CORPORATE SOCIAL RESPONSIBILITY AND SALES PERFOMANCE OF MTN:
A CASE STUDY OF FORT PORTAL BRANCH
BY
TURIHOHABWE NELSON
06/U/9269/EXT
A RESEARCH REPORT SUBMITTED TO MAKERERE UNIVERSITY IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF THE DEGREE OF BACHELOR OF COMMERCE
JULY 2011
1
DECLARATION
I TURIHOHABWE NELSON hereby declare that this is my own original work and has never been submitted for publication or award of any qualification in any University or institution. Where the work of other people has been consulted, due acknowledgement has been made.
Signed: ………………………………………….. Date: ………………………
Turihohabwe Nelson
(Student)
APPROVAL
This report has been submitted for examination with the approval of the University supervisor.
Signed: …………………………. Date: ……………………
Mr. Turyakira Nazarious
(Supervisor)
DEDICATION
This report is dedicated to my beloved mother Ms Ndinabo Kedress for her immeasurable support and guidance throughout my education career, to my dear wife Mrs. Janis Turihohabwe, and to my daughters; Precious and Pretty.
ACKNOWLEDGEMENT
I would like to first of all thank my beloved mother who worked tirelessly to support me both financially and morally throughout my education career.
Special thanks go to Mr. Turyakira Nazarious for devoting his time in guiding me as my supervisor throughout the research period.
I would like to express deep appreciation and gratitude to my wife for her outstanding support extended to me through out this course and to my children who missed me during the time I was doing this research work.
Finally I cannot forget my lecturers, friends, well wishers and all individuals who have in one way or the other contributed to my academic, spiritual and personal growth. May the Almighty God bless all of you abundantly.
TABLE OF CONTENTS
DECLARATION
APPROVAL
DEDICATION
ACKNOWLEDGEMENT
TABLE OF CONTENTS
LIST OF TABLES
LIST OF ACRONYMS
ABSTRACT
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
1.2 Statement of the Problem
1.3 Purpose of the Study
1.4 Objectives of the Study
1.5 Research Questions
1.6 Scope of the Research Study
1.7 Significance of the Research Study
CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
2.2 Corporate Social Responsibility
2.2.1 Dimensions of Corporate Social Responsibility
2.2.1.1 Economic Dimensions of Corporate Social Responsibility
2.2.1.2 Legal Dimensions of Corporate Social Responsibility
2.2.1.3 Philanthropic Dimensions of Corporate Social Responsibility.
2.2.1.4 Ethical Dimensions of Corporate Social Responsibility
2.2.1.5 The Learning and Growth Perspective
2.3Sales Performance
2.3.1 Sales
2.3.2 Sales Performance
2.3.3. Sales Performance management
2.3.4 Key Sales Performance Indicators.
2.4 Relationship between Corporate Social Responsibility and Sales performance
2.5 Conclusion.
CHAPTER THREE
METHODOLOGY
3.1 Introduction
3.2 Research design
3.3 Study population
3.4 Sampling Design
3.5 Sample size
3.6 Sources of Data
3.6.1 Primary data
3.6.2 Secondary data
3.7 Data Collection methods
3.7.1 Questionnaire
3.8 Data processing and analysis
3.8.1 Editing
3.8.2 Presentation
3.9 Limitations of the study
CHAPTER FOUR
PRESENTATION AND INTERPRETATION OF FINDINGS
4.0 Introduction
4.1 Demographic characteristics of respondents.
4.1.1 Position held by the respondents.
4.1.2 Age range of respondents.
4.1.3 Gender of respondents
4.1.4 Period spent working with MTN.
4.1.5 Level of education
4.1.6 Marital status of the respondents
4.2 Findings on Corporate Social Responsibility
4.2.1 The Company supports cultural galas, drama and Local Artistes in the area.
4.2.2 The telecommunication company sponsors students who excel at some levels of education
4.2.3 Support is extended for talent development through funding activities like parish game tournaments
4.2.4 Environmental management like tree planting projects is a concern of the company.
4.2.5 The company has supported educational infrastructural development by supporting construction of school facilities
4.2.6 Charity walks have been organized for victims of degenerative diseases such as cancer and cardiovascular infections
4.2.7 The company funds projects intended to create public awareness about some things like break out of epidemics.
4.3 Findings on levels of sales performance.
4.3.1 For the last two years, this branch has registered more customers compared to other years.
4.3.2 When the company launches a new product, most people show high demand for it
4.3.3 The Company has opened up more outreach centres in areas surrounding the Town to meet the ever increasing customer base in the area.
4.3.4 Our branch has extended working hours and operates on gazzetted holidays because of the increasing number of clients
4.3.5 The Company advertises extensively to boot its sales level.
CHAPTER FIVE
SUMMARY CONCLUSION AND RECOMMENDATIONS
5.0 Introduction
5.1 Summary of the Findings
5.1.1 Findings on Corporate Social Responsibility
5.1.2 Findings on levels of Sales Performance
5.1.3 Findings on relationship between Corporate Social Responsibility and Sales Performance
5.2 Conclusion
5.2.1 Conclusion on Corporate Social Responsibility
5.2.2 Conclusion on Sales Performance
5.2.3 Conclusion on relationship between Corporate Social Responsibility and Sales Performance
5.3 Recommendations
5.3.1 Recommendation on Corporate Social Responsibility
5.3.2 Recommendations on Sales Performance
5.3.3 Recommendations on the relationship between Corporate Social Responsibility and Sales Performance.
5.4 Areas for further research
References
APPENDIX I:Questionnaire for staff
APPENDIX II:Researcher’s budget
APPENDIX III:Introductory letter
LIST OF TABLES
Table 1: Positions of the Respondents
Table 2: Age Distribution of Respondents
Table 3: Gender of Respondents
Table 4: Duration of the respondents working with MTN
Table 5: Level of Education
Table 6: Marital status
Table 7: The Company supports cultural galas, drama and Local Artistes in the area.
Table 8: The Telecommunication Company sponsors students who excel at some levels of education
Table 9: Support is extended for talent development through funding activities like parish game tournaments.
Table 10: Environmental management like tree planting projects is a concern of the company
Table 11: The Company has supported educational infrastructural development by supporting construction of school facilities
Table 12: Charity walks have been organized for victims of degenerative diseases such as cancer and cardiovascular infections.
Table 13: The company funds projects intended to create public awareness about some things like break out of epidemics.
Table 14: Quite often, the company makes donations to a number of charity organizations
Table 15: For the last two years, this branch has registered more customers compared to other years.
Table 16: When the company launches a new product, most people show high demand for it
Table 17: The Company has opened up more outreach centres in areas surrounding the Town to meet the ever increasing customer base in the area.
Table 18: Our branch has extended working hours and operates on gazzetted holidays because of the increasing number of clients
Table 19: The Company advertises extensively to boot its sales level.
Table 20: Fort Portal branch has had an increase in the levels of profits over the last three years because of increasing customer base
Table 21: Relationship between Corporate Social Responsibility and Sales Performance
LIST OF ACRONYMS
ISO / : / International Standards OrganizationCSR / : / Corporate Social Responsibility
SPSS / : / Statistical Package for Social Sciences
ABSTRACT
The study was about Corporate Social Responsibility and Sales Performance: A case study of MTN Uganda, Fort Portal Branch. The study was guided by the following specific objectives; to find out the corporate social responsibility initiatives implemented by MTN; to assess the sales performance ofMTN; and to establish the relationship between corporate social responsibility being implemented by MTN and sales performance.
The study used a cross sectional survey design. The study involved 50 respondents. Simple random sampling was used to select the respondents. This was used in order to avoid bias while selecting the respondents. Primary and secondary sources of data were used. Data was collected using semi structured questionnaires. This was followed by editing for accuracy and consistence of the information. The responses were tabulated and then presented using frequencies plus percentages.
Findings onCorporate Social Responsibility initiatives indicated that MTN uses initiativesthat included funding charitable organizations, participated in promotion of environmental development, funded talent development, promoted local Artistes and organized charity walks to raise money for victims of degenerative diseases such as cancer. Findings on sales performance indicated that the profit levels of the company were high, new products introduced on the market were highly demanded and working hours were extended to serve the increasing number of clients implying that the levels of sales performance were high. Findings on the relationship between corporate social responsibility and sales performance indicateda high positive relationship between corporate social Responsibility and Sales performance.
Recommendations on Corporate social responsibility were: management of MTN should strengthen the monitoring and evaluation department so as to ensure that the planned for corporate responsibility activities are effectively implemented.Recommendations on sales performance were; need for training the staff on better sales management techniques andadopting adaptive selling so as to boost sales levels.The recommendation on the relationship between corporate social responsibility and sales performance was that management of MTN needs to channelmore efforts in corporate social responsibility initiatives if increase in sales turnover is to be realized.
1
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Corporate social responsibility refers to the discretionary actions undertaken by companies that are intended to advance social issues (Richardson et al, 1999). Corporate Social Responsibility is defined as actions that appear to further some social good beyond the interests of the firm and which is required by law (Mc Williams and Siege, 2001 cited in Katamba, 2008).
Corporate Social Responsibility policy functions as a built-in, self-regulating mechanism whereby the business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. Corporate Social Responsibility is the deliberate inclusion of public interest into corporate decision-making, that is, the core business of the company or firm, and the honoring of a triple bottom line: people, planet and profit (Carrol, 1991).
Sales performance is defined asthe rate at which a given business enterprise completes a commercial activity (Gilligan & Grauthern (1976:27).Sales are as a result of marketing communication in consultation with other marketing variables (Gilligan & Grauthern 1976:27). Sales performance refers to the quantity an organization is able to exchange for money. A sale is completed by a seller who is the owner of the goods. It starts with the consent to an acquisition followed by passing of title (Rubaliskas 2006).
According to Uganda Bureau of Statistics (2007), companies that employ over 101 employees are involved in some form of corporate social responsibility. MTN is no exception. MTN is committed to being a socially responsible company in Uganda. MTN views its Corporate Social Responsibility initiatives as integral to its core mission and sales performance.
MTN FortPortal Branch has for the last five years been involved in sponsoring events such as table tennis tournaments; sub county football competitions, secondary school music galas, sponsoring the upcoming local artistes in the area as well as sponsoring intellectually gifted but poor children and its employees for further studies. According to Romani and Kumar (2008) one reason for corporate social responsibility among organizations is that they develop and adopt a business orientation that allows them to survive in an increasingly competitive market place. This promotes competitiveness between the organization and others thus promoting the product sales. MTN Uganda, Fort Portal Branch could be seemingly venturing into these activities as a means of capturing the good will of people. Corporate Social Responsibility is a key to a successful business and therefore maintenance of good relationship with community and this could foster business development and attract more customers.
1.2Statement of the Problem
The goal of Corporate Social Responsibility is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Corporate Social Responsibility-focused businesses proactively promote the public interest by encouraging community growth and development that beefs up customer loyalty and brand personalization of the company products, hence sales growth (Kuppert.et al, 2005)
MTNsponsors sports events, promotes talent development by sponsoring local artistes, organizes charity walks for the noble cause of the disadvantaged, promotes strategies for achieving environmental sustainability and supports community development through construction of schools, sponsoring its employees to pursue further studies, among others (MTN, 2009 Annual Report).
Despite the various corporate social responsibility initiatives implemented by MTN, the company has not achieved its targets of increased market share through high turnover (MTN Corporate Department Reports, 2008, 2009 and 2010). Unless this anomaly is investigated, MTN will continue incurring costs of promoting Corporate Social Responsibility but will fail to realize a big difference in its sales turnover.
1.3 Purpose of the Study
The purpose of this study was to examine the relationship between corporate social responsibility initiatives implemented by MTN and sales performance of MTN.
1.4 Objectives of the Study
- To find out the corporate social responsibility initiatives implemented by MTN
- To find out the sales performance of MTN
- To establish the relationship between corporate social responsibility being implemented by MTN and sales performance
1.5 Research Questions
- What are the corporate social responsibility initiatives implemented by MTN?
- What is the level of sales performance of MTN?
- What is the relationship between corporate social responsibility initiatives being implemented by MTN and the sales performance of MTN?
1.6 Scope of the Research Study
Geographical scope
The research was conducted at the MTN district branch offices in Fort Portal District
Time scope
The research covered a period of five years of implementation of corporate social responsibility initiatives by MTN from 2005-2010.
Content scope
The research variables, which were the scope of this study, were of two types; dependent and independent variables. Theindependent variable was the particular corporate social responsibility initiatives implemented by MTN. The dependent variable was the company’s sales performance.
1.7 Significance of the Research Study
- The results of this study will provide useful academic knowledge and resource to students, academicians, policy makers and other stakeholders who wish to understand in depth the relationship between corporate social responsibility and sales performance.
- The research will benefit the public by exposing the various corporate social responsibility initiatives engaged in by MTN and how the public can measure the level of involvement.
- The accomplishment of the study will enable the researcher to acquire proficiency in carrying out future research studies with ease.
CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This literature review aimedatreviewing the critical points of current knowledge and or methodological approaches on the relationship between Corporate Social Responsibility and company or organizational performance. The literature review are secondary sources, and as such, do not report any new or original experimental work. The goal of this literature review was to establish the gaps and indicate attempts made to fill them.
2.2 Corporate Social Responsibility
Cochran (1985) advanced a theory of corporate Social Responsibility that recognizes a corporation as a responsible corporate citizen which should not only give back to the community, but should also refrain from doing certain acts which are harmful to the community. Thus Corporate Social Responsibility exhorts firms to diverge from their sole aim of maximizing profits and to lay more importance on improving the economic and social standards of the community in their countries of operation.
Warhust (2001) pointed out the three major elements of Corporate Social Responsibility as product use, which focuses on contribution of industrial product which helps in well being and quality of life, business practice which focuses on good corporate governance and gives high impetus for the environmental well being and equity which tries for distribution of profits equitably across different societies especially the host community.
Pinkston and Archie (1996) argued that an exact definition of Corporate Social Responsibility is elusive since beliefs and attitudes regarding the nature of this association fluctuate with the relevant issues of the day. As such, viewpoints have varied over time and occasionally are even oppositional. Although there are many definitions of Corporate Social Responsibility available, this research centered on more recent concepts of Corporate Social Responsibility.
2.2.1 Dimensions of Corporate Social Responsibility
Joyner, et al (2002) noted that Corporate Social Responsibility refers to categories of economic, legal, ethical and discretionary activities of a business entity as adapted to the values and expectations from society. They also added that, Corporate Social Responsibility refers to the basic expectations of the company regarding initiatives that take the form of protection to public health, public safety, and environment. These four; economic, legal, ethical and discretionary actions are the basic dimensions of Corporate Social Responsibility (Carrol, 1991).
A comprehensive definition for Corporate Social Responsibility is based on the idea that organizations have economic and legal obligations, together with ethical and discretional (philanthropic) ones (Carrol, 1979), while being socially responsible is often considered doing the ‘’right thing’’ or being ethical. Carrol (1979) identifies that the organization also has economic, legal and discretionary obligations to its target stakeholders.
2.2.1.1 Economic Dimensions of Corporate Social Responsibility
The economic nature of business organizations is obvious, since they are created in order to provide goods and services at a price. Thus, the objective of maximizing profits from their activity is essential, and performance is considered as the base on which the firm’s other responsibilities are founded. It is the responsibility of the firm to earn profit for owners.
Friedman (1970) argued that a corporation’s purpose is to maximize returns to its shareholders, and that since only people can have social responsibilities, corporations are only responsible to their shareholders and not to society as a whole. He says that being a good corporate citizen contributes to the community and the quality of life. ‘’There is one and only one social responsibility of business- to use its resources and engage in activities designed to increase its profit so long as it stays with the rules of the game, which is to say, engages in open and free competition, without deception or fraud.’’ The role of business is to create wealth by providing goods and services. They further assert that managers who have been put in charge of a business have no right to give away the money of the owners.