Corporate Social Responsibility BMW - Essay Example

? Corporate Social Responsibility: BMW Table of Contents BMW - Background 3 2. Stakeholder demographics 3 3. Impact of the firm’s CSR on stakeholders 4 3a. Positive Social Performance 4 3b. Negative Social Performance 5 4. Conclusions about the company’s performance in society 5 References 7 Appendix 1. BMW - Background BMW is a leading firm in the global automobile industry. The firm is usually considered as being part of the luxury car industry, due to the quality and the price of its products. In 2010 the firm achieved a profit of 60,477 million (BMW Group, 2011). The firm’s employees globally are estimated to 95,453 (BMW Group, 2011) – in about 150 countries worldwide (BMW Group, 2011). The firm’s success has been strongly related to its CSR policies, an issue evaluated in this paper. 2. Stakeholder demographics In order to understand the performance of the firm in regard to the interests and the needs of its stakeholders, it would be necessary to identify primarily the demographic characteristics of these stakeholders. In the most common view, the term stakeholder reflects the groups of individuals who are most likely to be affected by the company’s operations, meaning its employees, its customers, its suppliers and the community. In accordance with Freeman and Reed (1993) the key criterion for identifying the stakeholders of an organization is their relationship with the organizational objectives. In this context, it is noted that the term ‘stakeholders’ is used in order to describe ‘the groups of individuals who affect the organizational objectives but also those who are affected by the organizational objectives’ (Freeman and Reed 1993 in Gossy 2008, 6). Another approach used for describing the term ‘stakeholder’ has been reflected in the study of Hill and Jones (1992) who presented the following definition: ‘the term stakeholders refers to groups of constituents who have a legitimate claim on the firm’ (Hill and Jones 1992, 133 in Gossy 2008, 6). Through a similar point of view, stakeholders have been characterized as ‘all those who have a stake in the enterprise’ (Donaldson and Preston 1995, in Bacher 2007, p.10). The above view, which is also known as the ‘Stakeholder Theory of the Corporation’ (Bacher 2007, p.10) recognizes the high value of stakeholders for the success of business plans and for the viability of an organization. In the case of BMW, it is explained in the organization’s website that the term ‘stakeholders’ is used for referring to the following groups of people: ‘Customers, business partners, employees, media, policy and scientific decision makers, non-governmental organizations (NGOs) and investors’ (BMW Stakeholders 2011). The response of the firm towards the interests of its stakeholders is explained below by referring to an indicative example: the Education programs developed by the firm in order to support the community. Reference is made, as an example, to the educational program that the firm developed in 2007 in cooperation with the Warwickshire Wildlife Trust (BMW Group, Community 2009). 3. Impact of the firm’s CSR on stakeholders BMW highly values its stakeholders. In fact, in accordance with its statement on CSR, the firm has been trying to focus on the needs of its stakeholders, taking into consideration their views on its CSR performance. Moreover, the suggestions of stakeholders on potential failures or gaps in the firm’s CSR are taken into consideration when the firm’s CSR is to be designed and applied. The above view is based on the following fact: in the context of its efforts to be informed on the views of its stakeholders on its CSR, the firm developed a stakeholder survey in 2006/2007. The survey, in which about ‘200 stakeholders from 21 countries worldwide’ (BMW Stakeholders 2011) participated it was revealed that the dialogue developed between the firm and its stakeholders is proactive and it has been welcomed by the stakeholders; moreover, it has been revealed that the firm’s CSR strategy is highly appreciated by the firm’s stakeholders, as made clear through the Graph 1, Appendix. 3a. Positive Social Performance The firm has made significant efforts in order to respond to the needs of its stakeholders. These efforts are indicatively reflected to the educational program that the firm developed in 2007 in cooperation with the Warwickshire Wildlife Trust (BMW Group, Community 2009). The above program aimed to give the chance to a number of pupils to be educated on the potential co-existence of technology and wildlife (BMW Group, Community 2009). About ‘90 children from 3 different schools in West Midlands’ (BMW Group, Community 2009) participated in the above program, which was supported by the employees of BMW but also the officers of the Trust. Through this program the firm proved that the effects of its activities on the environment are highly taken into account when its strategies are developed. Moreover, the firm proved that its R&D department continuously examines all potential methods, which could ensure the elimination of environmental damages because of the firm’s operations. Most important, through this program the firm proved that it highly takes into consideration the needs of its stakeholders – in this case, the Community – and tries to appropriately adjust its strategies and operations with their needs. Another clear message from the specific initiative has been the fact that the firm highly supports the intervention of its stakeholders in its activities; stakeholders can be informed on the firm’s practices and state their view on potential changes/ updates required so that the requirements of CSR to be fully met. 3b. Negative Social Performance In accordance with the issues discussed above, the firm has managed to develop a quite effective CSR strategy. However, even if the firm’s CSR framework is carefully designed, failures may occur, as in all organizations’ operations. In the case of BMW, the following negative aspect could be identified in the firm’s CSR performance: the price of the firm’s products is high, a fact which is justified because of the quality of these products but also because of the firm’s brand name. On the other hand, the firm’s products are usually regarded as indications of high social status, as also the products of all firms in the particular industry, the luxury cars industry. From this point of view, people are likely to be urged to acquire the firm’s products in order to enforce their position in the society, i.e. for improving their social image. At a first level, this behavior cannot be negatively criticized. Problem seems to exist in the following case: there are people who cannot afford to buy products of this category; however, their willingness for social recognition may lead them to borrow money in order to acquire the firm’s products. This behavior might be socially acceptable but it would lead to severe problems for the person involved, especially family and financial problems. From this point of view, the firm’s CSR strategy can be considered as also having a negative aspect, which, however, is difficult to be controlled, being related to the different human responses towards a particular marketing campaign. 4. Conclusions about the company’s performance in society The firm’s performance in society should be evaluated by referring to the positive and negative effects of its CSR policies, as these effects have been revealed through the indicative examples presented above. At the next level, it would be necessary to use relevant literature for justifying the assumptions made. As noted above, the firm has developed an important CSR project in 2007; the specific project proved the firm’s vulnerability to CSR issues; at the same time, it proved the appreciation of the firm’s activities by the Community – taking into consideration that the Trust which activates in the area of Wildlife accepted to cooperate with the firm. On the other hand, the firm’s CSR strategy may also have negative aspects, as indicatively explained above. However, these negative aspects cannot be considered as standardized, not being based on specific facts and events, just on assumptions for the potential response of individuals towards the firm’s marketing campaign, as explained above. Also, the above negative aspects actually involve in all the firms that operate in the particular industry, the luxury car industry, and for this reason they should not have a critical importance when evaluating the firm’s performance in regard to the needs of its stakeholders. At this point, the literature published in this field should be used in order to evaluate the firm’s performance in society. In accordance with Lawson (2008) the CSR strategy of a firm should not be interpreted using a utilitarian approach since in this way, the following unfairness would be developed: the interests of the majority would be ignored because of the interests of a minority – who would considered as having a critical role in evaluating the CSR performance of an organization (Lawson 2008, p.39). The above view justifies the assumption made earlier that the negative aspects of the firm cannot be considered as crucial being related to the interests of certain individuals and not to the interests of the public in general. On the other hand, Sims (2003) notes that CSR should be equally developed both in regard to the firm’s external and its internal environment (meaning its employees and shareholders/ investors). In accordance with the firm’s relevant statement (BMW Stakeholder 2011), the CSR of the specific organization addresses equally the interests of all stakeholders; no differentiations are made between stakeholders in the internal and the external environment. Thus, from this point of view also the firm’s CSR should be characterized as effective. Furthermore, Husted and Allen (2010) emphasize on the need for CSR to take specific, practical forms, i.e. not to be limited into well-structured plans, which are not realized. In BMW, such initiatives are actually undertaken, as proved through the educational program that the firm developed, as described above. At this point, reference should be made to the study of Paskert (2008) who considers the CSR as being related to the firm’s financial performance. Moreover, in the above study, a relationship between CSR and the customer loyalty is established, a fact explaining the trend of firms to emphasize on CSR policies – aiming to secure their position in the market, either locally or internationally. On the other hand, Freeman (2010) notes that the development of CSR is a common phenomenon in all corporations worldwide, especially those operating in the international market, a view common with that supported by Maurer (2007) However, it is made clear that not all of them achieve to develop effective CSR strategies, a fact which is reflected in their struggle to standardize their performance. The above fact is also highlighted in the study of Prasnikar (2006) where a relationship is established between the CSR and a firm’s financial performance. In the case of BMW, the success of the firm in the global market – as indicated through its financial performance – proves the success of its strategies, including its CSR policies. Moreover, the active involvement of the firm in CSR plans proves the willingness of the firm to promote CSR not just in terms of theory but practically, in its daily relationships with its stakeholders. References Bacher, Christian. 2007. Corporate Social Responsibility. Norderstedt: GRIN Verlag BMW Group. Stakeholders. 2011. http://www.bmwgroup.com/e/nav/index.html?http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/verantwortung/publikationen/sustainable_value_report_2007/01/stakeholderdialog.html BMW Group. Community. CSR Case Study Series, January 2009. http://www.article13.com/A13_ContentList.asp?strAction=GetPublication&PNID=1464 Freeman, Edward. 2010. Strategic Management: A Stakeholder Approach. Cambridge: Cambridge University Press Gossy, Gregor. 2008. A stakeholder rationale for risk management: implications for corporate finance decisions. New York: Gabler Verlag Husted, Bryan, Allen, David. 2010. Corporate Social Strategy: Stakeholder Engagement and Competitive Advantage. Cambridge: Cambridge University Press Idowu, Samuel, Louche, Celine. 2010. Theory and Practice of Corporate Social Responsibility. New York: Springer Lawson, Dan. 2008. Investigating a global axiology: Looking for a global leadership ethic. Ann Arbor: ProQuest Maurer, Marc. 2007. Corporate stakeholder responsiveness: an evolutionary and learning approach. Bern: Haupt Verlag AG Morschett, Dirk, Klein, Hanna, Zentes, Joachim. 2010.Strategic International Management: Text and Cases. New York: Gabler Verlag Paskert, James. 2008. The impact of corporate social responsibility practices on corporate financial performance and consumer loyalty. Ann Arbor: ProQuest Prasnikar, Janez. 2006. Competitiveness, social responsibility and economic growth. New York: Nova Publishers Sikka, Prem. 2000. Shareholder Capitalism: What happened to the stakeholder society? The Tribune, 15 December 2000, page 10 http://visar.csustan.edu/aaba/news15Dec2000.html Simms, C., Trott, P. 2007. An analysis of the repositioning of the “BMW Mini” brand. Journal of Product & Brand Management. 16(5): 297 – 309 Sims, Ronald. 2003. Ethics and corporate social responsibility: why giants fall. Westport: Greenwood Publishing Group Appendix Graph 1 – Views of BMW’s stakeholders on the firm’s CSR strategy – results related to a firm’s stakeholder survey in 2007 (Source: BMW Stakeholders 2011). Read More