Socially Responsible Company Buying Objectives - Coursework Example

In this Complex World Companies have Objectives that are not strictly Economic. Discuss. Introduction: Business enterprises are profit oriented and hence their objectives should have an economic criterion as a component. More so in these days of competition, when there is greater focus on performance of companies and their bottom line. However, there are changes in the environment that most companies in with society and customers become more aware with the dramatic changes in which information is disseminated. Concerns on environment in society and the knowledge of the power of the customer have added new dimensions to the complex world in which these companies operate. Societal demands on new roles for companies on societal needs are forcing companies to think beyond any traditional philanthropy that they were engaged in to company objectives that are not strictly economic. Corporate Social Responsibility: Traditional philanthropy may be viewed as the only times when companies deviated from spending their resources without real tangible returns to their coffers. This was however limited to activities towards their employees or in a minimal manner to the society or societies in which they operated. The complex dimension that has arisen for companies is the demand from societies that they need to show more concern for the societies in which they operate. Such a perspective is reflected in the call of the United Nations for companies around the world to be aware and show adopt more socially oriented objectives as they explore opportunities (Magee, 2007). With the concept of globalization and the global village become more of a reality than a considered possibility actions of companies oriented towards economic concerns with societal detrimental effects have a means of spreading to all corners of the globe, which has made the societal demands for responsibility from companies more strident. This has led to the concept of corporate social responsibility, wherein companies become aware of the needs of maintaining the environment in which they operate and assistance to societal needs and are encouraged to incorporate them among the objectives of the company. This has resulted in environment orientation, social buying, and social advertisements as examples of the incorporation of non-economic criterion being incorporated in company objectives (Drumwright & Murphy, 2001). Greening in Company Objectives: Since the last decade of the twentieth the concept of corporate greening, wherein companies have become more aware and concerned about their environmental responsibilities and have shown the tendency to incorporate this non-economic criterion among their objectives has attracted a lot of interest. According to Schaefer and Harvey, 1997, the underlying basis of the models of corporate greening that have been developed are that companies have a choice of incorporating or nor incorporating non-economic environmental criterion in their company objectives and that there is a line of progress from a company that takes no interest in environmental issues on to companies at the other end of the spectrum, who have extremely high interest in environmental issues. This means that companies move along the various stages of this line incorporating more non-economic environmental criteria into their objectives and all companies are positioned somewhere along this line in their attitude to environmental issues (Schaefer & Harvey, 1998). The environmental non-governmental organizations (NGOs) are not just a strident voice on societal environmental issues, but are knowledgeable about the issues, and are an acceptable voice to society. An example of the increasing incorporation of non-economic environmental objectives in the objectives of companies is demonstrated in the increasing strategic green alliance between companies and environmental NGOs. The reason that it is strategic is that it leads to corporate enviropreneurship. Entrepreneurship by itself is built around objectives that are essentially economical, whereas enviropreneurship results in objectives that have both economic and non-economic company objectives. Enviropreneurship may be considered as the strategic meeting ground between the economic considerations of companies in their objectives and the reduced stress on economic objectives demanded by environmental NGOs. For companies this strategic green alliance provides the means of coming to a compromise on economic component in its objectives and the incorporation of non-economic criteria in its objectives. This process involves give and take by both the involved entities. The company concedes to some non-economic criteria in its objectives, while the environmental NGO does not push for all the non-economic criteria it would like to the company to incorporate in its objectives. It is a win-win situation for both. The company is able to dampen the impact by slowing down the incorporation of the non-economic elements in its objectives, while the environmental NGO is able to draw the company further down the spectrum towards demonstrating a high interest in environmental issues by incorporating more non-economic criteria in its objectives. The example of the Green Peace-Foron alliance in changing the refrigerant use for refrigerators is a case that makes the incorporation of environmental criteria in company objectives clear. Green Peace championed the use of the environment friendly ‘GreenFreeze’ refrigerant to reduce the use of the refrigerant chlorofluorocarbon (Freon), which was damaging to the environment. Most of the companies had Freon based manufacturing facilities and were disinclined to invest in the new refrigerant technology for economic considerations. However, Green Peace tied up with Foron Household Appliances to promote the use of ‘GreenFreeze’ and the success of this strategic tie-up on meeting the 1987 Montreal Protocol on reducing the emission of ozone depleting substances, has led to the diminished use of Freon as a refrigerant. (Stafford, Polonsky, & Hartman, 2000). Innovative products are central to a company remaining competitive and the cornerstone around which many industrial organizations operate. Studies conducted in the United Kingdom on the current attitude of research and development on innovative products shows that there is an increasing focus on products that are more environment-friendly, even though it may have economic repercussions on the economic objectives of the company. This shows that company objectives at even the grass-root level are starting to incorporate non-economic criteria like environment friendliness (Foster & Green, 2000). Socially Responsible Company Buying Objectives: For Drumwright, 1994, p.1, socially responsible buying as demonstrated by companies is “under the rubric of non-economic buying criteria – criteria other than price or trade-offs made between price and the many varied dimensions of quality”. This means that the basic objective of purchase in companies shifts from the attempt to buy products at the lowest price possible for the quality required to demonstrating responsibility to social concerns in their purchase objectives. The power of socially responsible company objectives lies in its ability for the creation of socially responsible markets and socially responsible alternatives for consumers (Drumwright, 1994). An example of this power can be seen in the shift that is occurring in the clothing and jewelry that are on offer to cater to socially responsible people. Fur, leather and certain clothing items come from animals or through environment degrading processes. Unless an alternative through products of clothing and jewelry that do not have an animal component or environmental degrading aspect about them are available people will continue to use such products. Some companies have started providing products that do not have any animal component or environment degrading components (Williams, 1989). Buying cheap from China with a cheap labor force working in sweat shop conditions has been practice for many of the clothing majors. However, they are currently coming under the scanner to abandon these practices and take steps to improve the working conditions of the Chinese workers as part of corporate social responsibility (Quan, 2003). Company Advertising for Societal Benefits: Advertising by companies associated with social dimensions have been increasing in the last few decades. Such advertisements do not promote the company or the products of the company and are considered as non-economic advertisement objectives of companies. Non-economic advertisement objectives are associated with the social causes that include AIDS, breast cancer, domestic violence, drug misuse prevention, literacy, mental and physical disabilities, racial harmony, rape prevention and wetlands and wildlife preservation. Social cause marketing has been showing a rising trend demonstrating the growing willingness to have the non-economic criterion of social cause marketing as part of their advertisement objectives. In the United States of America Social cause marketing grew from $100 million by companies in 1989 to $254 million in 1992. In recent times this figure is believed to have grown to $2 billion. Surveys from among the American public show there is appreciation in 84% of the population for the social cause marketing efforts of companies and give support to the perception that it improves the image of the company. This suggests there is a spin off in terms of company image in social cause advertising (Drumwright, 1996). Conclusion: The complexities of the modern world have caused the traditional philanthropy that some companies indulged to expand to incorporate non-economical criteria into their objectives in keeping with societal demands and social responsibility. Some commonly seen examples are the greening initiatives in product innovation, purchasing and in advertisements supporting social causes. All this supports the perspective that in this complex world, companies have objectives that are not strictly economic Literary Resources Drumwright, E.M. 1994, ‘Socially Responsible Organizational Buying: Environmental Concern as a Noneconomic Buying Criterion’, Journal of Marketing, vol.58, pp.1-19. Drumwright, E.M.1996, ‘Company Advertising With a Social Dimension: The Role of Noneconomic Criteria’, Journal of Marketing, vol.60, pp.71-87. Drumwright, E.M., & Murphy, E. P. 2001, Corporate Societal Marketing, in ‘Handbook of Marketing and Society’, (eds.) Paul N. Bloom & Gregory, T. Gundlach, Sage Publishers: Thousand Oaks, California, pp.162-183. Foster, C. & Green, K. 2000, ‘GREENING THE INNOVATION PROCESS’, Business Strategy and the Environment, vol.9, pp.287-303. Magee, J. R. 2007, ‘Financial Firms See Promise in Social Exchange Concept’, Securities Industry News, September 13, 2007, pp.13. Quan, K. 2003, ‘CHINA AND THE AMERICAN ANTI-SWEATSHOP MOVEMENT’. [Online] Available at: http://www.hrichina.org/fs/downloadables/video/ChinaandtheAmerican1.2003.pdf?revision_id=8726 (Accessed April 30, 2008). Schaefer, A., & Harvey, B. 1998, ‘STAGE MODELS OF CORPORATE ‘GREENING’: Business Strategy and the Environment, vol.7, pp.109-123. Stafford, R.E., Polonsky, J.M., & Hartman, L.C. 2000, ‘ENVIRONMENTAL NGO-BUSINESS COLLOBORATION’, Business Strategy and the Environment, vol.9, pp.122-135. Williams, L. 1989, ‘Wardrobes Tailored By Social Concerns’, The New York Times [Online] Available at: http://query.nytimes.com/gst/fullpage.html?res=950DE4D6123EF93AA15750C0A96F948260&sec=&spon=&pagewanted=all (Accessed April 30, 2008). Read More