Corporate Social Responsibility - Internal and External Stakeholders - Coursework Example

Name Course Tutor Date Corporate Social Responsibility A corporation is commonly referred to as a legal person with the ability to transact in trade activities. It has rights as well as duties. It is an establishment that has a privilege known as the corporate veil (Idowu et al, 2015). This honor, exonerates the individuals that carry out the organization’s operations, from the liability that may result from the routine administration of the business. Owing to the legal umbrella that the corporate person operates under, individuals such as executives, managers and entrepreneurs are able to undertake innovative business risks, without the fear of legal reprisal. With this understanding, it is imperative for the corporation managers and players to appreciate that, the privilege accorded to their institution, demands for higher standards of accountability. It is for this reason, that business ethics directs organizations to carry out their operations in consideration of the community and surrounding environment. This measure is known as the ‘corporate social responsibility’ (Idowu et al, 2015). Consequently, the establishment is expected to embrace policies and decisions that enhance sustainability. This can be done by focusing on key areas such as economic, environmental and social issues.   Internal and External Stakeholders The corporate social responsibility outlines the obligation of a firm to the society and other stakeholders as a whole. Each organization is expected to run its business within the confines of basic business ethics. It should strike a balance between making profits and relating positively to stakeholders. A firm should be concerned with the welfare and interest of all its stakeholders. These include internal and external stakeholders who have different needs and expectation of an existing organization. Internal stakeholders comprise of employees, administrators, managers and the business owners. On the hand, external stakeholders include, target customers, the shareholders, relevant authorities and government agencies, suppliers, creditors and the community at large. Employees are an integral part of the success and operations of any firm. The firm is therefore obligated to observe fairness and give equal opportunities when hiring staff members. In addition, workers are entitled to proper remuneration as per the provisions of the union deliberations and fair labor laws. The firm should undertake legal requirements related to employees such as tax remittance and tax compliance. Business institutions should also promote a culture of tolerance in this era of diversity and globalization. It is the responsibility of an organization to ensure personal growth of its personnel by planning for training programs and outlining a clear path to promotion and growth. Most importantly, organizations should ensure they provide safe environments for their workers to operate in. Employees should not be exposed to hazardous atmosphere while they are performing their duties. In addition, proper equipment and garments should be provided to protect workers who operate in hazard prone areas. It is the responsibilities of such entities to provide insurance for employees such as the medical and workplace compensation insurance. Once a company’s operations are ongoing, it is the responsibility of the firm to provide quality products and services to its customers for sustainability. Hence the administration should ensure customer satisfaction by providing continuous and stable supply. An organization should establish the need and expectation of its customers and meet this needs with fair pricing and honest marketing strategies. Furthermore, the traders should assure customer of quality products. This should be done by continuous research and improvement on product design and development. After completing a sale, the firm ensure that the after sale service is efficient. This service may consist of getting feedback from the client. Product defects should be addressed through a warrant regime where maintenance and repairs are carried out. Subsequently, the firm can also undertake measures to recall defective products and ensure the said defects do not recur. Business entities have an ethical as well as legal obligation to protect the environment from harm. The environment encompasses the land, the air and water bodies. Protecting the environment has got corporate as well as social benefits. It is the responsibility of the corporations to ensure that resources are not depleted from lack of proper resource management. For instance, firms could recycle resource to be used for subsequent production. In addition, firms can adopt green energy policies such as reduction of greenhouse gases to ensure that the energy resource is replenished.  Other measures such as use of green energy like the solar panels can prevent negative effects on the environment whilst producing clean and affordable energy (Wishart, 2009). It is important for corporations to acquaint themselves with the various environmental legislations, which relate to their business module. Air pollution is a number one contributor to global climate change. In addition to seeking approval before releasing the waste gas into the air, firms are required to significantly reduce emissions. The air pollution regulators expect firms that release waste gases to the atmosphere to control the smoke and prevent dark smoke from being released to the air. Dark smoke is an indication of high pollution content. To prevent this, firms are required to install proper equipment and furnaces. All pollution activities including those that are licensed, must been done in a way that protects human and animal health, prevent noise and odor pollution, protect from land, air and water pollution. Companies are expected to manage their liquid waste to protect the water bodies. Similar to air pollution, the disposal of trade effluents must be given consent by relevant authorities. Effluents include all commercial water wastes contaminated with chemicals, detergents, metal rinses, oils and greases. These liquids should not be released to the surface waters or public sewers. The waste should be treated and discharge on approved land disposal sites so that it can soak away. Sometimes, trade effluents can be treated and disposed into the public sewers or surface water after deliberations and approval from relevant authorities. The prime reason for creating business is to make profits. Organizations have a primary role to the corporate person as well as the shareholders and investors. To the shareholder, the corporation should always disclose a true and fair view of the firm through truthful financial records. Similarly, the firm should ensure that the equity owners receive a regular and stable dividend. It is also important to ensure general meeting are held at the stipulated time. The corporation has got a responsibility to ensure that it is branded and stands out from other identical business models. The firms should be committed to customer satisfaction and quality assurance. Most importantly, corporation should set aside funds through retained profits and invest in their long term goals and visions. Although businesses are obligated to give back to society, this action is not limited to financial advancement only. It is common knowledge that successful enterprises engage in charitable activities in a bid to give back to the community. In addition, many organizations collaborate with local authorities and chambers of commerce in order make financial contribution to projects that benefit the public. This includes building of social amenities such as school, roads, recreational facilities to mention but a few. Other than monetary contributions, the corporations may promote actions and policies within their entities that ensure communities are impacted positively. The firm’s operations should protect the ecosystem and the environment. In addition, the company’s products should promote health. For instance, a firm can choose to use packages that are biodegradable to preserve the environment (Wishart, 2009). For an institution that deals in food and drug products, the firm can undertake research that ensures products do not have negative health implication to their consumers. Firms that do not fully appreciate the corporate social responsibility tend to assume that the operations of their businesses are independent to those of the society that they operate in. Furthermore, they attribute social responsibility to occasional charitable contribution and fell that the actions of their businesses are not the concern of the community. However, risks that are solely caused by poor planning and disregard to the community can cause grave harm to the firm and other unrelated stakeholders (Griseri and Seppala, 2010). Such firms undertake projects that are insensitive to the interest and welfare of the community or repulsive to their moral standing and believe. When the community is affected or unsatisfied with a firm’s operation, they may revolve against such a firm and this would hamper its operations. In addition, public pressure may force the arm of government or relevant authorities to intervene and force the business entity to adopt certain business ethics standards. In extreme case, the authorities can force the company to shut down its business. For this reason, businesses consider the community as an integral rather than an independent entity to their business and operations. British Petroleum Company is a case in point of a firm which detached itself from the corporate social responsibility while undertaking an expansion project in the coast of Louisiana in the United States. The project involved sinking a deep well, known as the Macondo well in the depths of the Gulf of Mexico waters. Serious safety measures were overlooked and later it was established that the construction of the well was substandard (Landau, 2011). The BP management was in a hurry to complete the project that was running behind schedule by forty five days and anxious to save on operation costs. The management therefore chooses to use less building material than recommended to save on time. This reinforcement equipment was known as centralizers. In addition, they used a substandard cement reinforcement formula that involved adding nitrogen. This formula was inadequate for this project since the well density was not uniform and this caused the nitrogen to escape from the fortification cement. Lastly an important safety measure known as the blowout preventer failed to work during the disaster for failure of routine maintenance. This switch would have cut off the well from the oil deposit and prevented it oil spill. For failure to observe corporate social responsibility, BP caused a preventable disaster to take place. The lives of eleven employees where lost as the faulty well construction blew up. Scores others were injured. As if this was not bad enough, the well rig was completely destroyed by the monster flames leaving a trail of uncontrollable oil spill in the Gulf of Mexico. For eighty six days, BP was unable to stop the spill of approximately five million barrows of oil in the ocean waters (Landau, 2011). The lives and livelihoods of the community were adversely and negatively affected. The ecosystem and the environment were destroyed with toxins from the oil spill. Clearly, a corporation cannot exist and thrive in isolation. For sustainability, a firm needs to carry out its operations in a holistic manner. A successful establishment identifies and satisfies its responsibilities economically, socially and environmentally. For a long time businesses have assumed that their goal was to make profit at whatever cost. In reality, though stakeholders may be unrelated they all have a negative or positive impact on an organization. Internal stakeholders include business owners and employees. External stakeholders comprise of suppliers, creditors, customers, community, and government agencies. All this stakeholders have an invisible hand that operates together to build and grow a successful firm. Disgruntled employees distort the face of the organization and keep customers at bay. Dissatisfied customers do not purchase goods and services and this affects the profitability of the enterprise. Similarly when a firm lacks political and public goodwill, it can be put under pressure to change its operations. An effective management takes its corporate social responsibility seriously and incorporates it in the firm’s business model. Risks and benefits of a firm should put into consideration the effect of the outcome to all stakeholders. Unethical business practices may seem beneficial in a short period of time. Nonetheless, for a business to success and to be sustainable in future, it must embrace ethical business practices and responsibilities.   References Griseri, P., & Seppala, N. (2010). Business ethics and corporate social responsibility. Australia, South-Western Cengage Learning. Idowu, S. O., Frederiksen, C. S., Mermod, A. Y., & Nielsen, M. E. J. (2015). Corporate social responsibility and governance: theory and practice. http://search.ebscohost.com/login.aspx?directt=true&scope=site&db=nlebk&db=nlabk&AN=920364.& Landau, E. (2011). Oil spill!: disaster in the Gulf of Mexico. Minneapolis, MN, Millbrook Press. Wishart, D. (2009). Economic, social and environmental sustainability - do they really overlap? Dundee, Tay Estuary Forum.   +   Read More