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The Logic of Corporate Social Responsibility and Strategic Management

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The Logic of Corporate Social Responsibility and Strategic Management

Question 1: The Triple Bottom Line

The concept of the Triple Bottom Line (TBL) was coined to refer to the three P’s (profits, people, and the planet) that compose the main stakeholders in corporate social responsibility (CSR). Even though the practice of CSR began many years ago, a sustainable approach that satisfies all the key stakeholders in the society is yet to be achieved. Essentially, there are two distinct issues a corporate entity must accomplish to become a successful corporate citizen, namely: corporate financial performance (CFP), and corporate social performance (CSP). Whereas CFP or financial performance is more concerned with generation of profits, CSP or social performance is more concerned with welfare promotion of people and sustainable use of the environment or the planet. It is in the backdrop of incorporating CFP and CSP that TBL was crafted.

Individually, I am of the opinion that companies will perpetually place their profits ahead of the wellbeing of people or the planet. From an economic perspective, it is unwise for any company to engage in an activity that does not give rise to any incentive. However, there is a general realization that people are getting more concerned about the ethical responsibility of organizations they associate themselves with. For instance, more and more employees are willing to work for companies that pay them less as long as the companies show commitment towards promotion of ethics in the society. Similarly, buyers are developing a willingness to pay higher prices for commodities belonging to companies that exhibit high standards of social responsibility.

If employees and buyers persist to associate themselves with organizations that show a commitment towards better ethical practices, there is a very huge possibility that in the long run a balance between profits, people, and the planet will be attained. Such a possibility will give socially responsive companies a competitive edge over those that are unresponsive. As a result, engaging in CSR will cease to be a voluntary activity. Instead, it will evolve to become a necessity that companies must engage in if they are to compete effectively in the market place.

Question 2: Sincerity of CSR

In spite of the concerted efforts to attain a fair balance between profits, people, and the planet, still the pursuit for high returns by corporate organizations has the upper hand. To a large extent, I view CSR as an insincere ploy used by most of the corporations to gain a shortcut to profitability. Indeed, for quite a long time, the concept of profitability has dominated the decisions made by most corporate entities. Even currently, there is no better justification given to decisions made by organizations than profitability. Similarly, most companies perceive engaging in social responsibility initiatives as a new competitive frontier that has the potential of widen their customer base, and thus guaranteeing high profitability. Hence, whenever most companies engage in CSR ventures, they do so with a deceitful view of gaining the traction and favor of consumers.

However, there are a few companies that have turned themselves into genuine corporate citizens. To these companies, profitability is no longer an endearing issue; but rather the pursuit of making the world a sustainable place for everyone. Such companies have revealed the ability to go beyond the boundaries of normal CSR. An archetype of this group of companies is Bill Gate’s Microsoft. Gates has undoubtedly become a leading philanthropist figure who is diverging resources of his company to sections of the society that have no direct impact on the company’s profitability. In return, the existing customers repay the company by developing an incessant loyalty to its products. Going beyond the normal practices of CSR reveals that a company is not faking its overtures. Due to better reception given to the companies that reveal genuine CSR forays, in the future more and more companies are likely to engage in unadulterated social activities without necessarily expecting anything in return.

Question 3: The Decision to Move to eBay

The decision by eBay’s Chief Executive Officer (CEO) to join the company by resigning from positions she already held at well established businesses was both a risk and a well planned strategic decision. Companies that have already established their stake in the marketplace usually offer their employees job security, as well as guaranteed profitability. In contrast, new companies are usually surrounded with the uncertainty of their future. There is never a reliable measure to determine if a venture will succeed or not. However, strategic business minds have a unique capacity to examine a situation and predict, at least with a high percentage of precision, if a venture will succeed or not. For this reason, I think the CEO undertook both a risk, as well as a well planned strategic decision.

Rationally, most people tend to look for opportunities in well established companies that already have a good reputation of high performance. The reason behind this tendency is because an opportunity in these companies is packaged with an assurance of job security, better remuneration, and longevity. On the other hand, star-ups, or fresh companies usually lack the appeal of a lucrative opportunity due to lack of a credible financial history upon which a potential job holder can make an informed choice. Moreover, the knowledge of brilliant business ideas that have ended in strategic failure in the past makes the dream of joining new organizations uncertain.  Thus, unless one is willing to face the unforeseen future of a new business, there is no need of engaging in it in the first place. Similarly, the CEO of eBay joined the company when its past was scanty, and its future vey blurred. Nonetheless, she accepted the risk of joining. Interestingly, her strategic management skills revolutionized the company into the largest online auction platform.

Question 4: Decision of eBay to Incorporate Giant Vendors

The decision by eBay to allow large manufacturers and retailers to use its platform to vend their goods or services is a strategic retreat meant to address the changing market demands, as well as to expand its market reach. Hence, the new decision has automatically amplified the original mission of eBay to give priority to small retailers by availing to them a level playing field. In a normal market situation, small retailers are usually disadvantaged to market their commodities. Unlike moneyed giant manufacturers or retailers who can use aggressive marketing strategies, small retailers lack adequate financial capability that can enable them use alternative marketing strategies such as television advertising or newspaper advertisement. As a result, even though they have related or similar products to offer, the smaller firms are from the onset disadvantaged.

However, when eBay accepted to include big firms, the company shed the perilous tag of a platform meant for small retailers. It also provided a just platform where both big and small retailers can showcase their products. In addition, it attracted premium buyers who historically preferred to use commodities from big firms. Previously, this group of buyers saw no need of visiting this site. Thus, the new decision by eBay has actually improved the level playing field for small retailers. Unlike before, they now have a platform where they can compete with their bigger counterparts fairly.

 

 

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