Business / Ð²Ð‚ÑšThe Role Of Business Is To Serve The Larger Society, Which Is Best Accomplished By Being Responsive To The Larger Society.”

“The Role Of Business Is To Serve The Larger Society, Which Is Best Accomplished By Being Responsive To The Larger Society.”

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Autor:  anton  08 July 2011
Tags:  Business,  Larger,  Society
Words: 1115   |   Pages: 5
Views: 677

According to the above statement, the role of business is to serve the larger society. There are many arguments about whether business firms should serve the larger society or not. According to the traditional view, earning profit is the primary objective of the business. Some people hold the view that “the business of business is businesses”. Critics argue that responsiveness of business towards the society distracts from the fundamental economic role of businesses, others argue that it is nothing more than superficial window-dressing, still others argue that it is an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations.

However in the present context of globalization and market economy, there is new emerging view that business has social obligation, because it is also one of the indispensable organ of the society. Therefore they can not escape from social obligation, and the objective can be to bear social obligation along with earning profit. Proponents argue that by being socially responsible, corporations benefit in multiple ways by operating with a perspective broader and longer than their own immediate, short-term profits.

The objective of the business is to produce the goods and services that are demanded and affordable by the people. The function of the business is not to provide donation and charity. But the business should remain within its environment, which consists of social, economic, legal, technological and political environment. It should pay attention to the factors around it in order to live within its environment. According to Koontz and Fulmer, “While their major purpose is economic, their very survival depends on doing those things compatible with their environment.” In this way, it is necessary for a business to become responsive to the larger society. Social responsiveness means a business should be aware of the factors in its social environment and the need to respond.

Corporate Social Responsibility (CSR) is a concept whereby organizations consider the interests of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities and the environment in all aspects of their operations. According to Koontz and Fulmer, “In its more exact sense, it is more appropriate to see the social responsibility of business as being responsive to the entire social environment in which it operates.”

According to K.R.Andrew, “Social responsibility may be taken to mean intelligent and objective concern for the welfare of the society that restrains individuals and corporate behavior from ultimately destructive activities.”

Corporate social responsibility of a business is the most talked topic in the recent years. Every organizations, consumers, communities and shareholders are highly concerned about the social responsibility of a business. This is because people are more educated and aware about the impact the business is making on the society and environment where it exists. Each stakeholders of the business carefully watch every activity of the business and demand for certain actions by them. Examples of such actions may include pressure to remove pollution, provide health insurance, and remove discrimination of unprivileged and to make arrangement of safety in the industry. The need for business to become socially responsible arises due to the following factors:

• Public expectation: If the business does not meet the public expectation in terms of their social obligations, the public may deny the product or services of the business. Business can improve its public image by being socially responsible.

• Ethics: It is the moral responsibility of business to remove the ill effects of the work done by them. It is their work to bear civic duty and responsibility.

• Globalization: Global competition places particular pressure on multinational corporations to examine not only their own labor practices, but those of their entire supply chain, from a CSR perspective.

• Education: Through education, the development of community in holding businesses responsible for their actions is growing. Shareholders and investors themselves are exerting pressure on corporations to behave responsibly.

• Government regulation: Government regulation is expensive to the business. If business does not take social responsibility, the government will have to be compelled to regulate and control their activities.

Wal-Mart case of mother’s day product can be good example of how pressure is created by the society on the business to act in a socially responsible manner. Wal-Mart paid its women associates less then their men counterparts. Therefore, over 20,000 people signed a pledge to boycott Wal-Mart's Mothers Day products until the company addresses the issues of gender discrimination.

There could be other reasons like disputed business motives or self interest for the business to act in a socially responsible manner. Some critics believe that CSR programs are often undertaken in an effort to distract the public from the ethical questions posed by their core operations. For example, British American Tobacco (BAT), which produces major CSR reports. Still some CSR critics argue that the only reason corporations put in place social projects is for the commercial benefit they see in raising their reputation with the public or with government. For example, Shell has a much-publicized CSR policy and was a pioneer in triple bottom line reporting, but was involved in 2004 in a scandal over the misreporting of its oil reserves which seriously damaged its reputation and led to charges of hypocrisy.

There are many benefits of CSR both to the society and the business. The business benefits to the business are:

Reputation: Building a reputation as a responsible business sets the business apart. Many consumers prefer to buy from ethical businesses. Companies often favour suppliers who demonstrate responsible policies as this helps them to minimise the risk of any damage to their own reputations. Ben & Jerry's ice cream became as famous for its approach to responsible business as for its products. The company has grown dramatically while continuing to focus on CSR.

Human Resources: CSR creates good reputation of the business on the society.A good reputation makes it easier to recruit employees. Employees stay longer, reducing the costs and disruption of recruitment and retraining. Employees are better motivated and more productive.

Reduces risk:

Nestle's milk business in India provides a good example of CSR, which is beneficial to both society and the corporation. Nestle came to Moga (India), built chilling centres and sent its trucks out to collect the milk. With the trucks went veterinarians, nutritionists, agronomists and quality assurance experts to help the farmers in milk production. In just a few years, milk production increased 50-fold, and so did the quality, which enabled the company to obtain a stable supply of high-quality commodities without paying the middlemen. Nestle's experience in setting up collection points, training farmers and introducing better technology in India has been repeated in Brazil, Thailand and a dozen other countries, including, most recently, China. In each case, as Nestle prospered, so did the community.



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