Have
you ever asked yourself why companies continue giving us free goods? Have you
ever received any free good or service from a company? I cannot deny that
everyone has received a free commodity either directly or indirectly. This is
what the business world refers to as “Corporate Social Responsibility”.
Corporate
Social Responsibility (CSR) is a form of corporate self-regulation, which the
businesses integrate within their operations models for sustainable growth. CSR
policy functions as self-regulating mechanism whereby businesses monitor and
ensure their active compliance with the spirit of the law, ethical standards and
international norms.
Most
companies in Kenya actively participate in CSR initiatives. The primary
objective of these corporations is to embrace responsibility for the company’s
actions and encourage positive impact through its activities in the
environment, consumers, employees, communities, stakeholders and members of the
public. CSR is not one-shilling activity, but an activity that consumes
millions of money. I remember one day reading an article that Tuzo has
supported a football club in Kenya with Sh 20 million. Similarly, Equity Bank Foundation,
Kenol Kobil and KCB foundation spend a better amount of money to pay school
fees for bright and needy students. And more other companies…. Why should
businesses spent such huge sums of money to implement CSR?
CSR
could appear expensive in the short-run, but it leads to increased profits in
the long-run. Proponents of CSR argue that corporations that actively implement
CSR make more long-term profits than those that do not. Have you ever asked
yourself how these profits come about?
Let
us consider Arial detergent production company, which currently has a market share
of 25% in Kenya. First, let us ignore
the fact that Arial and Omo are at loggerheads regarding the former’s
compliance with the Competition Act, Code of Advertisement Practice and Direct
Marketing Rules in regard to its innovative advertisement. Procter & Gamble spent sh 360 million to
prepare and air the Arial advertisement. We know the media is very fair, it
charges only sh 179,000 per 30 seconds to buy airtime during prime hours (7:00
pm-10:00pm) when the televisions have the largest number of viewers. Ignoring complains
that the Arial advertisements are characterized by untruthfulness, the company
repeats several slots on various TV stations; the amount can sum up to sh 1
million every evening. This is just one example of a company; there are others
that spend more than this!
One
of the demerits of this advertisements is that not all people can access them. People
in rural areas do not have any idea about these products. Sometimes they see
the washing powders on the shelves, but no force has ever been applied to help
people identify the products. This is why I am talking about Corporate Social
Responsibility, rather than just advertising in the media.
Procter & Gamble could
be forgetting that excessive advertising would miss essential category of
buyers that have to be nudged or need little persuasion to make purchases. CSR would
provide the best cure to this since it would enable consumers to identify
themselves with the product and build loyalty with the company. CSR also gives both
present and prospective customer an opportunity to interact with the company in
a non-business environment, which encourages the public to seek its business
interactions. If I belonged to the company’s board, I would suggest at least
some form community service, perhaps to the jigger stricken area or give some
sachets to schoolchildren from poor communities to wash their clothes with
Aerial. The smell alone would make these children company’s loyal customers
when they grow up. Let me not attack Colgate because people in remote areas do
not even know that their teeth need to brushed, and it is the responsibility of
the toothpaste manufacturing companies to enlighten these locals so that they
can begin using and buying toothpastes. But toothpaste companies have left
people suffer with teeth problems due to non-cleanliness. This is what I call “LACK
OF AN EYE TO IDENTIFY BUSINESS OPPORTUNITIES”
I
watched the second day of the Westgate Mall Siege with my seven friends. We were
all worried about the plight that people outside were undergoing as they waited
for their family members who were still hostages. A canter came with several
dozens of plastic-bottled Fanta, obviously from coca-cola company. I heard one
of my friends say, “At least coca-cola can see.” As we went out for a drink,
almost everyone left their preferred drinks and “wanted to test whatever
coca-cola had offered to the hostages’ next of kin.” I think this is how a
consumer community begins to develop.
Equity
Bank has grown rapidly due to increased involvement in CSR. Everywhere in the villages,
people of all walks are talking of Wings to Fly. Children are encouraged to
work hard so that they can be supported by the bank. Teachers are also aware of
the same since they talk about the sponsorships to the children. Children grow
up while the word “Equity Bank” is ringing in their minds. Even if they miss
the chance, they already know about the bank very well. When they want to open accounts,
there is no halt that can prevent them from Equity Bank even, if it means queuing
for three consecutive days. This is the power of Corporate Social Responsibility.
It
is crucial that companies comply with the CSR requirements. CSR contradicts the
economic role of the business, but it recovers all the profits in the long-run.
The members of the public should also take seriously and exploit all
opportunities that present themselves in the name of CSR to augment their socioeconomic
development.
