1)
According to economists a small firm or a large organization operates in three different markets including capital, product, and an individual market for social pressure. The social presence is maintained due to pressure from activists, governments, and other not-for-profit organizations (Baron, Harjoto, & Jo, 2011). As the owner of a company the path followed is the same as provided by David P. Baron in his book “Business and its Environment.”
The company must support to operate at best in all the three markets and must create an equilibrium that emphasizes on establishing strategies to enhance financial performance, corporate performance, and also overcome the social pressures. The implementation of the budget can only be increase with the help of policies and strategies that provide transparency and align the operations with the objective of the firm. On the other hand, corporate performance can be increased with the use of specific ideas to distinguish the business from the competitors.
These ideas and plans must also be aligned with the vision and objective of the organization. Finally, the social pressures can be mitigated with the use of corporate social responsibility (CSR). In the current scenario, it is essential for large organizations to take CSR seriously as government and other institutions like media have created pressures. The pressures in the real world have resulted in an increase in the CSR activities by both medium and large organizations.
The implementation of strict CSR policies has been a topic of study by many researchers throughout the world, and most of the papers have highlighted an active yet weak relationship between the two variables. The significant contribution of corporate social responsibility is that the company can attract new customers and also the investors to invest in the business. The customers believe that the firm that encourages the investments in CSR activities is more reliable and professional.
The sales and awareness of products are also increased as people start to talk about the company’s operations and their significance in the global world. The book explains that the business must focus on establishing such strategies that can lead to an improvement in the capital, corporate, and social performance of companies (Baron, Harjoto, & Jo, 2011; Baron, 2006).
The book provides an understanding of the real impact of financial performance and corporate social responsibility of firms and prominent organizations. The companies that primarily focus on the implementation of the budget can get as much money to invest in social practices. It is a fact that corporate social responsibility could increase the financial performance of an organization, but improvements in financial performance must lead to additional money left for the company to invest in other activities such as corporate and social performance (Baron, 2006).
Baron (2006) in his book explains that there is a significant difference between corporate social performance (CSP) of an organization and corporate social responsibility (CSR). The main factor that distinguishes CSR from CSP is that CSR originates from moral responsibility and in contrast, CSP does not arise from moral duty. The author also states that there are differences between the outcomes of CSR when strategic plans are developed, on the other hand, CSR activities done after social pressures result in other outcomes.
The strengths of strategic CSR is that the organization becomes generous in giving, and most of the CSR activities are done outside the Unites States. The activities provide additional benefits to the environment from beneficial and innovative products. Most of the companies spend on limiting and prevent the amount of pollution. With the help of strategic CSR companies identify the countries and people who require help and provide the possible ways to help them in the short and long run (Baron, 2006).
The aim of ABC Company must be established in such a way that it facilitates/support the future strategies, and therefore, the goals for the performance and profitability will be measurable and will be aligned with the aim of David P. Baron (Baron, 2006). The employees of the organization who are one of the most appropriate and essential internal stakeholders of the organizations would be provided with improved policies that would lead to improvements in recruitment.
The management must focus on minimizing the wastage of resources to increase productivity and efficiency. The stakeholders of the business will be encouraged to participate in the operations of the business and would be provided with facts and figures for the CSR and other environmental activities of the business. The CSR activities will be reported to face the government regulations and would help to improve the prospects of the company.
The website of the business would also have the CSR reports so that the customers and other stakeholders would be able to know about the contributions of the business towards the society. The transparency in the operations will also be maintained to avoid inefficiency and ineffectiveness of the employees. The management aims to provide assistance and engagement to the stakeholders and will ensure that their interests are monitored and sustained. The company's major stockholders include the government, employees, media, and shareholders who invest their money in the stocks of the business with an intention to get higher returns. The stakeholders will support the steps undertaken by the company to support CSR activities as social pressures also want organizations to spend their profits on the betterment of others throughout the world.
2)
The analysis of David P. Baron’s book identifies the possibilities of understanding the non-market situation and environment also known as the issues analysis. The other type of analysis conducted to understand the market environment for a business is called the industry or a market analysis. The book by David P. Baron provides a complete description of the issues analysis with the help of a framework (i.e. analysis of non-market environment) that constitute of “The Four I’s” including Issues, Institutions, Interests, and Information.
The first I of the framework is Issues and the author states that the issues can be shaped by social, government, and legal forms and are the part of non-market environment globally. The issues must be explained in order to identify their significance. Taking a hypothetical example the impact of multicultural developments on the performance of organizations is the issue then the writer of the case must explain and define the issue. What is multicultural development? How can it impact on the performance of organizations? What are the measures of the issue? What is its Significance? And many more questions must be answered (Baron, 2006). Lewis (2015) states that the issues relate to the operations of the business and its strategies and businesses must concentrate to improve such issues (Lewis, 2015).
Secondly, the framework presents the concept of Institutions. The author explains that it includes all the arenas that are used to address the issue in detail. The main institutions addressed by David P. Baron include regulatory bodies/authorities, legislature of the economy, other administrative departments and agencies, international organizations, and judiciary. UN, UNICEF, WWF, and other organizations are the international organizations that address t he issues related to their interests. The other forms of institutions consist of non-government organizations and institutions that deal with issues related to public sentiments and media (Baron, 2006). Lewis backs the concept of institutionalization in the book as it can restore fairness (Lewis, 2015).
The third I of the framework are the Interest groups that are concerned with or affected by the issue. The most common interest groups identified by the author are the labor unions, corporations, trade associations, professional associates, and much more. All these interest groups are defined as organized groups. On the other hand, un-organized groups consist of motorists, consumers, and other taxpayers. The third and fourth types of interest groups are watchdog and advocacy groups and individual activists (Baron, 2006). Lewis (2015) states that an organization and individuals must have an interest in their respective fields and also must take part in the activities (Lewis, 2015). Finally, the framework explains the importance of Information. Information is a term used to determine the level of knowledge available to all the groups. Information is the core to resolve the issue and therefore, is important in the overall framework as it provides the alternative course of action for the issue (Baron, 2006). Lewis (2015) highlights the importance of information and state that the decision-making ability relies on the level of information that a person holds (Lewis, 2015).
3)
The main threats applicable to the business in implementing corporate social responsibility include proper implementation plans and financial risks. The implementation plans include proper operations of all the departments including finance, marketing, and others. The operational efficiency will lead to a potential increase in profits of the business, and the company would be able to adopt more measures to control the overall process. The identification of the resources and other financial aspects are important before the implementation of CSR. The company would require huge investments to facilitate the growing needs and requirements of the economy/environment. In recent time, the development in research and development is increased to almost ten times greater than that in the 1900s. The rapid increase in costs does not allow the businesses to afford such department and therefore, rely on the decisions of external parties, government, and other authorities to decide for the activities to be undertaken. The financial resources are required almost every year (it's the choice of the company) since some large organizations and not for profit organizations carry out the CSR activities many times in a year. The financial returns of the investment in CSR are not significant, and therefore, most of the medium and small organizations do not adopt such activities.
The decision of the business to engage the stakeholders is an essential part of the CSR process. The stakeholders must be provided with accurate and up to date documentation on the CSR reports. Applying transparency in the overall process can attract the investors in the market. New investors are the major source of resources and therefore, the business must concentrate on such activities to facilitate their stockholders. The government agencies and other regulatory bodies would show positive feedback to the programs and activities developed by the organization. It must be noted that the company must adopt the CSR activities by the requirements and standards set by the government. The company is focused on improving the working conditions for the employees and also has established ways to motivate the staff members. The motivation of the employees will allow the business to outperform in the market with the help of efficient employees that can help to enhance the performance and profitability. Finally, the role of media cannot be ignored and the company must set standardized procedures and should present efficient people to talk to the press to avoid issues. The policy of the business to provide a detailed description of the cost of CSR to the stakeholders will help to improve and stabilize the relationship with Media. The role of media is significant in providing details of the business to the world, and therefore, the business has taken steps to facilitate the media groups with specific and true evaluation of its overall business and other CSR-related activities. The business also expects that media can be a source of attraction to current and potential customers and investors. Therefore, the relations will be maintained in the most efficient manner.
4)
Press Release
For Immediate Release: On April, 2016
All the reports and information regarding the CSR activities of the company will be presented on the official website to aware the stockholders about the expenditure. Additional transparency and accountability of the employees would also be encouraged to avoid manipulations and future frauds. The aim of the company is to concentrate on the welfare of the economy and also to encourage the employees and other stakeholders to work efficiently and lead the company towards higher profitability in the future. The incremental profits are expected to be invested or retained for future spending on CSR activities for the business. The information of the conference will be provided on the official website of the ABC Company and the stakeholders especially media are encouraged to question the activities of the business unit.
Media Response
The steps undertaken by ABC Company are satisfactory as it focuses on introducing effective transparency and management tools and other practices. The introduction of such rules and policies are beneficial to overcome the challenges faced by large organizations of the XYZ industry. The company’s aim to present all the details to the stakeholders is also a policy to be appreciated and the stakeholders must use these details to take effective decisions about their future prospects. The steps to go with CSR as the core objective is a bright sign for such a business as the current scenario only focus on profit maximization. The perspective of the business is highly appreciated as it has taken steps to include a CSR department within its Research and development (R&D department).
The policies and procedures to improve the engagement of the stakeholders are exciting as the company aims to establish a system in which all the stakeholders can take part in the decision-making opportunities of the business. The availability of corporate social responsibility reports on the website allows the customers and other stakeholders to know about the roles and contributions that the company makes in the development of a sustainable environment throughout the world. The expected outcomes of the CSR activities would impact the perception of the customers and investors in a positive manner and the business would be able to attract new stakeholders. The government and other regulatory bodies must take steps to monitor the working of the business in order to avoid any sanction in the future.
5)
There are some nations that have set important and effective corporate responsibilities and promote businesses that take part in environmental and social practices. The extreme role of governments throughout the world has resulted in exceptional CSR programs and policies designed to help the people in need. Some economists and CSR critiques state that the government must establish agendas to support CSR and design rules and policies for businesses to conduct these responsibilities. The US Department of State established a responsible business conduct (RBC) team that guides businesses for practicing responsible practices that engage the private sector, NGO’s (non-governmental organizations), labor groups, and other governments (U.S. Department of State).
The government of US has also established a bureau of economic and business affairs that helps and provides assistance to the companies operating in the US to conduct and undertake CSR activities that enhance the sustainable development in the globe (IIP Digital). In India, it is essential for companies to provide 2% of their annual profits to CSR activities and it is the first country that has developed a rule and law for CSR activities (Forbes). There are debates about the law in India as economists believe that the mandatory 2% profit as CSR will create corruption, tokenism, and forced philanthropy in the country. The economists also believe that if the law is followed effectively, it will surely improve the lives of Indian residents, but the results can be extracted with the passage of time.
The most significant impact of the law would result in preventing the environmental degradation from the economy of India, and other countries must also focus on establishing such laws (The Guardian). The government of the US must also take steps to implement strict CSR policies, and the Congress must also set laws to enforce CSR activities for private and public businesses.
The Corporate Social Responsibility Committee (CSRC) is a committee that provides assistance to the new and current businesses about CSR policies and its dimensions relating to environmental, social, economic, and governance. The new business that are interested in learning CSR are provided with assistance to follow and establish effective CSR policies and the existing businesses are provided the guidelines about employment laws, ethical and governance issues, disclosures, human rights, risk management, and other best practices applicable to their course of operations (American Bar Association).
Works Cited
American Bar Association. Section of International Law: Corporate Social Responsibility Committee. 7 August 2015. Web. 28 April 2016 <http://apps.americanbar.org/dch/committee.cfm?com=IC634100>.
Baron, David P, Maretno Agus Harjoto and Hoje Jo. "The Economics and Politics of Corporate Social Performance." Business and Politics 13.2 (2011): 1-56. Print.
Baron, David P. Business and Its Environment. New York City: Pearson Education, 2006. Print.
Forbes. Corporate Social Responsibility: Should It Be A Law? 18 April 2014. Web. 28 April 2016 <http://www.forbes.com/sites/eshachhabra/2014/04/18/corporate-social-responsibility-should-it-be-a-law/#136c86397984>.
IIP Digital. Corporate Social Responsibility and the U.S. Department of State. 2016. Web. 28 April 2016 <http://iipdigital.usembassy.gov/st/english/pamphlet/2013/07/20130711278465.html#axzz477XmGoVj>.
Lewis, Michael. Flash Boys: A Wall Street Revolt. New York City: Norton, 2015. Print.
The Guardian. India's new CSR law sparks debate among NGOs and businesses | Guardian Sustainable Business | The Guardian. 11 August 2014. Web. 28 April 2016 <http://www.theguardian.com/sustainable-business/india-csr-law-debate-business-ngo>.
U.S. Department of State. Corporate Social Responsibility. 2016. Web. 28 April 2016 <http://www.state.gov/e/eb/eppd/csr/>.
