Discussion of bullet point 1 as put forward in the lesson on 25 March from U6 Business Studies group.
Bullet Point 1:
Sunny:
Possible costs and benefits of CSR:
• Fairtrade (e.g. Starbucks, Cadburys) products mean higher costs through wages. This will have an effect on the profits of these companies. (source: csr blog)
• In 2009 there were 800 million
• The majority of Fairtrade produce is grown in LEDC countries.
• Cadbury’s is a high-profile organisation which was one of the first businesses to do a CSR report. In 2009 they said that all their products would be sourced from fair-trade products in Ghana. This meant it was a £45 million investment in this country. (source csr blog)
• As fairtrade coffee customers, Starbucks pays 82p per pound for their coffee.
• Costa coffee added an extra 10p to their prices if it was a fairtrade product. The cost for Starbucks is actually less than 1p per cup. Cynically, this might mean that companies provide fairtrade simply to attract customers to a product which will offer them higher profit margins.
• Fairtrade is a ‘moneyspinner.’
Olivia:
• Effective CSR is good for differentiating a company:
o For example: John Lewis is well-known for being employee owned. This shows high commitment to CSR. This gives them a good reputation- it all ‘adds up’ and gives value to the business.
• It makes it easier to recruit employees, especially high-value managers who want to work for a socially responsible company.
• In theory: it will make employees more motivated.
• E.g. Co-op: They are meant to be very responsible and hope to extend these values to other companies they have taken over e.g. Somerfield.
• ‘Protecting tangibles and intangibles’ and a company’s intellectual property.
• Good for building market share- because the companies are sourcing their products ethically.
Rebecca:
Benefits:
• Allows differentiation from competitors- this helps to attract and retain customers. This then allows scope to charge higher prices. e.g. Body shop. The argument goes: if the prices are similar, some customers will go for the business which has a better social reputation.
• Some measurements of CSR: FTSE 4 Good index series. This is a series of share indices which shows companies that meet the criteria which businesses have to obtain. This is beneficial for investors, especially those which are concerned about the environment. (Possible follow-up: would be find the list)
• CSR leads to satisfied and motivated employees, which leads to easier and cheaper recruitment. Hopefully this will mean improvements in productivity as well, which leads to lower costs.
Costs of CSR:
• The cost of improved treatment of labour. The minimum standards that businesses have to have already cost money. But going further in your CSR will mean that you have to train employees further
• From The Economist article. Profit doesn’t come from CSR because profit alone will help the environment and society. According to the article, “CSR is the sort of thing that a business puts on in the day and wash off at night.”
o Why would profit help society? Because if a business has high profits, they clearly offer a popular product This will lead the business to expand. This expansion will necessarily employ more people. By employing more people, that is the way a business should help society. The profit could go down the road of more training, providing more job security and training and providing better-educated people.
o Following this argument, we would say that doing CSR makes a business focus on other things besides its main purpose, which is therefore a cost.
o For a good explanation of this: http://buss4csr.blogspot.com/2011/02/bite-bullet-potential-benefits-of-csr.html
Danny:
Benefits:
• Environmentally friendly businesses will have lower operating costs. The focus on reducing waste will increase your efficiency, thus reducing your costs.
o Toyota is a very good example of this, as they JIT system and the most updated technology. This is very efficient, it reduces waste and therefore is a benefit.
• This will lead on to improved financial performance. If more people want to buy environmentally friendly cars due to environmental awareness, Toyota is going to be the first business they go to as they have the brand recognition for it.
• Another benefit: if consumers see the CSR objectives in Toyota they are more likely to buy from them. Link to differentiation of product.
George:
Benefit:
• Producing the CSR report is part of the business function and will give the person employment. Or is this a cost?
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