Corporate Social Responsibility on Customers

Introduction

Corporate Social Responsibility (CSR) is one of the components of business practices that generate significant value to the firm. In fact, most firms illustrate the importance they attach to the practice due to its ability in value creation.

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While some studies indicate varying results on the relationship between CSR and the firm’s value, most studies have indicated positive relationship between the CRS activities and the increased value particularly to the customers (Siegel & McWilliams, 2000). Specifically, CSR practices geared towards attaining the increased customers’ outcome significantly increase the value of the firm.

A standard corporate social responsibility programme often includes a broad commitment to the communities in which the firm does business (Starcher, 2010). Depending on the industry and the firm’s core values as well as operating principles, the commitment to CSR practices may be implemented in a variety of ways including promoting fair trade, providing capital, financing renewable energy sources, or managing any number of complex challenges facing global communities today (Miller, 2011).

While a CSR program could be viewed as a risky or costly investment, good corporate citizenship is increasingly being seen as an antidote for traditional business woes like corporate scandals, pressure from regulators and the media as well as the downside of globalization.

Essentially, corporate social responsibility remains critical to the firm’s growth and development. In particular, firms should align their CSR strategies with the needs of customers in order to be successful in the global business environment. Most businesses agree that promoting social responsiveness in business practices is one of the key successes (Starcher, 2010). The reason is that social responsibilities have direct influence in the firm’s efficiency, reputation as well as the customers’ relationships.

Most importantly, firms have to find ways in which activities geared towards benefitting societies are linked to the customers’ needs. In other words, CSR strategies that put into consideration the views of clients are critical for the firm’s success. In the current business environment, customers are highly sensitive to the actions of the organisation (Visser, Matten, Pohl & Tolhurst, 2010). Unethical activities contribute negatively to the firm’s reputation, which in turn reduces the general revenues.

Several research findings indicate that practicing social responsibilities promote trust between the firm and the clients, which in turn increases efficiency and productivity (Ballou, Godwin & Shortridge, 2003). The relationship between corporate social responsibilities and the firm’s success has also been found to be direct.

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The meaning is that companies practicing social responsibilities have good reputation. Good reputation results in increased profits as well as long-term benefits to the firm. Moreover, good reputation increases public confidence on the firm and its products as well as services leading to increased sales (Miller, 2011).

The Relationship between CSR and Business Processes

Businesses are currently integrating the needs of clients into their corporate strategies. Incorporating the interest of customers into the corporate strategies is beneficial to the firm not only in the general growth and expansion but also in the profit generation (Carroll & Buchholtz, 2008). The executive responsibility is to ensure most favorable set of scales while responding to the assorted desires of various stakeholders and constituencies affected by the top decisions.

In other words, the businesses should not only respond to the needs of customers and investors but also other stakeholders including suppliers and communities in which the firm operates (Starcher, 2010). Large multinational firms such as IBM have always aligned the business strategies with the needs of customers. In fact, IBM has adopted various CSR activities regarding environment, waste management and clean energy as one of the ways through which the business acts responsibly.

In fact, such activities and practices have enabled the firm to remain relevant in the market amid intense competition in the industry. Essentially, the interest of all stakeholders provides key dimensions of social responsibility that managers must take into consideration in order to remain relevant in the modern marketplace (Amir & Lev, 2003). Integrating these needs into the business strategies is critical for the firm’s success.

The CSR and the Customers

The most important dimension is how the firm’s social responsibility practices affect its relationship with customers. According to Ballou et al. (2003), attention is now being shifted from producers to consumers. In fact, putting customer first is the norm of today’s business practices (Ballou et al., 2003). The researches indicate that a practice that emphasises on the customer satisfaction ensures lasting relation and enhances company performances.

A social responsibility that enhances the needs of the customers distinguishes the firm and leads to its success. Successful companies always built long-lasting relations with customers through the emphasis on the client’s needs and offering quality and reliable services. For instance, the success of Google has been attributed to the increased concern to the security of its web users.

In fact, the firm has emphasised on the security of its sites and users identities. The firm acknowledges the importance of such actions in retaining the customers and its success. In other words, adopting ethical and socially responsible practices that take into account the customer’s perspective is critical to the success of the organisation (Crane & Matten, 2010).

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The Link between CSR and the Business Client’s Strategies Taking Coca-Cola as the Case

Coca-Cola CSR strategies incorporate the organisational invariable compulsion to operate honourably in order to persistently advance cost-effectively whilst enhancing the welfare of various organisations’ target clients and the surrounding communities. McWilliams, Siegel and Wright (2005) suggested that corporations ought to assume philanthropic initiatives found in the neighbourhood where such organisations carrying out their business to be triumphant and lucrative.

Further, imperative commitments that uphold the firms’ CSR strategies incorporate profitable, legitimate and ethical liabilities (Dahlsrud, 2008).

The useful errands in line with the corporate social responsibility strategies incorporate the ecological concerns that have connections with the natural ambiance, financial and public matters that ultimately head for the progress of the neighbourhood and the administration. Via approving a range of corporate social responsibility projects, Coca-Cola has the capability of influencing the varying civic outlook, corporation icon, industrial assets and permissible rules.

To remain viable and profitable in the current highly competitive market, Coca-Cola must initiates and implements appropriate corporate social responsibility. Many scholars have argued that the relationship the business has with its stakeholders including clients depend on its output in all aspects whether social or economical (McWilliams et al., 2005).

In addition, decisions normally being made by various stakeholders particularly customers are majorly influenced by CSR programmes initiated by the firm and how such programmes contributes to the wellbeing of the society (The Economist, 2005).

According to Warwick (2008), CSR remains to be critical ethical obligations in all aspects the societies expect in any business organisation. CSR practices in Coca-Cola mirrors the relationship the corporation has with the societies. Further, better CSR practices have enabled the firm to sustain its client base and succeed in the global competitive market. In other words, good CSR practices geared towards benefitting the clients have enhanced the firm’s globalised activities.

Currently, the firm has realised that CSR remains critical to its growth and sustainability (Bies, Bartunek, Fort & Sald, 2007). In fact, the corporations has realised that it can only sustain substantial growth through the provision of morally oriented services. In other words, all its operations must be based on ethical considerations as well as initiatives that are beneficial to the clients.

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Regardless of the resources needed to attain such initiatives, the corporation has thrived to put in place practices that satisfy all its stakeholders including clients and shareholders. Generally, CSR activities must be geared towards enhancing the firm’s reputation, brand image and competitive advantage (Servaes & Tamayo, 2013).

The pursued CSR practices provide a framework through which the firm builds its reputation and image. The reason is that most of the consumers will tend to identify themselves with the firm. Essentially, practices of firm geared towards attaining the needs of the customers has enabled the firm to integrate good cultural values that ensure increased and sustained customer growth and alignment to the firm’s products.

Moreover, good reputation built on moral values will enable the firm recruit and retain quality employees that are critical in the development of the firm’s products and services (Ludescher, 2009). The firm can only create products and services that are competitive in the market only if it adopts CSR practices that are acceptable to all stakeholders. CSR practices that are environment oriented will enable the firm become a market leader in the industry. The reason is that such practices are acceptable to all clients across the board.

In fact, CSR practices adopted by the firm to satisfy the clients have also enabled the firms to create effective and sustained supply chain management with other companies that are of similar ideologies. The result is the reduction in the production cost.

CSR should be programmed in such a way that it enables free information to flow. Free information is critical for the improvement of the firm. Through acceptable CSR programmes, companies are capable of reaching areas that have not been exploited by other firms thus expanding its market (Hohnen, 2007).

Coca-Cola customer oriented CSR initiatives are founded on five basic elements, which includes value addition, the improvement of the products, projections that are long-term, public awareness as well as being sensitive to the goals and strategies that have been put in place.

An initiative that enhances continuous introduction of new products in the market increases the customers’ satisfaction and at the same time enables the firm to remains competitive (Brammer & Millington, 2008). The firm’s activities are also legitimate. In other words, the firm has remained sensitive to the needs of all stakeholders including consumers. Essentially, firm’s product and services are always created in accordance with the societal expectations.

Adding value remains critical element in the firm’s CSR strategies. Value addition increases the firm’s merit and trust among the clients thereby enabling the organisation to expand its place in the market (Brammer & Millington, 2008). However, this trust is not limited to the clients but also to other stakeholders including suppliers, investors and employees (McWilliams et al., 2005). Considering these elements, Coca-Cola has generated value through incorporating CSR initiatives in its various global operations.

Indeed, the firm is always involved in delivering community services. The result is the generation of maximum profit that has enhanced its global competitive advantage. The attainment of the factors that contribute to increased global competitiveness is essential in determining the firm’s endurance (Porter & Kramer, 2006).

Reasons for Linking CSR with Business Strategies

As indicated, business development and growth depends on effective CSR programmes. Since many corporations are going global, they need a strong foundation on which they can anchor their growth. Adopting and integrating appropriate CSR practices would increase sustained development in businesses.

The appropriate CSR practices include continuous production and sales that will ensure uninterrupted profitability. In the contrary, firms that ignore CSR practices particularly during decision-making process will likely be faced with problems that can take them out of business (Hohnen, 2007). The current increasing risks involved in business activities can easily be managed by putting into consideration programmes and activities that take into consideration all the stakeholders views.

All businesses organisations must have control measures that guard them against any external and internal risks. The control measures must be in line with guiding principles set by the regulating bodies. Additionally, businesses are supposed to adopt practices that take into consideration the needs and expectations as well as interest of all the stakeholders (Gray, Owen & Maunders, 2007).

Currently, firms in all sectors are adopting and implementing CSR strategies in order to remain competitive in the world market. Therefore, organisations should come up with sustainable CSR strategies that would enable it to remain viable within the highly competitive global market. The strategies should be aimed at building good relationship with the communities as well as clients (Cavett-Goodwin, 2007). In other words, firms should adopt practices that will enhance sustained value to its stakeholders.

As the organisations continue to grow, it should implement those practices that not only add value to the customers but also provide it with a rare competitive advantage. In essence, the firm should adopt CSR practices and enhance competencies that will ensure sustained profitability (Porter & Kramer, 2006).

In addition, CSR plays critical role in the business management. As indicated, CSR becomes an important business management tool in spite of the firm’s magnitude. The reason is that CSR is responsible for increased benefits of the firm’s products, which in turn increases brand image and profitability.

Therefore, larger corporations should compensate the societies in which they operate through initiatives that add value to the lives of people (McWilliams et al., 2005). One of the activities includes pro-environmental initiatives. Moreover, it is true that corporations and societies in which they operate are interlinked. Therefore, strategies that are initiated by corporations must be beneficial to both organisations and the societies.

Conclusion

In order to remain relevant in the market place, firms must practice corporate social responsibilities that are geared towards building good relations with customers. Social responsibility practices range from the production of goods and services that satisfy the needs of customers to sound financial management.

The benefits of improved financial and operation performances are associated with being identified as socially responsible corporation. Generally, investing socially responsible behaviours normally last longer and contribute into building more and just societies as well as contributing to the returns on investments.

References

Amir, E. & Lev, B. (2003). Do financial analysts get intangibles? European Accounting Review, 12(4), 635-659.

Ballou, B., Godwin, N. & Shortridge, R. (2003). Firm value and employee attitudes on workplace quality. Accounting Horizons, 17(3), 329-341.

Bies, R. J., Bartunek, J. M., Fort, T. L., & Sald, M. N. (2007). Corporations as social change agents: Individual, interpersonal, institutional, and environmental dynamics. Academy of Management Reviw, 32(6), 788–793.

Brammer, S., & Millington, A. (2008). Does it pay to be different? An analysis of the relationship between corporate social and financial performance. Strategic Management Journal, 29(2), 1325–1343.

Carroll, A. B. & Buchholtz, A. K. (2008). Business & society: ethics & stakeholder management. Farmington Hills, MI: Cengage Learning.

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Crane, A. & Matten, D. (2010). Business ethics: managing corporate citisenship and sustainability in the age of globalisation. Great Clarendon Street, Oxford: Oxford University Press.

Dahlsrud, A. (2008). How corporate social responsibility is defined: An analysis of 37 definitions. Corporate Social Responsibility and Environmental Management, 15(1), 1–13.

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Ludescher, J. (2009). Corporate social responsibility: From corporate strategy to global justice. Web.

McWilliams, A., Siegel, D. & Wright, P. M. (2005). Corporate social responsibility: strategic implications. Web.

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Siegel, D. & McWilliams, A. (2000). Corporate social responsibility and financial performance: Correlation or misspecifications? Strategic Management Journal, 21(5), 603-609.

Starcher, G. (2010). Towards a new paradigm of management. European Business Forum, 32(6), 23-46.

The Economist, (2005). The importance of corporate responsibility. Web.

Visser, W., Matten, D., Pohl, M. & Tolhurst, N. (2010). The A to Z of corporate social responsibility. Hoboken, NJ: John Wiley & Sons.

Warwick, M. (2008). The five dimensions of CSR. Web.

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