Direct - Business Thesis

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TITLE: An analysis on the impact of corporate social responsibility (CSR) on customer
satisfaction in UK retail industry: a case study of Tesco.
Table of Contents
SECTION-1: INTRODUCTION .................................................................................................................. 1
1.1 Background of the Research ............................................................................................................... 1
1.2 Research Rationale.............................................................................................................................. 2
1.3 Research Aim and Objectives ............................................................................................................. 2
1.4 Research Questions ............................................................................................................................. 3
SECTION-2: LITERATURE REVIEW ....................................................................................................... 4
2.1 Theoretical Framework: Corporate Social Responsibility .................................................................. 4
2.1.1 Definition of Corporate Social Responsibility: ............................................................................ 4
2.1.2 CSR from Customer’s Perspective .............................................................................................. 5
2.1.3 Approaches to CSR ...................................................................................................................... 5
2.1.4 Driving Factors of CSR................................................................................................................ 5
2.1.5 CSR Models ................................................................................................................................. 6
2.2 Theoretical Background of Customer Satisfaction ............................................................................. 7
2.2.1 Definition of Customer Satisfaction ............................................................................................ 7
2.2.2 Factors Influencing Customer Satisfaction .................................................................................. 7
2.2.3 Customer Satisfaction Strategies.................................................................................................. 8
2.2.4 Customer Satisfaction Models ..................................................................................................... 8
2.3 Conceptual Framework :: Impact of CSR on Customer Satisfaction................................................ 10
CHAPTER THREE: RESEARCH METHODOLOGY.............................................................................. 11
3.1 Research Investigation: Exploratory ................................................................................................. 11
3.2 Research Strategy: Survey Questionnaire ......................................................................................... 11
3.3 Sampling Method: Simple Random Sampling.................................................................................. 11
3.4 Accessibility issues ........................................................................................................................... 12
3.5 Ethical Issues .................................................................................................................................... 12
3.6 Data analysis plan ............................................................................................................................. 12
3.7 Research Limitation .......................................................................................................................... 13
SECTION-4: TIME SCHEDULE AND REFERENCE ............................................................................. 14
4.1 Time schedule ................................................................................................................................... 14
REFERENCE.............................................................................................................................................. 14
SECTION-1: INTRODUCTION
1.1 Background of the Research
In competitive customer driven business environment, customers are no more satisfied with high
quality and reasonable price as they want their favoured organization will contribute on society,
community and environment (Mittal and Frennea, 2010). When an organization can ensure
efficient contribution on the betterment of society, community and environment, it enjoys high
level of customer satisfaction, sales profitability and performance. Corporate Social
Responsibility (CSR) is the newest concept to respond to the new need of customers where
organizations integrate concerns of social, community and environmental benefits with their
business model to satisfy customers at maximum level (Nareeman and Hassan, 2013). CSR
creates positive perceptions and respect among customers regarding organizations (Sarah, 2007).
Tesco, the leading retailer in UK retail industry, was an outstanding performer before recession.
However, the organization lost its previous glory and performance level in post-recession period.
For example- the organization is experiencing negative sales growth trend from 2011 till now
(Mycustomer, 2014; Vaitilingam, 2013). Most of the analytical reports have revealed that the
major reason for the fall of Tesco’s empire is that the customers are no more satisfied with
Tesco. This low level of customer satisfaction of Tesco has been driven by different causes
where the major cause is decline in reputation due to poor human resource management e.g.
unethical downsize; work hour cut etc. and different scandals e.g. financial flattening, horse meat
scandal etc. (BCC, 2014 and The Telegraph, 2014).
If the organization wants to enhance its customer satisfaction level to be back in its former
position in the market, there is no alternative but healing the poor human resource management
image and upholding customer rights to back customer confidence (The Telegraph, 2014 and
Salmi, 2011). In this context, most of the retail market analysts have suggested that if the
organization can ensure efficient CSR practices, it will heal current poor human resource
management image, turn back customer confidence and enhance green business image that will
maximize customer satisfaction level (PR Week, 2015, Mycustomer, 2014, Business Matters,
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2014; Graiser and Scott, 2013). But, there is no validity of this theoretical recommendation from
practical context of Tesco. In this gap, the research has been proposed and the purpose of the
research will be to analyse how corporate social responsibility (CSR) can enhance customer
satisfaction level of Tesco.
1.2 Research Rationale
In this post-recession period, Tesco is suffering from continuous sales fall due to its poor
customer satisfaction level. From different theoretical analysis, it has been revealed that in this
context, efficient CSR practices can contribute to heal the customer satisfaction problem and
enhance satisfaction level of the organization to stop its sales fall. The research has been
proposed to validate the strategic suggestion from the practical context of Tesco. This research is
a burning issue for Tesco as the organization is suffering from continuous sales fall due to its
poor customer satisfaction (Business Matters, 2014). In contrast, the research will work for
establishing a solution against the problem that efficient CSR practices can enhance its customer
satisfaction level. More or less most of the organizations in UK retail industry except discounters
like Aldi and LiDl are suffering from regular sales fall (Business, 2014). This research will
generate a valid solution to enhance customer satisfaction level and sales. From this context, it is
a lively issue for all the organizations in UK retail industry. This research will mainly focus on
the investigation of current customer satisfaction level and CSR practices, inefficiencies of CSR
practices and relationship between CSR practices and rise of customer satisfaction level of
Tesco.
1.3 Research Aim and Objectives
This research is aimed at analysing the corporate social responsibility (CSR) on the customer
satisfaction of Tesco in UK retail industry. In order to attain the aim, the following research
objectives will be achieved:
1. To assess current customer satisfaction level of Tesco.
2. To investigate the current CSR practices of Tesco and inefficiencies of these CSR
practices.
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3. To investigate the impact of efficient CSR practices on customer satisfaction level of
Tesco.
4. To recommend possible ways to ensure efficient CSR practices to increase customer
satisfaction of Tesco.
1.4 Research Questions
The principal research question, which will be focused in this research, is “How Corporate Social
Responsibility (CSR) can increase the customer satisfaction level of Tesco in UK retail
industry?” Subordinate research questions will be as follows:
a. What is the current customer satisfaction level of Tesco?
b. What are the current CSR practices of Tesco and what are their inefficiencies?
c. What is the impact of CSR practices on customer satisfaction of Tesco?
d. How to ensure efficient CSR practices to increase customer satisfaction of Tesco?
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SECTION-2: LITERATURE REVIEW
2.1 Theoretical Framework: Corporate Social Responsibility
2.1.1 Definition of Corporate Social Responsibility:
Corporate Social responsibility refers to a business practice that involves participating in
initiatives that benefit society (Fallon, 2014). Fallon (2014) has also stated that the key to
winning the customers in todays globalized business world, apart from offering strong loyalty
program to a personalized, mobile-friendly shopping experience, is using profits of the
organizations to do good in the worlds and the surroundings of that organization.
[Figure 2.1: CSR Scope, Source: UNIDO 2015]
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2.1.2 CSR from Customer’s Perspective
Researchers have found that most of the customers have agreed that all organizations should do
business, make profit and do CSR at the same time and that the customers are loyal to the
organizations that do charity works regularly (Somerville, 2013). Moreover, customers also
believe that attaining CSR will always bring good to the organization (Becker-Olsen et el, 2010).
2.1.3 Approaches to CSR
Tilcsik, and Marquis, (2013) have found that corporate philanthropy is the most common
approach or form to CSR which includes purely monetary donation to the communities in
financial need and to non-profit organizations that deals with social needs. Risk Management
approach of CSR deals with actions that are directly linked with the operations of the company
(Groza et el, 2011). CSR mega mind Michael E. Porter and Kramer in their 2006 work “The Link
between Competitive Advantage and Corporate Social Responsibility” have said that corporate
success and social welfare are interdependent. Crating shared value refers to mutual
development. For example, corporations need educated, healthy, tech-savvy work force. If
corporations invest some of their profits to educate and train the eligible workforce the
communities around them, both will gain significant benefit from such investment (Porter and
Kramer, 2006).
2.1.4 Driving Factors of CSR
Quaak (2007) have said that CSR approaches and strategies must be transparent in order to be
effective to bring good results to the organization. Zhang (2009) have suggested that the
organization that is about to take and implement CSR strategies must have good corporate
reputation prevalent in the marketplace. Li & Zhang (2010) identified corporate ownership
structure as another driving factor of CSR. Du, Bhattacharya and Sen (2010) have identified that
the effectiveness of CSR strategy depends largely on the effectiveness of the communication to
the stakeholders and community.
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2.1.5 CSR Models
Carroll’s (1991) four-part pyramid model of CSR is widely considered the leading model of
CSR. It is a hierarchy of separate responsibilities. The pyramid model was framed to embrace the
entire spectrum of society’s expectations of business responsibilities.
Geva (2008), in her
comparative analysis of CSR models, has defined intersecting circle model as non-hierarchical
set of intersecting responsibilities. Concentric circle model was developed and suggested by
Committee for Economic Development. This model shows four concentric circles having same
four sets of responsibilities as the Pyramid model and the Intersecting Circles model.
[Figure 2.2: The Socio Economic Models of CSR, Aviva Geva 2008]
Clarkson (1995) have said that the stakeholder model of CSR solved the problems of the
previous theoretical models of CSR where it was difficult to measure and test narrowly
identifying the actors and defining their positions and functions. Donaldson and Preston (1995)
have said that this model has advantage over the other models of CSR in terms of usefulness.
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[Figure 2.3: Stake holder model of CSR, (a) Market Stakeholders of Business, (b) Non-market
Stakeholders of Business, Source: Lawrence, James Weber, 2008]
2.2 Theoretical Background of Customer Satisfaction
2.2.1 Definition of Customer Satisfaction
Researchers defined customer satisfaction as the difference between the expectations of the
customer before purchasing the product and the actual performance received by the customer
after purchasing the product (Tse and Wilton, 1988, Oliver 1999). The main factor that affects
the competitiveness and the success of any product or service is customer satisfaction (HenningThurau and Klee, 1997). On the other hand, other researchers like Gustafsson et el. (2005) have
defined customer satisfaction as how customers evaluate the performance of a product or service.
2.2.2 Factors Influencing Customer Satisfaction
A number of researchers have defined price fairness as whether the price that is being charged
for a product or service is reasonable, acceptable or justifiable by the customer (Xia et al., 2004;
Kukar-Kinney, Xia and Monroe, 2007). Kim, Park and Jeong (2004) defined customer service as
a set of activities or preparations including customer support, system to process customer
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complaints, speed of processing customer request and complaints, friendliness of the
environment etc. that organizations offer to its customers.
Product
Quality
Service
Quality
Customer
Convenience
Factors of
Customer
Satisfaction
Price
Fairness
Employee
Quality
Business
Environment
[Figure 2.4: Factors of Customer Satisfaction, Source: Fornell et al, 2010]
2.2.3 Customer Satisfaction Strategies
Different researchers have summed up through maintaining 3 Cs, i.e. consistency with customer
journey, consistency in emotion and consistency in communication, an organization can maintain
and eventually increase the level of customer satisfaction (Mittal and Frennea, 2010). Another
strategy to customer satisfaction is a three-part strategy suggested by Davidow and Uttal (1989),
where it is said that customer satisfaction can be achieved through focusing on the segmentation
strategy, doing customer research and setting customer expectations.
2.2.4 Customer Satisfaction Models
Kano Satisfaction Model: Kano (1984) has developed a model to measure the satisfaction level
of customers that distinguishes between six separate categories of quality attributes. He classified
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customer needs that are crucial for customer satisfaction into three categories, such as- a)
Primary Satisfiers (More is better), b) “Must Be” or Basic Needs (Must Be Met), c) Excitement
Needs (delighters).
[Figure 2.5: Kano Satisfaction Model, Source: Kano, 1984]
American Customer Satisfaction Index (ACSI) Model: Evans and Lindsay (2012) have described
the ACSI model as a tool to calculate customer satisfaction at a national level.
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[Figure 2.6: ACSI Model, Source: Evans and Lindsay (2012)]
2.3 Conceptual Framework :: Impact of CSR on Customer Satisfaction
Customer need fulfilment is the main prerequisite to customer satisfaction (Anderson, Fornell
and Rust, 1997; Mittal & Frennea, 2010). Now a day, customer needs are not confined within
reasonable pricing, best quality products, quick service, and good after sales service etc. Fisher et
al. (2009) have found that the customers expect that the organization whose products they are
purchasing will contribute in communal developments and ensure eco-friendly operations.
Efficient CSR practices enable an organization to bring development in the community in which
it operates and creates sense to protect the environment (Ismail, 2009; Kemp, 2010). As a result,
it creates a notion in the customer’s mind that the organization is not only just making profit but
also is responsible to communal development and careful about the ecological balance (Lee and
Shin, 2010). As a result, they become satisfied and loyal to the organization. The above findings
from different scholar’s researches have been depicted in the following diagram:
Societal
Development
Efficient CSR
Practices
Communal
Development
Customer
Expectation
Fulfilled
Highly Satisfied
Customers
Environmental
Development
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CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Research Investigation: Exploratory
Three major types of research investigations are there. They are- exploratory investigation,
descriptive investigation and hypothesis testing. Explanatory investigation contains both
ambiguous problems and variable, whereas descriptive investigation contains research problems
but ambiguous variables and hypothesis testing investigation contains both clarified research
problems and variables that need to be established. (Saunders et al., 2007; and Sekaran and
Bougie, 2010). As such, this research will be designated as an exploratory investigation since
this research investigation will contain both ambiguous research problems and variables that
need to be explored.
3.2 Research Strategy: Survey Questionnaire
In this research, survey questionnaire strategy will be adopted. The main perspective behind the
selection of this strategy is that it will support hybrid research method (Creswell, 2013). Since
hybrid method will be used in this research, no other strategies will be able to bring the solid data
but the survey questionnaire strategy. Moreover, survey questionnaire strategy will be easily
manageable and it will help to get desired data in a very convenient manner. In this research,
data will be collected through a precise but well-organized and proficient mixed-type survey
questionnaire that will contain both open ended questions and close ended questions. Since the
research needs both qualitative and quantitative information, this mixed type questionnaire will
contain the questions to supply in-depth data and quantitative data.
3.3 Sampling Method: Simple Random Sampling
There are two key systems of sampling- probability sampling and non-probability sampling.
Probability sampling has several subclasses, such as- simple random sampling, systematic
random sampling, stratified random sampling, multistage sampling etc. (Kothari, 2011).
Similarly, non-probability sampling also have several subclasses, such as- convenience
sampling, purposive sampling, quota etc. (Kothari, 2011). However, in this research, the sample
population will be selected based on the simple random sampling under the probability sampling
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method, where each and every employee and customer of TESCO will have equal chance of
being selected for the data collection purpose (Kothari, 2011). The justification behind this
sampling method is that it will eliminate biasness and produce superior quality data (Saunders, et
al, 2007).
3.4 Accessibility issues
Accessibility issue refers to the negative factors that hamper the collection of data and restrict the
source of data (Mertens and McLaughlin, 2004). This research might face some accessibility
issues like non-cooperation of the respondents and inappropriate time schedule for the survey.
The non-cooperation problem can be mitigated through motivating the respondents. On the hand,
time schedule mismatch can be eliminated through providing greater flexibility to the
respondents.
3.5 Ethical Issues
In order to make the research valid and credible to the audience, ethical considerations have to be
dealt with carefully (Kothari, 2011). Since a lot of researchers advised about them, ethical issues
will be considered very carefully and meticulously here in this research. Plagiarism will be
avoided and reference will be given to the works of other researchers. Data will be collected
from the respondents in an ethical way without externally motivating or influencing them and
without any social and racial biasness. Confidentiality of the organizational data will be
maintained. Privacy to the personal data of the respondents will be ensured.
3.6 Data analysis plan
This research will use pre-coding system to analyse the numeric data. Responses will be precoded and then evaluated and analyses. Microsoft Excel will be used as the primary data
analysing tool because of its flexibility and manageability with the available resources and
knowledge base. In this research post coding technique will also be used to analyse the in-depth
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data. Different data presentation tools including pie chart, bar chart, histogram, and radar chart
will be used to visually present the data analysis (Cooper and Schindler, 2006).
3.7 Research Limitation
Creswell (2013) defined research limitations as barriers to the perfection of the research. In
another sense, Saunders et. al., (2007) have said that the research limitations are the factors that
obstruct the progress of the research toward gaining the optimum outcome. Several factors have
affected this research negatively towards achieving the optimum output of the research. The
main obstacles were the small sample size and limitation of academic time and resources. These
factors contributed negatively to the research output.
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SECTION-4: TIME SCHEDULE AND REFERENCE
4.1 Time schedule
Chapters
Time duration
Introduction
1 week
Literature review
1.5 weeks
Methodology
1 week
Data collection, analysis and findings
3.5 weeks
Conclusion and recommendations
1 week
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