Business & its stakeholders, Social Responsibility Concept of CSR

Unit-5

Business Environment
Market
Shareholder Employee Creditor

Non Market
Local Communities

Central/Local Govt.
Foreign Govt. Business Firm

Supplier
Distributor

Social Activist
Media

Customer
Competitor

General Public
Business Support
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Who are Stakeholders?

Stakeholders are groups of people who have an interest in a business organisation They can be seen as being either external to the organisation, or internal But some may be both!

Stakeholders
All groups affected All groups affected by a corporations by a corporations decision and policy
decision and policy

Primary Internal

External

Types of Stakeholder
Owners (I) Shareholders (I) Managers (I) Staff or employees (I) Customers (E) Suppliers (E) Community (E) Government (E)

I = Internal E = External

Types of Company Stakeholders

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Stockholders
Want to ensure that managers are behaving ethically and not risking investors capital by engaging in actions that could hurt the companys reputation Want to maximize their return on investment

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Managers
Responsible for using a companys financial capital and human resources to increase its performance Have the right to expect a good return or reward by investing their human capital to improve a companys performance Frequently juggle multiple interests

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Managers
Problem has been that in many companies corrupt managers focus not on building the companys capital and stockholders wealth but on maximizing their own personal capital and wealth

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Employees
Companies can act ethically toward employees by creating an occupational structure that fairly and equitably rewards employees for their contributions

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Suppliers and Distributors

Suppliers expect to be paid fairly and promptly for their inputs Distributors expect to receive quality products at agreed-upon prices

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Vendor Conduct
Gaps Code of Vendor Conduct

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Customers
Most critical stakeholder Company must work to increase efficiency and effectiveness in order to create loyal customers and attract new ones
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Community, Society, and Nation

Community
Physical locations like towns or cities in which companies are located A community provides a company with the physical and social infrastructure that allows it to operate

A company contributes to the economy of the town or region through salaries, wages, and taxes

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Ressponsibilty of Business
Towards Employees : Payment of right wages & salaries Provision of proper facilities Proper personnel policies relating to promotion, performance appraisal etc. Towards Customers: Right pricing Proper information about products Ethical promotion including advertising. Towards Government : Payment of Taxes & dues. Timely Filing Returns & other records . Supporting government in social development activities. Towards Competitors : Fair competitive practices , Restraining from instigating employees,suppliers or dealers or competitors etc.


Towards Stakeholders: Provision of proper information Timely payment of dividend etc. Towards Financial Institutions: Proper information about firms financial position. Timely repayment of advances & interest etc. Towards Society: Contribution towards welfare of society. Fair practices health, safety and
environmental standards etc.

Corporate Social Responsibility

CSR is about how companies manage the business processes to produce an overall positive impact on society.

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Corporate Social Responsibilities (CSR)

Corporate social responsibility (CSR): An obligation, beyond that required by the law and economics, for a firm to pursue long term goals that are good for society . The continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as that of the local community and society at large. About how a company manages its business process to produce an overall positive impact on society.
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Meaning of CSR
Conducting business in an ethical way and in the interests of the wider community Responding positively to emerging societal priorities and expectations A willingness to act ahead of regulatory confrontation Balancing shareholder interests against the interests of the wider community Being a good citizen in the community
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Definitions:
Corporate, Social, and Responsibility.

In broad terms, CSR relates to responsibilities corporations have towards society within which they are based and operate, not denying the fact that the purview of CSR goes much beyond this. CSR is comprehended differently by different people.
A commitment to improve community well being through discretionary business practices and contributions of corporate resource
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Contd
Millen Baker:
A way companies manage the business processes to produce an overall positive impact on society.

World Business Council for Sustainable Development:

Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.
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Social Responsibility...
an organizations obligation to maximize its positive impact on stakeholders and to minimize its negative impact includes legal, ethical, economic, and philanthropic (discretionary) dimensions

Ethical Dimension...
behaviors and activities that are expected or prohibited by organizational members, the community, and society (not codified into law) standards, norms, or expectations that reflect the concern of major stakeholders

Key Issues in CSR

Labour rights: child labour forced labour right to organise safety and health Environmental conditions water & air emissions climate change Human rights cooperation with paramilitary forces complicity in extra-judicial killings

Poverty Alleviation job creation public revenues skills and technology

Key drivers of CSR

Around the world

NGO Activism Responsible investment Litigation Gov & IGO initiatives

Developing Countries
Foreign customers Domestic consumers FDI Government & IGO

Key Drivers: NGO Activism

Facilitators: IT (esp Internet), media, low cost travel Boycotts, brand damage, influence legislation, domino effect e.g. Shell in Nigeria, Apparel Industry (Nike), Wood Products, etc.
Shell Oil Company built oil pipelines through peoples farmlands and property that leaked and caused not only death to the vegetation but to the surrounding land.

CSR Management: Plan, Do, Check, Act method

Plan Do

Consult stakeholders Establish code of conduct Set targets

Establish management systems and personnel Promote code compliance

Act

Check

Corrective action Reform of systems

Measure progress Audit Report

 For example, after 1945, TATA implemented social welfare provisions for its employees that have since become the legislative norm. From the perspectives of customers, CSR activities may include commitment to product quality, fair pricing policies, and so. TVS Electronics was involved in CSR during the Tsunami to provide relief measures to the victims. They have also participated with the government to improve sanitation in a village called Tiruvidenthai. Such initiatives will help in improving the conditions of rural people.

CSR: In a developed country governance, Business ethics, Human rights and Environment

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CSR in a Developing Country( India):

Focus on nation building Socio-economic development Rural development Employment Education Health care Community support

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The multiple responsibilities of business

Economic Responsibility

Legal Responsibility

Social Responsibility

Principles of corporate citizenship

Good corporate citizens strive to conduct all business dealings in an ethical manner, make a concerned effort to balance the needs of all stakeholders, while working to protect the environment. 1) Engages in fair and honest business practices in its relationship with stakeholders. 2) Sets high standards of behavior for all employees. 3) Exercises ethical oversight of the executive and board levels. 4) Strives to manage the company for the benefit of all stakeholders. 5) Initiates and engages in genuine dialogue with stakeholders. 6) Values and implements dialogue. 7) Fosters a reciprocal relationship between the corporation and community.

8) Invests in the communities in which corporation operates.

9) Respects the rights of consumers.

Principles of corporate citizenship

10) Offers quality products and services.
11) Provides information that is truthful and useful. 12) Provides a family-friendly work environment. 13) Engages in responsible human-resource management. 14) Provides an equitable reward and wage system for employees. 15) Engages in open and flexible communication with employees.

16) Invests in employee development.

17) Strives for a competitive return on investment. 18) Engages in fair trading practices with suppliers. 19) Demonstrates a commitment to the environment. 20) Demonstrates a commitment to sustainable

The purpose of CSR

The purpose of Corporate Social Responsibility (CSR) is to make corporate business activity and corporate culture become sustainable in its three dimensions: economic, social and environmental.

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Benefits
CSR behaviour can benefit the firm in several Ways:
It aids the attraction and retention of staff It attracts green and ethical investment It attracts ethically conscious customers It can lead to a reduction in costs through re-cycling It differentiates the firm from its competitor and can be a source of competitive advantage It can lead to increased profitability in the long run
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Mahindra & Mahindra

Mahindra & Mahindra-The K. C. Mahindra Education Trust undertakesa number of education initiatives, which make a difference to the lives of deserving students.The Trust has provided more than Rs. 7.5 Crore in the form of grants, scholarships and loans. It promotes education mainly by the way of scholarships
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ITC
ITC partnered the Indian farmer for close to a century. ITC is now engaged in elevating this partnership to a new paradigm by leveraging information technology through its trailblazing 'e-Choupal' initiative. ITC is significantly widening its farmer partnerships to embrace a host of value-adding activities: creating livelihoods by helping poor tribals make their wastelands productive; investing in rainwater harvesting to bring much-needed irrigation to parched drylands; empowering rural women by helping them evolve into entrepreneurs; and providing infrastructural support to make schools exciting for village children
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L&T
L&T set out to regulate and promote Construction Vocational Training (CVT) in India by establishing a Construction Skills Training Institute (CSTI) on a 5.5 acre land, close to its Construction Division Headquarters at Manapakkam,Chennai. CSTI imparts, totally free of cost, basic training in formwork, carpentry, masonry, bar-bending, plumbing and sanitary, scaffolder and electrical wireman trades to a wide spectrum of the rural poor.
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Dabur
SUNDESH Sustainable Development Society (SUNDESH) is sworn to the mission of ensuring overall socioeconomic development of the rural & urban poor on a sustainable basis

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