Shri Vile Parle Kelavani Mandal’s

Narsee Monjee College of Commerce & Economics

(Autonomous)

Bachelor of Management Studies (BMS) Programme

2020-21

FY BMS Semester II Division A

Course Name: PRINCIPLES OF BUSINESS MANAGEMENT
Project Title: CSR AND BEST MANAGEMENT PRACTICES ACROSS THE
WORLD

Submitted by:
Student’s Name SAP ID Roll No
PALAK MUCHHAL 45401200043 A053
 Declaration of Originality

I, hereby declare that this assignment titled ‘CSR and Best management practices

across india’ is entirely my own work and that any additional sources of
information have been duly cited.  
I hereby declare that any offline/online sources, published or unpublished, from
which we have quoted or drawn references have been referenced fully in
the bibliography list. I understand that failure to do so will lead to plagiarism and
severe disciplinary action will be initiated against us.  
I understand that I may be required to present the assignment and /or appear for
viva (Offline and/ or Online). I acknowledge it is my responsibility
to keep updated with the schedule of the presentation/ viva and I will ensure I
am available during the same.  

Student Name: Palak Muchhal

Sign:
 CSR and Best management practices
across the world.

WHAT IS CORPORATE SOCIAL RESPONSIBILITY?

Corporate Social Responsibility (CSR) is how companies manage their affairs to produce an
overall positive impact on the society. It covers sustainability, social impact and ethics about
core business – how companies make their money – not just add-on extras such as philanthropy...
The society is of key importance to these companies as they derive their major resources / inputs
from the society and hence it becomes their obligation to act towards the benefit of this very
society.

CSR has become an integral part of a company’s functioning and today it has become
indispensable that a firm demonstrates such responsibility. Although, earlier it was not a legal
compulsion that had to be walked through by any firm, but following it was considered as a good
practice for taking into account social and environmental issues.

COMPANIES ACT 2013

Seeing the importance of CSR, the new companies law, enacted on 29th Aug. 2013 had
introduced various new provisions. Among those, one is CSR i.e. Corporate Social
Responsibility. Sec. 135[8] of the Act provides obligation for every company having the net
worth of rupees five hundred crores or more, or turnover of rupees one thousand crores or more,
or net profit of rupees five crores or more during any financial year shall constitute a Corporate
Social Responsibility committee. As per the provision, the companies covered under it shall
spend at least two per cent of its average net profits made during the three immediately preceding
financial years, in pursuance of its Corporate Social Responsibility Policy.
There are various activities that have been provided in the Act, that the companies can undertake
in lieu of Corporate Social Responsibility. Companies can invest their profits in area such as
hunger, poverty, education, gender equality as part of any CSR compliance. Amid the COVID-
19 (coronavirus) outbreak, the Ministry of Corporate affairs has notified that companies’
expenditure to fight the pandemic will be considered valid under CSR activities. Funds may be
spent on various activities related to COVID-19 such as promotion of healthcare including
preventive healthcare and sanitation, and disaster management.

BENEFITS OF COMPLIANCE OF CSR TO COMPANIES

Compliance to CSR rules does not only benefit the society but is also crucial for the success of
an enterprise as it involves more customer engagement. It leads to strong brand positioning,
enhanced corporate status, market share/sales, increase in its ability to attract and retain
employees, appeal to investors and financial analysts. Customers are more inclined towards
companies that according to them are not only minting profits but are also making sure that they
are ethical and are benefitting the society. The university of Michigan had annulled its contract
with coca cola because of the environmental and labor issues in India. The fact that the
university agreed to revive its contractual relation with the company only if it made audits and
worked towards the benefit of the society made it very obvious that today the customers are
ready to compromise on the quality and price of the products and services being offered but not
on their ethical standards.

EXAMPLES OF COMPANIES THAT PRACTICE CSR

There are companies that are not one-dimensional and focus on creating an impact. The Tata
group, carry out CSR activities aimed at upliftment of the poor strata of the society and
empowerment of women, it provides academic scholarships and organizes awareness programs
for various health care services like immunization, AIDS etc., Mahindra &Mahindra’s field of
action is promoting education and to extend a helping hand to the economically backward classes
in that field. The DHL group as a part of their CSR activity aims to reduce all the logistics
related emission by the 2050,to achieve the goal of limiting global warming below 2 degrees as
prescribed in 2015 Paris Climate Conference and United Nation’s 2030 Agenda for Sustainable
Development.CSR has become an inseparable part of these companies as they themselves benefit
from it by creating a good brand image amongst the employees and their customers.

ISSUES HINDERING THE CORPORATE SOCIAL RESPONSIBILITY

Mandating CSR for businesses will not do any good unless there are proper mechanisms for its
enforcement. One of the main hindrances that stand in the way of effective CSR enforcement is
finding credible projects that the corporates can support.

Most companies tend to distribute their funds to projects, which are located close to where they
are based. This eventually leads to the industrialization of the areas that are already developed or
developing. All the resources get diverted from the underdeveloped and poorer sectors of the
nation that are in ardent need of these resources to the already developed sectors.

To avoid paying towards CSR many companies across industries have strategically formulated
ways that combine sustainability, their social obligation with their business ideas. The idea
behind this is not to accelerate the growth of the society but to simply increase their profit
margins. Hindustan Unilever was seen following the same strategy to deceive the customers.
They spent a lot of money in the underdeveloped rural areas to create awareness amongst them
about sanitation and the need of good hygiene. At face value this activity done by them would
constitute to be an act that complied with the CSR laws but in reality, it’s a façade. This society
outreach activity was considered as their normal business activity as it directly fetched them
monetary benefit . It was more of a marketing strategy, as the company primarily dealt in toiletry
and detergent, by creating awareness about sanitation they were indirectly creating demand for
their own product. The CSR rules of the Companies Act, 2013 would not take such activities
under the purview of CSR.
BEST MANAGEMENT PRACTICES ACROSS THE WORLD

The following analysis is based on a survey conducted by National Bureau of Economic

Research (Nicholas Bloom, Christos Genakos, Raffaella Sadun ,John Van Reenen)

Management practices is measured along three dimensions: (1) performance monitoring, (2)
target setting, and (3) incentives/people management. Within these three areas of management
“best” management practices are those that continuously collect and analyze performance
information, that set challenging and interlinked short and long-run targets, and that reward high
performers and retrain/ fire low performers.

U.S. management has by far the largest advantage in incentives (with Canada and Germany
following) and the second-largest advantage monitoring and target-setting (behind Sweden and
Japan, respectively). The data in the survey also described how management styles differ across
countries. In the United States, India, and China, managerial use of incentives is substantially
greater than use of monitoring and target-setting, while in Japan, Sweden, and Germany,
managerial use of monitoring and target setting far exceeds the use of incentives . One reason
for this kind of specialization could be that the lighter labor market regulations in the United
States make it easier to remove poor performers and to reward high performers.

Product market competition has a critical influence in increasing aggregate management quality.
Better managed firms appear to be rewarded more quickly with greater market share and the
worse managed forced to rapidly shrink and exit. This appears to have led American firms to
rapidly copy management best practices from around the world. For example, Most of the large
firms in US have adopted Japanese originated lean manufacturing technique.
REFERENCES

• Jafri, Qamar Ali. “Triumphs and Failures of Corporate Social Responsibility in India.”
iPleaders, https://blog.ipleaders.in/csr-triumphs-failures/.
• Hoffman, Andrew. “Coca-Cola Learns a Tough Lesson about Corporate Sustainability.”
Grist. Grist. https://grist.org/article/hoffman1/.
• “Five Years After CSR Became Mandatory, What Has It Really Achieved?” The Wire.
https://thewire.in/business/five-years-after-csr-became-mandatory-what-has-it-really-
achieved.
• “Management Practices Across Firms and Countries” by Nicholas Bloom, Christos Genakos,
Raffaella Sadun, and John Van Reenen.
https://www.hbs.edu/ris/Publication%20Files/Management_Practices_cd1ecd8a-6aeb-43e0-
9d3d-f912ed242bf9.pdf