1) In your own words and using referenced quotes describe what is meant in strategy by 'Organisational Purpose‘ and describe what is meant by 'Corporate Social Responsibility‘.
Organizational Purpose:
Organizational purpose defines the fundamental reason for the organization's existence. It acts as a guiding force upon which every other decision is rooted. It dictates how you will use your time, attention, and resources to serve your niched market better than anyone else. It is important for any business because:
- It energizes the company to move forward
- It empowers the passion
- It frees resources
- It separates from the pack
- It helps them to maintain a strategic outlook on their competitors
- It helps to find a way to view the competition as a potential value-added partner
- It helps to focus on their actual greatest threat
- It helps to continuously evolve
Corporate Social Responsibility:
CSR is defined as a business outlook that acknowledges responsibilities to stakeholders, suppliers, customers, and employees as well as local and international communities in which it operates and the natural environment.
Corporate social responsibility is also referred to as "corporate citizenship" and involve incurring short
term costs that do not provide an immediate financial benefit to the company, but instead promote positive social and environmental change.
2.Should organisations focus more on profit and shareholder satisfaction or responsibility and stakeholder satisfaction? Discuss your own thoughts but try to support your ideas with theory or examples.
Profitability and responsibility can be combined in an ideal world, where business can make as much profit as possible along with meeting all its responsibilities, keeping its shareholders and stakeholders happy. However, it is clear that it is least partially contradictory. On one hand, business must be profitable to survive and must earn a higher return on the shareholders equity. While on the other hand, companies are a network of parties and people working together towards a shared goals.
In my opinion, companies should take a step towards CSR. The ultimate aim or mission of the company is to earn profit. In order to do that company must first take responsibilities towards its customers, suppliers and employees. If they are able to fulfill their needs, then only they can work effectively to achieve its aim leading to profit maximization.
Much evidence shows that social responsibility, including business ethics, is associated with increased profits. For example, one survey indicates that three out of four consumers refuse to buy from certain businesses, and a business's conduct was considered an important reason to avoid a business. An important academic study found a direct relationship between social responsibility and profitability. The study also found that social responsibility contributes to employee commitment and customer loyalty- vital concern for any firms trying to increase profits.
3) Write about your experience with today's case study. What answers did you give to the questions? What did you think of the CEO?
Today's case was very interesting. It talked about how Pepsico focused on Organizations purpose and Corporate Social responsibilty that are incorporated in their strategies.
The strenghts and benefits of this kind of strategies are;
- improved financial performance
- enhanced brand image and reputation
- increased sales and customer loyality
- increased ability to attract and retain customers
- easier access to capital
- comply with regulatory environment
The weakness and disadvantage of this strategy:
- it is an expense to the company, the main reasons any company would object to participating in CSR is the associated costs.
- shareholder expectation: when considereing CSR is the possible negative perception of shareholders.
- loss of focus.
References:
Enterprise and Industry, Corporate Social Responsibility [Online] Available at http://ec.europa.eu/enterprise/policies/sustainable-business/corporate-social-responsibility/index_en.htm [Accessed on 1 May 2013]
Corporate Social Responsibility. [Online] Available at: http://www.untag-smd.ac.id/files/Perpustakaan_Digital_1/CORPORATE%20SOCIAL%20RESPONSIBILITY%20The%20Debate%20Over%20Corporate%20Social%20Responsibility.pdf [Accessed on 1st May 2013]
