Introduction
Many companies practice corporate social responsibility (CSR) to enhance accountability to the stakeholders and society. The model helps an organization to assess its impact on society, including environmental, economic, and social aspects. Through the program, the company can influence society positively and promote its brand. It also improves the working relationship between the corporation and the employees because CSR boosts their morale and enhances connection with society. Subaru has been on the forefront in developing CSR activities, aiming at the creating sustainable environment through its core business. The company was established on July 15, 1953, under the name Fuji Heavy Industries Limited (FHI). Its headquarters is in Shibuya, Tokyo, Japan and it deals with automobiles, garbage trucks, aircraft, and industrial engines. It is imperative to examine Subaru’s organizational policies and initiatives in the company’s corporate social responsibilities to reveal the impact such innovations have on the stakeholders, customers, and society.
Company’s Philosophy
The company’s management philosophy utilizes the principle “customers come first.” Hence, the firm becomes compelling and has a strong market presence to deliver the vision statement: “Enjoyment and Peace of Mind.” The company’s CSR activities mainly focus on management strategy. The corporate philosophy aims to produce distinctive products that meet customer satisfaction, provide high-level quality products, and embrace advanced technology. The firm focus on promoting harmony among the environment, stakeholders, and the society and to enhance positive contribution towards the society’s prosperity. FHI has a future global perspective that aims to foster progressive and vibrant services.
The CSR Action Items of Fuji Heavy Industries
The management has developed CSR activities encouraging employees to participate in the process. Notably, the action items include customers and product, compliance, corporate governance, environment, social contribution, information disclosure, and procurement. FHI utilizes its philosophies of creating technological advancement to produce high-quality products. Subaru promotes harmony between society, the environment and the shareholders by enhancing information disclosure and environmental CSR initiatives.
Customer and Products
The company creates products by focusing on safety to earn confidence and satisfaction from the customers. Subaru has tried to attain this aspect of maintaining the safety of the drivers and the occupants. The company achieves such initiative by ensuring that the element of collision safety is maintained when manufacturing vehicles, which is in line with the company’s All-Around Safety principle. These tests prove that the vehicle can absorb shock after collision. The company utilizes the advanced technology to enhance automobile performance in regards to braking, driving, and turning.
The position of the center of gravity has a significant effect on the stability of a vehicle. Therefore, the company has applied this technology to ensure that safety is maintained and stability is enhanced. As a result, the company launched the legacy model, which covered 100,000km without developing mechanical problems (“Annual Report 2015,” 2015). The exemplary led to developing a driving support system focused on the stereo cameras. In 2008, the company commercialized the eyesight technology where the stereo cameras surveyed the vehicle’s forward area. Further, the technology developed a pre-crash and warning braking function aimed at preventing accidents. Subaru is working on a plan to develop themes, which will include heavy traffic autopilot and automatic freeway driving.
The company strives to achieve customer satisfaction through the establishment of the Subaru customer center. It is under the company’s code of conduct, which aims at providing accurate, fair, courteous, prompt, enjoyment and peace of mind, as well as equitable services, that the customer center was based on. The center has the responsibility of receiving customer inquiries, handling requests, and conducting consultations. The comments received from the customers are forwarded to different departments and reviewed for future product improvement. For instance, the improvements adopted from customers’ opinion are both the dealership and Subaru automotive business (“CSR Report 2015,” 2015). In regards to dealerships, the customers requested for the enhancement of children’s areas, display of information on the utilization of in-store equipment, increment of magazines, and the expansion of menus with free drinks. In the case of the automotive business, the customers requested for the creation of promotion videos where they could view Subaru dealerships. The customers have also requested for the creation of a Wi-Fi environment at every Subaru dealership.
Quality Management
The company takes pride in delivering high-quality services and products to meet customers’ diverse needs. It has established quality policies that support the company’s procedure, increases enjoyment, enhance environmental performance and safety. The quality policies have been established in other affiliated companies overseas and across Japan based on the affiliated companies’ varying business content. The creation of this platform supports ISO 9001 standards and quality policies that put it in action for effective and orderly operations (“Annual Report 2014,” 2014). They also aim to clarify the accepted quality targets to the customer during the planning stage. The quality management system uses the quality assurance aspects to identify the targets at all levels starting from the development of service and sales stages. Lastly, they aim to attend to requests and complaints obtained from the market and work on them to enhance customers’ trust.
The company has developed a quality management cycle that comprises all the states. The first level is the design and development level. In this stage, they focus on preventing quality variability and standardize the task beginning of creating the blueprint through the process of production (“Annual Report 2015,” 2015). The second level is the production stage, which involves introducing process management, which focuses on preventing defects, followed by implementing strict quality testing and inspection. The final stage includes sales and distribution, which involves introducing a quality management system once the products have been shipped to the dealership. A continuous collection of analysis still exists after the automobile has been sold. It is aimed at making quality improvements on any defect found.
The company creates a system that focuses on the improvement of quality. They also strengthen the system in North America, including enhancing personnel and the organization by improving the functions of their products. The company provides training on quality assurance to each department as part of their employee education to upgrade quality assurance.
Corporate Governance
Corporate governance is among the company’s main priorities that attain the required satisfaction to gain the stakeholders’ trust. It is only possible through achieving sustainable growth and improving the company’s corporate value. FHI separates the functions of business operation from that of decision-making and corporate management oversight to realize effective corporate management through advancing decision-making. The operation of the company is mainly based on proper decision-making, execution of business operations, and enhancement of risk management systems by monitoring the feedback and the company’s operations and management. Implementing timely and proper disclosure of the available information is practiced to improve management’s transparency.
The decision-making process, auditing, and the oversight are done by the board of directors, the board of corporate auditors system, and the board of corporate auditors. The board has eight directors, while two among them are independent (“Annual Report 2016,” 2016). The inclusion of the two directors is aimed at strengthening governance. Two out of the four members of the board of corporate auditors are also independent. Issues that might need the board of directors’ consultation are normally discussed at the meeting held by the executive management. The board deliberates on the management strategy of the company, as well as the execution of main business operations. The company has developed an internal control system, ensuring that the directors’ executive duties align with the laws and regulations stipulated by Japan’s Ministry of Justice.
Regarding the risk management system, the corporate planning department plays a crucial role in business’ common functions and other departments of corporate operations of the company by linking the various departments to enhance risk management. The audit department is responsible for undertaking a planned audit on all the departments. The company has developed a functional organization and system to ensure compliance, which is a basis of risk management. The company has developed a compliance committee that plays a significant role in determining, deliberating, exchanging information, liaising and discussing the company’s compliance (“CSR Report 2016,” 2016). Considering departmental compliance, the company has assigned the compliance staff in every department who are expected to develop a system that implements compliance at various departments. The officers are trained regularly on issues of compliance.
The corporate auditors hold meetings with the board of directors, investigate subsidiaries, visit the company’s work sites, receive opinions from the internal department of audit, and audit the duties executed by the directors (“Annual Report 2016,” 2016). At the beginning of every year, the department gives an advanced policy regarding the internal audit plan at the beginning of the year. The audit department reports the entire internal audits monthly to the corporate auditors. Therefore, those activities are initiated to attain collaboration.
The Environment
In line with FHI’s policy, the company appreciates the existing relationship between business activities and the global environment. The company strives to deliver clean plant and offices, decent dealers, green products, and logistics. The company intends to reduce environmental burden by providing clean plant and office through cleaner production process and other business operations. FHI has played in making sure that the company produces environmental-friendly products. The company reduces the existing environmental burden in its product distribution. The firm’s effort in environmental conservation does not stop at the product processing stage but extends to the dealership stage, where the dealers are supported in the activities of environment preservation. According to the environmental report of 2016, the company uses its environmental policy in their involvement in biodiversity conservation.
Social Contribution
The social contribution policy is divided into three elaborate categories in line with the company’s philosophy. The contribution is based on the development of technology and science, the culture of automobile, and the road safety promotion. The company also fosters knowledge in regards to creative manufacturing. The third policy involves contributing to the development of the communities in areas where the company operates (“CSR Report 2016,” 2016). The company has established a social contribution committee that is responsible for maintaining and promoting social contribution activities through leveraging expertise and technology. The committee is comprised of managers from all sites.
The committee holds a meeting every six months where issues and results are compiled, and reports are submitted to the CSR Committee. The company’s president, also the committee chairperson, is served with the report to initiate evaluations (“Annual Report 2014,” 2014). The social contribution committee makes improvements to the report and allocates funds according to the suggestions. In line with road safety and automobile culture development, the company organizes Subaru road safety workshops.
The workshop’s main objectives are to enhance road safety awareness to children in elementary school. The company involvement in traffic safety campaign is evidenced through the company’s initiative of cooperating with safe driving supervisors and police in promoting activities that will help in the prevention of road accidents and enhance traffic safety (“Annual Report 2014,” 2014). The company operates through schools with traffic safety guidance and using reflective materials to prevent accidents at night. FHI also promote awareness to children by initiating campaigns such as “SUBARU Kids.” Subaru America partnered with the Salvation Army Kroc Center of New Jersey, where the two contributed 27.4 tons of food and 60,500 pounds through Subaru Choice Food kitty for the needy families (“CSR Report 2016,” 2016, p. 65). It was a great success since the food contributed was enough to feed 1,311 families with over 1,900 children.
Information Disclosure
The company strives to increase its shareholders’ trust by disclosing corporate activities and strategies in a proper, timely, and fair manner. The increment of management transparency will enhance trust between the shareholders and the company. FHI also publishes monthly magazines, which gives important information regarding corporate initiatives and policies. The company has published over 720 issues since it started. The company was ranked position one by the Securities Analysts Association of Japan, beating twenty companies. FHI strives to broaden its stakeholders’ understanding in regards to corporate activities and management policies through organizing shareholders’ tour. The company allocates a Q&A session between the company’s office and the shareholders to achieve direct communication between the company and its shareholders (“Annual Report 2014,” 2014). On March 2016, 48 groups of shareholders visited the Gunma Manufacturing Division Yajima Plant.
Procurement
In line with the corporate philosophy, the company strives to procure environmentally friendly parts, equipment, and materials of high quality that provide excellent cost performance. The realization of the objective calls establishing working relationships that focus on trust, equality, and mutual benefit. FHI has developed three essential policies for effective procurement, which include the establishment of best partnership, open and fair way of supplier selection, and compliance and green procurement (“CSR Report 2016,” 2016). All the suppliers must comply with the guidelines before the selection. The company has established a purchasing committee whose role is facilitating fair procurement practices and encouraging CSR to the supplies. The company organizes specified training to its employees meant to equip them with business skills.
Conclusion
As it is evident from the analysis of the company, FHI has divided its corporate social responsibilities into various policies. CSR has impacted the communities where the company operates positively and increased FHI’s automobile sales. Regarding customer and products, the production of safe products has helped develop customers’ satisfaction and confidence. The company has managed the quality of the products through the enhancement of policies. FHI has established quality policies that support the company’s customer-first policy, increase enjoyment, and enhance environmental performance and safety.
Corporate governance is critical for the smooth running of a business. The running of the company is mainly based on proper decision-making, execution of business operations, and enhancement of risk management systems. The board of directors initiates the process of decision-making, auditing, and oversight. The entire process is done with the assistance of the board of corporate auditors and the board of corporate auditors system. Hence, through the conservation of the environment, the company has developed essential policies that govern the company’s commitment. The company strives to deliver environmentally friendly plant and offices, clean dealers, green products, and logistics. These policies govern the whole production process from the processing stage to the dealership stage. Social contribution is an important exercise since the company is responsible for giving back to society.
References
Annual Report 2014. (2014). Retrieved from https://www.subaru.co.jp/en/ir/library/pdf/ar/ar_2014e.pdf
Annual Report 2015. (2015). Retrieved from https://www.subaru.co.jp/en/ir/library/pdf/ar/ar_2015e.pdf
CSR Report 2015. (2015). Retrieved from https://www.subaru.co.jp/en/csr/report/pdf/2015/01_opening.pdf
2016 Environmental Report. (2016). Retrieved from https://www.subaru.co.jp/en/csr/report/pdf/2016/15_environment_report.pdf
Annual Report 2016. (2016). Retrieved from https://www.subaru.co.jp/en/ir/library/pdf/ar/ar_2016e.pdf
CSR Report 2016. (2016). Retrieved from https://www.subaru.com/content/dam/subaru/responsibility/downloads/csr_report_2016_all.pdf
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