A small personal summary for bullet point 2

Bullet 2 – The importance of CSR relative to the company’s corporate objectives

- In discussing the importance of CSR relative to corporate objectives, a tobacco company has an interesting situation. For a business like Altria who are a leading global tobacco company that own the Marlboro brand, they will find it extremely difficult to be socially responsible due to the fact that it is a demerit product.

"The Cigarette is the only legally available product that when 'used as directed' will kill the user and injure others"

(Clete Snell 2005)

This has significance because being responsible is acting for the greater public good, making helpful and positive impact on the economy.

So in the process of selling cigarettes they are going against all of these already. For a company like this CSR towards the public community stakeholders is not as important a concern as the company’s aims and objectives and other CSR areas to more powerful stakeholders. They would place much more importance in their other corporate aims like investing in leadership, making good returns for their shareholders (a little CSR here, not for the community stakeholders though) and purely satisfying the adult consumers. (poor CSR here as this is not for the overall benefit of the community is it?)

The benefits of Altria investing and trying to improve their image as a user friendly, green company are miniscule compared to if they focused the funds towards new PR activities and expansion solely due to the product they sell. So hence they don’t place a lot of importance on this kind of CSR. It’s not a worthy responsibility for the business to accept to any kind of extent.

- However one example of a business in which places CSR fairly above corporate objectives or even sometimes mingles the two together is GSK (Glaxo Smith Klein).

“Thus, corporate responsibility

is an integral and embedded part of the way GSK does business.”

GSK have a large well-organised document prepared on responsibility for this year and many years previously. It states everything from the way they engage with all stakeholder groups via meetings, sales representatives, employee surveys and consultation, to the way they are helping to make drugs more widely available in less developed countries. ie. More flexible pricing strategies and refocused R&D to suit the local needs of these places.

http://www.gsk.com/responsibility/

- New sustainability targets set with long-term goal to become carbon neutral by 2050
- Details on new initiatives to increase access to medicines in LDCs
- Charitable support increased to £222m

these are the corporate objectives of GSK and as you can see they are all extremely responsible aims.

- On a different note, some companies will find it difficult to place importance on one or the other more strongly. Companies like BHP Biliton and BP are always going to come up against problems. For example, BHP can’t possibly choose not to accept responsibility for the environmental impact they have as one of their corporate objectives is to:

• Make optimal use of the development and conversion of natural resources.

Now to complete that goal, although worded well, this means they need to dig up a lot of land area, cut down a lot of trees or drill into rocks and mines, they are going to have to (legally) place importance on making best efforts to sustain the environment and not creating too much of a negative impact at any one time.

For BP as well, if they were to go straight into their drilling over the world without a care about marine life and even human life risks of their actions, the cost of the bad PR and company image would be catastrophical and would outweigh any advantage they may have gained by refusing acceptance. So for these companies, CSR is essentially imperative relative to their corporate objectives.

A small personal summary of bullet 1

Bullet point 1 – Benefits and costs to a business for being socially responsible

A quick idea of some benefits followed by examples:

- Whilst other businesses are not selling or making their products in a way that lets them use socially responsible methods, The businesses that do gain a competitive advantage (a USP?) which consumers are willing to pay a premium for.

- Internally, being socially responsible can increase motivation hence the productivity and welfare of business employees.

- Good CSR is a long term investment for avoiding the very damaging impacts of poor CSR. So it is valuable to a company in the long term.

- With a label of being a ‘green’ company, finance can be a lot easier to raise and maybe even more available from upfront payments for doing more green activities.

• The WINFA, Windward islands farmer’s association have been trading bananas all over the world including to the UK under the fair trade premium. By doing this, it is evident that due to them being socially responsible, they can now sell their bananas at a higher price as people are willing to pay an extra cost for a fair trade banana.
• In terms of CSR helping internally, John Lewis have strongly succeeded in this and now have a workforce of around 76500 motivated employees. They are incredibly socially responsible towards their partners by sharing a huge amount of company profits with them as well as treating them with mutual respect and like shareholders.

http://www.johnlewispartnership.co.uk/Display.aspx?MasterId=81f00253-1639-4749-a590-d2cd32540b62&NavigationId=613

• Ben & Jerry’s would be a prime example of a company known for their green and friendly approach to business. So in essence, they have found it a fairly simple procedure to raise capital whenever they need it as they will have gained huge amounts of support by taking part in many events and trying to solve environmental issues. For example the contribution in the competition for the largest ice-cream in the world along with the many other activities they contribute to will gain them more recognition and support.

Some negative points (costs):

- For a business to bother with the CSR approach, it costs money. So in turn a business may lose on company profits and hence competitiveness and in price competitiveness against competition.

- An obvious cost being the great possibility that shareholders may disagree with the way their money is being spent. Internally the disputes and uproar could be harmful to the companies flexibility and performance.

- Very importantly, if the product is price elastic, the rise in costs due to CSR expenditure will be most damaging to such businesses.

- Sometimes favouring towards ‘higher quality’ or ‘responible suppliers’ can be a disadvantage to maybe some of the poorer supply chains that cant afford to look after their employees as much?

Bhp Biliton spend approximately 1% of after tax profits on CSR

Hello! Mr Hughes, Just wondering how will CPA come up in the exam? Will the diagram already been drawn out and we just fill in the numbers? or do we have to interupt it?
Thanks! :)

Possible Section A Essay

Here is the section A essay prompt, the same we did in class as a Written Assessment on 31 March (Group D) or 1 April (Group B).

Consider the link to the Green and Black news article- could be a good place to reference in your own research for costs of CSR.

Green & Black's meets Fairtrade pledge


The organic chocolate manufacturer has met its target for full Fairtrade certification in the UK by the end of 2011.

Organic chocolate manufacturer Green & Black's has already met its key target for Fairtrade certification across all chocolate bars and drinks in the UK by the end of this year, it said on Tuesday.

The chocolate company also confirmed it is making progress to meet this pledge globally – in the 30-odd countries where it trades – by the end of 2011. At the same time it detailed its investment in Fairtrade for the longer term, agreeing to spend £400,000 a year for the next eight years to support the sustainability of cocoa-growing communities in the Dominican Republic. It pointed to the findings of a new report, due to be published next month, carried out by the University of Manchester, to identify the key issues faced by such communities of farmers, which said that increased investment should deliver significant and positive impact.

But the Fairtrade movement has attracted scepticism, notably from the free market thinktank Institute of Economic Affairs. Its spokeswoman, Ruth Porter, said: "Fairtrade tends to help producers in better-off countries when there are many in poorer countries who deserve to be helped, but who cannot afford to meet the many conditions required for certification. Big brands (such as Green & Black's) have much so much power and sway and we think they could be doing more to ease the plight of the poorest farmers. We should be talking about free trade, not Fairtrade"

http://www.guardian.co.uk/environment/2011/mar/08/green-blacks-fairtrade-pledge

Question: With reference to the article above and your own research, to what extent do the benefits of Corporate Social Responsibility outweigh the costs for a business? (40 marks)

The value of social a social network

Ever see a comment by a troll?

Better start by asking what a troll is. Apparently it's tech speak for a person who leaves a really stupid or rude comment in an online forum to get laughs from everyone else. Check it out:

http://www.economist.com/node/18483765?story_id=18483765

Yea, we've all seen the type.

But if you ever wondered why Facebook has a $50 billion value then think of what it's doing: leveraging it's network of real people to provide a service to help websites keep the posts clean. It's that network of real people that makes it so valuable.

What do you think about it? Will this idea work?

A2 Revision Quizzes

A great way to revise for some of your PESTLE Analysis topics:

http://www.tutor2u.net/blog/index.php/business-studies/comments/aqa-a2-business-buss4-revision-quizzes/

A Level Revision Guides

If you would like to purchase an A Level revision guide then this is what Mr. Hughes recommends:

Unit 1 Revision Guide

Unit 2 Revision Guide

Unit 3 Revision Guide

Unit 4 Revision Guide

Happy Revising!

The future of music and television?

Check out how new ideas on technology are changing the way big businesses distribute media:

http://www.economist.com/node/18486163

So many good links here. Intellectual property management (specifically, copyrights), Place in the marketing mix, and technology in operations. What do you think about it? Would you be more willing to go to Amazon or Apple if they had a 'Digital Locker?' Do you agree that television firms should be upset with Time Warner Cable for coming up with a new iPad app?

Supply Chains and the Disadvantages of Just In Time Production

The Japanese are always given credit for developing the types of efficient operations management, e.g. Just in Time or Kaizen. But what happens when something goes wrong, as has happened with the recent tsunami disaster? Check it out:

http://www.economist.com/node/18486015

Probably the most interesting idea: companies might have to give up efficiency for robustness, i.e. hold more stock as an insurance for those times when supply chains are not functioning.

Also, consider this to PPQCRF- the importance of reliability in the supply chain.

Extension Strategies in Tobacco Industry

http://www.economist.com/node/18486173

Ever wonder how companies use extension strategies in real life? Check out this article. Basically, the developed world is a market in the decline part of the product life cycle. So what does big tobacco want to do to keep revenues high? Find new markets.

Advantages of CSR- The Link to Happy Workers

Check out this guy talking about the need for bigger companies to have CSR for the effect it has on their workers. Powerful stuff for talking about bullet point no. 1.