The Importance of Social Responsibility - Assignment Example

Supervisor Explain how one company (e.g., Dell has responded to the importance of social responsibility by developing and implementing socially responsible, sustainable, strategies and practices. By: October, 2008 Table of Contents 1.0 Introduction 1.1. Overview of the Activities of Dell 1.2. Stakeholder theory and Mapping 1.3. Analysis of CSR with Respect to Dell 2.1 Importance of CSR to Businesses in the Phase of Challenges. 3.0 Conclusion 1.0 Introduction Corporate social responsibility (CSR) refers to the awareness, acceptance, and management of the implications and effects of all corporate decision making, taking particular account of community investment, human rights, and employee relations, environmental practices, and ethical conduct. (Park, 2007). According to Hsueh (2008) CSR has received much attention in recent years and more and more businesses are taking CSR to improve their corporate image. CSR activities show consideration for the environment, consumers, charity, minority groups, employee welfare, community development, women empowerment, etc. (Hsueh, 2008). For example car manufacturers across the globe are responding to the major global concern of Carbon dioxide (CO2) emission which is tremendously depleting the ozone layer and increasing the risk of cancer and other diseases that come as a result of ultraviolet light. Today, the requirements of an organisation’s stakeholders including, customers, employees, suppliers, shareholders, government, etc are on a continuous rise. In addition, to providing an annual report to the company’s shareholders organisations are expected to provide alongside a corporate social responsibility report that details how they interact with society and the environment in which they operate. A mining company may have to disclose how it maintains safety of its workers. Mining is a very risky job and a lot of cases mining casualties where people die in gold mines for example have been reported. Organisations in such industries therefore have a legal obligation to disclose in a corporate social responsibility report the safety measures that they have put in place to tackle such casualties so as to reduce their chances of occurrence to zero. Conventional wisdom dictates that any mining company that cannot demonstrate that it has good safety measures is likely not going to attract enough workers. This is true given that potential employees to such an industry are particularly concern about their safety, although they may need the job as a means of making a living. Having said this so far, the aim of this paper is to carry out an analysis of corporate social responsibility with respect to Dell Computers, stakeholder theory and finally how businesses should use CSR. The last part of the paper provides personal conclusions based on the findings. 1.1.1 Overview of Dell Computers At the dawn of the 21st century CSR began to gain world wide rapid importance and Dell Computers was amongst the first companies to add CSR into its business philosophy. Dell company was the second largest PC company in 2007 (Dell Company Review 2007). This was thanks to its inbuilt advantage of lower cost and highly efficient supply chain management technology (Dell Company Review 2007). Dell Company is the premier computer system provider worldwide with it highly customized products. However, today competitors as emulating Dell strategy through mass production and just in time production methods. According to the company 2007 annual report, the company currently employs more than 88000 people worldwide. As a multinational technological company, it activities are diverse. It currently sells personal computers, computers related products, servers. Data storage devices, network switches, soft wares and computers (Dell 2007 Company Review). No wonder, the Fortune 500 magazine ranked Dell Computers Corporation 8th on its annual list of most admired companies in the United States. The table below extracted from the company webpage provides a brief summary of its market structure. Items Value in Billion of $ Market Capitalisation 45.09 Revenue 61.133 Total Assets 27.561 Total equity 3735 Employees 82700 The next section discusses stakeholder theory and thereafter this will be analysed with respect to Dell Computers. 1.2 Stakeholder Theory and Mapping The accountability model assumes that the organisation has many responsibilities which come as a set of rights for stakeholders, including rights to information from the organisation to demonstrate its accountability in relation to the stakeholders’ expectations and provide an account in relation to that effect. Stakeholders are individual or companies who depend on the company for information and a living and for which the organisation depends on to survive (Johnson et al. 2007). In every corporation, it is necessary that management is likely to carry out its activities in line with the expectations of powerful stakeholders. Powerful Stakeholders include those stakeholders who control resources which are scarce and essential to the success of the organisation. Management would therefore take on activities that are in line with the expectations of powerful stakeholders and provide disclosure of these activities by means of a social responsibility report. Figure 1 below shows the major stakeholders that have an interest in the organisation. As can be seen in the figure, the major stakeholders have different requirements from the organisation. For example management is interested in compensation, prestige and power; employees are concerned with job satisfaction, compensation and safety in the case of high risk companies such as mining companies; minority groups are interested in fair employment and no discrimination, for example, this group would love to see a company that does not discriminate between Caucasians and Asian Minorities or between Caucasians and Blacks when it comes to employment, they are against racial discrimination by companies when it comes to selection of candidates to fill a place in the company. The community loves a company that takes into consideration the community first when it comes to employment, as well as an organisation that takes measures to preserve the environment and the earth’s natural resources that are necessary for maintaining the ecosystem; Creditors are interested in companies that can pay interest and principal upon maturity of debt obligations; shareholders are interested in dividends and capital gains; customers need quality products and services as well as increased customer value and customer satisfaction; suppliers need regular payments and continuity of business (going concern), for example, no supplier will like to supply a company that is unable to settle its accounts payable or that is likely not going to continue business; and the government needs to collect taxes from the company Figure 1. Major Stakeholders of an organisation. Source: adapted from: Brignall and Ballantine (1996). From the above analysis, it can be depicted that, while the annual report can satisfy the needs of creditors, suppliers, shareholders, government, and management it is difficult to satisfy the information needs of the other stakeholders such as the community, minority groups and customers; the latter category is that which requires a corporate social responsibility report. This therefore goes a long way to explain why organisations prepare a corporate social responsibility report from the annual report. 1.3 Analysis of CSR with Respect to Dell In recent years, CSR has been subjected to much debate and criticism. Proponents of CSR argue that there is a strong business case for CSR, “in that corporations benefit in multiple ways by operating with a perspective broader and longer than their own immediate, short-term profits”. (Sacconi, 2004) “Critics argue that CSR distracts from the fundamental economic role of businesses; others argue that it is nothing more than superficial window-dressing; still others argue that it is an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations”. (Bulkeley, 2001; Sacconi, 2004).Today more and more companies are engaging in corporate social responsibility reporting, which helps major stakeholders to better understand how the company interacts with its society. (Sacconi, 2004) Many organisations in many countries have begun voluntary disclosure of the social environmental impacts of their activities in their annual reports. (Deecan and Unerman, 2006) These practices which have now become widespread began in many countries in the early 1990s, following considerable advances by a number of large companies to report environmental aspects of their business activities. The disclosures have often been made in the annual reports which include the financial statements comprising the balance sheet, profit and loss account and cash flow statement as well as a statement of shareholders’ equity. (Deecan and Unerman, 2006) The content of the social and environmental impact usually comprise of policies, practices and or impact of the reporting organisation on its environment. (Deecan and Unerman, 2006). Dell Computers Corporation is one of the very first companies in the 21st century to make it activities socially responsible. According to the company website and 2007 annual review, businesses have responsibilities to stakeholders to make sure their actions do not cause harm. To the employees, Dell offers an ideal work environment in all the countries and communities where Dell is operating. The company has globally put in place effective staff training and retention programs, Dell also employs people with disabilities and its diversity programs ensure barrier free work place. To customers, Dell offers them a higher value for any product purchase through its competitive pricing and affordable technology. To the investors, Dell ensures that the company is managed with the highest standards to ethics, responsibilities in the best interest of shareholders. The board adheres to corporate governance policies and practices. To its supplier’s stakeholders, Dell Computer Corporation promote ethical and socially responsible behaviours by promoting sustainable environmental practices, fundamental human rights, dignity and health with safety. From the 2007 corporate annual report, Dell is a corporate citizen and work closely with local communities in all the locations it operates. The company has a technology given programs for education and community groups, employees are made to donate time and money to worthy courses. Dell also sponsor its direct given programs to communities and groups (Corporate Annual Report 2007). To the government, Dell pays all its taxes, operates within industry and environmental standards and above all adheres to laws regulating wages, hours and working conditions. The company systematically carries environmental audit programs to create awareness, sensitivity and openness. According to the company’s website, “Dell complies with all the environmental laws and regulations, including ISO 14001 and OHSAS 18001, and manages its facilities with the environment in mind. Dell designs products with up-to-date recyclable materials, using the Reduce, Reuse, Recycle initiative at its manufacturing site. It commits to taking back old computer parts for recycling”. No wonder in 2004, Dell began the “Design for environment program”. The product concept and design revolve around Safe operations Extending product life Reducing energy consumption Avoiding environmental sensitive materials Using parts that can be recycled Dell is a model in the CSR doctrine. No wonder, Dell’s vision is to create a company culture where environmental excellence is second nature. 2.1 Importance of CSR to Businesses in the Phase of Challenges. Organisations can use corporate social responsibility to improve on their performance. Customers have become more concern about CSR and as such tend to promote the products of companies that have improved CSR structures. Employees too would love to work in a company with well-developed corporate social responsibility structures. A study by Bansal and Roth (2000) analysing 53 firms in the United Kingdom and Japan reveal that there are three motives for engaging in CSR: competitiveness, legitimation, and ecological responsibility. Therefore a company that has a good CSR policy is likely to be more competitive than one that has a poor CSR policy. In addition, such a company will quickly gain legitimation which will go a long way to increase acceptance of its products by the community and thus increase its sales performance as well as overall profitability. Many customers today have increased their concern for CO2 emission. In response car makers have began manufacturing hybrid cars that emit lower levels of CO2. For example, German car makers, BMW, Porsche, Volkswagen and DaimlerChrysler displayed cars with low-emission diesel engines and hybrids that use electricity to augment traditional fuel motors, as well as hydrogen fuel cell concepts that BMW is researching. It is all part of the effort to make high-mileage, cleaner cars that also meet drivers expectations for performance. Swedish automaker Volvo AB had its plug-in hybrid concept at the show, called the Recharge and based on its C30 hatchback. Volvo says a fully charged model can travel about 100 kilometers, or more than 62 miles, on electricity alone before the engine takes over. (Mildenberger and Ashuman, 2000) Computers manufacturers such as Dell are also working on new technologies in order to facilitate the use of recycled materials, they also try to design computerss with recycling in mind, to design and specify components that can be made out of recycled materials. (Mildenberger and Ashuman, 2000). 3.0 Conclusion From the foregoing discussion, one can conclude that major stakeholders of an organisation have increased their concern on how the activities of the organisation affect the social and environmental setting in which they operate. As a result there has been an increase in the requirements from companies. These issues pose significant challenges for companies as far as their competitive position and long-term performance is concerned. Consequently, it is necessary for companies to design CSR policies that would enable customers and other major stakeholders to perceive them as genuine companies. Such an approach will go a long way to improve the competitive position and long-term performance of the company. No wonder, companies like Dell has incorporated this in their mission and vision statements. BIBLIOGRAPHY Bansal P., Roth K. (2000). Why Companies Go Green: A Model of Ecological Responsiveness The Academy of Management Journal, Vol. 43, No. 4 pages. 717-736    Brignall S., Ballantine J. (1994). Performance Measurement in Service Business. International Journals of Service Industry Management. Vol. 7(1), pp 6-31. MCB University Press 0956-4233 Bulkeley, H. (2001). Governing Climate Change: The Politics and Risks Society. Transactions of the Institute of British Geographers, New Series, vol. 26, No. 4, pages 430-447 Deecan C., Unerman J. (2006). Financial Accounting Theory. European Edition McGraw-Hill Hsueh, C., Chang S. (2008) Equilibrium analysis and corporate social responsibility for supply chain integration European Journal of Operational Research, Volume 190, Issue 1, Pages 116-129 Johnson, G and Scholes, K and Whittington, R (2007) Exploring Corporate Strategy (Prentice Hall: Britain Mildenberger U., Khare A. (2000) “Planning for an environment –friendly car”, Technovation, vol. 20. Park Chris. (2007). Corporate Social Responsibility"   A Dictionary of Environment and Conservation. Oxford University Press, Oxford Reference Online. Sacconi, L. (2004). A Social Account for CSR as Extended Model of Corporate Governance (Part II): Compliance, Reputation and Reciprocity. Journal of Business Ethics, No. 11, pages 77-96. Read More