Business 101 Research Essay 2019 S1 PDF

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Air New Zealand Limited (Air NZ) is one of New Zealand’s biggest and most popular airlines. The airline provides both cargo and passenger services to an approximate annual total of 15 million people worldwide...

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Trinh Huynh 592300729 Air New Zealand Limited (Air NZ) is one of New Zealand’s biggest and most popular airlines. The airline provides both cargo and passenger services to an approximate annual total of 15 million people worldwide. Air NZ have received multiple awards for their service, including ‘Airline of the Year’, which was awarded to them by Travel Weekly, five years in a row. (Air New Zealand Limited, 2019). As a highly-recognised company, it is important that Air NZ incorporates the factors required to become a more socially responsible as well as sustainable organisation in order to maintain their well-preserved reputation. This essay will be divided into three sections. The first section will define and explain the different components of Corporate Social Responsibility and Corporate Sustainability. The second section will analyse Air NZ’s approach to Corporate Social Responsibility and Corporate Sustainability. The final section will discuss whether Air NZ approach to business is reflective of the shareholder theory or the stakeholder theory.

There is no universally accepted definition of Corporate Social Responsibility (CSR), however, CSR, to put it simply, is a form of self-regulation which integrates sustainability into a business model, which in this case is Air NZ. There are four groups of CSR theories; the instrumental, the political, the integrative and the ethical theory. The instrumental theory focuses solely on making the business a means of profitability. The political theory acknowledges the business’ responsibility to form and maintain a relationship with society due to their social status. The integrative theory believes that a business cannot thrive without the assistance of society. The ethical theory is understanding that the business’ vision of CSR is ethically driven, allowing them to accept social responsibilities as part of their ethical obligation to society. (Garriga & Mele, 2004). Corporate Social Responsibility goes hand-inhand with Corporate Sustainability. Sustainability is the ability of current generations to meet their needs without compromising the ability of future generations to do the same. There are 1

Trinh Huynh 592300729 three pillars of sustainability; social, environmental and economic. Corporate Sustainability (CS) is simply, sustainability in regards to business. It is the ability to meet the needs of the business’ current stakeholders without compromising the needs of future stakeholders. (Dyllick & Hockerts, 2002). Sustainability is difficult to maintain, especially in the corporate world. As a result, several companies have engaged in greenwashing which is the act of convincing consumers that they are investing in a company that is environmentally friendly. (Alves, 2009). Examples of companies that greenwash include Volkswagen, SeaWorld and Nike.

Air NZ recently celebrated their 75-year anniversary in 2015. The company believes that in order to continue thriving for another 75-years, they need to incorporate a new goal into their journey. This goal is to “supercharge New Zealand’s success socially, environmentally and economically.” (Air New Zealand Limited, 2019). New Zealand is well-known as a sustainable country, however Air NZ plans on further strengthening New Zealand “100% Pure” brand image. According to their ‘A Year in Review’ section in their sustainability report for 2018, Air NZ has generated $540 million in earnings, and has given $128 million to the New Zealand government. The company also employed 11,900 people worldwide making Air NZ New Zealand’s No.1 employer. In their sustainability framework chart, it is evident that Air NZ recognised the different challenges they have faced in developing an environmentally, socially and economically sustainable journey. Air NZ have also developed aspirations and goals in order to overcome these challenges by 2030. These aspirations include transitioning to an ultra-low carbon economy in order to reduce their contribution to greenhouse gases which results in global temperatures increasing. (Air New Zealand Limited, 2019). Out of the four CSR theories, Air NZ seems to take on the ethical approach in business. As previously stated, Air NZ plans on supercharging New Zealand’s success in the three pillars of 2

Trinh Huynh 592300729 sustainability. They do this through sponsorships and by working alongside the local community as well as community partners. Some examples of Air NZ sponsorships include the Department of Conservation, the All Blacks, as well as the international marathons hosted by Air NZ in Queenstown and Hawke’s Bay. Air NZ also helps the local community by creating programmes like Airpoints for Schools which allow their airpoints members to help fund local schools’ travel needs by donating their airpoints dollars. Air NZ has also partnered with Koru Care, providing flights to amazing destinations for children with serious medical illnesses. (Air New Zealand Limited, 2019).

The shareholder and stakeholder theories are both affiliated to CSR, with both theories dictating how the company should operate. The shareholder theory claims that maximising shareholder returns is the main priority, however, the stakeholder theory states that the main priority is to balance out the financial interest of the shareholders with that of other stakeholders, even if it reduces the shareholder returns. (Smith, 2003). Both theories heavily depend on the manager as it is their responsibility to carry out these theories. There are three moral types of management within the shareholder and stakeholder theory, and therefore, there are three different types of managers. The three moral types of management/managers are immoral, amoral and moral. Immoral managers do not care about what is morally right or ethical. Instead, they focus on personal or corporate success and profitability. Amoral managers are neither immoral nor moral. These managers are unaware of the fact that their business decisions could negatively affect the business and their consumers. Moral managers want the business to be successful and profitable, so long as the journey to reach this destination is ethical, legal and fair. (Carroll & Meeks, 1999). Linking back to the four approaches of CSR; instrumental, political, integrative and ethical, the shareholder theory shows some similarities to the instrumental approach whilst the stakeholder theory resembles 3

Trinh Huynh 592300729 the ethical approach. Using this comparison, it is evident that Air NZ is more reflective of the stakeholder theory as the company has shown great interest in forming and strengthening a relationship with the local community as part of their ethical obligation to society. Air NZ also maintains a moral management system as seen in their sponsorships to a wide range of organisations and programmes.

To conclude, Air New Zealand is an organisation which is both socially responsible and sustainable. The airline company is also reflective of the stakeholder theory and maintains a moral management system.

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Trinh Huynh 592300729 Reference List Air New Zealand Limited. (2019). About Air New Zealand. Retrieved from https://www.airnewzealand.co.nz/about-air-new-zealand Air New Zealand Limited. (2019). Sponsorships. Retrieved from https://www.airnewzealand.co.nz/sponsorship Air New Zealand Limited. (2019). Sustainability Report 2018. Retrieved from https://pairnz.com/cms/assets/PDFs/2018-Sustainability-Report.pdf Alves, I. M. (2009). Green Spin Everywhere: How Greenwashing Reveals the Limits of the CSR Paradigm. Journal of Global Change & Governance, 2(1). Carroll, A., & Meeks, M. (1999). Models of Management Morality: European Applications and Implications. Business Ethics: A European Review, 8(2), 108-116. Dyllick, T., & Hockerts, K. (2002). Beyond the Business Case for Corporate Sustainability. Business Strategy and the Environment, 11(2), 130-141. Garriga, E., & Mele, D. (2004). Corporate Social Responsibility Theories: Mapping the Territory.” Journal of Business Ethics, 53(1-2), 51-71. Smith, H. J. (2003). The Shareholders vs. Stakeholders Debate. MIT Sloan Management Review, 44(4), 85-90.

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