Primark Case study
This case study was taken from http://businesscasestudies.co.uk/primark/beyond-corporate-social-responsibility
Primark is a subsidiary company of the ABF (Associated British Foods) Group. The company was launched in 1969 in Ireland trading as Penny’s. By 2000, there were over 100 stores across Britain and Ireland. By 2012 Primark had 238 branches across the UK, Ireland and Europe. Primark has become distinctive for offering unbeatable value while never losing its innovative, fashion-driven edge.
Like many retail fashion businesses, Primark does not manufacture goods itself. Its expertise lies in understanding its customers and working with its suppliers to produce goods to Primark’s specification. It then gets the right goods to the right places at the right prices. Its profitability depends on sheer volume of sales. Primark’s value-for-money prices rely on low costs. These are achieved in part through economies of scale and efficient distribution.
Primark’s products are mainly sourced from suppliers in Europe and Asia. Its key sourcing countries are China, India, Bangladesh and Turkey. Putting the manufacturing of garments into these countries creates jobs. These are often at better rates of pay than other types of work on offer, improving overall standards of living.
Primark has initiated a programme of activities which supports its corporate social responsibility (CSR) stance and ensures that its trading meets the company’s values and ethical standards. Underpinning its programme of activities is Primark’s Code of Conduct which ensures that all workers making its products are treated decently, paid a fair wage and work in good working conditions. For more information please visit www.primark-ethicaltrade.co.uk
This case study looks at Primark’s involvement in the HERproject (Health Enables Returns) which is raising awareness and delivering healthcare education to female workers in supplier countries.
What is CSR?
Businesses need to acknowledge and respond to factors in their environment, for example, changes in available workforce or the business’ impact on its local communities. Corporate social responsibility represents the responsibility that a business has towards all its stakeholders, not just to owners or shareholders, to deal with their needs fairly.
Internal stakeholders include shareholders and employees. Shareholders want a return on their capital and this depends on making a profit. That in turn means by adding value. Employees want job security, good pay and conditions and job satisfaction. External stakeholders include customers, suppliers, non-governmental organisations, workers and the local communities where products are made. All of these have different needs.
An organisation therefore needs to be able to respond and demonstrate responsibility in different ways. This might include activities as wide-ranging as encouraging employees to volunteer in community projects; sponsoring and supporting charity work; or contributing time and money to improving its environmental impact.
Why Primark embraces CSR
As an international business with a global supply chain and a growing retail base, Primark believes that business has a responsibility to act and trade ethically and that, by doing so, it can be a force for good. Its business directly contributes to the employment of more than 700,000 workers across three continents. Ensuring that their rights are respected is key to its continued growth.
Primark does not own the companies or factories that produce its goods, but it does have a responsibility to the workers in those factories, to its customers and shareholders, to ensure that its products are made in good working conditions. The HERproject in Bangladesh is an example of how Primark is actively seeking to make positive changes in the lives of its supplier workforces.
In Bangladesh, over 50% of the manufacturing workforce is made up of women. The jobs available to women in garment factories give them greater independence and help to reduce poverty. However, these women often have little education and low levels of literacy as they drop out of education early to help their families.
They also lack basic knowledge of health, hygiene and nutrition and an understanding of how a woman’s body works. Poor hygiene often causes persistent and painful infections. Childbirth is particularly hazardous and post-birth complications are common. There is little understanding of the symptoms of sexually transmitted diseases (including HIV) or the means of preventing transmission. Far more women than men are malnourished, and many women suffer from anaemia. These issues, often combined with a lack of access to qualified medical advice, mean that the female workforce is particularly vulnerable.
The HERproject uses education as the key tool against all these interrelated problems. The programme aims not only to improve the health of female workers through training and education, but also to give them the tools to help them take charge of their personal and working lives. These benefits in turn pass on to their families and help to enhance whole communities.
Making CSR happen
The HERproject is an initiative started by BSR (Business for Social Responsibility), a non-governmental organisation that works with over 250 companies on environmental, social and human rights. The HERproject has so far helped over 50,000 women in different countries. It has done this through working with companies like Primark, Primark’s suppliers and local health providers.
The HERproject is simple but surprisingly powerful:
▪ A small number of female staff in a factory (around 10%) is selected to become health education trainers called ‘peer group educators’.
▪ The local health service provider trains the peer group educators, who are then responsible for training the other women based in the workplace, passing on the message and helping to disseminate what they have learned.
The process emphasises mutual help and encouragement. The women trainers are effective because they fully understand the local culture. They are not seen as outsiders imposing strange ideas. Instead, the trainers understand why the women may be reluctant to seek help with issues that can be sensitive. They can build their self-confidence as well as their practical knowledge.
The HERproject is also helping others not directly involved in the project. Outside the workshops informal learning continues. Women build supportive relationships and talk to each other out of work. This is reinforced by the project helping to set up factory clinics and creating vital referral links to local hospitals.
Selina Kamal is a factory quality inspector and a peer educator for HERproject. Through her own training she is now more aware of the importance of cleanliness for herself and her children. They all now drink purified water and eat more vegetables. She has already helped a friend, Shilpi, who is a school teacher.
The value of the HERproject
Improving the health of women workers in Bangladesh and helping to empower and educate the female workforce is an important ethical goal in its own right. The benefits to communities can also be seen. Over time, initiatives like this can support key issues such as reducing infant mortality.
Factories in Bangladesh taking part in HERprojects have seen healthy returns on the money invested by Primark in the programme. This has been achieved through improvements in productivity, a more stable workforce, lower absenteeism, decreased labour turnover, improved quality and a reduction in housekeeping costs. As an example, the managing director of one factory in Bangladesh found that absenteeism in the factory fell by 55% during the first six months of the HERproject. Turnover of female workers dropped from over 50% to around 12%.
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Mrs Kaniz Fatema is the managing director of a medium-sized factory in Dhaka, Bangladesh. When the HERproject was introduced to her factory a year ago, she was unconvinced, viewing it as ‘just another project’. However, just one year later her view has been transformed. Women’s health is now high on her agenda. A healthier workforce is literally paying dividends.
Absenteeism and labour turnover are down by a startling 50%. Productivity is up, and even internal staff communication is more effective. Mrs Kaniz Fatema now employs a female doctor and has set up a scheme to provide sanitary napkins to her female workers, helping to embed a new culture within the factory and allowing health education in the factory to continue after the project ends.
Other benefits are harder to measure but are increasingly recognised by the factory managers. Getting women to communicate effectively on health matters builds trust and confidence. This feeds back into better communication with supervisors and managers. This, in turn, leads to improved teamwork and the motivation to accept more responsibility and leadership roles in the community.
This demonstrates the principles of the Hawthorne effect theory of motivation. Theorist Elton Mayo found that factory workers with long hours of routine work were motivated by someone taking an interest in them and their work. Feeling that they mattered as individuals, they experienced a new connection with the job. As a result, productivity improved. In a similar way, by focusing on the women workers and their health issues, the HERproject is also delivering improved motivation. See the HERproject video at http://www.primark-ethicaltrading.co.uk/ourwork/c/womens_health
The industrialised countries of the world benefit from the lower costs of labour in countries such as Bangladesh and India.
However, more consumers are now asking if this is ethical and questioning its sustainability.
Some trade-offs between stakeholder needs are inevitable. CSR does not come free. It involves a real commitment of resources, management time and energy. On the other hand, as studies of the HERproject in other countries have shown, each dollar invested in the health of female employees can yield more than three dollars in business benefits. In addition, the improvements in human well-being are incomparable.
Despite criticism of globalisation, business and trade can be a force for good. This is increasingly recognised in the ways that consumers assign values to brands. Primark is making progress in taking on wider responsibilities and devising relevant projects that work on the ground. It has done this with help from NGOs and organisations such as BSR. Its approach with the HERproject is not purely about business benefits, but focused on making a difference to the lives of its supplier workers.
To date, 4,500 women in Primark’s factories have been trained under the HERproject in Bangladesh. The project results have shown such benefit that the project is being rolled out to Primark’s suppliers in China and India. Primark’s ongoing involvement with the women workers in Bangladesh and other supplier countries will help to provide it with a sustainable and ethical business model.
Task 1 of 2 Presentation (ACs 1.1, 1.2 & 1.3)
You are working for Bargainum, a competitor of Primark. After reading the above case study, your manager asked you to investigate the feasibility of doing something similar or better. But you must first convince the Operations Director.
Prepare and deliver a presentation to brief the director about the importance of sustainability:
1. Investigate the current global sustainability agenda and issues (e.g. fair trade, poverty, environment, etc.) by providing examples
2. Review the impact of the current issues on businesses (e.g. effect on consumers, effects on profitability, etc.)
3. Analyse the reasons for UK organisation to adopt sustainable practices (e.g. brand recognition, legislation, etc.)
▪ 1x executive summary
▪ 1x PowerPoint slide
▪ 1x handout (if applicable)
▪ 1500 words
Task 2 of 2 Report (ACs 2.1, 2.2, 3.1, 3.2 & 3.3)
Your pitch was convincing, and the Operations Director asked you to write a short report for more details and to build a case for it.
With reference to the case study and other organisations,
1. Determine what being a sustainable business organisation means
2. Explain the changes (strategic and operational) that are being required to become a sustainable business organisation
3. Explain the principle of the triple bottom line and how it can be implemented, using examples such as Primark and other organisations
4. Provide a flowchart and review the strategic sustainable planning process (e.g. set sustainable vision, assess current situation, create a financial plan, etc.)
Delivery and submission
▪ 1x short report
▪ Indicative word count 2000 words excluding diagrams.