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Essay Unit 20 - Investigating Corporate Social Responsibility
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Jorawar SinghUnit 20: Investigating Corporal Social
Responsibility
Assignment 2 of 3: should a large business
have a CSR policy
Learning aim: to investigate the potential
benefits and drawbacks of a large business
having a CSR policy
Pearson BTEC Level 3 National Extended
Diploma
- Jorawar Singh
1
,Jorawar Singh
Introduction
I'm looking for a career that requires and involves corporate social responsibility, and the
effect it has on big companies as well. As part of my work in a small business article service,
it is my duty to study a large private sector company's CSR, looking at both advantages and
disadvantages and to if it has importance in the way it helps the business be the way it is.
This article will include an evaluative report on the role of a CSR policy, the recognition of an
external body, and the role it has played in helping to transform my chosen company. The
article would also have a reasonable conclusion that is clearly justified by well-balanced,
advanced arguments and backed by use of research and facts at the end.
Section 1: Why having a CSR policy is good for H&M
A benefit of a CSR policy is that by promoting your approach of working ethically,
consumers see H&M as having a good reputation because it is doing a good thing that is
by choice and not mandatory. This could be an example of a USP and something that
competitors are not doing which can attract customers. Furthermore, perception of the
business names can be looked good upon and in case of any bad publicity, the good
ethical work H&M do can weigh out any potential negative effects of bad practices so
customers do not lose trust in the company. Having as many customers as they can attract
is good for H&M as it produces an opportunity for mass sales, revenue, and profit because
those customers do no t have a clear outlining reason to not shop at H&M because of its
affairs on factors like the environment.
Secondly, recruitment and employee retention are also improved within H&M because if
the clothing company works with and around employees and is an example of them acting
responsibly then employees will feel respected and valued. This will lead to them feeling
motivated and confident in the workplace as they feel that H&M is investing profits (that
could have been used on other important things like CSR projects) into them through
health and safety to bonuses/ rewards to more frequent training which can help them do
their job more effectively. Therefore, they will be more productive and be there perhaps
for a long-term leading to a decrease in recruitment fees as well as doing their role to the
best of their ability implicating that it has flaws all round.
In addition, the company may receive opportunities to progress economically because
acting responsibly can be favoured by all stakeholders of the business. Being favoured by
shareholders and may be other important stakeholders can mean that targets are being met
and operations are going well. This will lead to less pressure from them which can help
managers and owners of H&M work well in with their first priority getting a job fully done
not to impress stakeholders but purely for business success. Shareholders may in fact
reinvest more money into the H&M as if they believe in the method of adapting good CSR
policy then they will support that through funding. If used correctly, the new implications of
CSR can be shown off by H&M stores which will be preferred by customers who will spend
more if they’re in the store therefore meaning more sales, revenue, and profit
2
, Jorawar Singh
Another benefit of acting responsibly and adopting CSR is that it allows leeway for an
increase in higher prices for goods or services. This is because H&M does more than
competitors like Primark and so when an item is bought that money that is paid goes
towards the good cause of CSR in a business as well for the business to break even. It can
also mean that a customer is paying for a more valuable version of something which means
they are not being somewhat ripped off and this will lead to an increase in marginal profits
by a certain amount which when totalled up can be enough to fund H&M to progress for the
future therefore they know that they can adapt and will be less likely to close down like
other stores such as JJB or BHS.
As well as having a good reputation and brining customers in, H&M are also earning original
customer loyalty and retaining them. This is good because already having some customers
can be cheaper for H&M. Cheaper because H&M have a much greater chance of making a
sale by approaching current consumers with a demonstrable interest in their products and a
desire to purchase it. Research has shown that the likelihood of converting a current client is
60-70 percent, while the probability of converting a new client is just 5-20 percent so it
means marketing to current customers provide a clear reduction in advertisement budget,
but it also provides an opportunity to prove H&M's appreciation to rewarding loyalty
customers. This will lead to H&M having a secure foundation for being able to break even
which is their original customers therefore new customers and be seen as extra profit
through their sales and revenue.
Section 2: Possible disadvantages of a business
adopting a CSR policy
CSR - Corporate social responsibility (CSR) is a business model that allows a business to be
socially accountable and responsible to itself, its customers, and the public. Companies like
H&M should be aware of the kind of effect they have on all industries or factors, such
as economic, social, and environmental aspects.
Despite a business-like H&M acknowledging the benefits of how ‘’doing what’s ethically
right’, there are numerous disadvantages to a company enduring good CSR issues within
their business.
One disadvantage of adopting a CSR approach is that H&M could possibly greenwash their
consumers and stakeholders. The term greenwashing means that a company claims to do
so much for the environment but in real life doesn’t not meet those claims. If H&M do this
then people will realise and H&M will be seen as a company who lies and is deceitful and
this will decrease their reputation. It could also have legal implications and also negative
publicity through false information and mis advertising. In addition, stating claims that
over exaggerate the truth can mean that H&M lose bodies who support their
environmental work and their right to put their logo in stores for promotion. This is an
example of H&M not having a This will lead to a loss in a unique selling point that
differentiates them from others, waste of costs that were funded for environmental work
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