BÀI TẬP LỚN TRÁCH NHIỆM XÃ HỘI CỦA DOANH NGHIỆP

Thus, when depends on many factors, which include the CEO’s attitude toward CSR, the firm’s industry and actions of competitors, and the cultural environment in which the firm is operati

VIETNAM NATIONAL UNIVERSITY UNIVERSITY OF ECONOMICS AND BUSINESS

ASSIGNMENT Course: Corporate Social Responsibility

Semester 1 (2021-2022)

SUPERVISOR: Dr Nguyen Phuong Mai STUDENT: Dinh Huyen My

STUDENT CODE: 18050771

CLASS: QH-2018-E QTKD CLC 1

Hanoi, 12/2021

Question 1 (5 marks):

Why do some firms, industries, and cultures have different CSR thresholds than others? Illustrate your answer with real examples for all three categories

(Write a short essay from1500 to 4000 words to answer the question)

Answer:

The decision of when to implement a CSR policy is compounded by why, where, and how it should be implemented, not to mention who should oversee the process The industry context complicates things further because of the varied stages of acceptance

of CSR by different competitors Another level of complexity, differences among countries and cultures, ensures different firms will approach CSR in vastly different ways Although the value of an effective CSR policy within spe- cific industries and firms is becoming increasingly accepted, the point at which such a policy becomes ripe for implementation (or unavoidable to those unconvinced of the benefits) varies Thus, when depends on many factors, which include the CEO’s attitude toward CSR, the firm’s industry and actions of competitors, and the cultural environment in which the firm is operating

CSR Threshold determines the timing as to when and where the CSR should be undertaken in the organization The threshold determines whether the organization is ready to pursue the policy or not and thus its implementation The threshold enables the business entity to relate its core business and expectations of the society Different organizations have varied CSR threshold due to the culture of the organization, competition levels in the industry and nature of the services and products offered Implementation of the CSR policy varies from the organization to organization, for

instance the current environment and the attitude of top management towards the CSR affects the threshold In most manufacturing firms CSR threshold does not change due

to environmental factors like the service industry where the attitude of the top management determines extent of participation in social activities

An organization’s CSR Threshold is the point at which they turn their attention towards CSR strategies This tipping point occurs due to many factors, such as acceptance by competitors, management’s attitudes, and the surrounding cultural environment Since these aspects are different within various industries, the CSR threshold will be different from business to business In particular firms, the CEO may have personal intrinsic inclinations to conduct business with a sense of corporate opportunity toward social responsibility This business would, most likely, create CSR policies offensively out of management’s high ethical and social awareness On the other hand, companies that may not be led by such management, would defensively react to the demands of consumers in relation to CSR initiatives for reasons, such as avoiding negative media attention or increasing sales

In terms of industries, the consumer’s impression of that industry will dictate the businesses within that category’s CSR threshold Companies that sell products are more apt to have lower tipping points than a service industry This may be in part to the fact that services are generally more difficult to quantify harm in than in malfunction or loss

in products Additionally, the expectations of certain cultures can affect the CSR threshold of an organization In developed countries a company’s point can be defined

by created laws and regulatory bodies However, in many other parts of the world, CSR can be seen as something that only big business needs to take into consideration While

these views are evolving, the resource variation between these two types of cultures still maintain vast differences in when the CSR threshold is met

CSR thresholds are highly dependent on multiple different factors For firms their business level strategy has a major impact on when they choose to implement CSR policies The firm’s size and capacity, as well as positioning in the industry dictate their timing for CSR At an industry scale its quite dependent on the nature of said industry Apparel for example opposed to the banking industry has a much lower threshold The culturalthreshold is relative to a culture’s perception of the importance of CSR as well

as the development and ability to make changes

Walmart's business-level strategy probably raises its CSR Threshold; that is, the firm has more CSR leeway and can “get away with" more because its value proposition

is based on a strategy of low cost A Walmart shopper, for example, is unlikely to be surprised to discover that the firm favors products manufactured overseas by low-paid contract employees For a firm like The Body Shop, however, which has built its reputation and customer base largely on the social justice issues it advocates (such as

no animal testing and fair trade), the CSR Threshold at which customers, the media, and society react may be much lower Thus, The Body Shop's stakeholders are likely to have a lower tolerance for perceived ethics violations

In other words, a Body Shop customer would expect the firm to live by the values that attracted him or her to the store in the first place, which translates into a lower CSR Threshold for the firm One CSR error by The Body Shop, for example, may well be equal, in terms of stakeholder backlash, to multiple CSR oversights by Walmart Products targeted at market segments or niches, such as lifestyle brands, are especially

valuable to a firm because they often rest on subjective perceptions tied to shifting social trends, rather than objective price and quality comparisons Customers will pay a greater premium for such products Yet, paradoxically, those able to pay this premium are precisely those with the widest range of alternatives, backed by the resources to make different choices The subjective base on which lifestyle brand allegiance lies, therefore, also presents a danger to the firm

Question 2 (5 marks):

What is meant by the term “CSR as brand insurance”? Can you give an example of a real firm that has benefited from CSR in this way? Regarding CSR implementation, what additional actions do you suggest the chosen firm do to strengthen its brand? (Write a short essay from 1500 to 4000 words to answer the question)

Answer:

CSR as ‘brand insurance’ is needed because even the most prestigious brands have substitutes Do NIKE's shoes do the job any better than Adidas'? Is Starbucks' coffee any better quality than the coffee served at Tully's? Would car engines run any less efficiently if, instead of BP's gasoline, they had to run on Shell's? A CSR mindset throughout the organization heightens the brand-user bond, reducing the brand's vulnerability to internal management lapses

CSR is needed as a brand insurance because of most of the brands, even high-status brands, have alternatives The brand-user bond will be strengthened through a CSR mindset and be able to reduce the brand’s vulnerability to internal management lapses It has the ability to give a company credibility if they get in trouble with a legal

problem because they can show a good track record when proving themselves as socially responsible

Savvy nongovernmental organizations (NGOs) and consumer activists that know how to engage the ‘always-on’ media are able to multiply the impact of CSR lapses Their actions can severely threaten the implicit contract between the brand and its users These groups can carry the threat of conveying detailed and often emotive ‘evidence’

of CSR lapses further and faster than ever before John Passacantando, Executive

Director of Greenpeace USA, expresses the new sense among activists of their growing relevance in the global debate: “You have to skip the middleman and find a way to put

on pressure that becomes unbearable for these companies Don't just write to your congressman Take it straight to the brand (Gilding, 2001)”

The linkage between stakeholders and brands is the purpose of branding As the value of this relationship grows, so does the strategic importance of CSR This simple

relationship can be summarized in what we label The Branding Law of Corporate Social Responsibility: “The importance of CSR to any organization is directly related, and rises in proportion, to the value of the firm's global brand.”

Executives find it difficult to apply cost–benefit analysis to avoid future problems of uncertain likelihood But these are the ideal conditions for insurance, not

an insurance that pays off after a crisis but more like traditional boiler insurance that focuses on preventative protection The reason why firms need CSR is not because they necessarily have a pressing problem at the moment but so that they can avoid (or at least lessen) problems that undermine their brand going forward Simply put, CSR represents conflict prevention and can be thought of as modern day boiler insurance

Here we describe how CSR activities can play an important role in the risk-management dimension of a firm’s strategy Consider the situation of Mattel in 2007.4 Mattel ‘s CEO, Robert A Eckert, had just learned that it faced the largest toy recall in history, covering some of its most popular product lines These toys were found to contain extremely high levels of lead paint Disclosing the problem and recalling the affected toys would surely be costly to Mattel; however the long-run impact on the profitability of the firm would ultimately depend on the cause that the public and investors ascribed to the problem If they saw the problem as one mainly stemming from Mattel’s negligence in overseeing its Chinese suppliers, there would be serious, long-term consequences If, however, it were seen as merely an “honest mistake”— something that could happen to even a diligent firm—the damage would be much less

We shall argue that Mattel’s “reputation,” driven in part by its perception as a

“responsible” corporate citizen, will do much to drive beliefs about the proximate cause

of an adverse event

Although adverse events have direct costs in the form of regulation penalties and lawsuits, there are also indirect costs to consider For example, Mattel may have to monitor its input suppliers more carefully and engage in a substantial public relation campaigns to communicate such improvements Being a publicly held company, these expected costs will be (almost) immediately reflected in its stock price Investors will also price in the future expected cost of such adverse event for the firm -their beliefs about the possibility of such events happening again Obviously, investors’ judgment about this risk will be colored by the firm’s reputation before the event Is this an anomaly or is it consistent with a view that Mattel has been rather cavalier in monitoring

its suppliers? In short, the degree of price change following the event will be based on the weight investors place on its cause

Similarly, regulators have limited resources to investigate adverse events In local law enforcement, the decision to prosecute some crimes and not others is known

as “prosecutorial discretion.” In a regulatory setting, a similar principle applies: All things equal, those firms that are thought less likely to have committed negligence as opposed to have experienced bad luck will be pursued less fiercely or not at all One can think of a scale describing the possible causes of an incident The left side of the scale is labeled “bad luck”—the incident was caused by factors largely out of the firm’s control The right side of the scale is labeled “bad management”—the incident was caused by negligence, foolhardy cost-cutting, or some other factor under the control of the firm Where investors and regulators place an event on this scale depends on the firm’s reputation, based on its past actions as a “responsible corporate citizen,” leading

up to the event

Viewed in this light, expenditures on corporate social responsibility (CSR) can

be thought of as an insurance premium In normal times, this simply reflects a pure cost; however, when an incident arises, the firm is insured to the extent that its past CSR activities tip the scale toward bad luck rather than bad management, saving the firm money, avoiding regulatory scrutiny, and preserving the value of its brand That is, CSR provides a contingent benefit

Corporate Social Responsibility means that, “a corporation should act in a way that enhances society and its inhabitants and be held accountable for any of its actions that affect people, their communities, and their environment; it implies that harm to

people and society should be acknowledged and corrected if at all possible” (Lawrence,

A T & Weber, J., p50 para 2) Mattel is a socially responsible corporation according

to their 2009 Global Citizen report, Mattel's Corporate Responsibility mission is to “act with integrity in all we do to bring the world safe toys that grown-ups trust and children love We are committed to positively impact our people, our products and our planet by playing responsibly This commitment resonates in our actions and through our

company values each and every day, as we: Play Fair by continually encouraging the Mattel organization to align decision-making with the company's values Play Together by working with employees, partners, vendors and regulators to bring the world safe toys that grown-ups trust and children love Play to Grow by committing

to a sustainable future through efforts to work smarter and reduce our impact on the environment Play with Passion by volunteering in our communities and helping underserved children experience the joy of play” (Mattel, Inc., 2014)

Furthermore, Mattel has always listened to its stakeholders and encouraged open and mutually transparent dialogue “Stakeholders are all those who affect, or are affected by, the actions of the firm” (Lawrence, A T & Weber, J p21) Mattel’s communication with its stakeholders and its management of the public relations crisis not only greatly impacted the recall outcomes but showed socially responsible and ethical corporate behavior

In order to ensure the safety of children’s toy’s I believe that toy companies, the CPSC, and the government should work together to develop a plan Us Senator, Dick Dubin is calling for stricter government regulations for recalls on defective toys In an interview Durbin says, “When defective toys are found we don’t have the laws to

enforce it The law requires the commission and the company responsible to negotiate and have conversations about next steps before a press release is issued to the public This problem is that these negotiations can take months” (Reuters, 2007) Not having these regulations in place could lead to injury or possibly death The Us Consumer Product Safety Commission (CPSC) is also calling for new testing standards to test toys before they are imported from other countries

Mattel’s Global Product Integrity team is engaged to ensure that products meet

or exceed our standards and specifications They have also added new requirements to our processes and dedicated more resources to improve product quality and safety Mattel takes pride in its integrity, safety and quality of their toys Mattel also designs its toys to meet or exceed applicable safety standards wherever they are sold Which includes; the evaluation and careful selection of materials and components to create engaging toys that are durable and safe; all while working to comply with each country’s unique regulations (Mattel Inc., GCR, 2009, p15)

In my experience the collaborative accountability model has always been an effective way to ensure not only are standards adhered to but that the rules will be enforced Currently, stricter government regulation and enforcement of prompt communication between the responsible parties are being considered Toy companies believe they are making toys safe by testing the toys and keeping products out of the supply chain that may compromise their safety They have a mandatory program that includes testing, standard procedures for verifying products conformed to the US safety standards In addition to developing testing methods, and working with the government

to implement legislation