Business Essays - Products Company Society

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Products Company Society

Introduction

With 400 brands spanning 14 categories of home, personal care and foods products, no other company touches so many people's lives in so many different ways. At Unilever’s it is believed that corporate social responsibility is something that is done to society. It is inherent in everything the company does.

Not just voluntary philanthropy or community investment, important though that is, but the impact of its operations and products as well as the interactions that it has with the societies its serves. The company strives to generate employment. For every job the company creates in Unilever it indirectly creates several more in its supply chains and distribution channels. And businesses create less tangible social and economic benefits such as training and the transfer of skills, technology and know-how.

Kellogg Company is the world’s leading producer of cereal and a leading producer of convenience foods, including cookies, crackers, toaster pastries, cereal bars, frozen waffles and meat alternatives. Kellogg Company has a rich history of corporate social responsibility, a history that has grown and evolved to meet the complexities of today’s business world and the challenges of a global society.  Its founder, W.K. Kellogg, sought to “invest my money in people.”  That legacy continues to guide the company and its people. Social responsibility is a way of life at Kellogg.

Literature Review on Corporate Social Responsibility and its Impact on Business and Society

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Earlier businesses were considered to exist for the sole purpose of conducting business, and profits and growth were considered the mainstream results that determine the viability or success of the business, and they were held accountable their own economic well-being

According to London Benchmarking Group model “Business Basics, in the context of CSR, relates as how the company does its business and whether it is sensitive about the impact of its business on society and the plane- i.e. Societal and environmental returns apart from financial returns-the so called ‘ ‘tipple bottom line reporting’.

The Spectrum of Corporate social responsibility of businesses is very wide. It is not only the right things to do it but CSR efforts must distinguish a company from its industry peers. A business has responsibility towards all its stakeholders, including: the customers, to whom it sells goods and services; employees who perform integral part in operations of the business, shareholders & investors who finance the business assets, the environment and community at large, the suppliers and also the government.

The Board of trustees is responsible to perform a stewardship role, which balances the short term interests of the present day shareholders with the need to safeguard the interest of all the stakeholders now and in the future.

The literature on corporate social responsibility (CSR) is vast and spans numerous disciplines. In addition, the conceptual, moral and practical foundations for CSR are often poorly specified and range from pragmatic calculations designed to maintain profitability in the long term (Hamann 2003) to claims that corporations share with individuals and governments a moral duty to respect human rights (Lertzman and Vredenburg 2005). This situation has often left companies undecided about where to focus their energies and prioritise results (Watts 2005; Dashwood 2007) and created difficulties in evaluating CSR performance.

CSR best practice has generally been accepted as encompassing other issues such as sustainability, ethical supply and how a business engages with its communities. But the key issue is embodied in the final strand of most firms" CSR policies - how a business supports its own workplace and therefore its own people. The true power of CSR is when it is used to unify businesses behind a set of values. Any business that wants to be successful needs people to speak the same language and to establish a belief that every employee has worth and value (Jamiesen, M).

The contract between business and society is in three parts. The first is formal: laws and regulations. The second encompasses semiformal expectations, such as consumers’ expectations about privacy, which, if violated, could lead to increased regulation. Third and most challenging are known as frontier issues, those issues that have not previously been considered companies’ responsibility but may be in the future. The question of a financial institution’s responsibility to combat climate change is one example.

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The major benefits of CSR found to be includes CSR creating a ‘feel good’ factor about the company, which is increasingly instrumental in relation of talented professionals. It also focuses on social involvement of business would foster a harmonies and healthy relationship between the society and business to the mental benefit of both; the Social responsibility issues like Recycling, Reuse and Reduce waste may have favorable financial effects for the businesses, the social involvement of businesses may create a positive image for the company that may help in attracting customers, efficient personnel and investors.

Student Goldman wants to find business activities where doing better, helps attain the target—whether that is a social or environmental cause. Some examples quoted includes such as the recycling industry, where the more revenue businesses generate by diverting waste to alternate uses, the better it is for the environment. So there is not a trade off at all.

According to Watson, the ultimate shareholder ends up being millions of people invested through things such as pension funds. This creates enormous overlap between what’s good for shareholders and society. But for him, social and private interests go together. Companies are always really profitable in the long term. They’re not going to solve all our social problems. Not everyone sees it this way. All decisions will be weighed against profitability (Brady).

If a company is considering drilling for oil in a location where residents are concerned about the effects, the company may decide to take less profit in order to mitigate the impact. “But if it gets too expensive, they won’t do it. It is suggested that competitive forces can encourage companies to do things that are not sustainable or socially responsible.

In the end, it’s probably not realistic to expect every company to score well on a long checklist of social goals (Katz). But, for businesses earning profits is hard work and it’s even harder to create a profitable company where people enjoy coming to work, and add layers of social responsibility on top of that. But, to the extent that companies are aware of all the stakeholders when they’re making their decisions, they’re going to make better decisions.

As the issues have become more complex, so has the thinking about them. Environmental awareness has become sophisticated enough not to boil down to mere contradiction, and its hard today to find a business executive who doesn’t feel that environmental sustainability is important (Steen, 2007).

Certain authors try to link corporate social responsibility with the strategy making of the organization and view CSR in the longer perspective. From a strategic planning point of view, taking into account the Corporate Social Performance perspective raises some useful questions to be addressed in the strategy formulation and implementation phases: firstly, in a global business environment, to which communities a multinational corporation is responsible: home, hosts or all of them? Next what values, laws, regulations, best practices should apply: home, hosts or both? How to deal with social specificities and how to address various change issues in the different sites? How executives and managers should balance short-term shareholders’ expectations and long -term stakeholders’ interests? Who defines corporations’ public responsibilities? How social performance is measured? All these questions are not easy to be answered and yet impact heavily strategic design and day-to-day operations.

The temptation could be then for executives and managers either to ignore them, either to concentrate too much. Both approaches are to be avoided, because anytime Corporate Social Performance programs are considered distinct from ‘real’ or ‘business’ corporate performance, then they lose their viability and usefulness and contribute to widen the gap between business and society (Biscaccianti, 2003).

Corporate Social Responsibility has become increasingly important to businesses over the last few years. The case for demonstrating corporate responsibility is getting stronger. Expectations among key opinion formers, customers and the public are increasing, Staying on top of and in front of this strengthening tide of opinion for company involvement is a challenge for all companies. Some are meeting it; others are failing to do so, and still others are scrambling to catch up with public expectations.

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Corporate Social Responsibility cannot be an additional extra - it runs to the core of every company's ethics (both abroad and at home), and its treatment of employees and customers. With more and more companies responding to stakeholders' calls for increased accountability, and many publishing Health, Safety and Environmental or Social reports, the wider issues of business ethics remain key for all large companies.

Unilevers

With 400 brands spanning 14 categories of home, personal care and foods products, no other company touches so many people's lives in so many different ways. From comforting soups to warm a winter's day, to sensuous soaps that make you feel fabulous, its products help people get more out of life.  Today Unilever employs 179 000 people in 100 countries worldwide, and supports the jobs of many thousands of distributors, contractors and suppliers.

Unilever has grown into one of the world's major consumer goods businesses by making and selling brands – such as Dove, Omo, Lipton and Knorr – that meet people's everyday needs. Each day, 150 million people choose Unilever products to feed their families and clean themselves and their homes. At Unilever, it is believed that the very business of doing business in a responsible way has a positive social impact. Thus they try to create and share wealth, invest in local economies, develop people’s skills and spread expertise across borders.

The purpose of Unilever being started as a limited liability company is the creation of profit and is also an important reason of its existence today, it was not for the creation of profits that companies are primarily designed. Incorporation with limited liability was a concept created by society as a means of enabling people to exploit opportunities, manage risks and accomplish something together profitably that they could not achieve separately. So if companies did not exist and you wanted a means for delivering innovation, you would have to create them.

Companies are, therefore, a product of the societies in which they operate, which is why, when people ask me what is the relationship between business and society, I am always surprised, because the question implies that business and society are somehow distinct and separate from each other.

At Unilever no separation is seen amongst it. Business is part of society, not outside it. At Unilever it is believed that business has a responsibility not just to make profits for its shareholders, but to innovate, to create a long-term sustainable business for all the stakeholders. This may not be true for all businesses. Different companies have different purposes, motives, and values and, as with all sections of society, business has its fair share of bad and ugly companies, as well as good ones.

It is believed that corporate social responsibility is something that is done to society. It is inherent in everything the company does. Not just voluntary philanthropy or community investment, important though that is, but the impact of its operations and products as well as the interactions that it has with the societies its serves.

The company strives to generate employment. For every job the company creates in Unilever it indirectly creates several more in its supply chains and distribution channels. And businesses create less tangible social and economic benefits such as training and the transfer of skills, technology and know-how.

At the most basic level, the company produces products that raise the quality of life. These products enable people to feed themselves and live clean and hygienic lives. You and I might take that for granted, but for many in the poorest parts of the world, washing hands literally saves lives by counteracting the spread of disease. Decent nutrition underpins health.

So it is believed the very business of doing business responsibly can have a positive impact and contribution to make to society.

Unilever is a decentralized business and its managers have a lot of autonomy to take decisions that are right for their local markets and right for the local cultures and societies in which they operate. In other words, we it is a multi-local multinational and this is what makes it successful. And, of course, all our consumers are local too; they are citizens who live in local communities. At the company it is believed that the only way a company can be guided in its corporate behavior is by paying due regard to society’s norms and expectations and by articulating its own values and standards.

At Unilever they have a statement of Corporate Purpose and a Code of Business Principles, which set out the company’s aspirations and the operating standards. In the Code of Business Principles, all standards are stated explicitly.

The Board of Unilever also undertakes not to criticize local management for any loss of business resulting from adherence to our Code and employees know that they will not suffer any repercussions from reporting any breach of the Principles.

In essence, though, our commitment to responsible corporate behavior is based on conviction rather than compliance. It wouldn’t work any other way because ours is neither a centralized nor a compliance-driven culture.

At the company it is known that corporate social responsibility is not a soft issue. There are times when tensions between commercial opportunity and social impact involve issues that are not clear cut or straightforward, requiring tough trade-offs. CSR is a hard-edged business issue.

Kellogg

With sales of almost $11 billion, Kellogg Company is the world’s leading producer of cereal and a leading producer of convenience foods, including cookies, crackers, toaster pastries, cereal bars, frozen waffles and meat alternatives.

The Company’s brands include Kellogg's®, Keebler®, Pop-Tarts®, Eggo®, Cheez-It®, Club®, Nutri-Grain®, Rice Krispies®, All-Bran®, Special K®, Mini-Wheats®, Chips Deluxe®, Sandies®, Morningstar Farms®, Famous Amos® and Kashi®. Its products are manufactured in 17 countries and marketed in more than 180 countries around the world.

Kellogg icons such as Tony the TigerTM, Snap! Crackle! Pop!TM and Ernie KeeblerTM are among the most recognized characters in advertising.

Kellogg Company has a rich history of corporate social responsibility, a history that has grown and evolved to meet the complexities of today’s business world and the challenges of a global society.  Its founder, W.K. Kellogg, sought to “invest my money in people.”  That legacy continues to guide the company and its people. Social responsibility is a way of life at Kellogg.  It means investing in and enriching our communities. 

It means encouraging employee volunteerism.  But it means much more.  Its commitment to being a good corporate citizen also includes protecting the environment, selling nutritious products and advocating healthy lifestyles, acting with integrity and adhering to the highest ethical standards, promoting diversity in its work force and partnering with diverse suppliers and ensuring a safe, healthy workplace.

The company’s values reflects its attitude towards corporate social responsibility. The values include integrity. The company presses on acting with integrity and show respect. It requires demonstrating a commitment to integrity and ethics, showing respect for and value all individuals for their diverse backgrounds, experience, styles, approaches and ideas, speaking positively and supportively about team members when apart, listening to others for understanding and assuming positive intent.

The accountability requires accepting personal accountability for our own actions and results, focus on finding solutions and achieving results, rather than making excuses or placing blame, actively engage in discussions and support decisions once they are made, involve others in decisions and plans that affect them, keep promises and commitments made to others, personally commit to the success and well-being of teammates and improve safety and health for employees, and embrace the belief that all injuries are preventable.

The responsibility towards customer is shown by the passion about the business, the brands and the food. It requires showing pride in its brands and heritage, promoting a positive, energizing, optimistic and fun environment, serving its customers and delighting consumers through the quality of Kellog’s products and services, it promote and implement creative and innovative ideas and solutions and aggressively promote and protect its reputation.

W.K. Kellogg, the founder of the company, built the company on the foundation of integrity.  His Square Dealer policy, where every dealer – wholesale or retail, big or small – got a square deal, is one example of his rigorous commitment to treating everyone fairly and with respect.

Acting ethically is a key part of what the company is today.  Its commitment to continuing the legacy that Mr. Kellogg entrusted is outlined in its Global Code of Ethics. All employees must read and adhere to these standards. 

Through the Global Code of Ethics, the employees understand that: the company is firmly committed to the fair and equitable treatment of all the employees and job applicants, customers and consumers expect more from Kellogg Company and it is every employee’s job to make sure Kellogg meets their expectations.

Investors count on Kellogg to deliver on its commitments, provide accurate information about its affiliates and to make responsible business decisions based on reliable records. Kellogg believes in doing business with suppliers, contractors, joint venture partners, agents, sales representatives, distributors and consultants who embrace and demonstrate high standards of ethical behavior. The company actively seeks opportunities to contribute to the communities in which it does business, and to improve the environment that sustains us all.

Evidence of CSR

Yes, the two companies have met the CSR criteria identified in the literature, it meets the three levels that are basically identified and has clearly laid down the efforts in catering to the stake holder concerns mentioned, be it the customers, government or any other.

Project RESPONSE is the flagship research initiative of the European Academy of Business in Society (EABIS) knowledge development and learning program. It has been carried out through an innovative partnership between EABIS academic members and corporate founding partners IBM, Johnson & Johnson, Microsoft, Shell and Unilever.

Supported financially by the European Commission under the Sixth Framework Program, RESPONSE is led by INSEAD in partnership with Copenhagen Business School, SDA Bocconi School of Management, Leon Kozminksi Academy, and IMPACT. EABIS funds collaborative research, education and training projects and hosts numerous events and workshops across Europe to develop more and better knowledge and learning on corporate responsibility.

It also leads the EU Commission funded ‘European Platform for Excellence on CSR’ (CSR Platform) project as the designated centre for excellence on CSR Research under the Sixth Framework Programme. With a European focus, but a global outlook, EABIS’ membership currently numbers 80 organizations, spanning four continents and 19 countries.

The network includes some of the world’s largest global corporations, such as Shell, Unilever, IBM, Johnson & Johnson and Microsoft and the majority of Europe’s top business schools such as INSEAD, IMD, ESADE, IESE and the London Business School (EABIS).

Unilever is a leader in CSR reporting and assessing the environmental impact of its products over their life cycle. Its margarine and vegetable oil products plant in Rexdale, Ont., participates in the Canadian Greenhouse Gas Challenge Registry, a voluntary emissions reduction program. Unilever has several green sourcing initiatives, including a sustainable fisheries program in co-operation with the World Wildlife Fund.

Kellogg’s charitable initiatives include donations to non-profit organizations where employees or retirees volunteer. Kellogg¹s loses marks, however, for insufficient environmental reporting--apart from a brief outline of initiatives, the company discloses no details on programs or performance. Michigan-based Kellogg¹s has used recycled paper to make cartons since it was founded in 1906.

Corporate Social Responsibility and Marketing Management

Marketing must reflect and interpret the consumer culture. Now that a more acute sensitivity to ethics has arisen in a number of consumer markets, has marketing picked this up? The answer is that in the best marketing companies, yes we have. Why have companies failed in observing basic business ethics? Because marketing, the custodian of the consumer franchise has been excluded from decision-making.

Idealism, rationality and choice all play their part in marketing. The marketer’s task is to unearth the role these ideas play in customer preference. Governance and social responsibility have therefore emerged rather naturally as areas of direct concern for marketers, because critically they have become issues for opinion leaders within the consumer culture.

What is really important about a company to most people? The top answers in a recent MORI survey were: services, products, and customers. A critical factor in consumer choice is trust. We all feel a real sense of trust for our favorite brands, and always have done. But in a data driven, high-tech, high reward, virus riddled world, the absence of trust has crept in. A sense of mistrust has begun to pervade the market (Stubbs).

ITC’s efforts can be seen in its corporate social endeavor for its environmental awareness program 'Sunfeast Hara Banao Campaign'. The campaign had a registered participation of over 70,000 students from over 100 schools spread across Mumbai. ver the last six months a detailed programme was undertaken orientating school children on topics such as:

  • Reduction in usage of plastic bags: School children were given practical lessons on the disadvantages of plastic bags and the adversities faced thereof (Plastic bags is one the leading damaging components of the environment), recycling of plastic to minimize usage of plastic bags
  • Use of alternative materials: Step-by-step instruction in using alternate material such as waste paper to a make paper bags instead of plastic bags
  • Encourage butterfly gardens: A team of experts educated and introduced children to the concept of 'Butterfly Gardens', wherein special plants are grown whereby creating a natural habitat for butterflies to breed
  • Signature Drive: A pledge from people in support of Sunfeast Hara Banao Campaign for a better tomorrow. A total of about two million signatures have been obtained by the students as a part of the drive

It is found that ITC Ltd will be investing around Rs 600 crore for rolling-out around 76 Choupal Sagar complexes. The efforts are geared towards providing employment in the far flung areas. The company has presence in 130 districts and following its expansion, will have a presence in 350 districts.

ITC has also started selling fresh fruit and vegetables in states like Punjab. Presently, the company is selling fruits and vegetables in West Bengal, Uttarakhand, western Maharashtra and Andhra Pradesh and trying to find out how it works and accordingly will roll-out our expansion plans the company has also started operating in states like Bihar and Orissa. Operating in these states also helps the company in its corporate social responsibility initiatives, he said. Depending on the response, the company plans to foray into other states.

References

Hamann, R. (2003) ‘Mining Companies’ Role in Sustainable Development’, Development Southern Africa 20.2: 237-54.

Lertzman, D.A., and H. Vredenburg (2005) ‘Indigenous Peoples, Resource Extraction and Sustainable Development: An Ethical Approach’, Journal of Business Ethics 56: 239-54.

Watts, M. (2005) ‘Righteous Oil? Human Rights, the Oil Complex and Corporate Social Responsibility’, Annual Review of Environment and Resources 30: 373-407.

Dashwood, H. (2007) ‘Canadian Mining Companies and Corporate Social Responsibility: Weighing the Impact of Global Norms’, Canadian Journal of Political Science/Revue canadienne de science politique 40.1: 129-56.

Ali, A. and Faircheallegah, C. (2007) Extractive Industries, Environmental Performance and Corporate Social Responsibility

Jameisen, M. (2007) Clearer definition will help firms’ CSR commitments

Steen, M. (2007) What does corporate social responsibility mean to you? Stanford Business Magazine

David, P. (2007) Managerial Contracting and Corporate Social Responsibility, Journal of Public Economics

Perrini & Fransisco (2008) Editorial Introduction: corporate social responsibility and trust, A European review

Basu, Kunal, Palazzo & Guido (2008) Corporate Social Responsibility, Academy of management review

Kolstad, I. (2007) Why firms should not always maximize profits, Journal of Business Ethics

(2007) How to be a CSR champion Supply management

Wasieliski & David, M. (2007) Corporation, Be good! The story of corporate social responsibility, Business and Society