The Principles of Corporate Social Responsibility - Essay Example

THE STRATEGIC MANAGEMENT ASSIGNMENT By Student’s Name Code + Course Name Professor’s Name University Cite, State Date 1.0 Corporate Social Responsibility Corporate social responsibility refers to the relationship that exists amongst different stakeholders that might include multi-national companies, government agencies as well as the immediate communities from where operations are conducted (Chernev & Blair, 2015). Research indicates that the activities of a corporation have a relatively higher level of impact on the external level of environments and thus, it is recommended that one of the fundamental roles of accounting should be focused on providing a report on the impact of the organisation in regards to the aforementioned matters (Chernev & Blair, 2015). It thus means that the activities of CSR are highly effective on the external environment composed of the immediate business environments under where the company operates the local community environment where it is located and the broader international environment especially for multi-national companies. The principles of CSR are used in controlling the surrounding activities under which the company operates. These principles include; sustainability, accountability and transparency. Sustainability is a principle that is related to the effect of taking actions in a current period but has other options in the future time (Chernev & Blair, 2015). For instance, if resources are consumed in an uncontrolled manner in the present period then they will be unavailable in the future and this might pose a challenge in case scarce resources. In essence, sustainability is focused on enlightening a society about the consequences of overconsumption of resources that cannot be easily regenerated. Accountability relates to corporations recognising that there immediate activities and decisions pose significant levels of issues to the existing external environment and thus, assuming responsibility for these of its decisions. In this regards, the principle calls for the quantification of the effects of actions adopted both within and without the business environment. Transparency is concerned with noting of the external level of impacts of the actions taken by an organisation being reported in their factual nature as opposed to compromising some level of information (Chernev & Blair, 2015). CSR activities can be easily identified with Qantas operations, which was marred with issues related to employee relations as executive management and engineers had at one time refused corporation. The feud, in fact, led to punctuality issues for customers that also affected on a significant level the on-time performance model of the corporation (Glavas & Kelley, 2014). The corporation has also had its brand reputation and relationship with such crucial stakeholders as customers affected in a negative manner due to the stringent industrial actions. Subsequently, the recent grounding of Qantas airlines affected about 80,000 customers worldwide. On the contrary, the corporation also later enjoyed new business opportunities especially in the international markets like the Middle East region. The move to partner with Emirates for hub platform in the region is set to increase the firm’s profitability and ensure trust with the existing customer base. Another important aspect rests with the current efforts made by the firm to rebuild its trust with the workforce. It is fair that Alan Joyce(CEO) refuse any possible future pay increases or align pay to match the percentage increases of other junior employees in order to cement a favourable platform for operations (Glavas & Kelley, 2014). 2.0 PESTEL Analysis This is a marketing tool that is mostly used to analyse as well as scrutinise the existing macro environmental factors that have a direct impact on the operations of a given company (Dockalikova & Klozikova, 2014). The tool has two distinctive functions that include; allowing the recognition of an environment under where a company operates and also, to avail data and useful information that can facilitate an organisation to predict future conditions that will affect operations. PESTEL stands for (Political, Economic, Socio-cultural, Technological, Environment and Legal) analysis. It is important to understand that there a great number of factors within the macro-environment that can directly affect the decisions of a management team of a given organisation. These factors (PESTEL) are discussed as follows; Political factors: they refer to government policies like the degree of intervention within a given economy. It also involves decisions made by the government in relation to subsidies, public goods and services as well as priorities of business venture within a given locality. Political decisions will always impact a larger section of a business operation like education of employees, their respective health and infrastructural economy. Economic factors include such distinctive elements like existing interest rates, taxation changes, economic growth as well as inflation rates. A higher level of interest rate might prevent future investment since it becomes expensive to borrow funds while a stronger local currency might affect export levels since it can increase commodity prices in relation to the foreign currencies (David, 2009). A perfect example can be noted within the Australian supermarket industry where there has been witnessed reduction in consumer sentiments and disposable household income, which has had a negative effect on spend habits (Smith, 2006). Social factors are the possible alterations witnessed within a given society that might pose a challenge on the immediate demand for an organisation’s products and services as well as the availability and willingness of citizens to work. For instance, the Australian supermarket industry has recently witnessed changes in population demographics as well as location decisions hence affecting range of products offered within any given time due to decreased demand. The ever-changing societal values in relation to healthy living have also impacted negatively on purchasing behaviours of customers such that increased demands was perceived in organic produce alone. Technological factors refer to the new technological advancements that are deemed useful in the creation of newer products and processess. Such online platforms as online payment solutions as well as technological devices like smartphones have improved the manner for which business operations are executed. The aspect of technology can minimise costs level while improves quality and innovation opportunities. A good example of technological advancement and benefits within the Australian supermarket industry can be perceived when Woolworth embarked on a trial of two virtual supermarkets in both Melbourne and Sydney in order to facilitate convenience of purchases (Smith, 2006). Environmental factors relates to the effects of weather and climate change. Changes in climate and weather affect a sector of the economy that depends on a stable conducive environment like tourism and farming industry. There has been a growing trend to try and protect the environment in order to cut down on the level of impacts on such crucial sectors like travel and transportation. Legal factors are concerned with legal operational environment under where corporations operate. Such legal matters as putting limitation of age of workers as well as disability discrimination rules, increase in the minimum wages affect a company’s immediate level of costs as well as demand especially in cases where laws prohibits customers from purchasing a certain level of a product or service at any one moment. 3.0 Porter’s 5 Model Porter’s 5 models is an evaluation tool that analyses the immediate competitiveness of a firm in its operational environment (Grundy, 2006). It provides a strategic insight that prevents possible future exposure to competitive edge at risk and thus, ensures the profitability of products on a long-term basis. It is fair to note that the profitability of an organisation within a given industrial sector depends on the following five forces; First, it involves competitive rivalry within the industry so that inter-competition between corporations will establish the attractiveness of given sectors (Grundy, 2006). The force ascertains the struggling of corporations to maintain their market shares as well as power of operations. In consequence, the aspect of competition changes in relation to changes in sector growth and development as well as existence of barriers (Grundy, 2006). The current Australian supermarket industry is composed of about 3500 competitors with a combined sales profits amounting to $3.3 billion in 2012. The industry is highly concentrated with Woolworths and Coles being the major competitors with a combined market share of at least 71% as at 2011. Competition is based on such elements as price as customers became price-conscious on commodities they desire to purchase at any given moment in time. Secondly, there is the threat of new entrants so that companies’ devise methodologies deemed fit to prevent competition from entering the market (Grundy, 2006). Barriers can be in form of legal and industrial while arrival of new companies into a market will depend on size of the underlying market among other factors (Grundy, 2006). The Australian supply chain has witnessed a structural power shift in the past 30 years or so that the current objective is focused away from maximising farm-gate returns to delivering of bottom line profits to manufacturers. In the Australia supermarket industry, the threat of new entrants is exposed to barriers like the underlying limited sites for development of structures, limitation of zoning and planning regimes as well as the current foreign investment rules that requires development of vacant pieces of land within a period not exceeding 12 months of acquisition by the foreign investors (Smith, 2006). However, the recent entrance of such giant foreign supermarkets like Aldi and Costco proves that the industry’s returns are still favourable to deter possible entry. Third, there is the force related to threat of substitute products in the market. Substitutes can be depicted as being alternatives to what is offered in the market (Grundy, 2006). The Australian supermarket industry is faced with threats of such other substitute like the 7-Eleven convenience store but they lack the capacity to offer a wider range of stocked products like supermarkets. Supermarkets have downplayed this threat by introduction of private-labelling as well as implementing self-checkouts for customers (Smith, 2006). The fourth force reckons the bargaining power of suppliers so that powerful suppliers have the capability of imposing their condition in regards to such aspects as price, quality and amounts offered as supplies (Grundy, 2006). The fifth force rests with the bargaining power of customers. In case their bargain is powerful, they tend to influence the profitability levels of the underlying markets by imposing their condition relating to price, service and quality. 4.0 Branding Branding is deemed to be mental build that determines a connection between an individual’s desires to a certain company’s products and services (Todor, 2014). This linkage is accomplished through the utilisation of a distinctive combination of logos, trademarks, taglines and other behavioural elements in a way that depicts the emotional construct of a given company. Branding is a concept that has penetrated its way into such areas of operations as marketing and forensics (Todor, 2014). For instance, in marketing area, the aspect of branding has been established as being the immediate means for improving a client’s perspective in regards to certain identifiable products and services hence creating a pervasive means to provide a communication platform of information and mark differences among its products and peers. In forensics, branding is employed as a way of identifying and differentiating criminal suspects from others in determining crucial cases (Todor, 2014). A perfect example of branding can be perceived in Collingwood Football Club effort’s to attain substantial numbers of members as a way of enhancing a cordial relationship with the fan base. Branding through membership of fans can also be perceived in such notable leagues as AFL and NRL where individuals are expected to pay certain amounts in order to access other benefits of a club. 5.0 Business Level Strategic Corporations These strategies relate to the decisions that companies make on their way to developing, sustaining and utilising their competitive advantage (Rizea, 2015). After analysing an entity’s product line, target market and levels of competition, businesses are encouraged to recognise the position of the competitive advantage. Business-level strategy enjoys a greater number of variables that are significant in regards to company size, debt leverage as well as capital outlays. These business-level variables are deemed to generate a positive relationship to a firm’s performance and profitability within a specified period (Rizea, 2015). Qantas seems to have opted to employ a business-level strategy that well relates to its objective of increasing performance and profitability levels. This has been made easier with such partnerships with Emirates and Virgin Australia to offer travel services as a result of the Alan Joyce’s grounding decision. 6.0 Sustainable Competitive Advantage The aspect of sustainable competitive advantage has been studied at greater lengths for longer periods. In fact it is ascertained that the sole competitive global business strategies is focused on differentiation by distinctive specialisation in relation to quality, product as well as service technology (Liu, 2013). In the manufacturing industry, it is noted that sustainable competitive advantage ensures a higher level of involvement in the course of devising effective strategic planning processess (Bhamra, Dani, & Bhamra, 2011). It is a resource-based strategy that has continued to gain grounds over the years. Companies that can ensure the sustainment of competitive advantage as well as prowess will likely outperform others in the long run (Liu, 2013). Following this line of reasoning, a distinctive sustainable competitive advantage is always proposed and recognised as the sole advantage to develop resource-based strategies as well as fast strategies by way of fast learning that is supported by agile strategy formulation and implementations. References List Bhamra, R., Dani, S., & Bhamra, T., 2011. Competence understanding and use in SMEs: a UK manufacturing perspective. International Journal of Production Research, 49 (10), 2729–2743 Chernev, A, & Blair, S 2015, 'Doing Well by Doing Good: The Benevolent Halo of Corporate Social Responsibility', Journal Of Consumer Research, 41, 6, pp. 1412-1425. Dockalikova, I, & Klozikova, J 2014, 'MCDM Methods in Practice: Determining the Significance of PESTEL Analysis Criteria', Proceedings of the European Conference on Management, Leadership & Governance, pp. 418-427. David, F.R.2009. Strategic Management. Concepts and cases. USA: Pearson Education Ltd. Glavas, A, & Kelley, K 2014, 'The Effects of Perceived Corporate Social Responsibility on Employee Attitudes', Business Ethics Quarterly, 24, 2, pp. 165-202. Grundy, T 2006, 'Rethinking and reinventing Michael Porter's five forces model', Strategic Change, 15, 5, pp. 213-229. Liu, Y 2013, 'Sustainable competitive advantage in turbulent business environments', International Journal of Production Research, 51, 10, pp. 2821-2841. Rizea, RD 2015, 'Growth Strategies of Multinational Companies', Economic Insights - Trends & Challenges, 67, 1, pp. 59-66 Smith, M. 2006 ‘Organic produce in Australia’s major supermarkets’, Australian Organic Journal, p. 20. Todor, R 2014, 'The Importance Of Branding And Rebranding For Strategic Marketing', Bulletin Of The Transilvania University Of Brasov. Series V: Economic Sciences, 7, 2, pp. 59-64 Read More