- Analyse the role of CSR and Ethics in business and its impact on business performance
- Critically appraise responsible strategies and practices adopted in the development and operation of hospitality organisations
Business ethics is the moral judgment of the organizational decision about what is right and what is wrong. This is the essence of right work in the organizational environment. Organizations should follow ethical rules in business. Use of business ethics helps organizations to achieve success and to sustain their growth and development in the market. On the other hand, the impact of adhering to a set of business ethics in a company includes a number of significant benefits (Afiya 2005). The ethical business conduction sends a message to the customers that, the company from which they are buying products or services would keep their commitments and it would be considered as a trustworthy and responsible organization. On the other hand, working in a strong ethical business environment, employees also feel safe as they know they would not be subjected to any kind of unethical activities.
Corporate social responsibly (CSR) are the business philosophies adopted by an organization, which indicates that, the organization is running their business ethically and responsibly. CSR policies in an organization act as the regulatory mechanism in the organization to monitor ethical standards of the organization and promote the organization to make some social welfare, which is beyond the firm’s interest and required by business ethical laws (Jaszay and Dunk 2006). It also helps to enhance the responsibility of the organization for its corporate action. This assignment would focus on the analysis of these two interchangeable features of some selected hospitality organizations to evaluate their role as being a ‘responsible’ organization.
Pyramid of CSR
CSR strategies were introduced in the year of 1950, but its popularity in the practices was increased many years later. The modern concept of the CSR activities is adopted from Archie Carroll’s “Pyramid of Corporate Social Responsibility (Cotterill 2007). This model is helping the business organizations to successfully conduct the CSR activities and to achieve the desired level of success. Carroll developed this pyramid in the year of 1996, but it has become the most popular model of CSR almost 20 years later of the development. This pyramid has four different levels for the different types of CSR applications. The first step is about the economic responsibilities of an organization, where the target is to be profitable. The second step is the legal responsibilities. In this step the organizations have to focus on the legislations applicable in their working (Atakan and Eker 2007). The business organizations or societies must maintain the laws in the area of the legal responsibilities. The third step of the pyramid is the ethical responsibilities. In this area, the business organizations should ensure that they are conducting their business in lawful way. The last and fourth step of the pyramid is about the philanthropic responsibilities. In this step, the organizations have to be a good corporate citizen. Important areas of focus in this step are the social, educational, recreational and cultural development of the common people (Balmer, Fukukawa and Gray 2007) Use of these CSR strategies and to understand the potential impact of the CSR strategies in the business will be understood clearly by focusing on each of the CSR strategies and the examples of some business organizations who are using these. In this purpose, the CSR activities performed by McDonalds, Subway and Nandos will be analyzed in this report.
Within CSR activities, economic responsibilities are important one. It is the first and foremost responsibility of a company to be responsible and it should be concerned with the turning profit. Cotterill (2007) argued that, before being a good corporate citizen, a company should ensure that the business is profitable. In the case of McDonald’s, it purchases over €80 million of 100 % Irish beef, which is used in the restaurants in Ireland, however, to be sustainable globally, it also export these foods to its industry across Europe (Doherty 2007). In Europe, the company uses Irish beef in all over Europe. To be economically responsible the company involves CSR activities regarding quality assurance, business ethics and social responsibility (News.mcdonalds.com 2016). McDonald’s won Chamber Ireland 2010 CSR award with the suppliers under ‘Flagship Farms’ program, which is recognized by the farmers supplying to McDonalds. In their environment-related CSR activities, the environment friendly supply chain of McDonalds positively affects on the immediate beneficiaries, making the company economically responsible (Paton 2007).
In spite of only being responsible for the company’s success, Subway also contribute to the local community in any social events, they provides sponsorships and donations to institutional events, thereby being economically independent and responsible. Subway has been conducted the original fresher/healthier campaign with F.R.E.S.H. steps initiative for rising awareness and educate communities against childhood obesity (Choi and Parsa 2006). These steps enhanced the brand image towards the customers and their overall commitment helped the company to be profitable throughout the financial year. This impacted on the community positively (Subway 2016).
In Nando’s commitment toward economic sustainability, it has been shown that the company has been compliance with corporate social investments. The company’s social and ethics committee has been committed that, they are following all the requirements for the development of ideal franchisee background, they have adequate financial resources (Clark 2006). In Nando’s programs for business management, it has been depicted that, franchisees are credit worthy and the company is taking the liability of these independent franchisees. Though the impacts of these activities are fruitful for its economic growth, the company is facing issues regarding sustainable economic growth and development. Nando’s CSR commitment included the improvement of South African economic landscape and trust on Relate business model (Kallio 2007).
The legal responsibilities in the company refer to ensure that the company is following local and national laws and legislations in their business. It also makes the company legally responsible and help to build trustworthy customers. McDonalds has been facing a number of lawsuits mostly for trademark disputes (Detwiler 2005). However, the company is providing employee’s rights and following standards of business conduct in international market. In New York lawsuit against McDonalds has been claimed for the obesity related health issues of some children’s for which the company was claimed to be compensate. The company for longer period held the fact that, they were not responsible for the treatment of their employees in more than 14000 restaurants owned by franchisees (Kallio 2007). The legal issues and disputes made a solid impact on the company reputation. McDonald’s reports in UK revealed that workers are paying fewer wages and the company has been reported to use genetically modified food, which are unethical practices. The impact on the company included loss of workers and decreased brand image (Doherty 2007).
In the case of Subway, in the organization all the activities are done by following rules and regulations. Jones, Comfort and Hillier (2006) reported that, Subway Group maintains their complete title and intellectual property rights to their other materials. The company follows strict codes of conducts, breaching these indicates significant compensation.
In the case of Nando, the branches are also owned by the franchisees and the company took their liabilities. The company has been committed to the partnership with Relate Inc, which enhanced the legal opportunities for employment creation, skills development. The legal and ethical operations of the company has been positively affected their growth (Kallio 2007).
1. Ethical Responsibilities
As per the viewpoint of Atakan and Eker (2007), ethical responsibility of a company in business is the responsibility or the duty to follow some moral values and correct paths to carry on the business work. Therefore, it can be easily said that all the business has some ethical responsibilities towards the customers and the society as well.
The company, McDonald has a clear code of ethics that largely governs the business of the company and the company is fully committed to that and follows proper implementation of the ethical codes. The code of ethics in the company focuses on the part that the restaurant heads are audited periodically by the internal and external mechanism and they are abide by the standards of business conduct. It has been observed that the code of ethics of this company is committed towards resolving any private as well as public conflict that might take place in economy, politics, social, environmental and financial stances in the operating areas of MacDonald (Jones, Comfort and Hillier 2006).
It has been found that the vision of Subway is to make the restaurants along with the operations as environmentally and ethically responsible as possible. The company has always tries their best to carry on the business in such a way that leave a positive impact on the society. The core believe of the company is to use good and environmentally helpful business practices, as this tends to increase business profitability, enhance customer dining experience and most importantly help to protect the environment (Kasim 2006).
One of the major ethical responsibilities of Nandos is to provide proper training to the employees of the company from the first day of joining the company. The company believes that the trained employees of the company help to serve the customers and this help to company to achieve an important position in the highly competitive market. The company has maintained a proper ethical code that all the employees in the company will respect each other in the organization to maintain a proper and healthy working environment in the company (Lane 2006).
Therefore, it has been found that all the above-mentioned companies have been trying their best to maintain some basic ethical responsibilities in their business and the customers in the present day are highly influenced by the ethical responsibilities adopted by the companies (Lantos 2002).
Philanthropic CSR is associated with donating funds, goods or services to other organizations or needy people. For an example, a local bank may donate fund to a school for purchasing uniforms or some other materials. The philanthropic responsibilities also include the responsibilities towards the environmental development. These CSR activities help the business organizations to develop a good brand image which helps them to achieve higher success in their business (Kasim 2006).
McDonalds uses low energy LED lights, other energy saving electric equipments for saving the electricity. They use waterless urinals for saving the water. Hey have also developed rain water reserve tanks in the area of the water resource management. The cardboard boxes used by this company are recyclable and 85% of the packaging materials of the company are made from renewable resources (Lane 2006). This company invests over £360 million in the area of the agricultural industry of UK. McDonalds donates for eye care hospitals in India. They also encourage people for donating to the eye care organizations. They collect money at their store counters. According to the CSR report of the financial year 2012-2013 McDonalds conducted nutrition education programs for people in collaboration with the Alliance for a Healthier Generation. Name of his program was Clinton Global Initiative. They offer fruits, vegetables and low fat dairy products in their happy meal package in more than 95% of their stores (Maak 2007).
Subway provides fresh food products to the customers with the high level of nutrition facilities. They focus on the safety measures while producing the food products. They also focus in the area of the energy saving, water saving and other environmental development. Subway is working for reducing the waste in the area of the philanthropic responsibilities. They encourage their franchises for contributing to their communities and for promoting the diversity and choosing the eco-friendly options for their business practices. The company is gaining the high level of popularity with their fresh food quality. They do not serve any unhealthy food to their customers (Mathisen 2006).
Nandos also serves fresh foods to their customers. Providing better nutrition and freshness in their food products is their major activities in the area of the philanthropic responsibilities. In the year of 2013, the company has donated 34000 Qatar Cancer Society. The program was named as PINK campaign for supporting breast cancer. They are also engaged with the cultural activities with communities (Nando’s Qatar 2015). They have sponsored Iftar for the cancer survivors in Qatar. Nandos has donated the amount of QR350000 to Reach Out To Asia’s campaign named as “My Education, My Hope”. These activities of the company are helping them for developing a good brand image and conducting more successful business by reaching close to the customers (Merchant 2005).
In the above assignment, the focus was on the ethical and social business management. The concepts of CSR and business ethics were discussed in brief. These responsibilities are linked to the company objectives and make the organization to behave as a good corporate citizen. Sometimes, the concepts of business ethics and CSRs are used in interchangeable ways. Companies attempt to be social citizens by their CSR activities. In this context, the corporate social responsibility pyramids were discussed. After analyzing this model, CSR activities of three fast food companies were discussed. Three fast food company McDonalds, Subway and Nando’s CSR activities were discussed in respect to the four stages of CSR pyramid model. In this context, how these three companies are philanthropically, ethically, economically and legally responsible as a corporate social citizen were discussed. It can be interpreted that, these companies has significant brand image with responsible position in the market. However, the analysis found that, some legal and ethical issues were faced by both McDonalds and Subway; however, they undertook legal steps to be ‘responsible’.
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