Question - Describe Carroll's pyramid of corporate social responsibility (CSR). Drawing on the information from the case study and using Carroll's pyramid of CSR, discuss whether ToysKZ fulfils its corporate and social responsibilities.

Student guidance for Question 2 This question requires you to explore the social and corporate responsibility of the ToysKZ operation in Kazakhstan, through the lens of Carroll's pyramid of corporate social responsibility (CSR). The question has two parts. First, start your answer by describing Carroll's pyramid of CSR and drawing on Reading 47, Block 6 and each of its components. Then, using the information and evidence from the case study, explain how various aspects of CSR apply to ToysKZ business activitie Case study - Sitting in the lounge of the Almaty International airport in the vicinity of Almaty, the largest city of Kazakhstan, Mathias Nielsen is in deep thought. He has been regional manager for Central Asia with ToysDK, a multinational retailer specialising in toys and other products for children, for more than two years, but it was the first time that he found himself so puzzled. His first two years in Almaty were a success - when he stepped into this new post, his ambitious plan of vertical integration and acquisition of one of the ToysDK suppliers in Kazakhstan worked almost perfectly well. His past experience of working in Baltic countries, and command of Russian helped him develop good local connections in the Almaty area. He got along particularly well with Oleg Matveev, a recent UK Open University MBA graduate with a background in engineering and zest for innovation, who came from a predominantly Russian-speaking north of Kazakhstan. Mr. Matveev was in charge of one of the old Soviet factories in the Almaty area and it was Oleg's vigorous activity that led to acquisition, restructuring and rebranding of this manufacturing facility, where ToysDK now have a minority stake and which is known as ToysKZ. ToysKZ demonstrated remarkable progress over the last two years. Due to avoiding hefty customs tariffs on the EU and China exports, ToysDK retail stores in Kazakhstan sourced a considerable proportion of their stock from local suppliers, particularly from ToysKZ. This has led to lower retail prices for ToysDK customers, which was a welcome development at the time when the Kazakh economy was struggling and disposable income levels in the country were stagnant. Notably, the quality of ToysKZ products was quite high and they complied with both the EU and international environmental standards, so plans of expansion into vast markets of the neighbouring China and India were on the cards. The new factory also developed good reputation in the local community. First of all, salaries of its shop floor workers exceeded average salaries in that part of the country, reaching 300,000 Kazakhstani Tenge (around 450) per month. In addition, ToysKZ was involved in a range of local community projects, from refurbishing children's playgrounds and sports facilities to investing in recycling and green initiatives in partnership with local and international non-governmental organisations, such as Greenpeace. In fact, even the local government officials, initially cautious of foreign presence, warmed up to ToysKZ and were keen to promote some of their initiatives, such as educational visits to schools aimed at raising awareness of waste recycling and other environmental issues. However, today was quite a different day for Mathias Nielsen. He met for lunch with Mr. Algaev, one of the community leaders in the Almaty area, whom he had met at a networking event earlier this month. Mathias expected this to be quite a routine working lunch but, quite unexpectedly, the conversation turned out to be difficult. He knew that many of the ToysKZ factory's workers were from other Central Asian countries (such as Uzbekistan or Tajikistan) - due to low wages and lack of employment opportunities in their home countries, hundreds of thousands of migrants from these countries moved to metropolitan areas of Kazakhstan for work. However, the situation that Mr. Algaev had described looked shocking to say the least. He said that, in recent months, in confidence, he received numerous complaints from migrant workers at ToysKZ about work conditions and treatment of shop floor staff at the factory. Although on paper the pay was good, it was not uncommon for workers to under-report hours of work or to get someone else to do their work for them. The workload was designed to achieve unrealistic targets, so workers had to work overtime and during holiday periods. Many migrant workers did not have the required papers to be employed in Kazakhstan, did not pay their social contributions or receive any benefits, so they had to leave their families behind in their home countries. Some of the migrants did not even have the right to reside in Almaty and often had to put up with squalid conditions, sharing one room with several other workers. Due to fear of deportation and a subsequent ban for visits to Kazakhstan, many of them were afraid to speak up about their problems or waited for their contracts to end, so they could leave before any breach of law was discovered. All of this information came as a complete surprise to Mathias Nielsen. Still in shock, he gave a quick phone call to Oleg, and his colleague's response was no less surprising. Although Oleg agreed that there might be some irregularities and minor law infringements involving some Central Asian workers at ToysKZ, his view was that the factory does not have to look into individual circumstances of every worker, including their living conditions. In his view, the situation that Mr. Algaev described was not uncommon and that as long as local authorities turned a blind eye to these breaches of law, ToysKZ were fine. Oleg noted that the company's domestic competitors were almost certain to also resort to migrant labour and were also likely to continue to do so in the future. So, in his opinion, in order to survive the competition and keep the customer end prices low, it is essential for ToysKZ to continue to keep staff costs low (and continue to employ migrant workers) if the factory were to continue to be financially viable and the initial investment into its renovation were to pay off in the nearest future. Heading towards the airport boarding gate, Mathias is still in doubt as to what he has to do. Does he mention about the problems at ToysKZ during tomorrow's meeting with senior management in Copenhagen? Does he focus on investigating the issues at ToysKZ and then report its results to senior management in Denmark? More importantly, what does the company have to change going forward if it were to continue to operate in Kazakhstan? All of these questions cross Mathias's mind as he steps into the aircraft and dusk sets over the airfield.