Najla recently wrote a blog post connecting the concept of Corporate Social Responsibility  to Walmart.  Her piece was a reply to Mahesh’s post, but I will focus mainly on her response and interpretation.

Walmart has continuously violated air and water pollution regulations, and thus has been forced by the U.S. government to pay millions in damages.  It is now attempting to make amends by demonstrating corporate social responsibility (CSR).  Najla’s premise is that CSR will increase long term profit; I argue that corporate social responsibility will only significantly increase profits if the public is aware of the company adopting such ethical practices.

Once there is a scandal, the company in question must rehabilitate its image in order to increase profits in the long run.  This can not be left to the saturated, and inefficient media coverage.  To get a direct message to the consumers, the company (or rather, the Marketing and PR departments) must release a campaign backing up its new position.

The perfect example: Nike.  It saw severe backlash from the public when evidence regarding its sweatshop practices was released more than a decade ago.  Instead of shying away from the allegations, Nike decided to take responsibility of the situation, and began a campaign advocating transparency, and proper working conditions.  The Business Insider presents a timeline on how Nike overcame the scandal.

The public was exposed to the fact that Nike was attempting to become more socially responsible, and thus the company managed to survive.  It managed to reposition itself in the consumers’ minds: something that is significantly more difficult to achieve than simply creating another brand that from the beginning advocates ethical practices.

I am interested in seeing the development of Walmart’s course of action: if it does not manage to successfully demonstrate to the public its new stance on ethical practices, then it would face a rejective market.

Sidebar–A Question Worth Investigating

Which is more costly: creating a new brand, or launching a corrective campaign with severe advertising to reposition the line?