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COURSE :GMUL5063 LAW, ETHICS & CSR

LECTURER : DR RUZITA AZMI
CASE STUDY 2:
COMPANIES PERSEVERING AGAINST ALL THE ODDS
GROUP 2 :
1. KALAIVANI MYLVAHANAM
821246
2. MURUGESWARY
821120
3. ELLY TAN
822052
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What is CSR?

 CSR (also known as corporate social performance, sustainable business,

sustainable responsible business, corporate responsibility, corporate citizenship,
responsible business) is an integral component of the operations of a company
whereby it voluntarily contributes to society in terms of economic, environmental,
ethical and social investment
 A corporate social responsibility (CSR) policy is beneficial not only for a
corporation’s bottom line but also for its employees, stakeholders, consumers, and
for communities, the environment and society at large.
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A CSR policy Vs Humanity, Environment, Ethics & Law

 The benefits of CSR practice are immense for corporations, the community and the environment.
There are various factors responsible for the steep rise in the number of corporations adopting CSR.
1. First, consumers across the globe are becoming more and more aware of the environmental and social
implications of their purchases and hence they take these issues into consideration when making their
decisions.
2. Second, globalisation has given rise to new challenges for corporations in terms of government regulations,
tariffs, varying standards, ethical issues, environmental restrictions, labour exploitation, and so on. These
issues can be very costly for corporations, and hence corporations have to use socially responsible policies.
Many corporations use CSR methodologies as a strategic tactic to gain public support for their presence in
global markets, helping them sustain a competitive advantage by using their social contributions to provide
a subconscious level of advertising (Fry et al., 1982).
 Furthermore, corporations increasingly like their actions, activities, policies and processes to be visible through
various manifestations of CSR.
 Thus, corporations are put under immense pressure to avoid harm in respect of the broader social welfare,
including people and the environment.
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COMPANIES PERSEVERING AGAINST ALL THE ODDS IN
CSR

 Large companies are benefiting society while acting in their own interests. It is the relentless maximization of profits,
not a commitment to social responsibility
 These companies trumpet their efforts to produce healthier foods or more fuel-efficient vehicles, conserve energy and
other resources in their operations, or otherwise make the world a better place. It's not surprising that this idea has won
over so many people—it's a very appealing proposition.
 But it's an illusion, and a potentially dangerous one.
 The danger is that a focus on social responsibility will delay or discourage more-effective measures to enhance social
welfare in those cases where profits and the public good are at odds. As society looks to companies to address these
problems, the real solutions may be ignored.
 In a simple way, in cases where private profits and public interests are aligned, the idea of corporate social
responsibility is irrelevant. Companies that simply do everything they can to boost profits will end up increasing social
welfare
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Companies to be discussed
against the Odds?

British American Tobacco McDonald

NBC Philip Morris

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British American Tobacco (BAT)

Background
 World second largest quoted tobacco group by market share, with brands sold in more than
180 markets.
 Employ more than 60,000 people worldwide and have 50 cigarette factories based in 31
countries.
 First tobacco company listed in the Dow Jones Sustainability Index.
• Evaluating the sustainability performance of the largest 2,500 companies listed on the Dow
Jones Global Total Stock Market Index.

Action taken
 Release the first social and environmental report from tobacco industry in year 2002.
 1) Do you agree with the action taken? 7

Disagree
 Tactics use to improve corporate image.
 Tools of PR because tobacco companies are not allowed to promote their
products by law. By engaging CSR activities, their products able to reach
various audiences.
 Actions Critics
Youth smoking Propose to restrict the age of purchase cigarette. - WHO is working with governments to control tobacco by
prevention ban advertising and tax increases.
- BAT opposes the law.
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Harm reduction Introduce low toxicant oral tobacco, a proven - PR tactics help BAT to rebuild its reputation as a
reduced risk product. responsible company.
- Hired consultants to lobby government officials and media
in Latin America in order to divert the attention from
secondhand smoke and avoid smoking restrictions.

Child labour Set out Supplier Code of Conduct - includes a -admitted that using middle person to purchase tobacco is
specific requirement for all their suppliers to ensure difficult to trace where the leaf came from and ensure all farm
their operations are free from the exploitation of owners follow the rules.
child labour. - indirectly contribute to child labour.

Working with Farmer Invested more than £60 million each year in - some farmers are tied to contracts obliging them to
supporting farmers. buy their chemicals, seed and equipment from BAT
subsidiaries.
- farmers owe the company money more than they
receive
Adhere to GRI proudly announced that they are adhering to GRI the guidelines found that it allow companies to choose which
guidelines. guideline to follow.
 2) What benefits or harm to stakeholders resulted in each situation?
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• Companies with CSR activities generated higher profits as compared
Shareholders to similar companies without CSR. Benefits

• Create job opportunities as BAT employs more than 60,000 people Benefits
Employees worldwide.

• Secondhand smoke - cause of various serious diseases, including lung

Customer cancer, heart disease in children.
Harm

• Receive unfair price of tobacco.

Harm
Suppliers/Farmers • Farmers exposed from hazardous chemicals which damage their
health.

• Tobacco products cause millions deaths every year.

• Significant contribute to poverty. Some poor families in many low- Harm
Community income countries spend as much as 10% of their household income on
tobacco products.

Government • High tax received. Benefits

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IMPOSSIBLE for BAT to
abandon their business.

Consumers who choose to

smoke would be denied
the right.
 Do you agree with the action taken? 11
McDonald's has had a wide range of issues in the past. Many situations which have
occurred in the past are the following:
1. Child exploitation
McDonald’s mascot, was how his character had too much of an influence on children’s
eating habits, and promoted bad nutrition; therefore exploiting children by attracting
them to extremely bad nutrition.

Disagree
Promoting directly to children means that they are encouraging
the children to consume unhealthy products; therefore
decreasing their health and nutrition rate, and leading them to
other physical and mental issues, such high cholesterol, body
mass increase, mood swings and many more.
2. Unethical ingredients.
The McDonalds food industry has been criticized throughout their business career in terms
of the ingredients within their products.
This lead to many other issues, such as decrease of overall health amongst children who
ate in McDonald's, as well as Child Obesity.
McDonald’s said: “We reiterate that until today, all the food sold at McDonald’s
restaurants conform to the food safety standard under Hong Kong legal regulations.”

agree
Mid-July, 2014, there was a scandal in Hong Kong, involving the McDonald's industry,
which resulted in Hong Kong having to remove their famous 'Chicken McNuggets' and
'Chicken McBurger's' from their food menu.
The operation 'Shanghai Hsui' is where McDonalds is known to have their ingredients flown
in from, and it has now closed down due
to health and safety violations and caused McDonald's an
extremely unsanitary, unhealthy, and very unethical reputation.
 What benefits or harm to stakeholders resulted in each
situation? 13
STAKEHOLDERS RESULTED IN EACH SITUATION
Employees  McDonald’s prioritizes employees as its top stakeholder group. The
interests of these stakeholders include career development and fair
compensation. McDonald’s addresses these interests through a number
of training and development programs.

 However, the company pays low wages that are almost down to the
level of the legal minimum wage, even when employees keep
demanding for higher wages. Thus, McDonald’s corporate social
responsibility efforts only partially satisfy the interests of employees
as a stakeholder group.
Customers  McDonald’s Corporation views its customers as its second-priority
stakeholder group. The interests of these stakeholders include
affordable and healthful food choices. 14
 However, the company is widely criticized for the health effects of its
foods. In this regard, McDonald’s corporate social responsibility
efforts only partially satisfy the interests of customers as a major
stakeholder group.

Investors  McDonald’s strives to fulfil the demands of investors as a major

stakeholder group in the business. The interests of these stakeholders
include profitability and growing revenues. McDonald’s addresses
these concerns through stable business operations.
 The company currently has a low but stable growth rate. The
introduction of new products, such as through McCafé, also helps
address such interests. Thus, McDonald’s corporate social
responsibility efforts effectively satisfy the interests of investors as a
major stakeholder group.
Communities  McDonald’s supports communities as one of its main stakeholder
groups. The interests of these stakeholders include community
development support and environmental programs. McDonald’s 15 has
sustainability and support programs for this stakeholder group.
 The firm’s sourcing policy prioritizes sustainable production, such as
in farms. Also, the McDonald’s Global Best of Green recognizes and
rewards innovative environmental ideas and contributions.
 Thus, the company has a wide variety of corporate social
responsibility programs to support these stakeholders. McDonald’s
effectively satisfies the interests of communities as a stakeholder
group.
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McDonald’s corporate social responsibility initiatives are considerable. They

are effective in addressing the interests of the stakeholder groups of investors
and communities.

However, McDonald’s only partially satisfies the interests of employees and

customers as major stakeholders in the business
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NBC Universal
BACKGROUND
 NBCUniversal (referred to as NBCU or NBCUni and formerly written as NBC Universal) is an American multinational media conglomerate.
 NBC Universal was formed on May 12, 2004 by the merger of General Electric's NBC with Vivendi's Universal Entertainment. HQ is based in
Rockefeller Plaza's Comcast Building in Midtown Manhattan, New York City.
 The company is one of two successor companies to MCA Inc. (Music Corporation of America), the other being Vivendi through its subsidiary
Universal Music Group.
 NBCUniversal is primarily involved in the media and entertainment industries; among its most significant divisions are :-
 NBC, one of the United States' "Big Three" television networks, and the major film studio Universal Studios. It has a significant presence in
broadcasting through a portfolio of domestic and international properties, including terrestrial and pay television outlets.
 Via the Universal Parks & Resorts division, the company is also the third-largest operator of amusement parks in the world.
 In 2013, Comcast Corporation completed the acquisition of the businesses of NBCUniversal. Currently they are a global media and technology
company with their primary businesses Comcast Cable (is the nation’s largest provider of video, high-speed Internet, and voice services to
residential customers under the XFINITY brand)
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1. DO YOU AGREE WITH THE ACTION TAKEN?

DISAGREE
 After some liquor companies began producing television commercials for alcoholic beverages like vodka, cordials, rum, liqueurs and Scotch whiskey; The General Electric-
owned network - NBC creates a SO CALLED GOOD APPROACH by voluntary ban on distilled spirits (hard liquor) in their commercials WHICH adhere to the 19
stipulations occupy two pages. These are the few:-
 The Adv will only appear after 9 p.m., for instance;
 Barring the appearance of a professional athlete in the liquor ads,
 Provision that the commercials may appear only on programs with audiences in which a minimum of 85%of viewers are 21 and older. In addition, the spots must not
promote distilled alcohol products ''as a 'mark of adulthood' or 'rite of passage' '' and may not show or represent consumption on camera,
 The actors in the liquor commercial ads must be at least 30 years old, and
 The agreement is the Liquor makers must first run for four (4) months a series of social-responsibility campaign (on subjects like designated drivers/ drinking
moderately /safe drinking) before liquor marketers are allowed to run commercials for their distilled-spirits brands (a multimillion-dollar campaign).
 The first advertiser inaugurating the change in policy is Diageo's Guinness/UDV, which markets more than 200 spirits brands Johnnie Walker Red Label,
Bailey's, and followed by Smirnoff Vodka.
 At the end of the four-month period during which the hard-liquor advertisers can run only social-responsibility spots, the guidelines state, one out of every
five of the actual product pitches they run must still be devoted to messages on issues like drinking responsibly and ''alcohol-related health consequences.''
 This approach was the hidden agenda for NBC TV networks to seek to reverse a steep revenue decline that began in the spring and accelerated after Sept. 11.
2. WHAT BENEFITS OR HARM TO STAKEHOLDERS RESULTED IN EACH SITUATION?
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• NBC’s turnaround represents a significant victory after this liquor ban activity. Profit increase.
Shareholders • Company reputation in market increase with CSR approach + 1 st national network broadcast
company. It’s a great milestone for company growth and share market

Customers • Addiction to hard liquors is proven medically that its injurious to health

• Prominently will be educating young generations about liquor brands even with the so called strict
stipulation codes was enforced
Community • Despite the revival of NBC’s liquor adv ban, this liquor brands will get significant exposure
among the community

Employees • Staffs are unlikely to act voluntarily in the public interest and against shareholder interests.

• Brand Exposure -the liquor makers greatly benefited under the CSR Campaign shield
• The spending for the 4 month commercials ads – will generate a multimillion-dollar profit
Suppliers • Major victory for liquor marketers seeking to gain access to the powerful advertising medium in
television (mass broadcast) along with their traditional outlets is indirectly promoted – expansions
in liquor outlets
• Responsible & Answerable to Public Health Agencies
• Lack of Control Measures - Messages in Adv should have to be from the public health agencies not
drinking liquor company executives.
Government • This is a step forward to the first indirectly get the mass media to telecast to the community for a good
deed because sometimes its difficult to outline appropriate regulations, particularly for complex industries
requiring much specialized knowledge.
• Mutually together with NBC other TV networks and local TV stations follow the foot path by
Competitors accepting commercials for liquors as well as for lower-alcohol products like liqueurs and blended
specialty drinks.
 DIVERSE ON DEMAND 20
–Bring up Social Issues Forefront
SPROUT’S KINDNESS COUNTS

• Sprout is our 24-hour preschool television

channel - that parents and kids share
together.

• Reaching more than 55 million homes,

Sprout is the No.1 on-demand service for
younger children.

• The campaign encourages kids to perform

small acts of kindness and share their stories
on the Kindness Counts website.
 DIVERSE ON DEMAND 21
–Bring up Social Issues Forefront
CHARACTERS UNITE

• In 2012, USA Network, NBCUniversal’s top-

rated cable network, significantly expanded its
Characters Unite public service campaign to
fight hate and discrimination, and promote
tolerance and respect.
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Philip Morris
• ESTABLISHED IN YEAR 1847
• AMERICAN GLOBAL CIGARETTE COMPANY
• US CIGARETTE BRAND MARKET SHARE,
51.3% (YEAR 2015)
• TOP BRAND - MALBORO
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Do you agree with the action taken?
 The company released a 20 pages anti-tobacco brochure in year 2002
 Quote – smokers are far more likely to develop serious diseases than nonsmokers
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The Multistate Master Settlement
Agreement in 1998
 Bans the use of cartoons in the promotion, advertising etc
 Bans all outdoor advertising like billboards
 Bans the distribution and sale of apparel with brand name logo
 Bans payments to promote tobacco products in movies,
television shows etc.
 Bans gifts of tobacco without proof of age
 Prohibits targeting youth in marketing
 Prohibits brand name sponsorship of event with a significant
youth audience
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DISAGREE

 Rebranding
 Protection
 Reposition
 Rebellion
Malaysia 26
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EFFECTIVE??? Or PROFITABILITY???
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What benefits or harm to stakeholders resulted in each situation?

Shareholders

Government

Society

Employees
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Advertisement

 https://youtu.be/MMwLAfB3KXM?t=5
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Business
CONCLUSION

Government

Society
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