Page 238 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Strategic Management

Notes or prevent legal and regulatory actions that could prove costly or burdensome. A study of
leading companies found that environmental compliance and developing eco-friendly products
can enhance earnings per share, profitability, and the likelihood of winning contracts.

It gives Competitive Advantage

Being known as a socially responsible firm may provide a firm a competitive advantage.

Example: Firms that are eco-friendly enhance their corporate image. In western countries,
many consumers boycott products that are not “green”. Companies that take the lead in being
environmentally friendly, such as by using recycled materials, producing ‘green’ products, and
helping social welfare programmes, enhance their corporate image.
In sum, companies that take social responsibility seriously can improve their business reputation
and operational efficiency while reducing their risk of exposure and encouraging loyalty and
innovation. Overall, companies that take special pains to protect the environment (beyond what
is required by law), are active in community affairs, and are generous supporters of charitable
causes are more likely to be seen as good companies to work for or do business with. It will also
benefit the shareholders.

Task Consider any one CSR initiative taken up by any one major corporate house in
India. Do you think there was any strategic objective behind the initiative or was it purely
philanthropy?

Caselet Coca Cola India’s CSR Strategy

oca-Cola India being one of the largest beverage companies in India, realised that
CSR had to be an integral part of its corporate agenda. According to the company,
Cit was aware of the environmental, social, and economic impact caused by a
business of its scale and therefore it had decided to implement a wide range of initiatives
to improve the quality of life of its customers, the workforce, and society at large.
However, the company came in for severe criticism from activists and environmental
experts who charged it with depleting groundwater resources in the areas in which its
bottling plants were located, thereby affecting the livelihood of poor farmers, dumping
toxic and hazardous waste materials near its bottling facilities, and discharging waste
water into the agricultural lands of farmers. Moreover, its allegedly unethical business
practices in developing countries led to its becoming one of the most boycotted companies
in the world.
Notwithstanding the criticisms, the company continued to champion various initiatives
such as rainwater harvesting, restoring groundwater resources, going in for sustainable
packaging and recycling, and serving the communities where it operated. Coca-Cola
planned to become water neutral in India by 2009 as part of its global strategy of achieving
water neutrality. However, criticism against the company refused to die down. Critics felt
that Coca-Cola was spending millions of dollars to project a ‘green’ and ‘environment-
friendly’ image of itself, while failing to make any change in its operations. They said this
was an attempt at greenwashing as Coca-Cola’s business practices in India had tarnished
its brand image not only in India but also globally.

Source: www.icmrindia.org
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