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Dinh Ngoc Linh

ID: 42801273
Apply Financial Analysis and Management AFIN 252
Essay
Length: 1500 Words

The simple meaning of Corporate Social Responsibility (CSR) is corporate have
responsibility to community and should contribute or support to them. Over the year,
the CSR becomes the trend that has more and more influence over almost
corporate. Large corporate tend to spend some of their pre-tax profit to support
community with the aim to benefit themself and society. However, this action lead to
some questions such that whether it goes against the purpose of corporate which is
to maximise the profit and increase the shareholders wealth; is it really better off for
both corporate and community and who will be the most benefit; whether the benefits
for corporate exceed what they contribute to society. This essay will discuss those
questions clearly.
The World Business Council for Sustainable Development (n.d) state: Corporate
social Responsibility is the continuing commitment by business to behave ethically
and contribute to economic development while improving the quality of life of the
workforce and their families as well as the local community and society at large.
Some typical examples can be pointed out are BHP Billiton, which has made
US$195.5 million of Community Contributions, including to a UK-based charitable
company and many contribution activities; Kellogg Company (Community investment
n.d) contribute more than $8 million in cash and $20 million in product to various
charitable organization, others are British Petroleum, IBM, Motorola, GE, Coca cola,

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Body Shop and so on. The world is experiencing the increase of trend in contribute
and support community after the financial crisis, especially in Australia and New
Zealand (probono news 2010).
It can be seen that the practice of CSR is a good way to better of both corporate and
society as a whole. According to the businesslink (n.d) and Industry Canada
government website (2012), practicing CSR result firstly in increasing corporate
reputation, create goodwill and hence attract more skilled workers, reducing
regulatory requirements and the taxes imposed on corporate. Secondly, activities
that involve local community will make doing business more effective and efficient;
by understanding the corporate impact on community, corporate will develop
products and services that suitable with the customer as well as reduce waste and
recycle material for environment protection and decrease input cost. Finally, making
the corporate become more competitive compare to those who didnt practice CSR
in the same compete environment because customer are likely to support corporate
that closely involve in their community.
Corporate Social Responsibility benefits are widely known because of what it brings
to the community and the corporate. However, a lot of people disagree with the CSR,
they also argue about the nature of CSR and that the corporate should focus on
making profit rather than concern about CSR. All of the ideas below are representing
for the argument that corporate should not practice CSR because it will not
consistent with the aim to maximise shareholders wealth.
First, after the world financial crisis few years ago, almost every corporate were
greatly affected and faced with the significant decrease in profit, reducing its size and
struggle with making new investments. Its reasonable to say that this is not the time

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to practice CSR. Shareholder would be happier if company save their money and
only invest in project than bring specific profit than reputation, which is less valuable
in this difficult time. A cost must be incurred in order to earn profit, but in financial
crisis time, any cost incurred that doesnt show how much profit return will be
rejected by the corporate. In this case, CSR is that cost and this cost similar to self-
imposed tax on the corporate. No one can deny that CSR do bring a lot of benefits
but for how much and whether it worth for what corporate contribute to community or
not, especially when the economy going down and inflation increase. As a result, if
corporate keep practicing CSR, the cost will pass on customer and it is not what
people expected about CSR.
Second, it will not be fair for those large corporate practicing CSR while other do
nothings, young company for instance. Although everyone can argue that the
company that ignore CSR will not get benefit like corporate that concern, but the
point is when CSR become more and more popular that someday the government
may impose the regulation that large corporate must have CSR or community
investment program, for example. Therefore, there will be no fairly competitive
market. Large company must spend their profit to contribute to community while
young company can invest their financial resources - the one that some of it should
be use for CSR, to earn profit. Despite the fact that large corporate earn large profit
and contribute one or two percent of it does not matter but business is business,
everything must be fair and cleared.
Third, corporate somehow has done their basic CSR, pay enough taxes for the
government and create jobs for hundreds of thousand people. It satisfies conditions
of both community and the government, corporate have no more responsibilities,

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social issue is the problem which belongs to authority and they have responsibility
for this. The main goal of doing business is making profit, corporate do not born to
make dealing with social issue. Although social activists can disagrees the idea
because if corporate do not good at this then financial support is enough and the rest
will be taken by activist, but as mentioned above, corporate pay tax for government
and government can do whatever they want including support community.
The advantages and disadvantages, cost and benefits of practicing CSR has been
discussed and result in two different schools of thought. However, the essay will not
make any judgment but rather talk about the relationship between CSR and
corporate main goal.
In the days of everything value is counted into money and corporate extreme focus
on profit, they are no longer realise the mutually relationship between corporate and
community. The fact is that corporate is part of the community, they rely in the input
and labour come from society and the society consume the output from the
corporate. From this view of point, the practice of CSR does not go against purpose
of the corporate and it consistent with the aim to maximise shareholders value.
Furthermore, although the benefit for corporate and for community is hard to
indentify but it is really better of both of them, the benefits are the same because
they have a closely mutually relationship.
The question is how to increase the benefits of that relationship? The simple answer
is to fix CSR with the strength of the corporate, according to Rickgoossen
(September 2009). Richgoossen also provide some persuadable typical examples
such as Coca Cola IBM and Toyota. The main ingredient of Coca Cola is water and
the Company has try their best to provide clean water for communities incorporate

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with WWF, US Agency for International Development and the Gates Foundation
(May 2011). IBM (n.d) uses their technology to build a smarter world and as they
say, technology is the key for solving traffic jam, food shortage, energy; Toyota (n.d)
contribute to the reduction of cars emission by using alternative energy friendly with
the environment. It is clearly to see that three large corporate practicing CSR based
on their strength, core product. The mutually relationship is reflected by making and
improving their core product satisfy the CSR, the community is first better off and
result in the increase in sale because customer attracting in not only high quality
product but also by having good impression on corporate that support the community
as well.
In conclusion, Corporate Social Responsibility are mentioned in everyday because of
its benefits bring to the community such as build reputation and more competitive but
it also causes the argument that it go against the aim to maximise shareholders
wealth, which is the main goal of corporate in competitive business environment, by
using financial resources for non-profit investment. Therefore, to bring benefits for
both of them, Corporate should place CSR on their strategy products to support the
community and hence increase the sale, gain more profit and satisfy the
shareholders expectation.






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Reference
BHP Billiton n.d, homepage, BHP Billition, Melbourne, viewed 25 March 2012,
http://www.bhpbilliton.com/home/aboutus/sustainability/Pages/Community.aspx.
Business.gov.uk n.d, homepage, corporate social responsibility, viewed 27 March
2012,
http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1075408491&type=RESO
URCES.
Coca Cola 2011, water target, homepage, Atlanta (USA), viewed 31 March 2012,
http://www.thecoca-colacompany.com/citizenship/pdf/SR08_WaterStew_30_33.pdf.
ic.gc.ca 2012, Business Case for CSR, government homepage, Industry Canada,
viewed 25 March 2012, http://www.ic.gc.ca/eic/site/csr-rse.nsf/eng/h_rs00100.html.
Kellogg (n.d), homepage, Kellogg, Michigan (USA), viewed 29 March 2012,
http://www.kelloggcompany.com/social.aspx?id=57.
Toyota n.d, pursuing the ultimate eco fuel for modern cars, homepage, Toyota,
Japan, viewed 24 March 2012, http://www.toyota.com.au/hybrid-synergy-
drive/alternative-fuels.
Probono News 2010, Community Investing Strong as Corporate Give Back in 2010,
Probono Australia, viewed 20 March 2012,
http://www.probonoaustralia.com.au/news/2010/11/community-investment-strong-
corporates-give-back-2010.

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Rickgoossen 2009, Focus on CSR as a competitive advantage, 4 September,
viewed 29 March 2012, http://www.makegood.com/blog/2009/09/04/focus-on-csr-as-
a-competitive-advantage/.
IBM n.d, Smatter Planet, homepage, IBM, USA, viewed 30 March 2012,
http://www.ibm.com/smarterplanet/us/en/?ca=v_smarterplanet.
World Business Council for Sustainable Development n.d, corporate social
responsibility, homepage, World Business Council for Sustainable Development,
viewed 15 March 2012, http://www.wbcsd.org/work-program/business-role/previous-
work/corporate-social-responsibility.aspx.