Course 1.

What you should know

By the end of this subtopic, you should be able to:

 define the following terms: (AO1)
○    vision
○    mission
○    objective
○    growth
○    profit
○    strategy
○    tactic
○    corporate social responsibility (CSR)
 distinguish between a vision statement and a mission statement (AO2)
 explain and evaluate various business objectives, including CSR (AO2, AO3)
 discuss how strategies and tactics help businesses achieve objectives (AO3)

A vision statement describes where the company aspires to be in the future. Hence,

vision statements provide organizations with clear long-term direction.
A mission statement is a declaration of the purpose an organization. It often includes a
statement or description of the organization, its function, and its overarching objectives.

Vision statement = Some day

Mission statement = Every day

 A vision statement is inspiring declaration of what an organization strives to be,

or wants to achieve, in the distant future. This usually includes, the organization’s
core values
 A mission statement is a succinct declaration of an organization’s (why it exists),
(who they are) and (what they do). It is, therefore, a written declaration that
normally remains unchanged over time.
 Vision statement tends to be a broad and abstract statement, a mission statement
tends to be narrow and more specific.
 Vision and mission statements give stakeholders of an organization a sense of
purpose and direction.
 A firm’s mission and vision statements serve to guide the organization’s strategies
and strategic objectives.

Criticisms of vision and mission statements

Mission and vision statements are often criticized for being:
 Too vague, so therefore are rather meaningless and / or difficult to measure.
 Vision statements (and many mission statements) are very long term, so may not
ever materialise.
 Virtually impossible to really analyse or disagree with, so may be ignored or not
taken seriously by stakeholders such as employees.

Business objectives (or simply objectives) are the clearly defined and measurable targets
of an organization, used to to achieve its overall goals. Examples include "to achieve
sales growth of $500 million in the Asia Pacific region in 2022”.
Business objectives are essential for all businesses so that people know where they are
striving to go or what they are trying to accomplish. They give people a sense of common
purpose, and team spirit (cohesiveness). They also enable managers and entrepreneurs to
measure progress towards
SMART objectives acronym: Specific, Measurable, Agreed, Realistic, and Time
specific.

 Alternatives for the 'A' and 'R' in SMART are: specific,

measurable, achievable, relevant and time-related.

 Objectives can be long-term (strategic objectives) or short-term

(tactical objectives).

1.Tactical objectives are easier to change or reverse than strategic objectives. They are
specific targets with definitive timelines.

2.Strategic objectives are targeting that the whole organization is striving to achieve.

It requires a greater investment in human and financial resources than tactical and
operational objectives. It is often related to what the owners of the business want to focus
on, such as business survival, growth,

Business objectives can give employees and managers a sense of direction (and purpose).
Hence, they can help to motivate employees and raise labor productivity, greater sense of
belonging and team spirit (cohesiveness).

Many businesses strive to grow in order to gain from the benefits of

growth. Growth refers to an increase in the size of a business and its operations. These
benefits include:

 Higher sales revenue and profit - as a firm grows, its sales revenue increases,
thereby improving the changes of higher profits.
Growth can be pursued by internal and/or external methods. Internal growth (also
known as organic growth) takes place when an organization expands without the help of
an external partner firm. Instead, it uses its own resources to do so, such as using retained
profits to invest in production facilities in new locations.
External growth (also known as inorganic growth) refers to the expansion and
evolution of a business by using third party resources and organizations rather than
relying on internal sources and activities.
Methods of measuring the growth of a business include:
 Sales revenue - the monetary value of the products that the business has sold, per
time period).
 Sales volume - the number of products that the business sells, per time period).
 Profits - the financial surplus that remains after all costs of production have been
deducted from a firm's sales revenue).
 Customers - the more customers that the business has, the larger it tends to be).
 Number of employees - the more people that are hired by the business, the larger
it tends to be.
 Market share - this measures the firm's sales revenue as a proportion of the whole
industry's sales revenue.
An increase in any of the above measures suggests that the business will have grown

Profit (or financial surplus) is the positive difference between a firm's sales revenue and
its total costs of production, per time period. Profit as a business objective is important
for two main reasons:
 It acts as a reward for the owners and investors of the business.
 It provides an internal source of finance to further develop the business.
Profit acts as an incentive for entrepreneurs to take risks and start up new businesses. It
also provides incentives for them to remain in business and pursue growth in order to
reap greater financial returns. Profit as an internal source of finance enable the business
to grow further without the need to over rely on external sources of finance that incur
interest and debt.
It is assumed that profit maximization is a top priority for traditional commercial (for-
profit) businesses.
There could be liquidity issues for a business that does achieve profit in the long-term,
which could possibly lead to bankruptcy and business closure.

Protecting shareholder value is ultimately the responsibility of the company's chief

executive officer (CEO) and board of directors, based on their strategic plans to earn a
healthy return on the capital invested in the business.
Protecting shareholder value encompasses both short- and long-term objectives, including
survival, profit, and growth in order to give owners a financial reward/return on their
investments.
 Survival  - This is the most basic of all business objectives as nothing else matters
if the business cannot survive. Every business must earn enough revenue to keep
it operating or else it will collapse.
 Profit  - The profit motive provides a financial return for shareholders in the form
of dividend payments. Most private sector, for-profit businesses have this as their
main organizational objective in order to provide value for their owners.
 Growth - Enlarging the business can help to increase sales revenues, profits, and
customer loyalty. These combined benefits of business growth help to generate
improved shareholder value over time.
 Market share - Firms may aim to increase their market share (their sales revenue
as a proportion of the entire market's sales revenue) in order to gain the benefits
of being the market leader. These advantages include enhanced brand awareness,
brand value, and brand loyalty, all of which help a company to protect the
interests of their shareholders.
 Ethical objectives and corporate social responsibility - For a business to remain
relevant, profitable, and competitive, it is not enough to only sell more goods and
services. Businesses have to operate in a socially acceptable and responsible way,
such as ensuring business activities do not cause damage to the planet or people.
Doing so can also improve the corporate image of the company. Only then, can
the business generate and protect shareholder value in the long term.

Ethics are, essentially, about what is deemed to be right and what is considered to be

wrong, i.e. morality from society's point of view. They are based on the values of the
organization, in accordance to society’s norms and beliefs.
Business ethics are the guiding principles that provide moral guidelines for the conduct
of business activities. Ethical objectives are organizational goals based on moral
guidelines in order to influence or determine business decision-making.  This means such
businesses act morally towards their various stakeholder groups, including employees,
managers, customers, shareholders, suppliers, financiers, local community
(including consideration for the natural environment), the government, and
even competitors.
Examples of ethical objectives include:
 improving the overall wellbeing of workers
  honesty and fair treatment with regards to dealings with customers and suppliers
 adopting green (clean / renewable) technologies
 pursuing sustainable growth strategies
 observing and respecting intellectual property rights of others
 using socially responsible advertising, and corporate governance (such as
financial integrity and transparency).
As part of its corporate social reasonability (CSR) strategy, businesses may establish
an ethical code of practice - a formal documented policy setting out the way the
business believes it should behave, including how to respond to situations that challenge
its integrity or social responsibility or accusations/situations of unethical business
practices.

Examples of unethical business practices include:

 the exploitation of stakeholders (such as low-paid workers, child labour, suppliers
being paid late, and poor delivery of services to customers)
 misleading marketing gimmicks, including direct advertising aimed at young
children
 exploitation of the natural environmental and ecosystems, and
 fraudulent business activities (such as financial deception).

There are both advantages and limitations of businesses pursuing ethical objectives.
 Advantages of ethical business objectives
Pursuing ethical objectives is an ongoing and long-term journey for businesses. However,
there can be substantial advantages from doing so. These interrelated benefits include:
 Improved corporate image - Being known as an ethical business can help to
enhance the corporate image and reputation of an organization. This can generate
additional long-term gains for the business such as improved sales and consumer
loyalty. By contrast, acting unethically can certainly lead to negative publicity
from the mass media, leading to serious damage to the organization’s reputation.
 Higher sales revenue - Due to improvements in education and the growing use of
social media platforms, customers tend to prefer to buy from businesses that act
morally and have ethical goals. They do not tend to knowingly purchase products
from businesses that cause significant harm to the natural environment or exploit
child labor, for example. Hence, ethical businesses can gain from higher sales
revenue in the long-term.
  Increased customer loyalty - Similarly, customers are more likely to be loyal to
businesses that look after their customers, employees, suppliers, and local
communities. For example, customers are likely to prefer to be loyal to cosmetics
companies that do not test their products on animals but actively take actions to
protect the natural environment.
 Reduced costs - Despite the costs of compliance, acting ethically can help a
business to cut certain costs in the long-term. For example, acting in the best
interest of the environment can help to reduce the costs of excessive packaging
and waste.
 Higher staff morale - Employees feel better working for a business that does the
"right" things, from society's point of view, beyond just obeying the laws of the
country. Higher staff morale also helps to improve labour productivity and the
level of employee motivation.
 Increased employee loyalty - Similarly, ethical business practices help to attract
and retain highly motivated employees. In particular, highly qualified and skilled
employees may not be willing to work for unethical businesses. Having a good
corporate image and reputation for ethical business practices makes it
significantly easier for organizations to attract, hire, and retain employees.
 Avoiding fines and penalties - Acting unethically can result in lawsuits (legal
action taken against the businesses) and expensive fines as well as other penalties
imposed by the courts.

Limitations of ethical business objectives

Pursuing ethical business objectives also have their limitations and can be challenging
and expensive to accomplish. These limitations include:
 Compliance costs - There are costs associated with implementing ethical
behaviours and corporate social responsibility. These costs are potentially
extremely high. For example, supermarkets have to spend more on purchasing
organic fruits, vegetables, and meats rather than genetically modified produce.
The costs of production are also higher for ensuring employees are paid fair
wages rather that exploiting workers.
 Higher prices - High compliance costs can lead prices having to be raised in order
to maintain profit margins. Furthermore, rival businesses might not implement
ethical objectives and could have lower costs as a result. This can reduce the
 price competitiveness of the business as it pursues its ethical objectives and
corporate social responsibilities.
 Lower profits - The compliance costs of acting ethically, such as the adoption of
green technologies or the sourcing of fair trade raw materials, means higher
production costs for the business and hence lower profitability. This would then
lead to lower dividend payments made to shareholder or business owners.
 Subjectivity - The notion and concept of ethics is subjective. People and
businesses in different parts of the world may have varying views about what is
and what is not considered ethical behaviour (refer to BMT 11 - Hofstede's
cultural dimension).
 Stakeholder conflict - Although customer might prefer to purchase from
businesses with ethical objectives and employees might prefer to work for ethical
business, the directors and owners of the business might not be so keen due to
some of the disadvantages outlined above. Many for-profit organizations aim to
profit maximize in order to meet the needs of their shareholders and financiers or
investors. Shareholders may be reluctant to accept lower profits, at least in the
short term. Hence, this can put pressure on managers to pursue other business
objectives other ethical objectives and CSR practices.

 Business ethics are the principles that provide moral guidelines for the conduct of
business activities.
 Ethics are about what is deemed to be right and what is considered to be wrong,
i.e. morality from society's point of view.
 An ethical code of practice is a formal documented policy that sets out the way a
business believes it should behave, including how to respond to situations that
challenge its integrity or social responsibilities.
 Ethical objectives are organizational goals based on moral guidelines in order to
influence or determine business decision-making.
 Growth refers to an increase in the size of a business and its operations, using
measures such as market share, sales revenue, or the number of customers.
 Objectives (or business objectives) are the clearly defined and measurable
targets of a business, used to to achieve its overall organizational goals.
  Profit is the positive difference between a firm's sales revenue and its total costs
of production, per time period
 Shareholder value is about safeguarding the interests of the owners of a limited
liability company (one owned by shareholders either as a private or publicly
traded company).
 SMART objectives are organizational targets that
are specific, measurable, agreed, realistic, and time specific.
 Strategic objectives are long-term goals that the whole organization continually
strives to achieve.
 Tactical objectives are short-term specific goals of a business with definitive
timelines for specific functional areas of an organization.

Business objectives can be categorized as long-term (strategic objectives) or short-term

(tactical objectives).
Strategic objectives refer to the long-term goals that the whole organization continually
strives to achieve. They are used to achieve the overall strategic goal or vision or mission
of the business as an organization.
Strategic objectives are the responsibility of executive directors (senior management) and
are ultimately about results.
Tactical objectives refer to the short-term and specific goals of a business with definitive
timelines for specific functional areas of an organization. Therefore, they are easier to
change or reverse than strategic objectives. In general, tactical objectives have a pre-
determined time frame of less than a year. Tactical objectives are usually delegated
(entrusted) to the others lower down in the organizational hierarchy.

Strategies
 Strategies are the actions in which a business plans to reach its long-term
organizational aims and corporate objectives.
 Examples of these strategic decisions include: diversification, overseas expansion,
and mergers or takeovers
  Strategies used to achieve the strategic objectives are decided by the senior
leadership team or board of directors.
 Strategies also affect and are affected by the functional areas of business: Tactics

 Tactics are the shorter term approaches to achieving (tactical and operation)
objectives.
 They are the methods used by an organization to meet specific and measurable
goals.
 They are used by the workforce to work towards achieving the strategic objectives
of the organization.

 Tactics are the actions required to achieve the short term objectives of an

organization.
 Tactical objectives refer to the short-term and specific goals of a business with
definitive timelines for specific functional areas of an organization.
 Strategies are the actions required to achieve the long term objectives of an
organization.
 Strategic objectives refer to the long-term goals or aims that the whole
organization continually strives to achieve.

Corporate social responsibility (CSR) refers to the value, decisions and actions that
impact society in a positive way.. It is about an organization using ethical objectives to
commit to behaving in a socially responsible way towards its internal and external
stakeholders, not just to the owners or shareholders.

Business organizations are ever more aware of the need for firms to set ethical
objectives as part of their corporate social responsibility (CSR). Doing so helps
businesses to earn or sustain a positive corporate image in the eyes of external
stakeholder groups, such as pressure groups, the government, financiers, and
customers. It can certainly help to create greater customer loyalty as more people are
informed about and aware of the importance of social responsibilities towards others.
Internally, it can also help to improve the morale of workers, staff motivation, employee
retention, and labor productivity.

Nevertheless, as with pursuing ethical objectives, the pursuit and implementation of CSR
practices can have their drawbacks too. These limitations include:
 Compliance costs of always trying to act in a socially responsible way, i.e. the
costs of compliance with the firm's ethical code of conduct and society's
expectations of corporate social responsibilities.
 The added level of bureaucracy in following CSR codes of practice and formal
company policies can delay decision-making, especially in large business
organizations.
 Hence, this can cause stakeholder conflict, i.e. shareholders, financiers, and
investors may become upset due to the impact of higher production costs.

Just as business objectives are not static, the role and nature of corporate social
responsibility also evolves over time.
 A key purpose is to create a positive impact on the reputation of the organization.
It is about building desirable products, practices and relationships that generate
this positive impact.
 Opinions change over time - what may have been considered socially acceptable
in the past may no longer be the case, e.g. animal testing, the use of plastic carrier
bags, sexist adverts, advertising of tobacco products, or targeting children in
television advertisements. Also see ATL Activity 4 below.
 Societal expectations and the growing popularity of social media have caused
CSR to become more integrated into today’s corporate cultures with businesses
playing a greater role in community relations.
 Increasingly, businesses are interested in CSR as a genuine way to have a positive
impact on their triple bottom line: ecological, social and economic
sustainability.
Case study 1

Patagonia is a US outdoor equipment and clothing company and a leader in CSR. The
company originated as an alpine climbing equipment manufacturer, but changed its
product portfolio over time to outdoor clothing.

In 2018, Patagonia changed its vision and mission to: 

We’re in business to save our home planet.

We aim to use the resources we have—our voice, our business and our community—to do
something about our climate crisis.

The company is well-known for its strong sustainability policies and actions. It constantly
vets its supply chain and is working to improve the sustainability of its material inputs. It
has a circular strategy which includes a platform called Worn Wear where customers can
trade in and buy used Patagonia clothes that have been repaired by the company.

Patagonia also considers the ethical implications of other business functions. It refuses to
advertise on Facebook and Instagram, and carefully considers the financial institutions it
works with. It also promotes more responsible consumption. As long ago as 2011 it had a
famous ‘Don’t buy this jacket’ advertising campaign, and you might hear the check-out
person at a Patagonia store asking, "Do you really need this shirt?" These messages
encourage conscious consumerism, even though it may hinder growth in the company’s
sales revenue. However, Patagonia has a strong community who appreciates the
company’s values.

In 2021, on Black Friday (a major shopping day in some countries at the end of
November), Patagonia pledged to donate 100% of sales revenue to environmental non-
profits. The compnay raised and donated 10 million USD, five times the amount
expected. Throughout the year, 1% of Patagonia's sales revenue is donated to these
organisations.

However Patagonia is far from perfect on CSR. The company’s size, growth and supply
chain complexity present challenges for its social, environmental and ethical objectives.
And its claims on sustainability make it a target for critics. But that feedback is often
used to improve the company’s materials, processes and policies.

Questions

1. Define corporate social responsibility (CSR). [2 marks]

2. Explain one benefit and one limitation of Patagonia’s strong CSR actions and
policies for the company itself. [4 marks]

Exam Practice Question 2

Distinguish between a vision statement and a mission statement.  [4 marks]

Exam Practice Question 3

(a) Define the term ethical objectives.

 (b) State two examples of ethical business objectives.

(c) Explain two reasons why an organization might choose to set ethical business objectives.

 Exam Practice Question 4

Using relevant examples, distinguish between tactical objectives and strategic
objectives.   [4 marks]

 Exam Practice Question 5

Timpson is a key-cutting and shoe-repair chain based in the UK. Sir John Timpson (born
1943) is the Chairman of the multinational company. Timpson has over 2,100 retail
outlets in the UK. The company uses the principle of “upside down management”,
meaning all staff are authorized to do whatever they judge is necessary to give customers
the best experience - so long as they operate within the law, of course. This is all part of
the company's stance on corporate social responsibility.
The privately held company is well-known for giving people a second chance, by hiring
people who have previously been imprisoned; ex-offenders account for around 10% of
the company's workforce. Timpson has also been known to go above and beyond to
support its workers in their personal lives, such as complimentary company-funded
counselling services and even providing loans for a deposit on residential property. The
company also offers a free dry-cleaning service to support the unemployed prior to their
job interview. This was particularly welcome during the recession caused by the COVID-
19 coronavirus crisis.

(a) Define the term corporate social responsibility (CSR).

(b) Define the term privately held company.

(c) Examine the benefits of corporate social responsibility (CSR) in a business such as Timpson.

Exam tip
You may be asked to identify a strategy or tactic in the context of a specific case study.
Make sure you keep the difference between a strategy and a tactic in mind, so that you
show understanding of the scale and importance of the two types of actions.

Exam tip

You may be asked to identify a strategy or tactic in the context of a specific case study.
Make sure you keep the difference between a strategy and a tactic in mind, so that you
show understanding of the scale and importance of the two types of actions.

No True or
Statement
. False?

An organization can change its business objectives over time

1.
due to changes in both the internal and external environments.

2. A vision statement tends to be narrow and specific.

The statement which sets out an organization’s purpose and its

3.
corporate values is known as the vision statement.

An organization’s moral duties to its internal and external

4. stakeholders in acting as a good corporate entity is known as
corporate social responsibility (CSR).

The statement which sets out an organization’s long-term

5.
aspirations is known as the vision statement.

Reducing pollution and environmental damage by using non-

6. fossil fuels is an example of an ethical objective set by a
business.

7. Fairer trade with low-income countries is an example of an

 ethical objective set by a business.

A vision statement gives a clear timeframe for when future goals

8.
will be achieved.

An organization’s mission and vision statements serve to guide

9.
the its strategic goals and corporate strategies.

Avoiding the risk of legal compensation is a valid reason for a

10.
business to set ethical objectives.

Business objectives are not the clearly defined and measurable

11.
targets or goals of an organization.

Growth, as a business objective, refers to an increase in the size

12.
of an organization and its operations.

Inorganic growth refers to the expansion and evolution of a

13. business by using third party resources and organizations rather
than relying on external resources.

The long-term approach that indicates how a business will

14.
achieve its goals are known as tactics.

Protecting shareholder value, as a business objective, is about

15. safeguarding the interests of the owners of a limited liability
company.

Actively pursuing ethical business objectives can be beneficial

16. for the organization's triple bottom line (people, planet, and
profits).

The short to medium-term objectives set by middle managers to

17. achieve a specific part of the overall strategy are called tactical
objectives.

18. There are not compliance costs associated with implementing

 ethical business behaviors and corporate social responsibility.

Strategic objectives refer to the short-term goals that the whole

19.
organization continually strives to achieve.

Creating a positive corporate image is a valid reason for a

20.
business to pursue ethical objectives.

Teachers Solutions

Case study 1.
Question 1
CSR is a set of actions taken by a business to improve its impact on society and the
environment. Businesses hold themselves accountable for these impacts.
Define is an AO1 level command term requiring a precise meaning of a word.
 One mark for a vague definition.
 Two marks for a complete definition.
 Definitions do not require application to the stimulus material.  
Question 2
One benefit of CSR for a business is that consumers are more likely to stay loyal to,
promote and pay a price premium for its products. This can enable purpose-led
businesses to earn higher revenues and profit. The case study points out that ‘Patagonia
has a strong community who appreciates the company’s values’ and it was able to sell
five times as much on Black Friday as it expected (all of which was donated).
A limitation of CSR for a business is that pursuing CSR objectives is likely to increase
the costs of production, which can reduce profits. These costs can come from sourcing
more environmentally sustainable materials and products with higher labour standards.
The case study points out that Patagonia ‘constantly vets its supply chain and is working
to improve the sustainability of its material inputs’, which means that the company
probably has higher costs of production.
Explain is an AO2 level command term requiring a detailed account including reasons or
causes. Explain why, explain how.
 Only one benefit and one limitation need to be explained. Other responses are
possible and would be rewarded if appropriate.
 To achieve full marks, you must always include theory and application to the case
study in your responses.

Exam Practice Question 2.

A vision statement is an inspiring statement that provides all stakeholders with
information about the organization’s purpose, its values, and what it strives to achieve in
the distant future. It focuses on tomorrow (the very long-term) and what the organization
wants to ultimately become.
By contrast, a mission statement is a more quantifiable and tangible statement of what the
business wants to do or achieve every day. The mission statement portrays what the
business is about, whereas the vision statement is about where the business is heading
towards. It focuses on today and now, and what the organization does to achieve this.
Award [1 – 2 marks] for an answer that shows some understanding of the demands of the
question, showing basic knowledge of the difference between vision and mission
statements.
Award [3 – 4 marks] for an answer that shows good understanding of the demands of the
question, showing good knowledge of the difference between vision and mission
statements, similar to the example answer above.

Exam Practice Question 3.

(a)  Define the term ethical objectives.  [2 marks]
Ethical objectives can be defined as the moral principles and values that underpin human
behaviour in an organization, country, or region. Morals are concerned with that society
deems to be 'right' or 'wrong'. Hence, ethical objectives are the moral principles that guide
business behaviour.
Award [1 mark] for a definition that shows some understanding of the term ethical
objectives.
Award [2 marks] for a clear definition that shows good understanding of the term ethical
objectives, similar to the example above.

(b) State two examples of ethical business objectives.  [2 marks]

Possible answers could include:
 Ecological (environmental), social (cultural), and economic sustainability
 The fair treatment of employees
 High standard of health and safety in the workplace
 Ethical accounting practices
 The fair treatment of suppliers
 Accept any other valid example
Award [1 mark] for each appropriate example given.

(c)  Explain two reasons why an organization might choose to set ethical business

objectives.  [4 marks]
Possible reasons could include an explanation of:
 Improved corporate image
 Higher sales revenue
 Increased customer loyalty
  Reduced costs
 Higher staff morale
 Increased employee loyalty
 Avoiding fines and penalties
 Improved triple bottom line
 Accept any other valid reason that is clearly explained
Mark as a 2 + 2
For each reason, award [1 mark] for a valid reason and an additional [1 mark] for a clear
explanation.

Exam Practice Question 4.

A tactical objective is a short-term target that is in line with the organization’s long-term
goals. Typically, tactical objectives have a pre-determined time frame of less than a year.
An example of such an objective is to improve labour productivity in the workplace by
using non-financial methods to motivate the workforce.
By contrast, a strategic objective is a long-term goal used to achieve the overall strategic
goal or aim of a business.  For example, a strategic objective might be to improve the
market share of a company by expanding its product portfolio in a particular market. This
will take a longer time to achieve than tactical objectives.
Award [1 – 2 marks] if both tactical objectives and strategic objectives are outlined,
although the response lacks some detail and/or clarity. Examples might also be missing
and/or a clear distinction is not made.
Award [3 – 4 marks] if both terms are clearly understood and a distinction is made. There
is good use of appropriate examples and proficient use of business management
terminology throughout the answer.

Exam Practice Question 5.

(a)  Define the term corporate social responsibility (CSR).  [2 marks]
Corporate social responsibility (CSR) refers to the extent to which a business such
as Timpson attempts to meet the interests and obligations to its various stakeholders, such
as employees and the local community. Adopting a CSR approach to business means that
the actions of a business goes above and beyond the minimum required by law, meeting
the needs and wants of society.
Award [1 mark] for an answer that shows some understanding of the term CSR, although
the answer lacks clarity.
Award [2 marks] for an answer that shows good understanding of the term corporate
social responsibility, similar to the example above.

(b)  Define the term privately held company.  [2 marks]

A privately held company is a business owned by shareholders but the shares of the
business cannot be advertised for sale nor sold via a stock exchange. Shareholders have
limited liability, so if the company experiences insolvency or bankruptcy issues, the
owners will only be liable for the capital they invested in the company.
Award [1 mark] for an answer that shows some understanding of the term privately held
company, although the answer lacks clarity.
Award [2 marks] for an answer that shows good understanding of the term privately held
company, similar to the example above.

(c)  Examine the role of corporate social responsibility (CSR) in a business organization
such as Timpson.  [6 marks]
Possible examples of CSR from the case study include:
 Hiring ex-offenders to give them a second chance.
  Providing complimentary dry-cleaning services to the unemployed in the job
search.
 Financial support for employees trying to get onto the property ladder or to
support their mental well-being.
Arguments for Timpson acting in a corporate socially responsible way include:
 Ethical business practices matter to society, especially at times of great
uncertainty and stress caused by the coronavirus outbreak.
 It improves the corporate image and reputation of Timpson which is arguably
good for its sales revenues and profits in the long run.
 It can help to attract new customers, suppliers and potential investors - as well as
retaining existing ones.
 It can increase employee motivation, as they feel respected, cared for and valued.
Hence, working at Timpson becomes less stressful and more purposeful.

Award [1 - 2 marks] for an answer that shows a limited understanding of the demands of

the question. The answer might be presented in a list-like format, without depth or detail.
Award [3 - 4 marks] for an answer that shows some understanding of the demands of the
question. There is consideration of the role of CSR, with some application to the case
study. However, the answer lacks depth / details in some areas.
Award [5 - 6 marks] for an examination that shows a good understanding of the demands
of the question. There is consideration of the role of CSR, written in the context
of Timpson and effective use of the stimulus material in the case study. The answer is
well-developed and there is effective use of business management terminology
throughout the response.