‘A business’s only responsibility is to produce profits.

To what extent do you agree with

this statement?’

Introduction

Friedman (1970) observes that the main responsibility of a business is to use resources human

or otherwise efficiently in order to enhance profits bust also observe rules of the game. This

is statement points to the importance of profits in an organisation. Profit equals Total

Revenue subtract Total the Costs which implies that a business to break even revenues must

be more than costs (Okpo, 2013). Profit earning is significant to a business because

profitability determines whether or not a firm can obtain financing or credit from banks,

appeal to investors and ensure growth. Companies cannot remain in operation without turning

a profit (Okpo, 2013; Failte Ireland, 2013).

The corporate social responsibility is the act of a company taking into consideration of the

economic, environmental and social impacts and accounting the human rights (Whitman,

2017). The reason for this is mainly the, consumers are not only looking for quality in

products and service, rather they are evaluating the CSR. Usually, the companies offer the

information about the CSR they are involved in. Some of these activities include;

environmental control effort, philanthropic activities, ethical labour management and

volunteering (Okpo, 2013). For instance, the Coca-Cola company has done allot of voluntary,

especially in Vietnam where they have created community based water project (Coca-Cola,

2014).
 The advantages and disadvantages of CSR (Carroll and Shabana, 2010).

Advantages. Disadvantages.

1). Aids in regulation of the labour. 1). The company faces additional bureaucracy,

2). Firms would know what is anticipated of with incessant rise with observers.

them. 2). There may an arise in cost of operation beyond

3). It can enhance growth as well as the profitability range.

sustainability.

4). In case of downsizing can assist in

outlining balancing of the firms and their

employee.

This section looks at the cost and benefits as regards deciding to engage in CSR or if decided

not to engage in CSR. Whereas, a main business goal is to generate profits, a company has

other goals other than profits (Adeyanju, 2012; Carroll and Shabana, 2010). Most companies

are looking beyond profits and beginning to address other societal and environmental issues

in line with triple-bottom-line model (Elkington, 1998). This is what is termed to as

Corporate Social Responsibility (CSR). Corporate Social Responsibility (CSR) has gained

importance in the contemporary world, and its effects on firm’s performance have generated

discourse from industry practitioners and scholars alike. CSR has been described by Ferrell,

Hirt and Ferrell (2014) as minimising the negative impact on society which implies

maximizing positive impact.

decided not to engage in CSR. As observed by Tran (2015), it is important to strike the right

balance between profits and CSR. CSR is very important to a business, and its importance

can be seen from its advantages. Some of the advantages of engaging in CSR are it improves

the corporate image whereby it is morally right for a firm to take care of the environment and

society besides making profits. Another advantage is being sustainable in order to earn a

social license to operate. A company’s activities might be disrupted by the community if it

acts unethically.

As observed by Carroll (1999), CSR looks at serving the interests of other stakeholders such

as suppliers, the society, employees, general public among others besides the shareholders.

He reiterates that CSR is composed of four elements economic, legal, philanthropic and

ethical. The above CSR definitions show that a business objective goes beyond generating

economic value for shareholders and includes taking care of societal interests and

environment. For a business to be corporately and socially responsible, some of the activities

to be carried out are reduced water and air pollution; cleaning the environment; company

sponsorships such as sports; respecting human rights; feeding the poor or helping the needy,

being honest with consumers, avoid bribes, avoid child labour and taking care of animals

among others. For example, it would be unethical for a company to establish a recycling plant

for lead or garbage in a densely populated area due to air pollution. Such a company even if it

employs many people, pays taxes and enhances economic value will be considered as being

unethical. A recent example is NIKE whose products were rejected by consumers when

media highlighted Indonesian suppliers are mistreating workers (Porter and Kramer, 2006).

The Coca-Cola company for instance, the company has a lot of stockholder, hence the

company is a high profit making firm. As such, the company is unable to support a few

designated societies for unspecified period of time, rather can introduce new tools and
assistances and then neglect them, potentially exposing the community to more threats than

before the program. For instance, in Vietnam the company engage in a variety of activities

like the water project. The Clean Water for Community program started, the Vietnamese

community has been accessing the water sine the year 2004. The company conferred that the

results have been more constructive to the brand image, with a lot of press coverage (Coca-

Cola, 2014).

In summary, Caroll (1999) and Carroll and Shabana (2010) highlighted reasons for and

against the focus on CSR. Advantages or why CSR includes leads to long-term profitability

reduces Government interference through strict laws; firms might benefit from tax rebates;

reduce interference from the local community (promote good relationships), and it promotes

sustainability. Arguments against or disadvantages of CSR are business are ill-equipped to

tackle societal issues; company profits are taxed by the Government hence it is the sole

responsibility to take care of the society and environment; makes businesses less competitive

since CSR is not sole reason why companies exit and sometimes profits are not enough to

handle societal and environmental issues (Caroll, 1999; Porter & Kramer, 2006).

Regardless of the pros and cons surrounding CSR, it is imperative for businesses to engage in

socially responsible activities. Ferrel et al. (2014) reiterates that businesses created problems

hence they must assist in resolving them, being responsible will lead to economic survival,

businesses have both financial and technical muscle to handle societal issues, and extreme

laws are avoided when businesses act responsibly. Furthermore, a strict focus on profits may

lead to harmful elements in the environment which also includes unethical behaviour.

Conclusion
Immense advantages come along with an organisation engaging in any CSR activity. When

the company enact this as a routine the company, attains a bigger exposure. Moreover, as

much the company is giving back to the society the community, who are the consumers flock

for the product. The involvement of the community in uplifting the community enhances the

growth of the company in multifarious aspects, for instance the company may attain a cheap

labour from the community. Like Coca-Cola company in Vietnam. The CRS plays core

factor in the increment of the company’s profit.

References

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