Examination of the Allegation Made by the British Prime Minister - Essay Example

? Sustainable Management Futures Contents Examination of the allegation made by the British Prime Minister 3 Milton Friedman’s and Norman Bowie’s neo-classical models of corporate social responsibility 5 Recommendations for a sustainable market economics 6 Examination of CSR activities of Tesco 7 Examination of the allegation made by the British Prime Minister The British Prime Minister opined that the economy has to deal with the legacy of debt as well as debt. He put forward the example of Eurozone which is suffering from deep trouble at the moment. The level of unemployment took the rising curve again. The present government in Britain is doing its best to keep the economy moving. Some of the initiatives from the part of the government include massive drive on infrastructure and measures to drive growth and enterprise. But the main concern that is being asked by the people is when the economy will find the smooth path that is when the economy is expected to work according to the anticipations. The government must aim to attain higher growth than just making policies to deal with the storms that can affect the international economy. The Prime Minister believes that a better economy can be build under the current regime. According to him, human wealth and happiness can only be improved through open markets and free enterprise. The system of open market as well as and the free enterprise regime will generate progress to lift the people out of poverty and lay down the path of innovation. Open markets and free enterprise acts a bridge between contribution and reward. The idea of market that was presented by him is of something for something. This idea needs encouragement rather than condemn. Therefore, one should use the crisis of capitalism rather than undermining them. As the economy has experienced the situation before, so the strengths and the weaknesses of the free market regime are known. All are certain of the situations where market works and where it fails. The prospects of globalization can slide into monopolization. Such situations will drive the small and the local players out of the market. Two problems can creep up in open market regime. The first problem that can creep in is vision of social responsibility and the second problem is the one of popular capitalism which allows all to share in the success of the open market. According to the minister, the previous government did not take the requisite steps to regulate capitalism. He opined that labor either went towards socialism or embraced capitalism. They did not realize that capitalism has negative aspects too. He declared that Tories have the capability to understand capitalism better and know how to deal with the worst excesses of the system. Capitalism can also be the resultant of loss of moral choices. An example of the banking system can be taken into account. Many people think that time calls for do something for the associated corruption and greed accrued in the banking system. One thing that is frequently missed by the people is that capitalism requires free market. The price and the quantity are determined by the market itself. The presence or absence of government can give rise to more economic problems. The government may not take the necessary steps and then blame the economic system. The politicians cry for regulations and continue to expand their power at the expense of the people. The time has come for involvement of more people in a genuinely popular capitalism. The last government claimed to get out from the boom and bust but what it really did was allowed the economy fuelled by debt to get out of control. The serious imbalances between the financial and manufacturing services were the resultant. The initiatives encouraged the debt to crop up higher as it needed to pay the rising costs of welfare. This paved the way for market failures. The previous government left all with a share of debt. People became concerned that they will lose purchasing power and the whole system lost confidence. The whole system ended up with unpopular capitalism apart from popular capitalism. The speech of the Minister directed not to stop the free market system from working but changed the way it works. The prime Minister claimed that if all individuals act to follow the steps that will derive their own self interests then the acts will have remarkable effects of leading to the overall benefit for the society as a whole. The basic truth is that if people have stakes in some business they will participate in the growth of the business and share the success. But the problem that the country currently faces is that as the country has become richer, participation from the people has died down. Milton Friedman’s and Norman Bowie’s neo-classical models of corporate social responsibility The main pillar of the neo classical view put forward by Friedman and Bowie was that the corporation was to make profit without any infliction harm. The other models stated that corporation can make profit only through honoring the moral minimum or respecting the rights as well as justice of the individuals. The corporation lacks the resources to deal with the social problems. One can argue that the concern regarding the rights of the stakeholders is required in order to achieve long term profits. The short term orientation of the stakeholders can affect the firm negatively. The quality of the workforce is the most important asset for a company. Any advantage that a country can gain in terms of capital markets will be in short term. If the country wished to reap the benefits it must address the social problems. Since costs are immediate and high, benefits seem distant. Moreover people also do not like the policy of raising taxes. So there is little incentive to pay the costs for the politicians. If matters are made worse by the rising debts, business will get involved in the social problems and such actions from the part of the business houses are justified as it is necessary to increase profits. The following conclusions can be drawn from the theory. It is the extended view of the business houses to take part in the duty to help the social problems. The business adopts the duty with the view that such action will benefit the firm. The sole reason a firm being socially responsible is altruistic as improved workforce is a public good. Therefore, employees as well as stakeholders would have ample reason to believe the attempts of the corporate to solve social problems. Recommendations for a sustainable market economics An effective legal system is the basis for sustainable economic activity. The legal system lays down the preconditions for a strong economy. Regulation is the appropriate approach to shape incentives in a competitive environment. Regulations should be laid down in such a way that decentralized activity acts to benefit the society. The sustainable economic system must be must be geared by private property ownership. Private ownership is the basis of innovative entrepreneurship. The economic system that is based upon the private property has the potential to safeguard employment in s sustainable fashion. Private ownership is characterized by a competitive system in which the smaller enterprises are liable for the economic activities. Making use of ownership ensures careful business activity against concentration of profit seeking in the short term. A competitive system that is based on free determination of prices optimizes scarce resource allocation. Competition fosters progress and restricts the one sided market power. Such system calls for open markets and the control of market power circulates within the state. Competition is rooted in the performance and the equality of opportunity. The prospects for profit will stimulate the competition and at the same time the personal liability in the event of losses curbs risky behavior. A sustainable market economy requires long term economic policy in national and international financial markets (German Council for Sustainable Development, 2010, p. 2). Confidence is a prerequisite for long term investment decisions. The rejection of the protectionist measures would act as the driver to bring in confidence in the system. It is the responsibility of the state to make provision for goods if the fails to make adequate arrangements. An efficient infrastructure and access to proper health care and provision for fundamental opportunities for education are some of the areas where the state can concentrate. The involvement of the state is necessary where there is social disadvantage. But the intervention of the state should be limited. A market economy requires a system of levies that is incentive oriented in order to finance state tasks. The characteristics of the tax should be such that they neither minimize the performance nor lead to some distortions in allocation. Sustainability is an expression for intergenerational justice. Sustainability is facilitated by a legal system that is based on responsibility as well as liability. A solitary move from the part of the countries will not be a cure taking into account the current economic scenario. On the other hand it can exacerbate the impacts the crisis can have globally. A coordinated policy for open markets and the following the policy of fair rules is crucial. The associated international institutions must be strengthened to counter the policies of protectionism and economic nationalism (Stiftung, 2009, pp. 3-4). Examination of CSR activities of Tesco The company that has been selected for the project is Tesco Plc Ltd. The company has got the headquarters at United Kingdom and id the multinational grocery of Britain. The company is ranked third in the world in terms of revenues and ranked second in profits (TESCO, 2012). The company operates in 14 countries across many continents and is the leader of the market in UK and is also listed in the LSE (London Stock Exchange). Tesco claims corporate social responsibility as an integral part of their business plans. The company is mentioned in the platinum section of 2007 CR index and won the platinum award for outstanding performance in the field of community management, market place management as well as social impact. Tesco started to have a separate report on corporate social responsibility from 2001 and in the very next year the report comprised of 34 pages. In 2007, the report is 80 pages long along with more than 20 online WebPages. Since the year 2002, the company has initiated a steering wheel upon the focus of the company lies. The report of 2002, dictated corporate responsibility being a strategy of business, a management tool and a part of corporate governance. The focus has shifted in 2007 but all are certain that the motivation behind CSR activities is from financial point of view (European Foundation for the Improvement of Living and Working Conditions, 2003, p.1). In 2001, an initiative by the company named Computers for Schools was started by the company but it could not achieve much success in the initial periods. But now it is the integral part of the strategy and has gained pace in the following years. There has been a backlash over the increasing number of stores of the company. Although the company claims that such type of activities make the surrounding areas more competitive but the articles about towns tell a different story. The express stores have their own problems like the large trucks tries to get into the narrow roads giving rise to congestion. The company was also accused of enjoying monopoly. The Guardian emphasized upon the fact that the company has the potential to build so many stores that it can justify them as the regeneration program. The company can defend their increasing stores as an aid towards the community as it will contribute is lowering down the unemployment level. The reports state as the company grows far and wide, it is the small independent stores that have to pay the price. In the past two years, the press became active in the reporting of town councils. The councils do not allow the organization to open up business in their areas. On major problem that the councils have to face against the applications of planning permission from the company is that once the application is rejected the company will challenge the decision and move to the courts. It is not possible for the councils to contest because of financial reasons. Although few towns have tested success but some are of the opinion that they already lost by allowing Tesco to open supermarkets. Recently, it became difficult for Tesco to achieve planning permission. The company was quick to realize that it would have to add some more sweet other than supermarkets in the planning offerings. Tesco was greeted in Linwood because it offered some lucrative packages like offering money for the library, and regeneration of the community and health centers. It also came to the report that the company forces other organizations to change their planning application so that competition in the area gets reduced. There are no such reports on participation of Tesco in charitable functions or any initiatives from that part of the organization. The local newspapers may report the charitable donations from the company or there is no such report on the hands of the press. Since the initial part of their CSR activities, Tesco saw community as a part of the activities. Since their introduction, the company was keen to gain the trust of the general people and the customers of Tesco. Tesco have only one initiative in connection with education n the community. Although Tesco said that they will take the opinions of the schools, the parents as well as the customers but all are uncertain about how the scheme is initiated. In the report of 2007 there is no mention of education section and the aim is to be good neighbors with sustainability being the core of the business. Tesco also runs football to let participation of school children. Since 2005, they have started a scheme relating to sports equipment. Tesco is cashing in on the restrictions of the government in funding basic equipment. In the report of 2007, the company tries to suggest that it is advancing social mobility with the aim to serve large number of communities. They contribute in the way by creating more jobs or job opportunities; build the basic skills of the deprived communities even in remote areas. Tesco also took the initiative of employee volunteering scheme. The report also suggests about the concern of the company to make the market effective. They have referred to the interests of the Competition Commissions and the effect it can have on the market. The latest initiative from the company is the labeling of the product carbon footprints. This can also have a negative by effect on food’s advertising. Fish farming was criticized lately and it was found that may retailers tend to fool their customers. It was also found that some Tesco stores labeled fish products incorrectly. The company claimed to build the greenest store in the world. Tesco follows the policy of recycling, cutting emission and reduce waste as well as reduce energy consumption in their operations. The programs of the company are based on long term strategies and it is not possible to implement them quickly at least those are in line with the environmental initiatives. The company joined hands with the government in developing renewable sources of energy industry and supports the Kyoto protocol (IBS Case Development Centre, 2011). The focus of the company is still on water and energy consumption. They have been able to achieve 50% of their targets and took the initiatives to achieve the target more optimally. Till 2007, they have built 3 environment friendly stores and planned to build all new stores in the same fashion till 2020. The objectives of the company are the lower grades that can be easily achievable and lack the initiatives to make the real difference. The company chose to pock their own recycle scheme and claim that they have been able to recycle over 90% of the plastic materials. They also announce for their customers the facility to recycle old mobiles as well as inkjet cartridges. The company is also committed in the idea of waste management. They try to inform the customers the importance of recycling. They have introduced biodegradable packaging wherever possible (Rana, 2007, pp. 48-52). Tesco also took the initiative to invest in new technologies. The company has pooled resources in collaboration with the partners to introduce new software that will reduce the number of empty vehicles on road. It has also worked to reduce the impact of carbon dioxide from the distribution centers. The road miles have been reduced by consolidating and rationalizing the distribution network. The new distribution centers of the company reduce the carbon footprint. The Home insulation service of the organization is serving more than 5 lakhs customers for three years now. The service aims to reduce the annual bills on energy consumption. In order to decrease the use of fossil fuel, the company introduced to sell of biofuels. The company is committed to purchase timber only from legal sources. In the year 2008, the company widened the policy of wood and paper to include the marketing materials and the catalogues within the policy regime. It seeks to buy seafood only from responsible fisheries. It informs the customers about the catching methods and the fresh range. Responsible supply code was developed in association with International Fishmeal and Fish Oil Organization. The company trains the suppliers to deal with the UK Code of Practice. The suppliers can get in touch with the senior management to resolve any issue that they come across with the buyers. In 2005, the company was the first among all to employ a Code Compliance officer. In the year 2008, there were no complaints made to the officer. Therefore, taking all the fields into account it can be stated that the company under consideration is following the corporate Social Responsibility effectively and will continue to keep up the good work in future for the goodwill of the company. Reference Stiftung, K. 2009. “Guidelines for Prosperity, Social Justice and Sustainable Economic Activity”. [Pdf]. Available at: http://www.kas.de/wf/doc/kas_17025-544-2-30.pdf. [Accessed: 10th July, 2012]. German Council for Sustainable Development, 2010. “Stabilising the Financial Markets”. [Pdf]. Available at: http://www.nachhaltigkeitsrat.de/uploads/media/RNE_Statement_on_fiscal_sustainability_2010-11-10.pdf. [Accessed: 10th July, 2012]. Rana, D. 2007. “A case study of Tesco Corporate Social responsibility practices through analysis of reports and press coverage during the years 2002 and 2007.” [Pdf]. Available at: http://edissertations.nottingham.ac.uk/1508/1/07MADevinaRana.pdf. [Accessed: 10th July, 2012]. TESCO, 2012. “About us”. [online]. Available at: http://www.tescohsc.com/aboutus/corporate_responsibility.html. [Accessed: 10th July, 2012]. European Foundation for the Improvement of Living and Working Conditions, 2003. “Corporate social responsibility in Tesco”. [online]. Available at: http://www.eurofound.europa.eu/emcc/publications/2003/uk03002a.pdf. [Accessed: 10th July, 2012]. IBS Case Development Centre, 2011. “Tesco's Corporate Social Responsibility Initiatives”. [online]. Available at: http://www.ibscdc.org/Free%20Cases/Tesco's%20Corporate%20Social%20Responsibility%20Initiatives%20p1.htm. [Accessed: 10th July, 2012]. Read More