …………………………………………………………………..3

1.2 Introduction ………………………………………………………………………………3

2.3 Resumed analysis over ethical consumerism……………………………..3

3.4 What is ethical consumerism? Ethical strategies and businesses…………………………………………………………………………………….4-6

4.5 Co-operatives and their purpose……………………………………………………………………………………………6

5.6 The Co-operative Group, the family businesses and their ethics…………………………………………………………………………………………….6-8

6.7 Study over opinion survey regarding consumer’s behaviour….8-13

7.8 Conclusion and evaluation on the ethical consumerism and business strategy adopted by The Co-operative Group …………………13

8.9 Recommendations …………………………………………………………………..14

9.10 References and Bibliography ………………………………….………………………………………………………………15-16

Appendix ………………………………………………………………………………….17-18

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0.1 Executive Summary

The business report was developed in order to explore the ethical behaviour and ethical consumerism within one of the biggest leading co-operatives in the UK, The Co-operative Group. Studying the company’s strong ethical values, the survey will express consumer’s opinion towards how these are implemented in the consumerism as a whole structure. The expertise reveals the ethical strategy under which the massive group of family businesses are managed. As the primary research will further indicate, the company is recognised as being highly ethical, although some improvements on the marketing side of the business should occur.

1.2 Introduction

One of the reasons for which the business report was assembled and analysed is the ethical environment through which the consumers are influenced. Does ethical procedures in businesses influence the buyer? What do they relate with when deciding how to spend a certain amount of money and does their actions reflect any moral values? Companies tend either to adopt moral principles into their business either stay unethical and more concerned on making profit and expand through other values than trying to make a difference and promote the ‘’green market’’ (Green, Morton 1998).The report is looking to examine what ethical consumerism symbolises for the business and its consumers and if this is the best strategy to adopt in increasing different values.

After a deeper analysis of the ethical consumerism and the background of one of the biggest family businesses, The Co-operative Group operates, the research consists in primary research and secondary research. The primary research is carried through a questionnaire made of ten students in Greenwich School of Management studying the Study Skills module. The expertise is analysed through percentages, charts and graphics. The conclusion and the recommendations are made on the examination of both researches.

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2.3/3.4 What is ethical consumerism?

Before understanding what ethical consumerism is, we have to reflect on the terms “consumerism” and “ethical”. Consumerism is the process of buying and using goods or services. Making this process ethical means buying and using the products and goods that are made without damaging our environment or exploiting the employees or workers from a specific field of production. Being ethical in consumerism is getting interested how the products were made, where they come from, how exactly is the employer treating the workers and if there is any exploitation of any kind in their company. (IGD 2007), (Wikipedia, 2015)

Shopping ethically also means choosing organic products and fair trade goods over the aggressive consumerism that is encouraged by most companies for their own growth. It’s always about consumer’s choice and having the power to buy products that are produced in an ethical environment instead of the ones that aren’t in the criteria. Refusing to buy an unethically produced good or service is called “boycotting” the specific product as not agreeing on the way it was produced and this can affect companies and producers if the concern gets predominant thoughts in the consumer market.1 (Breen, 2004) (Nationwide Education2014)

Being an ethical consumer means taking into consideration different perspectives on how we manage our disposable income. Instead of using money as a status supplier for our own comfort, we should be more aware on the goods we purchase damaging the environment less and protecting the workers more.2 (Duh, 2010)

1. Breen T. H. 2004. Oxford: Oxford University Press2 Duh, M., Belak, J., & Milfener, B. (2010). Values, culture and ethical climate being part of ethical behaviour. Journal of Business Ethics, p.97, p.473–489.

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www.fairtrade.org.uk

Buying fair trade goods means getting informed on the product coming from an ethical source. For example, workers having good working conditions, being treated correspondingly and getting paid at least minimum wage. The companies that meet this standard are certified through The Fairtrade Foundation and this means they are working in ethical standards and are more supportive than exploiting the working market.3 Ethical practice is an important feature for a business to influence buyer’s behaviour and earning recognition amongst other ethical managed businesses. 4 (G., B., N., 1998) 3 http://www.fairtrade.org.uk/en/what-is-fairtrade?4Green Ken, Morton Barbara, New Steve, (1998, “Supply Chain Management: An International Journal”, Vol. 3, p.89 – 95

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The “Ethisphere Institute” is organising nominations for the “World’s Most Ethical Companies” every year and among the most known and appreciated businesses and organisations in matters of ethical practice are Gap Inc., Levi Strauss &Co., Ford Motor Company, Microsoft, Google Inc., Intel Corporation, Marks and Spencer, Spectra Energy, Xerox Corporation.5

One of these organisations are the co-operatives.

4.5/5.6 Overview on “The Co-operative Group”

A co-operative is a group of individuals that share the same needs and aspirations, values and principles, they share ownership on the business and they act together democratically creating value for customers and not necessarily focusing on the shareholder’s profit.6

The co-operatives are the largest form of consumer organisation operating in the UK. 7

The Co-operative Group is UK’s largest consumer cooperative and has a wide extent of retail businesses such as grocery retailing, financial, funeral, legal and electrical services, pharmacy and travel. Being a company founded, managed and owned by its own members, all of these share the same principles and values through which the organization was established more than 150 years ago. 8

Staying devoted to their ethical values, the family businesses in the group are having the same doze of interests and common purpose in working together for the wellbeing of their members, helping the community and being a social conscious business. The members stand for fair practice which is run in a democratic manner through vote and encourage the commitment with communities both local and international.9

As an ethical organisation, The Co-operative Group has a training and educational influence on its members and staff and promotes working together for developing the co-operative movement as a united strategy with

5 http://ethisphere.com/worlds-most-ethical/wme-honorees/6 http://www.co-operative.coop/corporate/aboutus/The-Co-operative-Group-Values-and-Principles/7 http://www.co-operative.coop/corporate/aboutus/The-Co-operative-Group-Values-and-Principles/8 http://www.co-operative.coop/corporate/aboutus/The-Co-operative-Group-Values-and-Principles/9 http://www.co-operative.coop/about-us/

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other co-operative organisation. The membership is accessible to everyone aged 16 years old and above and the group currently has over 100.000 employees in the United Kingdom. 10

The ethical strategy that is promoted by The Co-operative Group has a significant impact on consumers with an ethical background and expect the same ethical behaviour and standards in the corporate ground. The business has a people-based democracy instead of money-based one, and that is the key of bringing people in working together under the same ethical values, ideas and purposes, coming together for the benefit of everyone. The Co-operative has a different way of managing and running its business, all their 8.2 million members can get their voices heard and getting things done ethically in the way they run the business and policies they create. The members get a share of the business’s profits through points that are calculated and distributed each year and also benefit offers presented by the family of businesses. 1112

The Co-operative Group give people the chance to engage into their communities, elect representatives, make the best of themselves and get to cooperate for the same purpose. It’s a better way of doing business, it is done ethically and their members put value of people above the financial value. Equality and fairness, solidarity, shared responsibilities, honesty and being cooperative are the morals and ethics through which the business is lead. 13

Within The Co-operative Group the members and employees are relating on the same culture of “socially conscious environment” (NBS 2015) instead of materialism as some of the biggest markets have developed theirs.

“The “Socially Conscious Consumerism” report helped inform our green marketing practices and our green governance. We’re using it to evaluate which green programs to actively promote – and how.”(Andrew Wilczyski, Manager, Corporate Social Responsibility)

Although it is a leading co-operative within the UK and a diverse fielded business, The Co-operative faces high level of competition from larger

10 http://www.co-operative.coop/corporate/aboutus/The-Co-operative-Group-Values-and-Principles/11 http://www.co-operative.coop/corporate/aboutus/The-Co-operative-Group-Values-and-Principles/12 Folkes, V. S., & Kamins, M. A. (1999). Businesses’ ethical and unethical impact. Journal of Consumer Psychology, p. 8(3), p.243–259.13 http://www.co-operative.coop/about-us/

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opponents nationally and internationally. The group competes with players that are described by their size market, developed strategies, financial robustness, management skills, operation diversity and quality of services such as ASDA Group, J Sainsbury, Tesco and Morrison Supermarkets. (Co-operative Group (CWS) Limited SWOT Analysis, MarketLine)As a social conscious business, ethically managed, The Co-operative has been interested in the matter of renewable energy in the past years. The group is focused on minimising the carbon footprint, supplying their own energy or purchasing energy from renewable sources. (Co-operative Group Limited MarketLine Company Profile)

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STUDY on Ethical Consumerism Customer Behaviour regarding The Co-op Group services delivery

The information was assembled through a self-made questionnaire completed by 10 students aged between 19 and 35 from “GSM Greenwich school of Management” (London), studying Business Management and Study Skills module. The survey was completed by each student individually, taken home and returned within one day. The ethical influence of the survey was applied critically on consumer’s behaviour and it is reflecting the interest shown towards ethical issues in businesses and consumerism.

The consumer behaviour applied to the interviewed persons was influenced by business the ethical strategy under which the Co-operative operates by 40%, good prices balanced with the value for the quality of services had 40% of the votes and only 20% are more dedicated to the customer service, while its marketing and advertisement had no response. As I was interested in how my interlocutors respond to ethical markets and what determines them to purchase goods and products, 30% were concerned in how the business involves in community growth and local charities, a similar 30% was interested in the youth employment in the company, but the dominant 40% was influenced into using services/goods through the good customer service provided by the business.

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Considering the market competition continuing to increase, The Co-operative was considered by 60% to be delivering higher quality products and services than its opponents, 30% strongly agreed with the statement regarding qualitative comparison and only 10% disagreed. When it comes to delivering higher qualitative services for money and good pricing, 60% of the questioned students were agreeing and equally 20% strongly agreed and disagreed.

The respondents have shown a high interest in The Co-operative’s ethical and moral procedures: 40% agreed that The Co-operative has higher ethical standards than its competitors, 50% strongly agreed with the statement and only 10% disagreed. With a high interest in the quality of goods and services, 40% responded they are very satisfied and a large proportion of 60% were satisfied by the services and products The Co-operative deliver.

Even if the market competition continues to grow, the students felt positive about The Co-operative – 40% gave a very favourable feedback towards the business being highly recommended, 40 % would recommend it to friends or family members, 20% would consider recommending it less.

Taking into count the high percentage of satisfaction amongst the participants at the study, The Co-operative is known as being a strong voice in ethical environment and they are influenced by its involvement in the community groups, the quality of services and good balance price – value.

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Ethical Strategy ; 4

Price-Value; 4

Customer Service; 2

INFLUENCES

Ethical Strategy Price-Value Customer Service Marketing

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Opinion on The Co-operative market

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Good customer services Low prices

Young people employmenCommunity involvement

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Influences in ethical consumerism regarding purchsing from Co-operative

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Very high Average

Low None

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Recommendations

RespondsNumber of interviewed people

7.8 Conclusion

As pointed in the body structure of the report and after analysing the questionnaire regarding the ethical consumer and what are the factors that influences him most into using services and goods from an ethical source, the majority is ethically concerned on how businesses play their role in their local community and if they are more focused in making profit more than making a difference to people. Individuals get involved in co-operatives because they have a say in the decision-making of the company to run ethically, democratically and with a friendly approach towards the community development. Considering the fundamental and secondary research, the report draws the inference that The Co-operative Group is as ethical as their consumers expect, but there are expected some improvements in the marketing sectors more than in the ethical one. Drawing a conclusion over the report initiative, consumers are happier to purchase from an ethical company and they are aware of this strategy aspect in businesses.

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8.9 Recommendations

The primary research underlines that the consumers are influenced in the same equal way by the ethical strategy in The Co-operative Group such as the quality – price balance of the goods and services they use. The consumers recognise The Co-operative as being ethically higher than its giant competitors and would recommend that employment for the younger people without jobs and community involvement are the key factors in keeping the business ethical. The consumers are directly interested in ethical business procedures and are more likely to choose ethics over the services’ price-value-quality characteristic.

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9.10 References and Bibliography

Birchall, Johnston; Simmons, Richard. Annals of Public & Cooperative Economics. Sep2004, Vol. 75 Issue 3, p.465-495

Brunk, K. H. (2010). What is an ethical brand/company? – Consumer opinion on corporate ethics. Journal of Business Research, p. 63(3), p.255–262.

Breen T. H. 2004. Oxford: Oxford University Press

Creyer, H. Elizabeth, (1997),"The influence of firm behaviour on purchase intention: do consumers really care about business ethics”, Journal of Consumer Marketing, Vol. 14/ p. 421 – 432

Carrigan, M., & Attalla, A. (2001). What is an ethical consumer and do ethics matter in purchase behaviour? Journal of Consumer Marketing, p. 18(7), p.560–578.

Chen, Y. (2008). Ethical innovation and green image of organisations. Journal of Business Ethics, p.83, p.531–543.

Duh, M., Belak, J., & Milfener, B. (2010). Values, culture and ethical climate being part of ethical behaviour. Journal of Business Ethics, p.97, p.473–489.

Folkes, V. S., & Kamins, M. A. (1999). Firms’ ethical and unethical actions impact on consumer’s attitude. Journal of Consumer Psychology, p. 8(3), p.243–259.

Ken Green, Barbara Morton, Steve New, (1998) "Green purchasing and supply policies: do they improve companies’ environmental performance?’’, Supply Chain Management: An International Journal, Vol. 3, p.89 – 95

Laroche, M., Bergeron, J., & Barbaro - Forleo, (2001). About consumers who are willing to pay more for ethical products and services. Journal of Consumer Marketing, p.18 (6), p.503–520.

Pandey, A., & Gupta, R. K. (2008). Group consciousness in business organizations. Journal of Business Ethics, p.80, p.889–898.

Pruzan, P. (2001). Debate on organisations promoting values, ethics and visions, Journal of Business Ethics, p.29, p.271–284.

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Singhapakdi, A., Vitell, S., & Kraft, K. (1996). Ethical conduct offered by professionals. Journal of Business Research, p. 36, p.245–255.

Trundle, R. (2011). Consumerism. Socially conscious consumerism.

Wagner, M. (2010). Corporate social performance and innovation with high social benefits: a quantitative analysis. Journal of Business Ethics, p.94, p.581–594.

Research from: [http://www.nationwideeducation.co.uk/www/downloads/pupils/sustainable-living-education/14-16_sustainable-communities/slv_14-16_fs_ethical-consumerism.pdf] accessed on 15th of March 2015, 21:45PM

Research from: [http://www.co-operative.coop/about-us/] accessed on 17th of March 2015, 14:27PM

Overview available at: http://www.co-operative.coop/corporate/aboutus/The-Co-operative-Group-Values-and-Principles/] accessed on 17th of March 2015, 15:35PM

Records available at: [http://ethisphere.com/worlds-most-ethical/wme-honorees/] accessed on 20th of March 2015, 18:40PM

Graphic on fair trade goods and supply available at: [http://www.fairtrade.org.uk/en/what-is-fairtrade?] accessed on 20th of March 2015, 22:10PM.

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Appendix

SURVEY Gender: M FAge: 18-25 25-40 40-55

This survey is based on statements and questions regarding the family of business within The Co-operative Group that you will either agree or disagree with. Please choose a single answer you consider more influential in your consumer behaviour.

1. What influences you most in purchasing goods/services?

Ethical strategy of the business 4 Good price – quality value 4 Excellent customer service 2 Good marketing and advertisement

2. Considering some organisations, such as the Co-operative, which are ethically conducted for the public good, rather than the businesses profit, which of the following statements are more important in you using their goods/services?

They are providing good customer services 4 They keep their prices low They train and employ young people without jobs 3 They get involved with local charities and community groups 3

3. The Co-operative offers higher quality products and services than its competitors Strongly agree 3 Agree 6 Neither agree nor disagree Disagree 1

4. The Co-operative has higher ethical and moral standards than its competitors Strongly agree 4Agree 5Neither agree nor disagree Disagree 1

5. The Co-operative offers competitive prices and delivers value for money

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Strongly agree 2Agree 6Neither agree nor disagreeDisagree 2None of the above

6. How would you consider, generally, the services and goods The Co-operative provide?

Very satisfying 4 Satisfying 6 Unsatisfying None of the above

7. What is the probability for you to recommend The Co-operative to a friend, co-worker or family member?

Very high (I would definitely recommend) 4 High 4 Low 2 None of the above

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References

Bibliography

Appendix

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