Corporate Social Responsibility Adds to Brand Value - Essay Example

Title: Discuss the statement below in the context of Strategic Marketing: 1- Corporate Social Responsibility adds to brand value. Student Name: Course: Marketing Institution: Submitted to: Date Due: Introduction Corporate Social Responsibility (CSR) is how firms combine social, environmental and economic concerns in the firm’s values, culture, decision making, strategy and operations in an open and responsible manner. This creates better practices in the firm, wealth and enhances development of the society (Aaker, 1996). The characteristics of the triangular relationship between companies have changed in the previous two decades; the nation and the society have changed. CSR has increasingly become prominent because organizations have discovered that in addition to growing their businesses it is crucial to build reliable and sustainable relationships with the whole community. Elements of Corporate Branding (Kohli & Thakor, 1997) Engagement of Corporate Social Responsibility has numerous benefits to a corporation which have been discussed below. Fiscal growth Linking social performance (CSR) to financial performance has been of done in most empirical studies which mainly concentrated on demonstrating on the majority of the studies claiming to have revealed a systematic link between the two (Schmitt, 1999). The positive contributions of the Corporate Social Responsibility to market value are that it enables managers to invest in Corporate Social Responsibility where they obtain competitive advantages and reap more financial benefits. Specifically studies have shown that for “a typical company having a mean market value of approximately $48 billion, approximately $17 million profits on average in subsequent years for a one unit increase would result in Corporate Social Responsibility ratings (Chahal & Sharma, 2006). Reputational risk exposure reduction A corporate reputation often takes a long time to build, but can be destroyed in a second through fraud scandals or environmental accidents. Reputational breakdowns may be illustrated by Indian Union Carbide and US Big Tobacco. These reputational risks can be offset by being engaged in Corporate Social Responsibility (William, 1998). Brand image improvement and corporate reputation through positive Public relation Due to Corporate Social Responsibility positive media coverage improves the brand and corporate reputation. Philanthropy and other social activities (excluding cause-related) have “a high position impact on relationship and social measures of performance” it has been found that the “rate of charitable giving against profit is found to respond positively to public visibility.” This study suggests that corporations with high visibility (often consumer brands) are more likely than corporate with low visibility taking part in philanthropy to improve their corporate reputation in the eyes of society (Yoo & Donthu, 2001). Corporate Social Responsibility assists in building differentiation from competitors. The Body Shop can best illustrate this benefit. By companies concentrating on Corporate Social Responsibility they can maintain enduring relationships with stakeholders and convey a strong brand image and competitive advantage, which is difficult to imitate (Gary, R, & Rui, 2000). Enrichment of Customer devotion Currently Customer’s accessibility to information has increased thus this increases the risk of companies being found out for unethical practices. For example, in the 1990s criticisms of Nike’s operations in Asia forced the company to vary its manufacturing processes. Nike altered most of its labor; environmental and reporting practices, to enable it redeem its strong customer loyalty, and frequently insist on independent inspections of local subcontractors. It has been established that Corporate Social Responsibility which increases customer satisfaction which in turn leads to positive financial returns. It has been suggested that building satisfaction of customers which is a significant intermediate action in converting Corporate Social Responsibility into financial gains (Scott & David, 1991). Better culture, recruitment, motivation and staff retention The extent of organization culture and ethical values has positively impacted the economic performance (profitability, market share and sales volume); relationship performance (employees, channel members and consumers’ satisfaction and retention) and social performance measures (social return on investment (SROI). Corporate Social Responsibility has in addition to improving culture, has positively impacted staff recruitment and retention. It is always expected by the employees that their employer must poses an enlightened attitude to the community”. The consequence of Corporate Social Responsibility is a bonus in terms of stronger bond between staff and the organization and stronger motivation (Samli, 1998). This strong bond can be transformed into higher productivity, better quality of products, better and faster realization of the needed changes and innovations for instance the Esquel Group is part of the apparel industry with a big number of its staff in the Asia Pacific, is a good illustration for staff benefit from Corporate Social Responsibility to staff. Esquel Group’s core strategy is to create an “eCulture”. The eCulture simply means ethics, environment, exploration, excellence, and education, which are key elements of Corporate Social Responsibility. Advancement in terms of “improved productivity, diversity and learning and talent depth have been undertaken (Balmer & Stephen, 2003). Better government relations and less regulatory intervention Firms that have embark on societal and environmental activities outside law requirements are easily approved by the government. CSR indicators are being considered in deciding on procurement or export assistance contracts in a number of countries and some governments because they have realised that they cannot achieve sustainable goals without increasing in business sector engagement. Assistance to multinationals to overcome foreignness liability in new markets Corporate Social Responsibility for strategic investment can be compared to Research and Development and advertising which create intangible assets that help companies to prevail over nationalistic barriers, ease globalization, and out competition with local rivals. Corporate Social Responsibility therefore enables international companies’ operations across diverse local markets by provision of “legitimacy, reputation, and competitive advantage to curb against the liability of foreignness, which is the cost encountered by foreign subsidiaries above those of their domestic counterparts (Park, Bernard, & Deborah, 1986). Peril management To effectively manage risks social, legal, economic and environmental risks in an increasingly complex market environment, corporate social responsibility can improve the stakeholder security and market stability. Enhanced status administration Companies that are doing well due to CSR can build their reputation while the poorly performing organizations can damage their brand and company value when exposed. Improved skill to employ, widen and maintain employees This could be realized directly through introduction of family friendly human resource practices and policies or indirectly through introducing programmes and activities that helps in improving employee morale and loyalty (Chahal & Sharma, 2006). Enhanced modernization, competitiveness and promotion Corporate social responsibility is concerned with grabbing opportunities and avoiding risks. Firm can attain competitive advantages when they feedback from different stakeholders regarding ideas about new products, processes and markets. Firms which have attained environmental and social certification standards can be providing certain goods to retailers (Kohli & Thakor, 1997). Boosted operational efficiencies and cost savings. These flow in specific from enhanced efficiencies identified through an efficient move towards management that includes constant improvement. For instance, evaluating energy and environmental aspects of a process could expose opportunities for revolving waste streams into revenue streams (wood chips into particle board, for example) and for whole system decrease in energy use, and costs. Enhanced ability to attract and construct effective and effectual supply chain relationships Firms exposed to weak supply chains can make big profits through encouraging large firms to motivate smaller firms within the industry to adopt CSR approach to engage in long-term lucrative business relations through improving standards and risks reductions (David, 2004). For instance, some retailers require their suppliers to comply with worker codes and standards. Boosted ability to address change A company stands a good position to counter to changes that take place in the economic, social and legal environments when it regularly engages in dialogue with its stakeholders (Kohli & Thakor, 1997). Progressively, more firms are using CSR as a stepping stone towards identifying growing trends in the market. Extra vigorous “social licence” to operate in the community Improved stakeholder relations can arise when citizens and stakeholders understands the objectives and activities of a firm. This may lead to into strong and lasting alliances between the public, private and civil society that relates to CSR reputation, discussed above. Access to capital When deciding on areas to invest, financial institutions are progressively integrating the social and environmental criteria in project evaluation. Investors place their money in projects with efficient CSR management. A business plan integrating a good CSR methodology is often perceived as a proxy for good management (Balmer & Stephen, 2003). A promoter for responsible consumption Achieving sustainable development mainly depends on changing unsustainable consumption patterns. Companies play a major role in ensuring sustainable consumption patterns through how they provide their goods and services. Responsible consumerism is concerned on how goods are supplied in the market in relationship to consumer privileges and sustainability concerns and policies and not entirely about changing consumer preferences. Conclusion The Corporate Social Responsibility (CSR) is common in business practices and customers nowadays expect to associate themselves with socially responsible companies. CSR is very important for companies, but historically it has not been a very lucrative approach for companies’ involvement in the required activities. The 21-st century business enterprises will have no alternative but to execute CSR.A CSR process like any successful management strategy needs both high level management vision and support, and buy-in at all stages of the company. CSR does not provide instant outcomes (Mats, 1999). The same CSR initiative will also not work for all types of organizations. CSR initiative designing requires cautious planning and implementation mechanism. Thus Corporate should integrate the innovative CSR strategies into diverse marketing communication strategies to develop and maintain a competitive advantage. References Aaker, D. (1996). Building Strong Brands. New York: Free Press. Balmer, J., & Stephen, A. G. (2003). Revealing the Corporation: Perspectives of Identty, Reputation, corporate Branding and corporate- level marketing. London: Routledge. Chahal, H., & Sharma, R. (2006). ‘Implications of corporate social responsibility on marketing performance: A conceptual Framework. Journal of Service Researchl , 200-267. David, A. (2004). Brand portifolio strategy, Creating Relevance, Differentiation, Energy, leverage and Clarity. New York: Free Press. Gary, D., R, C., & Rui, S. (2000). Corporate Reputation and Competitivensss. New York: Routledge. Kohli, C., & Thakor, M. (1997). Branding Consumer Goods: Insight form Theory and Practice. Journal of Consumer Marketing , 190-230. Mats, U. (1999). brand orientation: A Mindset for Building Brand into Strategic Resources. Journal of Marketing management , 116-140. Park, C., Bernard, J., & Deborah, J. (1986). Strategic Brand Concept Image Magement. Journal of Marketing , !30-150. Samli, C. (1998). Social Resnsibility in Marketing ; A Proactive and Profitable Marketing Management Strategy. West Port: Quorum Books. Schmitt, B. (1999). Experiential Marketing; How to Get Customers to Sense, Feel, Act and Relate to your Company and Brands. New York: Free Press. Scott, M., & David, S. (1991). Cause Marketing: A new Direction in the Marketing of Corporate Responsibility. Journal of Service Marketing , 19-40. William, C. F. (1998). Values, Nature and Culture in thee American Corporation. London: Oxford University Press. Yoo, B., & Donthu, N. (2001). Developing and Validating a Multidimensional Consumer-Based Brand Scale. Journal of Business Research , 1-20. Appendices Appendix 1: The Six Conventions of Corporate Branding (David, 2004) Appendix 2: From Brand Assets to Brand Equity (Park, Bernard, & Deborah, 1986). Appendix 3: Brand Hexagon (Samli, 1998) Read More