Corporate Social Responsibility An automobile manufacturer has a reputation for
ID: 377286 • Letter: C
Question
Corporate Social Responsibility
An automobile manufacturer has a reputation for being employee-friendly, charitable, and innovative. It is also consistently praised for its high profit margins and efficient operating model. The corporate office is located in a technologically robust city with strict ecofriendly regulations; it is a community that is unforgiving to socially unconscious companies.
Because of recent increases in revenue, the CEO seeks investment opportunities and settles on one of the company’s suppliers abroad. The supplier has been struggling financially, but the CEO believes the company will be able to leverage the supplier’s existing resources and generate additional revenue.
The CEO informs the company’s leadership of the intent to purchase the supplier. This surprises the CHRO, because the supplier has been accused of committing human rights violations and damaging the environment in its home country. In fact, the company has been fortunate to have avoided negative attention from the public about this relationship. The CHRO is extremely concerned about the potential negative attention this transaction could create.
Choose the answer and provide the reasoning
The CHRO e-mails these concerns to the CEO and suggests that the company should stop using the supplier altogether and partner with a supplier that is socially conscious. However, the CEO responds by stating that the purchase will positively impact the company’s bottom line, and nothing else matters.
1. How should the CHRO respond to the CEO’s statement that the purchase will have a positive impact on the company’s bottom line?
A. Agree, since the purchase will most likely increase the company’s revenue by leveraging the supplier’s customers and strategic partnerships.
B. Agree, since the purchase will most likely strengthen the company’s future value to all of its stakeholders.
C. Send an e-mail reply and present the concept of the triple bottom line to the CEO.
D. Ask that a working group be implemented to analyze the possible effects of the purchase.
2. What ethical argument should the CHRO make for the company withdrawing from purchasing the supplier and seeking another supplier?
A. It would help avoid negative publicity and potential lawsuits.
B. It would help avoid potential strikes and disruptions to the supply chain.
C. Building a partnership with a supplier that has similar ethical policies would lead to better products and services.
D. It would allow for better products, more satisfied customers, and working communities that support the growth of the company.
Explanation / Answer
1.
CSR is a very important part of conducting business in today's market.
Since the CEO has different views about what the company will benefit from than the CHRO, there should be working group who analyze the decision before moving forward with it. This will allow time to make sure that both aspects of the deal are evaluated appropriately. Both quantitative and qualitive analysis needs to be done and then compared to make the purchase or not.
Hence answer should be
D. Ask that a working group be implemented to analyze the possible effects of the purchase.
2.
All the given options are valid arguments for the CHRO to make, but the most appropriate one which fits this situation according to the given text is A. It would help avoid negative publicity and potential lawsuits.
Negative publicity can affect all factors of the organisation such as customer motivation, employee satisfaction, pressure from communities and support groups as well as the growth of the company. It may also affect the company's relations with other existing vendors or any future business partners.
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