Merck & Co Corporate Social Responsibility

Table of contents

Corporate Social Responsibility is an initiative and voluntary act of a company to ensure that it protects the interests of its stakeholders as it conducts its business. These stakeholders include the company’s shareholders, employees, customers, the community, and society in general. The very essence of corporate responsibility is giving back to people a share of what the company earns in terms of business profits, patronage, and good will. A corporation is defined and governed by its mission statement and the vision that it seeks to attain as it conducts its day-to-day business operations. It is by this yardstick that the shareholders measure the accountabilities of the corporate officers as they manage and conduct its business. The primary responsibility of any corporation is the return of investments which the shareholders entrusted to the organization.

Officers of the corporation have the fiduciary obligation to ensure that business transactions and business decisions do not run contrary to the mandate vested upon them by the shareholders. This is corporate governance; corporate officers are obligated by law, moral, ethics, and culture to uphold the trust reposed upon them by the shareholders and to ensure that profits are raised from the operations of the business.

Corporate Social Responsibility: Through the Years

The concept of corporate social responsibility stemmed from the environmental protection laws which mandate corporations to care for the environment where they operate. Corporations have the obligation to warrant that its operation does not affect and degrade the environment – water, land, and air. Corporations guarantee that they support the continuity of life and promote people’s health and welfare at all times. It is towards this end that corporations incorporate corporate social responsibility (CSR) programs and initiatives in their business strategies. Corporate officers exercise corporate governance by complying with environmental laws; thus insulating the company and its shareholders from liabilities.

Through the years, the concept of corporate social responsibility has awakened various business organizations from the mere sharing and indulgence with the underprivileged in society to a system of accountability of business organizations as they impact on the environment and society where they operate. Corporate social responsibility has become a learning experience and a forum of benchmarking among business organizations setting a standard framework of conduct and corporate behavior towards society.

Corporate social responsibility is perceived by critics as a two-edged program of companies. The good side of any corporate social responsibility program is the benefit that it can provide and share with the identified beneficiaries. There are several programs and initiatives that a company may adopt to show its care and concern for society in general. The cue is that of responsiveness to the immediate needs of the people in the community where company operates. In effect, corporate social responsibility is a factor of social justice, a moral system which binds each one to a personal obligation to do something for the common good. A company, which by law is recognized as a juridical person, has the moral obligation to look beyond is processes and operations and contribute to the common good.

The other edge of which critics of the awareness and bandwagon of corporate social responsibility programs of companies  is based on the hidden agenda that a company may really have as it incorporates these programs in the corporate strategies. Critics perceive the company’s eagerness to initiate corporate social responsibility programs as a mask and strategy to hide the ill-effects that it may cause or it is already causing the environment. Oils leak to the seas, air is polluted, waters are contaminated, trees are cut, soil is eroded, and the earth’s resources are mined and quarried.

Ned Sullivan, the President of Scenic Hudson, an environmental group, and land trust, says, “Only after G.E. uses its ecomagination to rid the nation’s waterways of its contamination will these words ring true. Until then, its green campaign is nothing more than an eco smoke screen.” . This was Ned Sullivan’s reaction to the announcement by General Electric of its new program on ecomagination, a business strategy which is environmentally friendly. What really defines corporate social responsibility is the honest intention of a company, with all integrity, to truly care for all its stakeholders by not only focusing on the returns of investment, the insulation from liability and suit, provision of handsome pay and fat bonuses to management and the board of directors, competitive compensation package for its employees, or packaging and promoting products to present them as environmentally-friendly. Rather, what is more important is the company’s truthful intention to conduct its business operations without leaving a bad imprint on people and the environment without compromising its obligation to the shareholders who place their full trust in the company to returns of their investments. Corporate social responsibility should not kill capitalism or free trade.

Corporate Social Responsibilty: Merck ; Co. INC.

In the case of Merck ; Co. Inc., its mission states, “Merck ; Co., Inc.is a global research-driven pharmaceutical company dedicated to putting patients first. Established in 1891, Merck discovers, develops, manufactures, and markets vaccines and medicines to address unmet medical needs. The company also devotes extensive efforts to increase access to medicines through far-reaching programs that not only donate Merck medicines but help deliver them to the people who need them. Merck also publishes unbiased health information as a not-for-profit service.”

By its mission statement, Merck ; Co, Inc. has already categorically expressed its intention to donate medicines and ensure that these medicines reach the people who need them. Legally, shareholders have already bound themselves to acts of donations which the company’s officers and management may strategically decide on as they conduct the company’s business. The fiduciary duty to the shareholders include not only acts which ensure profits and return of investments but also on its humanitarian direction as embodied in its mission statement. Ethically, the direction of the officers and management of Merck ; Co., Inc. is well within the metes and bounds of their powers and duties.

The Merck Mectizan Donation Program is one of the company’s well structured and efficiently managed program of corporate social responsibility. Mectizan is donated and delivered to people in beneficiary countries who cannot afford the medicine yet are identified as the potential victims of river blindness. The program has been started in 1987. By the length of time at which Mectizan has been donated to various countries, shareholders have ratified the donation and have acquiesced to the decision of donation.

Legally, if shareholders had any objection at all to this decision of donating Mectizan to the identified beneficiaries, they should have raised such objection on time. By their own acts laches has set in. Therefore, the fiduciary responsibility reposed upon the officers of the company has not been violated; rather, the decision has been impliedly approved by the shareholders who are now estopped from raising their objections after a lapse of ten years since the start of the donation program. In a free market society, corporations are free[10] to produce and trade, operate and make profit through the operation of a market economy. A profit is a gain from any business transaction which is conducted for the benefit of the owners.

In the case of Merck ; Co., Inc., the decision to give by way of donation its effective and solely discovered Mectizan to the rest of the world in order to prevent river blindness from wiping out a large portion of society, was and is still the wisest decision to take. Morally, Merck ; Co., Inc. cannot be allowed by natural law to withhold the application of Mectizan’s efficacy and effectiveness from those who are susceptible to river blindness that leads to death. Merck ; Co, Inc has the moral obligation to produce Mectizan and make it available to the public and to society in general. However, upon Merck’s evaluation, it would be impossible to make Mectizan affordable to the poor people in the communities. Therefore, Merck ; Co. Inc. exercised its wise and sound business decision in donating Mectizan to the world. Management was right and profits, in terms of honor and good will, are continuously reaped and earned. The distinction of having a private-public partnership works well with Merck ; Co Inc over the last ten years.

This continued support from the government and non-government organization shows the value and the worth that this donation program has added to the organization as a whole. Merck ; Co Inc did not kill free enterprise or capitalism. In fact, it utilized its right under free enterprise when it decided to donate Mectizan to the whole world. It is their choice and their decision to maintain and sustain its control over Mectizan while they help the underprivileged in sustaining their lives.

The 1987 decision of the board of Merck ; Co., was a well-calculated decision to ensure that the company lives its mission while it builds its name and good will to people across the world. In this age of globalization and free markets, Merck ; Co is one of the market leaders in bringing its product to the rest of the world, thus establishing its name. A noble, well intentioned, and uncompromising act is always a welcomed precedence in society. Where the benefit is for the greater good, precedence, if indeed there is one, should be seen in the light of the help and support that the act is bestowing upon other people.

There were other options that Merck ; Co Inc may have considered but which would pale when put side by side and compared with the 1987 decision of donating Mectizan. One option would have been to sell the company’s right to manufacture and produce Mectizan to any party or corporation who would have been willing to accept such offer. But then, such an alternative would have robbed Merck ; Co Inc of the profit of gaining recognition and good will. There would not have been any noble act to speak of insofar as the company was concerned as the availability and delivery of Mectizan could have been through other modes of disposition such as sale. There is no guarantee also that Mectizan would really be made available to those in need had it been sold to another company by Merck ; Co Inc.

Another option which Merck ; Co Inc would have made was to wait for the shareholders to pour in additional investments or make tie-ups or mergers as there was really a potential market for Mectizan. However, time was of the essence and people were already dying of river blindness. Back then in 1987, the chance of getting the funding was nil and decision had to be made. Thus, in the best interest of society, Merck ; Co Inc exercised good and sound business judgment by producing the medicines and donating it to the whole world.

Another option which Merck ; Co Inc would have done was to put conditions to the donation by setting a period by which free goods would be available. However, where there was no definite time frame for the funding to pour in, the setting of a period would only be a futile exercise which would even be more costly if we consider the waiting time in production. Economies of scale would tell us that production in volume is less costly than production in smaller quantities. Hence, the 1987 decision was still the good and sound business decision.

Corporate social responsibility should not be looked at only in terms of obligation to society but also in terms of competitive advantage whereby a company gains the capability to sustain and improve its capital so that it can in turn improve on the brand.While this is realistic but this is not always true and correct. It depends on the circumstances and the benefits that the program generates for society. Mectizan is the breakthrough medicine for the treatment of river blindness, a disease caused by a worm that breeds in fast-flowing rivers. It is endemic in certain areas and these areas like West Africa, Central Africa, and Nigeria are places whose people do not have the means to procure a medicine such as Mectizan. Where Mectizan is not available, this river disease affected people’s lives and families.

Children stop going to school as they take care of their parents and adults. The circumstances river blindness wrought in these areas warrant the immediate need for cure for the 18 million people who are infected with river blindness. Out of this 18 million, 300,000 are irreversibly blind. The timeliness of the use of Mectizan dictates the degree of cure and the percentage of saving a person’s life.

Conclusion

The soundness of a decision is tested through the years. Where that decision continues to produce good results, then that decision must be the best and sound decision. The corporate social responsibility program of Merck ; Co Inc., specifically its Mectizan Donation Program has been an ongoing initiative for over ten years already. Its continued strength is measured through time and the impact that it has created to people in 30 countries proves that Merck ; Co Inc. made a good decision in providing Mectizan to the rest of the world.

The legality of a corporate decision is founded on its adherence to the corporate vision and mission statement. Merck ; Co Inc has this for their mission the “people first” policy. By their mission statement alone and by its people first policy, one can readily understand how the 1987 decision of Merck ; Co Inc was made and why its shareholders acquiesced to that decision. The world can only thank Merck ; Co Inc on its very noble and sincere corporate social responsibility program. Where others failed, Merck ; Co Inc succeeded, sustained, and prevailed.

References

  1. Tepper Marlin, Alice; John Tepper Marlin (2003-03-09). “A brief history of social reporting“. Business Respect (51). Retrieved on 200803-06.
  2.  De Schutter, Olivier. “Corporate Social Responsibility European Style.” European Law Journal Vol. 14 Issue 2 Page 203 March 2008.
  3. Bansal, P.; R. Roth (2000). “Why Companies Go Green: A model of Ecological Responsiveness”. The Academy of Management Journal, Vol.43, No.4, pp.717-736.
  4. D’Rozario, Benedict Alo.Social Justice ; Quality of Life. International Congress on Bioethics 05. 2005.
  5.  Capella, V. B. (2005) “The Right to Life, to Health and to Medical Care and Treatment: Contents and Limits”; Paper presented at the XIth General Assembly of the Pontifical Academy for Life held on 21-23 February, 2005 in Vatican, Rome.
  6.  Friends of the Earth (2005-04-28). “British American Tobacco Report Shows Truth Behind Greenwash”. Press release. Retrieved on 2008-03-07.
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  10.  Reisman, George (1996). Capitalism: A Treatise on Economics. Ottawa, Illinois: Jameson Books. ISBN 0-915463-73-3. 
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  14.  http://www.sightsavers.org/What%20We%20Do/Eye%20Conditions/River%20Blindness/World1622.html

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Corporate Social Responsibility Case Study

Table of contents

Corporate Social Responsibility (CSR) has been a concept widely debated upon the corporate world due to the different points which must be given consideration with, yet it holds true that in today’s world, corporate social responsibility, defined as all aspects of business behavior and impact on society, is on every corporate agenda (Ogrizek 2002, 215). Some perceive CSR as an added cost to the corporation, while other corporations see CSR as an asset as it gives additional value on how people perceive them as a corporation and as a group of employers.

Its remains to be continuously vague as people give different feedbacks and perceptions about it. Over the years, as the conceptualization of CSR has developed, it has become evident that CSR encompasses a variety of elements ranging from values and philosophies to societal and environmental issues, business strategies and the relationship between business and society. (Decker 2004, 713). This evolution of perceptions has made the corporations’ consideration of CSR much harder and complicated and the scope of CSR has gone beyond the traditional concepts and constructs which are presently recognized.

“The scope of CSR is much broader than charitable activities, philanthropy and community involvement. It embraces business practices, including environmental management systems, human resources policy and strategic investment for a sustainable future. ” (Ogrizek 2002, 216). Globalization, fair trade, community participation, Non-Governmental Organizations, Local Government involvement, sustainable development, and Stakeholder Management, are some concepts which need to be further clarified in order to fully understand the concept of Corporate Social Responsibility and how it currently works.

The further study and analysis of Corporate Social Responsibility is imperative in the attempt to make the interactions and the relationship between the different dynamics of corporations and the global population work smoother and better. The perception of CSR as means to further the ultimate goal of human development and sustainable development, rather than as a means for a corporation to fulfill its ethical responsibilities to comply by the international standards must also be considered by corporations.

Globalization, The increase of surplus products from different first world countries has led to the search of new market for the first world. This has caused the sudden increase of Multi National Corporations (MNC) gearing towards expansion in different countries particularly in the third world wherein surplus could generally be sold in compromised prices and the cost of workforce is relatively cheaper than in the first world.

For some institutions and Non-governmental Organizations this is viewed upon as a form of exploitation of intellectual and skills capacity of the Third World Population which has been fortified by the World Trade Organization (WTO). This perception has led to the continuous struggle of Non-Governmental Organizations and the increase in pressure for more socially responsible considerations in the management of the workforce.

While a corporation gains in cheaper labor and larger market areas, globalization has also compromised corporations to be more socially responsible not only in terms of managing their employees but in advocating for sustainable development and child and human development orientation. “Globalization has increased the calls for corporations to use firms’ resources to help alleviate wide variety of social problems. The pharmaceutical industry, for example, is asked to donate free drugs and vaccines to Third World nations where the afflicted cannot pay.

Firms engaged in manufacturing are encouraged to apply developed nation’s laws and norms to issues such as child labor and environmental pollution in less developed countries regardless of local laws or customs. ” (Hillman A. and Keim G. 2001, 125). International political activists have widely contributed to this induced corporate orientation through accessible communication brought about by globalization itself. “Thanks to this underground public opinion network it is much easier for activists to create worldwide coalitions than in the past.

The international mobilization at recent anti-globalization demonstrations in Seattle, Prague and Genoa, against the G8 summits and international financial institutions such as the World Bank and the IMF, put quite a lot of pressure on European governments and the Commission to define their socio-cultural policy within the globalization debate. ” (Ogrizek 2002, 217). Although demonstrations have caused international corporations and organizations to be more socially responsible in consideration to their employees and stakeholders, corporations still have not achieve considerable development in terms of gearing towards fair trade.

Due to this, much protest and debate has risen from the use of CSR as means of covering up the ill-effects of global capitalism and globalization. Fair trade Fair trade is one of the major factors considered in Corporate Social Responsibility. It is the equality in the exchange between the buyer and the supplier. There is however a thin line between “fair trade” and “ethical trade”, and it must be clearly emphasized that there is a distinction between the two concepts which involve the orientation of the corporations.

Ethical trade is to be considered as the basic ethics of any corporation which offers its products or services to the market. Fair trade on the other hand, focuses mainly on the product and the development the corporation could give the stakeholders. As Strong discussed, “fair trade represents an approach to the buyer-supplier transaction that aims at equality of change recognizing the power discrepancy between the developed and developing words. (Strong 1996, 32).

Fair trade is the recognition of the discrepancy between the economic capacities of both the developed and developing nations and tilting the balance towards the development of the Third World. Ultimately, the objective is to maximize the return to the supplier rather than the margin of the buyer, within an agreed development structure. (Barratt Brown 1993, n. p). This is basically trade basically biased towards the development of the Third World or developing countries which are the main suppliers or the sources of raw materials, cheap labor, and cheaper service sectors.

Barratt Brown (1993) cites the practices which identifies the distinction of fair trade such as direct purchasing from producers; transparent and long-term trading partnerships; co-operation not competition; agreed prices, usually set ahead of market minimums; focus on development and technical assistance via the payment to suppliers of agreed social premium (often 10 percent or more of the cost price of goods); and provision of market information.

Direct purchasing from producers discourages the existence of “middlemen” who prey on the suppliers by asking for rock-bottom prices which they bloat once they quote the price they give to the buyers. Transparent and long-term trading partnerships encourage development and transfer of the technology to the developing countries which serve as host to the Multinational Corporations (MNCs). Cooperation instead of competition policies foster and encourage the mutual development of both developing country and the MNCs.

Set prices, determined ahead of market minimums ensures the existence and the equal distribution of profits which fosters progression rather than repression of the stakeholders. The focus on development and technical assistance via the payment to suppliers of agreed social premium, ensures the gain of the lesser developed and the consideration to their capacity as a less developed nation. Provision of market information fosters and establishes trust between the corporation and the stakeholder producer of the products.

Fair trade contracts will typically include specific employer codes of conduct setting out terms for fair pay for workers and acceptable working conditions. (Nicholls 2002, 6) International demand for fairly traded goods has been standing out in the market as the demand for fairly traded goods has increased due to constant information and orientation about fair trade brought about by local and international progressive Non-Governmental Organizations. The global market for fair trade goods in 1999 stood at over $400 million and pned nearly 300 producer organizations (Raynolds 2000, 297-309).

Community Participation Community involvement or community participation is crucial in the conduct of Corporate Social Responsibility programs or projects. Since in the conduct of projects or programs, the consumers of a corporations’ produce – whether the produce be solid products or services – are mainly the ones defining the market flow and who compose the communities, there must also be a clear consideration and understanding of their opinions and perceptions of the communities in the conduct of projects or programs to avoid conflicts between the corporation and the communities.

There are however, different levels of participation such as direct participation wherein the community members are the one defining the program for themselves; collaboration, wherein both the corporation and the community members define the programs which they will both undergo; Consultation, wherein the community members are merely asked whether they like the project or not, and is more of project validation; and persuasion, wherein the community is asked to accept the project the corporation has planned to conduct.

The consideration of community involvement is however costly, since a high level of commitment towards community involvement must be supported adequate resources and a relational culture. ( Ruff Hewitt 2002, 2). For in the conduct of such project considering community involvement, different project feasibility studies, focused group discussions, surveys forums, and programs must be primarily be conducted before the actual implementation to yield better results in participatory development.

Corporations which give utmost recognition to the role of the communities gain a higher level of trust and higher market values for their products. As in the case of Home Depot Canada wherein the consumers take it considered it as their retailer of choice. (Government of Canada 2002, 17)

Non-Governmental Organizations

Non-Governmental Organizations (NGO) play major roles in Corporate Social Responsibility. Since Non-Governmental Organizations are generally caused oriented and progressive, they are perceived as unbiased and considered as a group with a perspective different from a corporation.

Thus in some countries, the existence of partner NGO’s and the consideration of their standpoints are required before the conduct of any project or implementation of any program. Local non-governmental organizations (NGOs) or trade unions are often asked to take part in setting up and monitoring contracts, as well as helping direct the micro-economic development projects that spring from the social premium. (Nicholls 2002, 7).

The context or the cause of the NGOs who would be consulted or be participants in the projects must be considered in doing projects. For example, a corporation with a project which would be largely affecting the environment should tap NGOs which are for the cause of the environment such as the green peace or any other local NGO present which is for the same cause. NGOs could also help the corporation engaging in CSR to enter a particular area or they may also serve as the corporations’ main partners in engaging in Corporate Social Responsibility.

In the case of The Home Depot Corporation in Canada, wherein they built homes for the homeless and other infrastructures, they tapped organizations such as the Habitat for Humanity, KaBOOM! , and Ice Dreams, for their Corporate Social Responsibility of building the . Habitat for Humanity is an international non-profit organization which calls for volunteers coming from corporations, and the community who would be the future homeowners, to work together by pooling resources and manpower to build homes. KaBOOM! is a non-profit NGO which builds safe and accessible playgrounds for the children in the community.

Ice Dreams is an initiative to build back outdoor rinks in Canada for Ice Skating, which Home Depot Canada made in partnership with Go for Green, a Canadian non-profit organization which encourages outdoor physical activities and environmental stewardships. (Government of Canada CSR Case Study: The Home Depot 2002, 5) The involvement of NGOs also has its negative points when it comes to Corporate Social Responsibility. In some countries, Local Corporations and Multi-National Corporations create their own “pseudo-Non-Governmental Organizations” to validate some of their programs without any dissenting opinions.

The vague definition of the concept NGO has largely contributed to the incidence of such corruption. Such circumstances must be avoided in order to gain corporate credibility and proper monitoring and conduct must be perceived as the proper way. Government Involvement The involvement of the government in Corporate Social Responsibility is also important. Since the government has the mandate and the power to create policies and also the responsibility to pursue and if necessary intervene in case there are some corporate flops which involve violations in government policies with regards to the protection of the environment and its citizens.

Constant communication, as well as collaboration or partnerships with the government, is necessary for possible recognition and reputation building. This should be crucial in making a proactive approach to crisis management. As in the case of the Canadian Pacific Railway which built its reputation with constant collaboration with the government. “In 2000, CPR began what was to become a productive partnership with the Federation of Canadian Municipalities and the Canadian Association of Municipal Administrators (CAMA), and organization that represents professional municipal managers.

This led to FCM and CPR signing a memorandum of understanding (MOU) in May 2001 committing the organizations to develop a collaborative process through which municipalities and railway could work to reduce the costly intervention of courts and regulators in the resolution of community-based disputes and to engage other industry players in turning the model into an industry –wide standard. The new CPR-FCM model was first tested on a housing development proposal next to CPR’s mainline in Brandon, Manitoba.

Based on this and other successful pilot projects in 2001, elements of CPR’s dispute resolution and proximity management models became the basis for developing industry wide standard. ” (Government of Canada, CSR Case Study: Canadian Pacific Railway, Re-engaging with communities 2002, 6) Lessons could be learned from different cases of corporations which made efforts to collaborate with the government and got the better end of it. The pro-activity of Corporate Social Responsibility efforts would greatly work better if done in cooperation with the government or other legal institutions.

Sustainable Development

Sustainable development is defined as development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs. Corporate sustainability is the capacity of an enterprise to maintain economic prosperity in the context of environmental responsibility and social stewardship. It is a business approach that creates long-term stakeholder value by embracing opportunities and managing risks deriving from economic, social and environmental developments. (Sahay 2004, 2)

Sustainable development basically means ensuring the maximum utilization of natural resources for the use of future generations. Since most if not all of the natural resources utilized by the human population is hardly renewable, the need for sustainable development arises and thus the strong determination of corporations to pursue such course in their Corporate Social Responsibility ordeal. This need is further strengthened by the existence of current climate and environmental changes.

The environment is a business concern all over the globe as some of the environmental impacts, such as global warming (DeCanio 1992), ozone depletion (Morisette 1989, 793-820), acid rain (Rycroft 1988) etc do not observe geographical boundaries. Since the cause of such huge environmental degradation is mainly due to abuse of some local, multi or trans – national corporation preying on third world countries. Sustainable Development is pushed for by most corporations to establish trust with the Third World Countries in which they plan to establish their network of companies.

Corporate reputation is an intangible asset that is related to marketing and financial performance. The social, economic, and global environment of the 1990’s has resulted in environmental performance becoming an increasingly important component of a company’s reputation. (Miles and Covin 2000, 299) The increase for corporate consideration for the environment has also pushed corporations to be more cautious in the conduct of their activities and their environmental impacts in order to maintain a good reputational advantage, and maintain their current market.

Presently in the Philippines, a Third World Country in Southeast Asia, a struggle between some citizens and their government is present due to the proposed economic agreement between them and Japan. The citizens of this country denounce in the existence of such economic policy wherein Japan would dump their toxic wastes in the Third World Country in exchange for some jobs within their country.

Such fiasco contributes to the mistrust of some stakeholders and other communities towards some international corporation. Stakeholder Management Stakeholders are those without whose participation, the corporation cannot survive (Clarkson 1995). This definition however, very narrow, since stakeholders are not only those who are of use to the corporation, but rather all individuals who are affected or have been affected by the corporations’ operations.

While not all community residents are employees, suppliers, customers or investors, they do provide various forms of important infrastructure for the firm and in turn are impacted directly by tax revenues and physical environmental protection (or degradation). (Hillman and Keim 2001, 126). Importance of these stakeholders which hold no stock or position in the corporation much be given due recognition, since, although these individuals do not hold anything in the corporation, it is them which are availing the corporations produce or services.

As narrow as the initial definition of stakeholders maybe, Clarkson (1995, 107) also asserts that “ the survival and continuing profitability of the corporation depends upon its ability to fulfill its economic and social purpose, which is to create and distribute wealth or value sufficient to ensure that each primary stakeholder group continues as part of the corporation’s stakeholder system”. Thus, it maybe perceived that, although some corporations attempt to provide social services only for their shareholders whom they consider as their primary stakeholders, they still give value to the communities and individuals affected, since they consider the consumers as those who control the market and at some point define the direction of their corporation. Purchasing a quality product at a reasonable price is a consumer objective. If desired value is not delivered, fewer products will be purchased.

This, in turn, affects present and future expectations resulting in lower stock prices, possibly leading to lay-offs, reductions in purchases of inputs from suppliers, and lower taxes being paid by the firm, etc. – negative consequences for all primary stakeholders. ( Hillman and Keim 2001, 127). Thus it is important to consider the welfare not only individuals or group which contribute financially directly to the firm, but the individuals who are affected and are using the produce or the firm’s services.

It must then be considered that, stakeholders are not only those who would be affected once a corporation falls, individuals who are affected by the corporation through existence should also be considered as stakeholders as well. Advantage Engaging in Corporate Social Responsibility has its advantages and disadvantages. Although its disadvantages are compensated by its advantages since most of the disadvantages are merely the costs which a corporation pays for conducting socially responsible programs or projects.

While CSR is usually motivated by a business’ desire to “do the right thing”, it does, in fact also offer a valuable opportunity to raise a business’ profile and brand. Early and rigorous adoption of a CSR program means that even small businesses can simply and efficiently differentiate themselves from their competitors and provides a first mover advantage over competition. (Ashtrust Briefing, Corporate Social Responsibility and Environmental Reporting a Question of Risk or Reward? )

In some countries such as South Africa, they view Corporate Responsibility as positive to their produce and have embraced initiatives and considered them as Corporate Social Investment (CSI). As particular to the context of their country, more consumers prefer corporations which exist responsibly in their corporations. Reputation building. Aside from the awareness of consumers on corporations’ environmental impacts strongly pushing corporations to be more cautious in their reputations.

Engaging in CSR is a proactive approach in managing different crises; it establishes credibility and builds good reputation for the corporation which means an added value in advertising and preference of market consumers. In the United States and United Kingdom, political activists have changed the perception of corporations and have somewhat pushed them to the thought of doing the right thing to save their faces, as exposes of some activists groups have made more people concerned about the societal and environmental impacts of huge corporations.

The failure of Enron and Nike’s sweat shops have boosted the people’s awareness over the performance of big corporations as such. Initiatives led in recent years against ‘superbrands’ like Nike, Shell, McDonald’s, Starbucks and Pepsi by activists in the USA and Europe have made companies concerned about promoting positive corporate image to the world, and made them rethink the values their brands represent to an online public that is becoming more and more likely to boycott brands that seem to be uncaring.

In addition, the rise of popular anti-brand sentiment in North America and Europe has made people more aware of the immense influence brands have in their daily lives. (Irwin 2003, 303)

Workforce Advantage

A company which is properly managed and has an efficient workforce will definitely be stronger and successful. Hence the existence of such individuals with skill and capabilities working for the corporation is highly important. A corporation’s Social Performance largely contributes to attracting quality workforce for a corporation.

Social identity theory suggests that job applicants have higher self-images when working for socially responsive firms over their less responsive counterparts. (Greening and Turban 2000, 254). This realization, leads to the tilt of corporations to move towards greater socially responsible functioning. Many firms now realize the importance of attracting and retaining highly skilled, quality employees as a necessary component of their competitive advantage (Pfeffer, 1994; Teece, 1998; Turban & Greening, 1997).

Also, socially responsible corporations’ employees also function efficiently than other corporations less socially responsive. Off-balance sheet intangible assets such as corporate image and reputation are becoming more important contributors to overall organizational performance ( Lusch and Harvey 1994). Thus, those corporations which are more socially responsible also yield better results and profits due to the performance of their workforce or employees. Furthermore, firms that produce superior quality products use truthful advertising, act in a socially and environmentally responsible manner, ad have a history of fulfilling their obligations to various stakeholder groups are creating reputational advantage ( Covin and Miles 2000, 300).

Case Summaries

Home Depot. The Home Depot Corporation Canada, is the world’s largest home improvement retailer and the largest retail chain in the USA. Founded in 1978, it has since then expanded into having more than 250, 000 associates in 1436 locations. Home Depot specializes in building materials lawn and garden improvement, and other home improvement supplies. Most of their stores offer between 40,000 and 50,000 different home improvement products. Home Depot also owns EXPO Design Center, a one-stop design and decorating retailer; Maintenance Warehouse; Apex Supply Company; Your “Other” Warehouse; and Home Depot Landscape Supply.

Due to the current well publicized Boycotts against products being made in sweatshops with poor working conditions, the pressure for retailers to screen and avoid products which are anti-Human Rights. Consumer groups, NGO’s and other civil society groups remain keen on these products made in inhumane environments. With these conditions Home Depot started to build rapport with their consumers starting with a Corporate Social Responsibility activity wherein they incorporated their employees as one of the main actors in the program.

They creates the Team Depot Program in which employees of Home Depot work together on projects which benefit communities and address social issues such as environmental problems, at-risk youth and affordable housing. In 2001, Home Depot employees donated 6 million hours to community service. Home Depot created group dynamics within the ranks of their employees wherein each retail outlet is assigned 2 hours per week wherein each outlet is able to select the issues or projects which are particularly important for them. Team depot’s CSR operation depends mainly on their employees’ volunteerism.

Home Depot presents to their employees who are active enough awards and recognitions, for their participation and their involvement in their program. Home Depot also partnered with other Non-governmental Organizations such as the Habitat for Humanity, which they have supported since 1989 through donations of building materials. They’ve also partnered with the Multiple Sclerosis (MS) Society of Canada, wherein they help raise money for research and support services for individuals with MS; and KaBOOM! In which they help build and fix playgrounds for depressed areas, where, a large part of the areas’ population are children.

Home Depot was also active with Go for Green a Canadian non-profit organization which encourages outdoor physical activities and environmental stewardship, wherein Home Depot was in charge of helping build outdoor skating rinks and information dissemination. In the mid-1980’s through some consultants, Home Depot also began to touch on disaster prevention, which added on as the fourth to their focus areas following:

  • affordable housing;
  • environment;
  • youth at risk.
  • disaster preparedness and relief.

Home Depot also made efforts to incorporate their corporate goals and Objectives with the goals and objectives of their CSR project.

Home depots major program areas, are mainly the communities which Home Depot employees and customers live. It has also made donations to community causes such as affordable housing, safe areas for children to spend their time while they learn, some programs for forestry and ecology and environmental protection such as donations to NGOs and other programs of the Team Depot. They also disseminate information about disasters and provide food and water to the rescue teams during disasters. Home depot also advocated for recycling and making safe and environment friendly waste disposal.

Home depot also ensured their suppliers’ compliance with health and safety regulations as well as environmental programs which ensures that their products are environment friendly. Home Depot also gives consideration to their employees’ individual and holistic growth. They offer a web-based learning program for all their employees to increase their product knowledge and eligibility for new positions. They’ve also tried to eliminate gender gaps by making positions for woman in management positions. Home Depot also extended health care benefits to part-time employees.

Home Depot has gained a lot from their active CSR programs, according to Home Depot’s executive vice president for human resources, CSR helps the corporation become the neighbor of choice, the retailer of choice, the investment of choice and the employer of choice. This active involvement of Home Depot has also made it easier for the corporation to obtain permits from the municipalities to open new stores. Concern for environmental issues has also made the corporation a retailer of choice since more consumers become aware of environmental and social concerns.

The corporations venue for human development and respect for their employees and their given benefits increase morale and the retention of good quality employees, and thus boosts their corporation’s performance. All the success of the corporations CSR programs may be attributed to the strong senior management of the corporation, the continuous voluntary effort of Team Depot and the successful recognition programs for the volunteers of their CSR coupled with the thorough embedding of their values to their employees. Conclusions:

Corporate Social Responsibility must always be treated as an advantage rather as a disadvantage, for there is no such thing as loss as long as the goal of the corporation in helping other people, communities, and countries is true and as long as there are no strings attached except for social benefits the corporation receives. The corporation’s mission, vision and goal must well be defined and emphasized in a corporation as well as there must be enough education done in order for stakeholders, stockholders and the communities to thoroughly understand the main goals of the corporation.

It must also be understood that, there must be thorough investigation, and community study done before implementing any social actions in any area. Proper consultation with communities through the help of community development workers and community members themselves and not their bureaucratic representatives – who often times offer corrupt responses, due to their parvenu characteristics – should be done. Although the existence of the governments influences must never be taken out of the consideration.

Identification of a specific area’s context and the thorough integration is a critical part in studying communities in feasibility studies. It must also be always taken into consideration that in dealing with communities, the orientation should always be from the people towards the people, since most, if not all of a corporation’s gains come from the people and thus its programs and must benefit the people as well.

Impacts of globalization on businesses might be big, as this means a corporation’s better growth, yet it must always be considered that the growth of businesses would also mean some impacts on the people and the environment. Fair trade must always be considered and carefully thought off, taking advantage of Third World Countries or Developing Countries might make a great deal of impacts to a corporation considering today’s fast transfer of data and very responsive mobilization of individuals and activists who often times sensationalize a corporation’s follies, in their attempt to shut down capitalism and global imperialism. At the same time, coordination and cooperation with NGOs is still critical, since they might be of good use, serving as a pool of new ideas for socially responsible actions.

Works Cited

  1. Ashtrust Briefing. Corporate Social Responsibility and Environmental Reporting: A question of risk or reward? Clarkson M. 1995. A stakeholder framework for analyzing

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Tim Hortons Corporate Social Responsability

Tim Hortons Corporate Social Responsibility Corporate Social Responsibility (CSR) is a process with the aim to embrace responsibility for the company’s actions and encourage a positive impact through its activities on the environment, consumers, employees, communities and stakeholders. Tim Hortons understands well this concept and the importance of corporate social responsibility. Making a True Difference is the way Tim Hortons defines sustainability and responsibility and the overarching framework that brings together all of our programs and initiatives.

Making a True Difference helps guide us on our corporate social responsibility journey, supports our overall vision to be a quality leader across all sectors in Canada and sustain our mission to deliver superior quality products and services for our guests and communities. Making a True Difference initiative include the following programs to help individuals, communities and the planet: •Tim Hortons Children’s Foundation: The Foundation is a non-profit, charitable organization committed to providing a fun-filled camp environment for children from economically disadvantaged homes. Local Programs: Tim Hortons is proud to support local initiatives that make a difference like: Tim Hortons Smile Cookie, Free Summer Swimming, Timbits Minor Sports Program, Earn-a-Bike Program, Remembrance Day, etc. •Sponsorships: Tim Hortons believes in giving back to the communities by participating in events, such as community festivals, or partnering with groups, such as minor sports teams, that are important to the community as a whole. Coffee Partnership: The overall vision of the Tim Hortons Coffee Partnership is to help build sustainable coffee communities by supporting coffee farmers in key areas that will improve their coffee business and their lives. •Aboriginal Relations: Tim Hortons have been working on implementing a meaningful, structured and long-term partnership with the Aboriginal community. •Animal Welfare at Tim Hortons: Animal welfare is an important issue to Tim Hortons and all its stakeholders, including Restaurant Owners, suppliers, investors and guests.

The company considers animal welfare to apply to all aspects of animal care of the farm animals within the supply chain •Waste Reduction: Tim Hortons promotes waste reduction through various in-store programs and continues to create awareness about the environment, litter, and the importance of keeping the neighborhoods clean. Tim Hortons CSR programs Achievements: •Tim Horton Children’s Foundation (THCF) welcomed 13,414 campers in 2011. •In 2011, THCF gave out 243 bursaries for post-secondary education worth $600,000 to graduates of the Youth Leadership Program. •Approximately $9. million was raised on Camp Day in 2011, benefitting the THCF. •$16 million invested in community initiatives across Canada and the United States. •Smile Cookie program raised $4 million for local charities across Canada and the United States. •Developed and implemented programs and initiatives within the Education, Employment, Empowering Youth and Economic Development pillars of “Horizons” – Tim Hortons Aboriginal Relations Program •The number of restaurants diverting our hot beverage cups and other paper packaging increased by 22 per cent in 2011 to more than 800 restaurants •Achievement of a 6. percent increase in fuel efficiency of the company’s distribution fleet since 2008. •9% reduction in water consumption at our corporate buildings in 2011 compared to our baseline year of 2008. •Animal Welfare Policy was revised and commitment made to source one per cent of system-wide eggs from enriched-cage hen housing systems as well as to encourage the pork industry to move away from using gestation crates over time.

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Burger King Corporate Social Responsibility

Assignment Corporate Social Responsibility (CSR) refers “the ethical principle that a person or an organization should be accountable for how Its acts might affect the physical environment and the general public” dobber, D. & Fahy, J. , 2009). Nowadays, CSR programme Is a global trend, which Is encouraged by the government. It also helps the company in partnership and investment opportunities. On the other hand, CSR programme can enhance the company’s Image In the consumers’ views. It would be very effective In a competitive market.

And furthermore, CSR programme can Improve he productivity and reduce the producing cost for the company. For these reasons, all kinds of business have began to focus on their CSR programme as responding to the sociality concerns In various ways. Burger King corporation (BKC) Is a global chain of hamburger fast food restaurants. 3K Is founded In 1954 by James McLamore and David Edgerton. In the end of 2012, It has a total of 12,700 outlets In 73 countnes. Recently, BKC has lust arnved to Vietnam. BKC Is located In Hanoi, Da Nang, and Ho Chi Minh City.

However, BKC does not seem to provide a good marketing campaign here. BKC has installed several CSR programmes in other countries but not in Vietnam yet. To implement a CSR programme is a way ot marketing it to Vietnamese society. The problem in Vietnam market is Vietnamese people are not used to tast food due to culture differences. They also care a lot about their looks, their healthy, especially obesity problem. People in ages of 16-35 are the main customer target of BKC, However, the rate of obesity of people in these ages is increasing rapidly.

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Virgin Airline Corporate Social Responsibility

Virgin Airline Company is an airline company owned by Sir Richard Branson, along with the Singapore airlines. It stands out as one of the top performing airline companies in the industry currently in Britain. This company, like any other was formed with the major objective of making profit and it has to do all that it takes to realize this goal. In pursuit of this goal, the company impacts on the environment, both negatively and positively since the company exists majorly to provide service to the society without which, it can’t survive.

The company, despite existing to maximize profit, is entitled to take responsibility considering the positive stance, not just accumulating profits at the expense of the society (Farmer, 2007). Sir Branson’s Company does enjoy the services of its employees and that is why it is riding high in the Airline industry. These employees are drawn from the society which forms the environment, where the business operates. One of the positive stances undertaken by the Company is providing job opportunities to members of the society.

This improves living standards of the individual employees and their families. Virgin Airline Company has to be close to the society and provide the best service to the society members including the best salaries to employees such that both the company and the society benefit. The company also serves to provide high quality services to passengers at subsidized prices during such periods as holidays and festive seasons. Environment conservation is a crucial responsibility to be accomplished by the company.

This social activity can be done by sensitizing the employees, stakeholders, customers and the entire society and encouraging them to personally get engaged in conserving it. The more healthy the environment, the more productive the employees will be and this impacts positively both on the society and Virgin Company. Safety and sanitation is also considered by the company such that there is maximum safety in the working condition of the employees. The Organization also supports energy conservation. Virgin airline has had to use bio-fuel in several cases such as in February 2008 when it used bio-fuel made from coconut oil.

It is imperative for the company to consider for example, providing social amenities to the community. The profits gotten by Virgin Atlantic Airline Company basically comes from the fare paid by passengers who come from the society. By investing back into the society, the company simply gives back part of what belongs to it. Supporting such social amenities as education through sponsorships and scholarships as well as funding the construction of health facilities, of which the Company does, serve to improve the society’s status hence mutual benefit for both the company and the society.

In conclusion, the company hence is entitled too ensure it is in is in good relations with the society, its employees, consumers and other stakeholders in the society. Making maximum profit is not to be the only objective instead this has to be accompanied with communal social responsibility to the society (Farmer, 2007).

Reference

Farmer, N. (2006). Social responsibility, Detroit: Lexington Books.

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Corporate social responsibility and business ethics

For several years, there has been much deliberation concerning who ought to be accountable for ensuring that tourism destinations are developed in a way that “meets the needs of the present without compromising the ability of future generations to meet their own needs” (WCED 1987, p. 7). Due to the numerous stakeholders involved where destination level sustainability is concerned, it is particularly difficult to decide who, if any, holds more responsibility than another.

This essay shall address the various stakeholders and attempt to give reasoning as to whether or not it is just to judge tour operators as being more liable than any other interested party in the tourism industry to encourage sustainability. Tourism has both positive and negative impacts on destinations and their inhabitants.

Whilst benefiting from an increase in revenue, job creation, improvements in infrastructure and amplified awareness of local people and their environments, destinations simultaneously suffer from exhaustion of resources, lack of respect for local cultures, disturbance of indigenous communities, and perhaps most significantly, a rapidly increasing pollution rate as a result of development of areas to meet the needs of tourists.

In order to minimise such negative effects, it is crucial that tour operators, tourists, local communities, local businesses, local governments, trade associations, NGO’s, and charitable bodies work together and promote sustainable tourism. There are several principles of sustainable tourism including the sustainable use of resources, management of consumption and waste, diversity maintenance, the integration of tourism into planning, support for local economies, improving local communities, communication between stakeholders and the public, training staff efficiently, marketing tourism responsibly, and undertaking research (WWF UK, 1992).

Although each of the aforementioned groups has an important role to play with regards to sustainability, it is necessary to analyse which should primarily be responsible and to what extent they can be. The function of tour operators is to act as intermediaries between customers, accommodation providers and transport companies in order to comprise a package of the vital elements required for a holiday. Tour operators therefore have the capacity to influence visits to diverse destinations regardless of their scale.

The tourism industry currently consists of two main tour operators dominating the market, which formed when “TUI UK” merged with “First Choice Holidays Plc” in September 2002 to create “TUI Travel Plc”, and the integration of “My Travel Plc” with “Thomas Cook UK Ltd” in June 2007, which created the “Thomas Cook Group Plc”. These mergers have enabled concentration of the tourism industry so that costs can be cut through economies of scale and tourists may benefit from cheaper holidays.

It could be said that these “Big Two” tour operators work in a way that appeals to the mass market, providing fairly standardised products, and are generally in pursuit of economic gain. Despite this market dominance, recent years have seen an increase in the number of independent tour operators that exist, such as “Geurba” and “Tribes Travel” which are part of The Association Of Independent Tour Operators (AITO). These focus rather more on the provision of more specific holidays that focus on more unique activities, such as African safari holidays.

It is a common misconception that mass-market tour operators such as “TUI Travel Plc” are the most damaging enterprises to sustainable tourism and people are quick to make the assumption that small-scale tour operators are the best option. Many holiday makers tend to presume that they are taking greater care for their surroundings should they book to go on holiday with an independent tour operator promoting the concept of eco-tourism. This type of holiday is generally seen as being a “green” holiday, which automatically offers people absolution and convinces them that they outweighing some of the negative impacts created by mass tourism.

In fact, it is frequently the independent tour operators who focus on unique trips to exclusive destinations that cause unrest and disturb local communities whilst attempting to satisfy niche market desires of those who wish to enjoy a more individualised experience. Whatever their size, it makes economic sense for the tour operators to ensure that their selected destinations continue to satisfy consumer demand in the long term as the cost and resources required to source and market new destinations are prohibitive. Complacency is therefore not an option where responsibility and sustainability are concerned.

Failure to recognise potential damage and act to prevent this could have serious consequences, at all levels, for their business. It is all too easy for one to believe that they are acting responsibly simply due to the nature of the business, but in reality the damage they are causing can go unnoticed. Corporate social responsibility and business ethics vastly influence how responsibly tour operators act. If a tour operator is more concerned with satisfying shareholders of their company, then profitability is likely to be their main incentive, presiding over the well being of local communities and other stakeholders.

Shareholders often do not wish for shifts towards greater corporate and social responsibility as it is worried that methods to reduce the negative impacts created by tourism will reduce the prosperity of the company, leading to a lower return on investment (UNEP 2005, p. 10). For a long time, it has been argued by tour operators that they are primarily responsible for their shareholders and looking after their business, and that destination level sustainability was not their duty to address.

Tour operators often claimed that they had no direct adverse impacts from within their offices and they preferred to shift the responsibility onto local governments and tourism suppliers within destinations (Carbone et al 2005, p. 261). In more recent years, however, tour operators have taken into account that they have immense power to influence choices of holidaymakers and they have the ability to sway the practice of suppliers in order to encourage more sustainable development (UNEP 2005).

According to Carbone, tour operators have begun to make vital contributions to furthering the goals of sustainable tourism development and are striving to protect the environmental and cultural resources on which the tourism industry depends for its survival and growth. Consumer awareness has been raised by the creation of trade associations and voluntary groups such as the Federation of Tour Operators (FTO), the Association of Independent Tour Operators (AITO), the Tour Operators Initiative (TOI) and Tourism Concern.

Such groups of tour operators have emerged due to the realisation of the growing demand for green consumerism. Whether or not they believe that they ought to be responsible for sustainability, they have influenced demand and brought together the tour operators who provide holidays catering for these consumer desires, encouraging these organisations to become more responsible. Tour operators are beginning to learn of the practical steps they can take and are, indeed, forced to take due to the nature of demand arising.

Even mass-market tour operators such as “First Choice Plc” are placing enormous emphasis on the fact that they are operating responsibly and they claim that they are “a leader in promoting sustainable tourism, committed to developing unique and innovative ways to support the environment and people” and that they “work with a wide range of organisations that help us understand the right thing to do with respect to the environment and people” (First Choice 2008).

In addition to such statements being made public, tour operators have also produced reports outlining their stance on their personal corporate social responsibility. “Thomas Cook Group Plc” has made clear in its “Responsible Tourism Policy” that they feel that destination level sustainability is an important factor in their operation. They strive to conduct business in a responsible way, minimising impacts, and simultaneously maximizing financial benefit (Thomas Cook Group Plc 2007).

Despite an apparent consciousness of tour operators to become more responsible, there is no guarantee that this has arisen as a result of genuine concern for destination level sustainability. Several independent tour operators such as “Audley Travel” are operating in a way that holidays are purely designed in a way to promote responsible travel and displaying a true passion about the countries in which they specialise.

This has resulted in them winning awards such as The Guardian’s “Best Tour Operator” award for 2007, and being granted the highest possible Responsible Travel rating from AITO. While these types of tour operators are making a concerted effort to be responsible for sincere reasons, it may be suggested that several of the other tour operators who have made statements claiming to be responsible are simply using this as a marketing ploy to influence demand in an increasingly growing market for sustainable tourism package holidays.

It is important for tour operators to make a good impression on their potential consumers and this is being done by promoting the idea of responsible tourism through statements on their websites and laying down guidelines on their websites as to how tourists may behave correctly in order to assist the struggle towards sustainable tourism. Companies for whom profitability and wellbeing of their shareholders is key would be very eager to build up their customer base in order to increase profitability, perhaps charging higher prices for tourists to benefit from theoretically more unique eco-tourism holidays.

The actions of such tour operators may appear to be ethical and moral, in the best interests of destinations with which they liaise, but in reality could be somewhat self-fulfilling. It has been suggested that “if market advantage is not the force which drives companies forwards towards responsibility, then [… ] is it negative PR” that encourages companies to act, or appear to act, more responsibly (Miller 2001, p. 595).

Certain tour operators have endeavoured to remove this preconception by sticking up for themselves and claiming that efforts to be responsible are due to them holding themselves responsible because they know they have the capacity to be, rather than putting on a front in an attempt to woo consumers. A spokesperson for First Choice has said, “the case for being serious about sustainable development is clear, and does not depend solely on our customers’ expectations” (2006 p. 42). This perhaps suggests that tour operators really are opting to take responsibility, at least to some extent, for sustainability at a destination level.

At this point, one may deem it conceivable to say that responsibility is most important to consumers if there are people assuming that tour operators are acting in a manner to simply satisfy consumers rather than perhaps to absolve guilt of previous damage caused by tour operation or to reduce any further damage. Today’s tourism industry is increasingly switching away from mass-market producer-driven tourism towards being more consumer-driven, enabling knowledgeable, responsible consumers to put mounting pressure on the industry to behave more responsibly (Kamp un-dated).

If this is the case, then it might be suggested that consumers themselves ought to be responsible for ensuring sustainability, rather than putting pressure on tour operators. If consumers integrate themselves into local destinations in the correct manner, disturbing indigenous communities to the smallest degree possible, yet helping them economically, then one might say they are acting responsibly with regards to sustainable tourism.

On the other hand, it is extremely difficult to expect consumers to know how to conduct themselves if they are not given guidelines suggesting appropriate behaviour. Without adequate education and awareness it is difficult to expect consumers to know how to be responsible and one would expect the tour operators, who are making it possible for tourists to visit certain destinations, to produce such guidelines.

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Carroll’s CRS Pyramid

1. Discuss what is meant by Corporate Social Responsibility according to Carroll’s Model of CSR (Carroll’s Pyramid). Include some examples in your discussion.

Carroll’s view is that profit is significant, but business has a deeper purpose on social accountability and responsibility. He developed the Corporate social responsibility model which means when a company responsibly runs its business operations and ensures that it has a positive impact on society ethically, legally and economically.

Carroll’s CSR pyramid has four types of responsibilities, and it shows how the organization should meet their social responsibilities.

Economic is the first responsibility: it is the business responsibility for producing goods and services needed by the community and selling them to make a profit. Companies have shareholders who invest to get something in return, they have workers who want safe and fairly paid salaries, and they have customers who demand good quality products at a decent price. A business exists to earn a profit for shareholders. If it fails, it expected won’t be able to pay its workers, taxes and other responsibilities. The first responsibility of the business is the base and the root of the pyramid. It is important for the business to be as profitable as possible because they will help them to have a strong competitive position and a high level of operational effectiveness.

Legal is the second responsibility: it is the business responsibility to make sure that they are complying the laws and policies. The community is expecting the businesses to follow all regulation and laws, honor its contracts, warranties, and guarantees. It includes environmental laws, consumers laws, laws protecting employees and labor laws, meeting all contractual commitments and honoring warranties and guarantees. Legal responsibility is important because it tells that the business is performing in a way to meet with the expectations of government and the law, it shows that the business is complying with many laws and regulations, and it shows that provide goods and services that least meet the minimal legal requirements.

Ethical is the third responsibility: it consists of what is generally expected by the community which is above economic and legal expectations. Ethical responsibilities are not necessarily should be imposed by law, but they are expected from ethical businesses by the public and governments. It is one of the businesses responsibilities to do what is right, just, and fair and to avoid or to have minimum harm to stakeholders, workers, consumers, environment, and others, and also by avoiding questionable practices. So, it’s things the community says its wrong and right that the company should follow if they want to be ethical. It is a benefit to the company to perform in a manner that is consistent with the expectations of the society norms and to recognize and consider new or evolving ethical norms adopted by the community. It is important that good business should be defined as doing what is expected morally or ethically.
Philanthropic is the fourth responsibility: businesses are expected to be a good corporate citizen—to meet its philanthropic responsibility to share financial and human resources to the society and to increase the quality of life. It includes giving back to the community by donation and ongoing support in charities and other social welfare programs. It concentrates on developing the quality of life of workers, local societies and community. Some examples, employees are going on projects for society, having or participate in programs that support society—education, wellness, and human services, culture, and creativity. Managers and workers can be part of charitable and voluntary activities within the local societies, providing support to public and private educational systems and helping voluntarily those projects that improve a society’s ‘quality of life.

 

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