Critical Evaluation of Corporate Social Responsibility - Coursework Example

Corporate Social Responsibility Table of Contents Introduction 3 Aim of the research 4 Literature review 4 Discussion 8 Conclusion 11 References 12 Introduction Over past 20 years, there has been a radical change in connection between society and business. Some of the fundamental drivers for drastic change are the influence of companies, globalization of trade, brand reputation, upsurge in strategic significance of stakeholder relations and increased size of companies. In the business world, the topic of corporate social responsibilityis increasingly capturing the mind and interests of people. From paternalistic philanthropy, the relationship between civil society association and companies has seen radical change in to the guidelines, responsibilities and civil rights of a firm in society. Over the period of time, corporate social responsibilities have gained its prominence in public and business debate. Furthermore, it has affected the working strategy of business in such a way that crosses the departmental restrictions. The corporate social responsibility is referred to as the strategic alteration initiated by firms or organization is such a way that is beneficial, society friendly and ethical towards the development of community. According to Moser, Gyomlay, corporate social responsibility is viewed as increasingly central concern and widely-applied concept in decision making process of a business. Moreover, it is defined as the circumstances where a business or firm engages in accomplishment and goes beyond the compliances that go beyond the interests of the firm and based on social good. It is believed that, every corporate report, policies talk about the undertakings and activities for corporate social responsibility. This has become the primary way of ensuring that a firm of business is achievingand satisfying all obligations towards society. The prime purpose of the report is based on critical assessment of importance of corporate social responsibility towards business and society. Aim of the research The aim of the project is based on critical evaluation of corporate social responsibility that is tactically beneficial for organizations or firms. Literature review Corporate social responsibility is also known as sustainable responsible business that is a practice of corporate self-regulation. It is defined as the sense of responsibly of a business or firm towards the environment and community. The citizenship is expressed by companies through contribution on social and education programs, pollution and waste reduction procedures. In early 1970, the term corporate social responsibility came in to prominence. Many multinational corporations used the word CSR to define the activities of businessthat impacted their duty and concerns towards the environment. Different researches have provided different viewpoints about the proper implementation and critical importance of CSR. It is considered as one of the few important practices that can create positive impact on long-term sustainability, healthy bottom line and triple bottom line. Moreover, it can also influence social, environmental and economic factors in numerous methods. It is considered as effective CSR strategy that must be aligned with the sustainability of effect, commercial added value and business strategy of organization (Grunewalder, 2008, p.12). Some of the primary benefits of corporate social responsibility approach towards the organization are improved relations with the community investment, proper risk management, strong performance, strong interactions with legal controllers and communities and enhanced company culture and employee relations. Some of the corporate social responsibility services include stakeholder engagement, assessment of existing CSR activities, assistance in influencing distributors and subsidiaries, preparation of corporate responsibility reports and development corporate social responsibility programs. Corporate social responsibility is also viewed to be as important approach for non-profit organization. Some of the corporate giving programs initiated by nonprofit organizations are volunteer grants and matching gifts. Employee Matching Gift Programs initiated by nonprofit organization is primarily based on doubling donations. This can be clearly explained by providing example of an employee giving 100 dollars check to organization, then employer have to write an extra 100 dollars check for matching gift program (Jackson, 2001, p.97). It is no surprise that this program can benefit nonprofit organization to enhance their employee engagement and foster donor or nonprofit connections. In case of Employee Volunteer Grant programs, paid time off and volunteer grants are provided to volunteer. This program is viewed to be win-win for both of the parties involved. This is considered as huge reason for explaining the importance of corporate social responsibility towards the nonprofit organizations. Corporate partnerships are another positive influence of CSR on nonprofit business or firms. The image of a company is heavily influenced by partnership with national and local nonprofit organization. This create sense of believe and trust on the mind of consumers that company is making their utmost effort to help the community. Another key benefit that can be notified through partnership with nationwide and local corporations is additional awareness. Over the decades, there has been continued growth for the significance and importance of corporate social responsibility. In terms of practices and theory, CSR is viewed as an increasing area of interest for entrepreneurs, practitioners and academics. The concept of integrating health, environmental and social concerns in the business operations and strategy is known as corporate social responsibility. CSR has become vital component of organizations. Nowadays, many multinational corporations try to run their business with corporate social responsibility. CSR is involved in all activities of big companies to keep their social and business environment complete. Corporate social responsibility has go long distance by improving service to customers and product quality. The effective execution of CSR has become primary responsibly and obligation for businesses. Starbucks Company is the best example to analyze the importance of CSR on effective business operations. According to Starbucks Company, the definition of CSR is to conduct business in such a way that can help to produce economic, environment and social benefit towards the communities. Some of the few real benefits of the company include strengthening supply chain, reduction of operating cost, customer loyalty and retaining customer. Several key benefits of CSR driven company like Starbucks are satisfaction of own partners, goodwill of the community, the retention of employees and long-term healthy relationship with the suppliers (Mullerat, 2011, p.19). There are several CSR initiatives started by Starbucks to show their fundamental value of running industry. The promotion of sustainable coffee farming is viewed as one of the greatest CSR initiatives of the company. This process of sustainable farming is virtually practiced on every single farm from where bean coffee is purchased by Starbucks. The key assumption of the company for introduction of these initiativesis to focus on farming. Furthermore, Starbucks Company does best to provide incentives to coffee farmers for sustainable livelihoods. Another successful initiative of the company is Coffee and Farmer Equity Performs. This CSR initiative is being executed for past 2 years. The primary focus of the initiative is putting emphasize on environmental and social plans aimed at buying, producing and purchasing coffee. Additionally, CSR policies are being publicly demonstrated by Starbucks Company is by introduction of Fair Trade Certified Coffee. The act of Delight and Surprise is another tactic that helped Starbucks to gain loyalty and recognition. This action of execution of random acts helped to initiate brand loyalty, product awareness and customer spending. The prime purpose of the strategy is to fulfill the expectancy of loyal patrons. Furthermore, first-time and loyal time patrons are offered discounted and free products. This resembles the fact that effective incorporation of CSR activities within the business practice of organization is vital and critical for development and sustainability (Baxi, 2005, p.99). The CSR principles are utilized by Starbucks Company to create effective programs like Coffee and Farmer Equity practices. The prime purpose of this program is to invest in the relationships for ensuring sustainability of suppliers.These provide vivid explanation about the importance of corporate social responsibilities on development of corporations. Wal-Mart is another multinational retail corporation have stated on their annual report about the important of commitment to CSR. In the year 2012, Pew Internet and American Life Project have created report that it is crucial for Multinational Corporation to focus on corporate social responsibility. There are four key areas which Wal-Mart has focus to implement initiatives. Company, environmental, local and social responsibilities are four key areas. The decrease of plastic shopping bags, lessening of energy usage, implementation of strict sustainability guidelines for products and elimination of landfill waste are some of the environmental responsibility implemented by Wal-Mart. The promotion of local farming, assisting disaster relief, implementation of school nutrition program and making microloans are some of the initiatives based on local responsibility. The CSR initiatives are being implemented by several business organizations to strengthen and build their relationships with multiple groups of stakeholders (Hancock, 2004, p.47). Moreover, this group of stakeholders can extend beyond local communities, competitors, suppliers, board of directors, financial markets, regulators and customers. A variety of different groups of stakeholders can be heavily affected by CSR activities. This affect through corporate social responsibilities is does potentially through conflicting goals and interests. There have been rapid upsurge of use of CSR activities within the business operation. The benefits of using incorporation of CSR activities are vital for the development of the organization. These are some of the examples of multinational corporations implementing corporate social responsibilities to enhance brand reputation and maintain sustainability (Combs, 2011, p.52). Discussion The fundamental drivers of corporate social responsibilities are employee motivation, laws and regulation, transparency, trust, increased public expectations, stakeholder, priorities, ethical consumerism and crises. Over the period of time, there have been swift rise of corporate social responsibility. Social and environmental implications have become primary center of attraction for consumers. In the era of globalization and technological advancement, the purchasing decisions of consumers are heavily influenced by ethical and environmental concerns. Many multinational corporations implemented corporate social responsibility activities within the business operation to increase their employee loyalty, generate brand equity, promote labor rights and wide ranging policies and burnish their negative image. The Coca-Cola Company is one of the multinational corporations that have implemented CSR activities to nullify their bad reputation in India and abroad (Hopkins, 2012, p.28). In the year 2003, the Indian NGO has made an allegation against Coca-Cola Company on containing high level of unacceptable pesticides. Furthermore, it is also believed that company has polluted water sources and extracted large amount of groundwater. A Joint Committee has been set up by government of India to undertake various investigations on the issue. Finally, tests proved that Coca-Cola Company has violated national laws. Nevertheless, the government of India has acknowledged adopting enforceable and suitable standards aimed at carbonated products of the company. This rise of conflict has created adverse impact on the development of Coca-Cola Company. The company was also accused of water pollution and water shortages especially in the areas of southern India, Kerala. This accusation has created reputational damage and loss of consumer trust in India. After the release of CSE report in the year 2003, there has been rapid downfall of overall sales by 40 percentages. In the year 2003, these drastic allegations has heavily impact the annual sales of the company by 15 percentages. According to Malhotra and Pirson, the primary reason behind the emergence of controversy is the response towards the issue. Coca-Cola Company tried to deny all allegation and claim regarding the issue of polluted water resources and containing high level of pesticides. The company tried to prove its integrity and truth by neglecting the issues. This created huge negative impact on Indian consumers. Furthermore, Indian population believed Coca-Cola Company as one corporate villain that focuses on making profits rather than concentrating on public health. There were also occurrence of several conflicts in Belgium and United States. But these conflicts were handled by focusing on stakeholder engagement and application of effective CSR activities. Coca-Cola Company tried to address the grievances of Indian communities. This forced the company to include measures for damage-control. In the year 2008, the Coca-Cola Company published its first performance report based on environmental activities. This environmental report also covered activities and issues between the year 2003 and 2007. Following controversy in India, the company was forced to implement more proactive corporate social responsibility policies. The prime focus of the company was based on water management. A water stewardship program was initiated by the company. This program was based on reducing concerns on polluted water and pesticides. In the year 2007, the company was associated with WWF to increase their understanding on water cycles and watersheds. Consequently, it is notified that execution of proactive CSR policies is crucial for addressing the criticisms of communities (Asongu, 2007, p.78). Previously, Coca-Cola Company tried to deny issues on water pollution and high level of pesticides on beverages. This controversy would have ended nicely, if response of the company was valid and acceptable. The company denied all claims, instead of demonstrating the situation. It can be informed that CSR related issues are required to be addressed before experiencing any damage on reputation of the company. Although, it is appeared that CSR helps to generate more benefits than that of costs. Corporate social responsibility is vital for companies as they are based on forethought and faith. The formation of trust with regulators, communities and customer is not simple. This basis of keeping trust can be easily lost and damaged. Therefore, it is crucial for organization to focus on long-term rather than concentrating on short-term basis. The application of CSR activities within the organization is not just about addressing the needs of customer or focusing on alterations to technology, then too concentrating on alterations in governance, environmental and social concerns. CSR programs are considered as more favorable solution for companies than that of other vastly noticeable strategies. CSR can be viewed as source of personal pride, which makes people working in an organization important (Sun, 2010, p.92). Now-a-days, leaders identify that it is crucial for an organization to involve in the changing world. The process of involving stakeholders, customers and employees can make the company more sustainable and stronger. There are also several business benefits through corporate social responsibility. These benefits are staff motivation, recruitment and retention. The side effects of socially responsible companies are cost savings and operational efficiencies. Corporations with CSR have better opportunity and ability to detect future threat and anticipate the requirement of stakeholders. When any organization has the ability to identify expectations and needs of stakeholders, then stakeholders respond with greater level of commitment (Crowther, 2008, p.82). Conclusion This can be concluded that corporate social responsibility is regarded as strategically essential practice for organizations. It is regarded as an obligation of company to pursue strategies and objectives that are in greatest interests for the benefit of society. The real-world necessity for corporate social responsibility originates from globalization, affluence and altering social outlooks. Many multinational corporations like Wal-Mart, Coca-Cola, Starbucks, etc. have profited from engaging in activities of CSR. These earned benefits include upsurge of sales, market share and stronger company image and brand positioning. Furthermore, this can also benefit companies by growing the ability of retaining and attracting workforces. This resembles the fact that the effective execution of CSR activities can boost employee and business morale and maintain sustainability. One of the key tenets of application of CSR strategy is sustainability. In the era of globalization, the world is shrinking and lessening. This is the prime fact which made companies to focus on the concept of CSR. Furthermore, this created high degree of scope and relevance for companies in every sector. Common public and consumers are becoming more sensitive towards environmental and social concerns, it is crucial for organization to have a thoughtful look about their role in society. References Asongu, J., 2007. Strategic CSR in Practice. London: Sage. Baxi, C., 2005. Corporate Social Responsibility. London: Sage. Combs, T. W., 2011. Managing CSR. London: Routledge. Crowther, D., 2008. Corporate Social Responsibility. Munich: GRIN Verlag. Grunewalder, A., 2008. Corporate Social Responsibility. London: Routledge. Hancock, J., 2004. Investing in CSR. London: Kogan Page. Hopkins, M., 2012. CSR and International Business. Stamford: Cengage Learning. Jackson, L., 2001. Corporate Social Responsibility. New Jersey: Pearson. Mullerat, R., 2011. Corporate Social Responsibility. New York: Springer. Sun, W., 2010. Reframing CSR. New York: Springer. Read More