Attaining Competitive Advantage
Social responsibility is the obligation that decision makers in a business or project make in order to improve the welfare of the business as well as the surrounding society. A business cannot survive without interacting with surrounding community and therefore the hindrance of those communities must be accounted for when making business policy.
A study of various companies has shown that corporation can do well by doing good. Well known global companies such as coca-cola, Pepsi, star buck, Toyota, IBM, and McDonald have proven that by taking responsibility for the well being of the environment and society, they can differentiate their brand and reputation as well as their services and product. Therefore companies which practice corporate social responsibility not only gain competitive advantage over their rivals but also generate significant return to their business (Crowther & Rayman, 2003).
There is basically two dimension of social responsibility which includes the classical dimension and the modern view. To the classical believers, expecting a manager to act in a socially responsible way is making him a public employee and not employee of private enterprise. Therefore they believe that all profit generated by the business should be ploughed back for investment. A classical believer would not
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However in the modern view a manger is expected to generate enough profit for the business and also participate in social responsibility. This modern view state that a manger by virtue of being a leader in society should assume social responsibility over and above the profit maximization principle.
Therefore in the modern society corporate social responsibility mean conducting business in an ethical way and in the best interest of the wider community and responding positively to emerging social priorities and expectation. It also means the willingness to work ahead of regulatory confrontation and balancing shareholders interest against the interest of the wider community (Kotler, 2004).
Every decision that a manager makes especially when designing the policy is expected to have social dimension by considering the impact to the society. Corporate social responsibility will therefore include the following action
- ensuring resources are not mismanaged
- Utilizing the resources in the environment in such a way that the society is ensured of future survival.
- Balance between profit level and consumer exploitation.
- Responding to the needs of the surrounding.
- Creating jobs to the surrounding community and reducing poverty.
- Ensuring that business does not interfere with the culture of the society.
- Decision policy that are in line with national objective.
- Charity programs (Werther & Chandler, 2006).
It is always difficult for managers to consider all objective of interested parties therefore there must be a trade off developing on how important a specific group is important to the organization. Most global business are now issuing CSR annual report that show there performance in relation to the various stakeholders in the organization. In the wake of global warming consumers and the society as a whole require that companies adopt strategy aimed at reducing carbon emission.
In considering a single case of Toyota Australia we can analyze how corporate social responsibility help to attain competitive advantage. Their report covers various stakeholders which include customers, employees, business partners, suppliers, and environment. Their social responsibility to different stakeholders include
1) Environment – the environmental committee help to oversee the implementation of the 5 year plan, communicating information across the firm and developing strategy. Further more the company is working closely with Toyota motor corporations energy Service Company in conducting energy audit and implementing energy reduction in the firm. The company has also adopted coolbiz and warmbiz initiative to reduce energy consumption in building. Through raising staff awareness and construction of waterless urinal across the construction site the company is expected to save more water.
2) Employees – the setting up of senior consultative group help communicate employee’s issues to top management. Toyota Australia have put in place a work place agreement which cover issues relating to employee health and safety, performance review, ant discrimination policies, flexible working hours, redundancy, termination and performance review. The setting up of open learning centers have improved on employees’ skill. Further more issues relating to employees health and safety have been given priority through the setting of a health care program.
- Customers – testing is done to ensure compliance before good are delivered to the market. The company also works with different stakeholder to ensure better quality. The presence of internal review process and external audit ensures that the company meets compliance and continuous improvement.
- Suppliers – the company developed a green purchasing guideline to encourage supplies to undertake environmental initiative.
- business partners – the company has put in place a dealer environmental risk audit program and providing dealer with resources to meet this requirement.
- Community – the company have formed local partnership and addresses needs identified by local community. It has also developed national partnership where they share resources, skills and expertise (Jones & Bek, 2006).
Through adoption of various environmental initiatives the company has been able to save on energy cost. The company has also adopted measures to reduce carbon emission and this have reduced government regulation and related compliance cost. It responsibility toward employee have led to lower conflict with employee which in turn result to lower employee turnover and increased motivation which increases productivity.
The delivery of quality product to customers ensures customers loyalty and this has led to increased sales not only in Australia but also in external market such as the Middle East. It partnership both at local and national levels ensures that the company has easier access to raw material needed in manufacture of vehicles.
Corporate social responsibility improves the image of the company and ensures customers loyalty in certain brand. The reputation gained from social responsibility action helps to increase a firm market share and ultimately it revenue. It also helps a firm to easily reach external/global market due to a strong brand image. As a result of cost saving a firm can adopt cost leadership strategy. Therefore corporate social responsibility helps an entity to gain competitive advantage over it rivals.
Crowther, D., & Rayman, L. (2003). Perspectives on corporate social responsibility.
Corporate social responsibility series. Alder shot, Hants, England, Ash gate.
Jones, I., & Bek, D. (2006). Multinationals in their communities: a social capital
approach to corporate citizenship projects. Cambridge, University of Cambridge,
Centre for Business Research.
Kotler, P. (2004). Corporate Social Responsibility: Doing the Most Good for Your
Company and Your Cause. Hoboken, John Wiley & Sons, Inc.
Werther, W. B., & Chandler, D. (2006). Strategic corporate social responsibility:
stakeholders in a global environment. Thousand Oaks [u.a.], Sage.