Assignment on Corporate Social Responsibility

Introduction of Corporate Social Responsibility

Organizations engaged in assets selling and purchasing activities pay attention to monetary values and benefits of the asset. The monetary value of an investment project and its return on investment (ROI) encourage or discourage investors to buy or sell an asset. However, for fixed assets such as property, land and equipment organizations consider the capital investment as money to be paid for it. While appropriate calculations of capital investment cost can enable managerial staff to take the right decision regarding selection or rejection of capital investment option. In modern organizations, the balanced scorecard is commonly in use to measure the performance outcomes and present a realistic report of performance to the stakeholders. In this present work, the main objective is to study specific capital investment that can be helpful to achieve one of the perspectives of the balanced scorecard.            

1.      Capital Investment of Corporate Social Responsibility

The balanced scorecard (BSC) is a strategic tool to measure and track data regarding a specific matrix. In the specific capital investment, managerial staff invest to earn the perceptive of the balanced scorecard (BSC). According to the research studies, leading companies around the world are using balanced scorecard (BSC) to keep their performance outstanding in comparison to the competitor company. Fortune 1000 companies are also using this strategic tool to align their capital investment with their corporate social responsibility and sustainability-related objectives (lexicon.ft.com, 2018). Additionally, capital investment budgets are also evaluated based on the measures of the balanced scorecard (BSC) to take a strategic decision about capital investment. For instance, in the food industry, balanced scorecard (BSC) is used with different goals which focus on turnover rate, customer satisfaction, cost-effectiveness, and products innovativeness (Gibbons & Kaplan, 2015). A specific capital investment regarding these goals is the quality improvement in production systems. In my opinion, management should invest in the quality improvement system with a vision to attain sustainability in the targeted market. Moreover, it will target the major perspectives of the balanced scorecard (BSC) which includes internal business perspective, innovation and learning perspective, customer perspective, and financial perspective. Managers improving quality of production system will be able to earn all these perspectives as it will increase customer satisfaction, profitability, innovativeness, and internal operational efficiency.       

2.      Specific Objective of the Capital Project

There are some specific objectives regarding this capital project. These objective are developed to align all activities with a focus on a single outcome to earn successful completion of this capital project. The managerial staff of the company should consider these objectives about the capital project while executing project related activities and operations. The general objective of this capital project is to bring improvement in the quality of production system in a Food Company to accomplish the prime perspective of balanced scorecard (BSC) as well as to fulfill goals about sustainability and social corporate responsibilities (Assiouras, Ozgen, & Skourtis, 2013; Cascio & Montealegre, 2016). Key specific objectives regarding this capital project are enlisted below:  

v  To bring improvement in the production system for cost-effectiveness

v  To measure outcomes in response to the improvement in the production system

v  To work as a socially responsible organization having focused on customer satisfaction

v  To ensure sustainable growth of the organization in a competitive market.  

v  To contribute in enhance of profitability.

v  To support innovativeness in the products and services     

3.      Cost of Investing in Capital Project   

A true cost of investing in the capital project is the amount includes all cash inflows minus all cash outflows. Cash inflows present the amount invested on the capital project in any form e.g. installation cost, maintenance cost, and additional cash inflows such as salaries paid for the capital project and cost of indirect labour work (Harris & Hartman, 2001). However, on the other hand, while calculating the cost of investing for capital project managers are also required to calculate cash outflows such as revenue and salvage value. Continuing the case of improvement in the production system of a food company, managerial staff will start up a 5-year capital project by purchasing new machinery in the production sector to make improvement in the production system. Regarding this production company case estimated cost of investing is presented below:

  In the above-presented analysis, all economic benefits are cash outflows of the capital project. While on the other hand, all cost including onetime cost and maintenance cost are cash inflows. Considering this, the cost of investing is the amount calculated after subtracting all cash outflows from inflows. The cumulative cost of investing for year 1 is 75,000 while for 5-year duration cost of investing is 93,743. The positive value of net present value indicates towards possible benefit in future in case the plan is implemented. However, the breakeven point is after 3 years of operations.

4.      Quantifiable and Non-Quantifiable Results 

The quantifiable and non-quantifiable results related to this capital project are presented below in separate headings.  

v  Non-quantifiable Results of Corporate Social Responsibility:

Non-quantifiable results of this capital investment project are the improvement in quality, increase in customer satisfaction, sustainable growth in the competitive market, and achievement of corporate social responsibility. Reduce in cost and improvement in quality will benefit society as they will be given healthy and organic food items which will fulfil the corporate social responsibility of the company. Although, improvement in cost system will accomplish the balanced scorecard perspective of internal business improvement (Assiouras, Ozgen, & Skourtis, 2013).     

v  Quantifiable Results of Corporate Social Responsibility:

According to the analysis of the cost of investing it is clear that capital project will provide financial benefits to the company. All cost will be covered within 3-year duration and rest of two will produce revenue streaming higher than the cost of operations. Thus, balanced Scorecard perspective of financial improvement will be achieved and the project would be able to provide monetary benefits to its stockholders and investors. Enhance in productivity and reduction in the cost of operations are also quantifiable results of this capital investment project (Martin, 2005). 

Conclusion of Corporate Social Responsibility

The whole discussion concludes that balanced scorecards are the strategic tools for managerial staff to make appropriate decisions regarding business operations and capital investments in a company. Balanced scorecard perspectives include are financial perspective, customer perspective, innovative and learning perspective, and internal business perspective. A specific project of production system improvement carried out in the food industry concluded that sustainability and corporate social responsibility related goals were accomplished as the company project had a positive impact on society and its operations.