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