Bullet Point 4 Essay Plan

As discussed in lesson on 18 May (B Group)

"The factors that determine the extent to which a business is socially responsible."

What is this bullet point requiring us to research?  What is the premise?

Premise: Some businesses will be more socially responsible than others.  Why is this the case?  What are the reasons for the firm taking the responsibility?
Which factors increase the extent to which a business is socially responsible, which factors reduce the extent?

Begin with some definitions:

Interdependence: When two or more things depend on each other (e.g. business and society)
Enlightened self interest: acting in a way that is costly or inconvenient at present, but which is believed to be in one's interest in the long term.  e.g. Firms accepting some short term costs (lower profits) in return for long-term gains.

Explaining factors which increase social responsibility:

Background and beliefs of the head of the busienss or the founder.  Strong links with company culture.  Some owners and founders think that it is right to be socially responsible.  This will affect what the business ultimately does.  (Link with management style: paternalistic vs. autocratic?)
e.g.

• Ryanair: Michael O'Leary has an autocratic leadership style.  His persnoal belief in maximising profit and neglecting customer interests has led Ryanair to be profitable but have a very poor reputation for CSR.
• Further evidence of this: What Michael O'Leary said about carbon emissions?  He thinks it's nonexistent: http://www.guardian.co.uk/environment/blog/2010/sep/10/michael-o-leary-ryanair-global-warming
• Evidence for the way that the company treats its passengers: http://www.ihateryanair.org/
• Ben and Jerrys: Their leadership style and background meant they were always wanting to make their company responsible.
• Dame Anita Roddick: Activist background meant that The Body Shop was always going to be relatively responsible.

Possible evaluation point for previous point: Depends on the type of market.  Compare and contrast RyanAir, which is in a very competitive market to something like The Body Shop.


How big the business is.  Whether or not it can afford CSR.


The relative power of different stakeholder groups to determine the business' success.  Link with the power of the media on the business' success.  (To put it another way: how much pressure can stakeholders put on the business?)
e.g.

• For example: how powerful are your customers:  In one example, american universities are insisting that the suppliers for their football licenced products are not made in China.  If that were a whole-country policy, how much would Nike try to improve their supply chain?  http://www.bloomberg.com/news/2011-05-17/notre-dame-says-no-to-made-in-china-on-fighting-irish-goods.html
• Another example: BA is very much depedent on its employees to make sure it can keep operations going.  As evidenced by the strike in December 2009, the employees can bring BA to its knees.  This means that BA will go out of their way to meet their needs, as evidenced here: http://www.britishairways.com/travel/csr-employee-support/public/en_gb.  Of course, the extent to which BA was successful in meeting these needs is largely debatable, given taht the employees wanted to strike in the first place.
• Another example: Burger King becoming more responsible due to pressure from PETA: http://www.mallenbaker.net/csr/page.php?Story_ID=70

Factors that will lead to less responsibility:

When businesses are controlled by a dominant owner.
e.g.

• Michael Leary: Authoritative and strong as a leader.  Does not want to adopt CSR.

Size of business:  Small businesses are not required to produce reports or appear responsible.  They might be able to get away with it because there is less scrutiny.

The relative advantage of appearing to be socially responsible in your market: What are other firms doing?
e.g.

• If all the other firms are gaining from CSR, then your company is more likely to engage in responsible behaviour (e.g. Costa vs. Starbucks)
• If the other firms in the market do not engage in responsible behaviour, or at least are not expected to, then it will lead to your company being less responsible.
• We thought McDonalds might be an example of this, though these companies do make an effort to show off their CSR: http://www.aboutmcdonalds.com/mcd/csr.html.  http://www.bk.com/en/us/company-info/corporate-responsibility/index.html

Conclusion.
What does it all depend on?

• Pressure from the public, both in publicity and in the attitude of customers.
• The nature of the product produced: e.g. it's easier for Apple to be responsible than it will be for McDonalds because of the nature of the product: hamburgers make you fat!
• The pressure from government: (this could almost be its own point).  And whether the company merely operates in accordance with the law or above and beyond it.

Key evaluation arguments:

• What are the benchmarks for CSR?  Who decides and how do we measure?
• No standards in reporting- how do we compare?
• The standards of what is acceptable are changing- is CSR a trend or fashion?  Is it going to be long-lasting?