CONTROL EFFICIENCY WITH CSR ACCOUNT
The profit from the right thing is that it's done .
• the foundations of the genesis of the concept of overall efficiency and the features of assessing the effectiveness of social responsibility;
• the main indicators of social activity of the company and corporate social responsibility and how they can be taken into account in the basic management models;
• macro and micro-regulators of the company's efficiency within its CSR;
be able to
• Link the company's benefits and the burdens of its socially responsible behavior;
• build and select criteria for ethical justification of organizational and managerial decisions and actions;
• a technique for measuring the company's strategic benefits from CSR activities;
• a methodology for assessing the effectiveness of corporate social policy in the format of the "information card."
The relationship between the company's benefits and the burdens of its corporate social responsibility
I learned greed that generosity, the more people give , the more she gets herself, and decided to make money on it. By and could not. Because I could not start ...
Additional costs associated with the burdens of social responsibility, affect the market conditions. He redistributes these costs between sellers and buyers in such a way that ultimately socially responsible behavior becomes beneficial to everyone. Let's show this by changing the supply-demand ratio for two situations, when the behavior of companies is unethical (Figure 14.1) and ethical (Figure 14.2).
In conditions of perfect competition, companies' revenues are determined from the calculation: Q0P0. In the case of unethical behavior, they will reduce costs, and there will be an opportunity to reduce the price of the goods from Р 0 to Р к (in the figure, the vector К ). Accordingly, the supply curve will change its position (S0 → S1), and in the market there will be a shortage of goods by the amount: Q K - Q 0. The market equilibrium point will move from the state A 0 to A 1 and the price will increase from P K to P 1.
Fig. 14.1. Influence of unethical behavior of companies on the market situation
For a period of time, unethical companies will receive additional income arising from the cost savings of the burdens of social responsibility. The magnitude of their winnings is highlighted in the figure by the area of the shaded rectangle P K P 1 A 1 F. However, due to socially irresponsible the quality of life of consumers of their products will worsen, and their effective demand will decrease (in the figure, the vector ). The demand curve will move to the left: D0 → D1, and there will be a surplus in the market for the quantity: Q 1 - Q C.
The market equilibrium point will move from the state A 1 to A 2, and the price of goods will decrease accordingly from Р 1 to Р 2. Because of the unethical behavior of companies, all market players were in the losers. Consumer losses are expressed in their unsatisfied demand, equal to: Q 0 - Q 2. The losses of companies (II) are determined by the formula 14.1.
P = Q 0 ( P 0 -P 2) + P 2 ( Q 0 -Q 2). (14.1)
In case of ethical behavior of companies (Figure 14.2), they will have additional costs, which will lead to an increase in the price of the goods from Р 0 to Р K (in the figure the vector ).
Fig. 14.2. Effect of ethical behavior of companies on the market situation
Accordingly, the supply curve will change its position (S0 → S1), and the market there over the goods to the value of: Q K - Q 0. market equilibrium point will move from state A 0 A u and price decline from P K to P 1. For a period of time, ethical companies will suffer losses because of the additional costs of the burden of social responsibility. The magnitude of their loss is highlighted in the figure by the area of the shaded rectangle P 1 P K FN.
However, due to socially responsible behavior of companies, the quality of life of consumers of their products will improve, and their effective demand will increase (in the figure, the vector ). The demand curve will move to the right: D0 → D1, and there will be a shortage of goods on the market by the amount: Q c - Q v. The market equilibrium point will move from the state A 1, to A 2, and the price of the goods will accordingly increase from P, to P 2. Socially responsible behavior of companies will help to ensure that all market players benefit. The benefit of consumers is expressed in the additional satisfaction of their demand, equal to: Q Q 2 - Q Q 0. The benefits of companies (B) are determined by the formula 14.2.
B = Q 2 ( P 2 - P 0) + P 0 (Q 2 - Q 0). (14.2)
Therefore, the costs of companies on the burdens of social responsibility are covered by income from additional sales volumes of products.
Based on the provisions of the theory of market equilibrium, explain what impact on the efficiency of the company will have a related, mutual and pure (independent of personal gain) altruism.
Not only theory, but also practice shows the close relationship between social projects and programs and the company's achievement of sustainable competitive advantages. However, there is no doubt that in the management of the first place is the survival of the company and only then - the problems of society, therefore, in conditions of low-skilled management, the issue of social responsibility of the company becomes predominantly academic. In conditions of modest profits, a company can be perceived as socially responsible if it ethically conducts its affairs in accordance with business philosophy and public expectations, satisfying the needs of people with quality products (services, works). When a company has substantial resources to increase its financial efficiency, it can direct them to CSR activities.
Among them, the most interesting are measures to reduce transaction costs, which are associated with the lobby and the conclusion of commercial transactions. This is a colossal reserve of efficiency increase, which provides the conditions for long-term sustainable development of the company in a business environment by strengthening the relations of trust and partnership. According to the estimates of the famous American economists D. North and J. Wallis, in the last hundred years the transaction costs have doubled, and the rates of their increase are increasing. Methods for the formation and development of confidential business relations in the framework of corporate social responsibility offer various theories explaining the relationship between CSR and the financial efficiency of the company (Table 14.1).
Theories explaining the relationship between CSR and the company's financial performance
Stakeholder Theory, Theory of Social Impact
The rationale for the strategic importance of public expectations and the proposal of a multi-criteria model for improving the competitive profile of an enterprise that maximizes financial efficiency by balancing the company's goals and the interests of its stakeholders
Using CSR technologies to create a reputation halo of a company that reduces the severity of the information asymmetry problem and serves as a guarantee of investment security in the medium term for a wide range of investors
Using CSR technologies as a psychological tool for maintaining stability. In the case of high financial performance, the company curtails social projects and uses their resources to increase their short-term benefits. In a situation of deteriorating financial condition, the company allocates additional social costs that mask the management failures
Theory of Insufficient Resources
Interpretation of the causal relationship between CSR and financial performance: with increasing social responsibility, free cash that the company spends on various reputational projects increases
Assuming that the costs of social projects are pure irrevocable, non-recoupable costs to the company
Theory of synergistic action
The presentation of the relationship between CSR and financial efficiency as a closed cycle of mutual influence, which is constantly reproduced
Study one of the theories listed in Table. 14.1, and based on it, build and explain the effect of the model of the relationship between financial efficiency and CSR.
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