With advancement in technology world has become a global village. Companies are reaching far away territories and brands are recognized globally. Multinationals have emerged as the driving force of economy as they don't find themselves restricted for resources and target market to any physical geography. Companies design their product at a different facility, test it, mass produce it and market it in different localities according to their goals, all to keep cost low and profitability high. This phenomenon has enabled them to establish their presence across the globe.
Though globalization created new opportunities for firms as it opened new prospective markets, new sources of cheap labor and friendlier laws, it also presented companies with unique challenges in form of highly aware customer and more demanding stake holders. Now all stake holders from customers to share holders, employees to suppliers and from government to local communities expect a positive, ethical dealing from companies. Because of their massive presence and impact on economy, societies / people's perception and expectations from these multinationals are rapidly changing.
Corporate Social Responsibility (CSR) might seemed a "too good to be true" idea a few years or a decade back, has now taken the main stream role in forming companies policies. Now people are more aware and expect more than a quality product, they want companies to give back to society in which they are operating. That is the reason a growing number of multinationals and known brands are teaming up with governments and NGOs to bring a positive change in society. Going green by controlling waste, reducing carbon footprints by local resourcing and launching charitable work are only few examples of activities that companies undertake to establish a positive image in society.
Becoming more ethically responsible may appear simple straight forward solution for increasing expectations of stakeholders in a globalized community but in reality it is not. Businesses are considered and designed to be profitable, that's the only way they can sustain in the competitive world, now a complete shift in perception is required. Now companies are not created just for profit but for benefit (Greenblatt, 2008), with a core ideology of giving back to society or preserving something unique and natural. For which strong leadership, rather stewardship is required from managers and entrepreneurs.
Ben & Jerry is an example and so is Ethos Water. This shift in mind set of businesses and managers is one of the main challenges towards an ethical, socially responsible corporate world. As it takes strong focus and commitment to deviate from the norm and make your own path in a fiercely competitive environment. Ethos started humbly and acquired reasonable success while donating half of its earnings to resolve water and hygiene crisis in developing countries. Now it is acquired by Starbucks and still gives away a fraction (. 05$) of its price (1. 80$) which amounted to 6 million USD. On its way to success it garnered accolades for its business model, which is profitable yet ethically responsible. Though Ethos is a success story as it turned to be profitable, SC Jhonson's Base of Pyramid initiative wasn't a commercial success but it achieved its goals of community mobility and improving life of its selected audience.
Finding and nurturing the right mindset is not the only challenge that companies now face to achieve the goal of becoming ethically responsible, in fact the very factors which contributed in their growth have become a challenge for them, globalization and ethical diversity (Johnson, 2012). Not only the divide between rich and poor is increasing but it's also becoming more and more apparent. Multinationals have the corporate muscle to shift the whole economic realm of a society but they tend to stand with financially stable parties to safeguard their share holder's interest, thus ignoring a lot of stake holders, making divide between haves and have-nots wider. These humongous multinationals also pose serious threat to upcoming entrepreneurs with deep rooted philosophy of bringing a positive change in world. With enough liquid money in their piggy banks, they can acquire and engulf their competition, making survival of ethically responsible companies even more difficult. The best and probably the only way of survival in such a cut throat corporate environment is saving your core values to the…