Inorder to understand corporate social responsibility (CSR), it isadvisable to consider the discretionary field of decision making thatfaces business leaders on their everyday business operation. Thus, instudying corporate social responsibility, what is evaluated is therelationship between a business and the societies with which it isoperational, and the responsibilities business owe societies inregulating their actions while they aim at making profits. Thiswithout any doubt makes CSR critical yet controversial, since theprofit sector is the largest and most innovative part of any givenfree society’s economy. On the other hand, it is controversialbecause others are of the idea that companies have an obligation tothe society beyond the benefits offered by economic prosperity.
Hence,CSR is the view of corporations and their role to the societyassuming responsibility to peruse goals in addition to profitmaximization, and the responsibility accruing to stakeholders to holdthe firm accountable for actions it takes. It is from this plightthat this essay focuses on the CSR accruing to General Motorsresulting from GM crisis involving over 28million vehicle recalls andother issues related to faulty ignition switches, in particular GMcar models.
GM’sChallenges of Corporate Crisis / Reputation Management
Basedon the Global law initiatives for sustainable development, factorswith the highest ability to have an impact on surroundings in both aconstructive and destructive manner affect the large corporations.The giant corporations carry more than the influence to change thenatural environments, cultural standards and expectations.Nevertheless, this has not been the issue at GM as matters have runout of hand with the corporation seeing a recall of over 28 millionfaulty vehicles. Thus, the corporation has lost trust from thesociety since the entities by which they are engaging in businesshave proved catastrophic to the societal well-being and thus fail incorporate social responsibility (GLAWCAL 1).
GMMotors faces more than a reputation management crisis since it couldbe slapped with a decade of law suits emanating from its delay torecall the faulty vehicles in the US. However, the greatest challengefacing the corporation’s CEO will be to convince the public that GMis taking responsibility for the faulty ignition switch issues thathave caused deaths and injuries via car crashes. There has been acall for transparency over the issue, stating who was aware of theproblem existence, when, and why it was not addressed. Nevertheless,corporate legal departments do not encourage this type oftransparency. This will have catastrophic disciplinary and financialconsequences (Coombs 2).
Impactsof Legal, Regulatory, and Political Issues
Asof mid-July 2014, GM motors faced 95 lawsuits from the ignitionswitch recall. In addition, the corporation has had to set a specialvictim’s fund, which has so far received over 165 claims fromdifferent families who have lost loved ones in accidents resultingfrom a faulty switch problem. The company has previously been finedby the justice department. For instance, in the fall of 2009 andearly 2010, the corporation was fined $1.2 billion for misleading thegovernment in a time when their vehicles were being investigated.
Thus,GM motors faces s legal liability for not being in line with businessethics, that is, knowing about the existence of a defect and notacting upon it, or conducting a recall. At the regulatory front,there has been increased recalls simply because companies are tryingto correct safety issues earlier, thus being more receptive to theindustry. On its part, this plays a positive role on the consumersturning them into loyal customers since the automakers issue recallsrepairing their vehicles, and for the dealers, it offers anopportunity for other repairs and services at a discounted rated(Coombs4).
Therecall crisis of faulty vehicles at GM motors may be viewed to be theresult of poor corporate decision making based on the fact that thecompany has taken long to recall or act on the faulty switch.However, the corporation is already on the right track doing manythings well following a crisis management perspective. Some of theethical considerations have been talking to the affected families bythe CEO. The corporation has also expressed anger and disappointmentat the corporate decision making, which resulted in the acceptance ofthe faulty and substandard ignition switch. Injuries and deaths haveresulted from the delayed intervention, which is a fault arising fromdecision makers’ failure to recognize their moral and ethicalcomponents of their decisions (Johnson 7).
GM’sStrategic Management of Stakeholder Relationships
Morethan often when dealing with a crisis, corporations tend to leave outsome of their key audiences, who are their consumers, investors, andemployees. The GM CEO on her part addressed all the audiencesassociated to corporation. On media, the CEO addressed the consumersassuring them of a fresh start and approach at GM Motors. The CEOdemonstrated to the investors that action was underway and thus theyneeded not to panic. The corporation employees have not been left outin the stakeholders’ relationship strategy the CEO addressed theemployees, with the head showing a remorseful human side, henceensuring that the employees were reassured. Thus, the GM motorscarried out a critical strategy of crisis management by reaching outto all stakeholders (Coombs 5).
Corporatesocial responsibility (CSR) helps a corporation prior to the crisisand has an effect on how the company is perceived to handle a crisisthat befalls it. Where the image was positive or neutral, theconsumers are and other stakeholders are more willing to give theorganization and its CEO a chance or the benefit of the doubt. In thecase where the image is negative, the CEO and the whole corporationare put under heavy examination, and most of their actions aredoubted until they prove themselves otherwise (Johnson 7). Corporategovernance at GM motors has evolved to the stakeholders’ model ofgovernance considering external factors, consumer activities andindustrial activities facing the corporation.
Inconclusion, corporate social responsibility (CSR) is increasinglybecoming relevant for business today. Corporations are now operatingon a global business scale environment, having branches in multiplecountries and cultures, which magnify the complexity of business.Corporations are faced by more social norms and have diverse culturalvalues to navigate, in additional to the wide array of stakeholdersthey face. Thus, to ensure profit maximization, business have to bekeen on responsibilities they owe the society, hence ensureself-regulations on actions they take.
Coombs,W. Timothy. "State of Crisis Communication: Evidence and theBleeding Edge." ResearchJournal of the Institute for Public Relations 1.1(2014):1-12. Print.
GLAWCAL.GeneralMotors: The Failure of Corporate social Responsibility.New York: Wiley, 2014. Print.
Johnson,Craig E., and Paul Shelton. "Ethical Leadership in the Age ofApology." International Leadership Journal 4.2(2014): 7. Print.