Carly Mecklenburg
Assignment #1
In the past ten years, corporate social responsibility (CSR) and sustainable practices have
gone from being buzz words to redefining the way that corporations craft their business
strategies and business model. Companies now have to think of everything from what
lightbulbs they use, to their community involvement, to who is making every last
component of their product.
True social responsibility can’t be based on trying to please others, or the public, but
instead must be founded on a drive to abide by sound moral and ethical decisions that
will have a positive impact. CSR is a way of running a business from the ground up. It
should permeate into every element the business from the very beginning of the
material/labor supply chain through to the end product or service.
The extent to which a business participates in CSR practices depends on the company’s
values and what their customer’s demands. One of the main difficulties comes in the
balancing of a corporation’s obligations to its stakeholders. A corporation has a
responsibility to its shareholders, to its employees, to its customers, and to it suppliers.
Up to a point a company can practice social and environmental responsibility without
much effect on the bottom line. Some things, like environmentally friendly light bulbs
end up being cheaper. There come a time though, where a company really has to start
thinking about how its CSR practices effect the bottom line. They have to find a balance
between their responsibility to shareholders to make a profit and their responsibility to
society. For example, say a clothing company has an opportunity to lower production
costs on t-shirts due to a surge in supply of workers in their production city. They can pay
the workers less and still get the same quality and output. Should the company pass the
savings on to the customer, pocket the extra money as profit, or not lower wages on its
warehouse workers? Who does the company put first, customer, shareholder or
employees/suppliers? A business plan has to lay out these situations and the priorities.
CSR practices do not have to be independent of making money but society tends to not
“count” practices that companies make money off of.
My group chose to look at Walmart, Target and Costco. We wanted to compare
companies that were in about the same segment; low cost, high volume, one stop retail
shopping. Walmart and Target are very much in the public eye while Costco is a bit less
talked about.
The companies were quite alike in many aspects regarding CSR. None of the three
reference any type of CSR in their mission statement. But, all the companies do have
extensive environmental, community and social responsibility sections to their website
and produce CSR reports.
In terms of business strategy, Walmart has tried to create a persona of CSR. They went
through a period of intense scrutiny for their alleged predatory pricing and since then I
personaly have seen an increase in their announced CSR initiatives. Both Walmart and
Target have nearly identical statements regarding how/from where they source their
materials.
One interesting contrast is that Walmart gives away its old merchandise (although it
tosses food) while Target sells much of its old stuff and used to burn old clothes. I could
not find anything about what Costco does with its old stuff.
Costco is very clear in its hierarchy of stakeholders in terms of business strategy. Their
code of ethics reads as:
Obey the law.
Take care of our members.
Take care of our employees.
Respect our suppliers.
If we do these four things throughout our organization, then we will achieve our
ultimate goal, which is to:
Reward our shareholders.
All three companies have statements regarding the importance of diversity in the
workplace. Target is the only company that references diversity among their suppliers as
being important to them.
Community involvement is most evident in Walmart. Walmart makes a point of working
in the communities that they have stores in. Costco focuses on children in its charitable
giving and doesn’t give much emphasis to communities. Target gets involved in
community via community service but tends to give money to more national charities.
Target give 5% of taxable profit away and started a charitable foundation in 1918.
Walmart and Costco do not set a specific percent to give away.
Walmart is the only of the three companies to really publicize their charitable giving and
CSR actions in traditional marketing ventures. Target draws attention to CSR activities
via social media. For example, they let Facebook members pick who the company should
give money to. Costco does virtually no marketing and doesn’t have a PR department.
For all three of these companies positive CSR work is critical to their long term success.
It is interesting to note how alike all three of these companies are in the wording of their
code of ethics and CSR views. Differences exist but the same basis ideas are common to
all.