Corporate social responsibility covers almost the whole business world. Protection of the environment, well-being of the employees, the society and the community at large are in its focus. Organizations can be either socially responsible or irresponsible. It is important to understand that whichever the case, there are impacts. Social irresponsibility is followed by several negative impacts such as the company's negative image and poor performance. Mattel Company demonstrated social irresponsibility, which has cost the organization considerably.
The core policy of corporate social responsibility requires that any business organization must ensure of being committed to fulfilling its social and environmental responsibilities in whichever place it is operating. According to the policy and principles of corporate social responsibility, the business activities of an organization should not in one way or another affect the social environment of the stakeholders and the society. The activities must not harm the consumers environment or cause any physical or mental illness to the people in the society. Lead is one of the elements with adverse health effects when its uncontrolled quantities are released into the environment. According to Sethi et al., Mattel Inc. failed in ensuring that their product safety measures were adhered to. Releasing a production of over 18 000 000 products that contained quantities of lead exceeding the safety level, with or without noticing that fact, was an act against the principles of corporate social responsibility. In this manner, the company failed its responsibility of protecting its customers and the society at large.
Looking at the quantity of their faulty products released into the market, it becomes difficult to treat it as an accident. The company must have the mechanism and techniques of determining the levels of lead in its products. It is not easy to have such a large quantity of faulty products circulating in an economy. From my perspective, the data was an outlier as it did not conform to the normal expectations of a responsible and established organization like Mattel Inc. This issue has negatively impacted the organization in several ways. The public trust in the company's products had greatly reduced, and this affected the returns of investments which also affected the company's shareholders. For example, according to the principle of CSR, Mattel Inc. had the responsibility of maintaining the shareholders profit level or increasing it. The shareholders expected such an outcome, but, unfortunately, the company's actions resulted in the profits decreasing. Another company's responsibility was to protect the public from harmful substances. People bought their products because they trusted the company. Instead, they released lead into the environment. Finally, they had the responsibility of ensuring that their positive name is maintained as negative image damages employees reputation; and the employees believed in the organization's capacity and abilities. The company failed in this task too, resulting in its employees being associated with negligence and irresponsibility. Such a reputation affected their ability to look for jobs in other companies in future as they released the dangerous lead-containing products into the society. In such a way they went against the principles of CSR.
The trust of the society in a company's product is one of the determinants of market share. Once an organization breaks the customers trust in their products, their market share will go down, and recovering from such a situation will take years. Mattel Inc. is still struggling to get back to its original position. Several industry experts argue that with the existing competition in the market, it is hard to win back your customers' trust once they begin to feel unsafe using your product. Research indicates that Mattel Inc. immediately changed the design of its products and safety mechanisms to help curb the menace, but has not managed to get them back to their highs. In fact, the 25% decrease in stock, which resulted from that incident, has not been regained. Experts say that this will pass, however it may take longer than expected to draw the parents attention to Mattel's toys again.
I have come to realize that the first step to a successful performance of the organization is to make sure that corporate social responsibilities are well taken care of. Currently, the investors have changed the ways they assess the company's performance, and the criteria they use in making decisions includes ethical concerns. Employees also consider companies which follow these principles. Companies today are also trying to partner with organizations that have social responsibility manners. It is therefore clear that a company can be considered socially responsible only if it behaves in an ethically acceptable manner. Ethically acceptable manner implies taking into consideration the society in which the organization operates. In the current society, it is no longer about the prices of an organization’s product that will drive its market share. The relationship between the organization's activities and the corporate social responsibility determines the market share for that given organization.
This issue of corporate social responsibility does not just affect the market share but also the qualification of employees the company can absorb and their ability to retain them. No employee wants to be associated with a negative image. If the organization fails to meet the social responsibility requirements, some of the good employees will leave the company. Potential investors are interested not only in the company's performance but also in the security of their investments in future. According to David, when an organization gains a bad name due to being socially irresponsible, like in the case of Mattel Inc., potential investors are scared. Even those who already have shares in the company will tend to withdraw or sell those shares. This is so since they are not sure of how long the negative image will affect the company's performance. They are also not sure of whether the organization will be able to stay in business.
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