PGBM04 Market Values of CSR Performances in Telecommunication Sector Assessment Answer
International Business Environment
Drawing on current business examples, critically compare and contrast how active development of corporate social responsibility has impacted on the performance of different companies
Corporate social responsibility can be defined as an autonomous amendable business strategy formed by an organisation that enables an organisation to achieve sustainable growth and development and benefit all the associated stakeholders and the broad society as a whole. The current essay will provide a conceptual understanding of corporate social responsibility and its various aspects in respect of two different companies. In other words, it will compare and contrast between the impacts and key benefits acquired in Vodafone and Sainsbury organisation based in the UK. The essay will throw a deep insight into the significant concern of market values of CSR performances observed in the telecommunication sector compared to the retail sector here. Further, it will reveal the social and financial performance between the two chosen sectors drawing examples from both. Besides, there will be some significant challenges and limitations while planning and executing CSR strategic implications observed in the telecom and retail sector as well.
Concept of Corporate Social Responsibility and its Purpose
The concept of corporate social responsibility is to focus on enhancing business strategy that emphasizes on the sustainability of the business. In other words, the corporate social responsibility of an organisation is to establish innovation from risk management to value creation (Louche and Idowu 2017). The authors are trying to put forward the concept of strategic implications of CSR approach that includes the capacity to address the issues of socio-economic and environmental perspective. It determines the fact that an organisation would need to have the ability to create value, integrating value as well as distributing value in order to accomplish sustainability in business. Such a strategic process of construction, incorporation and circulation meets the purpose of CSR successfully in an organisation that fulfils the needs and demands of the firm, its internal and external stakeholder’s together (Wickert et al. 2017). Based on the understanding of the concept and purpose of CSR, it can be demonstrated considering the existing CSR activities of the chosen firms from two different sectors. For example, in the telecom sector, Vodafone is currently among the leading mobile network providers in Europe, gaining around 71% of revenue from mobile users. In addition, it has introduced to offer a converged solution to the customers. Apart from this, Vodafone has commenced innovation plan for getting seamless access to social media and video application through Vodafone Pass facility and initiated an urgent action against energy and environment free of emission by the management (Vodafone 2019).
On the other hand, in the retail sector, Sainsbury has taken various schemes such as empowering the farmers through collaborative training guidelines and handling deforestation by planting more plants and trees in the surroundings with the active involvement of employees. Also, Sainsbury has addressed the carbon emission issues, dropping food waste and maximising competency of employees as well for future prospects of the organisation (About.sainsburys 2019).
Hence, it can be justified that the fundamental purpose of CSR is regularly monitored and modified with a constant plan of action for the benefit of people, profit and planet.
Market Values of CSR Performance in different sectors
From the conceptual understanding of CSR purpose, another primary focus has been made on the questions about the market value of corporate social responsibility initiated by different organisations. Daszynska-Zygadlo et al. (2016) opined that the market value of CSR performances could be measured for future growth and development of an organisation. The authors are trying to indicate that the customers and employees are equally important in increasing the value of CSR in the market. It can be better recognised that if an organisation establishes plan according to the choice and social culture and target customer segmentation, it would be beneficial for business implementation, as different organisations’ approach of CSR is unique and distinct compared to the other market competitors or substitute products. Organisations of retail and telecommunication sectors have potential segmented customers to act accordingly. In fact, the customers are demanding in terms of quality, price and durability of products and services in the market. Other than Kotabe and Kothari (2016) added that market value could also be measured depending on the competitive advantage compared to other competitors in the market in a similar field of business. In the telecom sector, there are competitors like British Telecom, EE, Virgin and O2 are equally offering mobile telecom services and broadband services to the customers, as per specific choices and preferences. For example, the customers using Vodafone telecom and broadband services are in much demand of high-speed internet access and multiple packages in accessing video applications and various social media websites (Vodafone 2019). Additionally, the customers are expecting the frequency of high-speed connectivity would not affect the social environment as well. In order to fulfil this requirement and demand of the customers, the organisation has invented innovations for making the future exciting for its customers. Adapting such CSR approach, Vodafone has received good response and satisfaction level and high value from its customers from the leading business market that is Europe and AMAP countries, which are Africa, Middle East and Asia-Pacific (Vodafone 2019).
On the other hand, in the case of Sainsbury retail market is concerned, the customers of the Organisation demands quality products and healthy products at a reasonable cost that can fulfil the quest of every customer. Fulfilling the desire of every customer can be mitigated through a strategic market research and development process. Jones and Comfort (2018) argued that the strategic method of product designing, supplying of raw materials, packaging and generating a finished product into the market is a systematic process for executing strategic CSR plan of action. It demonstrates the fact that in for gaining high value to the customers in retail sectors, the organisation would need to emphasize on sufficient human resources efficient in handling lean production that could be able to secure the cost of production and at the same time it could be able to deliver the standard quality of the product as well. Further, it will also be able to avoid damages during the production process. Sainsbury contains capable team for taking proficient responsibility in making variations of products and incorporating innovations in products as well. In fact, it has been identified that among the retail competitors like Tesco, Marks and Spencer’s and other Sainsbury is holding the leading position at the current stage. It could be possible for its 185,000 supportive colleagues providing intensive service quality to a range of around twenty-eight million customers in more than seventy countries of the world. In addition, it has also continued its collaborative services for an excellent social cause in the community development programs generating approximate fund of £ 35 million for charities (About.sainsburys 2019). Therefore, it can be ensured that the value of CSR in Vodafone in the telecommunication sector compared to the Sainsbury in the retail sector is quite equal in terms of customer satisfaction levels and competitive advantage.
Stakeholders’ conflict resolution in CSR activity
Other than the above perception of CSR activities discussed, stakeholder conflict is the major issue that occurs during the decision-making process of corporate social responsibility within different organisations. Wang et al. (2016) stated that the stakeholders are competent partners for enhancing business operations with long-term vision. It determines the reality that most of the stakeholders are in conflict related to different perspectives of benefits in business. This means, some of the stakeholders are concerned about the social benefit, and some are concerned about the economic benefits of an organisation itself. In this kind of situations, the management of an organisation deals with the negotiation process between different stakeholders while taking final decisions. In Vodafone, the stakeholder conflicts are often resolved through the negotiation process for achieving sustainable development in business. In addition, the internal stakeholders such as the employees are effective in producing quality service in compliance with the terms and conditions and CSR policies set by the Board of Directors and the higher authority. The regulatory intervention for cyber security services in the market has been ethically partnered with suitable stakeholders. For example, introducing cloud-based applications and products are available and offered with skilled technicians and staffs that gives a feeling of secured network services (Vodafone 2019).
On the other hand, Flammer (2015) added with the above statement that stakeholders' conflict could be reduced by an approach of strategic leadership approach of an organisation. It indicates that if the management of an organisation adopts the right approach of leadership behaviour, it can modify and restructure the CSR plan of action that would be beneficial for society and organisation equally. In Sainsbury, the management takes a unique leadership approach informing the business model and strategic plan for creating sustainable growth of the business through innovation and motivation of employees. For example, Sainsbury has received the best place of work environment among the other retailers in terms of operational costs, diminish risks and attract and retain staffs from different regions (About.sainsburys 2019). Therefore, the stakeholders’ perception of conflicts can be understood by the fact that organisations like Vodafone or Sainsbury would need to implement right leadership approach and arbitration process for managing and controlling business in a strategic way.
Company benefits of CSR:
Corporate Social Responsibility or CSR serves several benefits to the business that considers it irrespective of the organization sector or size. Social investment by corporate helps to build their reputation as a responsible business that, in return, leads towards competitive advantages. The active development of CSR has influenced different companies differently; however, they received similar potential benefits like positive corporate reputation, organizational growth and easy access to capital. For instance, Sainsbury that has been UK’s popular retailer leading across general merchandise, foods, financial service and clothing often gain benefits of increased customer loyalty and products sales through responsible corporate practices (About.sainsburys 2019). On the other hand, Vodafone that is leading company in the telecommunication sector in the UK by decreasing resource use, emissions and waste management under CSR gains benefits of better cost saving with attractive positive media attention. Lee (2016) argued that being accountable, sustainable dealing makes it easier to recruit new staffs or retain current ones. The consideration of developed CSR activities by several companies in the UK that include safety and health benefits provided to staffs has benefited from motivating staffs to stay longer. This has led to a decrease in expenses and disruption of retaining and recruitment. Moreover, CSR activities also help companies to gain strong financial performance in the competitive marketplace. The companies like Vodafone that has an international presence, its good image as corporate helps the company to have workforce diversity along with benefited in terms of greater quality and productivity (Vodafone 2019). The development of CSR focuses on business practices or products to be responsible for customers with clear guidance of product features or ingredients. It is evident that such activities under ethical conduct of organization benefited exerting growing impact on buying behaviours of customers. The customer is becoming concern about complex issues that affect community, world or them. In support of this, companies like Sainsbury drive their competitive edge through building brand trust, a healthier society, managing environmental harm along with making resilient business. The concept of CSR becoming widespread across modern organizations, and they have a responsibility to achieve further than the narrow perspective of short-term profit maximization.
Benefits to the community, general public and Environmental benefits:
CSR at present is highly topical, making it crucial for businesses to act in the marketplace that is society friendly, ethical and advantageous to the community in terms of enhancements. At present corporate social and corporate citizenship is the concept in which business corporate consider society’s interest by undertaking responsibility for influence of their actions on suppliers, shareholders, staffs, stakeholder, community, customer and environment (Lee 2016). In terms of benefiting the general public and community, corporate noted to engage in increasing the country's employment rate, charitable contributions and community education. Companies comply with regulation and voluntarily take actions to develop the well-being of their staffs, families, society and local community at large. For instance, CSR practices undertaken by several companies in the UK have been the mutual process for them to benefits community along with benefits themselves as well. At the time of adopting CSR, it becomes important to aware customers about it. For instance, in regard to Sainsbury, it has implemented itself as chief on environmental efforts and has been careful to aware customers about CSR activities (About.sainsburys 2019). In respect to contributing towards the community, businesses pay notice to material recyclability, enhance product functionality and durability as well as use renewable resources at lowers cost to contribute to the ecology of the nation and keep the environment clean. Wang et al. (2016) added that there had been a commensurate increase in specialized companies operating at the global and national level that suggest targeted long-term or short-term sustained community-level programs. For instance, Sainsbury to address global and domestic issues has integrated ore values that enable them to drive positive growth in the community across the UK by highlighting the healthier living, reducing emission and waste management across the value chain. For the well-being of the public, the company has collaborated with Comic Relief under Fair Development funds that aimed at supporting workers, farmers and growers in developing nation (About.sainsburys 2019). On the other hand, telecommunication organizations like Vodafone work ethically for delivering values for society and a higher return for shareholders. The leading scale initiated by the company allows it to sustain their investment in better gigabit infrastructure, delivering the outstanding customer experience that benefits the community and drives revenue increase (Vodafone 2019). Moreover, to benefit the next generation, companies often noted to leverage financial knowledge and functions to develop financial literacy in every age groups and develop industries and human resource capabilities of the nation. The several companies, in contrast to monetarily benefiting community groups, provide economic and financial education in line with businesses and give a tour to workplaces cultures. It is also noted that there have been companies that contribute towards the betterment of the community by giving scholarships to overseas students through the international and domestic foundation. Environmental CSR intends to decrease harm to the environment from business practices. In contrast to companies benefited from contributing towards the public in particular, within green CSR, even the simplest energy efficiency measures help to generate saving and make a difference. For instance, companies, even from different sectors irrespective of size can decrease business's environmental influence in ways like generating products that are recyclable, environment-friendly packaging, efficient network distribution and optimization of product life-cycles.
CSR and Accountability:
The recent development of the CSR largely put emphasis on the accountability of company, leader or businesses looking for ways to confirm integrity. Marco‐Fondevila et al. (2018) argued that in international stakeholder community, accountability becomes key challenges of the company. It makes it important for responsible leaders to concern with aligning and reconciling demands, interests, values and needs of the staffs, suppliers, community, NGOs, customers, community and environment. For instance, Vodafone having operation across the globe often track their records in regard to CSR accounting that is effective during adequate CSR measures are involved in internal and their supply-chain actions (Vodafone 2019). The success of the community-based programme for company accountability is conditional on the adequate combination of societal, corporate and state factors. Watts (2015) supported that accountability towards corporate social responsibility is more than giving false hopes and fake promises. Private companies, not a government organization, outline standards of environmental and social responsibilities, which they expect public organizations to be accountable and fulfil. In order words, corporate accountability is crucial to shareholders troubled with ethical investing. The fundamental of such practices relate to the concept that corporate needs to be responsible for the influence of their action in the community they operate, its people and on the environment. For instance, in the case of Vodafone, the company through CSR practices broadcast a sense of referring to several organizational practices that highlight the beliefs that company have responsibility above generating profit for respective shareholders (Watts 2015). In contrast, corporate accountability terms are usually used rather than referring to more enforceable and confrontational strategies of impacting corporate behaviour. Crane et al. (2019) supported that for an organization in the corporate sector, accountability implies that company behaviour is affected by the stress exerted by governmental and social actors after corporate itself. In the process of accountable business practices, companies have the responsibility to track negative duty to refrain from damaged occur to community, individual or environment and often depicts positive duty to safeguard environment, community and society. For instance, safeguarding human rights of communities and workers impacted by business activities is also a significant action in leading corporate accountabilities. In order to improve the company's growth, promoting accountability becomes important. For several companies in order to rise as accountable and responsible corporate within the community and be reputable in the eye of their customers, they require promoting accountability through clearly stating expectations, recognize or reward success. An accountable system has a better chance of success in case all expecting to be accountable to understand the expected outcome.
Organizational Challenges and Limitations:
The implementation of corporate social responsibility, companies often encounter limitation and challenges. The complexity of functioning in international society relate to new demands on companies and their leadership. Maak et al. (2016) supported that organizational challenges in establishing CSR relate either to concerns at organizational or political issues and that are often rooted in the culture. As the responsibilities and roles of government is being re-determined and boundaries between government and business becoming less clear, the study highlights that corporate leaders like Vodafone as well Sainsbury often face a daunting array of hardships. Kolk (2016) argued that in the new era of CSR, the demands of consumers, staffs, stakeholders, international as well as national regulators, NGOs, activities groups and watchdogs are curial to be satisfied. The recognized limitation and opportunities of CSR in well-known nations of transformation or Central European nation like the UK relate to brand image, job-market condition, legal background, economic stagnation or social decline. As per the challenges in CSR implementation, the leaders for the sustainable global community need to be developed. In regard to Vodafone Company, responsible leadership require to be related to the capability of sustaining and building relationships with every relevant, and it need not personalized, but socialized leaders. In contrast, Sainsbury to be the public organization in the UK pay attention to developing leaders who might be related in varying ways, listen and care for others as well as align varying values into familiar vision (About.sainsburys 2019). Therefore, meeting CSR implementation challenges need joint efforts of the international society and responsible leadership dedicated to ethics, values and diversity.
The overall discussion and arguments based on CSR activity have helped in the acknowledgement of active management organisations in different sectors. In other words, it can be affirmed that CSR is a value proposition in business that brings prosperity and success of organisations and provides benefits to the employees, customers and the community as well.