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Contents

1.0 Discuss your understanding of business ethics and corporate social responsibility (CSR). Your answer should contain analysis of how these two concepts differ and relate to each other ........................................................................................................................................... 2 2.0 Critically analyse how business ethics is a critical factor of consideration in the global marketing context....................................................................................................................... 7 2.1 Introduction ...................................................................................................................... 7 2.2 Ethics and Employment ................................................................................................... 8 2.3 Ethics and Promotion ..................................................................................................... 10 2.4 Ethics and other Marketing Functions ........................................................................... 11 3.0 Evaluate to what extent CSR is considered to be a necessity to businesses operating in the global market. Your answer needs to show discussion on whether global firms can possibly align their engagement of CSR activities with their pursuit to fulfil its economic objectives. 13 3.1 Introduction .................................................................................................................... 13 3.2 Trends leading towards Necessity .................................................................................. 13 3.3Importance of Corporate Social Responsibility (CSR) ................................................... 16 3.4 Challenges and Issues of Corporate Social Responsibility ............................................ 17 3.5 Conclusion...................................................................................................................... 19 4.0 Report Conclusion ............................................................................................................ 19

1.0 Discuss your understanding of business ethics and corporate social responsibility (CSR). Your answer should contain analysis of how these two concepts differ and relate to each other

Business ethics can be defined as the application of general ethical principles and standards to business behaviour ( Thompson, Strickland and Gamble, 2005). In other words, business ethics can be described as a set of moral and social guidelines set by an organisation in order to perform their different activities and therefore it can be considered as a code of conduct. The behaviour of the organisation is dependent on what is considered to be right or wrong by the different stakeholders ( customers, suppliers, employeesetc), individuals and other related organisational bodies. This means that the ethics of a company might be different from another one because what is considered to be right or wrong within a specific company might be considered unethical by another company. These differences are due to the various socio-cultural factors ( beliefs, attitudes, values..etc) and background of an individual or a group of people. Previously, the firms focussed mostly on profit making at any cost even if it meant to sacrifice the society however, according to the US department of Commerce (2004), nowadays the trend is to maximise the profitability without having unwanted impact on the society. In other words, business organisations nowadays focus on both increasing their revenue but also how the wealth that is being distributed within the society it is evolving. As stated above, organisational ethics will always vary between companies and this is a main reason to which government are nowadays regulating the activities of the organisations. This is done by imposing certain laws and regulations such as having a minimum requirement for labour expenses, protection of intellectual properties and other eco-friendly laws and regulations which will reduce pollution and global warming ( C02 emission within Europe). The involvement of different governmental bodies meant that ethics nowadays hold an important place within an organisation. This resulted into having managers promoting ethical values of the company within the staff and other stakeholders. Furthermore, business ethics is considered to be beneficial as stated by Thompson et al (2005), there are two reasons why a companys strategy should be ethical: (1) because a strategy that is unethical in whole or in

part in morally wrong and reflects badly on the character of the company personnel involved and (2) because an ethical strategy is good business and in the self-interest of shareholders. Ferrell et al (2009) further added that the benefits of ethical behaviour are : higher profitability on the long term, lower stress and anxiety for not only managers but employees also, stronger relationship between the shareholders and finally an enhanced leadership. The two group of researchers clearly stated that business ethics not only enhance the profitability of the organisation but also its reputation within the society. Moreover, the reduction of stress and anxiety and having a stronger relationship between supplier distributorsetc might contribute into having a better performance of the organisation. However theoretically implementing an ethical strategy might be considered to be an easy job but however operationally, it is a much more complex matter. Employees and other individuals will daily face unethical activities such as corruption ( which might not be considered unethical in some countries :Russia, Cuba and China), dishonesty, swindling, copy of intellectual property among others. In some cases, the employee or manager might have to cave in to some demands from other individuals which might be crucial into concluding a deal. Unethical behaviours and activities might harm the companys reputation and its well being itself ( for instance Bernard Madoffs $50 Billion Ponzi scheme, forbes,2012). Furthermore, recently the world observed a global economic crisis whereby one of the main contributors (Lehman brothers) were involved in unethical strategies which is considered to be one of the main reason of that failure (lin,2009). In order to avoid these unethical behaviours and activities, organisations have set up a code of conduct or code of ethics whereby a documented copy about the different formal and professional rules, standards and regulations are distributed to the employees (Ferrell et al, 2009). To conclude, Business ethics in companies are the set of standards that have been set by the society ( that is what is considered good or evil and right and wrong) to which the company and its employees abide in order to not hurt stakeholders. The fact that the set of standards have been moulded by mostly external factors differentiate the term business ethics from Corporate Social Responsibility (CSR).

Ethics, morality and law are three terms that are interrelated to each other so it is vital to distinguish these terms with the goal of avoiding confusion. Ethics and morality are often considered to be the same thing which however have different implications. Morality can be

defined as an individual or group of individuals perception of what is right or wrong while ethics refers to putting these perception into action (Desnoyers, 2010). In other words, morality is the different principles that were set by the values, beliefs and other socio cultural factors while ethics is applying these principles and assess them in order to define whether the activities made by other individuals are right or wrong. Morality and ethics are closely related but however in certain cases, organisations might make decisions that are perceived to be moral but is viewed as the society to be unethical. One such example is the difference in price between a cold soft drink and one of the same brand in the normal temperature whereby certain retailers sell the cold one 20 cents more than the normal temperature one. Business ethics and business law are two interrelated terms that make it more complex to differentiate them. Law can be defined as law can be defined as enforced rules devised by the State to govern the behaviour of its members for the mutual benefits of all ( Dr Lung, 2003). In the business context, law can therefore be describes as the set of compulsory rules and regulations that an organisation should follow while conducting its activities. Therefore, it can be concluded that law will dictate the ethical code of organisation thus making business ethics to be an extensive part of the business legal system. However, there are several loopholes in the legal system in most countries whereby some ethical activities are prohibited while unethical ones are left untouched thus making it paradoxical. One such example is the Lehman brothers unethical business investment activities which led to the current global economic crisis whereby they did not break any legislation while operating. Corporate Social Responsibility (CSR) is a term that is often considered to be similar as Business ethics. However, CSR and Business ethic are two different business terms. The definition of CSR is an unclear one as different researchers have provided different explanation of CSR. According to Baker (2004), CSR can be defined as how companies manage the business processes to produce an overall positive impact on society. Lord Holmes and Richard Watts (Baker, 2004) defined CSR as the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large. The European Union further described the term CSR as A concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment. A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis (Baker, 2004).

Using the above three definitions about CSR, it can be simply defined as voluntary action made by companies for the well being of the society and which exceeds the set of regulations and rules set by the society, that is, CSR is much more than business ethics. Ferrell et al (2009) differentiate CSR and Business ethics by stating that CSR is associated with the effect of the global activities of a firm within its society while business ethics mainly deals with the decision making and strategy chosen by the management of the company and how it is regarded by the society. The extensiveness of the term CSR can further be established by the citation of Staples (2004) whereby CSR is regarded as the firms obligation to care for and develop social welfare via its business activities ( Turban and Greening, 1997), guaranteeing equitable benefits for stakeholders ( Li et al, 2010). Furthermore, CSR differentiates itself from business ethics as the CSR programme in different companies would not be the same as these voluntary actions of organisations will vary due to different policies or beliefs that the top management of the company have whilst business ethics are normally more-or-less similar between organisations evolving within the same environment as most of the codes of conduct are based on the society regulations and rules. This implies that CSR are not considered to be vital or being a priority for organisations while business ethics is considered to be more important. Therefore, we can consider that for a company to have a CSR programme, they must first be ethical as illustrated by Dr Carrolls pyramid of social responsibility.

Figure 1 : Pyramid of Social Responsibility (source : Caroll,1996)

AB Carrolls pyramid of social responsibility is made up of four levels: economic responsibilities, legal responsibilities, ethical responsibilities and finally philanthropic responsibilities. In other words, in our modern era the first three layers of this model deal mainly with rules, regulations and benefits that are imposed by the society while the philanthropic one deals mainly with the different voluntary action made by the organisation. Companies should therefore satisfy one level first before contemplating the other one. For instance a new organisation or a small business company will tend to make profit while operating legally first before engaging themselves in business ethics and finally in CSR programs. Companies that are consistent in the two first level will then take the initiative of introducing a professional code of conduct before finally introducing CSR programs. However there is now a new trend whereby companies are now implementing CSR as short to medium term marketing tool in order to increase their revenue and enhance their reputation. One such example is McDonalds CSR programs whereby a certain percentage of profit is allocated to non-favoured children consisting mostly of orphans and poor children. However even if this programme of The fast food chain can be considered to be applaud-able, there is also its dark

side whereby they are enhancing children to buy junk foods which in turn causing obesity thus it can be said that it is an unethical behaviour by the organisation. The previous example shows that companies do not really need to be ethical to have a CSR program. Moreover, there are also companies that build their business model around CSR such as Unilever, Bosch and Tom shoes (Forbes, 2012). In conclusion, CSR and business ethics are terms that are often used and considered to be the same in the business environment even though that they have different features and roles. However, these terms should in no case be neglected as they have a significant impact on the company in terms of reputation, profitability , performance (and so on) both on the long term and short term basis. It is vital to understand and differentiate these terms in order to be able to implement both terms in an organisation which might result into having a win-win situation.

2.0 Critically analyse how business ethics is a critical factor of consideration in the global marketing context.

2.1 Introduction
Business ethics is a term that has been widely used in the business environment and as a result of globalisation, this term is becoming a crucial one whereby companies involved in different environment have to manage different ethical issues and challenges. According to Yucel et al (2009), as companies move into global marketing , the number of ethical issues tends to rise which is mainly due to the cross cultural conditions present whereby firms faced more dilemmas regarding ethics and as a results they have to consider multiple issues before making a decision on a global marketing context. In other words, due to the difference between ethical principles between the various countries involved, the company must take into consideration all these factors before implementing a global marketing plan that would not damage the company interests in any of the host nations involved. Due to the variety in terms of socio-cultural factors such as norms, beliefs, traditions, religion, family class background and other factors, there is no global ethical standards, that is, there is a difference in what is perceived to be an ethical operation between countries or in

some cases between different communities in a particular country. This lead to multi-national organisation facing a higher range of ethical issues compared to regional and local companies that is some business activities in one country can be considered as being unethical in another country. for instance, giving a gift in a country such as Russia and China is legal and common while in western countries (UK,US and even Mauritius), it is considered as bribery thus making it not only unethical but also illegal. Another example is the promotion and advertisement of alcoholic beverages which in countries like the US and united Kingdom is perceived to be ethical while in developing countries such as India, China and other Shari-a governed countries (Like KSA, Malaysia and UAE), this activity is considered to be immoral and unethical. Even though ethics in global marketing term is a vast variety of activities, the researcher will focus on two vital part : Job practices from Multinational companies and Promotion and will provide brief explanation and description about other different global marketing activities.

2.2 Ethics and Employment


Throughout the evolution of business as we know it, companies have often tried to innovate in order to enhance their profitability and one of them is to minimise their labour cost by having subsidiaries (Volkswagen in China) or manufacturing contractors (foxconn representing apple in china and other Vietnamese companies manufacturing Nike and Addidas products) in countries which are either developing or facing employment issues. This lead to the introduction of sweat factory whereby individuals are employed to work under horrendous working conditions on a long haul basis while they are receiving a slightly over averaged salary than other local companies. However, it should be noted that the salary in these countries is much lower that if it was to be done in the home country. Multi-National Organisations have been using or contracting sweat shops due to two main reasons: the first one is that the labour in these countries are much more cheaper than in the home country and secondly, the different regulations and other trade unions are often absent in these countries. For instance, in China, several of sweat factories are operating under inhumane conditions. One such case is Foxconn ( Apples manufacturing contractor) whereby the employees are working in conditions such as overpopulation, absence of security while using hazardous materials, longer shift duration (up to 18 hours in some cases) and several other dangerous circumstances. In other words, the employers are benefiting at the detriment of the staff in these host countries. From this point of view, it can be considered

that these activities from the sweat factories are unethical but from the company or even the host country it might just be a normal operations. Therefore due to the difference in what is perceived to be (un)ethical, issues about sweat factories are nowadays rising. This statement can be further backed by that of Delios et al (2004) whereby Many ethical issued regarding sweatshops come from a difference of what is acceptable in the host country and in the home country. In other words, the home country of the MNC is most likely to consider these sweat shops or factories to be operating in an unethical manner. MNCs and host country however view the practice of sweat factories as to be not only legitimate but also ethical. Managers of these firms alongside other stakeholders in the host country consider that the presence or use of sweat factories are beneficial for both of the MNC and the society as they help to solve unemployment issues in the host countries, provide opportunities to employees and also the country will benefit from the foreign investment which supposedly with help them into developing more rapidly. This resulted into having the global firm to allocate the production of their products or in some cases services ( BPOs and call centres in India) to manufacturing contractor or other firms which will result into a win-win situation for both firms. However providing these contractors the responsibility of employing staff and producing their products have often been at some expenses other that economic one. For instance, Foxconn has been employing individuals under horrendous conditions and since the past few years, this move has back fired as there is now much criticism about the operations held by Foxconn specially from the western hemisphere who is one of the major market share of Apples products. Furthermore , another case of unethical behaviour from MNCs and their contractors in the Nikes scandal in the 90s whereby the firm was not only employing individuals under severe conditions but also was involved in the scandal of child labour. Several of the suppliers of the company had a great share of children as their workforce whereby they were forced to work for several long hours and was given a minimal salary with the goal of reducing labour cost and improving profitability. In both cases, the suppliers and the manufacturing companies have been ripped by economist, NGOs and the media but the one who suffered the most is the Multinational companies themselves. For instance, due to the excessive child labour use and sweat shops, Nike has recently been facing a boycott campaign from different NGOs (boycott-nike.8m /,
2008). in order to avoid a reputation of this scenario, multi- national companies are nowadays

controlling their business activities and in most cases they are trying to make it ethically enough to please all the parties involved.

However, not all MNCs are trying to regulate their operations and instead, they keep in pressurising suppliers to keep the labour and production cost low else they would delocalised to cheaper places. This implies that suppliers will have to continue using these sweat factories and other methods in terms of employment in order to meet these requirements set by the different MNCs. Furthermore, these measures are taken by the suppliers to cut their cost in terms of raw materials as quality wise it is not an option to move towards a cheaper and less reliable raw input. To conclude on this point, it can be said that the bargaining power of the MNCs being high influence the labour and their rights in these host countries. On the bright side, there is nowadays a lobby being set up by various institution and NGOs in order to monitor and guarantee that manufactures should nowadays abide to a certain code of conduct ( set by international Labour Organisation) but however reticent from host nations and also suppliers act as the barrier to that fight. Furthermore, determining if a practice is ethical or not is another issue as there is still this absence of a universal standard in terms of ethics.

2.3 Ethics and Promotion


Promotion and ethics is one of the main source of concern in global marketing due to the absence of a universal code of conduct and global regulations about how to perform that particular functions. Marketers often face ethical issues with planning their promotion process and one of them is the use of promotion to target children and teenagers whereby several precedents showed that much criticism on that particular activity. Promoting products while targeting children is an activity that is considered to be unethical in most cases as these children, being nave and vulnerable are often in danger of being influenced to buy or look for the products being promoted. Beder (1998) stated that Children do not really understand the main intention of advertisements whether on TV, internet or anywhere else. However he further added that advertising to children below the age of eight or nine, it is perceived to be unethical. This is because till that particular age children cannot really take a proper decision that whether a product being promoted is desirable or not thus with intensive promotion from marketers will alter the need or want of the young children who instead of being able to identify that the product will suit his desire, the child will believe that they should buy it. In other words, children are manipulated from these promotion and advertising campaigns resulting into expressing buying request behaviour ( Bedder, 1998) and therefore buying a product without knowing if it is required or not. The

fact that children are being misguided and mentally forced make this process to be unethical. Another ethical issue in promotion is the use of sex, alcohol and other psychological factors to target teenagers. Teenagers are in a phase whereby they are looking for an identity and the use of their role models (actors, singer..etc) to promote a certain product via advertisement will influence the teenagers to buy the product or services in order to be like these stars thus resulting them in to buying products that is some cases might be unhealthy and dangerous. One such example is the advertisement concerning beers such as Kingfisher or Heineken whereby stars are involved in these advertisement. Heineken for instance uses football stars such as Patrick Viera( former French and Arsenal) , Gigi Buffon( Italian captain) and Ruud van Nistelroy (former MUFC star) to act in their advertisement whereby they are enjoying beers while watching a football game. These individual being world stars and in many cases are icons and models, teenagers will often fall into this trap whereby they will try the beer to be like these stars. Durex and Axe are two companies that uses sex appeal as a tool in their promotion whereby in that case, it is either young adults or in the case of Durex in France where teenagers themselves acted in these advertisement which was retransmitted on television. However, it should be noted that these advertisement were mostly present in western country whereby it was considered to be suitable for general public view. In other words, the set of standards in a certain community will in a way dictate if the promotion is ethical or not but in recent times, it has been noted that targeting children and teenagers are considered to be unethical as they give rise to problems such as childhood obesity, premature sex life and alcoholism. A new trend that is now effective is the use of interactive adds on the internet or in free games ( for mobile phones and PS3) whereby the pop up adds make it attractive enough to misguide the children and youngsters. One such case is a seven year old who thanks to a Facebook app bought a power rangers at 750,000 on eBay after clicking a pop-up add. Therefore, in order to avoid any damage towards the youngster health and necessity, global marketers should therefore use ethics as a crucial factor in promotion and advertising.

2.4 Ethics and other Marketing Functions


Ethics in marketing is also present or required at several level other that promotion and supply chain whereby marketers have to consider various issues in other marketing activities such as the 4 Ps. In order to help marketers and reduce conflicts, the American Marketing

Association has set up a code of conduct whereby the different areas of ethical responsibilities of the marketers were set up and the table below provides some of these responsibilities:

Marketing function Promotion Price Product

Responsibilities Avoid misleading and fake marketing Must not use manipulative and misleading sales method Must not practice price fixing and over-pricing Must fully disclose full price of the product Must not have any hidden charges or cost Providing sufficient information of the product Must reveal all risks and other health hazard of product use Must recognise any additional cost including features

Place

Must not pressurise resellers on how to manage the product or services Must not use any sort of force or blackmailing within the distribution channel Must not manipulate product availability

Table 1: Responsibilities of marketers (source AMA,2003) Even if the different responsibilities stated above seems to be easy to put into practice, it has been noted that a large amount number of these firms have been ignoring these responsibilities due to the variety in socio-cultural factors (moral standards) and also other external factors such as government regulations, legal issues and lobbying from so called pricing regulators.

3.0 Evaluate to what extent CSR is considered to be a necessity to businesses operating in the global market. Your answer needs to show discussion on whether global firms can possibly align their engagement of CSR activities with their pursuit to fulfil its economic objectives.

3.1 Introduction
Corporate social responsibility (CSR) is nowadays a term widely used in the business sector and throughout the past 50 years, it has grown in importance within the business and global environment. The evolution of CSR during the past half decade itself shows the growing importance of the term. Social Responsibility (SR) is considered by several academicians to be the beginning of the term CSR. It was introduced by Howard Bowen in 1953 which defined it as the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society (Carroll, 1999). In the 1960s, other academicians tried to formalise the definition of the CSR such as Davis, Walton and McGuire who all tried to standardised the term but was in vain. However, these individuals successfully described the different aspects of the term thus showing an increase interest in the social responsibility. The two following decades also followed the trend whereby other academicians defined the term CSR in various ways with most of them having the same background as those in the sixties. At the end of the eighties and beginning of 90s showed that CSR became an important part of the business industry (Carroll, 1999) and in our modern era it is fast becoming a necessity due to various factors.

3.2 Trends leading towards Necessity


When CSR was first introduced, it was meant to be a voluntary activity whereby companies would provide fund or activities for the well-being of the society on their own terms. CSR has often been an optional activity until the past few years whereby the importance having a CSR programme rose up. Following a study and some surveys conducted by Grant Thornton (2008) , there are several factors or trends that lead CSR towards a necessity.

1. Changing Social expectation- following the recent global economic crisis, consumers and the society on a whole are nowadays expecting more from organisations and brand whose products and services are being purchased. This sense increased rapidly following the different scandals that lead to the recession. This trend has been more and more present in the recent years and TrendWatching.com (2012), even named this new society as Generation-G where G is meant for Generosity not for greed. The new generation itself is a result from several other factors such as recession which led to customers being disgusted by greedy corporate bodies who either had unethical behaviours that led to recession or simply by their lack of attention and care towards the society and other stakeholders. Another factor that contributed to the rise of Generation G is the crave of having institutions that care. Following the economic crisis which resulted into accrued debts, unemployment and challenging times ahead, individuals are now looking for companies that would help into not only saving their jobs and savings but also those of other individuals thus leading a sense of sympathy, empathy and finally generosity (trendwatching.com, 2012). The final factor leading to generation G is giving is now considered to be the taking while sharing is the new giving which in other words, both rich and common individuals have now adopted a new long-term norm of sharing whereby these individuals believe that while sharing, they will be able to reduce the sufferings of the society. Generation G can therefore be described as a generation that captures the growing importance of generosity as a leading societal and business mindset (trendwatching, 2012) thus using it against the different factors such as disgust towards greed and longings for institutions that care in order to make the world a better place. The change in the social expectation is nowadays one of the reason for which companies are introducing different CSR programmes in order to meet the requirement set by this generation.

2. Increasing affluence- following changes in the economic and technological landscape, customers are nowadays more well-off and more powerful. Customers can nowadays choose between a wider variety of products and therefore they can afford to pick and choose the products they buy (EIOD&ECRG,2010).

3. Globalisation-

following

considerable

evolution

on

technology alongside

the

deregulations set by several Foreign business friendly countries, the world can now be considered as a global village whereby business activities can be conducted in different countries. Globalisation led to the liberalisation of economies throughout the world which led to having more competitive business environments. Therefore, this trend led to a higher threat of new entry and also intensified competitions between established companies. CSR is this case can be used as a tool in both the marketing sector but also as a competitive edge. For instance, marketing will be useful in countries or societies that need some help from the different stakeholders while it can also be used as business model in pro-generation G societies. Furthermore, evolution in technology and communication led to a growth in the influence of media (EIOD & ECRG,2010) whereby medias will immediately bring any mistakes of companies to the attention of the public. Furthermore, the internet facilitates the communication between among like-minded groups and consumers- empowering them to spread their message, that is, they are given the means to coordinate collective action that is product boycott (EIOD & ECRG, 2010). In other words, the advances in technology and media means that if the wrong spot light is set on the company, it is likely to suffer thus making it vital for organisations more specifically MNEs to have a CSR programme to show that they care for everyone and that they are willing to help.

These three trends combined with the rising importance of brand and brand value to corporate success (particularly lifestyle brands) to produce a shift in the relationship between corporation and all stakeholders and more particularly between the organisation and the consumers. (EIOD&ECRG,2010). CSR is becoming more and more important specifically in a globalising world as brands or image are now built on perception ,ideals and concepts that promote higher values. The reputation and the brandings of an organisation is one of the driving factors of an organisation in terms of market share as consumers tend to buy from companies they trust. The combination of the different trends and brand value and image resulted in having individual better informed about the products and the manufacturer and also help into making them to be more empowered to put their beliefs in action. Therefore, to conclude we can state that CSR is fast becoming a necessity in the global business environment.

3.3Importance of Corporate Social Responsibility (CSR)


Corporate Social Responsibility is fast becoming a vital aspect for any organisation and its importance in global market is also soaring as the CSR program is not only being used to help the society but also help the company into surviving. Some of the significance of CSR in modern and global business activities are listed below: 1. Maintaining Relationship- in our modern era trust and relationship are two factors that are considered to be important by different stakeholders. Customers will want to buy products or services from companies that they trust, suppliers and distributors want to be business partners whereby they can rely on each other, the staff in the company themselves want to work under a brand or a company that is respected and finally NGOs are willing to work with companies that want to provide feasible solutions for problems or issues influencing the society. If the company set up a CSR programme that satisfies the need of the different stakeholders, investors (which is one of the main stakeholder) and the company itself will benefit the most of it. Having a good CSR set up, the company will be able to have a wider scope of customers which results into an improved profitability and finally a better image and reputation of the company.

2. Making the society a better place- it is logic to state that each stakeholder of an industry or a company will have different issues or perceptions on the society. For instance, a supplier will not have the same thought on the different problems as let say a customer. This will rise in conflicting interest between the stake holders whereby some might believe one activity is not desired and vice versa. however on the bright side, the stakeholders will be providing a different opinions and values which will be helpful while making decisions and also to have an efficient CSR programme which will influence all the aspects of the society thus making it a better place. Having an efficient CSR will not only reduce the pain the society but also improve the global performance of the

organisations by helping to focus on areas that are more important thus making most of the stakeholders happy. This in turn will result into the benefits stated in part 1 alongside with giving the company a competitive edge.

3. Success and competitive advantage- Using CSR as a business strategy is nowadays being more and more common such as Unilever and Tom shoes and if the CSR strategy has been well implemented it can be used as a success factor. In our modern era and due to various factors, business operations are often becoming a fight for survival whereby other rival firms and new entrants have now the capability to enter new market thus making life to be more competitive. Using the CSR strategy, companies will be able to have a competitive edge on rivals due to the fact that social responsibility is nowadays perceived to be important by the society. Furthermore, CSR will help the organisation into having a corporate strategy around which the company can rally but also give meaning and direction to day-to-day operations

3.4 Challenges and Issues of Corporate Social Responsibility


Even though CSR will bring the companies several benefits, there will be numerous challenges and issues that companies will face in order for it to operate as wished or hoped by the management. These issues and challenges will be present throughout the operations specially if the company is evolving on a global market or in a host country.

1. Transparency issues- the lack of transparency is one of the issues that companies need to focus on when implementing CSR in the different subsidiaries of the organisation. Due to the fact that CSR is a voluntary activity, it is difficult to completely regulate what is being done the organisation, how the fund that are supposed to be for the CSR fund are used and what the impact of the activities held have in the society. Furthermore in cases whereby multi-national companies conducting CSR in other countries which would be mostly developing countries, there might be cases of misuse of the fund whereby the absence of regulatory body or other audit firm will not be able to confirm whether or not the fund has been properly used or if the programme itself is operational. For instance, in India several companies have complained about the lack of transparency from implementing agencies such as their unwillingness to disclose information on their programs and utilization of firms ( Berad,2011). 2. Lack of knowledge CSR and business ethics are terms that are widely used within most of the developed countries whereby the different importance and implications of these terms are moreor-less known by the general population but however in developing countries there is a tendency to have a lack of participation in the CSR program due to the lack of understanding about the term itself. This result into having an absence of different infrastructures and non governmental bodies into participating in the programme thus making it to be useless.

3. Absence of infrastructure and NGOs- even if in developing countries, global companies are likely not face this challenge, they will face them in other countries where they are operating. For instance, an American company will not face a lack of infrastructure or NGOs in the US whereas if they want to implement a CSR in a country such as China or even India, they might face this challenge. The absence of specialised individuals and also well organised NGOs in the country or area whereby the company want to implement its problem will reduce the probability of have an efficient CSR implementation. This will results into having a programme consuming the resources of the organisation without benefiting for neither the society nor the company. Furthermore, if the willingness of the management is to only help the society, they will have first to bear several cost in order to set up the different infrastructure and also put in a committee that would decide on how to tackle the different challenges in that particular environment.

4. Lack of consensus and CSR guidelines- an issue which affect both developed and developing countries is the fact that there are several cases of duplication of CSR programme and activities. This is due to absence of collaboration between firms whereby instead of each of them help different communities or sector they might both help the same one thus resulting into having firms to competitive spirits instead of collaborating to help a wider scope in the society they are involved ( Berad,2011).

Alongside with the different issues stated above, there will be also other common challenges which are set by both external and internal factors. Regulating bodies, government, technology advancement within a specific society will have a direct impact on the CSR programme while internal factors such as values, beliefs, culture and their differences between members of the companies based in the host country and the home country might also be an issue specially if money is the priority in a developing country.

3.5 Conclusion
CSR is increasingly becoming a necessity in the global business environment more specially in the developed countries but it might not be the same in developing countries. In Developed countries, organisation are often using CSR not because they want to save the world but to save themselves. For instance, Organisations like Unilever and Bosch have built their latest business model based on CSR while other organisations such as McDonald have been using CSR as a marketing tool. However in developing countries, CSR might still be in its previous state that is only a mere voluntary action. This is because in these countries, the need for money and other resources are far more important than having to save the society, in countries such as China and India, CSR are in no case a necessity and most companies that are involved in that particular field are using it to promote their image and brand in the media without having any effect on their activities. To conclude, the researcher is of the same opinion of that of Grantthornton group of researchers that CSR is fast becoming a necessity and can no more be considered as a choice even though that several countries are still some way behind that phase.

4.0 Report Conclusion


Business ethics and CSR are two terms that are widely used and often considered to be the same. In this report we have attempted to differentiate these terms whereby to summarise the difference of these two terms can be described as ethic being more or less imposed by the society while CSR is a voluntary action. In part two of this report, the importance of business ethics in global marketing has been discussed whereby the conclusion is that ethics nowadays has a crucial role in the marketing society even if there are several cases where companies ignore this terms in their campaigns. The final part dealt with the assessment of CSR as a necessity in the business specially in the global business. In this part, it was found that business ethics is nowadays becoming more and more a necessity as it is being used as a business model in certain developed countries whereas in developing country its importance is rising thus we can conclude that CSR is fast becoming a necessity and no more a choice.

5.0 References

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