Discuss about the Corporate Social Responsibility or Sustainability Practiced by the Companies.
This report focuses on the corporate social responsibility or sustainability practiced by the companies in current market. For discussion, famous company of car industry Tesla Motors has taken. In present time, car industry is the fastest growing industry in the market. Tesla Motors are the famous company which was founded in the year 2003. The company basically deals in manufacturing, designing and wholesaling of the cars components (Tesla Motors, 2017). Now, aim of the company is to provide electric vehicles to reduce the impact of CO2 gases in the atmosphere. The strategy of Tesla Motors is to be the best technology company in the car industry by developing affordable electric cars for the consumers. Aim of the company is to reduce the dependency of customers on petroleum-based vehicles. This report is focused on the CSR activities of the Tesla Motors which are shared values and ecosystem innovation. Along with this, this report provides a theoretical approach in terms of CSR activities (Tyagi, 2011).
The theories of sustainability have come from the chain of innovation and transformation. Basically, the concept of corporate social responsibility is the process of globalization and impacts every organization as there are many social problems which have to face by organization while expanding the business in to global market. Now, CSR is the concept of global plan which is considered as the ‘social contract’ between the society and business. CSR practices are important for every organization for being accountable for the long-term need of the people and environment (McKnett, 2013). In the case of Tesla motors, there are two approaches of CSR. There are many researchers who have analyzed the practices of CSR in the business. CSR in the business activities enables the company to gain many benefits in terms of tangible and intangible benefits such as increase brand value, risk reduction, secured license to operate, cost decrease retention of customers and improved employee recruitment within the company. There are two complementary theories by which effectiveness of CSR practices in Tesla motors can be measured (Matten, Dirk & Jeremy, 2008). The description of those theories is described below.
This is the most important theory in CSR practices which depends upon the roles and responsibilities of the company towards stakeholders. This theory provides new way to the firms to think about the stakeholders. According to stakeholder theory, stakeholders are key concern of the organization which involves customers, employees, suppliers, shareholders and government. Basically, CSR practices focus on the social and environmental concerns so; there must be collaboration between the stakeholders and the organization on the voluntary basis. In the CSR practices, it is important for the companies to understand the importance of interaction with external and internal stakeholders. Based on the research in support of CSR, it is the accountability of the organization to identify the interest of various stakeholders rather than focusing on financial or economic requirements.
Figure 1: Various Stakeholders
(Source: Tyagi, 2011)
The arguments in the stakeholder theory depend upon assumptions that company should focus on maximizing profit through managing the interest of stakeholders. According to this theory, Stakeholders must be active in the decision making process of the organization. In case of Tesla Motors, CSR practices in the company are implemented on the basis of interest and demands of the stakeholders. Tesla is the biggest automobile company in the world and it identifies the needs of stakeholders on the top most priority. By effective corporate social responsibility, company is able sustain long-term development in terms of manufacturing electronic vehicle in the market. In Tesla Motors, important stakeholders are shareholders, employees, customers and society (Mangram, 2012). In these, the most important stakeholders are employees and shareholders which are chosen in the report.
Shareholders are the most important group of stakeholders in Tesla motors who are supportive to achieve the business goals and objectives. Main interest of the shareholders in the company is to maximize the profit of the business in the market. They are important because they affect the capital of the company. For understanding and addressing the core interest of shareholders, Tesla is planning for electric vehicles under the guidance and approval of the shareholders. The plan of electric vehicles is helpful in reducing the cost incurred in fuel and petroleum because electric cars will be very cheap in cost. In current time, customers are very concerned for surrounding environment so, with the idea of electric vehicles, company will be able to maximize the profit in the market. Providing electric cars to reduce harmful gases is also the part of corporate social responsibility of Tesla motors which is helpful in improving the performance of the company in the car industry (Hardester, 2010).
This group of stakeholders has the interest in the career development, equal treatment and opportunity and high wages. They are very crucial as they always impact on the production and capacity of services in the business. To identify the interest of the employees, Tesla has many activities related to CSR i.e. global learning, sustainable workforce, and global leadership programs. To protect the productivity, health and capabilities of the employees, company has initiatives in terms of sustainable workforce. Along with this, there are some development programs i.e. monitoring the profit and performance of the employees’ etc. managers in Tesla motors to motivate the employees to achieve the goals in the organization. They provide leadership programs i.e. experienced leader program for the middle level managers. These all programs come under the CSR activities and dedication of the company to address the interest of employees (Ashtiani et al, 2011).
Creating shared value (CSV)
Creating shared value is the link between CSR and the competitive advantage of the company. Shared value is not only sustainability but it is the new process also to get success. The objective of shared value is to implement the change in the business operations of a company in terms of people, process, strategy, structure and reward. In simple words, CSV is related to getting benefit in the business by using CSR activities (Porter & Kramer, 2011).
Figure 2: Customer Shared Value
(Source: Porter & Kramer, 2011)
In case of Tesla Motors, there are many reasons of the company to use value principles in the business operations. Provided values by the Tesla Motors are described below:
This is the key reason to create value for the customers. The aim of the company is to improve the lives of the people in the community. Elon Musk is the person in Tesla motors who has created and run the company. He is the leader in the company who believe in generating energy in the sustainable way. Because of his efforts, company is now famous in the car industry. That person has capacity to influence and motivate the culture of the company to get success.
Objective of Tesla Motors is to develop and maintain sustainable transportation by offering electric cars to the customers. By providing this value, the mission of the company is to do research on sustainability and provide benefits to the customers. Tesla is now providing benefits to the customers in terms of social and economic benefits related to price (Lantos, 2001).
This is another reason to create shared value principles in the business. Open innovation is helpful for the company to attract more and more customers. Innovation of Tesla Motors includes creating transportation sustainable for the travelers. To achieve business goals, it is important for Tesla Motors to create electric vehicles. This is the market of innovation with the shared values provided by Tesla Motors (Maula, Keil & Salmenkaita, 2006).
Values provided by Tesla motors are linked with the overall strategy and agenda of the company. Shared values of the company are connected with the sustainability. This is helpful for the company to run business in the operating market. To achieve long-term goals, shared values are also important for Tesla motors (Karamitsios, 2013).
Tesla motors are focused on the innovation for the whole environment. Objective of the company is to give importance for the humanity and customers in the society. To achieve this goal, Tesla will use solar batteries in the electric cars. Along with this, Tesla is developing the system of energy storage devices to develop more and more renewable energy in the environment. Now, in current time, Tesla is appropriate company to reinvent of future ecology. Customers are finding for stylish vehicles with sustainability. So, Tesla is just right in providing such type of vehicles to the customers. The shared values provided by Tesla Motors can be evaluated by some factors i.e. vision, and strategy (Kearney, 2013).
Vision of the company is to provide values to the customers in terms of electric vehicles so that the harmful gases in the environment can be reduced successfully.
The main strategy of Tesla Motors is to create values factors or the customers and society by new ecosystem innovations. The objective of the company is to create sustainable transportation for the customers.
This report provides supportive arguments for the CSR activities in the business. By the above discussion, it can be said that Tesla is going on the right way in terms of CSR practices. Tesla is providing values and shared principles and addressing stakeholders’ interests for the future growth and success. The company is focusing on CSR practices having the aim of providing values and ecosystem innovation
Tyagi, R.K. (2011). A Conceptual Study of Corporate Social Responsibility and Its Persuasion on Employees. pp. 2837
Porter, M. E. & Kramer, M. R. (2011). The Big Idea: Creating Shared Value: Harvard Business Review. 89 (1/2). 62-77
McKnett, C. (2013). The investment logic for sustainability. Retrieved on 29th April 2017 from https://www.ted.com/talks/chris_mcknett_the_investment_logic_for_sustainability
Maula, V. J., Keil, T. & Salmenkaita, J. (2006). Open innovation in systemic innovation contexts. Oxford University Press
Matten, Dirk & Jeremy M. (2008). “Implicit” and “Explicit” CSR: A Conceptual Framework for a Comparative Understanding of Corporate Social Responsibility: Academy of Management Review. 33(2). 404-424
Mangram, M. E. (2012). The globalization of tesla motors: a strategic marketing plan analysis. Routledge. 20(4). 289-312
Lantos, G. P., (2001). The Boundaries of Strategic Corporate Social Responsibility: Journal of Consumer Marketing. 18 (7). 595-632
Kearney, A. T. (2013). The Contribution of the Automobile Industry to Technology and Value Creation. 3-6
Karamitsios, A. (2013). Open Innovation in EVs: A Case Study of Tesla Motors. Sweden
Hardester, E. (2010). The profitability of the electric car (Thesis). Brigham Young University
Ashtiani, C., Cullen, G., Davis, P., Greenwald, J., Hardigan, P., Eladio, K., & Zimmerman, D. (2011). Plug-in electric vehicles: A practical plan for progress. Expert Panel Report, School of Public and Environmental Affairs at Indiana University
Tesla Motors, (2017). About Tesla. Retrieved on 29th April 2017 from https://www.teslamotors.com/en_CA/about