ACC514 Financial Accounting

Discuss in terms of management accounting. It should begin as general discussion/examination on the topic using academic literature and then be concluded with what this theme means for your organisation using case information and other sources Social Responsibility Environmental Responsibility Risk Management – strategic; regulatory; financial; operational.

Social responsibility has undergone a paradigm shift in the recent time as the focus of managerial decisions has shifted from shareholders to stakeholders. As a result, the traditional notion of social responsibility floated by Friedman has now become archaic. This notion advocated that the social responsibility of business was to maximise profits. However, the current day notion of social responsibility is broader in scope as it intends to cater to the interest of the diverse set of internal and external stakeholders (Smith, 2003). Further, there is an effort on the part of the management to take decisions in line with the concerns of the various stakeholders rather than remain fixated as profit generation being the only motive worth pursuing. Further, through internal assessments emphasis is given on reporting the impact of various activities on the society in general. Besides, businesses also tend to act as socially responsible corporate and contribute some amount or a fixed percentage of profits to the social causes which the business would intend to promote (Salzmann, Ionescu-Somers and Steger,2005) Even though such action may seem opposed to the interests of the shareholders but in the long run these create immense value and tend to be value accretive for the shareholders owing to the amount of good publicity which tends to drive sales higher (Crane and Matten, 2010).

A2 Milk is a leading milk producer which currently is not very socially responsible as is evident from the lawsuit filed in NZ over the marketing of milk where there are unsubstantiated claims of A2 milk being superior to regular cow milk which has drawn the flak of the advertisement regulator (NZPA, 2011). It is imperative that company should engage more proactively and ethically with the customers so as to deliver sustainable value from them through the medium of their products and unbiased information must be provided on the findings.

References

Crane, A. and Matten, D. (2010), Business Ethics, 3^rd ed, New York: Oxford University Press

NZPA (2011), Complaint upheld over A2 milk advertisement, [Online] Available at http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10700640 [Accessed May 26, 2017]

Salzmann, O., Ionescu-Somers, A. and Steger, U. (2005), The Business Case for Corporate Sustainability: Literature Review and Research Options, European Management Journal, 23(1), pp. 27–36

Smith, H. J. (2003). The shareholders vs. stakeholders debate, MIT Sloan Management Review, 44(4), pp. 85-90.