Corporate Social Responsibility - Example

Corporate Social Responsibility Name Course Name and Code Instructor’s Name Date Executive Summary A company that has a good and comprehensive corporate social responsibility is committed to continuously improve the quality of life of its workforce, customers, local community and the society. Corporate social responsibility oblige companies to move from a singular objective of maximizing profits and invest in improving the economic and social standards of community within which they operate. In these regard, companies are called upon to incline their commitment and operations to corporate ethics and Corporate Social Responsibilities, for instance, nurturing corporate culture that emphasizes business practices that value the society. For instance, any business organization is required to undertake its operations in a manner that is consistent with the societal expectation with regard to its morals and ethical norms while recognizing and respecting the new and evolving ethical moral norms adopted by the society. Outsourcing is the process of contracting business functions to someone else; it involves contracting out those business activities that were performed in-house to an external provider. Global outsourcing entails outsourcing operations across the border of the company’s home country (De Jongh & Prinsloo, 2005). A company adopting global outsourcing strategy seeks to achieve competitive advantage. The success and market dominance of any company depends greatly on its ability to create a sustainable competitive advantage over its competitors. Global outsourcing increases the ability of the client company to deliver superior products value to customers and hence it can earn above-average returns. The importance of CSR in outsourcing is eminent to both the service provider and customers; for instance, customers always consider the CSR capability of the service provider before making an outsourcing decision (De Jongh & Prinsloo, 2005). This implies that if customers place high value on CSR then the same must be reciprocated by the service provider. Table of Contents Executive Summary 2 Table of Contents 3 Introduction 4 Critical analysis of ethics, and corporate social responsibility 5 Lower operating costs 7 Brand Image and Customer Loyalty 7 Employees Recruitment, Retention and Productivity 8 Access to capital: Socially Responsible Investing 8 Risk Management 8 Critical analysis of CSR and global outsourcing 9 Benefits of Global Outsourcing 10 Cost efficiencies 10 Improved focus on core business 10 Access to World Class Capabilities 10 CSR Issues of Global outsourcing 11 Conclusion 13 Recommendation 14 Bibliography 14 Introduction Corporate Social Responsibility is business organization’s continued commitment to behave ethically while contributing to the economic development and improving the quality of life of the workforce, customers, their families as well as the local community and society at large. For any business firm to be socially responsible implies that not only will it be fulfilling its legal obligations but also going far beyond compliance and investing heavily in human capital, environment and relations with stakeholders (Anglo American, 2002). In essence, CSR compels business organizations to diversify from the singular aim of maximizing profits and channel their efforts in improving the economic and social standards of the communities within the countries they operate. In simple terms, CSR is the additional commitment by a business firm to improve the social and economic status of the various stakeholders involved as well as complying with all the legal and economic requirements (William et al., 2006). Owing to this definition, this report is focused to critically analyze the benefits of corporate ethics and corporate social responsibility; issues surrounding global outsourcing and corporate social responsibility; and give recommendations as to what the board of directors of Australian Vacuum Pump manufacturing Company need to know about of ethical and corporate social responsibility before making an outsourcing production decision. Critical analysis of ethics, and corporate social responsibility As aforementioned in the above discussion, CSR is a business strategy that focuses on long-term profitability of the business by taking on active role in the development of the community, the economy, and the environment through good business practices. The current world has become smaller and markets have been made more accessible through globalization. However, due to global ethical and corporate forces, small and large business enterprises alike are compelled to adopt CSR practices for them to persistently remain competitive both locally and on international markets (Wayne et al., 2010). Consequently, consumers and communities the world over are highly sensitive to business practices of companies operating in their society rather from which they buy goods and services (Bhattacharya, Sankar and Daniel, 2008). It has been established that customers prefer and are supportive of business organizations that they perceive as concerned with their general welfare through business practices rather than the employment opportunities offered. Given the above discussion, business firms are obligated to be committed to corporate ethics and Corporate Social Responsibilities, for instance, nurturing corporate culture that emphasizes business practices that value the society (William et al., 2006). For instance, any business organization is required to undertake its operations in a manner that is consistent with the societal expectation with regard to its morals and ethical norms while recognizing and respecting the new and evolving ethical moral norms adopted by the society (Burton, 2000). Additionally, the firm should make sure that the society’s ethical norms are not compromised in the course of pursuing organization’s corporate goals. It is important for business organization to recognize that corporate integrity and ethical behaviour go beyond mere compliance with corporate laws and regulation. Corporate ethical responsibilities of a firm encompasses ethical norms about fairness and justice; in essence it embraces those activities and practices that are expected or prohibited by societal members, however, they may not be included into the law. For instance, they reflect consumers, employees, shareholders and the society identify as fair, just, as well as protecting shareholders moral rights (Burton, 2000). Ethical responsibility is a legitimate CSR component and therefore should be highly fostered in all organization’s business undertakings. For instance, in order for the firm to be ethically responsible it needs to come up with a code of ethics that is essential in stimulating corporate social responsibility and reinforcing the underlying values. Consequently, training on code of ethics is vital in making sure that ethical; values are deeply ingrained in the organization (Walther, et al., 2007). Corporate Social Responsibility as earlier mentioned is the continuing commitment of a business organization to behave ethically while contributing diversely to the economic development and improvement of the quality of the life of the workforce and their families together with the local community and the society. It is also defines how the firm manages its business processes to produce overall positive impact on the wider society. For a company to be socially responsible means that it contacts its businesses in ethical manner and in the interest of the wider community; responds positively to emerging societal priorities and expectations; willingness to act a head of regulatory confrontations; balancing shareholder interests against the interests of the wider community; and being a good citizen in the community. CSR works hand in hand with business ethics as they both gear towards values, objectives and decision based on not only pursuit of profits but also the welfare of employees, shareholders and the wider society. Socially responsible firs always act ethically (Wayne et al., 2010). Corporate Social Responsibility can be categorized into the following dimensions; economic – the responsibility to earn profit for shareholders, legal – an obligation to comply with law, ethical – the firm should not only act for profits but also doing what is right, just, and fair, voluntary and philanthropic – the firm should promote the welfare and goodwill of people, and being a good corporate citizen contributing to the community and the quality of life (Anglo American, 2002). The CSR has the following benefits to the company: lower operating costs, enhanced brand image, increased productivity, increased customer loyalty, better access to capital, and improved financial performance. Each of these advantages will be discussed independently. Lower operating costs This fact is obscured to companies that are socially irresponsible as it seams contradictory to what is primarily required. However, a company that decides on being environmentally responsible implies that it will cut on the initial fuel costs. This may demand huge initial investment in for instance the use energy efficient vehicles and appliances will ultimately reduce operating costs in the end. The same applies to minimizing water usage and maximizing the use of recycled materials (Walther, et al., 2007). Brand Image and Customer Loyalty This is the most significant and vital business benefit of CSR; for instance, the positive impact that the latter has on the brand image and customer is huge. In fact, a company that is known and recognized in the public domain to be socially responsible and ethical, and markets itself as such, it will probably strategically position itself in a competitive market. Business firms that have good and comprehensive CSR policies have been found to build customer loyalty while increasing positive public perception of the company (Burton, 2000). For this fact it is essential and crucial for companies to promote CSR policy in order to increase the purchase intend. Employees Recruitment, Retention and Productivity Studies have established that potential employees are highly interested in CSR policies of potential employers. Companies with excellent social responsibility record always attract and retain best employees (Carroll, 2000). Consequently, employees who work for socially responsible firms are always highly motivated and satisfied in their jobs. For instance, they know that they are working for a firm that recognizes the greater good of the society and the planet at heart. Access to capital: Socially Responsible Investing It has been largely established that potential investors are highly interested in CSR policies of companies they invest in: especially in aspects associated with the environment and human rights. Business firms with good CSR policies attract investors to invest thus increasing their capital base. Emphatically, companies that are socially responsible will have greater access to larger capital base. Risk Management Companies that are socially responsible monitors and take responsibility of their own actions: with regard to this fact, they work to minimize their impact on the environment. They work fairly and closely with their stakeholders while contributing to the greater good of the society through volunteering programs (Carroll, 2000). If the larger public, the media, the government and regulators view that all these is correctly and genuinely happening, the company will be building reputation that is vital for its entire business operations. Public perception of the company can affect it to the better or to the worst (Burton, 2000). Critical analysis of CSR and global outsourcing Outsourcing is the process of contracting business functions to someone else; it involves contracting out those business activities that were performed in-house to an external provider. In this case, two or more organizations can enter into an agreement, which involves the exchange of service and payments (De Jongh & Prinsloo, 2005). Outsourcing helps firms perform well in their key competencies and hence mitigating expertise shortage particularly in areas that they want to outsource. When outsourcing operations crosses the border of the client company’s country then it becomes global. A company adopting global outsourcing strategy seeks to achieve competitive advantage. The success and market dominance of any company depends greatly on its ability to create a sustainable competitive advantage over its competitors (Vogel, 2005). In essence, globalization and global out sourcing create s an operating environment that is quite different from the national or local levels which is at times not predictable. Global outsourcing increases the ability of the client company to deliver superior products value to customers and hence it can earn above-average returns (Eisingerich et al. 2011). Competitive advantage is particularly gained when products are efficiently and effectively produced by global suppliers. The client firm can get cost advantage by successful global outsourcing. Consequently, the latter provides access to superior quality for instance product differentiation, which is key for the company to focus on a specific niche. Benefits of Global Outsourcing Cost efficiencies The main drive behind global outsourcing is cost reduction. Extensive studies about outsourcing global outsourcing practices revealed that company outsource to save on overhead or reduce short-term cost savings. Complete product development for companies is at times expensive requiring huge investments that are geared towards improving the product through continuous research and technology development. Outsourcing is the solution for reducing cost of the client company (De Jongh & Prinsloo, 2005). Improved focus on core business Across the globe, companies have some activities that are less essential as compared to its core business functions. Through outsourcing of non-core business operations, the company will enhance its focus on its core business in a better way. In this regard, the efficiency of the company will increase as more time and resources will be invested only in the core business functions Access to World Class Capabilities Through outsourcing, the company can produce customized products and services that may not be possible to be produced internally. In this case, the vendor company may have enough expertise and capabilities to produce products and services that meet customer demands on large scale something that the client company may not be able to accomplish. Consequently, vendor companies have dealt with similar events and challenges working with other different companies and hence have diverse knowledge of what the consumers need (Vogel, 2005). CSR Issues of Global outsourcing A company going global implies that it adopt network based operating models across different countries, regulatory regimes and cultures. This extended form of enterprise operation significantly enhances the efficiency and effectiveness of the company while improving and creating competitive advantage (Ron & Bill, 2009). Despite all these, network-based operating models have culminated into complex relationships between corporate domains and between corporations and their external operating environments (Carroll, 2004). In essence, the growth and complexity of the supply chain and moving to global outsourcing is increasingly becoming difficult in ensuring that similar conduct down the supply chain. For instance, they must ensure that boundary issues like human rights, labour standards, environmental care and occupational health are being dealt with through programs that ensure consistency of treatment and minimum standards taken into consideration. Outsourcing means the mother organization contracts a secondary firm to perform its business activities. In this regard, requirements concerning contract performance including technical specification of the product/works/services and other special conditions must be adhered to. Achieving socially responsible global outsourcing requires the mother organization to set CSR requirements that must be met in performing the contract (Ron & Bill, 2009). For instance, the client organization and the contracted firm must adhere to CSR conditions in order to make the contract positive or neutral from social responsibility perspective. Owing to this, the first-tier organization must ensure CSR requirements safeguard employees of the contracted firm while also ensuring that the contracted firm business activities have no negative environmental impact. Global outsourcing is an unstoppable trend and so are the overall expectations for CSR, in fact it has been established that CSR expectations have doubled over the past three years. For instance professionals across the board believe that being socially responsible is a worth business policy. As aforementioned, potential employees prefer working for a socially responsible company or employer. In these regard, global outsourcing firms must significantly and strongly emphasize on CSR for vendor companies in order to gain more competitive advantage (Ron & Bill, 2009). In this essence, the client company must have a CSR emphasis particularly on human resources and community involvement (Carroll, 2004). For the service provider to be socially responsible, it should adopt the UN global Compact while participating in the Global reporting Initiative (GRI), the Carbon Disclosure Project (CDP) while also adopting relevant ISO standards (De Jongh & Prinsloo, 2005). Employee’s health and safety, community involvement, philanthropy and environmental responsibility must be fostered by services providers while also making sure that the outsourced firms adhere to these CSR issues. Different countries have different regulations covering different CSR issues like fair wages together with occupational health and safety; however global CSR legislative framework is not uniform and consistent. In this respect, the client firm must ensure that the contracted firms comply with the local CSR regulations to make sure that its image and business operations are not negatively impacted. In the same line of argument, outsourcing buyers have found lower wages in developing countries, which often go hand in hand with lenient social responsibility requirements. Owing to these facts, outsourcing is viewed as one way of distributing wealth on global perspective (Ron & Bill, 2009). The importance of CSR in outsourcing is eminent both to the service provider and customers; for instance, customers always consider the CSR capability of the service provider before making an outsourcing decision. This implies that if customers place high value on CSR then the same must be reciprocated by the service provider. It has been also established that globally outsourcing firms place strong emphasis on CSR as an important component of their business. In this regard any company intending to globally outsource must address CSR issues regardless of its size or market position (Ron & Bill, 2009). Customers expect CSR capabilities and providers plan to deliver. Consequently, it is important to note that there is no distinct evidence with regard to resistance against CSR in any industry or region across the globe; in fact the global community prefer or favour companies that have comprehensive CSR policy that address social, economical, political and environmental issues (Shumate and O'Conner, 2010). Using socially responsible outsourcing (SRO) which is an outsourcing model where a firm operates strategically to yield social benefits in addition to its traditional commercial revenues to the service provider. In this essence, the SRO firm will be located in a marginalized region employing individuals from a disadvantaged population with a single most aim of alleviating their impoverished status while also improving the general livelihood of the community at large (Vogel, 2005). Conclusion The twenty-first century business environment is highly dynamic; marketplace and businesses are conscious of the moral and ethical context within which they must operate to make sure that they continually attract and maintain potential employees as well as long-term customers. Accordingly, the vital aspects of being economically, environmentally and socially active and responsible are another area that businesses have found to greatly impact their business operations. Including tenets of Community Social responsibility in their entire business operations has been found to add value to the community while benefiting the company at the same time. Global outsourcing is an essential strategy restructures the company to seek to achieve competitive advantage. The success and market dominance of any company depends greatly on its ability to create a sustainable competitive advantage over its competitors especially through global outsourcing. Incorporating CSR in global outsourcing improves the company’s global image thus enhancing its competitive advantage. Recommendation The company must ensure that boundary issues like human rights, labour standards, environmental care and occupational health are being dealt with through programs that ensure consistency of treatment and minimum standards taken into consideration. This will enhance the acceptability of the company in its new operational environment. Achieving socially responsible global outsourcing requires the mother organization to set CSR requirements that must be met in performing the contract. For instance, the client organization and the contracted firm must adhere to CSR conditions in order to make the contract positive or neutral from social responsibility perspective. For the company to be socially responsible, it should adopt the UN global Compact while participating in the Global reporting Initiative (GRI), the Carbon Disclosure Project (CDP) while also adopting relevant ISO standards for it to wholly comply with global business operation standards. Bibliography Anglo, A. 2002. Good Citizenship: Our Business Principles. London: Anglo American. Burton, B. K., Farh, J.L. & Hegarty, W. H. 2000. A Cross-Cultural Comparison of Corporate Social Responsibility Orientation: Hong Kong vs. United States Students. Teaching Business Ethics, vol. 4, no. 2, pp. 151-167 Bhattacharya, C.B., Sankar, S. and Daniel, K. 2008. Using Corporate Social Responsibility to Win the War for Talent. MIT Sloan Management Review, vol. 49, no. 2, pp. 37-44 Carroll, A. B. 2000. Ethical Challenges for Business in the New Millennium: Corporate Social Responsibility and Models of Management Morality. Business Ethics Quarterly, vol. 10, no. 1, pp. 33-42. Carroll, A.B. 2004. 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