Explain with examples what is meant by Corporate Social Responsibility and discuss why it is important to modern business

In todays world, Corporate Social Responsibility (CSR) has been one of the topics that every company must be concerned with. It is usually viewed as a legal obligation for every company to create social benefits alongside with the profit gains (Peng and Meyer 2011, p.297). CSR is a crucial factor for our society and environment. If there is no campaign to encourage us to save our planet, how can people be aware and know theirs obligation to save the world. This paper will explain the meaning of corporate social responsibility, advantages and disadvantages of CSR through the example of The Body Shop. In addition, it will discuss why it is important to modern businesses.

The meaning of Corporate Social Responsibility has changed since the early 20 century and it has never been a straightforward. The importance of CSR arose with the role of leadership, how a leader can manage the company with an ethical approach to society and what can be done for the environment. Furthermore, the focus of CSR has changed the behavior of organizations, not the role of leadership anymore. It created a debate about what companies should do for society. Subsequently, the structure of CSR places less stress on organizational behaviours and more on the responsibility (Blowfield and Murray 2011, p.7). However, the most well-known and accepted model of CSR is Carroll four-part model, which he defined as CSR includes the economic, legal, ethical and philanthropic expectations placed on organization by society at a given point of time (Carroll 2009, cited in Crane and Matten 2010, p.53). Moreover, the case of The Body Shops CSR is discussed as four-part model as an example. Firstly, economic responsibility, it is a basic responsibility of a business and The Body Shop has done very well on this area. Customers can be ensured a fair price with good quality because the products are made from natural ingredients. Staff is not trained to pressure customers to buy the products, but to be advised. Secondly, legal responsibility, products of The Body Shop have been made 1
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from natural ingredients. So, the company has complied by law, which is product safety and health regulation. Thirdly, ethical responsibility, against animal testing policy is a main strategy of The Body Shop to differentiate their brands. The company has requested their suppliers to sign a declaration that there is no animal testing. Lastly, philanthropic responsibility, the product packages are made from recycled materials in order to maximize waste and encourage the society in sustaining environment. (The Body Shop International Plc. 2011) Corporate Social Responsibility is generally perceived only from the positive side as it creates awareness and stimulates people to act for our society and environment. However, there is negative side as well. To begin with advantages of CSR, it helps to improve company reputation when the company sets up a new policy about CSR as a core value. It causes customers to become more loyal because the company is responsible for the environment and better customer relations because it is a trust between customers and the company. Once the trust is built, when the company does something wrong, customers might not assume that is an intentional mistake. Nevertheless, CSR has not all been beneficial. It also creates higher expenses as the company needs to buy new equipment that is environmentally friendly and shareholder resistance because some investor requires the company to be in the spot light of CSR to obtain higher profits (Dontigency n.d.),(Kielmas n.d.). In the case of The Body Shop, it has helped The Body Shop to improve company reputation as it became a well-known company by differentiating their products from others while the disadvantage aspect is that the company has held high expectations for shareholders and customers. So there are several criticisms about the core value of company (Mallin 2009, pp.59-78). Many companies have implemented CSR in their company. One of the leading companies that adopted CSR as a pioneer of ethic is The Body Shop. The company has used CSR as a competitive strategy in order to succeed in business. The shop owner knows what she does best. So, products are developed based on a specific group of customers in order to create a strong brand preferences and unique way with a perception of enormous customer groups, called sustainability ideals. The source of The Body Shop success is to utilize the benefits of CSR by selling products based on natural ingredients, paying a fair price and no testing on animal. According to porter (1985), he claimed that sustainability of differentiation depends on two things: "it is 2

continued perceived value to buyers and the lack of competitor ability to imitate it" (Porter 1985 cited in Mallin 2009, p.71). It requires a transparency of work process with stakeholders. From this example, it explains why CSR is important to modern businesses like The Body Shop (Mallin 2009, pp.59-78),(Kwapong 2005, p.89). Furthermore, there are several reasons why CSR is critical to modern business such as attracting and retaining employees, attracting socially responsible companies and reducing business costs. To start with attracting and retaining employees, it stimulates workers to increase commitments and productivities. Employees would feel meaningful by working for ethical company. In the second place, it helps to attract socially responsible companies. When the company promotes new innovative products that are environmentally friendly, it gives customers a good reason to buy products from this company. It means companies can gain competitive advantage by differentiating from others. Lastly, business costs is reduced when the company uses recycling material and conserving energy (Taylor 2009). To summarize, Corporate Social Responsibility is an obligation for companies to save our planet while it also gains benefits from society. Nonetheless, CSR not only has advantages, but also disadvantages. The company should be aware that the benefits outweigh the drawbacks and understand why CSR is so important to modern business. The case of The Body Shop's CSR is discussed as an example to understand more details. CSR is a critical issue that every company must be concerned about. So the company should find the effective strategies that match their circumstances in order to obtain the highest benefit from society while creating benefits as well.

Bibliography

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corporate-social-responsibility-13106.html (Accessed: 26 July 2013) Kielmas, M. (n.d.). Pros & Cons of Corporate Social Responsibility. Texas: chron. Available from: http://smallbusiness.chron.com/pros-cons-corporate-social-

responsibility-56247.html (Accessed: 26 July 2013) Kwapong, O.A. (2005) Business strategy, (2nd edition) MBA concepts and frameworks. Africa: Songhai group, p.89 Mallin, C.A. (2009) Sticking to core values: the case of The Body Shop, Corporate social responsibility. Myilibrary[Online]. Available at: http://lib.myilibrary.com /Open.aspx?id=244203 (Accessed: 22 July 2013) Peng, M. and Meryer, K. (2011) Corporate Social Responsibility, International business. Singapore: South-Western, pp.295-325 Taylor, D. (2009). Why Social Responsibility is Important to Your Business. S.l.: Articlesbase. Available from: http://www.articlesbase.com/team-buildingarticles/ why-social-responsibility-is-important-to-your-business-good-things-do-happen-togood-people-724063.html (Accessed: 2 August 2013) The Body Shop International Plc. (2011). Value report 2011. West Sussex: The body shop international plc. Available from: http://www.thebodyshop.com/content/pdf/ global-values_report.pdf (Accessed: 31 July 2013)