Corporate Social Responsibility means that the business is aware of its effect on society and considers the interests of society.
This article looks at how private business organizations decide on their business objectives. The most common business objectives for businesses in the private sector are concerned with:
1. Survival.
2. Growth.
6. Maximizing short-term sales revenue.
7. Maximizing shareholder value.
8. Corporate Social Responsibility (CSR).
Corporate Social Responsibility (CSR)
It is image and social responsibility strategy.
Nowadays, many businesses take an interest in social, ethical and environmental issues.
Social responsibility as a business objective means that the business is aware of its effect on society and considers the interests of society and environment by taking responsibility for the impact of their decisions and activities on customers, employees and local communities.
The business knows that by being a part of the community means that it needs to help serve the community, be a good, productive members of the society. It is because businesses ought to have responsibility not only to the owners, but also to a wider range of stakeholders.
Why has Corporate Social Responsibility (CSR) become an objective for businesses?
In the world we live in these days, a lot of things are about image and not substance.
The activity of pressure groups. Influential pressure groups are forcing businesses to reconsider their approach to decision-making from only profit making into both profit and society-oriented.
Media’s attention. The media promotes a greater awareness of social, ethical and environmental issues among consumers. There is much greater adverse publicity given to business activity that is perceived as being damaging to stakeholder groups and the wider world. Nobody wants to support the bad guys in the end, because the bad guy always lose in the end.
Trade unions. The role of trade unions and other worker representative groups have influenced how businesses treat employees.
Laws favoring consumers. Governments pass laws at local, national and international levels. Much of today’s legislation has been passed that favors consumers.
Changes in the society. Social attitudes have changed in the last few decades.
Legal changes. Local, national and international laws have forced businesses to refrain from certain practices such as paying staff very low wages, avoiding legal responsibility for their products or hiring child labor.
Managers wish to avoid conflicts with the law or bad publicity.
Who benefits from Corporate Social Responsibility (CSR)?
Customers. They normally want to buy from a company with solid reputation and appearance. Because of fierce competition, firms are likely to lose sales, if they do not consider the needs and wants of the customers.
Employees. Lots of regulations have been passed that regulate wages and working conditions.
Trade unions. Help with improving social facilities, wages and working conditions for the owners.
Suppliers. Just-in-time inventory and manufacturing system helped with cutting the cost of overheads and storage costs. Companies only produce when they have an order, and stocks of raw materials and components are delivered to the factory only when they are needed.
Examples of socially responsible corporate behaviors
Increasingly, consumers and other stakeholders are reacting positively to businesses that act in socially responsible ways.
1. Retailers that promote organic and vegetarian foods.
2. Companies which advertise their products made from recycled materials.
3. Businesses that refuse to sell goods tested on animals or from genetically modified ingredients.
Some businesses are being accused of faking their genuine concern for the society and the environment. In these cases, the actions must be taken as trade and reputation might be lost.
On another hand, many firms are being ethical or environmentally conscious because they have an objective of ‘public responsibility’ – they want to behave in these ways, not because they have to.
So, should all firms have objectives about social, environmental and ethical issues? Apparently, firms must adopt a wider perspective when setting their objectives and not just be aiming for profit maximization or business expansion.
It is because businesses that ignore their social responsibility are at the risk of bad publicity and possible legal action taken against them negatively affecting the reputation, sales revenue and profits of those businesses.
