Wednesday, September 07, 2005

Business of Business is Business

The debate on Corporate Social Responsibility has really highlighted the contribution and impact which organisations can have on common man's life.The CSR concept has got different implications in different countries.Euorpian organisations also include environmental friendly practises as part of CSR activities while Asian organisations see it as part of community develoment process.Ian Davis continues the debate on CSR in Mckinsey Quarterly Review. Milton Freidman's saying "business of business is business" has been extended to include the greater social role which organisation of today have got to play.
The problem with the "business of business is business" mind-set is rather that it can obscure two important realities. The first is that social issues are not so much tangential to the business of business as fundamental to it. From a defensive point of view, companies that ignore public sentiment make themselves vulnerable to attack. Social pressures can also serve as early indicators of factors essential to corporate profitability: for example, the regulations and public-policy environment in which companies must operate, the appetite of consumers for certain goods above others, and the motivation of employees—and their willingness to be hired in the first place.
Highlighting the unhealthy practices of promoting harmful consumption he write's:
In the food and restaurant sector, meanwhile, the long-escalating debate about obesity is now resulting in calls for further controls on the marketing of unhealthy foods. In the case of big financial institutions, concerns about conflicts of interest and the mis-selling of products have recently led to changes in core business practices and industry structure. For some big retailers, public and planning resistance to new stores is constraining growth opportunities. And all this is to say nothing of the way social and political pressures have reshaped and redefined the tobacco and the oil and mining industries, among others, over the decades.

In all such cases, billions of dollars of shareholder value have beenput at stake as a result of social issues that ultimately feed into the fundamental drivers of corporate performance. In many instances, a "business of business is business" outlook has blinded companies to outcomes, or to shifts in the implicit social contract, that often could have been anticipated.

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