Comparison of socially responsible business of Nokia Essay Example
Comparison of socially responsible business of Nokia Essay Example

Comparison of socially responsible business of Nokia Essay Example

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  • Pages: 7 (1850 words)
  • Published: August 31, 2017
  • Type: Case Study
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All organizations have a responsibility towards society as they operate within a social environment. To meet this commitment, modern organizations are increasingly embracing the concept of corporate social responsibility.

Although corporations often utilize corporate social responsibility as a marketing strategy, this study focuses on investigating the corporate social responsibility efforts of Nokia and Ranbaxy. The study will evaluate their specific areas of interest and the underlying policies guiding their corporate social responsibilities. Additionally, it will identify approaches for gauging the efficacy of these companies' CSR initiatives.

Introduction

Companies play a crucial role in society, as they depend on diverse resources including land, labor, resources, and capital from it.

In the past, companies prioritized profits over social welfare and thought that engaging in social welfare activities would be costly and reduce profits. However, they later realized that although

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it initially increased expenses, social welfare improved their corporate image and benefited them in the long term. Nowadays, most companies prioritize their corporate social responsibility. Paul Portney defines corporate social responsibility as "companies going beyond legal requirements" (Hay, et al., 2005, p.145).

Corporate Social Responsibility (CSR) is now a critical aspect of corporate governance in the modern world. It encompasses sustainable economic development, improving the quality of life for workers and communities, and accelerating progress towards the Millennium Development Goals (Blowfield & Murray, 2008, p.309). The process of globalization has led to the establishment of legal bodies that have made CSR mandatory for companies. These legal requirements consist of specific rules and regulations that corporations must comply with. In 2000, The Organisation for Economic Co-Operation and Development released a set of guidelines for international companies to adhere to. These guidelines focus on advancin

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society socially, economically, and environmentally (Idowu & Filho, 2009, p.35).

This text aims to discuss the Corporate Social Responsibility (CSR) initiatives of two global companies, Nokia and Ranbaxy. Nokia is a multinational company based in Helsinki, Finland, operating in the telecommunications industry and manufacturing mobile phones and related devices. Currently, Nokia has a presence in 120 countries and its market extends to over 150 countries. In 2009, the company earned an annual revenue of EUR 41 billion from the international market.

Ranbaxy is a major pharmaceutical company situated in India.

Founded in 1961, the company was later acquired by Daiichi Sankyo, a Nipponese company, in 2008. With a presence in 23 out of 25 international markets and operations in 7 states, it serves clients located in over 125 countries (Ranbaxy-a, n.d.).

Section 1: Stakeholder Salience Theory

The Stakeholder Salience Theory emphasizes the importance for companies to consider all groups with an interest in their operations.

In 1995, Donaldson and Preston introduced an attack that later formed the foundation for corporate social responsibility. Mitchell and colleagues (1997) define the stakeholder saliency theory as attributing power, legitimacy, and urgency as distinct features in assessing a company's connection with these groups (Winkler 2009, p.5). Power signifies the level of influence held by stakeholders within the company while legitimacy indicates their genuine or legitimate position within the organization.

The urgency faced by the direction in managing different affairs related to the stakeholders of the company can be explained by the last constituent. This constituent also expresses the relation of the stakeholders with the direction. By using these three factors, the stakeholders can be segregated as internal stakeholders (including the direction and the employees of the company)

and external stakeholders (including clients, providers, authorities, society, and the environment). In the later portion, we will discuss the Corporate Social Responsibility policy followed by both Nokia and Ranbaxy. At Nokia, Corporate Social Responsibility is known as corporate duty.

Nokia incorporates sustainability and related efforts into its operating system to enhance the success of its Corporate Social Responsibility initiatives. The company has implemented a code of conduct and a set of values referred to as 'Nokia Way', which are applicable to providers, employees, and clients.

The company partners with different NGOs to enhance social conditions in the states where it operates, including the International Youth Foundation. This particular NGO concentrates on offering assistance to street children (Nokia-b, n.d.). In 2006, SOMO released a study that emphasized the unfavorable working conditions of Nokia's manufacturing unit.

It was unexpected news because the company is a member of GeSI and EICC. These associations ensure that the excavation, extraction, and recycling methods used in the electronic sector are in compliance with the prescribed rules (Nokia-b, n.d.). This revelation contrasts sharply with their Corporate Social Responsibility efforts, which aim to uplift impoverished and disadvantaged individuals in society.

Nokia collaborates with various organizations, including the Royal National Institute of Blind People (RNIB), Finnish Federation of the Visually Impaired (FFVI), and European Older People's Platform (AGE) (Nokia-b, n.d.). Meanwhile, Ranbaxy's principle is to provide value to its stakeholders and establish a standard in the global market. The company motivates its workforce of 14,000 individuals to be innovative and achieve higher levels of excellence.

Ranbaxy highlights its strong Corporate Social Responsibility policies, which are closely aligned with its operating environment. The company places significant emphasis on enhancing healthcare

for mothers and their newborns by addressing issues such as Low Birth Weight, Diarrhoea, Pneumonia, Birth Asphyxia, Hypothermia, Anaemia during gestation, and obstetrical causes like Sepsis or Haemorrhage (Karmayog, 2008). In comparison to Nokia, Ranbaxy's approach to Corporate Social Responsibility is more limited as it does not have a separate report dedicated to this area in contrast to Nokia's comprehensive details provided in its annual report.

Corporate Social Responsibility initiatives at Nokia (Section 2)

Business organizations operate within a societal environment and have certain duties towards society. This is known as Corporate Social Responsibility (CSR) in today's world. Globalization has increased the awareness among companies about their responsibilities towards society. Companies also use CSR initiatives as a promotional tool, as it provides many benefits. CSR fosters ethics and encourages collaboration between labor and market communities.

Secondly, it fosters societal investing, which involves allocating funds towards benefiting society. Additionally, it contributes to improving public perceptions of the company and promoting trust and transparency. Corporate Social Responsibility initiatives also enhance an organization's reputation among the public (ASOCIO, 2004). Nokia, a key player in the mobile phone industry, is committed to adding value to society through its daily activities. Nokia has collaborated with the United Nations and other government agencies to implement various social initiatives.

It has utilized its expertise to provide a French telephone to approximately one billion individuals worldwide. The Corporate Social Responsibility policy of Nokia was established in 2009, with the goal of utilizing their expertise to offer solutions to society in the form of expert solutions (Nokia, 2009). As part of their Corporate Social Responsibility activities, Nokia has identified key focus areas where they will provide assistance. These

areas include Accessibility, Environment, Education, Supply chains, and Human rights (Nokia, 2010).

The shift in Nokia's Corporate Social Responsibility policy is due to two main factors: a decrease in mobile phone prices and an increase in global mobile internet expansion. The goal of Nokia's new CSR policy is to offer affordable mobile services to all social groups. The policy primarily centers on two key areas.

Nokia's Corporate Social Responsibility policy emphasizes on utilizing mobile technology for sustainable development, including the development of young individuals. It also acknowledges the importance of providing assistance for disaster management and supporting organizations like the United Nations. Moreover, Nokia's initiatives focus on achieving societal development, youth development, employee volunteering, and disaster relief through mobile technology. Additionally, Nokia aims to contribute to environmental sustainability by using materials that reduce pollution and promoting the use of reusable products for a healthier natural environment (Nokia, 2009).

Corporate Social Responsibility initiatives at Ranbaxy

Ranbaxy Ltd. is a pharmaceutical company that manufactures generic drugs. The company's main area of operation has significant impact on society. Ranbaxy's Corporate Social Responsibility activities began in the 1970s, a time when healthcare in India was very poor.

The house's Corporate Social Responsibility policy focuses on providing healthcare, societal development, and environmental improvements. The company aims to achieve sustainable and inclusive growth in society through these policies. To support this, Ranbaxy established the Ranbaxy Rural Development trust, which provides healthcare facilities to underprivileged communities. Additionally, the company continues to send mobile healthcare vans to remote areas to offer relief and medical services. Efforts are also being made to address malnutrition and vitamin/mineral deficiencies by distributing free medications and

more to the people residing in these remote areas.

The company implemented household planning programs in rural areas to educate people about different family planning measures. It worked together with NGOs and state governments in India to combat diseases like malaria, cholera, and polio. The company also organized immunization drives in collaboration with state governments and NGOs. Moreover, Ranbaxy began promoting awareness programs about AIDS, particularly in remote areas with limited connectivity. In addition to this, Ranbaxy founded the Ranbaxy Science Foundation to acknowledge contributions made by children in the pharmaceutical field.

Ranbaxy has incorporated the preservation and protection of the natural environment into its Corporate Social Responsibility (CSR) policy. The company's CSR policy demonstrates its dedication to promoting health, safety, and the natural environment. These three elements have been integrated into Ranbaxy's fundamental business policy for preserving the natural environment (Ranbaxy, 2010).

The CSR activities and policies of both organizations indicate that they have made revisions to their CSR policies since their inception. These changes have been implemented to include new areas in their CSR initiatives.

Categorization of Corporate Social Responsibility (Section 3)

Corporate Social Responsibility aims to align employee and customer values with the long-term corporate strategy in order to gain advantages. This requires a comprehensive understanding that considers various stakeholders. The Balanced Scorecard Institute defines a balanced scorecard as a strategic management tool that evaluates the performance of a specific business process, incorporating both financial and non-financial indicators for measuring organizational or business process performance.

Robert Kaplan and David Norton introduced the balanced scorecard model. This model consists of four perspectives: People, Customer, Internal factors, and Financial position. Unlike other models that only measure financial performance metrics, this

model also includes non-financial factors when evaluating the performance of a business process or organization.

Competitive advantage of Corporate Social Responsibility

Bob Willard proposed a list of 10 market forces that explain why organizations choose to implement Corporate Social Responsibility. These forces can be further categorized into two groups: mega issues and stakeholder concerns. These 10 forces serve as the foundation for any Corporate Social Responsibility initiative. The 10 points, along with their sub-categories, are as follows:

  • Mega issues
  • Health
  • Climate
  • Globalization
  • Breach of trust
  • Energy scarcity
  • Stakeholder issues
  • Stockholders (Active)
  • Green consumers
  • Ngos
    Government"The Financial sector."

Organizations can utilize the balanced scorecard approach to determine the benefits they gain from implementing Corporate Social Responsibility in their business strategies. To incorporate Corporate Social Responsibility into the balanced scorecard, organizations need to include the 10 issues under their respective headings. This means that all 10 performance measures will be included in the relevant sections of the balanced scorecard.

The incorporation of factors into the balanced scorecard allows for measuring the effectiveness of Corporate Social Responsibility schemes (Crawford, Scalleta, n.d.). The following table provides a detailed process that companies can follow to assess the accomplishments of their Corporate Social Responsibility initiatives.

The table above displays the category division of Corporate Social Responsibility, encompassing aspects such as health, climate, globalization, customer, fiscal, stockholders, employees, green clients, NGO's, government, and the financial sector. Each category corresponds to its position in the balanced scorecard system and the criteria used for evaluating policy effectiveness in Corporate Social Responsibility. The aim of this analysis is to assist organizations in assessing their policies' efficacy and

level of success.

By utilizing this technique, companies can analyze the results to identify effective and outdated policies. They can then select practices that align with the core vision and mission of the company. It is crucial for businesses to only adopt Corporate Social Responsibility practices that generate value for stakeholders and society as a whole. ORSA categorizes Corporate Social Responsibility into two dimensions: social responsibility initiatives and supporting tools and instruments. Social responsibility initiatives encompass areas such as human resources, community, environment, supply chain, and competition (Bissacco, et. al).

According to Al, the tools and instruments that support a company's ethical standards and corporate social responsibility include communication strategies, development plans, and administration. There are also other supporting elements such as management tools, laws and legislations, and problem management techniques (Bissacco, et al.).

Al. n.d.). It is necessary to combine the aforementioned factors in order to implement a successful Corporate Social Responsibility program.

Organizations implementing Corporate Social Responsibility must ensure that these two factors are integrated in order to bring about a positive and beneficial change in society. Companies must ensure that the Corporate Social Responsibility practices they adopt align with their core policies.

Decision

The extent and nature of Corporate Social Responsibility initiatives differ from one organization to another. The above survey compares and contrasts the Corporate Social Responsibility initiatives of two companies with different business positions in different countries. The survey reveals that the Corporate Social Responsibility approaches of the two organizations are quite distinct from each other.

The reason for the differences between the two companies is because they are involved in different areas. It was also observed that both organizations have implemented Corporate Social Responsibility initiatives that

align with their core business. Nokia focused on providing Corporate Social Responsibility by utilizing their expertise in mobile technology to bring about changes in communication. On the other hand, Ranbaxy used their expertise in the pharmaceutical industry to bring about changes in the healthcare aspect of society. Corporate Social Responsibility has also become a tool for promotions, as companies that adopt these practices are generally more accepted by society.

The significance of this is emphasized as companies operate within a social framework. Corporate Social Responsibility (CSR) practices contribute to improving a company's reputation among customers. Organizations practicing CSR should also evaluate the effectiveness of their CSR policies in achieving organizational goals. It is necessary to periodically assess their CSR initiatives to identify their impact on Corporate Social Responsibility.

They need to grasp the fact that Corporate Social Responsibility initiatives necessitate resources that ultimately impact the values and involvements of stakeholders. The balanced scorecard approach is a method that evaluates the effectiveness of a company's Corporate Social Responsibility efforts. To implement the balanced scorecard approach in measuring Corporate Social Responsibility, businesses must initially identify the elements that constitute their Corporate Social Responsibility policies. These elements must then be aligned with the corresponding perspective of the balanced scorecard. Ultimately, organizations must compare the performance of these initiatives against specific benchmarks.

Adoption of this technique would allow the house to assess the effectiveness of its Corporate Social Responsibility practices. They should regularly review their Corporate Social Responsibility policies in order to eliminate outdated areas or those that are not yielding favorable results.

References

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  • Volume 14, Issue 1.

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