The Essence of Corporate Social Responsibility Philip Morris and Starbucks - Case Study Example

?Essence of Corporate Social Responsibility and CSR Introduction The project has been done in lieu of identifying and analyzing the different aspectscorporate social responsibility. The different aspects of CSR discussed in the project include, benefits of CSR, importance of CSR keeping alignment with the business objective, factors influencing CSR activities, key performance indicators for CSR, value of social reporting and the influence of Government on CSR activities. CSR can be defined a commitment made by a company towards the stakeholder to operate in an environmentally, socially and economically sustainable fashion. CSR seeks to integrate workplace culture, communities and human rights to business strategies. In the initial days the many used to treat CSR as arm chair philanthropy, however things have changed drastically. It is treated as an integral part of the overall business strategy. In order to discuss the focal points related to CSR two companies have chosen in the form of Philip Morris and Starbucks. Philip Morris is one of largest tobacco companies. It includes seven leading international brands that include Marlboro, the top most cigarette brand in the world. Starbucks one the other hand is a global coffee chain. They are based on Seattle, Washington. It is also the largest coffeehouse company. It has over twenty thousand stores and operates in over sixty countries. Starbucks shops provide a wide range of products including hot and cold coffee, pastries, snacks, etc. As it can be seen that two companies with distinct product mix and different business model has been chose. The main objective of such choice is to demonstrate the importance and benefits of CSR across various industries. Add to it must be mentioned that as per research the key focal points of CSR activities of both the companies happens to be same, at least to some extent; such as investment in foundations and communities, waste reduction, energy conservation, recycling etc. Here it is needless to say that CSR for Philip Morris is supposed to be a bit trickier as compared of Starbucks keeping the product line in mind (Urip, p. 13). Potential Benefits and Importance of CSR CSR should not be looked upon a leakage of resources. If implemented properly CSR policies can provide an array of benefits such as increase the level of customer retention, enhances relationship with customers, suppliers, stakeholders and other channel partners, differentiates the company from that of the competitors, improves reputation, generates positive publicity and even helps the companies to get new business. This segement will be of great help to understand how CSR activities benefits Starbucks and Philip Morris to maintain better relationship with the stake holders. Stakeholders include employees, business partners, investors, local communities as well customers. It will also be helpful to analyze the alignment of CSR with the corpora objectives. It will reflect the importance of CSR keeping the overall corporate strategy in mind. Corporate objective can be defined as a realistic objective set by the company that influences key strategic decisions (Heal, p.132). Starbucks views CSR as an opportunity to give something back to the community. As a matter of fact it runs down deep to the company roots. For Starbucks CSR is an approach to fulfill the commitments made to the origins, environment, communities, and partners. Some of the approaches include investments to benefit coffee producers and their families; promoting the concept of recycling, conservation of coffee growing countries; having in store green teams. More than one billion people work at Starbucks. They are not treated as employees; rather they are treated as partners. As a matter of fact the mission statement of the company talks about the commitment to partners. As mentioned before CSR activities for Philip Morris are supposed to be a bit trickier as compared to the other. However the CSR activities of the company are nothing short of impressive. The company actively invests in art and culture, education and youth development activities. It openly admits that the company produces a product which is potentially dangerous to health and hence it suggests that people under the age group of eighteen should stay away from asking. The company looks to engage with responsibility with channel partners, government officials and customers. It appreciates that the employees are engaged with a product that carry risk. All in all it can be summed up that CSR has been very beneficiary to Starbucks and Philip Morris when it comes to business reputation and relationship building with stakeholders (Trosborg, p.603). Factors Influencing CSR activities CSR has most certainly come off page. Even a few years back it used to be treated as so called arm chair philanthropy- not any more. It is now an integral part corporate strategy. In this segment the key factors influencing the evolution of CSR will be discussed. Key factors influencing the evolution of CSR are political, economic, social and technological. Among these the political and social factors probably are of key importance. The political factors will be discussed later in the study. In modern day business customers want to do business with a company which socially responsible. Several examples have shown social image of a company has direct influence on the performance of the firm. Any sort of damage in the social image can be a potential disaster. This is one of the key reasons as Starbucks and Philip Morris invest heavily in the CSR activities to maintain an image of a socially responsible corporate entity. This helps the companies to build up relationship with the customers. This is the very reason as CSR is treated as an effective customer retention strategy (Mallin, p.10). Key Performance Indicators of CSR Although it is pretty difficult to tangibilize and make CSR results quantitative, yet some of the key performance indicators for judging CSR could be company sales, goodwill and online reputation of the firm. Sales have been chosen as it has been mentioned that customers are likely to do business with a company which is socially responsible. Goodwill is a key indicator as it is an important part of the balance sheet of the company. Internet is the easiest and fastest way to get information. Hence online reputation is a key factor. Any negative news or reviews about the company is likely to have a negative impact on the customers. The essence of online reputation has increased with the rise of social media. It is pretty needless to say that both Starbucks and Philip Morris are corporate giants. Hence there is very little to talk about their sales. However, their online reputation is nothing short of sensational. The Google search engine result pages show no negative reviews about the company; not at least in the first page. The performance of both the companies in social media is also pretty impressive. Bothe the companies have massive amount of followers and fans in the Facebook and Twitter accounts. Social Reporting Social reporting is an emerging concept or philosophy that includes facilitation, journalism and social media. The main advantages of social reporting are that it helps to develop conversation and increases engagement between the company and the stakeholders. Some ideal platforms for social sharing are slide share, Twitter, Facebook, Blogs, and YouTube etc. However one limitation of social reporting from the company’s perspective would be social reporting can share anything about the company like wildfire. The speed of sharing is likely to increase if it some negative and hence it keeps the companies on the toes. The authorities of Dominos Pizza still get goose bumps as someone makes them recall the YouTube disaster. Both Starbucks and Philip Morris are a big hit on social media. Both the companies’ are able to create successful engagement mechanism through social media platforms. Government Influence The influence of economic, social and technological factors has already been discussed once before. In this part the political factors will be discussed to complete the loop. Government influence is a key factor when it comes to the evolution of CSR. Lack of ethics could be treated as a by-product of increase in competition. As competition increased, companies tried to achieve success by hook or by crook. Hence in order to keep a leash on the companies Governments came up with certain legislation to keep the ethical aspect alive. One of such ways is to create awareness about the rights of the consumers. The intent of the customers to do business with a socially responsible citizen also happens to be an influence of the government. Government policies affect the business strategies of any firm; especially for companies like Philip Morris as they deal with Cigarettes. Throughout the Philip Morris website a constant effort on the part of the company can be witnessed to put up an image of a socially responsible company. Almost every segment of their website including products, research and development, etc. includes the risk of smoking. It also includes the potential risks taken by the employees of the company while manufacturing and marketing of cigarettes. The website also contains a segment called Tobacco Regulation that includes health effects of smoking, illicit trade. Government influence might be one factor leading to such actions (Bueble, p. 11). Conclusion To conclude things it can be said that both social reporting and corporate social responsibility are not a supporting strategy any more. They are an integral part of the corporate strategy. Social Reporting is being used to great extent by Starbucks and Philip Morris to derive user engagement. CSR activities should not be treated as draining of resources. It has been proved by both companies that if implemented properly it can do add value proposition to the brand. CSR should be made an integral part of the corporate objective as customers look to business with companies that are socially responsible. CSR also helps the companies to maintain harmonious relations with the stake holders as well as other Government entities as a close look is being kept on them. Works Cited Bueble, E. CORPORATE SOCIAL RESPONSIBILITY: CSR COMMUNICATION. DE: GRIN Verlag, 2009. Heal, G. When Principles Pay: Corporate Social Responsibility and the Bottom Line. US: Columbia University Press, 2008. Mallin, C. A. Corporate Social Responsibility: A Case Study Approach. Edward Elgar Publishing, 2009. Trosborg, A. Pragmatics across Languages and Cultures. DE: Walter de Gruyter, 2010. Urip, S. CSR Strategies: Corporate Social Responsibility for a Competitive Edge in Emerging Markets. Singapore: John Wiley & Sons, 2010. Read More