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As global warming, protection of animal and animal rights, preservation of green emerges highly, people, activists, media and also Government have been pushed to keep eyes on the impact and consequences of waste and activities of companies and organisations. As the activities become wider, we can even see the rankings of companies based on their CSR performance for example, by Myriad organisations. Even though the methods of rankings of them are sometimes found to be questionable, it can be said that it has achieved considerable attraction and interests from the public. The companies are, therefore, forced to take CSR into considerations.
Corporate Social Responsibility Practises
Baker (2004) stated that "the ways the companies use to change the impacts, of outcomes and processes of the business, on the environment as well as on the society, into positive ones. Companies can use three methods, namely philanthropy, cause related branding and strategically focused CSR, to implant CSR into part of their businesses. There are mainly two aspects to inspect the processes, CSR and impacts on the environment and social fields. Firstly, the inner circle covers the operations within the business which affects the inside world and outside world. Inside world means the effects on the people and the processes of the business or the relationship between them and the impacts on the outside which are born from those processes in the business.
Second is the outer circle which focuses on the things that the businesses have done to the outside world, or how are the products and services of the business or their impacts, socially and environmentally. By their very nature, outside stakeholders have more interests on the outside circle. Nevertheless, it is financial analysts who will calculate the effects both monetarily and non monetarily like the effects on the company's image, reduction of penalty taxes, etc which means businesses tend to do deeds which will positive effects on them rather than helping the society purely out of deeds.
Corporate social responsibility is what every business should have as a continuing commitment to behave or do deeds which would fit both ethically and should increase the economic development as well as the standards of living and health aspects of community and environment and quality of life of the workforce (O'Hara, 2013).
In some other companies, CSR is defined much more focusing on philanthropic model. Except taxes, the companies will operate solely in the purpose of making profit without considering any duties on the society. And they would make a donation of a proportion of the profits they made. With this concept, it is falsely believed that companies are doing deeds without considering or harvesting the fruits of the deeds that they could enjoy from what they have made.
However there are also companies which are focused in a more responsible way to the society and environment as it gives a consideration to the business individually which means the impacts come out directly from the very nature of the business. In that way, business can be more responsible for their activities and plus, they can invest in a project which would affect both on the society and that will in turn benefit the company.
CSR may become a strategy to draw attentions and improve the image of the business during hard and competitive times. In this paper, the author shall be evaluating the effectiveness of CSR practises adopted by firms in the retail industry such as clothing retail Nike and food retail company Coca Cola.
Nike Inc is the multinational company which is the marketer, seller and designer of authentic athletic footwear, sports equipment and accessories and apparel for different fitness and sports activities.
Nike does not fall behind other companies and has become one of the companies which value the corporate responsibility. Nike believes that corporate responsibility is not a mere donation but it can boost growth, image and innovation of the company. It sees that by using corporate social responsibility wisely and form a strong link and connection with the company's operation and brand, both community and employees' perception on the company can be greatly increased thereby improving image, energy, passion and company's product value greatly on the other hand. The company puts more efforts on the basis of long-term growth and innovation strategies like creating a better climate, environment and world, encouraging and producing potentials through sport.
Nike formed a partnership with RED foundation and start campaigns of fighting against HIV/AIDS in Africa which is renowned as "Lace Up, Save Lives". Under this campaign, not only Nike tries to encourage the people with HIV to "Lace Up" but also providing funds to The Global Fund (Save Lives) by dividing equally all the income generated from a pair of Nike and red laces to fight not only AIDS but also Tuberculosis and Malaria. Furthermore, they will provide the community with health education about HIV/AIDS disease and prevention. With these, we can say this partnership has delivered programs of both medication and education.
According to Clark (2006), the American multinational Nike is sacking Saga Sports Pakistani Company which is one of its hand-stitched balls manufactures due to significant violations of labour compliance. They have investigated that the manufacturer was subcontracting the works to causal workers who were working at their houses. A spokesman of Nike was saying that this was unacceptable because it is hard to check the safety of labour conditions when they are working at home as well as there could be a potential of child labour which they do not condone. In the late 1990s after the disclosing of underage labours practices around Sialkot in Pakistan made athletic-wear companies to tighten their checking over in this area. Nike which has been dogged by its abusive labour practices at those cheap labour countries such as Vietnam, Pakistan, Indonesia and China in the late 90's has been cleaning up its acts by taking action on this issue and has been praised by Oxfam. Now, Oxfam is working with Nike very closely to make sure that labours working in these factories have fair rights as well as getting standard working conditions. Oxfam also said that taking the action on Saga Sports is a very positive small step for Nike and Nike have to do more to make sure the rights of trade union are respected.
However, at early 2011, labour abusive problem at one of Nike factories had happened in Indonesia. "Workers from a factory of Nike's converse shoes in Indonesia said that they are being abused by their supervisors physically and verbally. Nike discloses that such abusive treatments has been occurring among the suppliers that make its hip high-tops however Nike is saying there was little it could do to stop it" (Anonymous, 2011).
From my point of views, it is not strange for Nike to face those kinds of labour abusive problem as it has a history of it. Nike's entrance to those markets which have cheap labours might be part of its long-term strategic planning. It would not be right to explain that Nike did not know that there are no cheap or child labour in those places. Nike is landing up in those places and has not taken proper precautions at all to avoid the use of underage labours in the production of its products. Basically Nike bases its products operations on the lowest labours wages to produce its products and to get more profit. Yes, Nike is cleaning up its acts by dealing with labour abusive issues and taking actions as the author mentioned above 2006 case but still the author personally thinks that what Nike doing is just a front and it is purely marketing tactic. Because if Nike really wants to be engaged the company interests in corporate social responsibility then, it should more engage in the area which is related to its environments. Instead of just randomly donating equipments around and making partnership with some charities just to retain its brand images and good public images which cannot lead real changes in society.
It is the most well-known brand name in the world and it is the world's leading beverage company. Protecting its reputation and the image of its brand is a main concern for coca cola management. It should not be surprised that the most important and critical ingredient for manufacturing process of coca cola company is water. To produce 1 litre of beverage requires 2.43 litre of water. Using such a large amount of water has led coca cola to face issues by community and environmental activists for damaging the surroundings by wastewater coming from the manufacturing process and using up water supplies from locals.
In 2003, coca cola was reported by the CSE (Centre for Science and Environment) for exceeding the allowing levels of pesticides according to European standards in a sample of a dozen coca cola beverages sold in India. This resulted immediate effects on coca cola revenues and gained a lot of media and public attention. However, it was considered safe under the local India law and thus, it was concluded that the company had not breached the national laws. But the Indian government acknowledged the need to adopt appropriate and enforceable standard for carbonate beverages.
The company was also faced the issues of water shortage in southern India. Besides, it was accused of water pollution by releasing wastewater into the surrounding of rivers and fields. Even the local public health authorities have to warn the local by posting signs around hand pumps and wells saying the community water was not healthy to consume as the soil and groundwater were polluted. Coca Cola Company set up one of its production operations in 2000 in Kerala, southern India. Right after the project began, local people said that they began to experience the shortage of water. The government opened trials against coca cola in 2003, and soon after that the company was banned for over extracting groundwater. In 2006, the Kerala government prohibited the sale and production of coca cola products based on the fact that it had high content of pesticides. But, later that year, India high court overturned the decision of Kerala court and the prohibition did not last long. According to Kumar (2010), a state government proposed fining a total of $47million to the subsidiary company of Cola in India due to its damage caused to the soil and water in Kerala in March 2010. Because of the long legal process against the government of India, the company lost the customers trust and this in turn damaged the brand image and reputation in India and abroad.
Liu (2008) states that Jeff Seabright, who is the vice president of water and environment resources of Coca Cola had recognised the fact that the company had not dealt with the controversy effectively. He acknowledged that local communities' perception of their operation matters, and that for the company having goodwill in the community is an important thing. Gradually, the strategy of Coca Cola was changed, concerning more about the damage control measures which addressed to the communities of Indian. Coca cola also founded Anandana which is the Coca cola India Foundation to concentrate on local water problems working together with NGO and local communities.
However, possibly one of the most outstanding changes in strategy of Coca cola was launching a range of water projects in India community. For instance, the rainwater harvesting project where the company's operations partnered with NGOs, the State Ground Water Boards, the Central Ground Water Authority and communities to address depleting the levels of groundwater and the water shortage by using the techniques of rainwater harvesting across 17 states in India. The technique is that it collects and stores the rainwater when preventing rainwater from runoff and evaporation for its efficient conservation and utilisation. The plan behind this is to retain large amount of good quality water which could go to waste otherwise. The 2012 water stewardship and replenish report mentioned that Coca Cola's operations together with NGO in India was outstanding and managed to utilize the rain water more efficiently resulting a balance between the use of groundwater for Coca Cola beverage production and saving and replenishing of water for the community. It is seemed that the issue occurred in India was a good learning example for the company and that it encouraged the company to practise a more proactive policy of CSR which concentrates on water stewardship on a global scale.
The company carried out a water stewardship programme in June 2007 and committed to lessen its water operation footprint as well as to offset the use of water in company production through locally related projects. Its main objectives are to increase the understanding of water cycles and watersheds to get improved water utilisation of Coca Cola, working together with various local communities across the globe and developing a universal framework to protect water sources.
In a new report, a CEO of Coca Cola, Muhtar Kent said that "the company has a responsibility and an opportunity to act as catalyst for positive change around the world" and to keep with this idea, Coca Cola went into a partnership with the environmental charity, World Wildlife Fund (WWF) to pursue Coca cola's Arctic Home its biggest cause branding campaign to protect polar bears. Since the 1920s, in the advertising of Coca Cola, polar bears have been featured and it became a major element of advertising of Coca Cola in the 1990s and this makes sense to me that the company would associate with WWF to aid keep polar bears safe. Also, it is a very determined campaign.
Pepsi, on the other hand, Coca cola's biggest competitor, have Pepsi Refresh Campaign which was planned to award million dollars in grants to companies whether small or big to sponsor new ideas which have a good impact on the environment and communities. It is a good campaign granting money to those who have good ideas to save the plant but the author thinks the campaign has no focused mission, it is quite confusing and do not see the connection between the Refresh campaign and Pepsi. In these modern days, partnering with other companies or institution is a must. Therefore, the companies have to make sure that the chosen partner company has to be a good fit for both the brand and cause when the companies are entering or joining into any cause related branding. In other words, it just needs to make sense and be related to what company is doing.
The author thinks that the corporate social responsibility adopted by the Coca cola is strategically focused. It might not be perfect but the company chose the right social issues to address. What they choose to do for the society like water stewardship programme is connected to what company is doing. The company has made a real improvement to society while the performance of the company is improving as well. This is a win- win situation for both company and the society.
Corporate social responsibility can become strength for the company rather than the fall down or a drag that will slow down the company's growth. Running a company cannot run away from the impacts on the environment and community that it produced. That is the very reason that the corporate responsibility arose. However, Porter and Kramer (2006) states that the company is not responsible for all the problems of the world but those that are connected to the nature and doings of the business. Therefore, by linking the corporate responsibility and the company's nature, the responsibility is no longer a loss to the company but can become a great asset to the company and image which we cannot achieve by money, possessions and quality of goods but reliable, a helpful and community concerned image can be built into the people's mind.