Corporate Responsibility - Case Study Example

Corporate responsibility "Critically evaluate how corporate responsibility is being adopted by companies in relation to the current market environment. Use examples to cite companies of excellence as well as companies that could be doing more" Your name Your grade course Date Introduction Corporate responsibility is the way in which companies manage their businesses to create a positive impact on the society. It encompasses two broad views in general. The first one is that the companies share the wealth they create with either the society they operate in or other under privileged societies. The other is managing their activities in a more ethically and morally responsible way. It is the voluntary exceeding of the societys expectations of the business. It is unanimously agreed that it is majorly affected by how the company manages its core businesses. (Baker) Corporate Social responsibility is extremely important to a company’s business. According to a survey by the Economist Intelligence Unit, Corporate responsibility is affecting the relationship between companies and their various stakeholders, such as investors, customers, vendors, suppliers, employees, communities and governments. (Doebele, The Importance of Corporate Social Responsibility;2005) Underlying principles The Corporate responsibility trend is being driven by a large number of factors. Companies that do not engage in social responsibility might be viewed as unethical consumer trust in large organizations is already waning. The rise in the corporate governance movement, globalization of businesses and the competition by rivals, all contribute to a firm’s increasing interest in corporate responsibility. The benefits of corporate responsibility may prove to be never ending for an organization. They might not necessarily be tangible because of the heavy costs of corporate responsibility but the intangible benefits include brand enhancement, stronger employee morale and investor confidence. Corporate Social responsibility comprises of ethical and managerial principles to guide a business enterprise. This is because it deals with everything from corporate image, public relations, environmental liability, lawsuits, relations with governments and worker morale. These corporate responsibility principles are guided by another set of principles. The first principle is that the company’s products raise the quality of life. Three basic types of processes are identified to implement corporate responsibility principles. They include environmental management, issues management and stake holder’s management. There will be times when two or more of these management areas will be integrated to form one area of concern. For instance in 1994 BHP Billtons shareholders were concerned about the company causing environmental damage in Papua New Guinea. (Gail Thomas; 2006) The most important questions to be discussed while assessing a companys corporate responsibility would be corporate morality and business ethics in management. For large organizations it will include measures for transparency and trust. Simple measures to inculcate this would be to avoid bribery and end corruption in the status quo. Companies such as Unilever already present an example by halting operations in countries where a prepayment bribe is required by officers and by pulling out operations from countries where climbing the corporate ladder was not possible without bribery. (Fitzgerland) Another measure by which companies can perform corporate responsibility is by maintaining a diversity and equality. Maintainence of a workforce which is diverse in creed, age, color, gender and style without any discrimination is a symbol of a company being an equal opportunity employer. This is again evident from Unilever‘s statistics which show that show eight executive directors are drawn from six nationalities. Their top 200 leaders represent over 40 nationalities. 29% of their managers worldwide are women and 50% of our graduate trainees are women. Corporate responsibility can also be incorporated by a sheer regard for the worlds status quo. Companies in the developed parts of the world are investing their wealth in underdeveloped nations. They are developing communities and building bridges to ensure that they get access to basic needs like food, health and education .They share the wealth they create with people. Another aspect of corporate responsibility is producing goods that are safe to use without endangering the environment. Companies that make profits while polluting the environment and dumping their wastes here and there, fall in this context. Defected corporate responsibility is also practiced by organizations in which unsafe products are distributed to the market. These accidental errors like the one by Johnson and Johnson in 1982. Defamers laced the drugs with cyanide and people died as a result. For a long period of time Tylenol was associated with poison and the companys market value fell by $1bn. Though the breach of the code of conduct was accidental but the marks left on the company were very hard to remove. This was in spite of Johnson and Johnsons immediate actions to remove all Tylenol medications from the market when the event happened again in 1986. Even then the company learnt its lessons late as tamper proof packing of Tylenol was introduced after that. Companies that practice social responsibility: There are numerous companies who practice corporate social responsibility very effectively. One of the main examples is of Ben & Jerrys ice cream. From its initial pre-Unilever days, the company practiced the act of giving it back to the society. So much so, that the initial share offer of the company was limited only to residents of Vermont as the company started in Vermont. This shows that the company is giving back to the society it is drawing its support from. Its strong mission and goals are not only preached. It often practices what it preaches, even if it hurts the company’s revenues. For instance, the company stopped producing its once popular Oreo Mint in 1988. This was because it did not approve of doing business with Oreo supplier, tobacco giant RJR Nabisco. The company is also known for its philanthropic endeavors. It gave 7.5% of its pretax profits to charitable organizations as compared to an average of 1% by ordinary American firms. The company also initiated a Matching gift program when donations by its workers were equally matched by the company. According to the latest news Ben & Jerry’s has announced that all of its raw material will be acquired by Fair trade means by 2013. It also provides a very sweet benefit program for its workers, details of which would be too long to cite here. Of the 30 companies with the best reputation in corporate America, Ben & Jerry enjoys the fifth position. (The Best Corporate Reputations: American Public Picks Top 30 Companies in U.S.). Other companies which employ corporate social responsibility include IBM. It introduced the idea of a smarter planet. It is bringing "green chemistry" in action by being the industry first to eliminate all known uses of perfluorooctane sulfonate (PFOS) and perfluoro octanoic acid (PFOA) from its microprocessor manufacturing processes. IBM is partnering and striking deals with scientists from King Abdul-Aziz City for Science and Technology to develop the recycling processes for polyethylene terephthalate (PET) plastic. This chemical is a common plastic used in containers for food, beverages and other liquids. (IBM;2009) Companies which are not very effective in incorporating responsibility: On the downside there are companies which have been slammed in the media for not meeting the society’s responsibility expectations. One of these is Hershey, the chocolate giant. Hershey’s was blamed for not using transparency in ensuring the source of its cocoa. It was accused of using cocoa from West African farms which are forcing child labor. This greatly tainted Hershey’s image despite the fact that it was funding a children’s school. The companys first corporate responsibility report assures that it would "advance and fund programs that enhance livelihoods and ensure fair labor practices in cocoa-growing region" (Gail;2006) Thus corporate social responsibility has moved from periphery of business to centre stage as rightly said by Niall Fitzgerland, chairman of Unilever. Caring capitalism is definitely a trend to be continued. Works Cited Baker, M. n.d. Definitions of Corporate social responsibility. Retrieved October 24, 2010, from http://www.mallenbaker.net/csr/definition.php Doebele, J. 2005. The importance of Corporate social responsibility. Economic Intelligence Unit . Fitzgerland, N. CSR: Rebuilding Trust in Business. London,Unilever and London Business school. Gail Thomas, M. N. 2006. Corporate Social Responsibility: A definition. Perth: Graduate School of Business, Curtin University of Technology. IBM.2009. IBM Corporate Responsibility Report. Retrieved 20 Oct, 2010, from http://www.ibm.com/ibm/responsibility/report/2009/index.shtml The Best Corporate Reputations: American Public Picks Top 30 Companies in U.S. 1999. lexis-Nexis Academic Universe . Bibliography: Burgeois. 1980. Strategy and Environment: A conceptual study. Academy of Managment Review Jones, G.1995. Organizational Theory. M.A. Addison Wesley. Read More