The Company Needs to Adopt Corporate Social Responsibility Practices - Assignment Example

The Company Needs to Adopt Corporate Social Responsibility Practices Executive Summary Corporate Social Responsibility is becoming popular in the business field. Aside from moral concerns on the part of the businessmen, various factors that translate to financial gains are driving companies to be more conscious of its treatment of its employees and to be more generous to the public. It turns out that observance of business ethics result to an increase in the quality of job performance and consumer preference towards the company's services. Arguments regarding the necessity of briberies and gift giving are also discussed and argued against using evidences from research studies. Analysis leads to the conclusion that our company needs to adopt socially responsible practices. The Indispensability of Business Ethics Every business venture aims at flourishing in the modern marketplace. There are several methods of achieving including the application of marketing strategies for sales increase, manufacturing and production concepts for cost-effectiveness and organizational management for over-all company harmony. However, the concept of an ethically-run business as necessary for the company to succeed is becoming more and more recognized. Corporate Social Responsibility (CSR) has become a by word for many business professionals. Although it is generally observing ethics and morals in business dealings, CSR is thought to comprise of activities such as supporting charities is CSR, funding anti-crime and poverty programs, exceeding legal or regulatory obligations in areas of business operation such as health and safety and consumer rights, managing the supply chain to ensure that suppliers respect human rights is CSR and taking measures to ensure that products do not harm the environment. (Kotler and Nancy 2004, p. 3) Our concern is not so much in defining CSR but in determining whether the observance of business ethics is optional or not. This paper will argue that business ethics is necessary and beneficial for the business firm. I will be deviating from the standard practice of justifying this claim using moral and conscience related concepts by arguing that being 'good' to the public and to the employees could result to financial gains for the company. Increased Job Performance Quality The reason why a field in business called Human Resources Management (HRM) exists is that it was long recognized that there is a need to ensure that employee issues are properly addressed. One of the secrets of successful business companies is that they were able to derive extra commitment from all employees resulting to unprecedented quality and responsiveness in products and services along with heroic frugality, incredible levels of integration and collaboration within and without the organizations, and especially to pull off continuous, brilliant, and cheap innovation. According to Kotler and Lee (2004) the only way one can "manage" high level human output is to set the conditions for everyone doing their best: including support of the core competencies of people, their ability to self-organize, their ability to change and grow. A company can achieve this if it fosters trust and build organizational cultures in which freedom and personal initiative can cohabit with cooperation, caring and a highly integrated harmony. Only thru a sincere observance of business ethics can the company assure that its employees do not stage rallies, release negative public statements regarding the company, resign and reveal company trade secrets. Being ethical also helps in attracting excellent and skilled professionals to work for the company. The Industrial Society for the US (in Price 2002) reports that "82% of US professionals claimed that they would not work for an organisation whose values they did not believe in" and that "among smaller businesses, the survey showed that 62% of owner managers were influenced by their employees to be more socially active." Consumer Preference Observing moral and ethical values in the conduct of business does not only ensure a guilt-free conscience on the part of the businessmen, it also results to financial rewards to the company. Pryce (2002) argues that consumer preference is becoming heavily influenced by ethical considerations of the firm's actions as evidenced by the results of the Millennium Poll of 25,000 consumers in 23 countries. The Poll reports that perceived corporate social responsibility is even more important than brand and price considerations. Another survey by London-based market research group Gfk NOP revealed that of 5,000 consumers surveyed in Germany, the US, the UK, France, and Spain almost half believe business ethics have deteriorated in the past five years and many see "ethical consumerism" as a means of holding companies accountable. 64% of German consumers and 55% of US consumers believe business ethics have worsened in the past five years. UK shoppers are the "most aware, most critical and most likely to see national brands as standard-bearers" wheareas Spaniards are the most cynical about ethical branding. What was remarkable in the results is the information that about 1/3 of respondents would pay 5-10% more money for many ethical goods. In the US, a survey by Rasmussen Reports also showed that three-quarters of workers still think companies have the responsibility to give back to their community. Nestle, Ford, Nike and Shell - all established household names - attest to the importance of observing business ethics. These companies have been the subject of criticism ranging from undesirable labour practices, environmentally threatening production processes, tax evasion and the like. Pryce (2002) writes that "all of these expressions of consumer anger were targeted at the perceived irresponsible behaviour of the company involved" resulting to "real damage to the company's brand, and in some directly to its financial performance". The Necessity of Bribery, Gift Giving and Entertaining In his investigations on the unethical behaviour of companies in international sales and purchasing, Wood (1995) found that gifts and entertaining are deemed by many companies "as a necessary part of the development of personal relationships which characterize successful international business relationships". Armstrong et.al. (1990), Donaldson (1989) and Fadiham (1991) inform us further that these business methods have long been in practice. Laczniak and Murphy (1993, p. 213) report that most companies find it necessary because it is the accepted practice in many countries, a form of commission paid to helpful intermediaries and the only way to compete in overseas markets. From the foregoing, it would seem that business ethics should be optional. The idea that it is necessary is faulty in the sense that the consequences outweigh the benefits. In the previous discussion, we have seen how the consumers are now reacting negatively to unethical business methods. Briberies and gift giving are certainly scandalous affairs especially when government officials are involved. It could lead to the cancellation of the project, blacklisting of the firm and severe criticism from many people which could ultimately result to the failure and bankruptcy as a whole. It has also been established that there is no basis in saying that companies who give out bribes will be more successful. For example, the Foreign Corrupt Practices Act that were considered by most US companies to be detrimental to international competition (Kaitaki and Label 1980, p. 42) have been found by the studies of Gillespie (1987), Beck et. al. (1991) and Bottigleri et. al. (1991) to have no significant effect on the competitiveness of US companies. Conclusion From the arguments presented above, one can see that business ethics is not optional. Rather, it is a responsibility which every firm must comply to. I argue that observing business ethics is not so much in having a clear conscience or any other morals-related benefits but in creating value that translates to continued success of the company. Having good employment relationships, positive public image and clean transactions with the government can result to remarkable gains and contributes to the sustainability of the endeavour. Recommendation Based on the findings of this report, the company is advised to incorporate Corporate Social Responsibility practices as it results to tangible financial benefits and ensure that the company flourishes in the market. References: Armstrong, R.W., Stening, B.W., Ryans, J.K., Marks, L., Mayo, M. (1990 ), "International marketing ethics: problems encountered by Australian firms", Asia Pacific Journal of International Marketing, Vol. 2 No.2, pp.5-18. Beck, P., Maher, M., Tschogel, A.E. (1991), "The impact of the foreign corrupt practices act on US exports", Managerial and Decision Economics, pp.259-303. Bottigleri, W., Marder, M., Paderon, E. (1991), "The Foreign Corrupt Practices Act: disclosure requirements and management integrity", Sam Advanced Management Journal, pp.21-7 . Donaldson, T. (1989), The Ethics of International Business, Oxford University Press, New York, NY. Fadiham, J. (1991), "A traveller's guide to gifts and bribes", Harvard Business Review, Ethics at Work, Harvard University Press, Cambridge, MA. GfK NOP (2007). Branding Effectiveness. London: Gfk NOP Publications. Gillespie, K. (1987), " Middle East response to the US Foreign Corrupt Practices Act", California Management Review, Vol. 29 No.Summer, pp.9-30. Kaitaki, J.G., Label, W.A. ( 1980), "American bribery legislation: an obstacle to international marketing", Journal of Marketing, Vol. 44 No.Fall, pp.38-43. Kotler, P. and Lee, N. (2004). Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause. UK: Wiley Laczniak, G.R., Naor, J. (1985 ), "Global ethics: wrestling with the corporate conscience", Business, Vol. 35 pp.3-10. Pryce, V (2002) 'CSR - should it be the preserve of the usual suspects Business Ethics: A European Review, Vol. 11, Iss. 2 April 2002 Rasmussen Reports (2007). Hudson CRS Survey. Hudson: Rasmussen Publications Wood, G, (1995) Ethics at the purchasing/sales interface: an international perspective International Marketing Review Vol 12, No 4, 1995 Read More