Corporate Social responsibility

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					Corporate Social responsibility:

Corporate Social responsibility is a comparatively newly developed concept whereby
companies combine and try to balance the social and environmental effects of their business
activities and try to reduce or mitigate any potentially harmful consequences.

Companies have duties and responsibilities just like a member of a society as companies
operate and perform business activities which affect its customers, other stakeholders and the
society at large. So, the aim is to eliminate or minimize any potential harm or disadvantages
incurring due to its business activities to the environment or society at large and
compensating the society members voluntarily for those harmful activities which cannot be
fully eliminated. By doing so, a CSR practicing company can become profitable on the long
run out running its rivals. Because nowadays consumers are more educated and concerned
about the environmental and social effects of any kind of business activities than ever before.
They want to know how the companies are operating and using their revenues earned from
them to fight environmental hazards like pollutions and social welfare.

But there is a paradox of practicing CSR as businesses exist to maximise shareholders’
equity- and in the meantime some of the steps required for being environmentally friendly
and socially responsible might turn out to be quite expensive for a particular business and
thus raising costs of the finished products which in the end will be priced comparatively
higher from its competitors and finally charged on to the end consumers.

Although it might seem at first thought that being socially responsible raises overall costs of a
product and reduces profitability, but considering the perception of consumers and reputation
of the company in the society; on the long run it will give the company strong competitive
advantage among the rivals and increase its market share which can in turn increase
profitability and maximise shareholders’ equity.

However there is no universally accepted or agreed approach to corporate social
responsibility until today. Some of the more common approaches which are being practiced
by the business organizations worldwide are as followings:

   a. The most widely used and common approach to CSR is called a community based
       development approach where firms develop business concepts to be more interactive
       with the communities into which they operate, either by involving community

       members directly into the business activities or conducting social welfare activities
       for the community members.
   b. The second approach is based on a corporation’s strategies to engage itself in fair
       trade or in ethically right deals.
   c. The most visible and most common approach of CSR adopted by the companies is
       donation to the poor and needy people. Companies also donate to community
       development projects and provide funding for human resource development
       initiatives. This is also called a philanthropic approach.
   d. Another approach is called shared value approach of CSR. This is about raising
       interest about the CSR belief- that businesses need educated, healthy workforce and a
       stable operating environment in terms of political and economic stability, whereas
       societies need healthy and progressive business organizations to survive and develop.
       So, the idea is to promote CSR as a reciprocal relationship.


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