MANAGEMENT OF BUSINESS

Corporate Social Responsibility

Corporate Social Responsibility may be defined as a business approach that contributes to
sustainable development by delivering economic, social and environmental benefits for all
stakeholders.
According to investopedia it is a self-regulating business model that helps a company to be
socially accountable to itself and its stakeholders.
Today many businesses recognize their corporate social responsibility to their community as
important since the continued viability and sustainability of their community is important for
their own continued survival.
Responsibilities of the firm
1. Workers-firms have the responsibility of paying a decent wage and providing humane
working conditions for their workers.
2. Government- firms are expected to pay their correct amount of tax and to abide by the
laws governing proper employee relations.
3. Community- firms must agree to follow the social contract with their community so that
apart from agreeing to control all types of pollution, etc, they should also be involved
with community development such as upgrading private roads, community centres,
school projects, etc.
4. Other organisations- many firms get involved in national programs such as the
sponsorship of sporting events and school scholarship because of the good public
relations they get.
Factors Contributing to Effective Corporate Social Responsibility
1) The program should be endorsed by a wide cross section of the community as this will
result in greater appeal and acceptance of the programme.
2) Any programme developed should be long term in nature and be sustainable.
3) The communities, organisations or individuals being helped should be consulted on the
formation of the programme. This will ensure the involvement of those benefiting.
Benefits of Corporate Social Responsibility
1) The goodwill of the firm increases. The corporate image and the brands offered will also
benefit from the good public relations which will in turn increase sales volume.
2) The profit levels of the firm increases
3) Most countries’ tax laws allow these firms to use their contributions as a taxable
allowance.
4) Helping communities can indirectly lead to a reduction in crime and an increase in the
skills of potential workers. Assisting with alleviating these social ills will create a safer
business environment.
5) Some people simply enjoy giving

Business Ethics
The term ethics refer to a set of guiding principles that direct the behavior of people.
Business ethics includes fraud and illegal dealings but it also extends far beyond a legal
framework. For example; there are legal ways accountants can present their financial
statements while manipulating accepted standards to suit some short term needs. While some
persons may consider this acceptable others find it unethical.
Negative Effects of Unethical Behaviour
1) Loss of corporate image.
2) Loss of profits due to employees committing fraud.
3) Financial losses due to lawsuits filed against the firm.
Reasons for Failure of Corporate Objectives
1. Failure to translate the strategy into actual operational plans- firms neglect to
provide the resources needed for translating the objectives into tactical plans, such as
finance, training of employees and redirecting organisation structure.
2. Tardiness in assessing the level of competency needed in comparison with the current
level of skill.
3. Failure to properly scan the business environment- which can lead to the development
of wrong plans devised.
4. Failure to align and link the various departments of the organisation to the
corporate objective. (One common such failure lies where the individual departments
press claims for their particular needs and objectives without looking holistically at the
corporate needs and objectives).
5. Failure to share the vision and by extension the main objective with the ordinary
workers. (This can lead to an unmotivated staff that may not care about the objectives of
the firm).
6. Resistance to change-the organisation needs to adjust the corporate culture so as to make
learning to adjust to change an ongoing process.
 Case Study
Digicel sees Profit by April
Steven Jackson Wednesday, January 07, 2004. The Gleaner
Cellular phone provider, Digicel Jamaica, expects to break even by March this year, giving
it the confidence and platform it says, to launch a landline service by the next year.
The company said that the move from the red into the black exactly three years after it began
service in Jamaica would come three years ahead of the initial projection- the result of a faster
paced revenue and customer growth than had been anticipated.
‘Although we had a loss in the first two years of operation…the company expects to turn
a profit this financial year, three years ahead of forecast’, David Hall, Digicel’s chief operating
officer, told the Business Observer. Digicel remains heavily indebted- but this is expected in an
industry like this where the set- up costs are huge. Overall, we are extremely happy with our first
three years in Jamaica.
Digicel owned by Irish investors who in 1999 paid the Jamaican government US $47 million for
the cellular license, has had to borrow billions of dollars in order to build out its infrastructure to
keep up with the frenetic demand for its service:
‘In Jamaica last year, C&W announced that the number of land line actually fell by
50,000. Therefore, we will go into land line- but we will concentrate initially on the corporate
market’, Hall told the Business Observer. ‘Yes we are definitely going into that next year but we
will still concentrate on our core business.’
Digicel says it expects to cross the millionth customer landmark by March this year, and
that some US$80 million of the money it has borrowed will be used to develop sites between
September 2004 and March 2005.
‘[It will bring] coverage up to 31 new areas in Jamaica’, says Hall. ‘This will bring our
number of sites to over 560 and will give us 95% population coverage and 88% location
coverage in Jamaica’.
Digicel captured the lead in the mobile market – from C&W- a year and nine months
after it began business in April 2001. It has 558 direct employees with another 3000 employed
indirectly via card outlets, dealer shops and phone distributors.
At the time of acquisition of the license, Digicel said it would use Jamaica as a
springboard for a launch into the region. The directors have so far fulfilled that commitment. For,
having invested some US$500 million in the region, the company now provides service in
Jamaica, Grenada, St. Lucia, St. Vincent and the Grenadines, and Aruba and is seeking license
for Trinidad & Tobago. The company will also begin servicing the Cayman and Barbados
markets by April 2004.
Questions
1. What proof is there that Digicel is using the corporate objective of increasing market
share?
2. What are some of the strategies being employed to achieve this corporate objective?
3. Why is diversification one of these strategies?
4. What proof is there to show that the objective was successful?