Business Rationale - Essay Example

Introduction

Companies that embrace CSR take responsibility for the impact of their actions and activities on employees, customers, communities, the environment, and the shareholders in all their operations and are thus aware of any injustices their activity may present (Wickert & Risi, 2019). Such companies will voluntarily take steps that improve the quality of life for their employees, families, and society. Sometimes, CSR is seen as an umbrella term. It describes how business firms integrate the social, environmental, and ethical responsibilities to which they are connected into their core business strategies, structures, and procedures within and across divisions, functions, and value chains in collaboration with relevant stakeholders (Wickert & Risi, 2019).

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Various Compelling Reasons

There are various compelling reasons why a company should engage in efforts primarily aimed at promoting social welfare. In this case, CSR proponents have always made four arguments for their case, which include; sustainability, moral obligation, reputation, and operational license (Fontaine, 2013).

Stakeholders of a company should be satisfied only when their company's activities balance its business's impact with other socially responsible practices, which shows they are fulfilling their obligation as per se. It involves the duty to act responsibly as a corporate citizen ('the right thing to do').

It is the CSR obligation that gives conditions upon which the license to operate and other crucial contracts are based, involving implicit and explicit approval from the host government, communities, and stakeholders.

Meeting present needs without compromising future generations' capabilities. Investing in socially, financially, and environmentally sustainable activities can help a company gain substantial progress (enlightened self-interest).

CSR initiatives are usually supported due to their reputational impact based on the fact that they will improve a company's image and increase its stock value. Such reputational benefits include; a more significant client base, the ability to charge relatively high prices, and more productive employees. Over the past years, we have seen companies dealing with, and managing their reputation risks in a reactive mode, only dealing with a crisis when it happens. The increased pressure for incorporating CSR activities in companies in the rising 'socially aware arena' has led to a substantial rise in investing in such activities.

Rising Demand to Respect CSR

Thus, most economic sectors are increasingly being affected by the rising demand to respect CSR. However, CSR issues may appear fundamental to one industry than the other, which makes the pressure to incorporate CSR exerted on various companies always differs (Gaither & Austin, 2016). Initiatives such as mining and construction, for example, are usually challenged on their practices for sustainable development due to their more substantial impact on the environment (Orlitzky et al., 2011). Other activities are always deemed as controversial, such as gambling, tobacco, weapons, nuclear, spirits, and many others, which makes it a necessity to have a provision that expectations and questions of various stakeholders should be built around such issues (Orlitzky et al., 2011).

For the beverage company Poppin' Soda, it is crucial to have a CSR strategy in place. Various factors impact the company's reputation in the industry and several other critical issues that will implement CSR needed. First, globally, this industry generates a low level of trust due to its failure to address CSR professionally. Secondly, beverage companies face a high risk of consumer regulation from governments and other regulatory bodies. Thirdly, most beverage companies only prioritize jobs and product safety as their top corporate social responsibility. Fourthly, given an opportunity to express the second most crucial area, a beverage company should reduce the environmental impacts of manufacturing as one of the top choices. Lastly, being known is being liked, and being liked is being trusted; thus, achieving CSR will make the company known, liked, and eventually trusted (Boumediene & Al Houda, 2018).

Specific characteristics of Poppin' Soda also make the importance of implementing CSR valid. One distinguishing feature is its size. Poppin' Soda is among the industry's growing companies, representing a relatively high percentage of production, net surplus, value-added, and intermediate consumption of all sector products. The weight of this company is high due to the large size of the domestic market. It becomes more significant due to the added distribution of beverage products globally (Boumediene & Al Houda, 2018).

Another very distinguishing feature is that the beverage business is a constituent of economic and cultural indifferences. The fact that drinks are ingested makes them different from all other products as it covers basic human needs, where people firmly hold views concerning what they drink. Therefore, it creates a unique group of responsibilities for a company in the industry, bringing about ethical considerations above economics. Such ethical issues include risk of disease, human well-being, health, quality and safety of beverages, marketing, diversified consumer drinking behavior, and quality of life. In the CSR context, the beverages sector faces numerous environmental and social challenges, mainly due to the growing evolution of consumer awareness of social and ecological issues (Boumediene & Al Houda, 2018).

Approaching CSR

The company's primary social responsibility is to maximize the use of its resources and carry out activities that are meant to increase profits so long as the company takes part in the competition that is free from fraud. A notable early CSR critic, Milton Friedman, once argued that CSR could confuse a company's real objectives by incorporating impediments in the smooth running of operations when the real activities of a company become critical (Fontaine, 2013). Conflicts may arise between the achievement of a company's profitability, its responsibility in and out of the workplace, and its advantage to the entire community due to its activities in that area (Wickert & Risi, 2019). Such situations are realized as a result of the lack of rewards in approaching a CSR strategy.

The severe problem is that CSR makes some arguments look simple but fails to acknowledge that trade-offs must be evident between a company's financial profitability and its ethical consequences resulting from carrying out its responsibilities towards the relevant stakeholders. What counts as an issue relevant to CSR changes over time as new problems emerge and novel practices become routine (Wickert & Risi, 2019). When both are realized, profits always win over morals. Therefore, such changes are evident from a shift in CSR scope from how money is spent to how money is made, and thus, a company does not have to choose between earning gains and being socially responsible (Wickert & Risi, 2019). Through studying news articles, company reports and interviewing business people, employees, consumers, and industry professionals, we realize that contributing to the societal good is more than a marketing tool (Boumediene & Al Houda, 2018). Thus, abstaining from CSR should never be justified by a lack of rewards as profits. Therefore, a company that chooses an all-inclusive CSR strategy not only minimizes any possible smash between social and corporate goals but is very able to exploit opportunities in the market that eventually generate rewards and gains for a company that carefully incorporates it (Fontaine, 2013).

Conclusion

Suppose the fear of trailing revenues is a motivation for some companies to abstain from CSR. In that case, it also implies that the possibility of ignoring CSR is likely to be greater than the peril of profit loss since businesses respond to CSR initiatives differently (Wickert & Risi, 2019). A modern company like Poppin' Soda is required to adhere to ethical standards and live up to its varying responsibilities as a vibrant change element in a globalizing arena. Additionally, members of the public have a right to expect a company to carry out its activities honorably within the stated framework and play a useful role that commends it to attain public trust through paying back to the society within which it operates (Fontaine, 2013). Moreover, in such a beverage industry where the quality of diversified products determines market value, a company is vulnerable to any effects that damage its reputation (Gaither & Austin, 2016). Poppin' Soda has not invested in enhancing a positive reputation through CSR.