Issues faced by Corporate Social Responsibility

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Corporate social responsibility (CSR) is also known as corporate responsibility and corporate citizenship, responsible action, responsible action constant (SRB), or the performance of social institutions. It is a form of the report of the companies and organization have been incorporated into the business model. Ideally, the policy of corporate social responsibility is a compact, self-regulation and the mechanism by which the work would monitor and ensure their commitment to the law and ethical standards and international rules. (William, Werther, David, 2005, 56-79)The development of the businesses in claiming the responsibility by the impact of its activities on the environment, consumers and workers, local communities, stakeholders and all other members of the public domain.

Furthermore, it proactively works in strengthening the public interest, by encouraging the growth and development of society, and voluntarily on the Elimination of practices which are acting as damaging the public domain, regardless of legality. Corporate Social Responsibility is essentially the inclusion of socially responsible companies to deliberate the public interest in the resolution companies decisions , and in honour of the triple bottom line : people, planet and profit.

The practice of corporate social responsibility is a subject of debate and criticism and widespread. Proponents argue that there is strong demand for the issue of social responsibility of businesses, and companies that benefit in many ways by working with a broader perspective and longer than their own direct, any short-term profits. Critics argue that the act of corporate social responsibility of the primary economic role of companies, and others believed that no more than window surface is decorated , and some say it was an attempt to pre-empt the role of governments as a watchdog on the powerful multinational companies . (Argandona, 2001, 163 175)

Corporate Social Responsibility and nature of business:

The companies are responsible only to their shareholders, not society as a whole. In spite of the companies accept only that it must comply with the laws within the countries in which they work, they argue that companies do not have any obligation another community. Some people look at corporate social responsibility as it is inconsistent with the nature and purpose of the business, but is considered an obstacle to free trade. Analyst assert that the social responsibility of companies match with capitalism and are in favour of neo-liberalism and argue that improvements in health and longevity or infant mortality may have been created by economic growth are attributed to free enterprise. (Spar, La Mure, 2008, 78 101)

CSR is the concept of creating a good sense of business. Basically, it means that in Corporate Social Responsibility: how a business should ethically behave and how it can contribute in the growth of the economy while improving the quality of life at workplace and their families including the society and community.

A theory with the name of creating shared value was presented by Professor Michael Porter. This theory states that corporate success and Social welfare are interdependent and go hand in hand. In this way, a company s contribution in social welfare identifies it potential of success. For example, a healthy environment at workplace, health educated workforce, a government policy adaptive and sustainable resource. These factors help the business to grow effectively. If the business acquires growth based on these factors then it is going to bring extra revenue which can be used in the development of Social welfare programs. This chain then goes on and on.

Marks and Spencer:

Marks and Spencer plc, also known as M&S, is a world s renowned retailer with its headquarters in Westminster, London. It has more than 300 stores across above 40 countries and more than 70 stores in UK. M&S is famous for its clothes and food products. It was found in 1884 by Thomas Spencer and Michael Marks in Leeds.

In1998, Marks and Spencer was the first British retailer to acquire pre-tax profit of more than 1 bn. However, after few years M&S faced crisis that lasted for few years. Since 2000 the company Marks & Spencer began rapidly to expand and explore other areas: household products, food, furniture, products for beauty, technology, financial services, etc. In recent years, Marks & Spencer stores act as full-scale shopping centres with huge grocery supermarkets, entertainment venues and cafes.

The company is covering general merchandise sector and food sector. The general merchandise is divided into menswear, women s clothing, home and beauty. All these units have contributed in shaping up company s vision stating that they want to set a standard through which other company should be measured. These units are centralized by the values of Marks and Spencer. These include trust, service, value and innovation. (Utting, 2007, 11 13)

Each of the units has developed its specific strategies of Corporate Social Responsibility that is based on the brand-value of trust. The issues that are tackled in the strategies were identified through customer research, understanding within business and by interacting with important stakeholders, government, NGO s etc. An action plan is developed for handling each issue that arises in order to balance expectations of the customers and the stakeholders and other external pressures. Such as, in the food sector, sixteen issues are identified starting from labour standards to pesticides.

These issues are divided into three groups: people, products and community.

People: these include the company s employees plus the people who are employed in its chain supply.

Product: this division emphasizes on the production of high quality, valuing that are positive for social and environmental benefits.

Community: this division emphasizes on the role of the company in helping to maintain and develop places where people can work and live easily.

For all these groups, Marks and Spencer have planned a program with the name of Plan A. (Archie, 2008, 28-46)

What is Plan A?

On 15th Jan, 2007, Marks and Spencer took an initiative by launching a program known as Plan A. This was to bring a dramatic increase in the environmental sustainability in five years and to increase the cost to 200 million.

Plan A contains hundred commitments for five years. In order to address the major environmental and social challenges faced by Marks and Spencer, today and in future. They have a tag-line for it which states: Because there is no Plan B. the commitments cover five different themes: Sustainable raw material, climatic change, fair partnership, health and waste with the purpose of:

? No waste will be sent to landfill

? Become Neutral to carbon

? Bring extension in the sustainability of resource

? Help in improving the lives of employees working in their supply chain department(Brown, 2008 ,125 147)

? Provide a healthy lifestyle to the customers and the employees of the company

In spite of the eighteen percent fall in the share price of the company in 2008, the company confirmed that they will continue with Plan A saying that there were persuasive commercials and moral reasons to continue the plan.

To begin with, as a part of Plan A, the iconic reusable, hessian, brown bag was introduced in the year 2007. This brought a hope that it will decrease the usage of plastic bags over the next few years. In 2008, Marks and Spencer introduced the 5p carrier bags scheme at their stores. The customers were supposed to pay 5p per vest carrier bag which was of standard size for their food purchases. This scheme was implemented as a part of Plan A, saying that it discourages the use of customary plastic bags. All the profits gained from the sale of these bags are given to the Groundwork UK.

To become a carbon neutral company, Marks and Spencer committed to only using the carbon equalizers as their last resort, confining to the cases where is required by the government or where the green air, road transport and technology will not be available for the predicted future.

In 2008, Marks and Spencer had 3 operational wind tribunes, one in Methlick and two near Strichen. These generate power that is enough to cover three stores through National Grid.

In 2009, the company started buying 2.6TWh of the renewable enrgy from the Npower which was enough to provide energy to all of the M&S offices and stores in Wales and England.

Analysis:

Benefits of Incorporating Corporate Social Responsibility: Plan A of Marks and Spencer

In 2007, Marks and Spencer came up with a program named Plan A. This was introduced to the public with the concept of developing an environment a better world for everyone to live in. They divided their plan into five major issues: raw materials, climatic change, health, waste and fair trade. This plan was developed to distinguish and help others in helping themselves. Plan A has provided numerous benefits. Some of these are: (Vogel, 2010, 45-79)

Firstly, Marks and Spencer got the value of differentiation. This does not necessarily related to the product but was also defining the moral values of the company. With the implementation of Plan A, Marks and Spencer got benefitted with appeal factor. A recent research states that, 88 percent of the customers will be more interested in buying the products from the company that is actively working in the society and engages and supports the activities in improving the environment of the society. Thus, it has provided an advantage to marks and Spencer by being well known for their active participation in Corporate Social Responsibility methods. They can easily attract their existing customers to increase their sales and they can even attract new customers by their Plan A project. This in turn, helps in adding up the profits made by their stores. But these profits eventually are used by Marks and Spencer in investing in the strategies of Corporate Social Responsibility. Although, Marks and Spencer can charge high price for their differentiated products in order to cover the cost of investment in CSR. The reason due to which they can charge higher price is their active participation in being socially responsible. This in the long run will increase their profit margin. This is a basic rule for CSR. (Cuthbertson, 2011, 64-71)

Secondly, the workforce at Marks and Spencer is very happy with some of the programs that the company is running. One of these projects was the Ready to Work project. In this project, Marks and Spencer helped around six hundred homeless people from UK to acquire work experience while they were being mentored by a friend. Moreover, above 30 percent of these people, who were internee, were later on provided a job because of the success of the project. This program came up with a market research which was successful and was stimulated by the founders of Marks and Spencer s strategy stating that the best and guaranteed way to acquire long-term success is to have good relationship with your suppliers, employees and the society. This message acted as a backbone for all the CSR strategies of Marks and Spencer.

A survey based on 500 employees of the company, stated that 75 percent fo the employees felt that the projects has contributed in making Marks and Spencer a great place to work. They also said that it helped them in increasing and enhancing their skills. This also led to an extra motivated workforce who feel completely comfortable at their workplace and have led to a decrease in the rate of employee turnover.

Thirdly, Plan A also covers the part of fair trade extensively. This is an issue which has gained UK s focus more than any other country. Marks and Spencer ahs purchased around a third of the world s fair trade cotton. (Cuthbertson, 2011, 64-71)

Not all the achievements were remarkably good. For cutting down the emission of CO2, Marks and Spencer tightened up the needs for attaining a company car. These steps did drop the corporate auto fleet from 488 to 469, but this did not brought any significant change. (Damien , David, 2010, 87)Compare to other achievements, this strategy must be left out of the spotlight.

Although, using a CSR strategy, can leave the company with a disadvantage. The biggest disadvantage for Marks and Spencer is the cost that is invested in the implementation of these strategies. Plan A introduced by Marks and Spencer had an estimated cost of around 200 million. Although, the CSR strategy helps in gaining profits in the long run and it helps in becoming financially strong, it still requires a huge amount of investment to implement the strategies. Thus, if the strategy of Corporate Social Responsibility is not successful in producing a desired amount of effect in attracting the customers, then it could cause great loss to the investors. This loss might not be disastrous for Marks and Spencer however; it can damage its reputation. Although, the Corporate Social Responsibility is about enriching the stakeholder, but if the strategy is not successful in bringing extra profit then it depends on the morals and values of the investor to consider what a good outcome is and what a bad outcome is.

Another disadvantage of this strategy would be the cost of keeping the customers happy. In the Plan A of Mark and Spencer, there are twenty targets for enhancing the fair partnership between the suppliers. Initially, the investment should be large as it targets the suppliers belonging to the international market. (Beder, 2007, 112-128)

The most essential factor in this Plan is the consumer power. According to the research, around 88 percent people would prefer buying a product of the company which is highly active in social activities and are working with the concept for enhancing the quality of life. Therefore, Marks and Spencer cannot bypass this point as according to the economic climate these days, a customer moves on to the next best solution available depending on the morals they chose to follow. Thus, to build up CSR strategies are a positive investment in holding back the goodwill and image of the company, which Marks and Spencer has already established.

Implementation in a developing country such as Bangladesh, India and Sri Lanka:

Marks and Spencer can do it by agreeing and determining a fair, living wage before implementing any process in order to make sure that their clothing suppliers do pay these wages to their workers in Sri Lanka, Bangladesh and India. This could happen as the supplier might not pay the actual amount and manipulate while paying to the workers. They will have to work with their suppliers in improving and enhancing the productivity and management activities of their employees.

Marks and Spencer can work with their suppliers in order to provide education and training programs. These include educating people about the basic health care and worker s rights in their factories that are present in the developed countries.

They can implement Plan A in these countries by talking the help of their suppliers in developing the factories with either being ethical or encouraging environmental characteristics. They can even encourage 10,000 farmers to join their sustainable agriculture program. (Mike , 2008, 353)

They can source all the cardboards for the packaging of Marks and Spencer food products though single model forest project.

They can also become the first key retailer in ensuring complete traceability of all the important raw material that is used in their home products and their clothes such as wool, Cotton, leather, wood, nylon and polyester.

They can also implement their Plan A project by becoming an important retailer to make sure that the key raw material such as soya, palm oil, coffee, beef, leather, etc, are coming from sustainable resources which do not contribute to deforestation.

As a part of their Plan A, Marks and Spencer have committed in enhancing and improving the lives of thousands of people in their supply chain sector. (Peter, 2010, 46) For implementing their project in the developing countries Marks and Spencer needs to operate the strategies according to their culture, ethical backgrounds, nationalities, religion and races.

Conclusion:

In this modern era, it is 100 percent important that companies differentiate themselves from rest of the market by working on developing strategies for their Corporate Social responsibilities. In order to make their strategy work successfully, companies need to strongly highlight educate people with their CSR plans. Keeping the research in mind, it is important for the companies to differentiate themselves. The company should also be aware of the cost that involve in the implementation of the plan. Whether you do it for financial reasons or to feel morally good, CSR plans completely depend on your ethics, both economically and personally.

Marks and Spencer has started their journey to make their business more sustainable. Over the past decades, the company has never been stagnant. It has been moving from philanthropy to investing in the community to investing in corporate social responsibilities. In 2007, Plan has proved to be a radical commitment by focusing on specific CSR issues and tackling the sustainability issues.

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