14 Apr We discussed the Fashion Industry (Fast Fashion) and its impact on the environment and child labour. The $5 T-shirt is readily available today, and

Module 7

What is a Market?

"An actual or nominal place where forces of demand and supply operate, and where buyers and sellers interact (directly or through intermediaries) to trade goods, services, or contracts or instruments, for money or barter. Markets include mechanisms or means for:

1. determining price of the traded item,

2. communicating the price information,

3. facilitating deals and transactions, and

4. effecting distribution.

The market for a particular item is made up of existing and potential customers who need it and have the ability and willingness to pay for it," (Business Dictionary, 2020).

Stakeholders as Market Makers

While markets are thought of in terms of exchanges quantified using money, the process of valuation can be expanded to include a firm’s relations with all its stakeholders, but measured in different ways. Each stakeholder brings different resources to the exchange in ways that can be expressed as opportunities or threats to the firm. As the firm responds, different outcomes are shaped that, ultimately, match the desires of all parties involved.

Markets and CSR

Markets capture our collective set of values. Lets look at t-shirts, for example.

$5 T-shirts are readily available today, and that did not occur by accident. In fact, the existence of the $5 t-shirt has profound implications for the type of society in which we live. Firms themselves do not impose a $5 t-shirt on us – that's not how markets operate. Instead, if we as consumers tell firms, with our purchase decisions and materialistic values, that we want to buy six T-shirts for $30, rather than two T-shirts for that same $30 – that is what the market will provide. This is not simply an economic decision, but one that is loaded with values that have monumental consequences for the kind of society in which we live—one that values quantity over quality, material goods over holistic well-being, and short-term comfort over long-term sustainability.

Let's look at an example that demonstrates this mutually dependent relationship between markets and stakeholders.

Source: https://www.conversationagent.com/2013/10/patagonias-growth-story.html

Patagonia's Product Lifecycle Initiative seeks "to include consumers in Patagonia’s vision of environmental responsibility. An internal document articulated that reducing Patagonia’s environmental footprint required a pledge from both the company and its customers. The initiative thus consisted of a mutual contract between the company and its customers to 'reduce, repair, reuse, and recycle' the apparel that they consumed," (Chandler, 2020, p. 163).

References

1. Do you know this term? (2020,). Retrieved from http://www.businessdictionary.com/definition/market.html