CORPORATE RESPONSIBILITY

The issues of social responsibility have received greater attention with the advent of intense globalization of business. Though there are disadvantages to adopting social responsibility, despite the numerous advantages of the practice. The problem that arises from using corporate social responsibility is that it promotes policies that are directly welfare reducing. Applying principles of corporate responsibility raises costs and prices. Whether it also reduces profits depends on market conditions. Corporate responsibility denies the managers ability to focus on the companies goals and to make decisions that will benefit the shareholder and the company. The key to a successful business if gaining profit. Adopting social responsibility decreases profit due to the modification that a company might have to enhance to their product in order to satisfy the public. There is too much focus on social responsibility. We expect businesses to produce goods and services efficiently and cost effective, but that does not constitute social responsibility to consumers. The book brings out several key issues about the disadvantages of social responsibility. Managing societies demands and the organizations demand will create conflicts and problems. Even though an organization might implement the process of social responsibility consumers may take the ultimate hit. Price increases can occur due to the modification of the product or service. For example the cigarette industry was extremely effected by social responsibility. Cigarette prices in the last 5 years has dramatically increased due to government intervention caused by societies demands. Cigarette companies had to re-market their products. On their advertisements they had to place warnings on their products, explaining that it may be related to causes of cancer.