Is Profit or CSR the Main Driver for For-Profit Business? At the very heart of defining a business, the executive leadership must first understand what products and services will the business bring to its customers; understanding what the consumer values is a key component in product and services development. The executive team also must understand other stakeholders and shareholders, and how it will operate in order to create profit while also meeting the shareholder and stakeholder expectations. At the heart of the matter is how leadership views profit. Is the company in existence to make a profit or to maximize profit. According to Northrop, profit maximization directs all firm behaviors towards making as large a profit as …show more content…
As part of product and service creation, successful companies spend significant energy understanding the end users value proposition to ensure the product will create value the consumer is willing to pay for (Expressive Product Design, n.d.). During this initial market and product research phase, the company and the consumer are working on the definition of shared value for the product. By adding sustainability as a core value as part of the product definition, the product can be created to meet the customer need in a way that is also valuable for the company to produce (Williams, 2014). Even Adam Smith acknowledged that human beings are self-interested, but also containing “sympathy, empathy, friendship, love, and the desire for social approval” (Williams, 2014, p. 11). Therefore both profit and social approval are intertwined when creating products consumers want. Embedding CSR in with how products are created ensures a scalable model for accommodating both profit and CSR. A company realizes profits from two activities, increased sales units with reduction of costs. The stakeholders that allow a company to do this are the internal employees to the company, and the businesses the company partners within their product supply chain. Lean development methodologies are common in manufacturing due to the relentless focus on continuous improvement, and efficient manufacturing practices while
Production practices have had an important role in satisfying the dynamic market. Many approaches have being developed in order to respond effectively to specific business requirements. In fact, some areas of management have focused its study on the overseeing, designing, and controlling the process of production in an effort to find the best methodology that ensures the business success and performance. However, complexities arise in this field because many variables such as costs, inventory, scheduling, suppliers, etc have to be considered in any business. Lean approach and the traditional approach are two points of view that aim to address this complexities, and those will be examined in this essay.
In recent years, increasing number of customers and businessmen start to concern about the ethical issues in businesses. Although the main purpose of business is to make profits, the social influence of it also appears to be focused by a large proportion of customers and businessmen. Corporate social responsibility (CSR), which is closely connected with this concentration, was put forward in 1953 with the meaning of interacting social, environmental, and economic considerations into the decision-making structures and processes of business (Industry Canada, 2013). Although criticized, there is a business case for CSR because it could enhance customers’ loyalty, improve
Companies today are heavily influenced by the demands of customers and stakeholders. Corporate social responsibility (CSR) refers to the social and environmental responsibility policies and practices developed by an organization to increase its positive influence and reduce its negative activity towards society (Parks, 2008). The business approach and corporate philosophy of an organization is easily altered due to economic pressures, technological improvement and stakeholder needs and demands. "Going green" or being eco-friendly is one such demand. Environmental and sustainability concerns originate most often from governments, consumer activists, and the general public (Schlosser, 2008). Thus, organizations must implement sustainability into daily practices. In addition, sustainability alters the nature of competition and drives companies to think differently about products, processes, and technologies (Parks, 2008).
Chase et al. (2006) state that “lean production is an integrated set of activities designed to achieve high-volume production using minimal inventories of raw materials, work-in-process, and finished goods” (p. 471). The essential components of lean production are surplus elimination, constant work-flow, and consumer appeal. The minute these components are in the neighborhood of supply, quality and cost, this outlines the groundwork for a lean production organization. A Japanese plan of continuous progress named the Kaizen is responsible for the lean production idea. Riordan can adjust the lean production concept by employee empowerment and advancement, staying focused on making processes stronger, impact of consumer relations, rapid merchandise growth and production, and cooperation with suppliers are the imperative strategies of Riordan managing lean. Features of a lean enterprise include a combined single piece continuous workflow and near incorporation of the entire value series from raw material to finished product. In addition, demand drives production rather than predictions. This means that manufacture designing is by consumer demand or appeal and not to become system loading or strict work flows on the company floor. This will help Riordan keep minimal inventories at each step of the production process. It is also important to know that having a working participation by employees involved in
This paper presents a relevant contribution for practitioners and managers to deal with the implementation of lean. It shows that through the effective use of available tools to measure the lean manufacturing implementation of the company. Lean methods are available for them to identify specific problems and opportunities to improve the lean practice implementation.
The concept of Corporate Social Responsibility is a relatively new in the management field and there is no single definition of it since everyone’s interpretation of the term is different. “Corporate Social Responsibility means something, but not always the same thing to everybody.” (Votaw, 1972, p.25) and from my understanding of the concept, CSR to me is “The voluntary business activities within the boundary of law that contributes to the wider community for a more sustainable environment”. Since everyone has a unique interpretation of CSR, the range of relevant CSR practices across businesses has been quite diverse as there is no such thing as features of CSR (Marcel van Marrewijk, 2003). Rising environmental and social concerns in
New Balance is a large company specialized in manufacturing footwear products at a global level. The case study reveals that New Balance is currently committed to formulating an integrated Cooperate Social Responsibility (CSR), which will enable it to place itself in a good position in a highly competitive market (Veleva, 2010). In 2009, the company was still struggling to build a CSR, which would create a reputable name for its products in the global market. However, as Veleva (2010) illustrates, the firm faced various challenges such as lack of a CSR department, which would foresee the implementation of an integrated CSR. This calls for the analysis of the various
In order to achieve the goals, there are several tools and methods have been introduced in lean production. The tools and methods are including:
One of the leading companies that adopted CSR as a pioneer of ethic is The Body Shop. The company has used CSR as a competitive strategy in order to succeed in business. The shop owner knows what she does best. So, products are developed based on a specific group of customers in order to create a strong brand preferences and unique way with a perception of enormous customer groups, called sustainability ideals. The source of The Body Shop success is to utilize the benefits of CSR by selling products based on natural ingredients, paying a fair price and no testing on animal. According to porter (1985), he claimed that sustainability of differentiation depends on two things: "it is continued perceived value to buyers and the lack of competitor ability to imitate it" (Porter 1985 cited in Mallin 2009, p.71). It requires a transparency of work process with stakeholders. From this example, it explains why CSR is important to modern businesses like The Body Shop (Mallin 2009, pp.59-78),(Kwapong 2005, p.89).
Just like these economists, consumers also have different understandings of CSR, but seem to act in a similar way that supports the notion of CSR. Asking a person if a business should be socially responsible or not could be misleading because the definition of CSR may be vague and not widely known to the people. The survey I conducted aimed to obtain 10 responses from college students that range between 17 and 25 years old. My class is a microcosm of the world because it consists of people who have different understanding of CSR due to their different backgrounds. Those whom I surveyed identified a business as socially responsible in distinctive ways, such as paying taxes, a good reputation, giving back to the community and taking care
In a competitive business environment where consumers are increasingly aware of their buying power, they are asserting their right to not only demand quality but hold companies to account to high standards. They are concerned with where the goods were originated, the conditions under which the goods are manufactured and what ethos a brand stands by. It has become crucial for a business to be built on ethical practices in order for an organization to maintain its success. Over time the idea of CSR just being an unnecessary expense has shifted, with it coming as far as being called out as a, ‘definitively important strategic issue’, Businesses now see CSR as a method of generating and protecting income through creating a good brand image and customer loyalty.
Product lifecycle pricing provides the firm a systematic way of understanding the true price of a product, including externalities, in their product creation process. In traditionally, the company only considers the costs of the end product. For instance, a company creating a product with multiple components sourced from various manufacturers looks at quality and price of the components to manage the costs of the final end product. Product lifecycle pricing encourages a company to consider the full cost of the subcomponents that make up the final product. Full cost includes not only quality, but a quantitative price attached to each step from the impact to the earth when extracting the materials for the product, the energy used to build the product, the living wage and working conditions of the people who manufactured the product, the impact to the environment in the community where the product was manufactured, and the disposal of the product at the end of its product life (Chandler, & Werther, 2014). If a CSR promoting company does not fully evaluate and understand the lifecycle, starting from the very beginning of the product creation steps, they run the risk of exposing their brand, and reducing brand equity, due to negative press in the event that poor CSR practices occurs anywhere along the lifecycle. Additionally, CSR positively affects supplier behaviors in the business-to-business (B2B) marketplace (Pai, Lai, Chiu, & Yang,
These day’s organizations everywhere throughout the world are confronting with expanding demands from clients and competitors. Clients have higher desires, and makers can meet these desires by expanding item 's quality, diminishing conveyance time, and reducing costs – or a mix of these three categories. These push business organizations to actualize new generation methodologies to upgrade their intensity in the worldwide commercial center. Lean is a coordinated arrangement of standards, practices, apparatuses, and procedures which expect the consumption of a wide range of assets for any reason other than the making of significant worth for the end client to be inefficient, and in this manner an objective for avoidance. The end of non-quality included exercises decreases expenses and process
The purpose of supply chain management is to manage the flow of goods and services from the procurement of raw material to the point of consumption. Furthermore, it deals with the storing of material, production, and distribution of a product that will maximize customer value and give a company a competitive advantage of the competition. Applying lean gives a company the ability to focus on constraints in the system that inhibit efficient product flow, eliminate waste and improve productivity and quality. For this to be successful its imperative companies seek to include suppliers, distributors and logistics into the process because lean requires integration, coordination and collaboration across the organization and throughout the supply chain (Agus & Hajinoor, 2012). As a result of increased transparency, companies will be more focused on performance and this will create a collective effort to reduce cost by eliminating waste and increasing productivity. Beyond the efforts to eliminate waste lean looks to incorporate customer value from the customers perspective. Simply, everything that is being done that ensures customer satisfaction is a value added step and any activity that fails to achieve customer satisfaction, which is something their willing to pay for, is a non-value added step and should be eliminated from the process. By simply knowing the process and eliminating
When policies to implement social responsibility are adopted, the direct financial impact on goods and services is evident; for instance, as part of its CRS strategy, Home Depot has partnered with Energy Star and according to the company’s 2016 responsibility report, the result of that partnership saved customers over $701.6 million in annual energy utility costs. More savings brings more sales. Additionally, a solid CSR demonstrates a level of ethical commitment and in today’s world, consumers are looking for that. Consumers will intentionally seek out products from suppliers who have CSR policies in place (“Resources & Reports”, 2016).