Positive &Negative Impact of CSR used by Company-Myassignmenthelp

Question: Discuss about the Positive and Negative Impact of Corporate Social Responsibility used by Companies to gain trusts of Customers. Answer: Introduction: Research motivations: The aim of the research the impact of corporate social responsibility in maintaining the stability of the business processes of commercial organisations. The aim of the paper is also to study the positive and negative impact of corporate social responsibility or CSR used by companies to gain trusts of customers. The assignment will delve into how CSR benefit the customers and how it misleads them in engaging transactions with the companies. The researcher has considered Woolworths as the base of studying CSR and its impact on the consumers. Unit of Investigation: Woolworths Supermarket is an Australian supermarket chain owned by Woolworths Limited based on Bella Vista Australia. The objectives of Woolworths are to become more customer oriented and to achieve increase in the sale of food and liquor products. The product portfolio of the supermarket chain consists of fruits and vegetables, non-vegetarian food, bakery, dairy products and eggs, kitchen food products, freezer, drinks, liquor, tobacco, pet, baby, health and beauty, household and lunch box. The supermarket chain allows the customers to buy products at the store and order online (Petrenko et al. 2016). Woolworths follows a very extensive corporate social responsibility strategy, which stands on three pillars namely, people, planet and prosperity. While dealing people, the international supermarket chain intends to achieve gender equality, equal pay to male and female employees and strives to employ members from the Aborigines tribe of Australia to generate employment among them. The company in order to ensure welfare of the planet component in its CSR aims to send all its food wastes to landfill for recycling and production of manure. It also strives towards reducing carbon emission to minimise environmental pollution. As far as the prosperity component of its CSR is concerned, it is applicable for all Woolworths Group of Companies including Woolworths Supermarket. According to its CSR, Woolworths works towards engaging in fair and equitable business with its suppliers. The company aims to inspire customers to consume its products in healthy and sustainable ways. Last but not the l east, the company aims to invest one percent of the total profits before interest and tax (EBIT) of its group companies three rolling years in community development partnerships and programmes (Grhan-Canli, Hayran and Sarial-Abi 2016). Research questions: The following are the research questions, which would form the substratum of studying the application of CSR in maintaining business sustainability in the organisations, how it helps them to achieve goodwill and its impact on the consumers. How are the corporate social responsibility clauses of company crucial in gaining and sustaining market goodwill? How do CSR of companies like Woolworths help them in achieving high market position? What positive and negative impacts does CSR have on the buying decisions of the consumers? How does CSR help companies to strengthen their brands? Outlook: The topic of the research, impact of CSR on consumers requires a broad outlook spanning concepts like CSR theories and brand equity. The paper is divided into an introductory part, literature review, methodology, findings and analysis, recommendation for future projects and conclusion. Methodology: The researcher used qualitative research to conduct the study. The topic the impact of CSR on consumers and their impact on brand equities of companies has a vast expanse. Such a vast topic cannot be researched successfully using quantitative methods. Hence, the appropriate method opted by the researcher is the qualitative method. The researcher has used data collection methods like studying records and documents from literary sources like journals, books, articles and magazines to gain substantial information for the research. The paper has been designed to cover various topics to explore the concept of CSR and its impacts on consumers in depth. There are several theories, which relate to corporate social responsibility like economic responsibilities, philanthropic responsibility and stakeholder theory. Applied theory framework: Background theory of Corporate Social Responsibilities: The corporate social responsibilities theory states that business organisations should operate in ways to benefit the society. The theory traverses a vast area consisting of law, ethics, philanthropy and stakeholders. The business organisations should abide by laws; operate ethically and morally while producing products to the consumers. They should follow environmental laws and apply methods like recycling of wastes to reduce environmental pollution and benefit the community as a whole. The following framework shows the parties to CSR which business organisations have to benefit through their operations: Parties to CSR To the companies CSR of the companies Government Lays down legal framework and gives facilities to companies Taxes, follow laws, function ethically Society Provides customers and employees Reduce pollution, manage wastes, Take part in social development initiatives Customers Revenue High quality products Corporate social responsibilities theories categories: Jones and Felps (2013), state that the aim of the business organisations are earning higher profits and maximising the investment of the shareholders. The shareholders invest in the capital of the companies, which account for their robust financial strength. It is this financial strength, which gives way to all other functions like production, employment generation and product designing. Lozano, Carpenter and Huisingh (2015) further supports this opinion of Jones and Felps. They state that globalisation of the corporate sector and the expansion of companies into foreign countries has led to increase in the importance of the shareholders. The corporate organisations increasingly operate towards maximising their profits by taking advantage of their market goodwill in order to give good returns to the shareholders. Lawrence and Weber (2014) contradict these profit making and shareholders capital maximisation concepts. They point out that business organisations irrespective of sizes of o perations and nature of business are members of the society and have responsibility of ensuring social welfare through their activities. This gave rise to the theories of corporate social responsibilities. Corporate social responsibility theory and business applications: According to Baksi, Bose and Xiang (2016) the theory of corporate social responsibility is viewed from two angles. First, the general theory states that business organisations should operate to earn profits and enter into ethical transactions with the community. This aspect of business conduct is restricted to earn profits by selling high quality of goods and services to the society. Here the aim is to ensure welfare of the society by providing them with high quality products. Lahiri and Dey (2013) points out that this approach is not about social welfare but providing society with high quality goods to earn customer loyalty and profits. The second approach to corporate social responsibility is about earning profits while simultaneously participating in social welfare. Rangan, Chase and Karim (2015) point out that most of the companies align their social welfare objectives with their business objectives. They make corporate social responsibilities to promote social welfare as a part of their core business objectives and generally place it under the supervision of a senior manager. Under the corporate social responsibility theory the business organisations have four responsibilities namely, economic responsibility, legal responsibility, ethical responsibility and philanthropic responsibilities. Corporate social responsibility helps in gaining and sustaining market goodwill: Henderson (2017), states that the economic responsibility component of the business organisations states that earning profit is synonymous to their survival. The business organisations require earning profits in order to survive in the market and support its business activities. High profits enable the companies offer high quality branded products to the consumers, which in turn strengthens their brand image in the market. Offering big brands help organisations to earn higher profits and invest more in their CSR. For example, waste collection organisations earn profit by offering waste management services to the domestic and industrial sectors. This management of waste benefits the society as a whole by reducing pollution and earns profits for the companies. Gonzlez-Martnez et al. (2017) point out that management of wastes require the waste management companies to invest heavy amount in waste management plants and machinery. This shows that profit these companies earn help them to ac quire advanced waste management plants to remove wastes and benefit the society. Thus, it can be inferred that economic responsibility of business organisations to earn profits also contributes towards social welfare. It can also be stated that stronger market image leads to strengthening of brand equities of the companies. CSR helps companies in gaining high market position: The commercial organisations should follow their legal responsibilities of abiding the laws framed by governments. He and Lai (2014), point out that the companies should follow laws while conducting business operations. This statement holds even more substantial for the multinational companies including international retail chains. These companies operate in more than one country, which brings them within purview of several laws. They should follow national laws in force within their home countries and host countries. They should also abide by the international laws applicable for more than one country. Huang et al. (2014) support these statements stating that following law helps organisations to enhance their product qualities which in turn strengthens their brand value. Fatma et al. (2016) contradicts these opinions to support legal responsibility and brand value creation. They state that companies can use their brand power to make lofty corporate social responsibility statements. They, in reality often offer low quality products, which actually harms the society, and use their brand power to use legal loopholes to avoid penalties and government actions. Thus, though legal responsibilities of the companies require them to abide by law to benefit the society, the companies may use their brand image to avoid penalties for selling low quality goods. Thus, companies can acquire high market position following CSR and abiding by laws. Thus, CSR and following law can lead companies to enhance their goodwill and gain more business advantages. Ethical Responsibility and waste management as parts of CSR: Corley, Kim and Scheufele (2016) while pointing to the ethical responsibility approach of the business organisations state that companies should operate ethically to ensure social welfare. They state the companies especially the multinational companies like the global retail chains operate and sell products in several countries. This gives them the scope to impact innumerable consumers and the society through their activities and more specifically through their products. Trevino and Nelson(2016) further point out that the companies should provide high quality goods and services as a part of their ethical responsibilities. These high quality products would meet the needs of the customers better and ensure their welfare. Thus, the companies serve the society through their goods and services. Krystofik, Wagner and Gaustad (2015) take ethical responsibilities to a broader level. They state that the business organisations should manage wastes by recycling them and disposing them in scient ific manner. These initiatives would result in reduction in the vast amount of wastes the companies generate through their actions and the pollution they cause. This would promote health and social welfare. Yu, de Jong and Cheng (2016) contradict this social welfare image of the business organisations and point out that many organisations exploit natural resources as a part of their operations. They use their market position to get access to natural resources and exploit them. Thus, companies instead of following ethical operations, carry out business operations in unethical manner. Lee, Park and Lee (2013) state that the business organisations should take part in social developmental activities even if they are not directly linked to their businesses. They state that it is the duty of the business firms to take part, support philanthropic activities, and bring about development of the underprivileged section of the society. Petrenko et al. (2016) contradicts Lee, Park and Lee. They state that philanthropic responsibilities are apparently not part of the core business practices of the firms. They point out that when business organisations participate in philanthropic activities, they become more visible to the consumers. The multinational companies can use their past philanthropic activities to promote themselves, thus strengthening their brand equity. They are able to influence the consumers purchase decisions using their humanitarian image. Chang and Tseng (2013) contradict this strengthening of brand equity by companies using philanthropy as a tool and state that business organisations often use their philanthropic images to sell low graded products to consumers. This ultimately hampers the consumers and the society. Thus, the companies can use corporate social responsibilities to sell low quality products to harm the consumers. However, Rubio, Oubia and Villaseor (2014) points out those selling low quality products on to the customers ultimately results in the business organisations concerned losing its market to their competitors. Thus, it can evaluated that CSR can help business organisations in gaining trusts of the consumers and selling them products. However, the products of the business organisations should meet the expectations of the consumers so that the organisations can sustain in the market. Benefit of stakeholders through CSR and market position of companies: The stakeholder theory according Hrisch, Freeman and Schaltegger (2014) refers to the companies should act ethically to protect the interests of groups it influences called stakeholders. The business organisations obtain human resources from the society and sell goods to the customers who are a part of the society. These organisations act according to the laws framed by the governments and give them taxes in return. The customers buy products and give them revenue in return. The shareholders invest in their capital and the business firm gives them return on their investment to cause capital maximisation. The government, customers, employees, the society and various other identities like banks impact the business of the business organisations and are impacted by it in turn. For example, the customer are impacted by the quality of goods sold by these organisations and in turn impact them by paying them revenue. Bridoux and Stoelhorst (2014) point out that business organisations should recognise the heterogeneous needs of the stakeholders like the government needs taxes while the customers need products from the business organisations. This theory clearly points out that the business organisations must strive to benefit the society and its various members or the stakeholders. Thus, it can be pointed out that the stakeholder theory and corporate social responsibilities theory are not exclusive and in fact, they are interdependent. The CSR of the business organisations direct them to act responsibly towards the benefits of stakeholders and the society. Support from the important stakeholders like governments, customers and suppliers help organisations to earn high revenue and expand into new markets. Thus CSR benefits stakeholders which in turn fuels the international expansion of the companies giving them high market position thus establishing brand more strongly in the market. Positive and negative impacts of CSR on consumer trust: Martnez and del Bosque (2013) point out that corporate social responsibilities play instrumental role for the commercial organisations in gaining trust of consumers. The fact holds even more crucial for multinational companies who invest millions of dollars in their business operations. These companies require selling their products in the market to recycle the invested capital and earn increase in their capital. As Henderson (2017) already points out that these companies require to earn profits to be able to sustain in the market. It can also be pointed out that the profits earned by the business organisations help them to benefit stakeholders like employees and shareholders. For example, they earn profits, which enable them to offer salary increments to the employees and capital maximisation to the shareholders. Thus, the business organisations aim to earn maximum profits by selling their products. Petrenko et al. (2016) reiterate that CSR makes the companies more visible before th e customers and the society in general. It creates trust among the consumers regarding the positive attributes of the products, which in turn optimises their purchase decisions. Grhan-Canli, Hayran and Sarial-Abi (2016) supports these opinions and state that involvement in social development initiatives strengthens the brand image of the company among the customers. These brand images have positive effects on the customer purchase decision processes. Yadav and Pavlou (2014) further point out that CSR helps the companies to market their products. This marketing increases customer awareness about products in the market and helps the customers to avail a larger number of products according to the diverse needs. Thus, it can be inferred from the discussion that CSR has positive impacts on the consumers. They can gain knowledge about and consume a large variety of products to satisfy their needs. Servaes and Tamayo(2013) points out that CSR is very expensive and mostly the powerful multinational companies can afford to invest a lot of money towards social causes. They point that the CSR of the companies actually prove their financial strengths and advertises their brand value, which they have earned by offering high quality products. Thus CSR helps the consumers to differentiate between the products of same category having different qualities. It can be pointed out that leading multinational companies enjoy a global scale of consumer satisfaction and have elaborate CSR controlled by the apex management. Thus, in other words CSR helps consumers to recognise superior quality branded products, which maximise the value of their purchase. Rubio, Oubia, and Villaseor (2014) contradicts these two statements and claim that CSR does not benefit consumers all times. The companies in fact use their CSR to create positive brand image in the society. They often sell low quality products using their superior image and socially useful image. Thus, it can be inferred that CSR helps the companies to sell low quality products, which ultimately harms the consumers. Chong et al. (2017) supports this negative impacts of CSR on consumers and points out that CSR helps the business organisations to market their products. This marketing creates artificial needs among the consumers to consumer products which ultimately do not increase their convenience. Thus, CSR help companies create artificial demand and sel, products which do not help the consumers in the long run. Findings and Analysis: Theme NO. Theme Description Sources 1 Companies follow CSR and benefit the society (Jones and Felps 2013), (Tai and Chuang 2014), (Lozano, Carpenter and Huisingh 2015), (Lawrence and Weber 2014), (Lahiri and Dey(2013), (Rangan, Chase and Karim 2015) 2. Companies can use CSR to market their products by participating in philanthropic activities and become more visible to customers. (Hrisch, Freeman and Schaltegger 2014),(Bridoux and Stoelhorst 2014), 3. CSR helps the companies to promote themselves and their products. The customers become aware about a large variety of products which allow them to satisfy their diverse needs (Martnez and del Bosque 2013), (Henderson 2017), (Petrenko et al. 2016), (Grhan-Canli, Hayran and Sarial-Abi 2016), 4. CSR helps customers to differentiate superior products from inferior ones (Yadav and Pavlou 2014), (Servaes and Tamayo 2013), 5. Companies can use their CSR to market inferior quality products which harms the customers (Rubio, Oubia, and Villaseor 2014) 6 Companies market their products using CSR as platforms and create artificial demands among customers. Thus customers buy products which do not benefit them in reality (Chong et al.2017) Conclusion: The study conducted above has various aspects, which combine to form a concrete conclusion. First, corporate social responsibilities have important implications on both companies and consumers. The companies need to earn profits to sustain in the market and provide benefit to important stakeholders like employees and investors. They need to act legally to avoid legal penalties and actions. They should follow the law and not try to skirt it. The business organisations require to act ethically while conducting business operations so as to benefit all the stakeholders like customers, shareholders, governments and community as a whole. The business organisations require participating in philanthropic social development initiatives to ensure development of social groups like underprivileged people. The study also reveals that companies can use corporate social responsibilities to impact the customers both positively and negatively. The multinational corporations use the corporate social r esponsibilities to market their products before the customers. This makes consumers aware of large variety of products available in the market, which gives them the opportunities to purchase and consume these products. Thus, corporate social responsibilities allow customers to consume a large variety of products to meet their diverse needs and augment the values of their purchases. The CSR of the multinational companies act as assurances of high quality products, which allow the consumers, differentiate these products from low quality products of the same category available in the market. However, it is always true that CSR guarantees high product qualities. In fact, companies use their CSR to create a strong market image and take its advantage to sell their low quality products. Moreover, the companies often market their products using their CSR to create artificial demands among the consumers. This makes the consumers buy products, which actually do not benefit them. Thus, CSR has both positive and negative impacts on the consumers. Recommendations: The following recommendations can be made to the international companies like Woolworths in the light of the above discussion: Woolworths must give corporate social responsibilities more priority and work more responsibly towards the society. The international retail company is present in several countries and works with hundreds of supply chains. Its supply chains consist of both multinational companies and small producers. As far as the multinational producers are concerned, Woolworths can engage in social initiatives with these companies, which enhance the market image of both the companies. As far as the small producers are concerned, the international retail chain must purchase more products from them to bring about their financial development. It must not exploit them by paying less for their products by taking advantage of its international retail chain status. Woolworths must use its CSR to reach out to more people that are underprivileged and involve the richer segment of its customers in these initiatives. It must also collaborate with governments in their social initiatives. Collaboration with these stakeholders will help the CSR initiatives gain more support and improve the brand value of the retail chain. However, Woolworths must use strengthened brand image to provide customers with large variety of high quality products. As far as consumers are concerned, it can be recommended that they increase their awareness about products before buying them. They should not solely depend in marketing initiatives of companies like CSR to make purchase decisions. 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