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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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  • Number of pages: 2

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Introduction:

This essay will begin with describing the importance and the need for the corporate social responsibility. A Corporate Social Responsibility (CSR) refers to the business practices adopted by corporations with the motive of benefiting the society. The few broad categories covered by the social responsibility of businesses are: Environmental efforts, Philanthropy, Ethical labor practices, Volunteering, etc. (http://www.businessnewsdaily.com/4679-corporate-social-responsibility.html ).

The Need for Corporate Social Responsibility:

Milton Friedman argues that since a company is a non-human entity it does not have any moral responsibility towards the society. He says that resolving the social issues is the governments' duty. A corporation's duty is to increase the shareholder's wealth. Giving away its profits for social development instead of reinvesting it in the company is not in the best interest of its duty. (Friedman, 2007). However, with the increase in ethical consumerism, Corporations have embedded CSR into its operations. Consumers want their favorite brands to set forth the values which they believe in. According to the survey conducted by double the donation, 55% of people are willing to pay more for products from socially responsible companies. Also, shareholders want to invest in businesses with good corporate reputation. Thus, focusing on improving the social aspect of the company will increase its customer base and will differentiate itself from its peers. Last year, corporations has therefore given $17.8 billion to charities and 93% of top 250 companies now publish annual CSR reports. (https://doublethedonation.com/why-corporate-social-responsibility-is-important/ )

The need for Civil Society Organizations:

One of the biggest criticisms against CSR is that companies only care about it for marketing purposes, and sometimes deviate from the actual motive of benefiting the society in the race of outperforming their competitors by utilizing opportunities. Here comes the need for a civil society organization (CSO). A CSO is defined as non - profit groups which take the help of activism and resource mobilization to create space for the state, the market and ordinary household to advocate for changes in certain issues. http://www.bbc.co.uk/worldservice/people/highlights/010705_civil.shtml . A CSO\'s main aims are to redress the issues faced by the consumers or ordinary people and make more people aware of their responsibility as a consumer. Since they have limited resources, they target the firm with greatest potential to affect their targets, in order to create a maximum impact. They use tactics like boycotting the use of products they manufacture, for example Chinese boycotted apple iPhones and iPods after the release of the working conditions of the labors in the Foxconn factory. (https://www.theguardian.com/technology/2012/jan/29/apple-faces-boycott-worker-abuses ) They also use tactics like Demonstrations, protests and marches. This is a method of mass civil disobedience which has two motives: Articulating the identities and experience of opposing consumers to the manufacturers of the product (Egan, 1998) and Sharing the experiences of consumers who are harmed by the corporate malfeasance in order to challenge the everyday consumer\'s experience of the product. (Pezzullo, 2003) Hence, affecting the company\'s revenues and brand reputation. Activists group also take the help of mass media outlets to spread consumer awareness and engaging them. Various documentaries make consumers critically assess the role that big corporations play in the contemporary society.  CSOs also not just inform consumers about the evils of child labor but how buying that one pair of jeans contribute to the ongoing violation of human rights.   

The Effect of activists on corporate:

These CSOs generally try and target the financial aspect of the firm by damaging their reputation so that no consumers buy their product or service and no shareholders are willing to invest in them. Especially the firms which are abusive to labour and environment are penalised the most by the investors. Epstein and Schnietz found that after the 1999 Seatle WTO failed trade talks, on average a portfolio of Fortune 500 firms suffered a 1.9% decline in equity value. But the firms that did not comply with the labor or the environment (from the mining, logging, oil, toy, and apparel sectors) social norms suffered a 2.7% loss. Pruitt and Friedman also found that average firm market value decreases by $120 million after a union sponsored boycott announcement is declared or after a threat to boycott against a company is made. After CSOs put pressure on the companies, the target companies try to limit the damage by using various strategies such as Wage a Fight, Withdraw, Wait or Work it Out ((*) Lawrence, A.T. (2010): Managing Disputes with nonmarket Stakeholders: Wage a Fight, Withdraw, Wait, or Work It out?, California Management Review, 53(1): 90- 113 ) These strategies depend on various factors such as Brand impact, Firm\'s resource dependence, Firm\'s power and the dispute urgency. These are evaluated further with the examples below.

Case of North Dakota Pipeline:

Energy Transfer Partners' $3.8 billion, 1,170-mile Dakota Access project, which is about three-quarters complete, would carry as much as 570,000 barrels a day of shale oil from North Dakota's Bakken field to the pipeline networks and refineries of Illinois. This will lower transportation costs for the company as much of the Bakken oil travels by train.

It has become a target because it passes less than a mile north of the Standing Rock Sioux reservation. But it is not the only reason for the dispute. If completed, it would disturb archaeological and sacred sites. The burial grounds, grave markers and artefacts, including ancient cairns and stone prayer rings, would be removed. And it could pollute the Missouri River water that the Sioux use for drinking. if the 30-inch-diameter steel pipeline leaked.

In spite of having an option of taking the route closer to Bismarck, the pipeline owner\'s did not pay any heed to that alternative as largely white resided there. This triggered accusations of environmental injustice and racism.

In the beginning the company, Energy Transfer partners, did not capitulate to the activists as there was low dependence on the non-market stakeholders for the resources and less urgency to settle the dispute as the number of people protesting was small in number and was not affecting the pipeline's progress at all. They decided to adopt the strategy to wait for the condition of dispute to shift. The company was quite confident about their technology and argued that a brand-new pipeline would be safer than alternatives, including rail cars, which have also leaked in accidents.

They showcased a combination of normative power i.e. allocating and using manipulating symbols and coercive power i.e. using tear gas, rubber bullets and piercing noise devices to inflict physical harm and to move the protesters blocking the road and pipeline route.

Slowly, with the help of social media the photos and videos of confrontations of protesters with police reached people. Also, the pop culture started to support, from actor Mark Ruffalo to former vice president Al Gore helped in reaching out to more people and making them aware. This generated a large following and support for the natives from across the world.

High emotions got involved from all over the world and companies reputation came at stake. The power also shifted from firm to the nonmarket stakeholders as they got the ability, only when a lot of people are involved, to force the government regulators to change their policies and bring the project come to a halt. This will make the company suffer with financial losses. Thus creating a sense of urgency. Energy transfer partners thus capitulated and withdrew from the project as all the three determinants were not in the companies favour.

Unocal in Burma:

Unocal corporation is a $7.8 billion U.S. oil and gas firm. This firm entered a $1.2 billion project which involved the construction of a 416 mile pipeline to transfer natural gas from offshore Yadana gas field across the southern panhandle of Burma into Thailand. Unocal partnered with SLORC, Thailand\'s national energy company and the French energy giant - Total. Unocal committed to $348 million to construct the pipeline and Total committed $6 million socioeconomic development program designed to provide healthcare, educational facilities and agricultural projects to the area\'s 35,000 local inhabitants. They employed 2000 workers and gave the workers higher than prevailing wage rate. They conducted periodic reviews of the place to conclude that the Yadana project is sustainable in both moral and environmental perspectives.

The SLORC (State Law and Order Resolution Council) is a brutal junta that had created massacre during its time of ruling Burma. It had killed thousands of innocent citizens and imposed its own brand of authorization, closed universities and enforced strict curfew.

The construction began in 1996. During the initial phase of construction anti - SLOCR rebels killed five Burmese members of Yadana survey team and constantly attacked Total base killing a further six project workers. To prevent further attacks SLORC deployed 4000 troops along the pipeline route. The construction was finally complete in 1998.

The commercial production commenced in early 2000.  It was reported that the troops were involved in atrocious violations of human rights i.e forcing unpaid labors and subjecting the population to random killing, beating, rape and theft.  As this news spread in the west one of the largest student movement was formed based at wisconsin called Free Burma Council (FBC).

FBC in the beginning indulged with peaceful protests and publicized consumer boycott. Activists later wanted shareholder resolutions to bring some changes but none passed. Finally the coalition applied to federal and sanctions as well as state and local selective purchasing laws. 13 cities passed laws barring government agencies from purchasing any good from any company with operation in the country.

Unocal also faced two law suits against them, along with pressure from FBC, stating that along with forced labor unocal was responsible for relocation of villages. This was however defended against successfully by providing satellite images of villages being untouched. And they claimed paying more than market wage to their workers. In response, plaintiff appealed the district court decision by providing evidence that in spite of knowing about the atrocious violation of human rights by SLOCR troops they did nothing to stop them. This went on for about 10 years. The Company decided to work it out with the activists. The management was powerful and was facing an urgent issue as the activists were being a hurdle in their operations. The then president John Imle was blunt in the meeting and said that if there would be any more threat to the pipeline then there would be more military. If the military were the reason for forced labor, then there would be more forced labor.

Unocal however did make small concession to activists demands. They hired their first director of corporate responsibility, and was responsible for improving the lives of people wherever they worked.  They also established an internal Corporate Responsibility Steering team and conducted a self-assessment of the firm\'s corporate responsibility with the help of Center for Corporate Citizenship of Boston college. However, despite years of pressure and opposition, Unocal had not capitulated to the activists\' demand.

In the case of Unocal the activists had problem with the companies association with SLOCR and was therefore not able to provide much damage to the firm. The power was in the companies hand as they had support from SLOCR. Therefore they decided to work it out with the activists. In the case of North Dakota Pipeline on the other hand due to all the factors in activists favor Energy transfer Partners had to withdraw.

Conclusion.

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