Role of Corporate Social Responsibility - Coursework Example

Corporate social responsibility Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Name Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Course Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Lecture Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 17th April, 2013. Corporate social responsibility deals with business ethics and the behavior of the business towards the surrounding environment. This also translates to the consumers in which the business is serving whether the products being delivered to them are safe and healthy to their consumption. Corporate social responsibility carries many questions that need to be answered while carrying out any business venture. Some of the questions are how legitimate the company makes its profits. This can be answered by the legal activities they do and if all the production is recognized by the law (Albareda, Lozano and Ysa 2007). Corporate social responsibility also seeks to answer the question of a fair distribution of resources in terms of wealth. All stakeholders are required to get an equal share of the company's wealth and the company should work hard to ensure that this is so. Another question that needs to be answered is whether the company should allow the government to decide any interest of the public and if the market should be given the responsibility of setting prices for some products (Brand Strategy 2007). Using the ethical theory, corporate social responsibility seeks to practice management theory which encompasses moral decision making which is meant for the good of the society. Corporate responsibility is voluntarily taking on responsibilities and all companies should consider what is good for the welfare of the stakeholders this time not concentrating on the economic status and the legality of a business (Fry, Keim and Meiners 1982). This requires a lot of sacrifice while dealing with corporate responsibility as many are the times some important things have to be foregone and some aspects such as integrity and fairness be practiced for any decision being made (Sun 2010). Corporate responsibility embraces two major factors being environmental and societal while in their business operations where they have to act in a voluntary manner as they interact together. Corporate social responsibility on the other hand can be defined as the commitment in which a company has which can either be socially or economically that seeks to consider all stakeholders interests (Carroll and Buchholtz 2006). Three views are taken into consideration while discussing corporate social responsibility as there is the classical economic view, the social view and maxical social view. Using the case study of ‘Tobacco Companies and Product Safety’, the discussion will give an explanation of the expectations of a company with regard to corporate social responsibility relating to the three views. In the classical economic view, the goals and aims in businesses are different from each other hence any business should have their unique organization and strategic goals to achieve. For this to be efficient there has to be a certain performance criteria that should be used to measure a company’s growth (Griffin and Mahon 1997). In a classical approach, the main goal is the creation of profit hence does not deal with any social concerns about their stakeholders and leaves other organizations to take the responsibility of being concerned about the welfare of the stakeholders. This has been a similar case in the cigarette manufacturing company whose aim was purely to make a profit and did not have any concern about the risk the company was giving its consumers (Asongu 2007). It can be concluded that the company was purely based on a classical economic approach in their corporate social responsibility. In Milton Friedman’s opinion, he presents three arguments where there is the free society argument, agent –principle argument and the taxation argument. Under the free societal argument is the classical view that sees a reduction of anything to result in reduction of something else. Taking the example of profit, if lowered, it will result to shareholders losing in terms of their share capital. If prices are increased, this will result in customers going for substitutes .This represents a lower efficiency in terms of everything which translates to most companies not taking this as the best preferred approach. Tobacco companies are in business mainly to make profits but at the same time, this profit should be made while adhering to the stipulated rules and regulations set by the government (Allen and Husted 2006). As stated by Friedman, a society can only be rendered free if a business fully maximizes its resources with the aim of generating profit and abide by the rules of the game. This in other words may mean that the business is free of fraud and has a free competitive ground to play in (Friedman1962). The social economic view deals with ethics and the responsibilities that a business is entitled to and takes little emphasis on the profit that the business makes. This can be said to be the moral approach that businesses have and any affirmative duties that makes the company produce products that are meant for the safety of the consumers. This view gives much consideration on ways and means of promoting safety and deals with steps of preventing unforeseen harm to consumers (Stigson 2002). The social economic view sees the management to be a system that takes charge of environmental risks hence carries out intensive research that is meant to conserve resources and at the same time give maximum protection towards the environment. Using the Kew Garden principles, he defines sins of omission to be sins of commission meaning that the acts done are out of negligence hence the company is guilty of being charged for harmful effects of any manufactured products. Broad social view otherwise known as broad maximal view relates to social problems that a corporation is meant to intervene in order to shape the society at large. A corporation is under obligation to be involved in the society meaning that they should aim at the proper utilization of resources. This means that their interest should not only be present oriented but also future oriented in order to cater for future generations (Spence, Habisch and Schmidpeter 2004). For this to be possible, a business should have a competitive advantage over other businesses so as to stay ahead of others. Some of the activities that a business should involve itself in is being innovative in the creation of their products. This comes with taking precautions on the health effects of the products being manufactured and whether they can affect the consumer in the long term. To be ethically appreciated in the society, a business has to combine the input with the processes and measure it against the output which should relate to consumer response. Tobacco companies have been faced with societal problems where the input and the processes have been measured against the profits were gotten (Siegel and Vitaliano 2007). As in the case study, many companies have incurred a lot of revenue out of cigarette sales, but these profits do not reflect corporate responsibility as most advertisements are done with no caution of the negative effects and to add more harm, the advertisements are even directed to children. With corporate social responsibility, there comes a question of if it is wise for a company to self regulate itself or the government should intervene in giving directions as to the proper ways of being socially responsible. According to KPMG (2008), there has been written standards of how any registered company should be responsible hence there should be constant monitoring and inspection of how profits are being generated and possible areas where discipline should be accorded. The government comes in to ensure that public interest is upheld using the legal regulations set up by the government. As stated by Milton Friedman, it is the responsibility of the government to ensure that morals are upheld by all business ventures. By installing moral standards to a business, the government helps it to avoid situations of experiencing negative competition hence generation of creative profits from the consumers. On the other hand, government regulations seem to act as a drawback in generations of more profit as the profit generated should be taxed and this brings about efficiency reduction (Jastram 2007). With a lot of government intervention in a business, businesses are restricted in what they may want to do hence it becomes cumbersome to create more profits. When there is no intervention from the government, a business takes charge of areas it should be responsible hence the principle of autonomy is practiced. This makes them to be rule makers and have a flexible approach towards dealing with corporate responsibility issues. Through self regulation, punishment imposed on wrongdoers is lenient but at the same time it becomes a challenge as wrongdoers may be highly protected and escape fines .From the case study, the Department of Justice ruled out that the tobacco companies are liable to the risks exposed to its consumers (Waddell 2000) .Though making a lot of profit, the companies have been making advertisements that do not give caution to their consumers advising on the risks one is exposed to. The target market of children does not obey any rule of being socially responsible as this does not serve as public interest indicating that the companies practice negligence towards their consumers. References Albareda, L., Lozano, JM & Ysa, T 2007. Public policies on corporate social responsibility:The role of governments in Europe. Journal of Business Ethics, 74, 391–407. Allen, DB & Husted, BW 2006. Corporate social responsibility in the multinational enterprise: Strategic and institutional approaches. 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