BBB4M1 Corporate Social Responsibility PDF

Corporate Social Responsibility BBB4M1  Global Companies Social Profits Responsibility/ Reputation - The responsibility - Profit is important, of business is to but busine...

Corporate Social Responsibility BBB4M1  Global Companies Social Profits Responsibility/ Reputation - The responsibility - Profit is important, of business is to but businesses have a increase its profits wider purpose and social responsibility Corporate Social Responsibility The duty of a company’s management to work in the best interests of the society A company’s commitment to manage the social, environmental and economic effects of its operations responsibly and in line with public expectations Why is CSR important for companies? ○ Companies rely on society for its resources (human, material, and environmental) ○ To advance the welfare of society ○ To act as a good global citizen through its policies Corporate Social Responsibility CSR can take many forms: ○ Treating employees ethically ○ Being environmentally conscious ○ Ensuring safe working environments ○ Creating and promoting diverse workplaces ○ Making charitable donations ○ Sponsoring local sports teams  Benefits of Corporate Social Responsibility Gain many advantages by demonstrating strong CSR: ○ Use CSR as a marketing tool ○ Prevent governments from implementing regulations in an industry that might interfere with businesses ○ Attract and retain excellent employees ○ Encourage increased profits  Challenges of Corporate Social Responsibility Criticisms of corporate social responsibility: ○ Costs companies money → reduces the amount of profit a company can earn ○ Spend valuable time and employee energy on CSR ○ Good corporate practices can be used to distract customers from problems a company may be creating (Tobacco companies) ○ Enhance reputation with domestic consumers, but may not act ethically in other countries Corporate Social Responsibility for Global Companies Companies need to be consistent in their CSR strategies ○ Practices in foreign countries = their domestic practice Today’s consumer is too educated and too connected A responsible corporate record is important to a company’s success ○ Consumers who find out about a company’s misdeeds will react by spending their money elsewhere Companies need to educate employees on their policies, practices, and expectations if they wish to establish consistent CSR practices Level of Social Responsibility Displayed by a Company Defensive Proactive Do the minimum Showing required leadership in CSR Obstructionist Accommodative Fight social Involved in some demands degree Corporate Social Responsibility Pyramid Economic Responsibility The lowest level of the pyramid represents a business’s first responsibility → to be profitable Without profit, the company would not be able to pay their workers, employees will lose their jobs even before the company starts CSR activities Being profitable is the only way for a company to be able to survive long term, and benefit society It is a company’s duty to produce goods and services that are needed/wanted by the customers, at a reasonable price  Legal Responsibility Second level of the pyramid is the business’s legal obligation to obey the law Most important responsibility out of the four levels → shape how companies conduct their business in the marketplace Employment laws, competition laws, tax regulations, health and safety regulations → some examples of the legal responsibilities a company should adhere to Failing to be legally responsible can have serious ramifications for business  Ethical Responsibility Ethical layer of the pyramid = doing the right thing, being fair in all situations, and also avoiding harm Should not only be obeying the law, but it should also do their business ethically → unlike the first two levels, this is not something that a company is obligated to do It is best for a company to be ethical → not only shows stakeholders that they are moral and just, but people will feel more comfortable purchasing their goods/services  Philanthropic Responsibility Philanthropy → the desire to promote the welfare of others Businesses are criticized for their carbon footprint, part in pollution, unethical labour practices → to counterbalance these negatives, they often “give back” to the community they take from Many people would want to do business with companies that are giving back to society Eg. Charitable donations & community initiatives  Stakeholders No matter how ethical a company is, it is difficult to please everyone Which group’s interests are most important when a company is faced with an ethical dilemma? → Managers often conduct a stakeholder analysis Stakeholders are individuals or groups affected by the organization that have a stake in its success and profitability The customers, suppliers, competitors, and employees, Primary that directly affect the company and its profitability. Stakeholders These stakeholders are of critical importance, and their interests should be considered first. Secondary Also have an impact on the company, but do not directly Stakeholders influence its success or contribute to its profitability Stakeholders  Stakeholders When preparing a stakeholder analysis, managers should analyze which stakeholders have the most power and influence in the decision-making process, and to identify which stakeholder has greatest impact on the profitability Nike is a company that is often referred to when discussing social responsibility ○ Nike changed its ethical practices to become more socially responsible in response to concerns expressed by customers and stakeholders ○ Key stakeholders in this situation included customers, management, employees, international governments, and suppliers ○ The media and special-interest groups were important secondary stakeholders—they dramatically influenced the behaviour of primary stakeholders by educating customers about Nike’s corporate practices ○ Currently, Nike has a well-developed code of conduct that is also used by its independent contractors, and it consistently pays above minimum wage Homework Page 269 Questions # 1 to 7