3345 words (cover page, table of contents, headings, appendix, diagrams, charts, tables, group reflection, references and references list are not included)

This paper displays the new structure toaddress this problem as well as analyzing the strengths and weaknesses of the proposal on how CSRaffects the mining company and the society from t

Organizational

Analysis

Group 7Tuesday 15:00

GROUP

REPORT

SEM C 2020

Literature review 8

Concept of CSR 8 CSR in mining and its drivers _8 Methodology _9

Solution development and proposal _14

Discussion and conclusion 16

Appendix _19

References List _22

Group Reflection and CONTRIBUTION _27

Assignment information:

Assignment name: Assignment 2 - Group Report

RMIT UNIVERSITY VIETNAM SAIGON SOUTH CAMPUS SCHOOL OF BUSINESS AND MANAGEMENT

Word count: 3345 words (Cover page, Table of Contents, Headings, Appendix, Diagrams, Charts, Tables, Group Reflection, References and References List are not included)

Submission date: 03/01/2020

Increasing pressures from shareholders and community are heavily placed on the miningcompany as it attempts to excellently perform Corporate Social Responsibility (CSR), leading to theneed for better organizational structures, especially CSR This paper displays the new structure toaddress this problem as well as analyzing the strengths and weaknesses of the proposal on how CSRaffects the mining company and the society from the subjectivist perspective Better control overvarious functions is also an urgent need of the mining company since their acquisition of numerouscompanies leads to a lack of connection between operations and sites It is required to developcommon approaches to the management of the sites, the company's purposes and objectives, and itsappropriate reactions to environmental and community pressures

PROBLEM STATEMENT

Current performance and situation of CSR in mining firm

Because the government forces them to guarantee corporate responsibility to the community,applying CSR becomes meaningless when they do not really consider environmental responsibility.Therefore, the approach that the mining company is taking to voluntary sustainability has no consensus

of purpose (Cho et al., 2015) It caused controversy among stakeholders as the company focusedprimarily on making profits and enhancing company’s brand identity

Therefore, the established CSR system must be based on real observations from society.According to Larsen (2010), CSR cannot be built in a conventional way, it must have social interaction

of attitudes, beliefs and purposes In the current situation, the company cannot avoid the punishment ofthe government and criticism from the society This has a great impact on the operation of the miningcompany, they have to trade a large amount of money and time to recover (Powell 2015)

On the other hand, according to Holme & Watts (1999), marketing can contribute to asustainable social enterprise The company faces a huge communication problem, creating manybarriers Specifically, the company will have a bad reputation forever, it is difficult to recover to itsoriginal state They need to prove more to gain trust from the community as well as their concern aboutthe environment (Sushmita 2013) Through this, the treatment system needs more time to identify andrespond Furthermore, companies should not always focus on maximizing profits, forgetting aboutsocial interaction and their views on the proper use of the CSR system (Kolstad, 2007) The situation iscaused by three root problems

The belief of firm

The mining company accepts the nature that profit cannot go along with CSR (Jasmine &Sameer, 2015) Because it is difficult to generate benefits and is costly, therefore, CSR is unnecessary.Moreover, they are facing pressure about the company to behave in socially responsible ways Hence,they noticed the use of CSR as a method to deal with pressure from the government, companyshareholders and society These can also be seen as defensive CSR (Sushmita 2013)

Company structure problem

In general, the company does not have a general approach to how to manage the differentorganizational functions, namely that they operate separately resulting in a looser corporate structure(Cho et al, 2015) (Muhamad 2008) In addition, the reason for the inability to promote economies ofscale comes from the problem of trust that the company is facing (ibid) Since they were not really

interested in adopting CSR, the firm decided to let the CSR department operate on its own, leaving itinconsistent in purpose (Spitzer 2010).

Figure 1 Company structure – divisional strcuture

Flow problem:

First and foremost, company obtain and review those of the negative mainstream that need to

be settle and as to protect the company images The next step is to take a hold of social media andrestrict the media from publishing negative news since bad reputation spreads harm to the company'sbrand identity The company then script a plan that will be proposed as we approach the shareholdersfor approval of the budget required As if matters violate the law, the company must approach thegovernment for granted permission, if not strategy will proceed to execution for matter to be settle andrecover the company images

Figure 2 Company flowchart, CSR department working process

In short, the process starts too late when a communication problem occurs resulting in reducedefficiency In particular, the company has to spend too much time and money to face the problem,while the social problems persist Furthermore, the slow operation makes the flow too rigid Becausethere is no strong bonding, the flow becomes cumbersome and it takes a lot of money for the flow toconnect with each other (Cho et al 2015) Even there is a few connections between departments insideCSR agency, as a characteristic of Organized Hypocrisy and Organizational Façades, it is not enough

to show the CSR effect on the company and local area Hence, company would face an increase in costdue to CSR process without gaining any profit (Piercy 2009)

CSR in mining and its drivers

Mining used to be just an operation to exploit a natural resources area until it dried out Thebusiness will then be relocated to the next location to follow this process In the early 1980s, themining companies incorporated environmental practices into their activities under heavy demands(drivers) from the local community (Jenkins and Yakovleva 2006) Researchers have identified drivers

in three categories, notably: an approach focused on value, an approach influenced by performance,and a stakeholder approach A value-driven based on self-motivated and relies on external influences

An approach to performance depends on the competitive advantages of a business for direct income Italso includes the image and credibility of a corporation The stakeholder approach dependsfundamentally on the parties involved; with the success of the business, this approach is required tofulfill stakeholder demands (Larsen 2010)

Methodology

Figure 3 Information systems development paradigm (source: Hirschheim and Klein 1989)

The traditional understanding of CSR is appropriate and can be used as an ethical frameworkfor business However, its characteristic sustainability is still controversial, especially when involved

in a social perspective (Carroll and Shabana, 2010) The traditional understanding has described CSR

is created based on the consensus of the society, the demand for the responsibility of business CSR isunderstood as its 4 factors of responsibility (economic, social, environment, philanthropy) in businessare interacted in order to reach out to optimize business performance but keep sustainability Theprevious knowledge about CSR has adopted the Functionalism paradigm (Hirschheim and Klein1989) There is no denying that a corporation should perform its economic obligation The primary aim

of an organization is to create and manage sustainable business income through the production anddistribution of the goods and services needed by society (Cho 2018) However, this approach is verycontroversial among stakeholders because it is mainly about the profit of the company, there is nosocial consideration in this part The incongruence between what company talk, decision, and actiontoward voluntary sustainability have been highlighted in Cho et al (2015) Another paper of Cho(2009) has claimed that organizations only do this to concrete their position and for private interest Atthis point, the mining company has separated the CSR department out from the company structure,make it become ineffective, instead of integrated it into company structure as in flowchart above.Therefore, if viewing CSR in this view, as an objectivist viewer, CSR is established based on the need

of company, the need of either sustainability or economically, to adapt with the demand of the society.According to Caroll (1979), organizations applied this as a defensive strategy, rejecting broad ethicalresponsibility by passively complying with legal requirements and remaining legally valid, they acted

to protect their self-interest This has led to an unsustainability corporate structure, there are nonetworking between the departments, each department having their separate function Due to this fact,

when a CSR issues happened – which is demand various co-operate between department, the companydecision and action will become ineffective

This paper will deny the objectivist view and take a stance as a subjectivist to reduce theincreasing tension of shareholder activism and community pressure being placed on the company Forthis point, it is necessary to create a concept model and restructure the company's CSR department.Our conceptual model still stays in the integrationist view as before - the reason for the existence ofCSR in mining companies On the other hand, the change in the objectivist dimension is necessary To

be brief, based on Hirschheim and Klein's (1989) paradigm’s model, the social relativist perspectivemust be adopted – view from a subjectivist perception After adopting this paradigm, the understanding

of CSR will be changed: There's no specific reality, there are only different interpretations CompanyCSR is not associated with an observable economic fact, but with a transition in traditions-socialnorms, conventions, societal beliefs, and ideals Our solution – epistemological assumption, demandinteraction with stakeholders to redesign a CSR system that is suitable for each mining site The reason

is that there is no empirical criterion separating good and bad systems All depends on what the partiesunderstand is relevant – this is the ontological assumption of this paper (Hirschheim and Klein 1989)

In practical terms, it is impossible for companies to fully apply a proactive strategy - absoluteconsideration of their social obligation and active participation in society However, companies can

take an accommodative stance - accept some ethical responsibility toward their stakeholders Throughsome configuration, companies can effectively remove operational problems and suppressstakeholders' dissatisfaction (Carroll 1979) The mining company should work out with stakeholders,accept their perspective to find out their preferred views By then, the CSR system that meets the

stakeholders’ view can be considered legitimate.From communication, the best CSR system isdeveloped and constantly updated and legitimizedthrough adjustment CSR systems cannot beformulated in a normal way, not without socialinteraction (Larsen 2010)

Regarding problem of company’s corebeliefs about the nature that CSR systems couldcost more its advantage, building up, a model thatqualify the positive relationship between CSR andCFP is utterly possible, in fact The solution for CSR in mining industry would be a model that could

Figure 4 The stakeholder map (Source: Freeman,

1984, p.55)

balance both profitability and stakeholders’ perspective The table in appendix 1 presents the data forthe four dimensions of the CSR Overall, all dimensions are strongly connected to the CFP Thesefindings confirm the hypotheses for CSR dimensions Hence, there is an important positiverelationship between the CSR and the CFP The findings agree with the argument put forward by Yoon

et al (2006) which indicates that these practices build a brand image for a business that can establishpositive public relations with stakeholders, such as consumer satisfaction and investor interest,resulting in increased profitability and market valuation This study suggests that, on average, investorsalso make money from their investment in business shares (Muhammad et al 2008) (appendix 1)Even so, Muhammad also claimed that for generating a productive partnership between CSRand CFP, the company need to be engaged fully in CSR environment in which all the stakeholders andthe company’s operation benefit each other after the stakeholder and company perspectives arecaptured and desired In contrast, different stakeholder communities have diverse requirements thatbusinesses cannot fulfill all these standards at the same time (Harrison & Freeman, 1999) due toconflicts of interest (Rainey, 2006) Thus, businesses frequently pick and pay more attention to some ofthem, which strongly related to the business (ibid) This decision would be conducted carefully throughthe measurement methods and metrics below (Ruf et al 2001) At a result, when a whole company aswell as the local area share a common viewpoint of this positive relationship, CSR system would beable to illustrate positive effect on a big social

network included company itself and the

community, as the characteristic of social

relativism (Hirschheim and Klein 1989)

In addition, there is a monitoring road

to be balance between profits and social

benefit for a mining business Which is the

key for the question is whether profitable

businesses are wealthy enough to splash out

on CSR as a luxury branding game, or

whether CSR and activities itself offer

revenues With the current issues that the

mining company is facing, the transformation in belief and cultural inside the company is not enough,

a method to balance the profitability and CSR is necessary The measurement should be conductedalong the project according to 4 stage (Peloza 2009):

Figure 5 The relationship among CSR, mediating process

and the profitability

Figure 6 Stages of Financial Impact from CSR (Source: Peloza, 2009, p.1523)

 In the CSP (Corporate Social Performance) metrics, which is a means to make CSR

practical and implementing it into business (Van & Gössling, 2008), the key CSR initiatives orpolicies regarding to environmental and social perspectives, such as recycling, and philanthropy aredisplayed in this stage, based on the demands of local stakeholders as well as the monitoring ofvariance between the firm’s damage and its advantages

 Mediating metric is essential for determining the relationship between corporate social

responsibility and profitability, since they are the mediating variables that indicate the causalitybetween value for stakeholder and value for shareholder (Appendix 2)

 Intermediate outcome metrics, which mainly compare the cost-based approach result and

revenue-based approach result by figure such as how far that CSR help in reduced energy expense orChanges in risk portfolio management, are much less frequently used than end state metrics In thisstage, cash flow and net profit are also monitoring to offer a clear comparison (Appendix 3)

 End-State metrics, including an accounting-based (ROA, ROS, ROE) approach, a

market-based (share price) approach and a perceptual approach (management survey), are perhaps the moststandard techniques for researchers to assess CSP and CFP (Peloza, 2009) (Appendix 4)

SOLUTION DEVELOPMENT AND

PROPOSAL

Regarding the problem above, the lack of integration, unity and stability of the organization.Amburgey et Al (1990) stated that corporate restructuring could be risky, but once it is overcome andworks, it improves the wellness of the company In other words, operations did not operate smoothlythroughout agencies; and It is therefore essential that the paper aims to restructure the organization ofthis mining business as a more suitable working network

According to above analysis, opening the close functionality working process of CSR byspreading the CSR conduct to other related departments, is necessary In this case, to develop beliefand cultural of the company, the CSR system should combine Business Communication and Branding,

and Human Resource departments, while to monitoring a whole process as well as balance the CSR

process itself with the profitability, there is an essential collaboration between CSR departments and

Administration, included Finance, Commercials and Process Within administration, the mentioned

four metrics would be applied as the backbone of the process, while other additional departments such

as Human Resource would be used as the subfunction framework