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Corporate governance

1 Solved Question with Answers
  • 2017

    4. (b) Corporate social responsibility makes companies more profitable and sustainable. Analyse. (2017) 

    Corporate social responsibility is based on the premise that a business can only thrive if it operates within a thriving society. In that way, the business depends on the community it operates within, and as such, has an ethical and moral responsibility towards that community. A business is perceived as legitimate when its activities are congruent with the goals and values of the society in which the business operates.

    Consumers and other companies are likely to shun firms that develop unethical reputations. And arguably, companies that don’t pay attention to their social and ethical responsibilities are more likely to stumble into legal troubles, such as mass corruption or accounting fraud scandals – threatening the sustainability of the business itself.

    By promoting respect for the company in the marketplace, CSR can result in higher sales, enhance employee loyalty and attract better personnel to the firm. It is also a way to connect to the personal well-being of customers. In this way, the CSR can contribute towards higher profits for the company. 

    Therefore, by ensuring brand loyalty and consumer patronage, CSR can ensure that the business remains sustainable in the long-term and it stays profitable.

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