Evaluate the likely impact on WTZ's future profitability of increased focus on corporate social responsibility (CSR).

Mark scheme

Marking points from the official mark scheme (May/June 2022). The mark or mark type is shown in brackets.

1. Definition of corporate social responsibility (CSR): where a firm considers the impact of its decisions on society and the environment.
2. Treatment of employees
3. Environmental responsibility e.g. pollution
4. Ethical supply chains
5. Accounting practices
6. Role of triple bottom line
7. Role of social audits
8. Understanding of profitability – relationship between profit and sales or capital employed. It is a measure of efficiency.
9. Possible impact of increased focus on CSR on WTZ:
10. Brand loyalty develops
11. Increased sales
12. Employee retention and recruitment improved
13. Costs of adopting CSR goals e.g. higher wages,
14. Application
15. Making use of case information:
16. Minimum wage paid to employees
17. Increasing absenteeism in Hydrocamel factory
18. Core activities benefit the environment already
19. Contracts with charities
20. Increasing social awareness shown in PEST analysis
21. Analysis
22. Benefits of using environmental credentials in marketing of the business to build positive publicity and gain sales. This could result in higher revenues and profit.
23. Using recycled plastics to make Hydrocamel could be a USP to promote sales to charities enabling WTZ to deal with challenge of Hippo Barrel.
24. Changing working conditions and treatment of employees may be expensive e.g. paying above minimum wage. This could result in higher prices and customers looking elsewhere for materials and products.
25. Improved treatment of workers could result in higher productivity and a reduction in absenteeism and labour turnover so costs might be reduced resulting in higher profitability.
26. Evaluation
27. Judgement of the likely impact on WTZ's future profitability of increased focus on corporate social responsibility (CSR).
28. Elements that the evaluation/judgement might depend on:
29. Change in culture toward employees might be required to avoid accusations of selective use of CSR.
30. Does CSR matter to customers of the recycled materials? Cost may be more important.
31. Developments in technology offer opportunity for WTZ to act more responsibly without an overall increase in costs.
32. Has to be genuine CSR not ‘greenwash'. Potential backlash if WTZ operations do not match claims.
33. Significance of competitors' strategy towards CSR – if competitors are not embracing CSR this could put WTZ at a price disadvantage.
34. Need to communicate CSR through social/environmental audits so that customers are aware of the increased focus.
35. Profitability is a relative concept whereas profit is an absolute concept.
36. An increased focus on CSR could increase profit without increasing profitability.
37. WTZ might have more important problems to focus on in the short term such as quality standards or how to respond to competition.