Tuesday, 5 April 2011

To what extent do you think objectives relating to corporate social responsibility should be impact over the other Corporate Objectives

Corporate objectives are goals or target that concern the business as a whole. The objectives are the broadest objectives at the top of the business being made by either the owner or the board of a large company. These objectives filter down into Functional objectives and business targets in order to make these corporate objectives achievable and targets must be SMART in order to for fill corporate objectives. This gives them a sense of direction, which can aid efficiency, teamwork and motivate employees. This also evaluates performance, this means that a sense of control of the company as they are striving for something and can see how far they are away from achieving the targets.
Usually, corporate objectives usually are regarding the amount of profit, sales revenue or marketing share they can improve by.  These objectives are designed with the interests of the shareholders as they are the main people which influence decisions as they are investing shares into the company. These are able to maximise efficiently in order to gain a higher profit margin overall so the “Risk takers” known as the shareholders will be able to get a higher dividend. Corporate social Responsibility takes into account that businesses should serve the interest of a range of stakeholders such as the community it is impacting on, the environmental factors of the actions being taken to make and sell product and positive and negative effects on the community such as employment to pollution. In the present day, the businesses have a more CSR approach when making corporate objectives for the business rather than the traditional, free market approach for businesses to make objectives based on efficiency.
The free market view of CSR argue that the businesses only have one social responsibility, and that is to make a profit in order to give shareholders to their dividend as it is the reason why a business was created- to benefit the owners or “Risk Takers” that are investing into a company. Profit is seen to be the most motivating force in a business and the search for profit in a competitive market and become market leader which also makes the business more powerful as other businesses react in a way which the market leader does. This means that they have to be more innovative with the products and cash cows which they need to make and design. For example, McDonald’s launched their snack wraps on July 1st 2006 and provided a new way of healthier food, which in turn made McDonalds more profitable as it entered new markets in the industry In order to gain more market share and sales revenue.  Because new innovative products need to keep the costs down in order to maximise the profit margin, they are made in order to 30% of the actual cost of the product in order to have a profit margin, therefore as Snack Wraps cost £1.49 which means each product has to cost 40p in order to comply with the finance objectives and gain a decent profit margin.
Also, they will argue that as they only have one social responsibility, it will help benefit many other areas without effort. These would include the customer, as they have better quality products, and lower prices available to them. They would also provide a service to the community as in help keep unemployment low, and also help employees to have job security when running a successful efficient business; therefore they will have an interest in company profits if it lets them keep their jobs. Profits are also essential to finance as the growth of a business by either retained profit or finance, this is only available to profitable firms and also gives better benefits to the community. For example: they are looking to open 30 drive thrus every year within the UK which will in turn give job opportunities and more market share and numerous benefits to the community. This also will be seen a good brand image as the UK is in a period of high unemployment and they are creating jobs, rather than the global company expanding and the profit side which is seen to put a positive “Mask” over the companies’ objectives and have a positive impact through the shareholders decisions.
If a company wishes to also be socially responsible, this means they will have higher costs such as fair trade products or sustainable products which are certified by an external body. These reduce the profit margin as they are more expensive and harder to be cheaply produced. For example, more restaurants in the UK offer a refusal of refills now they Rainforest alliance certified but only offer a loyalty scheme which is “buy 6 cups, get the 7th free”. This shows that because they are using a sustainable source, they have had to pass the drawbacks onto the customers as they cannot have refills every time they buy a cup of coffee.  This shows that to keep the costs down, they have had to adjust policies in order to maintain their profit margin.
The case for objectives relating to CSR is that the large business is having an impact on the environment and community that they have a right to expect that they accept some degree of corporate social responsibility towards various groups of stakeholders. For example, McDonald’s are seen as a unhealthy company and relate to a higher rate of Obesity and Heart disease therefore, in order for them to be seen as more socially responsible, they have had to put healthier eating and a more wide range on their menus, but still be able to prepare them quickly in order to fit with the corporate objectives for example, the chicken and bacon salad and the use of advertising such as Carrot sticks and fruit bag instead of Small fries being advertised, so they cannot be held responsible as they have had the choice to decide a healthier option or not.  This means that other stakeholders such as Customers and the community are happier because of the choice, even though this still benefits the shareholder as most Happy Meals are served with fries still, even though they are advertising the healthy option which also shows CSR as they are taking responsibility and providing alternatives for the public. The importance of CSR has increased; therefore the awareness of this with other stakeholders has increased about the long term effects on businesses, such as obesity and healthy eating in this case. This means that therefore, McDonald’s have objectives relating to healthy eating and the environment in order to show other stakeholders that they care. An objective that McDonald’s stores have is to reduce utilities by 4% which is seen to be more socially responsible, but also increases profit margin as they are keeping costs down.
The other perspective on CSR is that it is neither based on the free market, nor the moral case for CSR.  This means that CSR can be incorporated while making it profitable and have the most impact on all stakeholders, rather than maximising profit in order to satisfy one type of stakeholder. This can be summed up in an expression which is “Doing well, by doing good”.  The annual report of McDonalds in 2009, shows that the use of innovation and providing healthier products and having CSR friendly objectives, means that they can also maximise profit as they are gaining a larger market share and more sales revenue due to accepting  to be socially responsible but not necessarily proved that it was because they are incorporating CSR. McDonald’s are shown to be more successful and growing because of a meeting incorporating CSR into objectives, including having social objectives such as energy etc. One objective is to reducing waste by recycling cardboard which is not food contaminated and turning 10% of the waste which is oil to biodiesel.
In conclusion, I think that large companies provide a profitable free enterprise, or “Free market” while remaining more socially Responsible then the past. This means that the business can be create CSR objectives such as creating biodiesel from waste and also remain profitable as they are cheap products and some CSR objectives give advantages to the free market as they can help to reduce costs, such as “Reducing utility bills by 4% every year”. This shows that incorporating CSR means that the free market can benefit from being socially responsible, therefore corporate objectives should be made with profit in mind but have an impact on being socially responsible in order to improve brand image and loyalty through other stakeholders and ultimately grow and gain more revenue.

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