Corporate Social Responsibility Page 1

Cover Sheet

Course Code: FEAD22 Course Name: Advanced Professional Skills

Title of work: “Craft of Research”. Name Of The Topic: “Corporate Social Responsibility”

The Last Date: 20 January 2011

Date prepared: 19 January 2011

Group No. B24

Name of the Student:

Family Name Given name T-Number

Agastyaraju Aravinda 850805-T557

Name of the Supervisor: Samuel Petro Sebhatu, Mikael Johnson

Filled out by the examiner

First return: _____ Second return: _________ Third return:_____________Passed:____________

Received Points:___________ Grade:________________ Examiner:_____________

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ABSTRACT

This paper outlines the conceptual and contextual and disciplinary scope of the rapidly evolving

topic “Corporate Social Responsibility”. Corporate social responsibility is overseen in growth

industry – if u log on to Google and search for CSR you‟ll come up with 970000 web-pages to

inspect. CSR is turning into big businesses all over the world. This paper throws a light that how

CSR is contributing for the development and progress of the society.

Here I have given a clear view about the corporate social responsibility and its influence on the

society with the case of Toyota Corporation. I here presented the CSR initiatives and practices by

Toyota Corporation. Here I used secondary data from the company and other web sources. I use

both qualitative as well as quantitative data and analyse them to have better understanding about

the impact of corporate social responsibility on both the society as well as company.

Key Words Corporate Social Responsibility, Societal Concern, Competitive Advantage, Socially

responsible investment, environmentally responsible, ethical practices and service, Toyota

Corporation.

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EXECUTIVE SUMMARY

Corporate social responsibility is today‟s trending topic in corporate world. Since business and

society have been interdependent. This relationship between business and society is appreciated

like: “corporate should work like a honeybee, which take the nectar of a flower without the flower

being losing its shape and fragrance and provides honey for the wellbeing of the society”. The

business history is replete with evidences to believe that business grows and develops only where

society thrives. On the contrary, business dies when the society condemns and rejects it. No

business can survive without societal approval and sanction.

The interdependent nature of relationship between the business and the society is best illustrated

by the father of modern management Peter Ducker (1954) with the example of ship and sea. “Like

the relationship between a ship and the sea which engirds it and carries it, which threatens it with

storm and shipwreck, which has to be crossed but which is yet alien and distant”.

I have considered the case of the Giant automotive manufacturer “Toyota Corporation” which is

operating over all the global markets. I presented how the company is providing its services to the

society in terms of corporate social responsibility. Toyota Company is incorporating the

environmental responsibility from the development of sustainable vehicles and making

manufacturing plants sustainable to vehicle recycling. “Eco-driving” educational programs and

reforestation, Toyota is actively engaged in wide variety of programs to improve the environment.

This environmental responsibility is a key element of Toyota‟s corporate social responsibility

initiatives.

These activities lead to a competitive advantage to the company and create an impression in the

mind of public. Due to the company support in creating the better environment, society is also

grateful to the company. As a company, Toyota is fully committed to the principles of

sustainability. It promises the society, shareholder, and stakeholders for sustained economic

performance. At the company, social initiatives don‟t just cover the community, but also

employees, this re-interpretation has happened for an important reason: society represents a mix of

employees and non employees. By including employees in social initiatives, the company has

demonstrated that no initiative can succeed unless if the initiators of the improvement do not

figure among the beneficiaries themselves. So finally I can conclude that both company and

society are interdependent each other. CSR has become a key concept and activity in the

organization, which promotes a sustainability and growth towards the society.

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Abstract

Executive Summary

Table of contents

1. Introduction ........................................................................................................................... 5

2. Corporate Social Responsibility (Conceptual & Theoritical Framework) ............................ 6

2.1 CSR Pyramid ................................................................................................................... 8

2.2 Importance of CSR .......................................................................................................... 9

2.3 CSR & Stake holders ..................................................................................................... 10

2.4 Benifits of CSR ............................................................................................................ 11

2.5 CSR Dimensions ........................................................................................................... 11

3. Toyota Corporation CSR Principles & Policies ............................................................. 12

3.1 Toyota CSR Committee ................................................................................................. 14

3.4 Toyota CSR Policy Positioning ..................................................................................... 15

4. Analysis & Conclusion ....................................................................................................... 16

List of references ..................................................................................................................... 17

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1. Introduction

Corporate social responsibility is the continuing commitment by business to behave ethically and

contribute to economic development while improving the quality of life of the workforce and their

families as well as of local community and society at a large.

Carroll‟s model of corporate social responsibility states that organisation should need to adopt

discretionary responsibilities, ethical responsibilities, legal responsibilities and economic

responsibility. The corporate responsibility concept totally deals with environmental issues, which

relate to environment, and economic issues which relates to market place and social issues which

relates to society and government. The companies‟ argument for social responsibility is influenced

by different factors those are:

Changed public expectations of business

Public image

Avoidance of government regulation

Business has the resources

Prevention is better than cure

According to Carroll and Buchholtz “corporate social responsibility is the economic, legal, ethical

and discretionary expectations that society has of organisations at a given point in time”. (Carroll

and Buchholtz 2003, P. 36). Corporate responsibility reflects about how a company manages its

business process to create an overall positive impact on society. Business firms are now a days

thriving in global competition. To survive in this competitive arena not only the profitability but

also the need of service orientation towards employees, suppliers, customers, the local community,

state , and federal governments, environmental groups, and other special interest groups. Although

CSR activities implementation need more time ,effort and resources however the business

organisation have realised that it(CSR) is one of the most significant way for an organisation to

distinguish itself from its competitors.

This report mainly focuses on CSR in perspective of “TOYOTA Corporation” which is having its

operations across the globe. The company‟s mission statement is “to sustain profitable growth by

providing the best customer experience and dealer support”.

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Business can help by defining itself – by explaining what it is and what it isn‟t. From this stand

point:

The boundaries to corporate social responsibility are conceptual. A company‟s primary

responsibility is to its share holders, to its owners.

The boundaries are ideological. A company is not a government. It is not elected. It has no

popular mandate. It mustn‟t confuse its role with the role of others.

The boundaries are practical. A company has limited resources, limited expertise and

limited reach. A company is not a panacea, a cure at all.

The boundaries are influenced by self-interest. Business thrives if the society in which it

operates thrives. To neglect this is to put at risk the interests of shareholders of the

company.

2. Corporate Social Responsibility: Conceptual and Theoretical framework

More recently CSR has become focussed on corporate behaviour and policies and values. CSR

activities are influenced and based on different elements.

Corporate social responsibility of any company is based on the five elements. From the

above figure a company should be good in innovation, means introducing new products

and services from time to time in the market to service the customers which leads to

competitive advantage in market.

5 Basis of CSR

Opening and sensitiveness

to government

Value Creation

Long-term consideration

Innovation

Community sense

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Value creation is one of the primary targets for any company, because to create trust

worthiness in the market and in the minds of the shareholders, customers and investors

every company needs to generate the value from its operations. Today companies are not

working for profit motive. To survive in the competitive market every company need to

focus in service rather than profit. That is profit through service motive.

Community sense is, a company should be liable to the community and respects the

community needs and requirements and provides some good in terms of economic, societal

and educational issues.

Every company has to run on corporate governance, corporate governance is the frame

work of all the set of principles and procedures to protect the company from frauds and

other issues. For this the company need to abide the rules, laws and regulations framed by

the government.

Business is a process, it‟s not a contract, and if it wants to survive in the market it should

consider the needs and wants of the various interest groups.

Corporate Social responsibility: Defined

„Social responsibility refers to the obligations of businessmen to pursue those policies, to make

those decisions or to follow those lines of action which are desirable in terms of the objectives and

values of our society‟ – (Howard R. Bowen 1953).

In the words of Kenneth R Andrews, by social responsibility we mean the intelligent and objective

concern for the welfare of society that restrains individual and corporate behaviour from

ultimately destructive activities, no matter how immediately profitable, and leads in the direction

of positive contributions to human betterment, variously as the latter may defined‟ (Kenneth R

Andrews 1989).

Corporate responsibility plays an important role to enhance the brand image and reputation of

business firm. It (CSR) helps to improve sales and customer loyalty. It also enables to attract and

retain employees. The corporate social responsibility is deliberate to provide each business with a

far greater ability to create sustainable development. Corporate social responsibility is linked with

sustainability. The attraction towards corporate social responsibility for many businesses is that it

can help to increase sustainability without creating any negative effects. In the present arena CSR

has occupied very important place in the plans and strategies of the business organizations.

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2.1 CSR PYRAMID

Economic responsibilities

Business organisations are formed as economic entity‟s to provide quality goods and better

services to societal members. The profit motive was established as primary incentive for

entrepreneurship. Business organisations were treated as the basic economic unit in our society.

Thus its major role was to produce goods and services that consumers needed and wanted and to

make an acceptable profit in the process. At some point the motive of getting profits are

transformed into a notion of maximum profits, and it has been an enduring value ever since. All

other business responsibilities are predicated upon the economic responsibility of the firm,

because without it the others become controversial considerations.

Legal responsibilities

Business should not be only for profit motive while serving the society. At the same time business

is expected to comply and should abide with the laws and regulations promulgated by federal,

state and local governments as the ground rules under which business must operate. As partial

fulfilment of the social contract between business and society, firms are expected to pursue their

economic missions with the framework of law. Legal responsibities made businesses are having

Philanthropic Responsibility

Ethical Responsibility

Legal Responsibility

Economic Responsibility

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codified ethics and they co-exist with economic responsibilities as fundamental precepts of the

free enterprise system.

Ethical responsibilities

Al though the economic and legal responsibilities have ethical base about fair practice and justice

,ethical responsibilities embrace those activities and practices that are prohibited by members of

the society even though they are not codified in to law. Ethical responsibilities frames those

standards ,norms, or expectations that reflect a concern for what consumers, employees,

shareholders, and the community regard as fair just or in keeping with the respect or protection of

stakeholders moral rights. In other sense, ethical responsibilities rare viewed as newly emerging

values and norms society expects business to meet, even though such values and norms may

reflect a higher standard of performance than that currently required by law.

Philanthropic responsibilities

Philanthropy encompasses those corporate actions that are in response to the society expectation

that businesses to be good corporate citizens. That is actively engaged in various activities or

programs to promote human welfare or goodwill. Examples of philanthropy include business

contribution of financial resources or executive time, such as contribution to the arts, education, or

the community. Therefore philanthropy is more discretionary on the businesses part even though

there is always the societal expectation that businesses provide it.

The CSR of business entails the fulfilment of the firm‟s economic, lelgal ethical and philanthropic

responsibilities. The csr firm should strive to make a profitable value, obey the law, and be ethical

and good corporate citizen.

2.2 Importance of CSR

CSR is one of the fundamental tools in vital duty for any business organisation irrespective of its

size. The business which fulfils its corporate social responsibilities successfully will survive in

long run. To thrive in the present competitive world every organisation should be grateful to the

public. Though organisation and society are interlinked and inter depended, the fair practice of

CSR will impact on the good will of organisation.

CSR minimizes negative impact on stakeholders and it produces wealth and value for all

stakeholders.

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2.3 CSR & Stake Holders

Companies have their own ability to opt their stakeholders as children have to choose their

parents, so the firm is always prioritizing its stakeholders. The location, scale and nature of

operations will determine the stake holder‟s existence. Stakeholders will expect to be recognised

when the firms‟ effect on them, for better or worse, is direct or immediate. A useful technique at

this stage is stakeholder mapping this is a way of representing different stakeholder relationship

the firm has and their relative proximity or strength. Some businesses use grids and others use

circles. It is important to include all the relationships in which the firm affects people or they

affect the firm. The firm may be contemplating stakeholder engagement for better understanding

its impacts and to help articulate its values, mission, strategy, commitment and implementation to

facilitate a regulatory approvals process, to participate in measurement and reporting to improve

relationships.

INVOLVEMENT OF STAKEHOLDERS

MISSION

STRATEGIC PLAN, BUDGET AND

SUSTAINABLE REPORT

CODE OF ETHICS

OPERATIONAL PROJECTS

BALANCE SCORE CARD

VALUES

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2.4 Benefits of CSR

It aids the attraction and retention of staff.

It attracts green and ethical investment.

It attracts ethically conscious customers.

It can lead to a reduction in costs through recycling.

It differentiates the form from its competitor and can be a source of competitive advantage.

It can lead to increased profitability in the long run.

2.5 CSR Dimensions

Owners and share holder s is the key people for success of any business organization, they are the

one who invest for an organization so it is essential to work together for the benefit of an

organization. Employees are the one who works for an organization so, maintaining a sound

environment in an organization is very much essential therefore they can work hard for the benefit

of their clients. Consumers are the key people for the success of any business organization;

organization should take some necessary feedback from them. It would help them in the future for

better performance. Organization cannot go beyond the rule of the government so they should

cooperate with government to follow the rules and perform their activities.

Corporate social responsibility plays an important role to enhance the brand image and reputation

of the business firm. It (CSR) helps to improve sales and customer loyalty. It also enables to

attract and retain employees. The corporate social responsibility is deliberate to provide each

business with a far greater ability to create sustainable development. Corporate social

responsibility is linked with sustainability. The attraction towards corporate social responsibility

for many businesses is that it can help to increase sustainability without creating any negative

effects. In the present era corporate social responsibility has occupied very important place in the

plans and strategies of the business organizations.

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3. Corporate social responsibility Principles & Policies: Toyota Corporation

Toyota Company was founded in the year 1867 to create automobiles, head quartered in Aichi,

Japan. The company is famous for its quality and customer satisfaction.

CSR policy towards sustainable development

Toyota Motor Corporation take initiative to contribute to harmonious and sustainable

development of society and the earth through all business activities that we carry out in

each country and region based on our guiding principles.

Toyota comply with local, national and international laws and regulations as well as the

spirit there of and the company conducts its business operations with honesty and integrity.

In order to contribute to sustainable development, the company believe that management

interacting with its stakeholders as described below is of considerable importance, and the

company will endeavour to build and maintain sound relationships with its stakeholders

through open and fair communication. Toyota expects its business partners to support this

initiative and act in accordance with it.

CSR policy towards customers

Based on the company philosophy of customer first, it develop and provide innovative,

safe and outstanding high quality product and services that meet a wide variety of

customers demands to enrich the lives of people around the world.

Company endeavours to protect the personal information of customers and everyone else

where the company is engaged in business with, in accordance with the letter and spirit of

each country‟s privacy laws.

CSR policy towards employees

Company respects its employees and believe that the success of its business is led by each

individual creativity and good teamwork. The company stimulates the personal growth of

its employees.

Company supports equal employment opportunities, diversity and inclusion for all

employees and do not discriminate against them.

Company strive to provide fair working conditions and to maintain a safe and healthy

working environment for all the employees.

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Company respect and honour the human rights of people involved in business and in

particular, do not use or tolerate any form of forced or child labour.

Through communication and dialogue with employees, the company build and share the

value” mutual trust and mutual responsibility” and work together for the success of

employees and the company. Company allows employees right to freely associate, or not

to associate, complain with the laws of the countries in which it operate.

Management of each company takes leadership in fostering a corporate culture, and

implementing policies, that promote ethical behaviour

CSR policy towards business partners

Company respect its business partners such as suppliers and dealers and work with them

through long term relationships to realise mutual growth based on mutual trust.

Whenever company seek a new business partner, it is open to any and all candidates,

regardless of nationality or size, and evaluates them based on their overall strength.

Company practice and maintains fair and free competition in accordance with the letter and

spirit of each countries competition laws.

CSR policy towards shareholders

Company strive to enhance corporate value while achieving a stable and long term growth

for the benefit of our shareholders.

Company provide its shareholders and investors with timely and fair disclosure of

information on operating results and financial conditions.

CSR policy towards global society and local communities

Environment- Company aim for growth that is in harmony with the environment by

seeking to minimize the environmental impact of business operations, such as by working

to reduce the effect of its vehicles and operations on climate change and bio diversity.

Toyota strives to develop, establish and promote technologies enabling the environment

and economy to co exists harmoniously, and to build close and cooperative relationships

with a wide spectrum of individuals and organisations involved in environmental

preservation.

Community- company implements its philosophy of “respect for people” by honouring the

culture, customs, history and laws of each country and it constantly search for safer,

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cleaner and superior technology that satisfy the evolving needs of society for sustainable

mobility and company do not tolerate bribery of or by any business partner, government

agency or public authority and maintain honest and fair relationships with government

agencies and public authorities.

Social contribution- Toyota actively promote and engage, both individually and with

partners, in social contribution activities that help strengthen communities and contribute

to the enrichment of society.

3.1 CSR Committee in Toyota

Company has established 4 committees as sub committees under the main CSR committee, which

deliberates and handle important issues. Those committees are

Corporate ethics committee: internal governance, observation of regulation, constructing sound

corporate culture

Product environment committee: progress with product development that reliably addresses

environmental regulations

Production environment committee: progress for production technology development for reducing

CO2 and fulfilling the enforcement of production environment policy

Social contribution committee: fulfil social responsibility to the communities or our employees

and progress with social contribution activities.

The committee is deliberating and issuing reports on the issues listed below:

Planning global CSR policies and activities

Corporate Ethics, legal complaints.

Significant issues concerning, risk management

Significant issues concerning, social contribution issues and new environmental issues.

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3.2 TOYOTA- CSR Policy positioning

CSR department to promote Toyota CSR initiatives

In June 2010, the risk management committee was formed under the CSR committee in response

to quality issues, and will be chaired by a CSR committee member responsible for risk

management at vice president level. Originally organised under the CSR and environmental affairs

division, the CSR office was transferred to the corporate planning division to achieve deeper

Companywide expansion of CSR initiatives.

BASIC MAP

BASIC PRINCIPLES (CSR DIRECTION)

TOYOTA AUTO BODY 2020 VISION

MID TERM MANAGEMENT PLAN

COMPANY POLICY, FISCAL YEAR

POLICY, DEPARTMENTAL POLICY

DAILY BUSINESS TOY

OTA

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TOY

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4. Analysis and conclusion

Toyota clearly understands that the future of any organisation is based on three sub systems of

complex global system nature, socio political and global economy for their development and

sustainability. Its global warming prevention initiative which reduces co2 emission and prevents

global warming is highly prioritized, by restricting energy consumption in all areas of business

activities, in all stages of vehicle development and in design, production, logistics, and more. The

concept of “eco driving” is an environmentally considered way of driving that reduces the amount

of co2 emissions. The company is taking care of all parties like shareholders by providing them

value, for employees by providing them healthy and safe work environment and economic

benefits, for society by providing quality and innovative products for government by abiding the

rules and regulations. Because of its CSR activities Toyota has been selected as a constituent of

the Dow Jones Sustainability Indexes (DJSI) Asia pacific. And Toyota placed in global 100 most

sustainable corporations in the world.

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