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Summary Introduction to Business Management Chapter 5 Complete

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This document provides an in depth and thorough summary of chapter 5 of Introduction to Business Management 11th edition (Erasmus et. al.). It is ready for exam and tests. Everything is laid out as it is in the textbook. All needed information is provided in short. It is written in an easy to study...

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  • July 25, 2024
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Chapter 5 (Corporate Social Responsibility)
 Companies have societal and environmental impact
 Companies must manage business relationships with wider society
 Companies have a responsibility for the behaviour of others with whom they do business
 Contributes to sustainable development, health, and welfare
 Considers stakeholder interests and expectations
 Complies with law and international standards
 Works across the whole company and in personal relationships

Corporate citizenship Corporate social investment
Corporates are legal entities with rights and responsibilities Contribution made to society (excluding contributions made
similar to individual citizens, including right to enter through core business activities/ charity work) includes
contracts, hold assets, hire, and to sue and be sued (student sponsorships, local health clinic support etc)


Tripple bottom line
 Measures the financial, social and environmental impacts of business.
 All are equal and all are interconnected (planet, people and profit)


 Social drivers
 Companies desire a reputation of social responsibility
 Consumers and employees prefer socially responsible products and services
 Mainstream investment funds and stock exchanges are addressing CSR objectives
 Civil society organizations and others have collaborated with companies and governments to establish guidelines for
socially responsible corporate behaviour
 Companies engage in CSR to meet societal expectations and protect their reputation


 Governmental drivers
 Governments enforce local and national legal systems for companies to operate in their country
 These systems include laws on companies, labour relations, and environmental management
 Governments often encourage business involvement in social issues through CSR
 Governments can promote CSR through organizational support and funding
 Soft regulation can be introduced to encourage socially responsible corporate behaviour
 Compliance in CSR extends beyond the law's letter to the spirit of the law
 Complying: Letter of the law - company doing the bare minimum to avoid consequence.
 Complying: Spirit of the law - company doing what can be reasonably expected to further the objectives of the laws


 Market drivers
 (CSR) not only represents costs for companies but also offers advantages like reduced costs or increased revenues
 CSR Cost Reduction Strategies

,  Avoiding fines and legal costs
 Using resources efficiently, like reducing energy/paper use, reducing costs
 Using alternative raw materials like recycled materials
 Reducing salary costs
 Increasing staff productivity
 Reducing capital expenditures

 Ethical drivers
 CSR Revenue Increase Strategies
 Development of new products or services like carbon credit trading
 Growth of service markets through job creation, social development, or technological interventions
 Improving market access like through government purchase
 Avoiding protests
 Exploitation of CSR premium among consumers who prefer socially responsible products and services

Corporate governance
 Governance refers to the way in which a business makes decisions about how to manage affairs

 Corporate governance is the system by which companies are managed and controlled

 Refers to the relationship between those who govern and those who are governed

 Roles and responsibilities:

 Board of Directors
 Group of people assembled to lead and control the company and functions in the best interests of its shareholders.
 Executive directors: Full time employees

 Non-executive directors: Not involved in the day-to-day operations of a business


 Primary principles of good governance:
Social responsibilities Discipline Transparency Independence
Accountability Responsibility Fairness


 How does corporate governance relate to CSR
 Corporate scandals can damage reputation and impact investors, shareholders, employees, and the public
 CSR acknowledges corporations' responsibility for societal impact
 Boards balance business purpose, core values, stakeholder involvement, and shareholder-stakeholder balance
 Corporate governance is balancing economic and social goals, individual and communal goals
 Chairperson and board should govern CSR programs, monitoring risks and opportunities, engaging with stakeholders,
formulating policies and strategies, and monitoring implementation
 Management should implement and manage CSR, mirroring financial governance structure
 CSR should be embedded in board-level structure such as a CSR committee

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