Part b explain why it is realistic for companies to

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Part B: Explain why it is realistic for companies to be socially responsible even when they are focused on profit maximization 3. Being socially responsible can help to enhance a company’s reputation The fact that a company is willing to devote resources into something that does not seem to help it rake in profits shows the company to be different, and possibly more ethical than many other businesses concerned merely with the bottom line, a situation characteristic of the business environment of today. Such behaviours may sit well with an increasing number of consumers today, who are more aware of companies’ huge responsibility and influence on society, thanks to activists, social media and some highly publicised examples of CSR. While such products may cost more and potentially deter those who are more price-conscious, there are also many consumers today who are increasingly concerned with the environmental and social footprint of their purchase. More
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companies may hence find their efforts to engage in socially responsible acts such as investing in fair trade practices pay off by way of greater profits. In fact, consumers may even boycott companies they perceive to be seeking profits at the expense of their social responsibilities to society. Evidence: Coca-Cola was also accused of causing water shortages in – among other areas – the community of Plachimada in Kerala, southern India shortly after its operations began in 2000. In addition, Coca Cola was accused of water pollution by discharging wastewater into fields and rivers surrounding Coca-Cola’s plants in the same community. The state government initiated proceedings against Coca-Cola in 2003, and soon after that the High Court of Kerala prohibited Coca Cola from over- extracting groundwater. The brand suffered a great loss of consumer trust and reputational damage in India and abroad. In India, there was an overall sales drop of 40% within two weeks after the release of the 2003 CSE report. The impact in annual sales was a decline of 15% in overall sales in 2003 – in comparison to prior annual growth rates of 25-30%. This highly publicised conflict in India also caught the attention of consumers in the US. After a series of demonstrations by students who joined two activist groups in the US, 10 American universities temporarily stopped selling Coca Cola products at their campus facilities .
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