Balancing Profitability, Corporate Social Responsibility and Sustainability
Order Instructions:
Entrepreneur Richard Branson noted recently in his LinkedIn blog that, “The entrepreneurs who will succeed in 2014 will need to focus upon having a purpose beyond profit for their business.” To what extent do you agree or disagree with this? Justify your reasons with reference to relevant literature.
Essay Plan for topic 2.
Entrepreneur Richard Branson noted recently in his LinkedIn blog that, “The entrepreneurs who will succeed in 2014 will need to focus upon having a purpose beyond profit for their business.” To what extent do you agree or disagree with this? Justify your reasons with reference to relevant literature.
Background /Introduction
Richard Branson is an internationally known British entrepreneur who has developed a significant brand called Virgin which has operated across multiple sectors ranging from record stores, airlines, trains and even a bank. Branson in his Linked In column is utilising his role as a respected leader with a reputation for an interest in corporate social responsibility to stimulate the readership with his commentary on emerging market opportunities and entrepreneurial behaviour. Historic thought expressed by Friendman (1962) was that profit was the goal and once that goal has been attained in legal manner the company should be allowed to proceed ahead relatively unchecked.
Branson presents a more modern commentary which demonstrates the importance of entrepreneurship, job creation and its impact on the world economy linking his predictions for 2014 with the importance of considering the sustainability agenda and the rapid changes generated by technological advancement.
This essay will argue that Branson is smart in advocating the importance of highlighting the increasing awareness of corporate social responsibility to entrepreneurs and his readers. It will explore the role of Richard Branson as a thought leader and his awareness of ‘increased education among stakeholders in societies plays a role in influencing the expectations and perceptions of sustainable business practices’. It will be argued that Branson is demonstrating emotional intelligence with regards to his evaluation of what stakeholders are looking for sensing a need for purpose beyond profit. Daniel Goleman describes such intelligence as a ‘social radar’. Evidence of such is demonstrated within the Branson blog by his decision to operate a Branson Centre of Entrepreneurship which offer start up loans to socially responsible companies. This position is supported by Blaga (2013 p2.) who argues that the two core issues facing contemporary society are the Global Financial Crisis and global warming.
Branson is further demonstrating leadership within corporate social responsibility by utilising his brand to ‘adapt to change and to solve problems of a personal or social nature’. The essay will explore the areas of capital, technology, generational changes with Generation Y and the importance of stakeholders, particularly customers, influencing the behaviour of entrepreneurs to consider more than simply profit.
Preliminary conclusion
This essay will explore the correlation between motivation via for profit organisations, as described by Matt Michalewicz in Life in Half a Second (2013 p.125) as “the exchange rate between life and cash” and their ability to deliver both profitability and positive purpose. As Daniel Priestley points out in his book Become a Key Person of Influence (2011 p.103)
Two hundred years ago the wealthiest people owned tracts of land and sprawling farms. One Hundred years ago the wealthiest people owned massive factories and bustling production lines. Today the wealthiest people simply have big ideas that spread like wildfire.
Within the essay further evidence will be sought to both support and challenge the hypothesis presented by Branson and subsequent arguments highlighted in this plan.
Reference List
Blaga, S 2013 ‘Rethinking Business Sustainability’, Review of Economic Studies and Research, vol.1, pp 5-21
McCleskey, J. 2014 ‘Emotional intelligence and leadership: A review of the progress, controversy, and criticism’, International Journal of Organizational Analysis, vol. 22 no. 1, pp.76 – 93.
Svensson, G, Wood, G & Callaghan, M 2010, ‘A corporate model of sustainable business practices: An ethical perspective’, Journal of World Business, Vol 45, pp 336-345
Weerawardena, J, McDonald, R E & Sullivan Mort, G. 2010, ‘Sustainability of nonprofit organizations: An empirical investigation’, Journal of World Business, vol. 45, pp. 346–356
Priestley D, 2011, Become a Key Person of Influence, Ecademy Press, St.Albans, Great Britain.
Michalewicz M, 2013, Life In Half a Second, Hybrid Publishers, Melbourne, Australia.
Goleman D, 1999, Working with Emotional Intelligence, Bloomsbury Publishing, London, Great Britain.
Branson R, 2013, Big Ideas 2014: The Year of the Entrepreneur, LinkedIn Influencers, blog post, 11 December, viewed 20th August 2014
SAMPLE ANSWER
Balancing Profitability, Corporate Social Responsibility and Sustainability
Richard Branson is an internationally recognized British entrepreneur who has developed a significant brand called Virgin, which has operated across multiple sectors ranging from record stores, airlines, trains and even a bank. Branson in his Linked In column is utilizing his role as a respected leader with a reputation for an interest in corporate social responsibility to stimulate the readership with his commentary on emerging market opportunities and entrepreneurial behavior. Historic thought expressed by Friedman, as cited in Svensson, Wood and Callaghan 2010, p. 342) was that profit was the goal and once that goal has been attained in a legal manner the company should be allowed to proceed ahead relatively unchecked. Branson presents a more modern commentary, which demonstrates the importance of entrepreneurship, job creation and its impact on the world economy, linking his predictions for 2014 with the importance of considering the sustainability agenda and the rapid changes generated by technological advancement (Blaga 2013, p. 13). This essay will argue that Branson is smart in advocating the importance and of highlighting the increasing awareness of corporate social responsibility to entrepreneurs and his readers. It will explore the role of Richard Branson as a thought leader and his awareness of increased education among stakeholders in societies plays a role in influencing the expectations and perceptions of sustainable business practices, based on a critical analysis of particular sources.
Background
It will be argued that Branson is demonstrating emotional intelligence with regards to his evaluation of what stakeholders are looking for, sensing a need for purpose beyond profit. Daniel Goleman (1999, p.133) describes such intelligence as a ‘social radar’. Evidence of such is demonstrated within the Branson blog by his decision to operate a Branson Centre of Entrepreneurship, which offers start up loans to socially responsible companies. This position is supported by Blaga (2013, p. 2), who argues that the two core issues facing contemporary society are the Global Financial Crisis and global warming. Global financial crisis can be explained as the emergence of unstable economic environments which negatively impact on the growth curve of world economies. Just to mention but an example, the 2007-2008 Global Financial Crisis becomes the latest crisis that affected most countries whose currency is pegged on the dollar. The immediate effect of this crisis was the collapse of companies, which had to lay off employees because of the decreasing demand for their products. This led to a reduction in the purchasing power of the customers as well as a reduction in the propensity to purchase. From this example, it is made evident that the goal of profit making might fail to sustain a company if it does not leverage itself by use of lean production, sustainability and corporate social responsibility.
McCleskey (2014, p. 9) notes that Branson is further demonstrating leadership within corporate social responsibility by utilizing his brand to facilitate change while simultaneously solving both human problems that are both social and personal in nature. As a result, a deeper exploration of finance, capital, technology, generational changes with Generation Y and the importance of stakeholders, particularly customers, influencing the behavior of entrepreneurs to consider more than simply profit. Based on the commentary by Richard Branson, I agree that organizations need to focus beyond the profit maximization objective as this will facilitate their giving back to the community in which they operate. The thought of sharing in the success or the struggles of the society resonates towards the principle of corporate social responsibility (CSR). According to Goleman (1999, p. 34), this principle defines the ability of a company to self-regulate its activities by integrating business models where businesses can monitor and ensure that its activities comply with the laws, international norms and ethical standards. The hypothecation of corporate social responsibility principle is grounded on the need for companies to go beyond compliance and actively engage in promoting social good, which is beyond the profit making objective. It is argued that CSR triggers companies into engaging in actions that promote environmental conservation and this has a widespread impact on the stakeholders who include employees, customers, the communities and investors.
The applicability of CSR into the contextual statement presented by entrepreneur Richard Branson is supported by the opinions voiced by critiques of this business principle because it derails a business from its economic goals and roles. On the other hand, the proponents of CSR posit that it increases the long term profitability of a business by creating a long term relationship with the society so that it can enjoy a long lasting loyalty which in essence translates into increased profitability (Svensson, Wood, & Callaghan 2010, p. 10). There are other econometric researchers who conducted empirical researches and analysis which led to the conclusion that CSR has a neutral impact on the finances of a business thus companies can either embrace it or shun it depending on their preferences. Acting as a seasoned venture capitalist, Branson, acting as the director of the Virgin Group of businesses has in the past used CSR to bond with the people (Svensson, Wood, & Callaghan 2010, p. 10). This exercise dates back to the 2008 report when the company benefited by increasing its global awareness and customer base by being a part of CSR initiatives.
On the other hand, political sociologist who showed interest in the topic researched on the context of neoliberalism, capitalism and globalization. To some extent, the statement by Branson depict a scenario equivalent to capitalism where the objective of profit making is clouding the vision of companies into making them capital oriented. By referring to 2014, Branson refers to a futuristic period where companies that invest in creating social movements to brand their products and services are likely to be more successful that capitalistic companies that only focus on increasing their profits. Looking at CSR from a consumer perspective draws a different picture. As cited by Goleman (1999, p. 80), consumers are likely to acknowledge and support companies that achieve their targets while conforming to helping the society in which they operate. The customers believe that these companies have to fund charities and support sporting activities among other social activities that will win over their loyalty. In the long run, the companies have nothing to lose if they failed to participate in CSR activities but they stand to gain for a relatively longer period of time when they go an extra mile into acting beyond the profit motive. In spite of my support for the statement voiced by Branson, it is still contentious on the position of an organization that stops pursuing profitability in order to support the growth and development of the society. This dilemma is noticeable especially in the companies that could embrace emerging technologies as tools for profit maximization (Weerawardena et al 2010, p.99). By following the advice given by Branson, it becomes impossible for a company to satisfy the needs of the society while taking advantage of technological advancement especially those that demand laying off of employees so as to create space for automation.
Apart from the growing need to invest in social corporate responsibilities, Branson brings out the importance of entrepreneurship and job creation and how it is likely to impact on global economies. The ability for a company to invest into bettering human resource through job creation resonates to the need for sustainability among industries. According to Friedman, the sole purpose of beginning a business is to make profits. The other side goals include the need to be an own boss, create employment and practice entrepreneurial skills. These are collective possibilities why people create businesses. On the side, modern businesses are looking for ways to form and promote businesses that conserve resource use. This concept is not only applicable in eco-businesses but all over the world. The current trend revolves around the need for sustainability. The concept goes further into seconding the need for lean production which has a direct correlation to sustainability. The technological agenda further supports the achievement of sustainability. According to Goleman (1999, p. 29), the term sustainability business is synonymous with green business. It describes the ability for a business enterprise to minimize on the negative impact of its operations on environment, the economy, society and community. The concept demands that a successful business has to meet a triple bottom line by making provisions for progression of human rights policies as well as the environment.
For a business to be described as sustainable or green, it has to meet the following criteria. First, it has to incorporate sustainability principles into its decision making processes. Second, it has to consider supplying environmental friendly services or products. These services have to be differentiated and innovative so as to replace the demand for non-green products and service (Weerawardena et al 2010, p. 99). Third, the business has to participate in activities that promote the attainment of a better environment as compared to its competitors while fourth, a sustainable business venture is that which has made a commitment to abide by environmental principles in the course of conducting its business operations. Apparently, the statement made by Branson has a direct reflection towards the emergence and increase of such business ventures in the year 2014 and the years to come. He suggests that instead of these companies chasing after profit maximization as their sole purpose of operation, they have to participate in bettering the environment by promoting the innovation and production of environmental friendly products (Michalewicz 2013, p. 91). They have to ensure that their industrial processes, manufacturing processes and products have to address the current environmental problems arising from global warming and an increase in the emission of carbon gases.
Branson does not disqualify the objective of profit maximization. In fact, organizations have to make profits for them to survive global competition and the uncertainties that come with global financial crisis. For instance, during the 2007-2008 Global financial crisis, companies that were not properly leveraged by maintaining proper financial back-ups plunged into deeper economic uncertainties. At times, the profits could be re-invested into the business so as to ensure that the organization survives economic uncertainties. Nonetheless, sustainability could usher in a new revolution that could provide a balance between profit maximization and caring for the environment since it defines the ability of a company to “meet the needs of the present world without compromising the ability of the future generations to meet their own needs” (Weerawardena et al 2010, p. 99). The sentiments made by Branson identify the inert abilities for companies to design business processes that make provision for the business to take advantage of environmental situations so as to promote social welfare by producing renewable resources. Apparently, the Brundtland Report seconds these statement as the report emphasizes on the need for a company to balance between profits, the planet and people (Priestley 2011, p. 55). In the words of Richard Branson, the ability for a company to be objective on other activities rather than profit making insinuates the need to balance the triple bottom line concept which revolves around balancing profit, people and the planet/ environment. This can be attained by revamping of the supply chain, and the distribution systems so as to promote business growth while ensuring that the environment and the society gain maximally from the process rather than engaging in activities that maximize profit at the expense of the environment and the society.
The convergence of sustainability and corporate social responsibility initiates a new dimension to the whole topic of profitability for businesses. This is because these two concepts are voluntary but have enormous impact on the name, the brand and the loyalty of the customers towards the business. Both sustainability and CSR create value for the customers, the suppliers, the investors and the environment thus it provides a balance that surpasses any economic benefits that can be derived from increasing profit margins. In the end, Branson shows his concern for two major concepts that are hardly advocated for by entrepreneurs because of their sensitivity (Branson 2013, p.20). These two act as economic mediators, thus, initiating a proliferated diversity towards business management and profit maximization. In conclusion, a critical analysis of the sources referenced above justifies the position of the Branson’s quote, and through that, the paper has managed to establish a multi-faceted perspective regarding the factors that are influential in the current economical field.
References
Blaga, S 2013 ‘Rethinking Business Sustainability’, Review of Economic Studies and Research, Vol. 1, pp 5-21.
Branson R, 2013, Big Ideas 2014: The Year of the Entrepreneur, LinkedIn Influencers, blog post, 11 December, viewed 20th August 2014.
Goleman D, 1999, Working with Emotional Intelligence, Bloomsbury Publishing, London. Great Britain.
McCleskey, J. 2014 ‘Emotional intelligence and leadership: A review of the progress, controversy, and criticism’, International Journal of Organizational Analysis, vol. 22 no. 1, pp.76 – 93.
Michalewicz M, 2013, Life in Half a Second, Hybrid Publishers, Melbourne, Australia.
Priestley D, 2011, Become a Key Person of Influence, E-academy Press, St. Albans. Great Britain.
Svensson, G, Wood, G & Callaghan, M 2010, ‘A corporate model of sustainable business practices: An ethical perspective’, Journal of World Business, Vol. 45, pp 336-345
Weerawardena, J, McDonald, R E & Sullivan Mort, G. 2010, ‘Sustainability of non-profit organizations: An empirical investigation’, Journal of World Business, vol. 45, pp. 346–356.
We can write this or a similar paper for you! Simply fill the order form!
