Corporate Social Responsibility

Global Challenges

Individual Assignment: Kraft Foods and CSR.

2012 Global Challenges Table of Contents Table of Contents1 1. 0Introduction2 2. 0Application3 2. 1Kraft Foods Inc. 3 2. 2PESTEL Analysis3 2. 3SWOT Analysis5 2. 4Porters Five Forces5 2. 5Management at Kraft Foods Inc. 6 3. 0Corporate Social Responsibility6 3. 1Impact of CSR on Kraft Foods Inc6 4. 0Conclusion7 5. 0Recommendations7 6. 0References8 1. 0 Introduction Management is a term that is used and heard of every day and a role that is undertaken everywhere you go.

It’s the ability to maintain and produce the best from a team or from a task, the activity of completing a task using the resources that are available and taking responsibility of the situation in hand. Even as individuals everyone participates in management in one form or another, whether it’s in a work environment or simply from the everyday running of life. In a business sense however, ‘management is the jobs within an organisation charged with running the organisation on behalf of the beneficial owner’ (Pg no 294, Martin, 2005).

This report is going to examine the different principles and models of management, how it can be applied to individual companies and businesses and then go on further to examine Corporate Social Responsibility and how firms use this. ‘According to Mintzberg (1973) there are ten management roles, these are ‘Monitor, Disseminator, Spokesperson, Figurehead, Leader, Liaison, Entrepreneur, Disturbance handler, Resource allocator and Negotiator’. Mintzberg proposes that every manager’s role combines a number of roles, rather than ten individual roles. (Boddy, 2009) For example a CEO of a company could be a figurehead, a spokesperson, a leader as well as the negotiator; but he would assign the other roles to other specific managers or colleagues. Management involves a vast amount of planning as its sets out the direction of the work that needs to be done and the objectives that need to be achieved. According to Boddy (2011) ‘SMART acronym summarises criteria for assessing a set of goals’. This covers: Specific – Does the goal set specific targets?

Measurable – Ensure you can measure the progress towards the attainment of the goal Attainable – Assuring the goals are challenging but reachable Rewarded- A reward is obtained for succeeding the goal Times – The time scale of which the goal is to be achieved in Boddy (2010) proposes that ‘’goals and objectives are the same’’. However in cases like this it could be argued that they are different in which the goal is the overall target or aim, and the plan which looks at what is involved to obtain this goal is made up of individual objectives at each level.

A widely used management model used within virtually every company is the Competing Values Framework. ‘’It has been named as one of the fifty most important models in the history of business and has been studied and tested in organisations for more than twenty five years’’ (CVF, 2009). The model is made up of four components and each quadrant represents a different model and the roles that are played within the model; which can be seen in the diagram below in Figure 1. 1. The following section will demonstrate how the framework can be applied to individual companies. Figure 1. 1 Competing Values Framework.

Source: Octogram. net (2005) 2. 0 Application 3. 1 Kraft Foods Inc. Kraft Foods Inc. is the second largest food company in the world generating annual revenue of ? 54. 4 billion. The company was founded in 1903 in Chicago, North America, where their headquarters are still based, and shares began trading on the New York Stock Exchange in 1991. They have over 126,000 employees in over 70 countries and they sell products to consumers in 170 countries. Kraft’s products are divided into five categories: snacks and cereals, beverages, cheese and dairy, grocery, and convenient meals.

Popular household name brands include Philadelphia, Oreo and Cadburys, which they recently acquired in 2010 for $18. 5billion. The acquisition created the world’s largest confectioner, and confectionary now makes up for 28% of their net revenues. (Kraft Foods, 2012) In 2011 Kraft announced its intent to create two independent public companies by the end of 2012 as a strategic approach for growth; one being a high growth global snack business and the other a high margin North American grocery business. 3. 2 PESTEL Analysis ‘PESTEL analysis is a useful tool to understand the macro-environment in which Kraft Food Inc. perates and how these factors affect the company. PESTEL framework helps evaluate the risks associated with market growth or decline, and the position and direction of the company. ’ (Bender and Ward, 2008) It examines six different segments, which are: Political, Economic, Social, Technological, Environmental and Legal. Although there are many factors which fall under each of the segments of the PESTEL analysis it is important to analyse them and select the most significant factors which have the greatest effect on the company. POLITICAL Kraft Foods Inc. s subject to various federal and state laws in the U. S relating to the protection of the environment. They also have manufacturing facilities in 70 countries and consumers in 170 countries which subjects them to individual environmental laws, health and hygiene regulations in every country which they operate. ECONOMIC As Kraft operates in 170 different countries, currency fluctuations and unfavourable exchange rates can put pressure on the company’s earnings, particularly with the current Eurozone crisis. ‘Increased unemployment in the U.

S and other countries will lead consumers to cut spending on premium quality products’ such as those made by Kraft Foods Inc. (Bloomberg,2010) SOCIAL Diet patterns are rapidly changing in emerging economies like Brazil, China and India. The people in these countries are spending more on packaged food and this social drift has provided companies like Kraft to look towards emerging markets to increase revenues. (Yahoo Finance, 2010) Consumers are also getting increasingly aware about health implications of food which can cause obesity. ‘Federal Trade Commission reported that child obesity in the U.

S has quadrupled in the last four decades’ (RWJF, 2008). Food and Beverage companies need to respond to these changes to maintain its market share and profits. TECHNOLOGICAL ‘Kraft is investing heavily in new technology to reduce carbon dioxide emission and protect the environment. They have adopted a policy where there is increased use of rail and barge transport instead of using trucks. ’ (Kraft Foods, 2010) ENVIRONMENTAL There is increased pressure from governments and the general public about the way companies operate and their effect on the environment. ‘In 2008 Kraft Foods Inc. ame under pressure when Rainforest Action Network asked companies such as Kraft Foods Inc. to stop buying palm oil from Indonesia to prevent deforestation. ’ (CNN, 2008) LEGAL Kraft operates in a highly regulated environment with a constantly evolving legal and regulatory framework around the world; particularly when selling products for human consumption involves inherent risks such as contamination. ‘Cadbury, now owned by Kraft Foods Inc. had to recall 11 chocolate types in China in 2008 when at least 50,000 babies fell ill and 4 died by milk tainted with an industrial chemical. ’ (BBC, 2008) 3. SWOT Analysis Another approach that companies implement is the SWOT analysis. ‘’The core of this approach is a simple and eminently reasonable strategy that is concerned with identifying opportunities in the enterprises external environment’’ (Pg No 721, Linstead, Fulop & Lilley, 2009). This analysis examines the strengths and weaknesses internal to the company and then the external opportunities and threats. In Kraft Foods Inc. case the strengths that can be identified are that they are the world’s second largest food company and they have strong brand equity with over 100 years heritage.

However their weaknesses are that the Cadburys acquisition resulted in added debt pressure and they are subject to cut throat competition from rivals such as Nestle. From the external point of view an opportunity for the company is that they could centre new products in the health related market such as introducing low fat or organic products. But on the other hand a threat for Kraft is that the Cadburys acquisition resulted in a lot of protests and bad media from the British which resulted in a drop of profit margins. 3. 4 Porters Five Forces

Porter’s five forces is an analysis framework that identifies the competitiveness intensity and the five forces most relevant to the profitability of the company. ‘According to Porter (1980a) the ability to earn an acceptable return depends on five forces – the ability of new competitors to enter the industry, the threat of substitute products, the bargaining power of buyers, the bargaining power of suppliers and the rivalry amongst existing customers’ (Boddy, 2008, Pg No 93). This framework is demonstrated in the diagram below in Figure 2. 1. Figure 2. Porters Five Forces. Source: Wikepedia When looking at the bargaining power of suppliers with Kraft Food Inc. suppliers do not hold much power to enforce the company to extract their profits due to the competitive nature of the industry. Buyers however have an opportunity to extract firm profits as demand changes over the period of time. Due to intense competition in the market, there is a low possibility for new entrants to capture the market, and the threat of substitute products is medium as Kraft Foods Inc. hold such a large market share in the industry.

Finally competitors such as Nestle and Kellogg’s are spending enormous sums of money for the promotion and advertising of their brands yet Kraft Foods Inc. is still the second largest in the world. 3. 5 Management at Kraft Foods Inc. As previously mentioned in the introduction, every business’s management model can be applied to the Current Values Framework. When analysing Kraft’s business strategy and management it is evident that their current dominant model is the Rational Goal Model. This model focuses towards maximisation of output and making a profit.

Of course, the vast majority of companies would be dominantly working from this model as every company needs to make a profit in order to survive; although successful models of management relate to all four of the segments. ‘’The basic assumption of the Rational Goal Model is that clear direction leads to productive outcomes. There is a continuing emphasis on processes such as goal clarification, rational analysis, and action taking. All decisions are driven by consideration of the bottom line”. (Taylor, 1911) Kraft Foods Inc. hows elements of dominantly using this model from their hostile acquisition of Cadburys and with their intent to create two independent public companies as a strategic approach for growth. 3. 0 Corporate Social Responsibility ‘’Corporate Social Responsibility is the business contribution to sustainable development goals. Essentially it is about how business takes account of its economic, social and environmental impacts in the way it operates – maximising the benefits and minimising the downsides. ’’ (CSR, 2009) 4. 6 Impact of CSR on Kraft Foods Inc Kraft Foods Inc. as thrown into the media in 2010 with their hostile acquisition of Cadbury’s. Cadbury’s unions opposed to the take-over in fear that there would be big job cuts, and UK politicians even weighed in voicing their concerns. ‘Following the acquisition five senior executives of Cadburys quit and only 30% of the leadership positions were made available to Cadburys staff. ’ (FT, 2010). By the end of the acquisition over four hundred jobs had been cut by Kraft, this was deemed as an extremely bad case of CSR, particularly in the social aspect; and the company have been portrayed negatively in the media ever since.

However, it is not all negative when it comes to Kraft’s CSR. ‘Over the past 25 years they have donated more than $770 million in cash and food to those suffering from hunger and malnutrition. Kraft Foods ranked 23rd in the 2011 Corporate Social Responsibility Index and were recently awarded the Gold Award for Environmental Excellence at the 4th Global CSR Awards 2012. ’  (Kraft, 2012) They work with non-profit organizations such as Feeding America in the U. S. and Save the Children in Southeast Asia as well as helping develop healthy lifestyles programs for children in the U. S. , Russia and many other places. 4. 0 Conclusion In conclusion the above shows us how the management theory helps us to analyse an organisation, and we can see how Kraft Foods Inc. operates successfully using the Rational Goal Model. They do however operate in a highly competitive food sector, where margins are diminishing, and they have to face tough competition from branded food as well as generic food manufacturers, particularly in this economic slowdown.

Although the company does partake in a lot of CSR activities, a bad image always remains with customers for a lot longer than a positive one, and they still have a negative image portrayed on themselves from the hostile takeover of Cadburys. 5. 0 Recommendation Kraft Foods Inc. could benefit from repositioning their brand image in the markets to communicate with customers to remove the negative thinking from their minds which arose after Cadburys acquisition. They should also consider moving towards the Human Relations model in the CVF which emphasises commitment, cohesion, and morale. The key values are participation, conflict resolution, and consensus building. In this model the organisation takes on a team-oriented climate in which decision making is characterised by deep involvement. ’ (Quinn, 1988) This would be beneficial in gaining trust and respect from the employees after all the conflict and job losses that arose from the acquisition of Cadburys. Another option for the company, as mentioned before in the SWOT analysis, is the expansion into new and developing markets which will aid the company in earning more profits to meet their debt requirements.

With the consumer market becoming more health and environmentally conscious, organic and reduced fat content products could be a niche in the market for a confectioner such as themselves. 6. 0 References BBC (2008). Melamine found in Cadbury goods. September 2008. Available: www. bbc. co. uk Accessed 12 May 2012  Bender, R. and Ward, K. (2008). Corporate financial strategy. 3rd Ed. London: Macmillan p. 52-55. Bloomberg, Homan, T. R. (2010). U. S. Employers Add Fewer Jobs Than Forecast. December 2010. Available: www. Bloomberg. om Accessed 24 April 2012. Boddy, D (2011). Management, An Introduction. 5th ed. Essex: Pearson. CNN, Gunther, M (2008). Eco-police find new targets. August 2008. Available: www. money. cnn. com. Accessed 23 May 2012. CSR. gov. uk (2009). Available: http://webarchive. nationalarchives. gov. uk/+/http://www. berr. gov. uk/whatwedo/sectors/sustainability/corp-responsibility/page45192. html/ Accessed 22 May 2012. CVF. (2009). Competing Values Framework: An Introduction. Available: http://competingvalues. com/competingvalues. om/wp-content/uploads/2009/07/The-Competing-Values-Framework-An-Introduction. pdf Last accessed 12 May 2012. FT. Elizabeth Rigby. (2010). Kraft hit by exodus of Cadbury executives. Available: http://www. ft. com/cms/s/0/1dad970a-69c1-11df-8432-00144feab49a. html#axzz1viuO14PA. Last accessed 18 May 2012. Kraft Foods, About us (2012) Available: http://www. kraftfoodscompany. com/About/who-we-are/index. aspx Last accessed 28 April 2012 Kraft Foods CSR (2012) Community Involvement Available: http://www. kraftfoodscompany. om/About/community-involvement/community-involvement. aspx Accessed 22 May 2012. Kraft Foods, Document Sheet (2011) Available: http://www. kraftfoodscompany. com/SiteCollectionDocuments/pdf/kraft_foods_fact_sheet. pdf Last accessed 20 May 2012 Kraft Food Q1 Financial Figures – http://phx. corporate-ir. net/phoenix. zhtml? c=129070&p=irol-EventDetails&EventId=4756026 Linstead, S, Fulop, L and Lilley, S. (2009). Management & Organization. 2nd ed. London: Palgrave McMillan. Pg No 721. Martin, J (2005).

Organizational Behaviour and Management. London: Thomson Learning. Octogram. (2005). CVF Framework. Available: http://www. octogram. net/quinn-model Last accessed 6 May 2012. Porters Five Forces, Wikepedia. Available: http://en. wikipedia. org/wiki/Porter_five_forces_analysis Accessed 22 May 2012. Robert Wood Johnson Foundation (2008). Food and Beverage Marketing to Children and Adolescents: What Changes are Needed to Promote Healthy Eating Habits? October 2008. Available: www. rwjf. org Accessed 22 May 2012 Taylor,

Explain why CSR is a key concern in managing the operations of a large business? Cadbury Corporate social responsibility is an important concern in managing the operation of a large business, as it integrates financial, social and environmental goals. Cadbury, an internationally well-known chocolate company, is now Fairtrade Certified, becoming easy for the consumers to recognise their products. And with this label, the company is now helping the Third World Producers by guaranteeing a better deal. These include the improvement in their financial, social and environmental performance.

Being a Fairtrade Certified Company, Cadbury helps make a difference and provide better financial deals for the developing country farmers, producers and their community through the provision of a fair price. And this helps them protect themselves from damaging fluctuations in world market prices. Fairtrade is also the only system that provides farmers and the producers with an additional lump sum of money for investment in social, economic and environmental development. These include, growing their business, investing in their communities by building schools, roads, hospitals etc.

So when consumers buy Cadbury dairy milk chocolate, they are not only treating themselves, but at the same time helping improve the lives of Fairtrade farmers and their families in developing countries. This step is very valuable for their business to become known, encouraging customer awareness. It is Cadbury Schweppes’s aim to help all the Cocoa farmers improve their social standard of living by helping them develop sustainable crops of quality beans. In Ghana, for example, where most of the cocoa is bought, the company supports farming communities through programs on tree crop management and building wells for drinking water.

But it is not it, the Fairtrade also provides security to the farmers, provide good working conditions and support in gaining knowledge and skills to operate successfully in the global economy. This assures their safety and a good social standard life. Cadbury also contributes to a better quality of life for the society by pursuing environmental awareness. Businesses nowadays are increasingly aware of the impact their decisions may have on the society and the environment. And therefore are aware of making decisions that are socially responsible.

Some of the environmental responsibilities include; treating waste water prior to disposal, looking to improve energy efficiency, controlling the release of gases into the atmosphere and using environmentally sustainable farming methods. This not only helps the environmental aspect, but creates a good public image and encourages long-term profitability. Therefore CSR is a key concern is managing the operations of a large business, as it determines how consumers looks at the business, and whether the financial, social and environmental goals create a good impact for the business to work efficiently, grow and make a profit out of it.

Corporate social responsibility which is also known as CSR is a form of corporate self-regulated that has been integrated into a business model. It was started to be popular in 1960s to 1970s after being implemented by many multinational company. The focus on CSR in Malaysia has increased in recent years, in line with international trends. Although several companies have CSR programs that go back many years, in some cases decades, it has in recent years been possible to identify an increased awareness of the issue.

The approach of CSR becomes widely accepted by community-based development approach. Today, more companies than ever before are recognizing the significance and value of integrating CSR into all aspects of their business operations and decision-making processes. Communities are seen as more than just a market for the roll-out of products and services. The long-term growth and profitability of companies are inextricably linked to the sustainability and well-being of the community. Petrodec Sdn Bhd is one of the company in Malaysia that committed to their CSR program.

In year 2011, Petrodec had become more integrated in CSR where they had adopted SM (U) Al-Irsyad, Pulau Pinang and planned activities with Blind Associate in Kulim called Rumah Bakti.

Introduction

This project starts with the importance of the CSR commitment to the company then followed by the background of the company, Petrodec Sdn Bhd. This will continue with the listed CSR activities done by Petrodec Sdn Bhd. Then it followed by the plan for next year and challenges faces by the company. Then it covers recommendation to conclude the whole program presented for year 2011. .

Company Background

Petrodec Sdn Bhd Petrodec Sdn Bhd (formerly known as Focal 2000 Sdn Bhd ) was established on 21st April 2000 with a mission to provide a comprehensive range of engineering solutions and services in the construction industry. Petrodec Sdn Bhd has been registered with CIDB (G7) since year 2001 and PKK (Class A). Holding the paid up capital of RM1,000,000. 00, Petrodec Sdn Bhd is owned by two directors; En Mohd Zamri Bin Abdull Rahman and Tn Syed Lokman Bin Syed Idrus. Petrodec Sdn Bhd believes there is more to value than just the lowest price.

Value means providing our clients with the highest quality product for the most economical price. Petrodec Sdn Bhd has worked hard to earn a reputation for quality work and integrity in dealing with clients, local authorities, suppliers and subcontractors. It’s believes in building value into relationships by using quality people and products. Their goal is to develop long lasting relationships based on trust, honesty and professionalism. The organization had worked hard to earn satisfaction and respect from customer as they believe in continuous relationship with customers.

The basic philosophy of Petrodec Sdn Bhd is to offer oustanding services towards clients’ goals and needs. The company provides a total package capability and solution to suit projects of any scale and magnitude. Its services will be characterized by a high standard of quality services. The company believes in the solidarity of its internal skills and knowledge in satisfying the needs of its clients (Petrodec Sdn Bhd, 2010).

Company Values

The values and principles are “Experience, Effective, Efficiency and Excellence ” coupled with creative dynamism and vision will be the constant focus of the company ’ s work ethics. Petrodec Sdn Bhd, 2010)

Corporate Social Responsibility (CSR)

CSR is a form of corporate self-regulation integrated into business model. It starts to be popular in 1960s and early 1970s after multinational company really putting an effort to emphasis on CSR. Basically, the most successful and accepted CSR is the community-based development approach. In this approach, organization works with local communities to better themselves. The organization that is committed to employee development normally already practicing some of the CSR components.

That organization that openly shares information with employees about a move toward downsizing, and then helps displaced employees find new jobs, is actively practicing CSR. Moreover, the organization that is committed to the production of safe, reliable, and innovative products or services in line with customer needs is strategically involved in CSR. CSR is, therefore, a management approach that takes into consideration an integrated set of indicators that map the firm’s impact within the its economic, society and environmental existence.

Most importantly, findings from scientific research shows that CSR is essential for the long-term sustainability of an organization (Waldman, Sully, Washburn, & House, 2006). Company that narrowly pursue the profit motive, without concern for the broad spectrum of Stakeholders that are relevant to the long run, are increasingly shown to lack sustainability. But it’s not only important to realize the importance of these groups. Organizations must also be able to “connect the dots” and understand how various Stakeholders, and the satisfaction of their needs, represent interrelated challenges.

To some multinational companies and large organizations, they might have an established CSR that brings a significant impact to the company and community surrounded area. However to a small company they might have a different ways to involve with CSR activities. For Petrodec Sdn Bhd commitment to engage with CSR activities is important to ensure business continuity. It is a social obligations to contribute some and to be part of the society. The company hopes to share some of community pain in the welfare activities.

On the other hand, Petrodec is a construction company that have to engage with the community throughout the duration of project completion. It is understood, whenever a constructions works involve, there always be uncomfortable situations to the involve society. Projects like earthwork clearing, building constructions, roads constructions and many more would always be unavoided disturbance to the people stay around the constructions area. Therefore, involvement with society will make them understand the situation and understand why the work need to be done at that area.

CSR Activities 2011

Petrodec Sdn Bhd activities are divided into categories. First category is the adopted school and the second one is the welfare activities. Petrodec had chosen Sek Men (U) Al-Irsyad as the adopted school when they started the construction project to build new hostel. The welfare activities carried out at Rumah Bakti in Kulim town which is the only Muslim Blind Associate in Malaysia.

Adopted School- Sek Men (U)

Al-Irsyad Sek Men (U) Al-Irsyad is located at Pokok Sena, Pulau Pinang. In 2009, Petrodec had been awarded to build hostel for the student that can occupied 200 students.

It is also included room for warden and activity rooms. The duration for this project carried out for two years. It is long enough for the company to support the school activities. The school had their planned a lot of good programs to develop their students. But to ensure all activities can be run successfully, they need certain budget. So Petrodec had put up the initiative to volunteer to contribute RM10,000. 00 to ensure all their program smooth throughout the year. However, Petrodec only handover the RM10,000. 00 and the school had full authorities to use the money to run all the program as their planned and presented earlier.

Petrodec had not engaged personally during the activities. Speech competition, motivation activities, outdoor activities, external speaker comes for motivation talks and graduation celebration are parts of the activities that had been carried out throughout the year.

Welfare Activites- Pusat Latihan Rumah Bakti Kulim (The Blind Association)

Rumah Bakti Kulim (the blind association) is the only training center for muslim blind association in Malaysia. It’s accommodates around 20 people which is blinds that stayed in this Rumah Bakti.

All of them are teenagers who poor vision or blinds, and orphan. Petrodec had participate actively in their activites and involve personally in the activities. Total of RM20,000. 00 was granted throughout the year but it was given when the program are planned. In 2011, there are three major activities had been carried out. Two activities had joined event with Malaysian Estima Owners Group (MEOG) to had more people involve. The first event was held a week before HariRaya Aidilfitri 2011 which is on 20th August 2011. The total budget for this event around RM6,000. 00.

The MEOG team prepared the food for evening meal to break their fast, transportation (Estima) to bring the blinds to function house which is held at Kulim Golf Residents and Petrodec prepared cash donation, baju kurung and baju melayu for all the blinds. Total of 24 blinds received the cash donation and clothes on that day. Total 100 attendees participate in the event. It a very simple but a meaning full event. All the Petrodec staffs and MEOGians served the for the blinds, perform the maghrib prayers and then proceed with the clothes and cash donations sessions.

It was conclude to be one of the most successful event to MEOG and Petrodec Sdn Bhd this year. The second activity was activity korban on Aidil Adha. It was done on 9th November 2011 at Rumah Bakti Kulim. Total budget allocated was RM3,600. 00. This activity also a joined effort with MEOG. Rumah Bakti staff cooked for lunch for invited guest which included all the blinds at Rumah Bakti, Petrodec Sdn Bhd Staff and MEOGians. Korban meat was then distributed to poor people and included the residents of Rumah Bakti.

The meat for Rumah Bakti will be stored properly as that will be their food stock until year end and early of first quarter next year. This is due to normally it was the last contributions received from outside organizations for that year. Next year contribution will be received later in February. For day to day income, the blinds will continue living with their own income either from massage service and photostat service run inhouse. The third activity was to hire Tahfiz to teach the blind tahfiz Al-Quran. As they cannot read Al-Quran, therefore they have to hire Tahfiz for the purpose of learning Al-Quran.

This activity start in November and RM700. 00 was allocated for the Tahfiz monthly salary.

Next Year Plan

To ensure CSR activities continuity, Petrodec Sdn Bhd already presented next year plan to the board. Eventhough the budget still under approval by board of directors, the team will continue to look forward for the benefits of the company and the involve community. There are two plans for next year, which are to build prayer room at Rumah Bakti. It is estimated around RM30,000 needed. Petrodec also will continue to adopt school but it might change to another school.

The suggestion will be SK St Anne’s Convent, Kulim. Petrodec had suggested to do activities such as career week during activity week after UPSR 2012. The school will call professionals to give a talk about their career and share with the schools why is it their job is important to the society. Another activity will be participate in Hari Kantin where the Petrodec Sdn Bhd team will be coaching on the entrepreneurship to the students.

CSR Challenges

CSR activities need all the participants actively involve during the activities to ensure it is meaningful to the community.

This would be the biggest challenge to Petrodec Sdn Bhd as the company had a very limited headcount to perform their work and at the same time participate in the CSR activities. Thus, with limited resources such as small budget, time and material also had become the constrains to run CSR in more proper manner. Most of the activites had to be on adhoc basis rather than a well plan schedule. This is also can be constrains due to limited resources. However, the company had worked hard to close the gaps in ensuring the activities run smooth.

Conclusion and Recommendation

CSR is part of social commitment that company need to actively engage and participate. The company might have focus the CSR activities to the project area or to the community surrounded the organizations. Then only it will be meaningful to the people stay around the area.

Reference

1. Petrodec Sdn Bhd. (2010). Annual Report 2010. , (p. 10).
2. Petrodec Sdn Bhd. (2010). Company Profile. Pulau Pinang, Malaysia.
3. Waldman, D. , Sully, M. , Washburn, N. , & House, R. (2006). Cultural and Leadership preditors of Corporate Social Responsibility values of top management: A Globe Study of 15 Countries.
4. Journal of International Business Studies , 823-837.

The Role of Corporate Social Responsibility in International Development

Even though each year millions of people in developing countries are rising out of poverty to join the emerging middle class, a large portion of the developing world still lives on less than $2 a day. Governments, non-governmental organizations, non-profits, and corporations acknowledge this disparity and aim to address the issue using a variety of methods. Mineral extraction corporations, in particular, have the potential to play a key role in alleviating poverty.

These firms are eager to meet the increasing demands of the newly developing global middle class by spreading their operations further around the globe. Their sprawling presence creates new opportunities to serve the world? s impoverished through corporate social responsibility initiatives. Today, many of the problems seen in developing countries include inefficient distribution of resources, poverty, poor standards of living, overpopulation, malnutrition, disease, lack of education, gender inequality, and government corruption.

Corporate social responsibility initiatives create new avenues to address these issues associated with developing nations. In the past 20 years, the private sector has been experiencing a paradigm shift from purely focusing on generating profits to also contributing to the social good. Today, civil society pressures corporations to not only earn profits, but also contribute to the betterment of society. Corporate social responsibility initiatives are methods of how companies can provide services to society.

The term is roughly defined as “economic, legal, ethical, and philanthropic expectations placed on organizations by society at a given point in time “(Carroll and Buchholtz 2000, 35). Carroll and Buchholtz argue that each of these corporate social responsibility components must be met before the 1 subsequent component can be met (2000). Essentially, businesses must first fulfill economic responsibilities which include, making profits, providing employees with safe and fair paying jobs, and providing customers with good quality products. More broadly speaking: to be a functioning economic unit and stay in business.

Secondly, businesses need to commit to their legal responsibilities. Meaning a business must obey the laws and follow industry norms. Since the government is viewed as an extension of society, the laws that the government enacts are social codes that must be met before any other social responsibilities are pursued. The third step of corporate social responsibility is to address a business? s ethical responsibilities. Carroll defines this element as what is generally expected by society, above and beyond economic and legal requirements (1991).

Society generally expects corporations to be just, fair, and to do what is right. Lastly, businesses will focus on corporate social responsibility philanthropic initiatives. The Greek word “philanthropy” directly translated means “the love of the fellow human. ” Thus, philanthropic corporate social responsibility is how businesses can positively contribute to the overall quality of life (Hennigfeld et al 2006, 8). Corporations are driven to participate in corporate social responsibility by a compilation of altruistic and utilitarian motives.

The stronger and more integrated application of these motives precipitate richer, fuller relationships capable of producing higher value for stakeholders on multiple levels (Austin 2004, 30-32). Altruistic components refer to a passion to help society. Utilitarian components refer to organization competitiveness. It is important to note that each factor does not represent a “right” or “wrong” corporate social responsibility method. There is not an innate tension between the two because both are essential in the corporate social responsibility process. While it is important to serve the needs of the community, it is equally important to meet the legitimate needs of a corporation. (Austin 2004, 33). Davis and Blomstrom’s “Iron Law of Responsibility” suggests that “in the long run, those who do not use power in a manner which society considers responsible will tend to lose it” (1975, 50). The most successful corporations must choose to intentionally and strategically become a part of the solution to complex issues today, in order to preserve their businesses for the future.

Michael Porter, well-known for his work on competitive advantage, argues that if a corporate philanthropic activity does not have a strategy base, it is a disadvantageous activity. Thus, even though companies gear corporate social responsibility towards an altruistic element, a utilitarian element must be present, as well. Porter attests that certain philanthropic investments will create a long-term competitive advantage for business, industries, and communities (2003). In some cases, companies are better equipped than governments to meet society? needs because they possess specialized skills and technologies that are significantly more efficient than government. Similarly, the “bottom of the pyramid” method aims to tap into the nearly 4 billion person market in developing countries. When companies transform their products to meet the financial and resource needs of this market they simultaneously increase profitability and contribute to reducing poverty. In addition, when companies contribute to social, economic, or environmental community needs the company is investing in the region? s potential for business operations in the future.

As a result, improving the company? s competitive advantage compared to those companies who do not participate in equitable quality corporate social responsibility. 3 Adversaries of corporate social responsibility business strategy refute that corporations should play a role in philanthropic activities. Milton Friedman once attested that the primary “social responsibility of business is to make profits (Friedman, 1970). ” Within his argument, Friedman claims that only human beings are responsible for their actions and that corporations are not considered human beings.

Therefore, corporations are not responsible for their business activities, but rather the individuals a part of the corporation must hold themselves responsible. Further, Friedman (1970) asserts that social issues should be the responsibility of the state, not business. This is because managers do not have the capacity to understand how to address society? s needs. This rests under government jurisdiction. Since legal restrictions on business activity are set in place by the government, who represents society, managers are obligated to solely act in the interest of shareholders, as long as the mandatory legal framework is being met.

According to Friedman, shareholder interest revolves around fulfilling the corporation’s central purpose: profitability (1970). For managers to act otherwise, would be considered „theft? from shareholders. Friedman does not deny that corporations participate in such corporate social responsibility activities, however he argues that any business action performed for corporate-interest should not be classified as corporate social responsibility (1970). If actions are grounded in a central goal to produce profit, then Friedman reasons it should be not characterized as a corporate social responsibility activity.

Either way, corporations are engaging in corporate social responsibility activities, therefore, investigating the most efficient models provides valuable information to these entities. Determining which element causes the other, corporate social responsibility initiatives or profitability, is nearly impossible to prove because of the ambiguity between 4 each factor. There is, however, a positive relationship (Porter and Kramer, 2002). So according to Carroll’s four-level corporate social responsibility design, it is imperative that corporations take into account social concerns because corporate social responsibility promotes profitability, which is the first requirement of his corporate social responsibility model. Corporations are attracted to corporate social responsibility activities because of the multi-tiered benefits for the community and the corporation itself. For example, by using a socially responsible business structure studies show an increase in new consumers who are attracted to the company’s positive reputation.

Further, companies who uphold social responsibility attract a higher quality workforce, which is even more committed to their corporation because of its perceived socially responsible mission. Establishing a positive mutual relationship with the government is also an advantage for corporations. They gain more autonomy from and influence over legislation in order to promote their own business practices. Overall, corporate social responsibility represents short-term and long-term investments in the local population, government, and economy to secure a prosperous business in the future (Henningfeld 2006).

Individual corporations participating in corporate social responsibility initiatives dictate their own strategies according to their industry norms, available corporate resources, and specific community needs. Some corporations commit to meeting the minimum governmental regulations. By doing this, corporations curb the most pressing public concerns, but do not go beyond their legal obligation. On the other hand, corporate social responsibility could be used to fulfill a philanthropic vision in which a corporation proactively and consistently contributes to society above and beyond the basic governmental requirements.

Regardless of the differing corporate social responsibility 5 missions, each entity strategically formulates their corporate social responsibility agenda to, in some regard, meet the needs of the communities it affects. This agenda dictates how a corporation? s resources and expertise are administered. Discussed below are examples of methods in which corporations may construct corporate social responsibility initiatives. This information represents hypothetical strategies and possible results, not necessarily strategies proven to be most effective.

Corporate Social Responsibility Strategies

Environmental Sustainability Environmental sustainability initiatives aim to provide an environment that meets the needs of those today, without compromising the ability for future generations to meet their own needs (United Nations, 1992). Since a wide range of people benefit from sustainable development and environmental activist groups strongly support these initiatives it is useful in influencing positive public opinion. In addition, corporations preserve future resources for their own business activities.

The first step corporations take in pursuing environmental sustainability is to thoroughly research the environmental impacts of their operations. If corporations are producing negative environmental externalities, local communities are inflicted with present and future environmental challenges. In response, corporate social responsibility resources are used to create proactive and retroactive sustainable business responses, techniques, and technologies in order to reduce their direct environmental impacts. Further, environmental education and sustainable community development can be provided.

This strategy places more responsibility on the local citizens to use their sustainability education to benefit their 6 own community. In theory, it creates a longer lasting sustainable influence because community members can use their knowledge throughout their entire lifetimes and pass on sustainable traditions to future generations. (2) Anti-corruption/ Anti-bribery Multinational corporations operating in the developing world typically possess more influence over political, social, and economic issues than local community members.

This is due to the fact that the corporations have superior financial resources, connection with the government and knowledge about national legal issues. Despite this power disparity, it is in a corporation? s best interest to avoid engaging in corrupt activity. The news of questionable business operations eventually leaks out to the global community. Currently, international business etiquette disapproves of corrupt behavior and views it as immoral. A company that participates in corrupt activities negatively impacts its reputation, thus, diminishing shareholder confidence and ultimately decreasing overall business value.

To avoid this, a corporation should adopt anticorruption and anti-bribery corporate social responsibility strategies. When a corporation refuses to engage in dishonest activities, it reflects positively on corporate operations and adds to a just political climate (Stewart 2009). In addition, a contribution to a smooth running government benefits corporations because they can operate with few governmental interventions and also save money by avoiding bribes.

Local Economic Development Corporations may choose to invest in local economic development.

As a method to spur business growth corporations provide microfinance loans to local start-up or small businesses within the community. Business management courses that extend knowledge concerning entrepreneurship and sustainable business are another beneficial corporate social responsibility economic development alternative (Stewart 2009). In addition, contribution to infrastructure such as roads, ports, and city centers are beneficial for local trade because goods can be more efficiently transferred over a broader region. 4) Education and Training If a corporation employs people from the local community, it is necessary that these people are trained adequately. Education integration into business operations is imperative for social development (Nelson 2006). Corporate social responsibility focused on educational development helps people become more self-sufficient by teaching them skills that will attribute to being more productive members of society. This type of corporate social responsibility strategy, creates valuable human capital. Corporations could choose to focus on primarily employee training or choose to extend services to the entire community.

The latter would consist of supporting primary to tertiary schools in order to invest in local human capital for potential future employees. The locally operating corporations will be more efficient with trained and educated employees who gain business and operations skills. 8 (5) Health and Wellness Access to health care services attributes to healthier community members, therefore extending a person? s work life and improving productivity. “Business works best when operating in stable and secure societies,” (Plugge 2004) in which a healthy workforce plays an important role.

Corporate social responsibility health and wellness strategies may include education about basic hygiene, nutrition, and sanitation. Corporations who open access to basic medicines reduce the risk of many common illnesses that could be avoided or significantly reduced. All of these benefits contribute to stronger, healthier, and more productive employees.

Gender Equality and Women Empowerment

Evidence shows that empowering women contributes to positive socio-economic development within communities in developing countries (Malhorta et al 2002, 33).

Female leadership programs, increase corporate employment of women, provide microfinance loans for , and establish strict sexual harassment corporate policies are all possible corporate social responsibility gender equality initiatives (Plugge 2004, 6). By empowering women, more people are added to the work force, more businesses are developed, and familial relationships are more equalized. As a result, the community becomes increasingly competitive.

Employee Highly qualified professionals immigrate into local developing communities when a large business opens. These people have received ample training and are intellectually 9 qualified to operate a business on multiple levels. Using employee volunteerism within the local community is another example of a beneficial corporate social responsibility strategy. Depending on each employee? s skill set, corporate volunteers serve the community by improving local business strategies, infrastructure, education system, and public services. Studies have shown that employees desire a sense of “self-worth and a belief that their work provides value to the community,” rather than solely receiving high salaries (Shayon et al 1975, 2).

Employee volunteerism fulfills this desire for importance in corporate work. When employees participate in volunteer work they also gain and perfect skills that will be more effective within corporate operations. Hence, this corporate social responsibility technique improves employee morale, provides needed services to the community, and advances employee skills. Corporate Social Responsibility Implementation Techniques Corporations choose from a variety of implementation techniques in order to maximize the positive effects of each corporate social responsibility strategy within communities.

Specific techniques are “aimed at mobilizing not only money, but also the company? s people, products, and premises to help support and strengthen local communities and non-profit partners” (Nelson 2006, 7). Discussed below are examples of corporate social responsibility implementation techniques that multinational corporations invest in.

Philanthropic Cash Donations

The philanthropic corporate donation phenomenon began in the United States during the 20th century with business leaders such as Rockefeller, Mellon, Ford, Gates, Kellogg, and Packard. This type of relationship is based upon responses to non-profit requests for donations with simple “check-writing,” rather than a deeper interaction with charitable organizations. Interactions between corporations and non-profits are usually infrequent, with low engagement, and do not apply strategic planning. The basis for this implementation technique is to promote company image in a way that consumers and stakeholders perceive a compassionate and responsible institution. On the flipside, nonprofits receive the necessary funding to maintain service operations (Austin 2004, 4).

Independent Service Provider

Less commonly pursued, corporations may choose to develop an “in-house” philanthropic service department to carry out their corporate social responsibility strategies. This department would act as the management team for the creation and implementation of corporate social responsibility strategies autonomous from non-profits, non-governmental organizations or the government. Nonetheless, consultation from these service organizations and the government occurs because of their specialized understanding of philanthropic initiatives which the corporation does not possess.

Employee volunteerism would be the most common resource used within this implementation technique because it is one of the most accessible assets the company holds. 11 Direct Corporate Humanitarian Investments represent another form of independent service provider implementation technique that corporations autonomously develop. This technique “involves a firm using its resources and know-how to alleviate a particular instance of human misery” (Dunfee ; Hess 2000, 95). Corporations with specific niches in a development sector best optimize this technique.

For example, the pharmaceutical company, Merck, held the patent to the drug that controlled river blindness. Hence, Merck was the only entity that could distribute this drug independently to developing communities for a reduced price.

Partnerships Corporate and social sector partnerships resemble a joint-venture relationship in order to achieve common philanthropic goals central to the mission of each institution. Within the partnership each organization shares its resources equally and frequently communicates about specific initiatives. In addition, the managerial complexity required within a partnership typically precipitates a separate department to directly manage and implement the bilateral exchanges (Austin 2004, 4-5). In contrast to the previous implementation techniques, corporations acting in a partnership focus on specific initiatives and programs. For example, cause-marketing, project development, and synchronization of strategies are all activities involved within corporate and non-profit partnerships. Multinational corporations play an additional role in partnership corporate social responsibility implementation.

Specifically, multinational corporations frequently participate in cross-sector partnerships because most have a mission to engage with the local community. Not only do corporations transfer technology and economic 12 development, but also their values and social policies (Austin 2004, 35). This adds another level of influence within the partnership. Methods of how corporations establish partnerships include social networking, past relationships, connections through acquaintances, related institutions or an affiliation with a specific cause.

Typically in developing countries partnerships are with reputable non-profits or non-governmental organizations. Corporations partner with mostly traditional institutions because of their established reliability and proven success. In more progressive developing countries relationships could be developed with local service organizations, but in more underdeveloped countries multinational western based service organizations are used. A partnership acts as a form of risk-management for both the corporation and non-profit organization.

Corporations utilize a partnership as an effective tool to address incurred harm to the community from business activities or as a resource to resolve future issues (Austin 2004, 34). Specifically in industries that produce negative externalities, a preventative alliance with a non-profit that specializes in neutralizing harmful business activities is extremely advantageous. Businesses cut-costs, improve public image, and engage with the local community with an established partnership. Moreover, when a corporation partners with the government or provides a service to society, both parties create a “win-win” relationship (Steward 2009, 18).

The government gains from the economic development, material wealth, and jobs that corporations provide. Corporations benefit from government investment in infrastructure and legal protections. In addition, the government determines laws and regulations that a corporation must abide by. Thus, positive and reliable partnerships would influence the government to be more willing to 13 responsive to accommodating corporate needs. Governments are better off because corporations create an increase in GDP, provide jobs to local citizens and contribute to national development.

Non-profits and non-governmental organizations further gain from partnering with corporations. Funding diversification and reducing dependence on public resources are the main examples of how these organizations reduce their business risks. Corporations provide a secure source of funding despite possible government fluctuations in monetary support. For example, if a non-profit organization relies solely on government funding and there is a change in government leadership, budgeting, or policy that reduces funding to the non-profit, the organization would be at-risk of losing many resources.

By partnering with corporations, non-profits and non-governmental organizations reduce their financial risk and gain valuable business strategy consultation. Corporate Social Responsibility Assessment Methods The evaluation of corporate social responsibility initiatives is extremely important for organizational analysis and public awareness. Documenting corporate social responsibility investments may influence corporations to be more accountable and take more ownership over their activities because it will be appraised by corporate and public experts.

Firms use a variety of corporate social responsibility assessment methods in order to internally assess and externally report their corporate social responsibility investments. Reporting assessments may be an important and efficient way to communicate corporate social responsibility investments and achievements with academia, the financial community, government, policy makers, regulators, interest 14 groups, non-governmental organizations, general public, the local community, employees, shareholders, and the industry (Tilt 1994).

Jason Saul (2009) believes that “at the end of the day we have to demonstrate value, and the way we demonstrate value to business, and to society, is by speaking the language of the business—by speaking the language of measurement. ” Therefore, he argues that quantitative analysis of corporate social responsibility initiatives and reporting is a key component of corporate social responsibility management. In addition, if companies choose to use the internet and their websites to disseminate their social and environmental activities they have the potential to increase their transparency.

This is an advantageous mode of communication because of its wide accessibility, low-costs, and ability to easily create in-depth or interactive tools (Line et al, 2002). The information gathered from expert audits, annual reports, corporate social disclosure reports, environmental sustainability reports and corporate assessments can be used to assess the efficiencies and short comings of corporate social responsibility initiatives. Important factors to consider are generally firm transparency, corporate governance, code of conduct, corporate social disclosure, social mpacts, community relationships, product quality, and stewardship (Szablowski 2006, 49). Thomas Haynes (1999) further recommends all companies measure four critical areas of corporate social responsibility: 1) economic function, 2) quality of life, 3) social investment, and 4) problem-solving. However, Harold D. Lasswell would consider these four critical areas incomplete because it does not take into account the evaluation of corporate social responsibility investments and policies according to the appraisal results. The corporate social responsibility goals must be specific and clear in order for the evaluations to be 15 ffectively implemented to improve corporate social responsibility programs and investments or to propose alternatives. In the past decade, corporate social disclosure reports are being more commonly used. These reports consist of voluntary and mandatory accounting of community issues above purely economic activities, such as human resources, community involvement, energy, product safety, environmental issues). The Corporate Citizenship Company, an international corporate responsibility and sustainability consulting firm, uses seven categories to assess the effectiveness of corporate social responsibility activities.

Assessment Factors by Corporate Citizenship Company (Yakovleva 2005, 23) 1) Shareholders a. Return on investment b. Corporate governance 2) Employees a. Salary and Benefits b. Health and safety c. Training and staff development d. Diversity e. Communications 3) Consumers a. Price/ value b. c. Advertising policy 4) Business partners a. Jobs sustained b. Payment of bills c. Technology transfer 5) Government a. Tax contribution b. Local economic impact c. Transfer pricing policies 6) Community a. Charity contributions b. Local economic impact c. Transfer pricing policies 7) Environment a. Sustainable raw materials 16 b. Emissions to water and air c. Energy efficiency d. Waste management e. Reduced packaging f. Consumer education In partnership with the Corporate Citizenship Company, the London Benchmarking Group analyzes corporate social responsibility investments and gives each program and service quantitative value. The LBG was founded in 1994 and consists of over 100 companies dedicated to measuring Corporate Community Investment. Hundreds of companies round the world use the LBG method to quantitatively value corporate social responsibility activities. Monetary values are applied to 5 variations of business activities: 1) business basics, 2) mandatory contributions, 3) commercial initiatives in the community, 4) community investment, and 5) charitable gifts. These varying business activities allow corporations to classify a monetary value to a company? s corporate social responsibility inputs including cash, time, in-kind, and management costs (“Measure for Measure,” 2004).

The companies also assess their corporate social responsibility outputs and impacts in order to equate the net gains of corporate social responsibility investment. For example, new availability of cash or other resource, quantity of people aided, and business benefits represent measurable outputs. Assessment tools have the potential to be extremely valuable in corporate social responsibility strategies. Companies should be evaluating the performance of their corporate social responsibility investments to gain further intelligence about how to efficiently improve the use of their corporate resources.

However, currently corporations are not required by law to report their corporate social responsibility activities. Those that do report use different methodologies, creating inconsistencies in appraisals techniques. 17 Some models that companies are presently using could be omitting crucial key factors in corporate social responsibility efficiencies, thus, providing incomplete information. A comprehensive corporate social responsibility evaluation model needs to be established in order to effectively assess and improve corporate social responsibility activities.

Historical Trends of Corporate Social Responsibility Strategies Implemented by Corporations in Brazil Background: Corporate Social Responsibility in Brazil

Throughout Brazilian history, philanthropic and charitable donations were significantly represented in the nation? s culture. Since the colonial period, the Catholic Church has inspired the establishment of many civil society organizations that carry out needed services for society. This movement grew during the industrialization period and gained substantial public support.

During military rule, civil society organizations diminished in quantity because of the extremely centralized government. By the democratization period during the late 1980s until present, more and more corporations have adopted corporate social responsibility initiatives, thus, influencing a shift in Brazilian business culture. Brazilian society remains highly centered around philanthropic concerns, which is made evident through a study cited by Cappellin and Giuliani. In 2000, 70 percent of the adult population donated goods and money to social organizations or people in need (2004).

Understanding the historical trends of the evolution from philanthropy to corporate social responsibility strategies will provide more insight into the analysis of mining company corporate social responsibility and how it could be most effectively implemented. Brazilian colonial development was originally based upon an agricultural slave economy under an authoritarian and centralized government. The country? s colonial origins also influenced the predominance of the Catholic Church in Brazilian society. The state collaborated heavily with the Church.

Responsible for public services including education, health and social welfare, the Church played an important role in connecting 19 the state to its people. After the separation of Church and state in 1891, the Church continued to invest in schools, hospitals and charitable works (Landim 1998, 68). During this period, “popular Catholicism” inspired the establishment of the first societal associations, including the most notable “Brotherhoods of Mercy. ” These endeavors were sponsored by the business elites, who helped in establishing a philanthropic cultural norm among many wealthy citizens.

These associations were used for worship, as well as creating some of the first hospitals, homes and psychiatric hospitals (Landim 1998, 67). Corporations did not notably donate to philanthropic associations, but business leaders contributed individually. The state managed Brazilian society in a hierarchical fashion that maintained power and wealth within exclusive authoritarian elite. For example, societal changes generated by industrialization in the late nineteenth century were managed using agreements between the dominant elites (Landim 1998, 64).

Under governance, the Brazilian rich became relatively richer while the poor became relatively poorer. This disparity is evident to this day. During the industrialization period between 1822 and 1930, the government established associations to provide services and resources to the unemployed as a strategy to attract foreign workers. Trade unions gained momentum during this period, as well. Thus, businesses were forced to deal with employee rights and services in order to contract with the trade unions.

James Austin notes that if corporate social responsibility was implemented, it only extend to corporate employees (Austin 2004, 29) during the industrialization period. Military governments controlled the state from 1964-1985. They prioritized economic growth through expanding its industrialization system to diversify from the 20 previous mono-culture agriculture of sugar, rubber, coca, and coffee (Schroy 2006). In the mid-twentieth century the military government instigated anti-inflation policies and invested in economic infrastructure: industry, transportation, and power, but failing in essential reform of public education (Evanson 2002).

In addition, this period also marked the suppression of social organizations and social movements. The state controlled all social initiatives from education, to social security and health care. Consequently, the evolution of corporate philanthropy into Brazilian business strategy became extremely limited. However, the Brazilian non-governmental organizations, civil society organizations and non-profits that did operate during the period of military rule were given minimal supported by the government, so some organizations turned to corporations as a source of resources and funding.

This process led to significant alterations to how Brazilian social organizations strategized their operating models (Austin 2004, 207). Corporate Social Responsibility in Brazilian Business Culture In Brazil, like elsewhere, companies are being challenged to better strategize their corporate social responsibility resources in order to become a part of the shifting paradigm that businesses should implement corporate social responsibility initiatives in their development. A survey conducted by Instituto Ethos (2002), a Brazilian corporate social responsibility on-profit organization founded in 1998, reveals that Brazilian consumers expect ethical behavior from companies. It is no longer acceptable for a corporation to produce negative externalities without engaging in activities to recuperate and compensate those who are affected. On the other hand, Brazilian consumers seek out 21 companies that operate sustainably, collaborate with the community, and provide quality working conditions (Instituto Ethos 2002). Corporations increasingly devote more resources to their corporate social responsibility initiatives as a result of public pressure and evolving business missions.

In the 1990s, an increase in civil society organizations occurred because of the changing economy and collaboration of business leaders. Liberalizing the Brazilian economy presented many challenges due to over 25 years of strictly regulated military rule. After eradicating most trade barriers, local Brazilian businesses were faced with intense international competition that nearly suffocated local businesses. This created an extremely unfavorable economy for corporate commitment to factors outside of direct business activities, such as corporate social responsibility.

Instead, business leaders personally founded third-sector organizations in order to influence legislation and public opinion regarding issues they were most passionate about. For example, a group of business people who all had a mission to mobilize, encourage, and help companies manage their business in a socially responsible way, established Instituto Ethos. Once the Brazilian economy began to recover in the mid-1990s, businesses slowly started engaging in corporate social responsibility initiatives once again, first with charitable giving (Austin, 2004) to many of the newly established third-sector organizations.

The increase in research, academic studies, dissemination pieces, and broad media communication about corporate responsibility initiatives has further influenced businesses to participate in corporate social responsibility activities. The stronger spotlight on this shifting business paradigm further increases awareness and promotes widespread expectation of corporate social responsibility investment. 22 Brazilian Government Social Policies During the early part of the twentieth century, civil society organizations rapidly gained a strong presence within Brazilian culture.

In 1938, the Decree-Law was enacted establishing the Conselho Nacional de Servico Social (National Social Service Council or CNSS): a linkage institution between the state and public sector. The institution? s main duties included implementing and assessing aid to the poor and determine which nonprofits should receive government funding. In addition, the Legiao Brasileira de Assistencia (Brazilian Legion of Assistance or LBA) was established to serve the needs of the noticeably vulnerable portions of the population, for example, young children, pregnant women, and the elderly.

These services were carried out with the partnership of social or church organizations. These departments of state maintained a social network within the government and society that set a precedent for subsequent social governing and Brazilian culture. The military acted as a highly centralized functioning government from 1964 to 1988. Under military rule, the government directly controlled the economy, national development, and social service agencies. The military focused on rapid economic growth and expansion creating the “Brazilian Economic Miracle. From 1964-1972, Brazil experienced an average of 10% GDP growth (Schroy 2006). Despite its economic achievements, Brazil neglected education and health care reform leaving a significant portion of the population in poverty (Evanson 2002). By the end of military rule, the economic disparities between the rich and poor were epic creating the societal need for poverty assistance. 23 The current democratic government and constitution were founded in 1988 after the military relinquished governing power. In light of the experience under the military governments, the 1988 constitution directly protects Brazilian civil rights.

It is best known as the “Citizen Constitution” due to the state? s commitment to enhancing social policies and defending human rights (Austin 2004, 210). This philosophy aids in developing and maintaining civil society organizations that contribute to reducing poverty, improving health care and education, and protecting the environment. Government regulation of business also reflects the protection of civil rights. For example, in 1995 the Environmental Crime Law was enacted to give citizens the right to sue business executives in court if they do not comply ith health, environmental, or safety standards (Cardoso 2003). To understand the remaining needs and opportunities for corporate social responsibility contributions, it is important to understand existing social policies. Currently, the Brazilian government actively implements social service programs for poverty alleviation and social safety protection. The government of President Luiz Inacio Lula da Silva established the Ministerio do Desenvolvimento Social e Combate a Fome (Social Development and Fight Against Hunger Ministry or MDS) in 2004.

This ministry enacted “Assistencia Social” (Social Assistance), “Bolsa Familia” (Family Bag), “Seguranca Alimentar e Hutricional” (Food and Nutrition Security), “Inclusao Produtiva” (Production Inclusion), and “Avaliacao e Gestao oa Informacao” (Information Management and Evaluation) all aimed at elevating poverty and promoting human development (Desenvolvimento Social, 2010). As a result, Brazil? s poverty rate declined by 20 percent during the 1990s (Cardoso 2003). Bolsa Familia was created in 2003 as a 24 ethod to reduce short-term poverty and combat long-term poverty by requiring children to attend school and become vaccinated. Currently, the program provides 11 million families with US$44 a month (Casanova 2009, 141). The past decade has shown even more social improvements. The World Bank justifies that living on less than US$1. 25 equates to living in poverty. In 2003, 22. 9 percent of the Brazilian population was impoverished, but by 2009 only 10 percent of the population was impoverished (Santos 2010). It is important to note that there are still many weaknesses within the social system. 3 percent of the active working population does not qualify or social insurance, leaving them at risk against sickness, accidents or maternity leave. At the same time, 20. 3 percent of children are still living in poverty (Santos 2010). Overall though, the system as a whole has been effective in reducing poverty. Brazilian Government Environmental Policies The government has a formal commitment to sustainable development in addition to improving civil society. For instance, the Brazilian “Environmental Protection and Licensing Plan” requires corporations to receive a „Previous License? „Installation License? , and „Operation License”. At each stage, environmental risk assessments must be completed by the company and approved by the environmental government agency, Insituto Brazileiro do Meio Ambiental (IBAMA 2010). At any time in the application process, the Brazilian government has the right to halt construction. Government regulations appear to be strict; however, past precedent shows that the government encourages profitable resource extraction industries, such as mining. Mineral exports are a robust commodity for Brazil contributing to GDP and tax revenue for the quickly 25 eveloping nation. Therefore, the government reduces regulation and loosens its monitoring system in order to promote rapid resource extraction and increase national revenue. At the same time of the increasing expansion of the mining industry, the International Council of Minerals and Metals, consisting of 19 robust multinational mining corporations, have set in place environmental and social commitments in an attempt to preserve environmental and social rights. Each mining project must receive a “Social License to Operate” from the International Council of Minerals and Metals.

This requires consent by the local community through negotiations and written agreement of how the community will regulate mining activities. The firm is obligated to administer an environmental impact assessment to pinpoint potentially hazardous affects on the environment and how it plans to rehabilitate any degraded environments. However, the International Council of Minerals and Metals does not regulate corporate social responsibility initiatives. Companies themselves are responsible for implementation and assessment.

Present State of Corporate Social Responsibility in Brazil Instituto Ethos, Brazil? s prominent social change non-profit organization, reports that more than half of Brazilian companies implement social policies (2010). Public opinion continues to promote a shift in corporate culture to develop solutions to some of the country? s toughest problems such as, environmental degradation, poverty, and health care. The vast inequalities within Brazilian society have become a hot topic among international development organizations. For example, even though Brazil? s economy is 26 anked as the eighth largest economy in the world (IMF 2010), 50 million people are living on less than US$30 a month. Globally, Brazil is ranked 4th to last in income distribution and 73rd on the Human Development Index (Austin 2004, 215). This wealth disparity highlights the extensive potential corporate social responsibility initiatives could have upon the disadvantaged populations. Corporations operating in Brazil view corporate social responsibility as a tool to restore trust among the public by serving those who suffer from the unequal distribution of national wealth originally initiated by some of these corporations.

Sustainability

ViceChairman Geoff Lye reasons that “if business leaders can make a difference but choose not to, they will live to regret the disruptive social, environmental, and economic consequences that will result from failing to achieve development goals” (Lye 2006). Purely focusing on firm profitability is not enough now. A corporation’s culture, impact, and global image play an imperative role in Brazilian business activity. Businesses that do, however, chose to participate in corporate social responsibility initiatives usually focus on issues that have relevance to their own business activities.

For instance, Roberta Mokrejs Paro and Claudio Bruzzi Boechat (2008) researched business priorities and corporate social responsibility initiatives of 30 Brazilian companies. The study uncovered that corporations prefer corporate social responsibility activities that are important for business activities. For example, the top four corporate social responsibility initiatives among the participants are in the energy, water, education, and environmental sectors. These were also the top four sectors for the implementation of business activities (Paro 2008, 539). 7 The Brazilian government heavily promotes corporate social responsibility activities, as well as, implements extensive corporate regulations in order to protect its environmental, social, and economic identities. Even though some business philosophies behind corporate social responsibility activities appear to be clearly defined and structured, often the reality is a different scenario. Emilio Klein a researcher at the International Labor Organization remarks about corporate social responsibility in Brazil Hopkins 2007, 177): in that country everything is there on paper, perfectly neat and rational. But when you check the reality then things are very different. I would say that roughly in Latin American large corporations, and almost all enterprises, lack something that is essential in the background of your definition: fairness. They are unfair with their stakeholders, both inside and outside, and they can be so because they have all the power, including of course the government. If you add to that their short-term perspective, then you get what we get [in Brazil].

Employees, customers, purveyors or whatever, are being squeezed and pushed around by business, particularly those related to basic services (privatized), financial services and commerce. Even though the Brazilian government has set into place complex social and environmental protection laws, the enforcement and regulation of these principles are extremely limited. Therefore, businesses easily take advantage of local communities by out maneuvering them through economic and political avenues. As a result, businesses typically operate according to their own motives, not the governmental guidelines.

Instituto Ethos uses strategies such as expanding the corporate social responsibility movement, deepen corporate social responsibility practices, creating a more favorable business environment for corporate social responsibility, and articulating corporate social responsibility within public policies to achieve their mission. Currently, this Brazilian corporate social responsibility organization has 907 member companies 28 who combined employ about 1. 2 million people and contribute to about 30 percent of GDP. Business represents one of the most powerful groups in Brazilian society.

Therefore, it is pivotal that this sector engages in corporate social responsibility activities to achieve development success. In 1999, the UN Secretary General launched the Global Compact Program. This aims to coordinate business and corporate responsibility initiatives. Instituto Ethos organized a conference of over 107 companies to develop guidelines for Brazilian companies to participate in this Program. Fourteen principles were created: 1) Indivisibility of rights (all human rights must be considered as a whole) 2) Meeting employee human rights should be viewed as positive and productive for business 3) Companies are leading agents for hange because of their large presence in society, 4) Possible new labor relations could be developed 5) Refuse child labor 6) Implement multiple intervention corporate social responsibility programs 7) Business participation in policy development for long-term commitment 8) Promote women rights 9) Environmental protection 10) Exchange knowledge and methodologies 11) Increase interaction with UN agencies 12) Pro-active thinking 13) Create methods for discussion 14) Monitor Global Compact indicators 29

These goals represent key factors that Brazilian companies could address while constructing their corporate social responsibility initiatives. Because of the scope of corporate social responsibility options is broad, the presence of corporate social responsibility and corporate social conscience create a favorable environment for further promoting corporate social responsibility into businesses not yet participating. Modalities of Corporate Social Responsibility in Brazil Within the Brazilian corporate social responsibility environment, corporations most commonly participate in civil society partnerships.

A study conducted by James Austin (2004, 215) shows that of the 385 companies that participated, 85 percent rely on some variation of alliances with civil society organizations to implement social responsibility strategies. Of this group, 15 percent solely use partnerships to conduct their social practices, 37 percent use non-permanent partnerships, and 33 percent occasionally engage in partnerships. Most often these partnerships are multi-sectored, because each civil society organization has specific niches that aid in the common corporate social responsibility goal.

For example, businesses often partner with non-governmental organizations and non-profits that already have social management expertise to reduce implementation and operating costs for business social responsibility activities. In addition, corporations are amenable to working with local non-governmental organizations or non-profits because it can lead to positive community relations. In addition, corporations may also choose to partner with the local, regional or national government to implement social initiatives. Business leaders often view Brazilian governmental organizations as non-cooperative, bureaucratic, slow, nd 30 inefficient. Therefore, business and government alliances tend to be infrequent in Brazil (Austin 2004, 220). However, these difficulties do represent an opportunity for businesses to enhance government entities and to provide advice on how to make the government processes more effective. For example, Naturas commitment to improving local public education in Itapeceriaca da Serra not only required the company to work closely with the local government quiz, but also led to the establishment of “Barracoes da Cidadania” (Community Shelters).

This program is managed by the Municipal Secretary of Culture in order to provide needy children and youth social and cultural activities and equipment (Austin 2004, 220). Even though such partnerships are becoming more prevalent, a significant proportion of corporations? efforts remain un-partnered because of factors such as lack of confidence in civil society organizations, lack of information, and precedent frustration. 15 percent of the companies in the Austin? s sample do not engage in partnerships, but individually create and implement corporate social responsibility (Austin 2004, 219).

Some company executives believe that they can better manage their resources independently because they have “better control” (Austin 2004, 219) than those firms who engage in cross-sector partnerships to implement their social initiatives. Another finding is that companies that incorporate corporate social responsibility into their business models are more likely to make profits than if they treat these factors as expenses unrelated to business strategies directed to enhancing good will, educate potential employees or provide health care to the community (Hamman 2003, 238).

Company executives frequently commit to carrying out ethical business practices as a component of their corporate responsibility. This includes refraining from using 31 child labor, providing fair compensation, creating safe and comfortable work conditions, and operating within the legal environmental regulations. This promotes ethical business behaviors, as well as benefits the product and companies because they will avoid potential labor rights issues. Further, environmentally friendly operations reflect positively on the company and its products.

The company also reduces the risk for governmental fines due to negative environmental impacts. Often companies whose business leaders choose to invest in “green” technology and environmentally sustainable business practices tend to become industry leaders because they are evaluating and strategizing how to improve their operations, as opposed to maintaining the status quo. Joint commitments to practice corporate social responsibility among firms at the same level within a specific industry have proven to be an effective tool to promote company investment in corporate social responsibility initiatives.

These commitments consist of each company dedicating a standardized amount of business resources to corporate social responsibility. Therefore, no company can gain a competitive advantage by not engaging in corporate social responsibility, thus creating a “level playing field” within the industry. The International Council on Mining and Metals is an example of this type of alliance. The organization consists of 18 mining and metals companies, as well as 30 national and regional mining associations and global commodity associations.

Its vision is to lead “companies to work together and with others to strengthen the contribution of mining, minerals and metals to sustainable development” (ICMM 2010). This alliance encourages mining corporations to participate in corporate social responsibility, which neutralizes potential disparities 32 between competitors because a significant amount of the world? s most prominent mining companies are members of the International Council on Mining and Metals.

Corporate Social Responsibility in the Mining Industry

Mining company leaders argue that the extraction of non-renewable resources is essential to world development (Jenkins and Yakoyleva 2006, 271). They declare that newly discovered mineral deposits and improved technologies will provide additional wealth into the world? s economy. Even though the mining companies claim that they are a part of an important source of global wealth, public opinion has largely focused on the negative externalities of mining activity.

In response to this public cynicism, corporate social responsibility represents a valuable impression management tool that all prominent mining corporations utilize (Jenkins and Yakoyleva 2006, 272). Corporate social responsibility is treated as a strategic response to social challenges that inevitably arise from mining extractive operations. Almost all mining companies allocate resources to these initiatives. Thus, it is necessary for corporations in this industry to participate in corporate social responsibility initiatives in some capacity in order to remain current among industry competitors.

It has become standard practice in the mining industry to develop more environmentally and socially conscience operational strategies. “corporate social responsibility in the mining industry is viewed as a mechanism for maximization of positive and minimization of negative social and environmental impacts of mining, while maintaining profits” (Acutt et al, 2001). According to a poll of the ten largest mining companies in the world, the number one reason for participating in corporate social 33 esponsibility activities is to contribute positively to brand reputation. Additional incentives are to increase value to shareholders, maintain relationships with the domestic government, and satisfy socially conscience consumers (Hamann 2003, 242).

Introduction

Organizations should be treated as an-ongoing concern. This is because; there are a lot of revisions needed whether it is through reengineering, information system or its workforce so that the organization would be able to stand against competition. Organizations are made up of people who are responsible for certain operations in different fields and are thus inherently complex. Since change or revisions are the basic things that are needed in the organization, it is imperative that leaders must understand that a change to one component will always generate a rippling effect on other surrounding components (Abraham et al, 1997). Therefore, decision making should be done carefully and accordingly.

Sustainability can be thought of as a way of protecting the options that are present. Sustainable development actually needs a fundamental shift from the traditional or routinely activities involved within the organization to a circular approach of borrow-use return. It offers a compelling strategic paradigm for guiding business in contributing to the society’s desire for balanced progress towards economic prosperity, social justice and environmental quality.

If sustainability is accepted by the organizations, they should be able to understand the need of exploration and innovation as much as prescription and planning is needed. It frees the creative potential of the human mind and maximizes the potential for deeper learning within the boardroom. As a part of the business strategy, it has the ability to help the business performance of your organization to be superior and prosperous.

Currently, the world’s most popular chicken buckets restaurant is in hot water and being complaints by the animals’ activist called PETA for an inhumane method of killing chickens for their 850 million buckets supply of chicken. According to PETA, chickens are carelessly slaughtered everyday; chickens’ throats are slit and put into tanks of boiling water in order to be dressed while still alive and feeling the pain. KFC gets these slaughtered chickens from West Virginia slaughter house. Obviously, KFC is not taking the demands of PETA because after two years their promise to abide the animal welfare still remains as a promise (Curlee, 1994). Unlike, McDonalds, Wendy’s and other food chains serving chickens took the demands and followed by the book. According to PETA KFC should:

There is actually no best approach for sustainability because it would depend on the certain goal that would be reached by the organization. Rather, superiors involved in the organizations must make their own decisions which are based on varying cultural and environmental factors that are present. However, in this variability, there are common entrenched behaviors and thought processes that have to be changed which is necessary in order to embrace sustainability.

Analysis

The problem and complaints against KFC has two social issues to tackle, first, business ethics and second corporate social responsibility. In the first issue, since KFC is a multi-national company, seeking for profits globally and competitive advantage against their main competitors, there are a very huge demand of KFC’s chicken, and their current method is a very easy and fast way to cope up with this demand. The big question is, what will KFC do?

In search of customers and suppliers, individuals in business face a lot of challenges when they shift beyond their own business practice and culture in search of customers and suppliers.  One tough question is:  How do KFC resolve the conflicts between their business strategy and ethical principles and those of the country in which they are doing business?  What to expect from other countries’ views of business ethics to be?

However, because of the demands of the ethical business conduct, more especially that some governments pass anticorruption laws and that more multinational corporations (MNCs) formalize ethic codes and programs to support their internal ethical climate, more companies’ managers are becoming aware of the risk of expensive legal entanglements caused by doing business with firms having lower ethical standards than their own. Ethical practices are evidently crucial to establish an ethical work climate in strong corporate guidelines (Farmer and Hogue, 1985).

These guidelines set the ethical tone of the corporation and let the employees know that management considers ethical behavior an important part of its business operations. It can be communicated through conduct codes which outline the company’s main expectations. Management stratagem, accountability structures, organizational policies, incentive systems, training programs, and decision-making processes should all work as one to strengthen the firm’s fundamental ethical beliefs. However, in the government sector, giving of preferential treatment is through numerical hiring and promotion goals and ratios, to women and minorities, is a critical affirmative action (Friedman, 1970).

Public managers must make a selection of ethical judgments and decisions in pursuing the policy tasks entrusted to them. The KFC management considers ethical behavior an essential part of its business operations and can be communicated through mission statements while the government sector on the other hand, some public employers may operate under legal obligations to permit preferential treatment, others may opt to do so. Both of the circumstances, preferential treatment require difficult and controversial ethical choices.

How important is competitive intelligence in KFC? Generally, competitive intelligence (CI) is applied to the decision-making and planning processes to improve the performance of the company. CI is the process by which KFC must gather actionable information about competitors and the competitive environment. It connects evidently unrelated signals, events, perceptions, and data into patterns and trends concerning the business environment. CI can be simple, such as inspecting a KFC’s annual report and other public documents (Blenkhorn & Fleisher, 2001). CI has its vital role in the business organization like KFC and in the government area.

There is no problem in focusing to profit and competitive advantage as long as moral ambiguities are going to remain because no one can formulate policies that are morally justified under all circumstances. Ambiguity in fact does not diminish the importance of the issue; the moral aspect of governance corresponds to the quality of public service and governmental conduct. If not, how can the general public trust that their businesses are fairly managed and that they haven’t conceded rights and freedoms to an irresponsible administrative state? Competitive Intelligence (CI) has been performed by most of the organizations in today’s business environment. Most senior executives practice CI in their daily activities as they try to understand how to make better position in their organization’s products or services in the marketplace (Krizek and Power, 1997).

Only few founders can obtain the needed financial resources to launch their firms without having done at least some environmental scanning and identifying potential competitive danger. Companies that lack the range of resources needed to launch and maintain complicated or automated CT networks, the fact that the chief executive officer and senior managers act personally and continuously on intelligence gives them a chance in the competitive market place.

The second issue, their corporate social responsibility, they stick to their current practice of slaughtering the chickens or switch to a more humanitarian way of method and will not put all attention to profits and competitive edge in order to fulfill their responsibility? Corporate social responsibility can be defined as the duty of organizations to conduct their business in a manner that respects the rights of individuals and promotes human welfare (Farmer & Hogue, 1985). While the level of social responsibility exhibited by multinational corporations is said to be improving, perfection has hardly been attained. Governments and people around the world seem to have an increasing interest in scrutinizing the actions of global corporations, in effect forcing international companies to be good corporate citizens.

According to Maclaren (1996), corporate responsibility is supported by the concepts of multidimensional definitions and social marketing. In the multidimensional definitions concept, the focus is on the major responsibilities expected from companies. These major responsibilities include economic, legal, ethical and philanthropic dimensions. These responsibilities must be performed in order to benefit not only the company operators but also their employees, customers, the community and the general public.

Social responsibility in business has been debated for a long time, and several sides of the issue have been presented by ethicists. This debate has been extended in recent years to include the operations of multinational companies. Thus, it is important to view some of the changes in the attitudes and behaviors of multinational companies and their perceptions of corporate social responsibility in light of the evolving nature and composition of global competition (Friedman, 1970).

Business culture has turned its focus when the businesses penetrate globally. There had been dispute, argument, confusion and debate towards the subject “social responsibility” in business arena. Many believed that it is a tool to change the business set up to promote a more well working environment. However, there are also cynical about the existence of social responsibility and its role in managing the business.

Even so in history, the topic of social responsibility has received so much attention when it first came into popularity in the developed world. It became controversial because of its inconsistencies with the free enterprise system. However, whenever we view today’s scenario, there are indications that social responsibility has become an obligation for any business, and that it is permanent fixture on the corporate business scene (Karake-Shalhoub, 1999).

In order for KFC to give the demands of PETA and social responsibility, the company may apply some methods in corporate social responsibility and this is sustainability-change-efforts. Change may start at all levels of the organization. However, the presence of strong leadership is essential to guide the changing processes that are needed for sustainability to push through. This is because, without the presence of good leaders and governance system that may support the movement, sustainability will never be achieved.

Corporate Social Responsibility (CSR) has become the standard euphemism for the right social values that corporations oftentimes has neglected in their day to day practices and has the need to strive harder to achieve so as to solve the problem of those whom they have affected by their policies and actions. Its idea is; either radical nor is it new. The core belief is that the corporation incurs responsibilities to the society beyond profit maximization. Huge companies has the power to manipulate and influence the quality of life employees, costumers, shareholders and residents of local communities have in which they operate.

A single corporate decision may change the lives of thousands of people (Petrovich, 1994). Managers or people who are involved in the corporate world should always bear in mind that power also entails responsibility. Business responsibilities must include the known and foreseeable results of business dealings whether the results of their actions have been recognized by law or not. Corporate Social Responsibility (CSR) is the continuing commitment of the business to be ethical and contribute to economic development while improving the quality of their workforce, company and including the society.

The environmental demands are the ones that must not be overlooked. Every action that a corporation does always has consequences such as the cutting of trees for expansion. In this case, the corporate must reconsider and find different ways on how to manage this because it is very unethical and irresponsible of them to do this (Schwab and Brower, 1997).

The hand of government would then be there to put a hold to any actions that the corporate does which would be then considered to be harmful to the environment. Although many corporation disagree with the presence of the hand of government because for them it is not fair, it is quite appropriate if the corporation themselves would do a strategic analysis of what they are about to do because the government would never be tailing them if they have not done anything.

Conclusion

In this respect, it is illustrated that businesses from different countries do not show the same level of dedication to being perceived as socially responsible. Moreover, it is also attested that firms across countries have variety of principles, processes and stakeholder issues to express that they are responsibly committed.  People expect firms not only to perform the traditional function of providing goods and services to all citizens who are willing to pay for them, but also to help society solve its problems. If these things are generally seen as desirable, and the firm does them, then it is socially responsible. If the firm does not, then some people may feel it is irresponsible.

Moreover, incorporating and promoting increased public participation in dealing with plans and projects toward progress and development illustrates an efficient and effective measure to achieve more possible success of economic and social growth. Since the public is the foremost concern of every institutional and national improvement, it is very logical that public consultation will be highly incorporated as inputs to come up with sound policies that will reflect the preferences and general welfare of the society. Public participation will ensure developments that are in synch with the needs of the society and at the same time increase the likelihood of long-term and continuous growth for the whole country.

Even though the issue is tackled in its complexity, it is no doubt that social responsibility has to play a great role in today’s business world. It may either contribute to efficiency, effectiveness, success or failure. What is important is that we are becoming more aware each day. No doubt that in this era, social responsibility should become every business’ obligation.

Works Cited

1. Abraham, M., Burgdorf, M., Dittoe, J., Scherf, H., Seydlitz, J. & Silver, B. Sustainable Development: Best Practices Manual. Cleveland: Build Up Greater Cleveland, 1997.
2. Blenkhorn, D. L., & Fleisher C.S. Managing Frontiers in Competitive Intelligence. Westport, CT. Quorum Books, 2001.
3. Curlee, R. Waste to Energy in the United States: a Social and Economic Assessment, 1994.
4. Farmer, R. and Hogue, W.D. Corporate Social Responsibility. Lexington, Massachusetts: Lexington Books, 1985.
5. Friedman, M.  “The Social Responsibility of Business Is to Increase its        Profits.” New York Trines Magazine, Sept. 13, 33, 1970.
6. Karake-Shalhoub, Z. Organizational Downsizing, Discrimination and Corporate Social Responsibility. Westport, CT. Quorum Books, 1999.
7. Krizek, K. J. & Power, J. A Planners Guide to Sustainable Development. PAS       Report No. 467. Chicago: American Planning Association, 1997.
8. Maclaren, V. W. Urban Sustainability Reporting. Journal of the American  Planning Association. 62, 2 (spring): 184-202, 1996.
9. Petrovich, N. L. Introduction to Sustainable Development. Counties: Foundation for a Sustainable Future. Washington D.C.: National Association of Counties, 1994.
10. Schwab, A. K. & Brower, D. J. Sustainable Development: Implementation at the Local Level. Land Use Law & Zoning Digest (April): 3-7, 1997.

Many businesses feel that practising good business ethics is costly and unnecessary to become a profitable operation. The practice of business ethics is not cost nor is it a disadvantages waste of time. On the contrary, business ethics is good for business and is essential for the good reputation of a country. Business ethics also create an environment based on trust and make economic transaction predictable for producers and consumers.

Business ethics can be define as the study of proper business policies and practices regarding potentially controversial issues, such as corporate governance, insider trading, bribery, discrimination, corporate social responsibility and fiduciary responsibilities. Business ethics are often guided by law, while other times provide basic framework that businesses may choose to follow in order to gain public acceptance. Basically, business ethics are implemented in order to ensure that a certain required level of trust exist between consumers and various forms to of market participants with businesses.

Besides ethics, code of ethics also is the important part in good business ethics that can be applied in organization. Code of ethics can be defined as a guide of principles designed to help professionals conduct business honestly and with integrity. A code of ethics document may outline the mission and values of the business or organization, how professionals are supposed to approach problems, the ethical principles based on the organization‘s core values and the standards to which the professional will be held.

In order to complete this individual assignment, I was appointed to interview one of the staff of UiTM to get information regarding the issues which is “why good ethics is a good business in Strategic Management”. The person that I had interview is Miss Rohani Ismail, an assistant registrar of Academic Affairs (HEA) at UiTM, Terengganu. For the interview that I have conducted, some questions were submitted regarding this ethics issues in order to know work ethics applied in UiTM.

The first question that I asked is to know her opinion about the work ethic applied at HEA department, either it fulfil its code of ethics in UiTM and she said that work ethic at UiTM has its own value and even UiTM have the same code of ethics practiced in every department, but there is a different work ethic that is practiced in all department depend on the attitude of the individual. As example, the actual regulation did not state how long to rest or go out to eat, but there are some workers use to get out of the office by using that reason.

She said, as workers we need to understand there are responsibilities that must be performed on our job and the individual should understand their actions whether to break the rules or not. Next is in term of managing the office, if there are mistakes made by other staff, what actions she did in order to correct those mistakes and she tell that she will look at the types of mistakes if it is related to the work performed, she will criticize directly in front of all the staff.

This action is not the intention to embarrassing that staff but in order to teach other staff so that they will not make same mistake in the future and basically the critics is done politely. Furthermore, I also asked her in term of managing the office at HEA department or UiTM management is there bias or favouritism occurs between boss and staff. She just informed that there is no bias or favouritism practised in UiTM or any department in UiTM because they will accept any best ideas from their staff even they just subordinate staff.

Bribery is one of the bad ethic that now widely practiced in most of the organization and this issues had been asked to her to get her opinion and at the same time to know either it happen in UiTM or not. Miss Rohani said that according on her experience working with UiTM for 15 years; she has heard the bribery issues only once when she served in the student intake department at UiTM Shah Alam.

The bribery issue is known only through conversations among staff that bribery happen in the admission process. For example, the old system of student intake is using application of OMR form that need to be sent in the envelope and one case happen when she received the envelope of OMR form with the amount of money. She just thought that there is bribery element and she takes an action by sending back the money to the mailing address of the envelope in order to avoid the bribery case.

After that case, she never heard any case of bribery that related with UiTM. In term of social policy, she said that based on her experience UiTM are doing social policy through academic mission which if there is external event that inviting UiTM for giving speech or talks, UiTM will readily available and there is also commitment from UiTM towards this academic mission by opening booth for attracting peoples.

I also asked her about her satisfaction towards code of ethics and social policy at UiTM, whether it need to be improved or not and she just give it own opinion that she just follow the code of ethics provide by UiTM because she said that people who make such a policy is the expert, so why should not satisfied with the policy as long as it is good for everyone. Besides that, in term of love affairs she inform that there is love affair going on among the staff at UiTM and she had no problem about it because based on her evaluation on this issue through her work experience, it never interfere with the performance of work among her staff.

She also thinks that love affair helps in facilitate in terms of increased job performance because there are many staff who have long-distance love affair affect the job performance. Miss Rohani also did not deny that a love affair in the workplace can also have a negative impact if they do not have limits. In some organization, there is some case that occurs related to sexual harassments among staff and I asked her in order to know whether this issue ever happened in UiTM. Miss Rohani told me that she had experienced towards this sexual harassment issue but only a minor annoyance that oriented jokes.

Although this may be just a joke, but she use a hard warning to the perpetrator to prevent a similar incident happening again and so far she is not experienced it anymore. To close the interview, I asked her opinion on why good ethics is important in the work ethic especially in UiTM and she just give simple answer by saying as a Muslims, people should follow the principles that have been applied through the principles of Islam that can guide people to always be responsible for performing any work with the right guidance and teaching people in a particularly good attitude in complying with work that had been stated.

Draft a response to this customer. Analyze the responses of your classmates. What makes a good “service recovery” response. Develop some general guidelines.

A.Response Letter:

Dear Sir/Ma’am,

I am writing in response to your letter in which you described your disappointment in our service. I apologize for the treatment you and your family received and want to assure you that it does not reflect the quality of service we strive to maintain. I have already spoken with my employees and am confident this will not happen again. Please accept my apology. We appreciate your business and look forward to continuing our relationship in the future. Sincerely,

General Manager

B. •Apologize and take responsibility for the error or the inconvenience •Take action with an acceptable temporary solution or give the customer something of value as compensation •Make a promise to the customer to resolve the problem

•Keep the promise
•Follow-up
•Prevent recurrence