Why is corporate social responsibility (CSR) important to business during the contemporary period?
The concept of corporate social responsibility has become topical during the current period but there is no one agreed definition about the whole concept (Knights and Willmott (eds.) 2007). CSR has been defined as a function that transcends but includes making profits, creating jobs and producing goods and services (Oketch 2005 as cited in Smith 2003). On the other hand, (Strydom 2004 p.11) concurs that “Social responsibility is the concept that maintains that businesses are part of the larger society in which they exist and are accountable to the society for their operations.” In other words, there is need for the organisations to strike a fine balance between the needs and interests of customers, needs of the environment and the need for businesses to realise their financial goals. This goes hand in hand with the concept of ethics, which is loosely defined as an attempt to differentiate between something good and bad.
Thus, “a wide range of behaviours are classified under CSR including cause-related marketing, sponsoring charitable events, making charitable donations, utilizing environmental initiatives and demonstrating a commitment to health and safety issues,” (Maignan & Ralston 2002 as cited in Smith 2003). First and foremost, it is every company’s obligation to know that it is operating within a certain social set up with its own norms and values that play a vital role in maintaining the fabric of that society. According to Guarnieri, R. & Kao, T. (2008) there is need to establish goodwill with the values and norms of any given society it would be operating in as a way of promoting mutual understanding. The success of any given company would be determined by its willingness to observe the social norms of the areas it would be operating in. The success of any product would therefore depend on the amount of respect that exists between the two. Pinault, whose firm PPR is the second-largest luxury goods conglomerate in the world has underscored to be proactive and take a leading role in putting measures that are meant to ensure a better environment that can sustain future development.
In this case it seems as if PPR is more concerned with financial success through its luxury brands, the reason why there is need to adopt CSR initiatives as a way of creating goodwill to the people and environment. Randall (1994 p.101) concurs that: “the better the relationship, the more trust that has been built up, the easier it will be to solve the difficult issues which may arise.” Therefore, observing the norms of the society is the foundation of establishing mutual understanding which may lead to the success of whatever product.
Corporate social responsibility also entails doing good things to the society in which it would be operating. For instance, the Company may take a leading role in promoting activities that promote a clean environment like using raw materials with less content of green house gases. This would benefit the members of the society health wise and also help build a clean environment.
Which strategic option can be taken by PPR with regards to CSR?
CSR and leadership development strategy is a very effective development as far as social and community involvement are involved in the operations of an organisation particularly those which specialize in manufacturing luxury brands. This helps create a culture of trust and integrity where the employees increasingly want to be part of an organisation that provides stronger values, ethics and even spirituality (Guarnieri, R. & Kao, T. 2008). Values and ethics are ought to be the guiding principles in the operations of any organisation. Accordingly, an IBM report (2008) posits to the effect that, “programs like the Global Citizens Portfolio help sustain the company's commitment to its employees and the communities in which they live and work, reinforce a culture of trust and responsibility, and ultimately contribute to business success.” Thus, incorporating CSR strategies in the operations of the organisation has many advantages such as creating mutual trust among the stakeholders of the Company which can be a source of competitive advantage as a result of the credibility that will be created in the process. As such, CSR strategy driven by leadership development is very effective in that it will stimulate positive employee performance while at the same time cultivating a sense of trust among the members of the community it will be operating in. This strategy can be very effective for PPR since there will be likely chances of appealing to the concerns of the stakeholders.
To what extent can the conflict between luxury branding and environmental concern be solved?
Concern for the environment is one very important aspect that is driven by the notion of sustainable development which posits to the effect that the activities of an organisation should not compromise the future generations to enjoy the same resources. Pinault concurs that, "Luxury is associated with pleasure, individualism, unreasonable enjoyment ... thoughtlessness and waste, while sustainable development is synonymous with ethics, collectivity and restraint." However, according to Porter, M.E. & Kramer, M.R. (2006), there are mainly three requisites that ought to be taken into consideration as far as CSR and environment are concerned. There is need to ensure that there is willingness among the stakeholders to pay, low transaction costs and there should also be social acceptability for the transactions made. In this particular scenario, it can be noted that the essence of business is not only to reap profits but to promote sustainable development that is meant to be beneficial to the future generations. Whilst it has been noted that Pinault's concern for humanity does not involve reduction of prices of the goods sold, there is need to create a fine balance between branding of the luxury products and the environmental concerns. This can be achieved through embarking on the use of more user friendly raw materials that do not cause severe damage to the environment while at the same time ensuring viability of the organisation.
A luxury brand denotes prestige and it must not be compromising on quality. Whilst the notion of CSR is gaining consideration through the need for environmental concerns, it is highly recommendable that Pinault should streamline the operations of the organisation in such a way that the products retain their value and luster while at the same time striving to minimise the impacts of environmental degradation through its activities. During the process, it would also advisable for the company to embark on projects that would in turn cultivate part of the benefits to the society in a bid to create goodwill on behalf of the communities.
References
Guarnieri, R. & Kao, T. (2008) Leadership and CSR – a Perfect Match, People &
Strategy, 2008, Vol. 31 Iss. 3, pp. 34-41.
Knights, D. and Willmott, H. (eds.) (2007) Introducing organisational behaviour & management, London: Thomson Learning 658.4 KNI
Porter, M.E. & Kramer, M.R. (2006) Strategy & Society, Harvard Business Review, Vol. 84 Iss. 12, pp. 78-92,
Smith, C. (2003) Corporate Social Responsibility: Whether or How? California Management Review, Vol. 45, Iss. 4, pp. 52-76
Accessed 26 November 2009
Randall G. (1994). Trade Marketing Strategies: The Partnership between manufacturers, brands and retailers. London. Butterworth-Heinemann.
Strydom J. (2004). Marketing. 3rd Edition. Cape Town. Juta & Co Ltd.
Bibliography
Burgess S.M. (1998). The New Marketing. Cape Town. Zebra Press.
Cant M.C. (2000). Marketing Management. 4th Edition. Cape Town. Juta.
Kotler P. (1999). Kotler on Marketing: How to create, win and dominate Markets. London. Free Press.
Robins S.P., Odendaal A.& Roodt G. (2001), Organisational Behaviour. CT. Pearson Education.
