HOCHIMINH CITY OPEN UNIVERSITY

CORPORATE SOCIAL
RESPONSIBILTY

VÂN THỊ HỒNG LOAN

M A , D r, U n i S A

Head
School of Advanced Study
HCMCOU

CHAPTER 3

CSR
WHOSE
RESPONSIBILITY ?

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WHOSE RESPONSIBILITY?

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CONTENT CHAPTER 3

•  CSR: a corporate responsibility?

•  CSR: a stakeholder responsibility?
•  The Walmart paradox:
•  + Prices
•  + Suppliers
•  + Jobs
•  + Competitors
•  + Quality and Variety

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 CSR
A CORPORATE
RESPONSIBILITY?

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AGRUMENTS

•  CSR community expects too much

of firms; that firms react to change
better than they initiate change?
•  Expectation of society or of the
stakeholders of a company?
•  The stakeholders of a company
support it to practice CSR?

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ARGUMENTS

•  If company provides services but does

not based on customers’ expectation à
failed
•  If company practices CSR, do customers
ready to pay more?
•  If customers do not want to pay more
(because of CSR), society wants
company to spend this fee?

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CSR is an essential?

•  The main purpose of company is to seek

profits as much as possible.
•  However, it needs to follow current laws and
social ethics.
•  Need to obey fair competition.
•  Don’t cheat.
•  à belongs to components of CSR pyramid:
economics, law and ethics.

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 CSR
STAKEHOLDERS
RESPONSIBILITY?

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AGRUMENTS

•  Do stakeholders such as investors, policy

makers need to help business companies to
practice CSR?
•  Do customers ask companies to pay more for
their employees?
•  Does a company wants foreign suppliers to
commit to obey ethical responsibilities in order
to ensure CSR in the company’s supply chain?

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ARGUMENTS

•  Do stakeholders must have

responsibilities to contribute to their
society?
•  Do policy makers focus more on lending
programs for business in banks?
•  Do customers want companies to do
CSR in adversting products for children
on TV?

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ARGUMENTS

•  If it needs to avoid crisis, companies need to

practice CSR?
•  If a society decides no job for citizens in other
countries, companies in that society must pay
more for employees?
•  CSR is not to this group or others, we need to
know that we live in a house (our earth):
•  “We live in the house we all build”

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CSR: STAKEHOLDERS create pressure

•  If customers don’t buy products/services

because the company breaks the law in
production processà the company has two
ways: adaptation or bankrupt.
•  àStakeholders (customers) affect the
practice of CSR by company.
•  Concept: Corporate Stakeholder
Responsibility: in checking the corporate
responsibilities.

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CSR: STAKEHOLDERS create pressure

•  Business companies often meet the

requirements of the market but don’t
predict trends/changes of customers.
•  Governments make laws à suppliers
choose a company follows the laws;
customers recognize it because of the
benefits of society à Companies must
change because the need of customers à
Stakeholders àCSR

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CSR: aim for stakeholders

•  Ideal: get economic aim and bring

benefits for society.
•  Company follow economic values but
must provide social valuesà
Stakeholders outside companies, ex.
Communityà need to provide jobs/ safe
products.

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CSR: stakeholders promote actively

•  External: customers, investors,
environmental activists
•  Internal: owners, managers, employees.
•  Message: the best way is to get high
profits and satisfy expectations of
different stakeholders.
•  Media (internet, Social media):
Stakeholders have more chance to
oversee companies.

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CSR: honest stakeholders

•  Stakeholders don’t like unethical behaviors

But is not clear them in practice.
•  A research in USA, published in Journal of
Industrial Ecology: only 10-12% customers
bought products relating to environments.
•  A research by Brandweek: in the total of
customers said interesting in environment,
more than ½ of this don’t spell out a ‘green’
products.

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CSR: honest stakeholders

•  Need to educate stakeholders?

•  Put CSR subject into schools?
•  The United Nation six Principles of
Responsible Management Education
•  Accepted by 500 business schools in the
world.
•  Groups present assignments

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QUESTIONS ABOUT WALMART (P. 102…)

•  What do stakeholders complain about

Walmart?
•  Why have a lot of critics but sales still
increase?
•  Walmart is a good or bad for society?

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WALMART PROFILE

•  Established in 1962
•  Serves >200 million customers/week.
•  90% of all American live within 15 miles of a
Walmart.
•  In 2011, Walmart registered $419 billion in
sales.
•  If a country, would be 25th largest economy in
the world.
•  More than 900 million square feet of retail
space.
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WALMART PROFILE

•  China’s exports to it accounted for 11%

of the growth of the total US trade deficit
with China between 2001-2006.
•  In 2010, CEO Michael Duke’s annual
salary of $35 million (one hour by
him=his employees earned in an entire
year working: $8.75/h)
•  In 2000, Walmart was sued 4851
timesà2 times/h

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WALMART

à Successful and have influences on.

•  However, in a survey: Some stakeholders
don’t like this:
•  + Too powerful
•  + The Wal- Martization of America
•  + good for America?

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WALMART: COMPLAINTS

•  Suppliers: cost reduction

•  Regulators: low wages and benefits the
firm pays its employees.
•  The public: employs Indian, Mexico
employees.
•  -> view of the firm different views of
stakeholders à argue about the
success of Walmart

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WALMART: REASON FOR SUCCESS

•  Now: Walmart operates more than 10300

stores in 27 countries around the world.
•  Q. Why having many critics but sales still
increase?
•  Advantages: satisfy customers: reasonable
quality at low prices.
•  Achieves: cost savingà low prices
•  Howeverà affect other stakeholders
•  Low cost: employ labor with low salary/
foreignersà impact on US employees’ salary.
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POTENTIAL DANGERS FOR WALMART

•  What if consumers begin to worry about the

impact the company is having on the economy
and society more that they welcome the lower
prices the company brings?
•  Communities that worry about a megastore’s
impact on rural downtowns have already
restricted Walmart’s growth?
•  Will employees continue to apply for positions
at Walmart’s if better paid alternatives exists?

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POTENTIAL DANGERS FOR WALMART

•  At the company continues to expand, will the
governments begin to fear the monopolistic
characteristics of such a huge market influence?
•  Suppliers are stakeholders who both relish
Walmart’s market scale and scope, yet fear their
pricing pressures.
•  How will these various stakeholders reactions
affect Walmart’s business strategy over the long
term?
•  What is the outlook for the company from a CSR
perspective?

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 Walmart: Good for society?

§ Yes § No
§ Reasonable quality and § Loss of domestic jobs
low prices for consumers to overseas suppliers.
§ Good jobs in § Strong opposition
economically deprived against collective
regions presentation of
§ Wide rang of products workforce.
§ Relatively low
employee wages and
benefits

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Walmart: Good for society?

§ Yes § No
§ Redefinition of supply § Competitors (and
chain management sometimes suppliers) go
through technological out of business,
efficiencies. reducing competition
§ Increased productivity and, ultimately,
consumer choice
§ Litigation against the
company brought by
many stakeholder
group.

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IN PRACTICE

•  Slogan: “Save money. Live better”

•  Soft priceà reduce costà
•  Workers at Walmart, suppliers,
competitors à are affected because of
this--low salary
•  Low salary & welfare ßcritics, ask for
change (union, environmental people,
community, policy markers, educators)

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CSR

•  CSR needs to apply into business

activities (strategy & daily)
•  Walmart refuses to do CSR?
•  2005: adopted sustainability as a
corporate strategy.
•  Now: considered by many to be a market
leader in relation to environmental and
sustainability issues.

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CSR

•  Now works with the Environmental Defense

Fund and other environmental
organizations.
•  $35 million campaign in partnership with
The National Fish & Wildlife Foundation, 10
years, use lands to protect sensitive
habitats.
•  Hurricane Katrina in New Orleans, 8/2005:
the first company to help victims.

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CSR

•  Changes in the strategy of Walmart:

•  (1) Identify lacks in value chain/ lacks the
company used to reduce cost à help for
sustainability
•  (2) Analyze critiques of stakeholders about
Walmart which badly impacts on world and
society.
•  + Company organized a conference to listen
stakeholders (customers, union, government,
non-profit organizations,,…),ßPR

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CSR

•  Do environmental campaigns.
•  Set 3 aims for sustainability and
protecting environment:
•  + to be supplied 100% by renewable
energy
•  + to create zero waste
•  + to sell products that sustain our
resources and environment.

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CSR

•  Initial steps:
•  Reducing greenhouse gases at our existing
stores, by 20% over the next 7 years.
•  Reducing our solid waste from US stores by
25% in the next 3 years.
•  Working with suppliers to create less
packaging overall, increase product packaging
recycling and increase use of post-consumer
material.

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CSR

•  Walmart’s consumers make short term

purchase decisions based on price, with less
emphasis placed on the longer term, broader
societal consequences of those decisions.
•  Need to let stakeholders know this ßPR
•  Responding to its stakeholders’ demands
need not diminish the firm’s business model.
•  Walmart changes its logo and slogan
(7/2008).

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LOGO

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NEW LOGO

•  Media:
•  The firm attemptsà actions for
environmental sustainability.
•  A more environmentally friendly
corporation
•  àincrease the firm’s reputation

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STAKEHOLDER EDUCATION

•  Important stakeholders: customers and

suppliers
•  1st : aware of the issues
•  2nd: participate with the firm
•  Suppliers: packaging: instead of many small
packs à bigger packs (more items)à saving
•  Ex., Kid Connection Co. (toy products): saving
2,4 million $/year; 3800 trees; 1000 barrels
of oil

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STAKEHOLDER EDUCATION

•  Customers:
•  Ex, 2007, the firm announced a goal to sell
100 million compact fluorescent light bulbs
(CFL)
•  2007: sold 137 million CFL
•  6/2009: 260 million CFL
•  Customers saving: $7 million for electric bills
•  à “Sustainability index” à Reputation

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WALMART

•  2010: committed:
•  “cut some 20 million metric tons of
greenhouse gas emissions from its
supply chain by the end of 2015—
the equivalent of removing more
than 3.8 million cars from the road
for a year”

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WALMART

•  CSR policy focused on sustainability and

global responsibility.
•  However, still was criticized:
•  (1) the massive class-action employment
discrimination lawsuit against Walmart in
2011 à victory for the firmà introduce
“women-friendly plan”à the company remains
open to ongoing claims of sex discrimination &
sustain the image of a workplace that is not
equally welcome all employees.

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WALMART: CRITICISM

•  (2) the ‘bribery in Mexico’ scandal in 2012

damaged for Walmart because it details a
pattern of behavior of corruption and
suppression of information (pay for stores’
openness).
•  The US supreme court asked to report
•  à bad impacts for worldwide operations à
bad for reputation.

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WALMART: CRITICISM

•  (3) criticism arises due to Walmart’s size

and reach
•  à use too much electricity
•  à use too much land
•  à use too much resources of society à
create disorder for society

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CSR: WHOSE RESPONSIBILITY?

•  Management board? Employees?

•  Customers?
•  Suppliers?
•  Community around Walmart?
•  Local government?
•  Central government?
•  Environmental activists?

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MAIN ISSUES

•  Attitude of stakeholders to CSR?

•  à affect company’s activities
•  Does company educate its stakeholders
about CSR?
•  CSR: company makes differences for
competition?
•  Stakeholders: self-educate about CSR?
à require company to change in order to
meet current social requirements?
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MAIN ISSUES

•  Different stakeholders à different

requirements à satisfy all?
•  Requestsà influence company’s
strategy?
•  Legal issues and market rules
•  Culture, environment (foreign countries)

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IN BRIEF

•  Carry out based on the most important

stakeholders (ex. Customers & find out
how to satisfy expectations of others.
•  Let stakeholders understand company’s
strategy about sustainable development,
ask for their support (public relations)à
increase its reputation.
•  Survey (Walmart): level of sympathy mức
độ không thiện cảm giảm từ 38%
(2005) còn 20% (2010)
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CONCLUSION

•  CSR is not only a Corporate

Responsibility
•  But also a stakeholder
responsibility
•  Build and maintain relationship
between Company and
Stakeholders (PR)
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