Corporate social responsibility memo

Corporate Social Responsibility Memo

TO: CEO, Mead Johnson Milk Powder FROM: Vice-President of Ethics and Governance SUBJECT: Corporate Social Responsibility: Protecting Public Health and Working for Change

The scandal surrounding the contaminated milk has been discussed across the world (Branigan, 2008). This has decreased our credibility as a company. Mead Johnson Milk Powder must play a more important role in implementing corporate social responsibility. The company must make proof of its preoccupation for the community in which it activates. Our company finds itself in a situation where all fingers are pointing at our competitors, and our image is associated with this scandal. However, this situation can be turned in our favor. Although this situation may have started as a threat to our company, it can be easily transformed in an opportunity that we can exploit to the benefit of our company and of our community. However, before taking any action, one must clearly understand what CSR means. By CSR one usually understands the company's obedience towards law, ethical standards, and other national or international regulations. In other words, CSR represents the responsibility revealed by the company regarding matters like the repercussions that the company's actions have on the stakeholders. The most important stakeholders for our company are represented by customers, employees, the public, authorities, the community in which the company activates, and the environment (Jensen, 2004). But CSR is not limited to the situations mentioned above. CSR means that the company, corporation, or organization in case must actively participate in the life of the community, it must show a clear and active interest regarding the growth of the community. Also, the company must not make use of any unethical practices. Such practices include activities that generally produce some sort of damage to the community, its members, or the environment. In other words, the company must include in its agenda of the decision process activities that concern the public. Profit should not remain the only concern of the company. Or better said, the company must avoid following the shareholder theory and to start implementing a strategy that is clearly based on the stakeholder theory. Another aspect of high importance is represented by the measurement of CSR. It is difficult to quantify the effects of CSR. The qualitative effects of CSR implementation are much more visible (Sweeney, 2006). In our case, visible effects of integrating CSR in our company's strategy are intended to consist in increasing the health level of our consumers. Once our company achieves this objective, we should orient the company's future strategies in a direction that focuses on protecting public health. Given the scandal surrounding our competitors and the suspicions that are likely to be directed towards our company as well, it will be very productive to position ourselves as a company that puts public interest on the first position of our preoccupations. The benefits of implementing CSR are numerous. However, they will not produce effects immediately, as the benefits are considered to be medium term and long term ones (BusinessLink, 2009). One of the most important benefits of CSR is represented by the solid reputation that our company would be able to build. However, it takes time to build such a reputation, but the efforts will be worth it on long term. The fact that our company would have the reputation of a company that is always doing the right thing, that is not always oriented towards profit only, and that is actively concerned in the life of the community would increase the number of customers and it would significantly increase customer loyalty (Cuizon, 2009). It has been observed in other markets that customers prefer, or even insists on buying their merchandise from socially responsible companies. Individuals become more and more responsible regarding their health, their security, or the environment. This situation should be reflected by the companies on the market. Therefore, it is important that our companies join the club of socially responsible companies. In addition to this, our company could associate for certain social projects with other companies that have already built a reputation in using CSR. The association with such companies would transfer some of these companies' good name to our company. Having such a reputation is not only effective of the company's customers, but on its current and prospective employees also. For example, the employees recruitment process would be a easier one. Also, existing employees tend to stay longer with the company. This further reduces human resources costs. Other benefits are represented by increased employee motivation and efficiency. Public Relations benefits are not a benefit to be neglected. By building an image as a socially responsible company, our company would be better liked by the local and international media and would benefit from positive press coverage. We all witnessed the negative mass-media coverage surrounding the Sanlu situation. The same phenomenon, but on a positive side can be attained by adopting a socially oriented position. Another important benefit that derives from implementing CSR practices within our company is represented by the good relationship that our company would have with the local authorities. Investors are also influenced by the company's reputation. Also, a good reputation could help our company in any potential scandals that might affect our company if associated with the negative image of our competitors. This is the case of the contaminated milk (ChinaCSR, 2009). Given the context created by the contaminated milk scandal, it is imperative that our company takes immediate action towards including CSR in the company's policy. Just dissociating ourselves from the issue and from other companies that are suspected of having marketed contaminated milk will not be enough for eliminating doubt from the mind of the customer. Certain damage might have already been done. Implementing CSR practices in our activity will not be a short term process. There will also be costs involved. Even so, it is by far more important to invest in CSR and to build a strong reputation for our company than to invest in advertising, for example. Another direction that our company should follow regarding this subject consists in the fact that the process could be implemented easier if our company collaborates with other companies operating on the Chinese market, companies that have already made proof of the benefits determined by CSR. Some voices have agreed upon the fact that companies should not invest in CSR and that the public good should be left for the authorities and for the political leaders. But practice has clearly proved that companies investing in CSR are better seen by the public in general and their customers in particular, they are differently addressed by their competitors, and they are better seen by the authorities, which clearly makes it easier for such companies to develop their activity. Even more, since other companies have been successful at implementing CSR practices, not getting involved in social related projects would be a minus for our company. One of the factors that influence the success of such a strategy is represented by properly selecting the right causes for our company to get involved in. In other words, the company cannot address any type of social issues, as it may not prove to be effective for our company. Therefore, it is recommended that our company starts implementing CSR practices by addressing the matter of public health. Given the object of activity of our company, public health is the main target that should be addressed. Another area in which our company could develop social responsibility is represented by the welfare of children. This area is also in close connection with our company's object of activity. Also, the company should address the environmental issue also. The reason behind this statement relies on the fact that more and more people are environmentally-oriented. As mentioned above, customers tend to insists on buying products from companies that are actively supporting the environment. By addressing this issue that concerns all customer segments, our company might even expand its line of products by developing products that address these customer segments. In conclusion I must make it very clear that it is imperative that our company, as well as other companies activating on the Chinese market, no matter what their area of activity is, are obliged to improve consumer confidence. One of the best and the most durable ways of achieving this objective is represented by the implementation of CSR practices in companies' activity. The numerous benefits described above are a proof of the efficiency of this strategy.