How it used to be done
Consumers are becoming savvier. They do not just consider the importance of function and quality. They are beginning to value market participants that place stress on social values. In addition, companies have expanded their scope to deal with cooperative companies and local communities whereas in the past they dealt mainly with target consumers and stockholders. Moreover, it has also become important to achieve differentiation from competitors because the technology cycle has shortened and a standardization of action and design is becoming more common.
How it is being done today
FKI (the Federation of Korean Industries) analyzed the sales of the top 500 enterprises and 600 cooperating members at the end of last year. They found that the value of social contributions exceeded 3 trillion won. In addition, the survey results indicate that 8 out of 10 CEOs of major companies responded that they are continuing current levels of contributions or planning to expand social contribution in spite of the economic recession.
Helping consumers through technology
A good example is the Eyecan Mouse developed by Samsung Electronics. The Eyecan Mouse is an optical interface developed for disabled people. Users can input letters and move the cursor by moving their eyes. There is also a construction facility for the handicapped that has been established by Hanhwa Engineering & Construction. Hanhwa Engineering & Construction is building the Ggumegreen library which is a facility for the handicapped that addresses their specific needs. Finally, there is the touchable music seat for the Hyundai Sonata. This seat has been designed so hearing impaired people can listen to music through vibrations that come from speakers in the seat.
Helping consumers through service
The service center of SK telecom is a good example of this trend. The service center of SK telecom has established the “3G+image consumer center.” This center is equipped to handle the inquiries of hearing impaired customers through sign language using video calls.
Helping consumers through education about the strengths of the company
Lotte department store supports traditional markets by providing its know-how regarding department store operations. Lotte department store provides incentive for young customers to come to traditional markets by putting on events such as B-boy performances and clown shows. Moreover, the service manager, hygiene manager, and environmental safety team visit market areas to perform checks and provide education to improve service and safety. Another example is a cooking academy that has been established by Shinsegae food. Shinsegae food established this program whereby executives mentor middle and high school students in getting a cooking license through their cooking academy. There is also a good example in the cosmetics industry. Amore Pacific has dispatched 1,900 counselors over five years to deliver training on beauty techniques to 7,500 women suffering from cancer.
Effect of social contributions by corporations
Social contributions by corporations have a two-dimensional effect whereby consumers can experience practical life improvements by using technology developed for their specific needs. In addition, social contributions reflect the characteristics of the company that makes the contributions. These establish positive brand association with the consumers. Finally, it can reduce the burden on taxpayers by providing an efficient distribution of welfare funds. In many ways, corporations are able to cover areas that are missed by governmental social welfare programs.
We interviewed Dong-chun Park, CEO of Impact Square. Companies like Impact Square find ways for businesses to maximize their impact on society the economy, and environmental change through corporate activity unlike conventional companies that primarily seek to maximize profit. Impact Square consults on the social contributions of corporations like SK, KT, Mercedes-Benz.
Q) Why have the social contributions of corporations changed?
A) In plain language, companies have been going through a hard time in their primary businesses. Moreover, the fact is that citizens or consumers don't like it when companies make donations and provide services unrelated to their business.
Q) What do you think corporate social contributions will be like in the future?
A) I think a lot of it will center on portfolio management. Social contribution is a simple activity that is performed out of good will. This area should be administered more systematically and scientifically. In order to accomplish this, it goes without saying that we need to apply knowledge, people, and systems to execute these endeavors professionally. Therefore, companies should divide and administer their social contributions in terms of an organized portfolio.
As mentioned above, the culture of corporate social contributions is changing from one-dimensional contributions to industry specific social contributions in a variety of ways. Companies should strive to fulfill noblesse oblige, which means those who are able have an obligation to provide service to those who are not. Nowadays many companies think about how to provide more effective social contributions with recognition of their social responsibility. They should act with their hearts more than just thinking about profit. In the future, we expect that social contributions will continue along this trend as companies increase their activities and awareness of societal and consumer needs.
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