Corporate Governance and Social Responsibility in British American Tobacco - Case Study Example

RРОRАTЕ GОVЕRNАNСЕ АND SОСIАL RЕSРОNSIBILITY Name Course Instructor’s name Institution affiliation Date СОRРОRАTЕ GОVЕRNАNСЕ АND SОСIАL RЕSРОNSIBILITY British American Tobacco The term “corporate social responsibility” has been claimed to be a sugar coated term used by Multinational Companies to foster their popularity and reputation in disguise of their philanthropic acts. Corporate Social Responsibility roots can be traced to the 19th Century when large corporations engaged in philanthropic work which led to them gaining a great amount of popularity. This therefore led to actions by these Multinational Organizations being a “noblesse oblige”. However, with the emergence of civil rights, environmental movements and global peace the notion of these corporations returning more to the society was developed. This paper aims to review the corporate social responsibility of British American Tobacco multinational company by reviewing the egoism moral theory and using the social and economic strategic issues to support it. Introduction Since the formation of the British American Tobacco company when Imperial Tobacco of the United Kingdom and American Tobacco of the United States joined, it has faced a lot of social stigma globally. This is attributed to the company controversies associated with pollution and its product posing extremely harmful risk to human health. Despite the efforts of this multinational corporation appearing to dissuade the youths from smoking it has led to the perception that it is portraying smoking as an “Adults only” activity which also poses great health risk to the human lives(Muggli, 2007, pp.195-202). In this case, British American Tobacco Company is claimed to have reached a point where it no longer denies that its product poses extreme health risks to the users and the non-users as well. Despite the company’s knowledge that Tobacco and its products are the leading cause of preventable deaths in the world today, the company went ahead and aligned itself with the evolving corporate by engaging in ‘corporate social responsibility’. This was claimed to be a move by the company’s investors to somewhat cleanse the name of the company since it is evident the tobacco industry it quite lucrative for all the players, share holders and stake holders (Ibrahim, 2010, pp.233). Literature review This was followed by British American Tobacco being involved in intensive corporate responsibility that involved; supporting education through giving grants and scholarships. This is viewed as a way for this multinational corporation to buy silence and complacency from these institutions which would normally oppose them. On the other hand, this multinational company also engaged in community development projects for instance elimination of drought and hunger. In line with this, it was also involved in other community projects such as public health awareness where it used this as an opportunity to portray itself publicly as a multinational company that is concerned about health (Hirschhorn, 2008, pp.447-453, pp.447-453). The British America Tobacco company therefore turned its engagement in corporate responsibility as a PR stunt that was meant to cleanse the organization bad reputation. This is evident with the organization’s action where it changed the name of its affiliate company Philip Morris to Altria Group which helped the organization to distance itself from its affiliation with tobacco which was engrossed in the public mind (Chapman, 2009, pp.445-447). In addition to this, it can be argued that British American Tobacco rather extreme efforts in embracing corporate responsibility might be a result of the company restriction in advertising their products openly therefore, they have embraced corporate responsibility as a strategy for this company putting its name out there in the public. Henderson, (2014) points out at Corporate Social Responsibility as “global Salvationism” which causes a significant rise in cost and desirable regulation for business as well as economic freedom for multination corporations (Burton, 2010, pp.1089). However, Gerald, (2013) claims that those powerful corporations should be keen to act like citizens where they possess a moral conscience through corporate responsibility since “it is the right thing to do,” The Council of Sustainable Development, 2013 counters this argument by claiming that corporate responsibility nowadays has been swayed in the favor of huge multinational companies by creating for them incredible goodwill and customer loyalty. In addition to this the United Nation anti-globalization report of the year 2014 pointed out that portray the multinational corporation sign-on to the corporate responsibility call as a mere “bluewash” where these multinational corporations are simply hiding their malfeasance on the danger that they pose to the society in general through their goodwill actions portrayed as adherence to corporate responsibility (Brown, 2007, pp.76-80). Christian Aid, 2012 scratching denunciation of Corporate Social Responsibility also supports this claim. She points out that these multinational corporation have turned CSR to PR stunts which have been used to put its footprint out here in the market and a strategy to block the attempts to for the establishment of regulation on these companies claiming that this would be bad for their profits and the society in general will also suffer since they will be forced to put a halt on their Corporate Social Responsibility activities. In this case, she claims that these multinational corporations are the worst corporate responsibility abusers since they appear to be unrestrained. Henderson, 2014 also claims that that a majority of these multinational corporations take up the Corporate Social Responsibility initiative less out of conviction and as a strategy to deflect criticism (Ahenkora, Banahene and Quartey, 2013,pp.4). In this case, she claims that the commitment of these multinational corporations is more apparent than real. In addition she points out that this is a well-considered response in the present day business environment to attacks, suspicion and pressure. She also claims that this is a naïve move by these multinational corporations and in the long end it’s likely to damage the free market economy (Ibrahim 2010, pp.229). David Nicoli, during the investigation of Phillip Morris investigation for products health risk to the public in general argued that Philip Morris being a multi-faceted corporation it was concerned with issues that were beyond tobacco for instance; human rights, and child labour. Therefore, there was need to for necessarily creating an ethical corporate code of conduct focused on starving off anti-corporate attacks. This shows that British American tobacco used corporate responsibility a strategic move to block the attacks and pressure imposed on the company by lobby groups on the health risk that its products to the public in general (Brown 2007, pp.76-80). Case discussion The British America Tobacco engagement in corporate responsibility can be characterized by the theory of egoism. In this case, this theory claims that one’s action should be motivated by oneself. This theory centers on two variants the normative and descriptive. The descriptive is guided by the argument that individuals are motivated by their own interest while the normative variant argues that individuals should be motivated disregarding what motivates them. In this case, these two variants are applicable in the case of BAT, the corporation has appeared to manipulate its corporate responsibility for its own gain in order to put its self out there in the market. Hence, this corporation never really change rather it simply an alteration to appease the market, no matter the warnings they display on their products (Brown, 2007 pp.78). The corporation actions which are characterized by its need to be profitable through putting itself out there in the market and marketing its self through its good will through the corporation engagement in corporate responsibility can be backed up by the figure below of the pyramid of Corporate Social Responsibility. In this case, the corporate responsibility engagement British American Tobaccos similar to any other transnational corporation was an evident strategy for the corporation to regain the investors’ confidence and the public’s trust (Chapman 2009, pp.446). Thus, this corporation was seen to be extremely involved in corporate social responsibility in the wake of court the court cases against Tobacco Company’s advertising due to the health risk that their products have on the public in general. consequently, this corporation disguised under the “corporate social responsibility” (CSR) which it manipulates as a method to put itself in the market substituting the loss it has earlier experience regarding to advertising. BAT has contributed to the evolving of the capitalism markets especially in the tobacco industry (Muggli 2007, pp.197). This has given these multinational companies power to manipulate the law and the market in general for their own self interest despite the consequences that might occur. In this case, as evident British American Tobacco Company through its engagement in corporate responsibility was able to mitigate the future lawsuits against the company, restore its battered reputation and able to put itself out there in the market therefore ensured that it remained competitive. Conclusion It is evident that multinational corporation through embracing corporate social responsibility are able to have a great influence in the global market. This has therefore guaranteed these multinational corporations sustainable growth since their presence continues to be felt in both the local and global market through their engagement in corporate responsibility. The need for CSR has led to a strong corporate governance structure where companies are spending millions on public relations activities to appeal to more customers while maintaining a good image.On the other hand, it is also evident that corporate social responsibility (CSR) can induce these multinational companies to act as moral agents and evolve as market capitalism leading to a lot of compromise as outlined by Kohlberg. In this case, the case of British American Tobacco Company is the perfect example of this occurrence. References Ahenkora, K., Banahene, S. and Quartey, J. 2013. Societal Value Antecedent of Corporate Social Responsibility and Business Strategy. Journal of Management and Strategy, 4(4). Top of Form Bottom of Form Anderson, S. 2009. Every document and picture tells a story: using internal corporate document reviews, semiotics, and content analysis to assess tobacco advertising. Tobacco Control, 15(3), pp.254-261. Brown, B. 2007. Part IV: How Do Reputations Affect Corporate Performance?: Stock Market Valuation of Reputation for Corporate Social Performance. Corporate Reputation Review, 1(1), pp.76-80. Burton, B. 2010. Tobacco company prepares its first social responsibility report. BMJ, 323(7321), pp.1089-1089. Chapman, S. 2009. Advocacy in action: extreme corporate makeover interruptus: denormalising tobacco industry corporate schmoozing. Tobacco Control, 13(4), pp.445-447. Hirschhorn, N. 2008. Corporate social responsibility and the tobacco industry: hope or hype?. Tobacco Control, 13(4), pp.447-453. Ibrahim, J. 2010. Public health foundations and the tobacco industry: lessons from Minnesota. Tobacco Control, 13(3), pp.228-236. Muggli, M. 2007. Tobacco industry strategies to undermine the 8th World Conference on Tobacco or Health. Tobacco Control, 12(2), pp.195-202. Read More