Business Studies U6 Group B
Discussion: Bullet Point 1 and 2
28 March 2011
Bullet Point 1:
Jackson:
Benefit:
Being socially responsible will enhance a company’s brand image. Take Nike: For years they have had difficulty with criticism due to poor working conditions for those workers in their supplier’s factories. By reporting on CSR issues, the public will be more critical of businesses which fail to adopt fair labour practices. Therefore, Nike will change any poor practices to comply with the public’s desire for good CSR. This will lead to benefits for those workers in Nike supplier’s factories. e.g. a benefit to a stakeholder group: namely their workers.
Joe:
Being socially responsible enables companies to differentiate their brand. In crowded markets, it will be important to have this distinction so that customers are more likely to give your company repeat custom. Examples of this are:
• American Apparel
• Co-op
o Ross:
• Body Shop
Toby:
Similar point from before, along the lines of differentiating:
• John Lewis is well-known for having employees own the group. They are called ‘partners.’ This commitment to CSR (in theory) feeds into better customer service, thus higher sales and profits.
Alex:
“The business of business is not just about money. It should be about responsibility. It should be about public good, not private greed.” Quote from Dame Anita Roddick, founder of Body Shop.
Along that argument: a business which does well, socially, will do well for its customers. This could show up in many ways, namely: customer service (link to John Lewis)
Joe:
Haliburton, General Dynamics do not take into account their people, their labour forces. e.g. General Dynamics supplies arms for governments to wage war, most recently in Libya. Their CSR report has everything to do with their employees on a local scale (e.g. environment), however they do not appear to take responsibility for the use of these weapons and what they eventually do, e.g. kill people.
(This previous argument is going to be more relevant for bullet point 3)
More benefits:
Toby:
Reducing waste and resource use doesn’t only help the environment. It also
Ross et al:
Brand image is enhanced through being socially responsible.
Esso: Despite the government creating a bad image for Esso’s public relations due to their environmental impact, Esso produced advertising campaigns instead of driving, which were effectively adverts not to use their product. This is a benefit because it will make the company look ‘greener’ and led to people thinking that Esso cared more about just selling petrol, which then to an increase in demand.
In the end, it just increased their brand awareness massively. How else would an ad campaign designed to get people to cycle more end up making an oil company more money?
Alex: The company has more respect for you because, apparently, you understand these ‘green’ issues and appear to want to make them right.
“Smarter Drivers, Smarter Choices”
To see more: check out the www.buss4csr.blogspot.com
Costs of CSR:
Ross:
Obviously, they will have higher costs if they engage in CSR.
• Costs of advertising campaigns
• Cost of drawing up the report
Jackson:
If you treat stakeholder groups well, it means that you can’t do things like have minimum wage or poor working conditions. You have to comply with all rules and regulations. You have to do what your CSR report says you’re doing.
Ross:
Being observant and being respectful costs more. If you really want to be responsible, not just saying that you are, you need to actually do those things which will lead to higher costs.
e.g. Soft HRM may cost more money. It may be more expensive to provide a good working environment.
e.g. For Nike: it costs so much more to employ workers in developed countries, even though the conditions are better there.
The libertarian approach to an argument against CSR:
Joe:
“A business has the responsibility to make money for investors, not change the world”
Alex:
“The priorities that managers give to CSR may not reflect the will of the investors, how they want their money spent.”
(Coca Cola spending $88 million in charity: who’s decision was this? Maybe it’s worth looking this up)
Joe:
They should abide by the laws of the countries in which they operate, but not worry about anything else.
Ross:
You can run a business responsibly and legally without doing CSR, just obeying by the laws of the country.
Alex (counter to Joe): Acting in a responsible manner can mean that sometimes workers are further disadvantaged. (a bit complicated when you follow it to the natural conclusion)
(According to this argument, companies create value for employees, customers, suppliers based on how mutually beneficial the relationship will be between these groups and the shareholders. e.g. A company will do good things for its workers in that it gives them a job: after all, they’ve chosen to work there, and the jobs provide income for the local community.)
(Next stage: Investors are the primary responsibility of the company. They are the legal owners of the company. Therefore, they should be considered first.)
(It’s not the job of the company to change the world. Who’s job is it? Governments. So if we want to see change, change the laws that companies operate in. Don’t pressure them into helping people that don’t own the company)
Bullet Point Number 2:
Toby:
Either the CSR is the fundamental driver of other objectives in the organisation or it is a secondary objective.
Jackson:
Company with CSR at its core: Ben and Jerry’s. Evidence:
• Each new brand will explain where it comes from, where it’s made
• Relates the product’s name to where it is. E.g. chunky monkey: The cocoa comes from Africa, hence the reference. (e.g. Baked Alaska: part of the money went to a fund to combat global warming)
Alex:
Marks and Spencers:
• In 2004, M&S stopped using CSR as a way or managing risks and began to use CSR as a way of differentiating. Evidence through:
o Number of organic product lines.
o Fairtrade products.
Toby:
BA with fuel efficiency: (from www.buss4csr.blogspot.com)
• BA made a claim that they were going to reduce carbon emissions. At first glance, it looks as though BA is trying to be really socially responsible.
• However, how much of this is down to CSR objectives (really) when everybody knows that by reducing their fuel consumption and fuel costs they will also see their profit rise?
• Another example: By lowering the noise of their flights, they may be closer to getting another one of their other objectives: expanding Heathrow to include a third runway.
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