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Corporate Social Responsibility: Balancing Stakeholder interests and Corporate Values: A Cummins Strategic Decision Essay Example

  • Category:
    Business
  • Document type:
    Assignment
  • Level:
    Undergraduate
  • Page:
    2
  • Words:
    1115

СОRРОRАTЕ SОСIАL RЕSРОNSIBILITY

Identification and explanation of a corporate social dilemma

Corporate social responsibility entails voluntary actions of organizations that are beyond legal compliance. It involves considering the welfare and the interests of the stakeholders in the operations where the decisions taken in the organizations need not only to focus on the profitability of the company but also on the welfare of the stakeholders (Bassen, 233). Cummins Engine Company has stakeholders who need to be put into consideration in the process of making the decision that has to be followed. Putting the stakeholder theories into consideration, it is important to ensure that Cummins Engine Company does consider the various interests of the stakeholders in the process of making the necessary decision. This can involve stakeholder engagement where the different stakeholders of Cummins Engine can be included in the process of making the decision.

Implementing the consent decree and its terms in the operations of Cummins Engine can help in building the brand image of the company. If Cummins Engine opts to implement the consent decree by starting manufacturing the new engines that minimize the emission of the toxic gasses can make the company ethical responsible through considering both the society welfare and its profitability. Manufacturing the new engines might be costly but the company commitment to ensure that the wellbeing of the society is guaranteed can be crucial in improving the brand image of the business in the market.

Conceptual framework suitable to analyse the dilemma

Considering the integrative theories, an organization should consider its responsibility to the public where the company needs to ensure that the social effects of the company. If Cummins Engine Company decides to delay the implementation of the consent decree, it could mean that it would fail in considering the social effects of the engines. The consent decree is seeking to ensure that the engines that are manufactured are environmentally friendly by reducing the nitrogen oxide emission to the atmosphere (Cadbury, 15).

Discussion of academic

Portney (240) noted that organizations need to ensure that the operations are considerate to the wellbeing of the public by operating in an ethical way. A company can be considered ethical if it would ensure that the health of the people is not put at risks due to reduced emission of the poisonous gasses. Through being ethical, an organization can ensure that the stakeholders are taken into consideration in the various decisions taken in the organization

Analysis of qualitative and/or quantitative information that addresses possible solutionsto the dilemma

A penalty is imposed on the companies that do not comply with the requirements of producing new engines that are costly. EPA imposes a penalty of $3,640 for every engine sold aiming at encouraging the companies to implement the new decree of producing new engines that are environmental friendly. The penalty can make the company incur high costs in the long run. For instance, in the year 2001, Cummins Engine sold around 35,040 heavy duty engines to American making the company incur a penalty of around $128 million as a penalty for noncompliance. Considering these calculations, Cummins Engine is likely to incur high costs due to the noncompliance. This might have a negative impact on the profitability of the company as the penalties are likely to reduce the profits realized (Sen, 230).

Agreeing with the competitors makes Cummins Engine irresponsible to the society as that would mean an increase in the amounts of toxic gasses that can harm the health of the people. Besides, nitrogen oxide is among the greenhouse gasses that are responsible for climate change hence delaying the implementation of the consent decree is likely to increase the amounts of the greenhouse gasses in the atmosphere. Besides, the stakeholders of Cummins Engine expected their interests to be considered in the operations of the company where the stakeholders are looking for environmental friendly engines (Sen, 230). As a result, if Cummins Engine chooses to delay the implementation of the consent decree like the competitors, the company will be in conflict with the interests of its stakeholders.

Deciding to develop new engines can help in improving the market position of Cummins Engine as the company would be viewed as responsible for its operations making it attract more customers (Lindgreen, 5). Besides, the new engines are likely to gain increased demand because despite being environmentally friendly, it is clear that they are fuel efficient as the combustion of fuel would be complete in the process of reducing the gasses emitted. Besides, Cummins Engine will be able to eliminate the penalties that are imposed on every engine of around $3,640. This will result in decreased costs of operating hence increasing the profitability of the company.

Managerial recommendations. 

Joe Loughrey should launch the new and costly engine that can meet the set NOx emission standards. This is based on the underlying outcome of the two outcomes. Cummins Engine needs to ensure that it is a responsible corporate citizen where it should make sure that it is considerate to the welfare of the stakeholders. Agreeing with the position of the competitors of delaying the development of the new engines is likely to harm the reputation of the company as this decision makes the company fail to consider the interests of the stakeholders (Xueming, 10). For instance, Cummins Engine has the responsibility of ensuring that the engines produced can protect the environment through minimizing the emission of toxic gasses. Agreeing with the position of the competitors of delaying the production of the new engine is likely to result in environmental pollution that can affect the health of the people (Ness, 40). For instance, the toxic gasses produced by the engines can cause respiratory disease such as asthma hence exposing the health of the society at risk. Therefore, launching the new engines can be of great benefit to both Cummins Engine company and its stakeholders as the company can improve its brand image while ensuring that the interests of the stakeholders are met by reducing the amount of the toxic gasses.

Works cited

Bassen, Alexander, Sarah Jastram, and Katrin Meyer. «Corporate social responsibility.» Zeitschrift für Wirtschafts-und Unternehmensethik (zfwu) 6.2 (2005): 231-236.

Cadbury, Adrian. «Corporate social responsibility.» Twenty-First Century Society 1.1 (2006): 5-21.

Lindgreen, Adam, and Valérie Swaen. «Corporate social responsibility.»International Journal of Management Reviews 12.1 (2010): 1-7.

Ness, Mitchell R. «Corporate social responsibility.» British Food Journal 94.7 (1992): 38-44.

Portney, Paul R. «Corporate social responsibility.» Environmental Protection and the Social Responsibility of Firms—Perspectives from Law, Economics, and Business 4.39 (2005): 237-242.

Sen, Sankar, and Chitra Bhanu Bhattacharya. «Does doing good always lead to doing better? Consumer reactions to corporate social responsibility.»Journal of marketing Research 38.2 (2001): 225-243.

Xueming, and Chitra Bhanu Bhattacharya. «Corporate social responsibility, customer satisfaction, and market value.» Journal of marketing 70.4 (2006): 1-18.