Pemala Lama | Management

Chapter five Social Responsibility and Managerial Ethics

Case Study - Not Just Another Outdoor Company

1. Social responsibility refers to the duties of any organization, which comprises of more than just
economic obligations, but also actions and policies for the betterment of the society. Not all companies
are socially responsible as most businesses only aim to maximize profits or only follow the legal
approach (only obeying rules and regulations of the law). Here, Nau’s business approaches the
socioeconomic view of social responsibility. They believe that all companies are responsible in bringing
positive changes in the society as well as the natural environment.

Nau’s business approach runs on three different aspects. They are design, sales and the finance
department, which is contributing towards sustainable environmental and societal changes. Nau
encourages the use of sustainable fabrics, have smaller stores when compared to other firms saving
operational expenses and utilizing fewer materials. They also have a democratic policy where the
customers can decide which non-profit organization they would like Nau’s 5% of total income to go to.

Their company’s approach definitely leads towards a consistent and sustainable change in the
environment as well as improving the society’s welfare. I believe Nau’s company will have many
benefits, as we all know that socially responsible companies always rise above the rest and have very
few drawbacks. Nau’s approach will have national/international recognition giving them a good public
image. I also think that their company will have stable long-run profits. Everybody loves an ethically
motivated company who is working not only for the profits but also for the community, which in return
will attract lots of customers. On top of that, Nau is also under the supervision of a non-profit auditing
and research firm to assure that all operational actions the company takes will lead towards
sustainability in the environment. They look over Nau in order to make sure they are living up to its
code of conduct. Although it might be difficult at times for Nau to keep its economic conditions in check
and generate large amount of income, they will always have enough and rarely cross paths with failure.

In my opinion, Nau is definitely being ethical and responsible as its business is running on moral
conducts and for the betterment of the society. A socially responsible organization will always fulfill the
needs of the community and choose to do the right thing. For which Nau is the perfect example. They
are not violating any legal rules, not contributing because of social obligation but because they wish to
spread change and positivity. In terms of being responsible they are saving money in operational
expenses, save money on inventory and use “web-front” concept in lieu of large storage rooms.

2. Nau’s approach does have a limited appeal, as it is much difficult for socially responsible companies to
strive in this world full of phonies and ill minded people. Not all organizations have pure intentions to
develop the society and help sustain the environment. It is very easy to provide consumers with cheap
quality goods, replace raw materials with man made or mixed materials that degrades the environment.
Not all companies are up for challenges. Nau might have drawbacks during hard economic times, as
consumers prefer cheaper goods from expensive ones. Nau needs to develop new strategies to not only
sustain the environment but as well as sustain their company. They could offer cheap clothes too as they
develop only 24 out of 32 fabrics to be sustainable, Nau could use the rest 8 types of fabrics for cheaper
and everyday purchases.

Even though Nau has a limited appeal with limited operational decisions, it will however stay in power.
They do not have to worry about any legal violations so excluding the economic factors they will not
have much issues to worry about. In the long run their firm will always stay in power and gain
customers. After all, Nau has always been able to satisfy and even impress its stockholders.
 Nau’s approach does have its fair share of drawbacks like any other organizations, but comparing to
other companies that are not socially responsible these drawbacks are very few. One of the major
drawbacks for this company would be the ability to maximize its profits. Since the company has limited
options to find ways where they might be able to increase its company economically, this eventually will
lead to be a big disadvantage. The second disadvantage for Nau is lack of skilled employees as skilled
employees ask for high salaries for which Nau cannot afford. Another major disadvantage for Nau is the
extra costs that are involved. Extra costs like transportation, company supplies and many more are extra
burden for Nau as these are not operational costs. And lastly, Nau has to deal with the company’s
accountability, which might come as a problem for them.

3. Nau has declared a policy where the customers have to decide about which social issue they want to
bring an end to and have asked their customers to “connect the dots”. Their 5% of income will go to a
non-profit organization which will be of their customers choice. Personally, I think this is a great
strategy that Nau has created. It is definitely a businesses responsibility to let customers choose about
which social issue to face because not all customers agree to donate their money on one specific
organization. If you let customers choose, they will know exactly where their money is going which is a
huge benefit for Nau in terms of sales and profit. Nau can use this concept in several other operational
actions such as customer’s choice of fabrics, suggestions on how their company could help improve the
environment and ask their customers what they want and what they can do to help create a positive
society. This approach can preserve their customer network and attract many more. All companies are
responsible for their customer service so why not give them what they want and if they do not want it a
company can always make its decision. If you let customers make such decisions they will feel special
as being part of the contributions they make. Not only does this make your customer happy, but it also
makes them stay and build a long lasting relationship and a large customer base. After all, all
organizations run because of its clients and customers. Without them businesses have no purpose so I
believe Nau made a wise decision of giving the choice to its customers.

4. Nau is an incredible organization working for environmental sustainability and social welfare. I believe
there are many lessons that other organizations can learn from them. They are an honorable organization
from which other companies can learn a great deal of ethics and morals.

Other companies have a lot of history of harming the environment such as; polluting air, water and land
through toxic wastes. These pollutions already contribute to environmental degradation and needs to be
stopped. Some companies have stopped polluting not out of interest but out of obligation and instead of
polluting, these companies manufacture poor quality products, poor services, cheap labor expenses and
other ways of degrading the society. Not every company works for the welfare of people and the nature.

Just like Nau, other companies can learn to start utilizing storage space and stores. Other organizations
should also be able to contribute for the society as part of being human and showing humanity. Nau
believes in sustainability and standards. Of course their products might be expensive but they are not
doing it so for profit intentions. Their products are expensive due to the use of sustainable fabrics for
which once you buy, it will give you long lasting comfort and performance.

Other companies may learn to at least appreciate what they have and utilize resources in an effective
way if it is too difficult for them to take big responsibilities. Not everything is about money and profits.
Of course money is something, but let me make it clear that it is not everything. People tend to forget
about their values, what they are and what they have. Nau is an eye opening and well functioning firm
right now and other firms need to take a minute to thank them for their contributions and apply their
morals in their own. To be able to start a company being socially responsible is one step and it is not that
difficult to do the right things. Also, other organizations may learn that it is never too late to change and
start new.
Reference List

Hodgetts, R., Luthans, F. (1997) Ethics and Social Responsibilities. 3rd Ed.
Singapore: McGraw-Hill International Books

Nau (2014) About Us

Available from: http://www.nau.com/about [Accessed 08. 11.14]