Assignment 2

Assignment 2

EIB 20103

ME40

Prepared for: Prof Dato' Dr Kamarudin Mohd Nor

What is corporate social responsibility and why do corporations have social responsibility?

Corporate social responsibility (CSR) also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business] is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance within the spirit of the law, ethical standards, and international norms.

Corporate social responsibility has come a long way since 1970, when economist Milton Friedman called its advocates “unwitting puppets of the intellectual forces that have been undermining the basis of a free society for three decades.” In fact, corporate social responsibility (CSR) has a completely different meaning in the 21st century, when more and more firms anticipate and take responsibility for the impact of their operations on communities and the natural environment. Study after study has shown that corporate social responsibility not only provide sustainable business models, but also have improved marketing, employee recruitment, employee satisfaction, legal treatment, customer loyalty, brand perception, and richer partnerships. The top six reasons corporations have social responsibility:

1. Building a Positive Workplace Environment

Five years ago, it was considered good if a company simply did not harm the environment. However, times have changed, and now employees demand that their company do more than simply not be bad. They need to do well, too. It was the greatest benefits of promoting social responsibility in the workplace is the positive environment you build for your employees. When employees and management feel they are working for a company that has a true conscience, they will likely be more enthusiastic and engaged in their jobs. This can build a sense of community and teamwork which brings everyone together and leads to happier, more productive employees.

2. Consumers expect better business practices

Just under a year ago, a study was published showing that the average consumer will drive en extra 11 minutes to buy a product that supported a cause. Since then, more data has been released supporting the fact that consumers will adjust buying behaviour from average companies to socially responsible companies. Most of the consumers think companies should try to achieve their business goals while improving society and the environment and consumers think companies should support charities and nonprofits with financial donations. The important consideration is that consumers know that the corporation is making donations out of its own pocketbook, not asking for donations by its consumers. In fact, 35% of consumers dislike being asked to donate money at the checkout counter.

3. Showing a True Commitment

The most successful corporate social responsibility programs integrate these two types of CSR together to show a true commitment to a cause. For example, a company that uses sustainable materials in their products, donates financial resources to environmental causes, and allows employees to take paid time off for volunteering at environmental charities would be showing a true commitment to the environment that goes beyond any single CSR initiative.

4. Public Relations Benefits

Public relations are a potent tool for shaping consumer perception and building a company’s image. Corporations that actively promote their social responsibility activities often take steps to publicize these efforts through the media. Getting the word out about corporate donations, employee volunteer programs, or other CSR initiatives is a powerful branding tool that can build publicity for you in both online and print media.

5. Brand differentiation

In the past, brand differentiation was one of the primary reasons companies embraced CSR. Companies such as Timberland were able to find their voice and incorporate the company’s values into their business model. However, as CSR has become more commonplace, using it to differentiate your brand is getting harder to do. For example, the “Cola Wars” is one of the longest running rivalries in business. Coke and Pepsi are constantly looking to grab as much market share as they can from each other. Yet they are both adopting similar, although slightly different, approaches to CSR. Both Pepsi and Coke are pursuing strategies of zero net water usage. Both companies offer water bottles made from sustainable packaging as well. In the end, although neither company is necessarily going to see strong differentiation benefits, I see the diminishing returns on brand differentiation as a sign that CSR is taking hold and is not just a fad.

6. Government Relations

Corporations that place an emphasis on corporate social responsibility typically have an easier experience when dealing with politicians and government regulators. In contrast, businesses that present a reckless disregard for social responsibility tend to find themselves fending off various inquiries and probes, often brought on at the insistence of public service organizations. The more positive the public perception is that a corporation takes social responsibility seriously the less likely it is that activist groups will launch public campaigns and demand government inquiries against it.