1. Examine the link between accounting and other key management functions.
2. Explain the ways in which accounting policies can be influenced by factors external to a business.
3. Demonstrate an appreciation for organisational factors, which could influence the effectiveness of the function of accounting.
In the present scenario, the modern business organizations have realized the importance of corporate social responsibility. This further helps the organization to satisfy the wants and needs of their stakeholders. The given report will throw light on the importance of corporate social responsibility and its essence for meeting the strategic purpose of all the modern business organizations (Tully, 2012). Lastly, more than a few amounts of recommendations will be given to the management of the organizations in order to accept or reject the concept of corporate social responsibility. The organization chosen in the given case is Illuminate Ltd. The report will be presented to the board of directors of the organization (Azmat and Zutshi, 2012).
1. Explanation of the term Corporate Social responsibility
The term corporate social responsibility interprets about the responsibility of the modern business organizations towards meeting the objectives of their internal and external stakeholders. In other words, the integration of social and economic factors by a respective business organization can be defined as corporate social responsibility of the modern business organizations. Beams (2012) infer that actions taken in favor to meet the social and economic concerns of all the stakeholders are termed as corporate social responsibility of the organization. In addition to this, many modern authors define the term of corporate social responsibility as the manner to carry out the business in an ethically manner. There are several processes of carrying the process of corporate social responsibility.
One of the processes of carrying the approach of corporate social responsibility is triple bottom line approach. The triple bottom line approach has majorly three elements. These three elements are planet, people and profit. Due to this reason, all the modern business organizations interpret a CSR report in their financial statement that reflects the requirements of the stakeholders. However, on the contrary side, there are several criticisms to the aspect of corporate social responsibility. Many economists and business analysts argue that many business organizations carry out the process of corporate social responsibilities just to hide their respective operational process of their unethical business activities. This further misdirects their stakeholders of the business firms. Several controversial industries and organizations who are engaged in business processes of tobacco, alcohol produce goods and services that can be proved to be harmful for their customers even though they perform corporate social activities. Therefore, it is up to the business organizations in what manner they will carry out their business activities through corporate social responsibilities (Azmat and Zutshi, 2012).
2: Relationship of CSR with strategic purpose of the organization Illuminate Ltd
The modern business organization has witnessed the importance of corporate social responsibilities to attain their aims and objectives. The main purpose of every business organization like Illuminate Ltd is profit maximization and wealth maximization. This strategic purpose for the organization is to increase the customer base by providing effective quality of goods and services and to carry out the business in an effective manner Bragg (2011). This has direct relationship by meeting the objectives of the stakeholders. The stakeholders of the organization form customers, employees, suppliers, creditors and debtors. These stakeholders can also be segmented with the help of triple bottom line theory of corporate social responsibility. The people forms the employees of the organization, profit forms the profits earned by the respective organization and planet forms the total stakeholder’s environment of a respective business firm. Corporate social responsibility forms a part of strategic plan for the modern business firms Coombs and Holladay (2012). This is mainly because; the process of corporate social responsibility helps an organization to meet their respective social and economical requirements. The process of CSR involves engagement of the stakeholders in the strategic mission and vision of a respective firm. This can also be done through the application of ethical theories, fair trade theory, triple bottom line theory and engagement of different CSR programs and being responsibility to the society as well as the environment at large Cross and Khuzami (2012).
The above diagram interprets how the process of corporate social responsibility meets and helps to attain the strategic purpose and objectives of a business firm like Illuminate Ltd. In addition to this, this also reflects the communication process of corporate social responsibility includes CSR report, company websites, marketing channels, media and word of mouth coverage issues. This processes further helps to minimize the issues of various stakeholders of the entire business firm. This can further help to attain the strategic aims and objectives of a business firm like Illuminate Ltd. This is done through the assist of creation of awareness, attributes, trust, loyalty and advocacy of the overall stakeholders (Daghani et al. 2011). Therefore, it is inferred that the process of corporate social responsibility increase the contingency factor of the modern business firms. In addition to this, the brand image of the firm increases due to effective utilization of the process of corporate social responsibility.
Apart from this, the systematic and unsystematic risks of a business organization can be minimized if that particular organization can implement the process of corporate social responsibility. The process of ethical marketing, sustainability of the environment, development of the communities can also be done through the given CSR process. Through the given theories and process, the organization can gain potential benefit of strategic planning process and techniques. In addition to this, the philanthropic behavior of the organizations demands on the manner in which they carry out their business activities. This can be proved to be extremely effective in terms of their social and environmentally sustainable. Doupnik and Perera (2012) opines that the strategic success and strategic purpose of the organizations depends upon the quality control process of CSR and financial soundness of the modern business firm. Therefore, the management of the organization Illuminate Ltd needs to implement the process of corporate social responsibility in order to attain their respective strategic aims and objectives to make their business sustainable in the competitive business environment Follett (2012).
3: Application of the theory of corporate social responsibility while meeting the interests of the group of stakeholders
The modern business environment has witnessed several business organizations implementing different forms and concepts of corporate social responsibility to enhance their brand image and meet the requirements of their respective stakeholders. For example, the global organization Coca-Cola utilizes their reserves and surplus in women empowerment and in several water harvesting projects. Such types of program form a part of the corporate social responsibility of the organization Foreman (2013). These forms of activities help to meet the different forms of interests of the stakeholders of the particular business firm. In addition to this, there are several other good examples of corporate social responsibility activities in any given industry. For example, the global giant Microsoft also takes part in several corporate social activities like women empowerment, development in rural areas, disaster management. Their mission and vision is attainment of social and environmental friendly activities. The management of the organization aligns their strategic objectives with their corporate social responsibilities to meet the needs and interests of their respective stakeholders (Garrison et al. 2012). With effective CSR activities, the organization is also successful in increasing the shareholder value. This also helps the management to meet the interests of their entire stakeholders. This is also evident from the fact that there is a direct correlation between the strategic alignment of their respective goals and mission with their respective corporate social responsibility activities. As discussed above, there are various dimensions of corporate social responsibility (Haynes et al. 2012). These are people, planet and profit in the triple bottom line theory. This will surely have a positive impact on any particular business organization. The main strategic business objective of any particular organization is to increase their profitability as well as their customer base. With effective form of corporate social responsibility, any particular organization can attain a higher level of success in terms of attaining their respective goals and mission (Harvie, 2011).
On the contrary, there are several negative practices of CSR activities on any particular industry. The poor examples of corporate social responsibilities are HSBC, British Petroleum, etc. The organization HSBC has been involved financial unethical practices in their respective financial statements (Tully, 2012). This is a poor example of corporate social responsibility and can have a negative impact on the brand image of the organization. The organization British Petroleum was involved in oil split crisis that not only damaged the society, but also have a negative impact on the global world environment (Jahdi, 2014). This further interprets that the organization has shown a poor example in terms of corporate social responsibilities as per the requirements and interests of the stakeholders. Therefore, this further reflects that the modern business organizations have been successful in setting several poor and good examples in implementing the process and approaches of corporate social responsibility in an effective manner. In addition to this, it is of great essence for the organization Illuminate Ltd to carry out different forms of CSR as performed by organizations like Microsoft and Coca-Cola.
There are various expectations of the internal and external group of stakeholders of a particular business firm. These can be in the form of increasing their respective shareholder and equity value and keeping the environmental and social standards effectively. It is of great essence for the organization to manage their business activities effectively (Lee and Kim, 2012). This can also be done if an organization makes their business activities sustainable towards environmental and social efforts. This is only possible with effective implementation of CSR process.
Recommendations to the board of directors of Illuminate Ltd in order to accept or reject the concept of Corporate Social responsibility
There are several recommendations which can be given to the organization Illuminate Ltd in terms of improving and accepting the concept and theories of corporate social responsibilities. This is mainly because the organization can have a positive effect in all parts of the organization. Currently, the major issue of the organization Illuminate Ltd is that the brand equity of the firm is low and the customer base of the organization is also not on the higher side. Therefore, it is of great essence for the firm to increase their customer base as well as the market share by implementing the CSR concept. Apart from this, the business firm requires to implement the good process of CSR activities as followed by the organizations Coca Cola and Microsoft. This will further assist the firm to build up their customer base as well as their market share by a large extent (Lindgreen, 2012). With the application of all the theories of corporate social responsibility, the organization can attain a higher level of competitive advantage and can easily create brand awareness at par with its competitors. In addition to this, it can be also inferred that if the organization implements the tool of triple bottom line theory, then they can easily meet the interest of their shareholders as well as their entire stakeholders in a timely manner (Thomson and Jones, 2015). Apart from this, it can be inferred that the organization can also attain their respective short term and long term goals through effective usage of Corporate Social Responsibility. Apart from this, the board of directors of the organization Illuminate Ltd needs to include their corporate social responsibility report in their financial reports, websites, company journals, etc (LoÌˆber, 2012). This will also help to create awareness among the stakeholders and also will assist in meeting the requirements of the respective interests of the stakeholders. The CSR report of the organization will further help the organization to solve the issues of shareholders, employees, customers, suppliers, creditors, etc. The global CSR initiative undertaken by the organization will also assist to build up their business environment through ethics and integrity. This will assist the firm to engage their stakeholders in a prospective manner. All the legal and risk management issues can also be solved through the analysis and implementation of Corporate social responsibility process (McDonald, 2014).
Hence, it might be said that there are certain aspect of the corporate social responsibility that is important in the present scenario. The importance of the responsibility is related to the stakeholders and the efficacy lies with the amount of responsibility. The tailoring of the responsibility is related to the report and the effectiveness of CSR.
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