This is a summary on Topic 7: Social Responsibility. I achieved a distinction for this subject using these notes and I believe they will be beneficial to you too.
1.1 What is social responsibility?
Social responsibility means that a business needs to be careful that all its decisions and actions protect the
environment and improve the quality of life of all inhabitants of a society.
The environment consists of:
The air we breathe – this can become polluted by harmful emissions
Rivers and other natural water sources – which can be polluted by factories
Natural vegetation – which can be destroyed by economic
The inhabitants of society include:
The consumers – people who buy our products need to be protected from harmful activities and products
which are inferior or harmful
The workforce – workers should not be exploited
The consumers can:
Take consumer action – through boycotts or not buying the product
Make public any unethical actions – and so damage the business's reputation
Demand legislation against such actions
1.2 Corporate Social Responsibility
(CSR) refers to the practices of a business that aim to protect the health and rights of its workers, its suppliers
and its stakeholders and, in so doing, to protect the company's: reputation, brand name and goodwill.
Key areas of concern are protecting the environment; the well-being of employees, the community and civil
society in general, both now and in the future.
CSR is an example of self-regulation, the business monitors its own actions to make sure it complies with the
spirit of the law and ethical standards. It seeks to promote public interest and eliminate harmful practices
without the need to pass any formal act of legislation.
Unit 2: business initiatives to address social issues
2.1 How businesses can act in a socially responsible way
Take a community-based approach and work closely with the community to help community members to
better themselves. E.g. through skills development.
Take a monetary approach and make monetary donations to support local organisations.
Increase its CSR interest and show its belief that business success and social welfare are interdependent.
The first step would be to identify areas of social and economic need in the community. The business can then
determine how best to contribute.
E.g. Woolworths identified:
COMMUNITY UPLIFTMENT - sponsoring or joining programmes to benefit the community.
CARING FOR THE ENVIRONMENT - creating environment programmes to emphasuse the importance of
preserving the environment, such as financing clean up prorammes.
SPONSORING SPECIAL PROGRAMMES - providing finance for special events
SPECIAL EDUCATION PROGRAMMES - adopting a school and providing most of the school's needs, or
providing specialised equipment to needy schools.
2.2 some benefits of socially responsible action
Recruiting is easier as people are more willing to work for businesses that take CSR seriously
Competition is easier as customers are more willing to support bsuinesses with a strong sense of CSR
Investors are more willing to invest in businesses that have a high CSR rating
It improves the triple bottom line reporting
Community effort are widely publicised which enhances the standing of the business in the community
The potential benefits of CSR to communites:
Creates an awareness of the efforts being made by business to improve their living conditions, in addition to
the supply of goods and services (which is their main function).
, Customers are more willing to deal with businesses that recognise their need to give back to
the community . E.g. cleaner air.
2.3 The growth of CSR
The role of government: Government cannot satisfy all the service delivery demands by itself (consider the
recent protests); it has to rely on others
Reporting: There is a growing demand for Triple Bottom Line reporting
Customer interest: Customers purchase more readily from 'ethical' companies.
Growing investor pressure: Investors are changing the way they assess a company's performance and are
paying more attention to ethical issues.
Competitive labour markets: Employees are asking for more than salary and benefits; to hire and retain
skilled employees, companies are being forced to improve working conditions.
Supplier relations: Many companies are taking steps to ensure that their partners conduct themselves in a
socially responsible manner by introducing codes of conduct for their suppliers, to protect their own
reputation.
Forms of ownership
It is important to know the characteristics, advantages, disadvantages and differences between the various forms of .
ownership
The forms of ownership discussed below include:
Sole Proprietor
Partnership
Close Corporation
Non-profit Company
Profit Company (Private Company, Personal Liability Company, Public Company, State-owned Company)
Co-operatives
The information on all forms of ownership is summarised in the form of tables below so that the different forms of
ownership can be compared with each other. It is important to study the characteristics very well as this can help you
to think of advantages and disadvantages of the different forms of ownership.
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