Corporate Social Responsibility of San Miguel Brewery Inc.

Essay

San Miguel Corporation’s commitment to bring quality products to each and every Filipino home has
brought together well-loved brands that make everyday life a celebration. No other company in
Philippine history has developed such a rich and diverse product portfolio covering the beverage, food
and packaging industries as San Miguel. Prior to the creation of San Miguel Brewery Inc.

, all of SMC’s beer operations were under the San Miguel Beer Division (“SMBD”), a business unit of
SMC. San Miguel Brewery Inc. was incorporated on July 26, 2007, and the domestic beer business was
spun off from SMC effective October 1, 2007.

The spin-off of SMC’s domestic beer business into SMB was intended to realize the value of SMC’s
flagship business. Due to wide varieties of products, San Miguel Corporation had this brand extension
called the San Miguel Brewery Inc. SMB is the largest producer of beer in the Philippines, with a total
market share of approximately more than 95% in 2008. The Company has five breweries strategically
located across the Philippines and a highly developed distribution system serving approximately 471,000
retail outlets.

SMB has breweries in each of Valenzuela City, Metro Manila; San Fernando City, Pampanga; Mandaue
City, Cebu; Bacolod City, Negros Occidental; and Darong, Sta. Cruz, Davao del Sur, with a total annual
production capacity of 15.1 million hectoliters. Each of these breweries is equipped with automated
facilities capable of packaging the Company’s products in a variety of sizes and formats, including bottles,
cans, and kegs San Miguel grew to its commanding position in the Southeast Asian market in spite of
political upheaval, infrastructure glitches, and high taxes. It achieved its status through aggressive
competitive strategies and shrewd long-range planning over the decades. In today’s corporate world,
most business organizations have realized the importance to the perception of their clients and
consumers on the role of the organizations in national development. They perceive that this can be
accomplished by sharing a significant portion their profit.

“A corporation’s initiatives in social responsibility broaden with growth of its business. This is especially
true when social responsibility is woven into the fabric of its corporate structure.” “San Miguel is a
company of people who care about people and communities we serve and partner with as well as the
businesses we manage. We have a proud history of doing business honorably of working to improve the
quality of life and giving something back. Social responsibility exemplifies our spirit of caring. We care for
our environment, our stakeholders, our customers and investors, our host communities and our people
because they are integral to our growth. Our programs are design to enhance the relevance of social
responsibility endeavors as we partner with this vital linkage to our various businesses. Social
responsibility is a commitment we pursue for the long-term as we continue to honor our social covenant
with various publics.” Eduardo M. Cojuangco Jr. (Chairman and CEO of San Miguel)

Grewal & Levy (2008) stated that Corporate Social Responsibility (CSR) is the set of activities taken by a
company in addressing the impacts of the business operations to its stakeholders. Thorne & Ferrell
(2012) defined stakeholders as people that have a claim on the company’s products, operations, market
industry and outcomes. The company is committed to the empowerment of San Miguel host
communities and various stakeholders by harnessing corporate social responsibility among various San
Miguel businesses in pursuing mutually beneficial program that lead to self reliance and sustainability. In
creating an environment of sharing SMB comply with the policy on environment and environment
management system. Under this is solid waste segregation, energy and water conservation, reuse,
reduce, recycle and scrap selling. SMB also follows the Hazard Analysis Critical Control Point (HACCP).

“Two years ago, the San Miguel Beer Division began implementing an international standard for food
safety assurance, the Hazard Analysis and Critical Control Points (HACCP) program. Adapting HACCP for
application in the breweries involved voluminous documentation, including risk assessment of raw
materials, process operations, equipment, and machinery.” Grewal & Levy (2008) stated that a company
can act in a socially responsible manner if its employees maintain high ethical standards. Employees
must realize that their individual decisions will reflect the company’s image towards its CSR practices.
Cabrera (2009) explored that in the business world, business ethics are the set of principles and
standards that serves as guide to each individual in the company. Employees in a company may have
different ethics.

SMB took into consideration the different beliefs and the ethical values of its employees that’s why they
provided proper trainings to their employees to create a good work environment and have knowledge in
providing good service to their customers, and to fully implement their CSR practices. The main
components of corporate social responsibility are economic, legal, ethical and philanthropic aspects. Its
economic responsibility is to bring revenue, make a profit and compensate for all the firm’s liabilities.
They also have a legal responsibility to obey the law, an ethical responsibility to make sound business
decision that do not violate their code of conduct and a philanthropic responsibility which is to take into
consideration, and give back to the community.(Pearce II and Robinson Jr.,2009) Consumers and
investors nowadays are highly possible to purchase products and services from and invest in companies
with CSR policies (Grewal & Levy, 2008).
According to Hecht & Ramsey (2002), what you hope to become and who you are is reflected by your
corporate culture. In fact one of the San Miguel value is social responsibility, which is caring beyond
business. Because we care about our stakeholders, we strictly comply with the Current Good
Manufacturing Practices (CGMP) and ISO Standards by providing high quality products; we uplift the lives
of our stakeholders. This study is to be undertaken to determine the general attitude of the stakeholders
which involves the firm, employees, and customers, towards SMB’s corporate social programs. We
expect that this study will serve as a basis for the firm to evaluate and determine the effectiveness of its
social programs to its employees and customers. Rue & Byars (2003) states socially responsible firm goes
beyond its obligation required by law and practices long term goal that are beneficial to the society.

Knowing this SMB has its own waste water plant to ensure the water disposed isn’t harmful to the
environment. In addition, the company helps the communities where they operate by caring for the
environment. According to London & Morfopoules (2010) a CSR program put in place can only succeed if
it is given full consideration. A social program design and actively pursue not only for poverty alleviation,
(through job and benefits for the employees), educational help (sponsoring scholarships), health
(conducting medical and dental mission) and environmental protect (proper waste management from
within and without company premises). As a part of its CSR programs, SMB conduct their outreach
programs such as tree planting activities are done by the company.

The company promotes education to youth from low income families through scholarships, literacy
classes and support programs like supplemental feeding, book donations and so on that strengthen
communities through capability building activities and the provision of basic social services support local
enterprises that bring livelihood opportunities to community groups, dependents, San Miguel retirees
and other stakeholders provide assistance to disaster stricken communities through relief and
rehabilitation programs and protect, preserve and regenerate the environment.

The perspective on strategic CSR developed in this paper will help managers to design strategic CSR
programs based on its focus and direction, pro-activeness, activity nature, unique characteristics and
benefits. CSR nowadays become a trend in any company and it is considered as one of the business
strategy that the firm uses to survive in the industry. But still, doing these activities, firms are not free
from different problems. In addition, having a good reputation from the public not easily gained. Thus,
the researchers aim to determine the perception of customers and employees of SMB. This study will
attempt to answer the following questions:

This study will attempt to answer the following questions:

1. How may the respondents be described in terms of:

1.1. Age

1.2. Gender

1.3. Occupation

1.4. Place of Recedence

2. How may the Corporate Social Responsibility Program of San Miguel Brewery Inc. be assessed by its
stakeholders in terms of:

a. Ethical

b .Legal

c. Economic

d. Philanthropic

3. Are there significant differences into the response of the respondents?

3.1. Employees

3.2. Community

4. What are the possible implications of the general CSR programs of SMB in creating a good perception
to its customers and employees?

Hypothesis Ho

Ho: There are no significant differences on the response of the respondents. In terms of the ethical,
legal, economic and philanthropic practices of the company.

The framework of the study is divided into three parts. The first part of the framework shows the inputs
that would be processed and analyze to explore the perception of the community and employees
regarding the CSR program of SMB.

The next part discussed about the process that would be use in variable evaluation.

The last part after the evaluation and analysis is the discussion of the result of the processed inputs.
Conclusions and recommendations will be given after determining the impact of Corporate Social
Responsibilities to San Miguel Brewery Inc.
Input

The CSR practices of SMB in terms of:

* Economic

* Ethical

* Legal

* Philanthropic

Process

* Frequency Distribution

* Weighted Mean

* T-test

Output

To determine how the CSR practices of SMB influence the perception of employees and customers.

Figure 1

This study on CSR of San Miguel Brewery Inc. is deemed significant to the following: Owner/Manager of
San Miguel Brewery Inc. This study would give further insights about the firm’s current status in the
industry. The study would give information that the controlling officers of the company could use to
evaluate how effective the current management practices are. In addition, the study could be further
utilized as a tool in determining the existing challenges concerning aspects regarding its current
corporate social responsibility. Industry.

This study would provide information regarding the current status of the company as an integral part of
the industry in general. It would provide points that would help customers in determining if SMB is
socially responsible and what practices it performs for them. Future Investors. Vital information is
contained in this study, thus it is highly beneficial for individuals with investment intents. Through this,
investors would gain advantage and understanding on the venture they wish to enter. This study would
give them pointers on their planning and strategizing stage. Future Researches. This study would serve as
a reference for future researchers in completion of academic requisites.

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