a study of csr blessing in disguise _jims

8/10/2019 A Study of Csr Blessing in Disguise _jims

1/79


2/79

ACKNOWLEDGEMENTS

A lot of effort has gone into this training report. My thanks are due to many

people with whom I have been closely associated.

I would like all those who have contributed in completing this project. First of all, I

would like to send my sincere thanks to _______________ for his helpful hand in

the completion of my project.

I would like to thank my entire beloved family & friends for providing me monetary

as well as non monetary support, as and when required, without which thisproject would not have completed on time. Their trust and patience is now

coming out in form of this thesis


3/79

CONTENTS

Description Page No.

Acknowledgement (i) (i)Contents with page no. (ii)

List of figures (iii)

Executive Summary 4

Certificate of completion 5

Introduction to topic 6

Objectives 14

Literature review 15Induction and Training Program 21

Research Methodology 35

Analysis & Interpretation 47

Findings & Inferences 48

Limitations 61

Recommendations and Conclusion 64

Appendices 67Bibliography 67


4/79


5/79

the strategic development of the private sector, with a special accent on

development efforts for small and medium enterprises, both embedding

concepts of balance between economic, social, and environmental

factors, leading to sustainable quality growth of a country.

Corporate Social Responsibility

There is a wide consensus among public and private institutions that the concept

of Corporate Social Responsibility (CSR) is based on a company attaining a

balance between the interests of all its stakeholders within its strategic planning

and operations.

Over the past decade, numerous debates have emerged around the question of

whether such responsibilities should be voluntary or not, especially regardinggrowing environmental challenges in areas such as climate change, as well as

regarding the enforcement of labour standards and basic human rights. Other

critics have pointed out that the role of the private sector is defined purely

through production and profit-maximisation, generally assuming that only

government should take care of social and environmental issues through efficient

policy frameworks and mechanisms. Furthermore, concerns have been raised

that the almost total exclusion of SMEs (especially in developing countries) from

conceptual discussions on CSR could lead to a purely northern agenda for

multinational companies. It should also be observed that CSR has frequently

been misleadingly equated simply with corporate philanthropy and charitable

giving, which in turn are often separate from their core bus iness and without an

underlying strategic plan behind it.

Today, CSR is widely seen a management strategy option. A growing number of

successful examples have demonstrated that respecting CSR in strategicplanning, and following these through plans in operations, either leads to

increased economic output, or at least is (in the short run) neutral in its effect on

company profits. Furthermore, a growing number of large companies (and an

increasing number of SMEs) has recognised the need to improve their social and

environmental risk management strategies, grasp opportunities in innovative


6/79

technology development and knowledge creation, and engage more proactively

with their stakeholders.

While there is growing conceptual clarity around CSR, technical assistance

activities in this field are still scarce. One of the problems is that SMEs, notably indeveloping countries, often lack the capacities and opportunities to learn about a

possible CSR approach in their management planning and daily operations.

These co mpanies are therefore either caught by surprise by sudden CSR -

requirements from their (normally northern) customers and counterparts, often in

the form of complicated codes of conduct, or they face increasing difficulties in

accessing global supply chains.

This growing knowledge gap could have serious consequences on the

development of SMEs, especially in developing countries, but it seems to be

avoidable: the basic business concept of CSR, the inclusion of environmental

and social concerns into the comp anys strategy, is also valid and feasible for

small, even micro-enterprises, and does not depend on their location.

Practically, this means that, through CSR, companies can detect and overcome

inefficiencies in their production process, continuously upgrade the quality of their

products, and gradually develop their expertise in marketing and sales in an

ever-wider market place. By doing so, they eventually improve their

environmental and social performance and, thereby, their overall

competitiveness.


7/79

CERTIFICATE OF COMPLETION


8/79

CHAPTER I

INTRODUCTION TO THE TOPIC


9/79

product to be manufactured, the size, volume of operation, etc is determined by

the environment in which it operates.

Similarly it has an impact on the environment in which it exists. The business

decisions in an organization completely depend upon the environment and theirimpact. The environment can be divided into:

Internal Environment

External Environment

Social Responsibility of business refers to what business does over and above

the statutory requirement for the benefit of the society. The word responsibility

emphasizes that the business has some moral obligations towards the society.

The term corporate citizenship is also commonly used to refer to the moral

obligations of the business towards the society. It implies that like individuals,

corporates are also the part of the society and their behavior shall be guided by

the social norms. Social Responsibility has been defined by Davis as follows:

Social responsibilities refer to businessmans decision and actions taken to

reason at least partiall y beyond the firms direct economic or technical

interest.Still broader view has been suggested by Andrews when he says that:

By social responsibility, we mean the intelligent and objective concern for the

welfare of the society that restrains individual and corporate behavior from

ultimately destructive activities, no mater how immediately profitable, and leads

in the direction of positive contributions to human betterment, variously as the

latter may be defined. There has been a growing acceptance of the plea that business should be

socially responsible i.e. it should discharge its duties and responsibilities in

enhancing the welfare of the society of which it is an integral part. H. S.

Singhania classifies CSR into two categories:

The manner in which a business carries out its own business activity.

The welfare activity that it takes upon itself as an additional function.

Internal BusinessExternal

Environment


10/79

Models of Corp ora te Socia l Respo nsib i l i ty

There are some models, which endeavor to describe the evolution and extent of

social orientation of companies.

Carrolls Model: He defines CSR as a range and obligations a business has towards the society.

There are four categories of the obligation.

Economic Responsibility:

A firm being an economic unity, this is its prime responsibility, i.e. to satisfy

the economic needs of the society through generating surplus and investing in

development of the society.

Legal Responsibility:

A company performs this because it is bound to obey the law and the legal

system.

Ethical Responsibility:

Business organization is expected to undertake these though they are notmandatory. These include not restoring to unfair trade practices, not cheating

the customer, etc.

Discretionary Responsibility:

It refers to the voluntary activities undertaken by the organization for social

development programmes. These levels of responsibilities was named as

Pyramid of Corporate Social Responsibility

Orgn

Discretionary

Ethical Res .

Legal Resp.

Economic Res .


11/79

Ackermans Model:

Also described that CSR done by a company generally spreads over

three phases:

FIRST where the top management recognizes the existence ofsocial problem, which deserves attention and acknowledges the

companys policy towards it by making an oral or written statement.

SECOND phase is where the Co. appoints staff specialists or

external consultants to study the problem and suggest ways of

dealing with it.

THIRD phase involves the implementation of the social

responsibility programmes.

THE INTEREST GROUPS

Social Responsibility requires the identification of various interest groups, which

may affect the functioning of a business organization and may also be affected

by its functioning. Normally various groups associated with a business

organization are shareholders, workers, customers, creditors, suppliers,

government and society in general. The management owes responsibility

towards all these groups. Therefore, management should show a standardized

norm of behavior.


12/79

Shareholders:

The first responsibility of the management is to protect the interest of

shareholders. The interests of majority of shareholders and large minority of

shareholders are generally well protected through either direct participation in the

management actions or they have real power to intervene, if necessary. Theyshould be informed about the functioning of the organization adequately and

timely.

Therefore, management has a responsibility to provide proper safeguard to the

money invested by shareholders.

Workers:

Workers have direct interest in an organization because by working there, they

satisfy their need s. Thus, it is the managements responsibility to protect the

interest of workers in the organization. This can be done by the management in

the following ways:

Management should treat workers as another wheel of the

cart

Management should develop administrative process in such

a way that promotes cooperative endeavor between

employers and employees.

The management should adopt a progressive labor policy

based on recognition of genuine trade union rights

participation of workers in management, creating a sense of

belongingness, improving their living and working conditions.

Management should pay fair and reasonable wages and

other financial benefits to workers.

Customers:

Management owes a primary obligation to give a fair deal to the customers. This

can be done in the following ways:

Customers should be charged a fair and reasonable price.

The supply of goods and services should be of uniform

standard and of reasonable quality.


13/79

Management should not indulge in profiteering, hoarding, or

creating artificial scarcity.

Management should not mislead the customers by false,

misleading and exaggerated advertisements.

Creditors, Suppliers and Others:

They affect the organization in various ways. Therefore , the management is

responsible to fulfill its obligations towards them. This can be done in the

following ways.

Management should create healthy and cooperative inter

business relationship between different businesses.

Management should provide accurate and relevantinformation to creditors and suppliers.

Payments of price of materials, interest on borrowings, other

charges should be prompt.

Government:

It is very closely related with the business system of the country. It provides

various facilities for the development of business. Government, no doubt,

exercises control over business, but these controls are meant for overall

development of business. Management can discharge its obligation to

government by:

Management should be a law-abiding citizen

Management should pay taxes and other dues fully, timely &

honestly.

It should not corrupt government workers and public

servants and the democratic process

It should not buy political favors by any means

Society:

Organizations exist within a social system and get facilities from the system.

Therefore, they owe obligations to the society as a whole. This can be done by:


14/79

Management should maintain fair business policies and

practices.

It should play a proper role in civic affairs.

It should provide and promote general amenities and help in

creating better living conditions in general.


15/79

OBJECTIVE

To study how organization will be dealing with Corporate Sustainability /

CSR Communication and Value Creation A marketing approach of

Automobile and its overall merits and demerits.

To study the concept of the CSR activity and there reposition towards the

individual customer.

To study if the CSR has any impact over the brand image of the

organisation through the primary data analysis.

To study the employees readiness about the CSR activity to take it further

because it is an total organisation participation.


16/79

CHAPTER-II

LITRATURE REVIEW


17/79

CSR(corporate social responsibility) is a concept in which organizations consider

the interests of society by taking responsibility for the impact of their activities on

customers, suppliers, employees, shareholders, communities other stakeholders,

future generation and on environment. The organizations voluntarily taking

advance steps to improve the quality of life for employees and their families aswell as for the local community and society.

There are so much debate and criticism on CSR. Proponents argue that there is

a strong business case for CSR, in that corporations benefit in multiple ways in

long term run with high profits. Critics argue that CSR distracts from the

fundamental economic role of businesses; others argue that it is an eye wash by

big organizations; some other says by this governments watch as a watchdog

over powerful multinational corporations

Development

The term CSR came in to common use in the early 1970s firstly it was taken as

corporate stake holder responsibility. The term stakeholder, meaning those

impacted by an organization's activities, it was used to describe corporate

owners beyond shareholders from around 1989.

An approach for CSR that is becoming more widely accepted is community-

based development projects, such as the Shell Foundation' s involvement in the

Flower Valley, South Africa. Here they have set up an Early Learning Centre to

help educate the community's children, as well as develop new skills for the

adults. Marks and Spencer is also active in this community through the building

of a trade network with the community - guaranteeing regular fair trade

purchases.

Some other approaches of CSR is the establishment of education facilities for

adults, as well as HIV/CORPORATE SOCIAL RESPONSIBILITY education

programmers. The majority of these CSR projects are established in Africa. Ageneral approach of CSR is giving aid to local organizations and impoverished

communities in developing countries. Some organizations do not like this

approach as it does not help build on the skills of the local people, whereas

community-based development generally leads to more sustainable

development.
http://en.wikipedia.org/wiki/Organizationshttp://en.wikipedia.org/wiki/Societyhttp://en.wikipedia.org/wiki/Customershttp://en.wikipedia.org/wiki/Employeeshttp://en.wikipedia.org/wiki/Shareholdershttp://en.wikipedia.org/wiki/Communityhttp://en.wikipedia.org/wiki/Stakeholdershttp://en.wikipedia.org/wiki/Environment_(biophysical)http://en.wikipedia.org/wiki/Multinational_corporationshttp://en.wikipedia.org/wiki/Stakeholder_(general)http://en.wikipedia.org/wiki/Shareholdershttp://en.wikipedia.org/wiki/Shell_Foundationhttp://www.flowervalley.org.za/http://en.wikipedia.org/wiki/Marks_and_Spencerhttp://en.wikipedia.org/wiki/Fair_tradehttp://en.wikipedia.org/wiki/Fair_tradehttp://en.wikipedia.org/wiki/Marks_and_Spencerhttp://www.flowervalley.org.za/http://en.wikipedia.org/wiki/Shell_Foundationhttp://en.wikipedia.org/wiki/Shareholdershttp://en.wikipedia.org/wiki/Stakeholder_(general)http://en.wikipedia.org/wiki/Multinational_corporationshttp://en.wikipedia.org/wiki/Environment_(biophysical)http://en.wikipedia.org/wiki/Stakeholdershttp://en.wikipedia.org/wiki/Communityhttp://en.wikipedia.org/wiki/Shareholdershttp://en.wikipedia.org/wiki/Employeeshttp://en.wikipedia.org/wiki/Customershttp://en.wikipedia.org/wiki/Societyhttp://en.wikipedia.org/wiki/Organizations


18/79

Areas on which organization are taking initiatives

An essential component of corporate social responsibility is to care for the

community. Organizations take initiative to make a positive contribution to the

underprivileged communities by supporting a wide range of socio-economic,

educational and health initiatives.HEALTH: Health has identified as a primary objective in the community

development process. As a part of the healthcare initiatives weekly clinics,

counselling sessions, health camps are regularly held to promote general health

in the community. The health threats in the community are too many and in order

to treat some minor ailments and casualties, community members have identified

and are learning to treat minor ailments.

EDUCATION: Education too has been a primary focus area for the

organizations, and a number of initiatives have been designed to promote non-

formal education in the community. Akanksha , a non governmental organization

that focuses on developing strong educational foundations, deep sense of self-

esteem and facilitates fun activities for underprivileged children has been

identified to facilitate education and awareness. PMC schools have been given

computers to promote IT education in the neighbouring area of Chandan Nagar.

LIVELIHOOD ADVANCEMENT BUSINESS SCHOOL (LABS): A unique

program to create more opportunities for less privileged youth. Pune Corporate

Consortium for LABS was inaugurated on April 4, 2006. LABS, a flagship

program of Marutis Foundation (DRF), promotes customized programs for youth

and women in the age group of 18-30 years from economically weaker sections

of society, and empowers them to gain access to opportunities for sustainable

livelihoods and growth in the New Economy.

Potential business benefits

Corporate Social Responsibility (CSR ) agenda of a corporation shows of itssocial conscience and commitments to the community and society in which it

operates. It is not viewed as a liability on corporate resources. More and more

Companies have increasingly realized that it is an investment with multiple

benefits for the corporate sector. Various empirical research findings clearly

pointing to a strong positive correlation between CSR and corporate profitability

have further provided the impetus.


19/79

There are a lot of potential benefits of CSR for any organization. The scale and

nature of the benefits of CSR for an organization is different and depending on

the nature of the enterprise. It is difficult to quantify. However, businesses may

not be looking at short-run financial returns when developing their CSR strategy.

The definition of CSR used within an organization can change from the strict"stakeholder impacts". CSR may be based within the human resources, business

development or public relations departments of an organization.

The business benefits by CSR for a company

In Human resources

Any organization can take CSR programme on recruitment and retention. mainly

in the competitive graduate student market. Potential recruits often ask about a

firm's CSR policy during an interview, and having a comprehensive policy can

give an advantage to organization. CSR can also help to improve the way of

thinking of a company among its staff.

In Risk management

Risk Management is a central part of many corporate strategies. The

Reputations that take decades to build up can be ruined in hours through

incidents such as corruption scandals or environmental accidents. These events

can also draw unwanted attention from regulators, courts, governments and

media. Building a genuine culture of 'doing the right thing' within a corporation

can decrease these risks.

Brand differentiation

In crowded marketplaces where competition is very high, companies looks for a

unique selling proposition which can separate them from the competition in the

minds of consumers. CSR can play a role in building customer loyalty based on

ethical values. Several major brands, such as The Co-operative Group and The

Body Shop are built on ethical values. Business service organizations can takebenefit from building a reputation for integrity and best practice.

License to operate

Corporations are keen to avoid interference in their business through taxation or

regulations. By taking right voluntary steps, they can persuade governments and

the wider public that they are taking issues such as health and safety, diversity or
http://en.wikipedia.org/wiki/Human_resourceshttp://en.wikipedia.org/wiki/Business_developmenthttp://en.wikipedia.org/wiki/Business_developmenthttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/Retentionhttp://en.wikipedia.org/wiki/Graduate_schoolhttp://en.wikipedia.org/wiki/Unique_selling_propositionhttp://en.wikipedia.org/wiki/Brandshttp://en.wikipedia.org/wiki/Taxationhttp://en.wikipedia.org/wiki/Regulationshttp://en.wikipedia.org/wiki/Health_and_safetyhttp://en.wikipedia.org/wiki/Health_and_safetyhttp://en.wikipedia.org/wiki/Regulationshttp://en.wikipedia.org/wiki/Taxationhttp://en.wikipedia.org/wiki/Brandshttp://en.wikipedia.org/wiki/Unique_selling_propositionhttp://en.wikipedia.org/wiki/Graduate_schoolhttp://en.wikipedia.org/wiki/Retentionhttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/Business_developmenthttp://en.wikipedia.org/wiki/Business_developmenthttp://en.wikipedia.org/wiki/Human_resources


20/79

the environment seriously, and in this way they can avoid intervention. And

organization can improve its profit.

Examples of CSR

There are a lot of organizations which are deeply involved in corporate social

responsibility.At international level

The biggest example of this is Graminbank in Bangladesh . It is the worlds

great example of CSR.

Automobile giant FORD -This organization is providing health care

programme for deprived children since 1957 and also concerned about

the women health programme.

Microsoft group -this group is working at international level for educationprogramme for all society and basically in rural areas.

Steel maker Andrew Carnegie is contributing in education and charity.

In India

Tata group is most benevolent organization who is very focussed for welfare of

society from very initial. They are working at a great scale they are working on

these areas

Child health care

Women education

Working groups of women

Environment issues such as global warming

Mahindras - They provided hearing aid to nearly deaf child.

The Zensar Foundation has been working with various NGOs on multiple social

programs for Pune. It is associated with NGOs such as NFBM Jagruti School

for blind girls, Surajya SarwangeenSewaSanstha,SahityaRangabhoomiPratishthan , Saathi,

KagadKachPatraKashtakariPanchayat , Maher etc for development and social

benefit.

Adani group is operating a school for deprived children at Ahmedabad.

Other Initiatives: The Tsunami Relief operation at Zensar was an outstanding

success story of solidarity and support. The overwhelming response to the


21/79

appeal of employees donating a days salary went on to building a Tsunami

Relief fund which is being used for a sustained three-year Tsunami Rehabilitation

Program. Through the Centre for Youth Development Activities (CYDA) the fund

is being utilized to support the education of 120 students from Nagapattinam who

were worst affected by the calamityITC group has introduced e-choupal in remote areas to improve education

condition.

Hindustan leverlimited initiated Shakti group for women.

Four concepts of social responsibility

1. Stakeholder Responsibility

2. Profit Responsibility

3. Cause Marketing

4. Green Marketing

Stake Holder Responsibility

Stakeholders

A person, group, organisation, or system who affects or can be affected by an

organisations actions.

Types of stakeholders

Internal stakeholders:

Shareholders: Shareholders are owners of a particular company's Stock

or of a Mutual Fund. The unit of ownership is called a share

Employees: Any person providing paid or volunteer services for a

certifying agent.

Management : Management comprises planning, organizing, resourcing,

leading or directing, and controlling an organization (a group of one or

more people or entities) or effort for the purpose of accomplishing a goal.External stakeholders:

Consumers: are individuals, households, organisations, institutions,

resellers and governments that purchase the products offered by other

organisations.

Suppliers: Individuals or businesses that provide resources needed by a

company in order to produce goods and services.


22/79

Creditors: Individuals or corporations that have supplied credit (lent

money) to a firm.

Competitors: individuals or species that each requires the same limited

resource to survive.

Community: Group of people sharing a common understanding whoreveal themselves by using the same language, manners, tradition and

law.

Responsibilities of Stakeholders

The stakeholder responsibilities often involve moral and citizenship duties

requiring collective action. In general the responsibilities of stakeholders separate

into four general categories:

1. With the firm2. Among stakeholders themselves

3. Common pool resources (especially nature)

4. The commonwealth

A stakeholder must consider proper conduct.

The most obvious instances of stakeholder responsibility involves

The global natural environment environmental protection

The global labour standards minimum wages, working hours

Basic human rights right to live, follow religion, choose occupation etc.

Corporate stakeholder responsibility requires

Procedural justice integrating the values of them into the development and

implementation of a firms strategy.The stakeholders are integrated in the

strategic processes by either providing or receiving benefits or providing or

bearing risks.

Distributive justice

Acknowledges that all stakeholders who make (voluntarily or not) firm-specific

investments either by providing benefit or bearing risks should have the right to

the residual claim analogous to the shareholders firm -specific investment and

their right of residual claim based on their risk bearing function.


23/79

Profit Responsibility

An organisation work with profit motive. An organisation works within a society &

needs to check the impacts of its activities on the society. It cannot work in

isolation & hence also need to work for the welfare of the society. But this does

not mean that it invest all its profit for the benefit of the society. It is not aPhilanthropy organisation which can give away its profits for Charity. Hence an

organisation undertaking CSR activities need not to work philanthropy.

Cause Marketing

Cause-related marketing (CRM) is defined as the public association of a for-

profit company with a nonprofit organization, intended to promote the

company's product or service and to raise money for the nonprofit. CRM is

generally considered to be distinct from corporate philanthropy because

the corporate dollars involved in CRM are not outright gifts to a nonprofit

organization, hence not tax-deductible.

Cause-related marketing was first used by American Express in 1983 to

describe its campaign to raise money for the restoration of the Statue of Liberty.

American Express made a one-cent donation to the Statue of Liberty every time

someone used its charge card; the number of new card holders soon grew by

45%, and card usage increased by 28%.

Cause marketing is about businesses supporting social causes they believe in to

connect with their customers. Companies, big and small, are using it as a tool to

win customers and their loyalties, to present themselves as a responsible

organizations, to boost employee morale and loyalty, and, of course, to generate

funds for social causes. Getting associated with a cause through popular non-

profit organizations gives them free publicity and increased sales-not to mention

a tax-deductible expense.

Cause marketing principles, cautions, and trends:

There are seven principles about cause marketing as following

1. Unbalanced - Having a cause-marketing relationship that is too one

sided, self-serving, and/or commercial.


24/79

2. Dishonest - Having advertising that is not sincere, honest, or gives the

perception of non-profit endorsement and not handling criticism with open

and honest communication.

3. Evasive - No managing expectations on both sides. Be aware of and

clearly explain what you c an and cant deliver to your corporate partner.Ensure your own internal team understands what is and isnt being

achieved by a cause-marketing relationship.

4. Jeopardize - Not protecting the integrity of the organizations brand and

visual identity. Non-profits must take care as to use of logo, wording, and

approach.

5. Disrespectful - Not recognizing those nonprofits have valuable assets to

contribute and must receive compensation to reflect this value.

6. Carelessness - Not doing due diligence, risk assessment, receiving

institution wide support and ensuring you fulfil best practices (Better

Business Bureau) and any legal requirements.

7. Insincere - Not working with a corporation that walks the talk. The

program must be part of larger corporate citizenship.

Types of cause marketing

Product, service, or transaction specific

Promotion of a common message

Product licensing, endorsements, and certifications

Local partnerships

Employee service programs

In their efforts to diversify and enhance their funding base nonprofits have

embraced CRM. The practice has evolved to include a wide range of activitiesfrom simple agreements to donate a percentage of the purchase price for a

particular item or items to a charity for a specific project, to longer, more complex

arrangements. Corporations too have been drawn to CRM due to the competition

of the expanding global marketplace and the need to develop brand loyalty.

CRM has become a controversial topic among grant seekers, as nonprofits

entering into CRM activities debate the ethics of lending their name and


25/79

reputation to corporations. Some of the common criticisms of CRM are that it

undermines traditional philanthropy, that nonprofits are changing their programs

in order to attract CRM dollars and that only well-established, noncontroversial

causes can attract CRM dollars.

Benefits:

The possible benefits of cause marketing for nonprofit organizations

include an increased ability to promote the nonprofit organization's cause

via the greater financial resources of a business, and an increased ability

to reach possible supporters through a company's customer base.

The possible benefits of cause marketing for business include positive

public relations, improved customer relations and additional marketing

opportunities.

Examples:

Mercedes-Benz is selling Sedan model to raise funds for Sakes Fifth

Avenues key to the cure, a womens cancer initiative developed in

partnership with the Entertainment Industry Foundations Women Cancer

Research Fund. Mercedes-Benz expects to contribute $1million through

the sale of these vehicles. The campaign urges consumers to by a car, yet

pollutants found in car exhaust have been linked to breast cancer.

One example of cause-marketing would be the partnership of Yoplait' s

"Save Lids to Save Lives" campaign in support of the Susan G. Komen

Breast Cancer Foundation. The company packages specific products with

a pink lid that consumers turn in, and in turn Yoplait donates 10 cents for

each lid.

An example of a nonprofit certification of a product (business) includes theAmericanHeart Association's stamp of approval on Cheerios, the

popular breakfast cereal.

Launched in early 2006, Product Red is an example of one the largest

cause-related marketing campaigns to date given the number of

companies and organizations involved as participants as well as its reach

worldwide. It is also an example of a cause marketing campaign that is
http://en.wikipedia.org/wiki/Yoplaithttp://en.wikipedia.org/wiki/Susan_G._Komen_Breast_Cancer_Foundationhttp://en.wikipedia.org/wiki/Susan_G._Komen_Breast_Cancer_Foundationhttp://en.wikipedia.org/wiki/Product_Redhttp://en.wikipedia.org/wiki/Product_Redhttp://en.wikipedia.org/wiki/Product_Redhttp://en.wikipedia.org/wiki/Susan_G._Komen_Breast_Cancer_Foundationhttp://en.wikipedia.org/wiki/Susan_G._Komen_Breast_Cancer_Foundationhttp://en.wikipedia.org/wiki/Yoplait


26/79

also a brand on its own. Product Red was created to support The Global

Fund to Fight CORPORATE SOCIAL RESPONSIBILITY , Tuberculosis &

Malaria (The Global Fund) and includes companies such as Apple

Computer, Motorola, Giorgio Armani, and The Gap as participants

Green Marketing

Green marketing involves developing and promoting products and services

that satisfy customer's want and need for Quality, Performance, Affordable

Pricing and Convenience without having a detrimental input on the

environment .

Evolution of Green Marketing

The green marketing has evolved over a period of time. According to Peattie

(2001) , the evolution of green marketing has three phases. They are:

"Ecological" green marketing - During this period all marketing activities

were concerned to help environment problems and provide remedies for

environmental problems.

"Environmental" green marketing - The focus shifted on clean

technology that involved designing of innovative new products, which take

care of pollution and waste issues.

"Sustainable" green marketing - It came into prominence in the late

1990s and early 2000.

Why Green Marketing?

As resources are limited and human wants are unlimited , it is important for the

marketers to utilize the resources efficiently without waste as well as to achieve

the organization's objective. So green marketing is inevitable .There is growing interest among the consumers all over the world regarding

protection of environment . Worldwide evidence indicates people are concerned

about the environment and are changing their behaviour. As a result of this,

green marketing has emerged which speaks for growing market for sustainable

and socially responsible products and services.
http://en.wikipedia.org/wiki/The_Global_Fund_to_Fight_AIDS,_Tuberculosis_%26_Malariahttp://en.wikipedia.org/wiki/The_Global_Fund_to_Fight_AIDS,_Tuberculosis_%26_Malariahttp://en.wikipedia.org/wiki/The_Global_Fund_to_Fight_AIDS,_Tuberculosis_%26_Malariahttp://en.wikipedia.org/wiki/Apple_Computerhttp://en.wikipedia.org/wiki/Apple_Computerhttp://en.wikipedia.org/wiki/Motorolahttp://en.wikipedia.org/wiki/Giorgio_Armanihttp://en.wikipedia.org/wiki/Giorgio_Armanihttp://en.wikipedia.org/wiki/Motorolahttp://en.wikipedia.org/wiki/Apple_Computerhttp://en.wikipedia.org/wiki/Apple_Computerhttp://en.wikipedia.org/wiki/The_Global_Fund_to_Fight_AIDS,_Tuberculosis_%26_Malariahttp://en.wikipedia.org/wiki/The_Global_Fund_to_Fight_AIDS,_Tuberculosis_%26_Malariahttp://en.wikipedia.org/wiki/The_Global_Fund_to_Fight_AIDS,_Tuberculosis_%26_Malaria


27/79

Companies that develop new and improved products and services with

environment inputs in mind give themselves access to new markets, increase

their profit sustainability, and enjoy a competitive advantage over the companies

which are not concerned for the environment.

Adoption of Green MarketingThere are basically five reasons for which a marketer should go for the adoption

of green marketing. They are -

Opportunities or competitive advantage

Corporate social responsibilities (CSR)

Government pressure

Competitive pressure

Cost or profit issues

4 P's of Green Marketing

Every company has its own favourite marketing mix. Some have 4 P's and some

have 7 P's of marketing mix. The 4 P's of green marketing are that of a

conventional marketing but the challenge before marketers is to use 4 P's in an

innovative manner.

Product

The ecological objectives in planning products are to reduce resource

consumption and pollution and to increase conservation of scarce

resources (Keller man, 1978).

Price

Price is a critical and important factor of green marketing mix. Most consumers

will only be prepared to pay additional value if there is a perception of extra

product value. This value may be improved performance, function, design, visual

appeal, or taste . Green marketing should take all these facts into considerationwhile charging a premium price.

Promotion

There are three types of green advertising: -

Ads that address a relationship between a product/service and the biophysical

environment (National Geographic, Discovery Channel, etc.)


28/79

Ads that promote a green lifestyle by highlighting a product or service ( Khadi

Gram Udhyog)

Ads that present a corporate image of environmental responsibility ( ITC)

PlaceThe choice of where and when to make a product available will have significant

impact on the customers. Very few customers will go out of their way to buy green

products .

Strategies

The marketing strategies for green marketing include: -

Marketing Audit (including internal and external situation analysis)

Develop a marketing plan outlining strategies with regard to 4 P's

Implement marketing strategies

Plan results evaluation

Challenges Ahead

Green products require renewable and recyclable material, which is costly .

Requires a technology, which requires huge investment in R & D.

Water treatment technology, which is too costly.

Majority of the people are not aware of green products and their uses.

Majority of the consumers are not willing to pay a premium for green

products.

Since the second half of the 20th century a long debate on corporate social

responsibility (CSR) has been taking place. In 1953, Bowen (1953) wrote the

seminal book Social Responsibilities of the Businessman. Since then there hasbeen a shift in terminology from the social responsibility of business to CSR.

Additionally, this field has grown significantly and today contains a great

proliferation of theories, approaches and terminologies. Society and business,

social issues management, public policy and business, stakeholder

management, corporate accountability are just some of the terms used to

describe the phenomena related to corporate responsibility in society. Recently,


29/79

re-need interest for corporate social responsibilities and new alternative concepts

have been proposed, including corporate citizenship and corporate sus-

trainability. Some scholars have compared these new concepts with the classic

notion of CSR (see van Marrewijk, 2003 for corporate sustainability; and Matten

et al., 2003 and Wood and Lodgson, 2002 for corporate citizenship).

Furthermore, some theories combine different approaches and use the same

terminology with dif-ferent meanings. This problem is an old one. It was 30 years

ago that Votaw wrote: corporate social responsibili ty means something, but not

always the same thing to everybody. To some it conveys the idea of legal

responsibility or liability; to others, it means socially responsible behaviour in the

ethical sense; to still others, the meaning transmitted is that of responsible for in

a causal mode; many simply equate it with a charitable contribution; some take it

to mean socially conscious; many of those who me-brace it most fervently see it

as a mere synonym for legitimacy in the context of belonging or being proper or

valid; a few see a sort of fiduciary duty imposing higher standards of behaviour

on businessmen than on citizens at large (Votaw, 1972, p. 25). Nowadays the

panorama is not much better. Carroll, one of the most prestigious scholars in this

discipl ine, characterized the situation as an eclectic field with loose boundaries,

multiple memberships, and differ-ing training/perspectives; broadly rather than fo-

cused, multidisciplinary; wide breadth; brings in a wider range of literature; and

interdiscip linary (Carroll, 1994, p. 14). Actually, as Carroll added (1994, p. 6),

the map of the overall field is quite poor.

However, some attempts have been made to ad-dress this deficiency. Frederick

(1987, 1998) out-lined a classification based on a conceptual transition from the

ethical philosophical concept of CSR (what he calls CSR1), to the action-oriented man-agerial concept of social responsiveness (CSR2). He then included

a normative element based on ethics and values (CSR3) and finally he

introduced the cosmos as the basic normative reference for social issues in

management and considered the role of science and religion in these issues

(CSR4). In a more systematic way, Heald (1988) and Carroll (1999) have offered


30/79

a historical sequence of the main developments in how the responsibilities of

business in society have been understood.

questioned as CSR seems to be a consequence of how this relationship is

understood (Jones, 1983; McMa-hon, 1986; Preston, 1975; Wood, 1991b).

In order to contribute to a clarification of the field of business and society, our aim

here is to map the territory in which most relevant CSR theories and related

approaches are situated. We will do so by considering each theory from the

perspective of how the interaction phenomena between business and society are

focused.

As the starting point for a proper classification, we assume as hypothesis that the

most relevant CSR theories and related approaches are focused on one of the

following aspects of social reality: economics, politics, social integration and

ethics. The inspiration for this hypothesis is rooted in four aspects that, according

to Parsons (1961), can be observed in any social system: adaptation to the

environment (related to resources and economics), goal attainment (re-lated to

politics), social integration and pattern maintenance or latency (related to culture

and val-ues). 1This hypothesis permits us to classify these theories in four groups:

1. A first group in which it is assumed that the corporation is an instrument

for wealth crea-tion and that this is its sole social responsibil-ity. Only the

economic aspect of the interactions between business and society is

considered. So any supposed social activity is accepted if, and only if, it is

consistent with wealth creation. This group of theories could be call

instrumental theories because they understand CSR as a mere means tothe end of profits.

2. A second group in which the social power of corporation is emphasized,

specifically in its relationship with society and its responsibility in the

political arena associated with this power. This leads the corporation to


31/79

accept social duties and rights or participate in certain social cooperation.

We will call this group political theories.

3. A third group includes theories which consider that business ought to

integrate social de-mands. They usually argue that business de-pends onsociety for its continuity and growth and even for the existence of business

itself. We can term this group integrative theories.

4. A fourth group of theories understands that the relationship between

business and society is embedded with ethical values. This leads to a

vision of CSR from an ethical perspective and as a consequence, firms

ought to accept social responsibilities as an ethical obligation above any

other consideration. We can term this group ethical theories.

Throughout this paper we will present the most relevant theories on CSR and

related matters, trying to prove that they are all focused on one of the

forementioned aspects. We will not explain each theory in detail, only what is

necessary to verify our hypothesis and, if necessary, some complementary

information to clarify what each is about. At the same time, we will attempt to

situate these theories and approaches within a general map describing the cur-

rent panorama regarding the role of business in society.

Instrumental theories

In this group of theories CSR is seen only as a strategic tool to achieve economic

objectives and, ultimately, wealth creation. Representative of this approach is the

well-known Friedman view that the only one responsibility of business towardssociety is the maximization of profits to the share-holders within the legal

framework and the ethical custom of the country (1970). 2

Instrumental theories have a long tradition and have enjoyed a wide acceptance

in business so far. As Windsor (2001) has pointed out recently, a leit -motiv of


32/79

wealth creation progressively dominates the managerial conception of

responsibility (Windsor, 2001, p. 226).

Concern for profits does not exclude taking into account the interests of all who

have a stake in the firm (stakeholders). It has been argued that in certainconditions the satisfaction of these interests can contribute to maximizing the

shareholder value (Mitchell et al., 1997; Odgen and Watson, 1999). An adequate

level of investment in philanthropy and social activities is also acceptable for the

sake of profits (McWilliams and Siegel, 2001). We will re-turn to these points

afterwards.

In practice, a number of studies have been carried out to determine the

correlation between CSR and

corporate financial performance. Of these, an increasing number show a positive

correlation be-tween the social responsibility and financial perfor-mance of

corporations in most cases (Frooman, 1997; Griffin and Mahon, 1997; Key and

Popkin, 1998; Roman et al., 1999; Waddock and Graves, 1997) However, these

findings have to be read with caution since such correlation is difficult to measure

(Griffin, 2000; Rowley and Berman, 2000).

Three main groups of instrumental theories can be identified, depending on the

economic objective proposed. In the first group the objective is the maximization

of shareholder value, measured by the share price. Frequently, this leads to a

short-term profits orientation. The second group of theories focuses on the

strategic goal of achieving competi-tive advantages, which would produce long-

term profits. In both cases, CSR is only a question of enlightened self-interest

(Keim, 1978) since CSRs are a mere instrument for profits. The third is related tocause-related marketing and is very close to the second. Let us examine briefly

the philosophy and some variants of these groups.

Maximizing the shareholder value


33/79


34/79


35/79

which managers acquire resources, modify them, integrate them, and recombine

them to generate new value-creating strategies. Based on this per-spective,

some authors have identified social and ethical resources and capabilities which

can be a source of competitive advantage, such as the process of moral

decision-making (Petrick and Quinn, 2001), the process of perception,deliberation and responsiveness or capacity of adaptation (Litz, 1996) and the

development of proper relationships with the primary stakeholders: employees,

customers, suppliers, and communities (Harrison and St. John, 1996; Hillman

and Keim, 2001).

A more complete model of the Resource -Based View of the Firm h as been

presented by Hart (1995). It includes aspects of dynamic capabilities and a link

with the external environment. Hart ar-gues that the most important drivers for

new re-source and capabilities development will be constraints and challenges

posed by the natural biophysical environment. Hart has developed his conceptual

framework with three main inter-connected strategic capabilities: pollution

preven-tion, product stewardship and sustainable development. He considers as

critical resources continuous inprovement, stakeholder integration and shared

vision.

c) Strategies for the bottom of the economic pyramid.

Traditionally most business strategies are focused on targeting products at upper

and middle- class people, but most of the worlds population is poor or lower-

middle class. At the bottom of the economic pyra-mid there may be some 4000

million people. On reflection, certain strategies can serve the poor and

simultaneously make profits. Prahalad (2002), ana-lyzing the India experience,has suggested some mind-set changes for converting the poor into active

consumers. The first of these is seeing the poor as an opportunity to innovate

rather than as a problem.

A specific means for attending to the bottom of the economic pyramid is

disruptive innovation. Disruptive innovations (Christensen and Overdorf, 2000;


36/79

Christensen et al., 2001) are products or ser-vices that do not have the same

capabilities and conditions as those being used by customers in the mainstream

markets; as a result they can be intro-duced only for new or less demanding

applications among non-traditional customers, with a low-cost production and

adapted to the necessities of the population. For example a telecommunicationscompany inventing a small cellular telephone system with lower costs but also

with less service adapted to the base of the economic pyramid.

Disruptive innovations can improve the social and economic conditions at the

base of the pyramid and at the same time they create a competitive advantage

for the firms in telecommunications, consumer electronics and energy production

and many other industries, especially in developing countries (Hart and

Christensen, 2002; Prahalad and Hammond, 2002).

Cause-related marketing

Cause- related marketing has been defined as th e process of formulating and

implementing marketing activities that are characterized by an offer from the firm

to contribute a specified amount to a designated cause when customers engage

in a revenue-providing exchanges that satisfy organizational and individual

objectives (Varadarajan and Menon, 1988, p. 60). Its goal then is to enhance

company revenues and sales or customer relationship by building the brand

through the acquisition of, and association with the ethical dimension or social

responsibility dimension (Murray and Montanari, 1986; Varadarajan and Menon,

1988). In a way, it seeks product differen-tiation by creating socially responsible

attributes that affect company reputation (Smith and Higgins,2000). As McWilliams and Siegel (2001, p. 120) have pointed out: support of

cause related marketing creates a reputation that a firm is reliable and honest.

Consumers typically assume that the products of a reliable and honest firm will

be of high quality. For example, a pesticide -free or non-animal-tested ingredient

can be perceived by some buyers as pref-erable to other attributes of

competitors products.


37/79

Other activities, which typically exploit cause-related marketing, are classical

musical concerts, art exhibitions, golf tournaments or literacy campaigns. All of

these are a form of enlightened self-interest and a win win situation as both the

company and the charitable cause receive benefits: the brand manager usesconsumer concern for business responsibility as a means for securing

competitive advantage. At the same time a charitable cause re-ceives substantial

financial benefits (Smith and Higgins, 2000, p. 309).

Political theories

A group of CSR theories and approaches focus on interactions and connections

between business and society and on the power and position of business and its

inherent responsibility. They include both politi-cal considerations and political

analysis in the CSR debate. Although there are a variety of approaches, two

major theories can be distinguished: Corporate Constitutionalism and Corporate

Citizenship.

Corporate constitutionalism

Davis (1960) was one of the first to explore the role of power that business has in

society and the social impact of this power 4. In doing so, he introduces business

power as a new element in the debate of CSR. He held that business is a social

institution and it must use power responsibly. Additionally, Davis noted that the

causes that generate the social power of the firm are not solely internal of thefirm but also external. Their locus is unstable and constantly shifting, from the

economic to the social forum and from there to the political forum and vice versa.

Davis attacked the assumption of the classical economic theory of perfect

competition that pre-cludes the involvement of the firm in society besides the

creation of wealth. The firm has power to influence the equilibrium of the market


38/79

and there-fore the price is not a Pareto optimum reflecting the free will of

participants with perfect knowledge of the market.

Davis formulated two principles that express how social power has to be

managed: the social power equation and the iron law of responsibility. Thesocial power equation principle states that social responsibilities of businessmen

arise from the amount of social power that they have (Davis, 1967, p. 48). The

iron law of responsibility refers to the negative consequences of the absence of

us e of power. In his own words: Whoever does not use his social power

responsibly will lose it. In the long run those who do not use power in a manner

which society considers responsible will tend to lose it because other groups

eventually will step in to assume those responsibilities (1960, p. 63). So if a firm

does not use its social power, it will lose its position in society because other

groups will occupy it, especially when society demands responsibility from

business (Davis, 1960).

According to Davis, the equation of social power-responsibility has to be

understood through the functional role of business and managers. In this respect,

Davis rejects the idea of total responsibility of business as he rejected the radical

free-market ideology of no responsibility of business. The limits of functional

power come from the pressures of different constituency groups. This restricts

orga-nizational power in the same way that a governmental constitution does.

The constituency groups do not destroy power. Rather they define conditions for

its responsible use. They channel organizational power in a supportive way and

to protect other interests against unreasonable organizational power (Davis,

1967, p. 68). As a consequence, his theory is called Corpora te

Constitutionalism.

Integrative social contract theory


39/79

Donaldson (1982) considered the business and society relationship from the

social contract tradi-tion, mainly from the philosophical thought of Locke. He

assumed that a sort of implicit social contract between business and society

exists. This social contract implies some indirect obligations of business towards

society. This approach would overcome some limitations of deontological andteleological theories applied to business.

Afterwards, Donaldson and Dunfee (1994, 1999) extended this approach and

proposed an Integrative Social Contract Theory (ISCT) in order to take into

account the socio-cultural context and also to integrate empirical and normative

aspects of management. Social responsibilities come from consent. These

scholars assumed two levels of con-sent. Firstly a theoretical macrosocial

contract appealing to all rational contractors, and secondly, a real microsocial

contract by members of numerous localized communities. According to these

authors, this theory offers a process in which the contracts among industries,

departments and economic sys-tems can be legitimate. In this process the

partici-pants will agree upon the ground rules defining the foundation of

economics that will be acceptable to

the hyper -norms; they ought to take prece -dence over other contracts. These

hyper- norms are so fundamental and basic that they are discernible in a

convergence of religious, political and philosophical thought (Donaldson and

Dunfee, 2000, p. 441). The microsocial contracts show explicit or implicitagreements that are binding within an identified community, whatever this may

be: industry, companies or economic systems. These microsocial contracts,

which generate authentic norms, are based on the attitudes and behaviors of

the members of the norm-generating community and, in order to be legitimate,

have to accord with the hyper-norms.


40/79

Corporate citizenship

Although the idea of the firm as citizen is not new (Davis, 1973) a renewed

interest in this concept among practitioners has appeared recently due to certainfactors that have had an impact on the business and society relationship. Among

these fac-tors, especially worthy of note are the crisis of the Welfare State and

the globalization phenomenon. These, together with the deregulation process

and decreasing costs with technological improvements, have meant that some

large multinational companies have greater economical and social power than

some governments. The corporate citizenship framework looks to give an

account of this new reality, as we will try to explain here.

In the 80s the term corporate citizenship was introduced into the business and

society relationship mainly through practitioners (Altman and Vidaver-Cohen,

2000). Since the late 1990s and early 21st century this term has become more

and more pop-ular in business and increasing academic work has been carried

out (Andriof and McIntosh, 2001; Matten and Crane, in press).

Although the academic reflection on the concept of corporate citizenship, and

on a similar one called the business citizen, is quite recent (Matten et al., 2003;

Wood and Logsdon, 2002; among others), this notion has always connoted a

sense of belonging to a community. Perhaps for this reason it has been so

popular among managers and business people, be-cause it is increasingly clear

that business needs to take into account the community where it is operating.

The term corporate citizenship cannot have the same meanin g for everybody.Matten et al. (2003) have distinguished three views of corporate citi -zenship:

(1) a limited view, (2) a view equivalent to CSR and (3) an extended view of

corporate citizenship, which is held by them. In the limited view corporate

citizenship is used in a sense quite close to corporate philanthropy, social

investment or certain responsibilities assumed towards the local community. The

equivalent to CSR view is quite common. Carroll (1999) believes that Corporate


41/79


42/79

places emphasis on business responsibilities in a global context, have been

considered as a key issue by some scholars (Tichy et al., 1997; Wood and

Lodgson, 2002).

Integrative theories

This group of theories looks at how business inte-grates social demands, arguing

that business depends on society for its existence, continuity and growth. Social

demands are generally considered to be the way in which society interacts with

business and gives it a certain legitimacy and prestige. As a con-sequence,

corporate management should take into account social demands, and integrate

them in such a way that the business operates in accordance with social values.

So, the content of business responsibility is limited to the space and time of each

situation depending on the values of society at that moment, and comes through

the companys functional roles (Preston and Post, 1975). In other words, there is

no specific action that management is responsible for perform-ing throughout

time and in each industry. Basically, the theories of this group are focused on the

detection and scanning of, and response to, the social demands that achieve

social legitimacy, greater social acceptance and prestige.

Issues management

Social responsiveness, or responsiveness in the face of social issues, and

processes to manage them within the organization (Sethi, 1975) was anapproach which arose in the 70s. In this approach it is crucial to con-sider the

gap between what the organizations relevant publics expect its performance to

be and the organizations actual performance. These gaps are usually located in

the zone that Ackerman (197 3, p. 92) calls the zone of discretion (neither

regulated nor illegal nor sanctioned) where the company receives some unclear


43/79


44/79

evaluation and categorization), formalization of stages of social issues and

management issue re-sponse. Other factors, which have been considered,

include the corporate responses to media exposure, interest group pressures

and business crises, as well as organization size, top management commitment

and other organizational factors.

The principle of public responsibility

Some authors have tried to give an appropriate content and substance to help

and guid e the firms responsibility by limiting the scope of the corporate

responsibility. Preston and Post (1975, 1981) criti-cized a responsiveness

approach and the purely process approach (Jones, 1980) as insufficient. In-

stead, they proposed the principle of public responsibility. They choose the

term public ra-ther than social, to stress the importance of the public process,

rather than personal-morality views or narrow interest groups defining the scope

of responsibilities.

According to Preston and Post an appropriate guideline for a legitimate

managerial behavior is found within the framework of relevant public policy. They

added that public policy includes not only the literal text of law and regulation

but also the broad pattern of social direction reflected in public opinion, emerging

issues, formal legal requirements and enforcement or implementation

practices(Preston and Post, 1981, p. 57). This is the essence of the principle of

public responsibility.

Preston and Post analyzed the scope of managerial responsibility in terms of theprimary and sec-ondary involvement of the firm in its social envi -ronment.

Primary involvement includes the essential economic task of the firm, such as

locating and establishing its facilities, procuring suppliers, engag-ing employees,

carrying out its production functions and marketing products. It also includes

legal requirements. Secondary involvements come as consequence of the

primary. They are, e.g., career and earning opportunities for some individuals,


45/79

which come from the primary activity of selection and advancement of

employees.

At the same time, these authors are in favor of business intervention in the public

policy process especially with respect to areas in which specific public policy isnot yet clearly established or it is in transition: It is legitimate and may be

essential that affected firms participate openly in the policy formation (Preston

and Post, 1981, p. 61).

In practice, discovering the content of the prin-ciple of public responsibility is a

complex and difficult task and requires substantial management attention. As

Preston and Post recognized, the content of public policy is not necessarily

obvious or easy to discover, nor is it invariable over time (1981, p. 57).

According to this view, if business adhered to the standards of performance in

law and the existing public policy process, then it would be judged acceptably

responsive in terms of social expectations.

The development of this approach was parallel to the study of the scope

regarding business govern-ment relationship (Vogel, 1986). These studies fo-

cused on government regulations their formulation and implementation as

well as corporate strategies to influence these regulations, including campaign

contributions, lobbying, coalition building, grass-roots organization, corporate

public affairs and the role of public interest and other advocacy groups.

Stakeholder management

Instead of focusing on generic responsiveness, spe-cific issues or on the public

responsibility principle, the approach called stakeholder management is

oriented towards stakeholders or people who af - fect or are affected by

corporate policies and prac-tices. Although the practice of stakeholder

management is long-established, its academic development started only at the

end of 70s (see, e.g., Sturdivant, 1979). In a seminal paper, Emshoff and


46/79

Freeman (1978) presented two basic principles, which underpin stakeholder

management. The first is that the central goal is to achieve maximum overall

cooperation between the entire system of stake-holder groups and the objectives

of the corporation. The second states that the most efficient strategies for

managing stakeholder relations involve efforts, which simultaneously deal withissues affecting multiple stakeholders.

Stakeholder management tries to integrate groups with a stake in the firm into

managerial decision-making. A great deal of empirical research has been done,

guided by a sense of pragmatism. It includes topics such as how to determine

the best practice in corporate stakeholder relations (Bendheim et al., 1998),

stakeholder salience to managers (Agle and Mitchell, 1999; Mitchell et al., 1997),

the impact of stakeholder management on financial performance (Berman et al.,

1999), the influence of stakeholder network structural relations (Rowley, 1997)

and how managers can successfully balance the com-peting demands of various

stakeholder groups (Og-den and Watson, 1999).

In recent times, corporations have been pressured by non-governmental

organizations (NGOs), activ-ists, communities, governments, media and other

institutional forces. These groups demand what they consider to be responsible

corporate practices. Now some corporations are seeking corporate responses to

social demands by establishing dialogue with a wide spectrum of stakeholders.

Stakeholder dialogue helps to address the question of responsiveness to the

generally unclear signals re-ceived from the environment. In addition, this dia-

logue not only enhances a companys sensitivity to its environment but also

increases the environments understanding of the dilemmas facing the organiza-tion (Kaptein and Van Tulder, 2003 p. 208).


47/79

Corporate social performance

A set of theories attempts to integrate some of the previous theories. The

corporate social performance (CSP) includes a search for social legitimacy, withprocesses for giving appropriate responses.

Carroll (1979), generally considered to have introduced this model, suggested a

model of cor -porat e performance with three elements: a basic definition of

social responsibility, a listing of issues in which social responsibility exists and a

specification of the philosophy of response to social issues. Carroll considered

that a definition of social responsibility, which fully addresses the entire range of

obligations business has to society, must embody the economic, legal, ethical,

and discretionary categories of business performance. He later incorporated his

four-part categorization into a Pyramid of Corporate Social Responsibilities

(Carroll, 1991). Recently, Sch-wartz and Carroll (2003) have proposed an

alterna-tive approach based on three core domains (economic, legal and ethical

responsibilities) and a Venn model framework. The Venn framework yields seven

CSR categories resulting from the overlap of the three core domains.

Wartich and Cochran (1985) extended the Carroll approach suggesting that

corporate social involve-ment rests on the principles of social responsibility, the

process of social responsiveness and the policy of issues management. A new

development came with Wood (1991b) who presented a model of corporate

social performance composed of principles of CSR, processes of corporate

social responsiveness and outcomes of corporate behavior. The principles of

CSR are understood to be analytical forms to be filled with value content that isoperationalized. They include: principles of CSR, expressed on institu-tional,

organizational and individual levels, processes of corporate social

responsiveness, such as environ-mental assessment, stakeholder management

and is-sues management, and outcomes of corporate behavior including social

impacts, social programs and social policies.


48/79

Ethical theories

There is a fourth group of theories or approaches focus on the ethical

requirements that cement the relationship between business and society. Theyare based on principles that express the right thing to do or the necessity to

achieve a good society. As main approaches we can distinguish the following.

Normative stakeholder theory

Stakeholder management has been included within the integrative theories group

because some authors consider that this form of management is a way to

integrate social demands. However, stakeholder management has become an

ethically based theory mainly since 1984 when Freeman wrote Strategic

Management: a Stakeholder Approach. In this book, he took as starting point that

managers bear a fiduciary relationship to stakeholders (Freeman, 1984, p. xx),

instead of having exclusively fiduciary duties towards stockholders, as was held

by the conventional view of the firm. He understood as stakeholders those

groups who have a stake in or claim on the firm (suppliers, customers,

employees, stockholders, and the local community). In a more precise way,

Donaldson and Preston (1995, p. 67) held that the stakeholder theory has a

normative core based on two major ideas (1) stakeholders are persons or groups

with legitimate interests in procedural and/or substantive aspects of corporate

activity (stakeholders are identified by their interests in the corporation, whether

or not the corporation has any corre-sponding functional interest in them) and (2)

the interests of all stakeholders are of intrinsic value (that is, each group of

stakeholders merits consideration for its own sake and not merely because of its

ability to further the interests of some other group, such as the shareowners).

Following this theory, a socially responsible firm requires simultaneous attention

to the legiti-mate interests of all appropriate stakeholders and has to balance

such a multiplicity of interests and not only the interests of the firms stockhold -

ers. Supporters of normative stakeholder theory have attempted to justify it

through arguments taken from Kantian capitalism (Bowie, 1991; Evan and


49/79

Freeman, 1988), modern theories of property and distributive justice (Donaldson

and Preston, 1995), and also Libertarian theories with its notions of freedom,

rights and consent (Freeman and Philips, 2002).

A generic formulation of stakeholder theory is not sufficient. In order to point outhow corporations have to be governed and how managers ought to act, a

normative core of ethical principles is required (Freeman, 1994). To this end,

different scholars have proposed differing normative ethical theories. Free- man

and Evan (1990) introduced Rawlsianprinci-ples. Bowie (1998) proposed a

combination of Kantian and Rawlsian grounds. Freeman (1994) proposed the

doctrine of fair contracts and Phillips (1997, 2003) suggested introducing the

fairness principle based on six of Rawls characteristics of the principle of fair

play: mutual benefit, justice, coop-eration, sacrifice, free-rider possibility and

voluntary acceptance of the benefits of cooperative schemes. Lately, Freeman

and Philips (2002) have presented six principles for the guidance of stakeholder

theory by combining Libertarian concepts and the Fairness principle. Some

scholars (Burton and Dunn, 1996; Wicks et al., 1994) proposed instead using a

fem-inist ethic s approach. Donaldson and Dunfee (1999) hold their Integrative

Social Contract The- ory. Argandona (1998) suggested the common good notion

and Wijnberg (2000) an Aristotelian ap-proach. From a practical perspective, the

normative core of which is risk management, The Clarkson Center for Business

Ethics (1999) has published a set of Principles of Stakeholder Management.

Stakeholder normative theory has suffered critical distortions and friendly

misinterpretations, which Freeman and co-workers are trying to clarify (Phil-lips

et al., 2003). In practice, this theory has been applied to a variety of business

fields, including stakeholder management for the business and societyrelationship, in a number of textbooks Some of these have been republished

several times (Carroll and Buchholtz, 2002; Post et al., 2002; Weiss, 2003;

among others).

In short, stakeholder approach grounded in ethi-cal theories presents a different

perspective on CSR, in which ethics is central.


50/79

Universal rights

Human rights have been taken as a basis for CSR, especially in the globalmarket place (Cassel, 2001). In recent years, some human-rights-based

approaches for corporate responsibility have been proposed. One of them is the

UN Global Compact, which includes nine principles in the areas of human rights,

labor and the environment. It was first presented by the United Nations

Secretary- General Kofi Annan in an address to The World Economic Forum in

1999. In 2000 the Global Compacts operational phase was launc hed at


51/79

RESEARCH METHODOLOGY

HYPOTHESIS

Many individuals find investments to be fascinating because they can participate in the

decision making process and see the results of their choices. Not all investments will be

profitable, as investor wills not always make the correct investment decisions over the

period of years; however, you should earn a positive return on a diversified portfolio. In

addition, there is a thrill from the major success, along with the agony associated with the

stock that dramatically rose after you sold or did not buy. Both the big fish you catch and

the fish that get away can make wonderful stories.

RESEARCH METHODOLOGY

Secondary Data:

It will consist of information that already exists somewhere in documents. The secondary

data will be collected from the newspapers, expert reports, internet and HK Technologywebsite, etc.

Internet : -www.google.com , etc

Past records and analysis

Books, Magazines & Journals.

Both primary and secondary data will be collected to analyze:

Existing market scenario of Indian market with respect to Industry.

Customers views regarding Indian financial industry

Experts opinion regarding Indian Industry and contribution of Investment

decision into it.

TARGET AUDIENCE:

Financial manager of the firm, and customers.

SCOPE OF THE WORK
http://www.hbr.com/http://www.hbr.com/http://www.hbr.com/http://www.hbr.com/


52/79

This project is about hoe the Investor's Behavior is changing and they are now leaving

behind the sacred investment options like the fixed deposits, company deposits, gold etc.

Investors are now looking towards equity linked investment options.

JUSTIFICATION OF THE CHOOSING TOPIC

The unique investment strategy of letting the maturity of the debt investment run down

with time and targeting equity investments to capture dividends is targeted to deliver

positive returns over medium time frame. The investment strategy of the fixed income

portfolio is designed to remove the impact of interest rate movements over the medium

term. The strategy of targeting dividends in equities over a period is expected to improve

the yield of the fund. The above investment strategy expects to minimize capital loss in

adverse market condition and deliver moderate returns in stable/positive market

conditions.


53/79

CHAPTER-IV

ANALYSIS AND FINDINGS


54/79

CASE STUDY ANALYSIS OF DR. REDDYS CSRACTIVITY IN INDIA

Dr. Reddys Laboratories was founded by Dr Anji Reddy, an entrepreneur -

scientist, in 1984. The DNA of the company is drawn from its founder and his

vision to establish Indias first discovery led global pharmaceutical company. In

fact, it is this spirit of entrepreneurship that has shaped the company to become

what it is today.

Dr Anji Reddy, having moved out of Standard Organics Limited, a company he

had successfully co-founded , started Dr. Reddys Laboratories with $ 40,000 in

cash and $120,000 in bank loan! Today, the company with revenues of Rs.2, 427

crore (US $546 million), as of fiscal year 2006, is Indias second largest

pharmaceutical company and the youngest among its peer group.

The company has several distinctions to its credit. Being the first pharmaceutical

company from Asia Pacific (outside Japan) to be listed on the New York StockExchange (on April 11, 2001) is only one among them. And as always, Dr.

Reddys chose to do it in the most difficult of circumstances against widespread

skepticism. Dr. Reddys came up trumps not only having its stock oversubscribed

but also becoming the best performing IPO that year.

Dr. Anji Reddy is well known for his passion for research and drug discovery. Dr.

Reddys started its drug discovery programme in 1993 and within three years it

achieved its first breakthrough by out licensing an

anti-diabetes molecule to Novo Nordisk in March 1997. With this very small but

significant step, the Indian industry went through a paradigm shift in its image

from being known as just copycats to innovators! Through its success, Dr.

Reddys pioneered drug discovery in India. There are several


55/79

such inflection points in the companys evolution from a bulk drug (API)

manufacturer into a vertically integrated global pharmaceutical company today.

Today, the company manufactures and markets API (Bulk Actives), Finished

Dosages and Biologics in over 100 countries worldwide, in addition to having a

very p romising Drug Discovery Pipeline. When Dr. Reddys started its first big

move in 1986 from manufacturing and marketing bulk actives to the domestic

(Indian) market to manufacturing and exporting difficult-to-manufacture bulk

actives such as Methyldopa to highly regulated overseas markets, it had to not

only overcome regulatory and legal hurdles but also battle deeply entrenched

mind-set issues of Indian Pharma being seen as producers of 'cheap' andtherefore low quality pharmaceuticals. Today, the Indian pharma industry, in

stark contrast, is known globally for its proven high quality-low cost advantage in

delivering safe and effective pharmaceuticals. This transition, a tough and often-

perilous one, was made possible thanks to the pioneering efforts of

companies such as Dr. Reddys.

Today, Dr. Reddys continues its journey. Leveraging on its Low Cost, High

Intellect advantage. Foraying into new markets and new businesses. Taking on

new challenges and growing stronger and more capable. Each failure and each

success renewing the sense of purpose and helping the company evolve.

With over 950 scientists working across the globe, around the clock, the

company continues its relentless march forward to discover and deliver a

breakthrough medicine to address an unmet medical need and make a difference

to peoples lives worldwide. And when it does that, it would only be the beginning

and yet it would be the most important step. As Lao Tzu wrote a long time ago,

Even a 1000 mile journey starts with a single step.

OUR CORE PURPOSE

To help people lead healthier lives


56/79


57/79

Corporate social responsibility

While 'Sustainability: The Triple Bottom Line' as a term may have a

contemporary ring to it, the spirit underlying it has been relevant through the

ages.

In 1987, the World Commission on Environment and Development (established

by a resolution of UN General Assembly) defined sustainability as " Development

which meets the needs of the present without compromising the ability of future

generations to meet their own needs " . It also popularized the use of this term for

resources renew ability, desired business plan and a progressive way of doing

things.

At Dr. Reddy's, we believe that any high performance sustainable organization

rests o

a study of csr blessing in disguise _jims

Documents