Company social responsibility and marketing
author: Zoran Relic 19.11.2019
How do micro and small start-ups implement CSR?
As business entities, companies enforce specific established rules, have norms, and predetermined expectations. According to certain business classifications, small enterprises are the most numerous business entities and the most significant contributors to the development of the country's economy. Small and medium-sized enterprises in development are regulated and destined to do more than prescribed by laws and regulations. These enterprises must take into account the main factors that affect their business, such as trends and the effects of globalization on their local environments in which they develop their businesses. Adapting company employees to the changes in the environment, requires a focus on globalization, the development of Internet technologies and better education of individuals. In this segment, a need emerges to implement social responsibility. For successful social responsibility implementation, market leaders who are characterized by social sensitivity become role models. For ensuring the stable and sustainable growth of small businesses, they need to activate their mechanisms that provide the growth trend in the adoption of social responsibility. Small businesses can follow the example of other market leaders who have already implemented such an approach. The process of implementing social responsibility needs adaptation in the statement of the company's mission. It characterizes in practices such as mentoring high school students on financial literacy, training young people on entrepreneurial skills, and teaching financial responsibility as an essential segment of general culture. The right way of implementation of social responsibilities is donating a percentage of sales and/or a part of the profit to charitable actions. Best by paying directly into the giro accounts of charities or institutions and building a long-term partnership with them. Such partnerships create a positive change and impact on related entities. They cannot be implemented as a one-time payment, after which all contacts get terminated. By pointing to the company's charitable work and investment efforts that create social responsibility, the company meets preconditions for the model of triple balance (Global reporting initiative). Triple balance is a significant segment of financial reporting.
What do you think are the biggest challenges of small business social responsibility?
The biggest challenges of small business social responsibility are:
- Poor education in the civil sector
The transition from a socialist society to a transitional society left established practices and models of action from the past economic system that hampered any innovation and way of free-thinking. This transition also reflects in the social mentality of people who, in those earlier decades, acquired the habit that "everything is social," and it is vital to find a job or any employment. Preferably a job that requires the least work to be done. With this work/non-work comes a secure salary, and the state is expected to take care of all issues in society through its direct involvement and state interventionism. With this kind of mentality and state's direct involvement in issues of social and economic nature, interfering in them and hindering development through tax pressure, bureaucratization and nepotism exclude the precondition of meritocracy for performing responsible functions in decision-making positions.
- Corruption and organized crime
Profits generated in companies are, in some cases, deliberately extracted for personal gain. Piercings of the corporate veil that are either not punished or never begin as lawsuits but rather end due to statutes of limitations, as is the case in procedures and processes with more significant amounts of money. For example, the practice has shown that through conversion and privatization, property that ended up in private hands got obtained quickly. Likewise, in a legal and permissible manner without the corporate veil piercing, today's practice is a reduction of profits with a reason for diminishing the income tax on representation, meaning fulfilling personal needs and emphasizing own status. Then comes intentional borrowing, co-ownership in several related companies whose profits and/or assets are transferred from company to company and thus seemingly legal extraction of material benefits for one company. At the same time, another would end its business story. In such ways, individuals can create power and liquid funds used for image campaigns through the media and show how successful they are in business. In mentioned cases, if the flow of money was monitored, it would be clear to see that economic growth is emphasized, which is sustainable in the short run, but disastrous in the long run. In this way, the foundations for economic development based on the development of small and medium-sized enterprises cannot be laid.
- One-way communication and misunderstanding
With the authoritative approach of people working in responsible positions and delegating tasks, without understanding how to satisfy all stakeholders in the business process, primarily their customers and employees.Those people that do not make constant efforts to motivate customers to buy their products and services and do not understand how to invest in their employees in the long run. How to make employees happy, provide them with a higher degree of motivation to deal with all the problems. High motivation can have more benefits for a small business in the long run and is achieved through benefits like high salaries, hot meals during an hour break, flexible working hours, payments to the voluntary pension fund, Christmas bonuses, occasional awards, additional health insurance and other. For example, underpaid employees tend not to communicate problems with their superiors or submit innovative proposals to improve existing products and services. Companies need to make sure that all segments of the marketing mix are coexistent to avoid the risk of loss, for example, creating a bad product or service or poor analysis and controlling in the business process. Problems can even arise if suppliers have a negative rating, are proven to be exploiters, or end up in a public process, which can have a massive impact on small businesses.
MSmall businesses need to establish control mechanisms and ensure customer and employee satisfaction. Long-term sustainability must be implemented in a hard way with the abolition of old practices with additional daily efforts for employees themselves to understand the importance of incorporating ethical practices in their daily activities. By documenting positive developments, companies can present it as the development of business ethics and thus reap the fruits of their labor.
How to realize that social responsibility is an essential element of the marketing function?
By realizing that business entities must be guided by the practice of "good citizens," using a balanced way of turning profits while performing activities that benefit society as a whole. A "good citizen" approach is a way of bringing customers in, finding consumers who want to make a positive difference by participating in shopping. This is achieved by meeting the needs of customers with supporting and creating positive social trends, and by supporting the community through the provision of useful services and products. The price can be adjusted and presented to represent added value for customers who want to pay more precisely because they participate in the actual process of creating a better society. A good example is packaging with recyclable materials, where the profit goes to charity for groups that take care of vulnerable groups in society like poor or disabled people or children's hospitals. For instance, if customers order or buy on a specific date like Mothers Day, all proceeds from the sale are donated to the maternity hospital of the poorest city in the Republic of Croatia. In this way, small businesses create ethics. Investing in sharing profits with those in need and with social responsibility, ultimately creates a positive image of the company that can have a significant impact on both profitability and productivity.