Economical Cooperate Social Responsibility Essay

Question:

Discuss about the Economical Cooperate Social Responsibility.

Answer:

Introduction

In the recent past corporate social responsibility (CSR) have grown into a highly valued and significant part of businesses. Over the past few years, firms have been seen to invest their resources in the provision of goods and services to the public thereby cutting on the negative externalities that impact on business to levels that have not been seen before in corporations (Rahim, 2013). The participation of the company in corporate responsibility has been found to sway the consumer's purchase decisions with customers found to prefer goods and services from businesses that engage in corporate social responsibility than those that don’t. According to a survey, a majority of the stakeholders in organizations firmly believe CSR is an essential component of for large businesses to achieve the vision of the company (Jagd 2014). The Economic responsibility of a firm refers to the organization efforts to make sure that the firm is profitable and this way create long-term value for the company’s stakeholders and contribute to the universal and viable economy (Shimschack, 2012). By investing in Economic CSR, Apple Inc. has dramatically grown its profitability over the last few years. In the company's fiscal year ending in 2017, Apple Inc. revenue increased from $50.6 billion to $52.9 billion in 2017 compared to that of 2016 second quarter. The continuous ability to remain profitable has seen the company grow both it its products and its market share. Apple Inc. was reported to have grabbed 103.6% of the smartphone industry operating profits in 2016. The growth in earnings has seen the company’s dividend to its shareholders increase from 0.76 in 2012 to 2.03 in 2016. Further, Apple’s economic responsibility success saw the company’s stock grow from $ 80.33 in 2012 to $154. 32 in 2017 (NASDAQ, 2017) hence offering the company’s investors a high return and promising better future returns.

Corporate social responsibility has an economic phenomenon that weighs significantly on Apple Inc. The economic responsibility is important in that it has secured the current and long-term future of the company hence achieving its primary objective. By being able to make a positive return on its investment the investors’ confidence is elevated as it is an indication of the company’s ability to effectively manage the investments in its assets while using the assets to maximize the shareholder's wealth. With the company acting in an economically responsible manner, the performance of the business regarding stock management, capital goods investment, and the pricing strategies of the enterprise can be adequately evaluated to help the company strategize for the future.

Economic responsibility is a measure of a company success in the industry which it operates in. On May 2017, Apple Inc. announced a $ 17.8 billion profits in its first quarter of with a diluted EPS (earning per share) of $ 3.36. (Apple, 2017). The popularity of the company’s iPhone has seen the company’s sales increase translating into profits. Apple has commanded large markets share after Samsung with the introduction of iOS with iPhone 7. The iPhone 7 brand has been ranked as the top-selling brand being sought after in the United States, France, Germany, and United Kingdom. Apple Inc. and Samsung controls 70% of the United States market with the iPhone models accounting for most of the Apple’s sales.
In addition to securing the company future, being economically responsible supports the company bid in sourcing finances both internally and externally. Debt financing can benefit a company with cash flow challenges to expand into new territories. A corporation like Apple Inc. which is making enormous profits can alternatively finance itself comfortably by its profits instead of using debt. For example, following the slow sales of iPhone in 2016, Tim Cook the CEO of Apple and his executive team agreed to shed some of the Share they hold to stabilize the company during that period. With consistent growth in profits and demand for its innovative products, Apple has continued with its expansion plans and is currently underway to open up Beijing and Shenzhen research and development centres as the China is a lucrative market for Apple products. As a result of an increase in domestic demand, Apple has sought expansion plans of Foxconn Technology group though the amount of investment is not yet determinable to improve manufacture of Apples iPhone. Having sound financial base influences the lending institutions to lend as the company demonstrates its capacity to finance loan. Having strong capital base ensures that Apple's investments and reserves guarantee the lenders of ability for the business to service the loan giving the company a sound credit history and rating which is critical for future external borrowing needs.


Uncertainty often surrounds the nature of corporate social responsibility, and this makes it’s hard to describe CSR and to be sure of the activities surrounding it. The above being the case, it is Imperative to ensure precise identification of the activities that are involved with carrying out CSR (Katamba, 2012). The main principles governing CSR are; Sustainability, Liability, and clarity. Sustainability is concerned with the influence of present action taken by the organization over the choices at hand in the future. The utilization of company's resources may shape the future of a company as when resources are utilized in the present; then it means those resources will not be accessible for future use hence raising the need to carry out an in-depth evaluation particularly if the resources are limited in quantity. The sustainability principle echoes the need for the organization just to use enough resources that can be regenerated to avoid depletion which would cause the acquisition cost of the remaining resources to increase and thereby increasing the overall operational expenses of the corporation. By viewing the organization as part of a vast economic system ensures a company takes account of its activities not only for cost estimation and value creation purposes in the present but also for the future survival of the business. Sustainability can be measured by the percentage of resource utilization by the firm against resource regeneration (Blowfield, 2013). Business activities that are unsustainable in the long run can be accommodated by either strategizing on the future lack of the resources or by creating sustainable operations.

Liability in CSR looks into how the organization identifies the possible effect of its activities on the external environment and thereby taking the necessary action for the effect of its operations. Corporations should quantify the consequences of their actions on both external and internal parties affected. Companies have a responsibility to the wider society apart from the shareholders, and therefore should make reports to external stakeholders on the effect of the Company actions and how the actions affect them (Bustin, 2014). Reliability ensures that a company puts in place proper measures of the surrounding performance and the reporting of company activities. Further, it necessities that in recording and reporting company's performance the value realized should be greater than the cost incurred. In reporting a company should ensure that the report can be comprehended by all parties involved and that information contained in the report is relevant at all times. Further, the company should make sure that the reports are reliable to its users by providing accurate measurements, representation and free from prejudice. Also by making sure that the report is consistent with trends in the market, the report would achieve comparability characteristics. However given that the report makes use of both qualitative and qualitative data, the qualitative part of it is subject to numerous data hence need to have a broad cross-section to minimize inconsistencies.

The clarity principle of CSR implies that external implications of a company's actions can be determined from the company's reporting and relevant issues cannot be covered up when reporting (Oxelheim, 2006). The company report should provide all information regarding the external effects of the company's actions. The outside users of the information should be informed fully on reading the report by ensuring inclusivity as they don’t have the internal knowledge of business operations that is accessible to internal users of the content of the report. Like culpability and sustainability, clarity seeks to recognize a company's responsibility as a result of its activities and at the same time giving the external stakeholders the power to participate in the company's operations.

Apple Inc. cannot be termed as the largest Smartphone seller in the global market, but sure enough, it's one of the most profitable in the industry. A recent survey carried on the smartphones industry has revealed that Apple commanded 103.6% of profits realized from the sale of smartphones industry in the third quarter of 2016. By investing in computers as well smartphones that are consistently meeting the needs of the market the Apple Inc. has managed to remain competitive against its competitors and thereby racking more profits. The visionary leadership of Tim Cook has seen the creation and expansion of high-quality client focused electronic gadgets that are on a regular basis upgraded to match the changing needs of the consumers. The use of disruptive innovation stirs the market as it has the effect of giving a hit product one after the other (Kelly, 2017). By doing away with the iPod and concentrating with iPhone, Apple has seen its revenue grow drastically. By constantly innovating, Apple has been a trendsetter in the industry and thereby other smartphone companies most of the time make use of already existing ideas rather than trying to reinvent the smartphone industry as Apple is constantly doing. By ensuring that they integrate every aspect of the model in manufacturing Apple has created a brand as Apple owns its software .i.e. phone, unlike all other companies that make use of Android operating systems hence making Apple a unique brand.

Apple can be termed as economically sustainable as it makes the company products are on a continuous basis innovating hence ability regenerate the source of new ideas every time. The company ability to set the pace in the smartphone industry is a clear indication that Apple is making use of its innovation in an equal measure to developing new brands thereby staying ahead in the technological industry which is constantly varying.

In conclusion, corporate social responsibility a vast subject which a company should encompass in its strategy to ensure it aligns with the business goal. By Being economically responsible, Apple in will be able to safeguard its future in by ensuring they have a competitive edge against major competitors like Microsoft, HTC, Samsung, etc. Economical responsibility should observe the principle of corporate social responsibility by making sure that the Company it’s held responsible for its actions and how the company actions affect its shareholders.

References

Apple. (2017, May 21). Apple- Investors Relations. Retrieved from Aple Inc. Website:

Blowfield, M. (2013). Business and Sustainability. Oxford: OUP Oxford.

Bustin, G. (2014). Accountability: The Key to Driving a High-Performance Culture. New York: McGraw Hill Professional.

Jagd, J. T. (2014). Investor Oriented Corporate Social Responsibility Reporting. New York: Routledge.

Katamba, D. (2012). Principles of Corporate Social Responsibility (CSR). Houston: Strategic Book Publishing.

Kelly, G. (2017, May 22). Forbes. Retrieved from Forbes Website:

NASDAQ. (2017, May 22). NASDAQ. Retrieved from NASDAQ Website:

Oxelheim, L. (2006). Corporate and Institutional Transparency for Economic Growth. Amsterdam: Emerald Group Publishing.

Rahim, M. M. (2013). Legal Regulation of Corporate Social Responsibility. Brisbane: Springer Science & Business Media.

Shimschack, M. K. (2012). Economic Perspective on Corporate Social Responibility. Journal Of Economic Literature, 51-84.

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