Good Morning everyone, today my colleague Dusan and I will discuss about “ Why Companies should not
do CSR”


WHAT IS ARGUED
* Doing CSR does not meet Shareholders expectation of Profit return.
* Companies Reputation in danger.
* It increases Costs.
* Competitive Advantage and Disadvantages.
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And We have argued following subtopics

NOT MEETING SHAREHOLDERS EXPECTATIONS
▪Why do businesses Exist?
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•“a corporation’s responsibility is to make as much money for the stockholders as possible.”
•“Milton Friedman”
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First of all, let’s see why doing csr does not meet shareholders expectation of profit.
•Why do we do business and why do we establish companies?,
•Milton Friedman quote
•The focus of profit making shifts
•The company ignores obligations towards shareholders
•Instead of profit, they engage in csr
•instead of a smooth, it affects an outflow

▪Disclose shortcomings of own products
▪Customers lose trust
▪Decrease in sales
▪Market Share lost
▪Even Penalties
  COMPANIES REPUTATION IN DANGER
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•According to CSR policies, companies have to disclose shortcomings, causes damage to their
reputation.
•This creates inconvenience to the customers, and they lose trust in the manufacturer and may never
buy this product again.
•TOYOTA, which had to recall 9 million cars from the market in 2010 because those cars had some
minor problems and they seem to be caring so much about Corporate social responsibilities.
•The company revealed that the recall could cost up to 180 billion yen which is equivalent of 2
billion US, with 100 billion yen for repairs and 80 billion yen in lost sales. It said the recalls
reduced global demand for Toyota by 100,000 vehicles.
•The problems didn’t end there, their percentage of market share also decreased with a significant
figure.
•Volkswagen had even bigger problem, in 2015 they recalled nearly 500,000 vehicles from US market
that cost them about 7 billion USD.
•In addition to these costs, they had to pay $15.3 billion to US government which is the largest
auto-related consumer class-action lawsuit in the United States history, consequently sales have
significantly dropped within days after the incident.
•Organizations should instead consider factors that will affect the community before doing their
businesses instead of compensating after they have affected.

▪Unfair competition
▪Higher Expenses = Higher Prices
▪Higher Price = Less competitive
COMPETITIVE ADVANTAGE AND DISADVANTAGE
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•As mentioned earlier, big companies can allocate budget for CSR activities, but smaller companies
may not be able to do this. This may result in unfairness in the competition giving the bigger
companies competitive advantage.
•Small business will not be able to compete against bigger competitors who are using CSR as a
marketing weapon.
•If society forces business to undertake social responsible activities, it will result in higher
prices.
•Corporations would need to absorb the cost of such things a dirty air and unsafe products that
were previously passed on to society.
•By absorbing these costs, they would increase their prices and therefore be less competitive.

Real man don‘t do CSR
-Bill Gates of Microsoft
-Jack Welch of GE
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IT'S NOT THE RESPONSIBILITY OF THE COMPANIES TO DEAL WITH ALL THIS STUFF
▪It‘s the responsibility of the polititians to deal with all this stuff
▪Milton Friedman claimed that free markets, rather than companies, should decide what is best for
the world
▪Adam Smith’s “invisible hand” will do all the work
▪companies are meant to create products or provide services
▪Companies do not have the expertise to do CSR
▪The increased cost will be passed on to the consumer
▪Hard to measure
▪
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PROBLEMS WITH STAKEHOLDER THEORY
▪Responsibility to shareholders
▪Social problems are more complex than stakeholder theorist’s claim
▪Overregulation
▪disagreement among shareholders
▪
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SHAREHOLDER THEORY
▪maximize long-term shareholder wealth
▪Shareholders do not hire CEOs to act like a charity
▪Steve Milloy, Adam Smith and Milton Friedman (the business of business is to make money)
▪CSR promotes incompetence
▪for every five CSR actions a firm
▪    takes, you can expect it to commit
▪    one-act of CSiR
▪
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REFERENCES
•corporate social responsibility, Friedman’s view.
https://bfi.uchicago.edu/news/feature-story/corporate-social-responsibilty-friedmans-view
•TOYOTA recall expects to cost $2 billion.
https://www.forbes.com/2010/02/04/toyota-earnings-recall-markets-equities-prius.html#204baf435668
•Is The Toyota Brand in a Free Fall?
http://businesstheory.com/oh-what-a-feeling-is-the-toyota-brand-in-a-free-fall/
•Michael Lewis (2016-06-28). "Volkswagen agrees to landmark $15.3-billion emissions settlement in
U.S". Thestar.com. Retrieved 2017-07-24.
•Mallen Baker‘s blog (23.8.2008) Arguments against CSR
http://mallenbaker.net/article/clear-reflection/arguments-against-corporate-social-responsibility-a
nd-some-responses
•Sumaiyya Saleem, Amit Kumar & Adeeba Shahid. Arguments against CSR
http://www.imperialjournals.com/index.php/IJIR/article/view/1524/1466
     Zachary Cheers (2011) The CSR debate
http://digitalcommons.liberty.edu/cgi/viewcontent.cgi?article=1229&context=honors
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