The Purpose of Corporate Social Responsibility and its Application to Business - Term Paper Example

PAGE Corporate Social Responsibility Definition of CSR Corporate Social Responsibility is internal to an organization; it dictates the manner in which it has to plan about the courses of action it has to carry out with respect to the society. This term basically deals with the organization’s set of operations that it carries out for the welfare of the society while existing within itself. It helps the humanity in more than one ways, to train and educate them and to ponder upon issues, which can really change the fate of coming civilizations. It all comes under this heading of Corporate Social Responsibility. [Dave, 1997] Role played by Government and Citizens in CSR The Government must play its role in harnessing the skills attached with the corporate sector in finding out the better means in which it can benefit the society. For that certain loans and grants can also be fixed for a certain company depending on its market level in the business world. Extensive research has found that corporate responsibility is becoming an essential part of any company’s day-to-day undertakings. Thus, the responsibility played by the Government as well as the citizens in this regard should be quite eloquent and expressive. Their voice is given due value by the company and it does just about everything to get more and more customers and consumers which in turn excites it to search for better means to get the very same people. This, in turn, attracts the company to sponsor big events and sports galas, competitions as well as come towards social welfare works, which really benefits the society in more than one ways. Mr. Higgins, who completed a research on the local community, was not that enthusiastic about the role played by these companies in the social sector. People, according to him, were of the view that these companies filled in social responsibilities to a certain limit and not beyond that extent where other large organizations jumped in and took the lead. For the small business owner, CSR means a different thing altogether. He sees it in a different attitude encompassing his own business and its responsibilities fulfilled for the betterment of the society or let alone none at all. Pros and cons of CSR The Advantages Corporate Social Responsibility helps as a survival agent for any business in the new atmosphere of economy. By that it means whenever the economical climate changes, it favors the CSR that has been initiated by a business with respect to its role in fulfillment of the social responsibilities. This can be regarded as an advantage of CSR whereby the business gets a slight edge as opposed to the other ones in the corporate world who haven’t actually started with the idea of investing with consideration to the society in the forms of different sponsors, helping of non-Governmental organizations and the like. The Disadvantages The major disadvantage that CSR possesses within its fold is that it doesn’t have any profits in the short-term duration but hope can certainly be placed on the longer ones. This can be regarded as a short-term con, which can banish with the changing times of the business situation. [Leadbeater, 1996] Application of CSR to Business and its Purpose Corporate Social Responsibility can be applied to a business in a very innovative way. The company can invest in the social arena with much return in mind, not in the short-term but of course in the long run. Such is the example of Shell, which has introduced education programs for children all over the globe thus acting as a consumer-friendly company. People in return like to buy products of Shell because it gives them the pleasure that some proportion of the money earned by Shell would be spent on its different social and literary programs. [Cowe, 2000] Culturally, CSR can prove to be a very vital agent which can really highlight the problem areas of different people within a particular society and then go about correcting and reforming them in the best manner possible with the aid of funds and grants. This is the basic way in which CSR has been acting to do something for the sake of community welfare. The companies from the economic aspects can earn a due share with arranging all sorts of cultural activities in the name of charity that will benefit their cause and help the poor and needy. Tesco, which is a supermarket franchise, has been involved in Corporate Social Commitment ever since 1988. It formed a new team that had the mission of raising about 2 million pounds for Macmillan nurses, which was termed as the charity of that particular year. Thus, Tesco did its part in the field of community for the people and the Macmillan nurses in specific. Same is the case with Diageo, which is an international consumer goods company that highlights on the responsibilities of the corporate citizenship in its code of conduct. This policy encourages the community welfare work to its fullest from the company’s side. It has set up different programs in this very respect, one such of them is the Skills for Life program that gives the people a chance to come and discover their secret talent, attain new skills and know about themselves. Their Bartender project helps provide training and job experience for unemployed young men in Brazil. This is all community welfare work on the part of Diageo. Main Input: Corporal and Social Behavior together Corporal behavior is one, which has taken its base from the dealings of the business world. As such it has no direct or indirect contact with the social norms of human life but when we talk about Corporate Social Responsibility, this mixture of both these behaviors comes in the frame. When the corporal mannerisms interact with the society and its different manners and ways whereby it helps the society in various means, call it culturally or from the community point of view then this merger comes into reckoning. The society gains quite a bit from the corporal interaction and thus gives back much in return as well. It’s sort of a symbiotic relationship between the two where each benefits the other one. The business company, by helping the society in terms of different reforms and programs, gains a lot for the company’s overall standing between its competitors and all. The society, on the other hand, gets to make quite a lot as the business entity restructures the different people who are either illiterate or need help or are in distress. Controversies about Corporate Social Responsibility There are obviously many controversies whenever anything is done which involves the business doing something out of its actual set approach. The example here can be given of the company Enron for which the critics had said that considering the personal relationship between the CEO Kenneth Lay and the US President George Bush, the company would be rather listening and applying to Vice President Cheney’s energy policy process than any other single interest taking birth from within the company itself. Such kind of controversies can erupt anytime within any company that has set its mission to go about the process of carrying the Corporate Social Responsibility. Much has to be tackled whilst hundreds of obstacles come. CSR movement needs caution while promoting their achievements because there are many critics around who can question the legitimacy of a particular accomplishment and can sabotage it altogether. [URL: http://www.enron.com] Learning from CSR CSR can really get the best out of business companies and industries. When they find out that their market is in direct proportion to what they do in the social sector, they invest more and more which ultimately profits the society and the needy in particular. The citizens, no, matter what they feel about the corporal responsibilities they own to the society, must agree in principle that these business companies can really get the best out of themselves and help the society in more than one ways. Their commitment is loyal because this is the golden tenet of business, never to lie with the customer so how can they tell untruths and fool around people with false welfare works and the like. Application of CSR to Enron Enron was a company that rose from nowhere to being one of the America’s top ten companies in terms of its size and employees. It employed around 21,000 workers in nearly about 40 nations of the world. This company’s name is synonymous with the bi-word for corporate irresponsibility. Enron was all at ease with the CSR reporting, environmental and community programs in the society but within years this company came down to its feet. This is the same company that boasted Fortune Magazine’s Most Innovative Company in America for six successive years. Problems with Enron The company had been estimating itself as a highly profitable one, one that had gained much of the market share. But all this was untrue. This image rapidly changed and saw the company hiding debts of a large sum. They were being concealed so that they didn’t show up on the firm’s account books. The company was also entailed in political lobbying whereby it had a large number of legislators close to the firm in one way or the other. This point should have saved the company from its changing image in the global market but it didn’t happen that way. People started inquiring about the degree and appropriateness of such closeness between the business and the politicians. They also asked how the company had resisted the political influence for so long. Also, the firm’s accountants were found involved in the slicing of Enron’s accounts’ documents. These documents listed a fair scale of involvement. Enron could have prevented these problems much before it actually encountered them. The company should have avoided political lobbying at all costs and should also have invested in the social sector as its primary duty to the society. The top heads of the company were more towards the political framework of the country, which really hampered the progress of Enron as a business unit. People started to question all sorts of claims made by the company that it was the most profitable one. Much was needed to be answered when the accounts’ documents were found implicated by the accountants of the company. The company, speaking from an ethical point of view, should have concentrated more on the welfare of its workers and the society but its entailment with the politics really ruined its status worldwide and nearly pulled its name out of the top American companies. It ought to have followed the code of ethics that are set to be adhered by every business company. The Government regulation body should have imposed certain restrictions on the company’s involvement with the political set up. It could also have made it obligatory for the company to follow the norms like the other business giants do, failing whereby they could be imposed upon certain sanctions legally as well as otherwise. CSR as a Regulation Factor & Corporate Governance Corporate Social Responsibility can regulate the workings of the company and serve as a welfare organization for the masses of a particular society, thus boosting the market as the competition will increase between the different corporals, which will, in the long-term, only benefit the society. It would also fulfill the role due on the business companies’ part. Thus the role played by CSR with regards to the corporate world of present times is immense and cannot be denied its due place in the scheme of things. Sources Dave, Responsibilities Under Spotlight, The Evening Standard, 1997 Leadbeater, New Statesman, 1996 Cowe, Consumer Pressure Is Not Enough (Corporate Social Responsibility), 2000 Online: http://www.enron.com Word Count: 1,932 Read More