subjectbusiness and professional ethics r_.nld-to heet each of e Arguments for C
ID: 377102 • Letter: S
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subjectbusiness and professional ethics r_.nld-to heet each of e Arguments for Corporate Social Responsibility Arguments against Corporate Social Responsibility Balances corporate power with responsibility. Discourages government regulation. Promotes long-term profits for business. Improves stakeholder relationships. Enhances business reputation. Lowers economic efficiency and profit. Imposes unequal costs among competitors. Imposes hidden costs passed on to stakeholders. Requires skills business may lack. Places responsibility on business rather than individuals.Explanation / Answer
Arguments for corporate social responsibility:
1. When companies become complex organizations, they not only use the location's Human and material resources but also begin to influence many things in the market like trends, cost of related products (through pricing), cost of living (through salaries, wages), ability to influence government decisions etc. Any power cannot be misused. In order to maintain a balance and give back to the economy in which the company is operating, it is important to maintain a balance of its power and responsibility towards the society. Example: few companies daycare centres in the offices to help their employees maintain a work-life balance where they can visit their babies when necessary during work hours.
2. Government intervenes in business activities. Not conforming to the social norms may bring in legislative restrictions. Government influences companies through regulations that lay down rules on what they should do and what not. There are many regulatory bodies that monitor business activities. In order to avoid such implications, corporates need to fulfil their social responsibility. Example: Producing safe goods ( not producing and selling dangerous goods like explosives etc. which is illegal ), DuPont and CFCs.
3. CSR infuses the business name in the society. Once the Company becomes popular, it starts to mint money. Example: Any social campaigns a company is in, it comes in the eyes of many potential customers.
4. To get loyal and hardworking staff, it is important to be responsible towards their employees. The better the stakeholders are treated, the better their give back to the company. Example: Google offers numerous benefits to its employees and the employee retention rate is very good in Google.
5. This is related to point 3. Once a business is in the good eyes of the society and earns trust, it not only keeps loyal customers but also attracts many new customers through the goodwill. Example: XEROX has been actively into many CSR initiatives and bagged into the “100 Best Corporate Citizens List” by Corporate Responsibility Magazine for the ninth consecutive time.
Arguments against corporate social responsibility:
1. When amount is invested in non-profit activities, the current operating profit decreases.
2. Since additional costs are involved and not all the competitors use same CSR strategies, it can make a firm less competitive.
3. These costs are not related directly to business, however, sometimes additional costs need to be borne by the stakeholders for CSR.
4. Insufficient skills to manage the expenses or organize events, may lead to additional costs or even have no output.
5. The Business has to bear the cost, the employees salary etc. is not affected. Example: PUMA- Supplier’s Critical Conditions - China
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