Businesses are entities that are initiated with an aim of generating profits. However, the objectives of various businesses changes depending on the owners. Businesses owned by the government may have other objectives apart from maximizing profits. Some businesses may also be started with an aim of utilizing the available resources. However, most of the businesses are started mainly to ensure that the wealth of the owners are maximized. This is through investing in profitable projects that result in the highest profits. All other activities are carried out with an aim of ensuring that the businesses survive in the market and continue making profits. If a company fails to generate profits, it closes because the major aim of these enterprises is to generate profits.
Corporate social responsibility and ethics is an important aspect of businesses. All businesses have to observe ethics and corporate social responsibility to succeed in the business. Business operates in an environment and therefore, they should be responsible to this environment. It will be realized that the environment in which they operate provides them with the raw materials, labour and customers that are important for their survival. Businesses should therefore show interest in the environment in which they exist. Corporate responsibility is therefore showing concern to the community members, government, customers, employees, owners, and any other member of the society that is interested in the business entity. Failure to do this can lead to adverse effects to the business (Aras, 2010).
Corporate social responsibility can be achieved through various activities. To the customers, the business should ensure that the goods are safe, of high quality and can be supplied when needed. In addition, the goods should be at reasonable prices. The business should also respond to the need of the customers by producing goods that meet the needs of the customers effectively (Aras, 2010).
The businesses should also be concerned about the members of the society. They should minimize pollution that affects the members of the society negatively. The businesses should also ensure that minority people such as disabled are taken care of and people from the society receive employment from the business. The business should also support development projects in the society (Mallin, 2009).
It is true that observing corporate social responsibility is a cost to the business. Costs usually reduce the profits of the business. However, incurring these costs is extremely important if the businesses have to increase their profitability in future. Businesses have different corporate social responsibility objectives all of which support the fact that the businesses are likely to achieve a higher profit level by achieving the objectives (Idowu, 2009).
Corporate responsibility increase profits in various ways. By obeying the government laws and paying taxes as required, the government sees that the business is responsible. In this case, the business is never accused of disobeying laws that usually lead to huge fines. Fines are costs to the business and increase in the fines by the government means that the revenue of the business reduces to an extent.
Responsibility to the society is important in that the society become supportive to the business in various ways. Businesses that are socially responsible make the society to prefer them when it comes to the supply of raw materials. This means that such a business never faces delays or shortages of raw materiels. Such a business also receives the raw materials of the best quality. Businesses that are socially responsible therefore produce goods of the highest quality at lower costs and produce goods continuously since there are no shortages of raw materials. This ensures that there is continuous supply of their products to the customers hence revenues are collected every time. Increased revenues due to high quality also lead to increased profits of the business.
Corporate social responsibility is also important in ensuring respect for a certain business. If a business organization treats its employees well, then its reputation is highly respected. Employees in such organizations become loyal to their employers and concentrate in achieving the goals of production. Satisfied employees attract other highly qualified employees that are highly productive. This leads to improved efficiency in the organization and reduced conflicts with the employees. Efficiency reduces the production costs of the business. Reduced costs of production means that the profits and revenue of the business improve.
Corporate social responsibility also ensures that the customers are satisfied. Employees receive goods of the highest quality. The employees are assured of fairly priced goods, goods that meet their needs and the customers are assured of continuous supply in the future. Companies that are socially responsible also communicate to reply to the questions of the customers. This creates customer loyalty, which is important for the future survival of the businesses. Satisfied customers also inform other customers who come to the same business. As a result, the number of customers of the socially responsible companies increases. Increased customers means that the sales are increased hence the profits of the business (Hancock, 2004).
Google is one of the companies that had ignored corporate social responsibility for a long time, since it was started in the year 1998. Since then, it had never adopted corporate social responsibility in its activities. An American based company produces software for mobile phones and tablets. It is also a search engine company and it is used in the creation of various documents. It is during the mid of the year 2010 that the company realize that corporate social responsibility is important for the organizations’ success. It therefore took several measures to ensure that it also adhered to corporate social responsibility. First, the company aims at using resources that are friendly to the environment to ensure that the effects to the environment are reduced. The company also sponsors many children to pursue their academic activities from countries such as china. The company also sponsors development projects in various countries through assisting the nongovernmental organizations in these countries that support development. Since its adoption, the company is highly concerned about the corporate social responsibility to the people it serves.
After engaging in corporate social responsibilities since 2010, google has thanked the effects of approach since it has led to its increased profits. During the four quarters of the year 2010, the company recorded a continuous increase of profits from 48.7 to 51 percent. This is due to the increased sales and reduced costs of the company. Currently, the company has the largest share of the market that is more than 70 percent. This shows how corporate social responsibility can be of importance.
Walt Disney was started in 1920s.The company engages in providing entertainment services to families. It is associated with the production of movies that are liked by many people. Its performance in the economy is quite good. The company is recognized all over the word for the provision of quality services to people. The company pays volunteers who provide various services to the societies that the organization serve. This is as a way of giving thanks to the community. The company also has respect for its laborers. The employees in the organization are highly valued and are paid well without discrimination. The company is also concerned about the environmental pollution and it takes the necessary measures to reduce this pollution. It also helps to clean up the environment for the benefit of the society (Beesley, 1978).
The company adopted corporate social responsibility in the year 2003. Its market share in the year 2002 was about 14 percent. After adopting the corporate social responsibility, the market share increased to 16 percent. Since then, the market share of the company has been considerably high. The company was ranked among the top in terms of corporate social responsibility in the year 2010. This shows that corporate social responsibility has been working in favor of the interests of Walt Disney Company.
Microsoft is a global company that engages in the production of softwares that are used in computers, mobile phones, and iPods. This company is much concerned about the corporate social responsibility. In the previous years, the company did not care about its social responsibility. It was not until the year 2011 when the company accepted the demands of the shareholders to become socially responsible. The company had ignored the effects to the environment that it caused in the process of producing its products. In the current time, the company supports many programmes through international organizations such as WHO. The company also sponsors children in Africa to pursue their academic activities. The company has actually realized the importance of being socially responsible. Before accepting corporate responsibility as its strategy, Microsoft market share increased from 93 percent to 97 percent. This shows that the action had positive impact on the company regardless of the increasing competition in the company market.
General electric is a United States multinational company that operates in other countries apart from United States. The company was incorporated in the year 1892. The company has been ranked as the 14h most profitable company in world. Its concern on social responsibility is one of the strategies that have led to its success. The company ensures that it reduces environmental pollution. It also supports development projects in the regions that it operates. The company pays its workers well and ensures that their needs are well catered for. This is why the company has experienced good performance and its growth has been easy. Its strategy has created loyalty of the employees and they have no reason to leave the company in search for jobs in other companies. The company supports the career development of its employees and this attracts highly qualified employees who are innovative and bring new important ideas to the company. Since its application of corporate responsibility, the market share of the company has never dropped below 20 percent. The current market share of the company is 22.89 percent. This shows that the company has a reasonable proportion of the total market share in the United States economy considering other many companies involved in the generation of electricity.
Chevron is a multinational company based in the United States and its major role is production and supply of electricity. The company supplies oil and gas to various consumers in over 180 countries all over the world. The company has experienced many problems related to environmental pollution. It has faced fines due to its activities that highly affected its profits. However, the company currently takes environmental pollution seriously and is committed to reducing environmental pollution for the benefit of the society. The company relates well to both the employees and the society members. Regardless of the competition from other companies producing clean energy, the company has continued to perform well in terms of profitability. Its current market share is 46 percent, which is a good market share. This is a good performance and the company is expected to grow with this market share.
Starbucks is one of the most successful companies in the world. The company sells beverage products such as Coffee. It was established in the year 1971 and since then, it has always valued its customers for that long. Social responsibility has been a strategy that has been implemented throughout the life of the company. There are many companies in the United States that offer similar products like those of Starbucks. The company has a market share of 1.7 percent. Considering the large size of the market and the number of similar companies, this is a good share of the market for Starbucks. It is due to its corporate social responsibility strategy that the company has been able to remain profitable as compared to other competitors. The company is number six in terms of market share and it has remained among top ten in terms of the company with the highest market share in the market.
It is important to note that companies that have ignored corporate social responsibility have found themselves in problems. Their performance in the market has been deteriorating. Employees move from these companies to companies that better address their needs and the needs of the other members of the public. These companies have also lost their customers since many customers do not wish to be associated with companies that do not take care of the society they operate in. The following table shows how several companies have been performing in the recent years in terms of market share. These companies have all ignored corporate social responsibility. This is why their performance in the market has not been very attractive. It shows that customers have gone to other companies that are more concerned about their needs.
Evaluating the companies above, it can be seen that those companies that ignore corporate social responsibility experience less market share and low profits. Few shareholders are willing to invest in these companies and as a result, their share value is low. Even though some companies perform well in the market regardless of failure to obey corporate responsibility, it is because these companies have the strategic resources that help them maintain their market share.
It is important therefore to state that companies have to adopt corporate social responsibility if they are to perform well in the market. Through the strategy, they will ensure that their employees, customers, society and the government support their activities. By satisfying the employees, the companies will be able to attract even more qualified employees, which improve innovation and developments in the company. Satisfied employees also avoid strikes, which cost the company in a way, and at the same time, the employees remain motivated improving their productivity. Responsibility to the government ensures that the companies receive support from the government. Penalties are avoided which usually increase costs to the companies. Being responsible to the society ensures that the companies receive support and a conducive environment to carry out its activities. Such companies receive preference in terms of supply of raw materials and labour which leads to success. Generally, the long run effects of being socially responsible are beneficial for the company.
It is however important to realize that corporate social responsibility involves costs and this is why some companies choose to avoid engage being socially responsible. They instead use the funds for other purposes such as investment. However, the analysis of this research paper proves that in the long run, these companies suffer because they lose their employees and receive huge fines that affect their profits. They also lose their customers hence reducing their total revenue. It can be concluded that corporate social responsibility is advantageous for companies and they should consider implementing this strategy if they have to succeed.
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