It’s critical that investors analyze the complexities of the investment’s structure and strategy; evaluate the business or other expertise of the investment’s owner or manager, and obtain and interpret any available performance or other information about the investment There may also be higher costs associated with determining the suitability of an alternative investment.

TYPES OF ALTERNATIVES

Alternative investments can be placed into three groups by the primary role that they usually play in portfolios:

Investments that provide exposure to markets other than the traditional stock, bond and cash equivalents;

Investments that provide exposure to specialized investment strategies run by an outside management company. Hedge funds and managed futures might fall into this category;

Investments that combine features of the prior two groups, like private equity funds and managed futures.

Let’s take a brief look at the major types of alternative asset classes:

Commodities

Investors can gain direct exposure to commodities in spot (cash markets) or in markets for deferred delivery (futures and forwards markets). Direct investment entails cash market purchase of physical commodities – agricultural products, metals and crude oil – or exposure to changes in spot market values via derivative investments, such as futures. Only investment in commodities via the cash and derivatives markets constitutes alternative investing.

Indirect commodity investment involves acquiring indirect claims on commodities, such as equity (stock) in companies specializing in commodity production. Because cash market purchases involve actual possession and storage of the physical commodities and incur carrying costs (financing, insurance and transportation) and storage costs, investors have generally preferred indirect commodity investments.

Private Equity

The term private equity refers to a stock that is bought or sold via a private placement rather than through conventional public trading. To qualify as private placements, securities are generally offered for sale to accredited investors (institutions or high net-worth investors). Private equity investments can be made face to face with the company needing financing or indirectly through private equity funds. Unlike conventional investments, private equity securities are not registered with a regulatory agency.

Hedge Funds

There is no precise or universally accepted definition of a hedge fund. However they are usually described as pooled investment vehicles that may employ various investment strategies. Although generally regarded as loosely regulated, a trend toward greater regulatory oversight of hedge funds is under way in the U.S.

London is the leading center for Europe’s hedge fund managers, with three-quarters (about $300 billion) of European hedge fund investments at the end of 2008. Asia, and more specifically, China, is taking on a more important role as a source of funds for the global hedge fund industry. Major offshore hedge fund centers include Cayman Islands, Dublin (Ireland), Luxembourg, the British Virgin Islands and Bermuda. The Cayman Islands have been estimated to be home to about 75% of the world’s hedge funds, with nearly half the industry’s estimated $1.225 trillion in assets under management.

Hedge funds have to file accounts and conduct their business in compliance with the requirements of these offshore locations. Typical rules concern restrictions on the availability of hedge funds to retail investors (Dublin), protection of client confidentiality (Luxembourg) and the requirement for the fund to be independent of the fund manager.

Hedge funds can use more complex investment strategies and are often classified according to investment style. The five most widely used hedge fund strategies are: equity market-neutral, equity hedge, merger arbitrage, convertible arbitrage, and global macro. (See sidebar, The 5 Most Common Hedge Fund Investment Strategies.)

Managed Futures

These private pooled investment vehicles can invest in the cash, spot and derivatives markets and have the ability to use leverage (borrowed money) in a wide variety of trading strategies. Similar to hedge funds, managed futures programs are actively managed and are structured as limited partnerships open only to accredited investors. The managers take positions based on expected profit potential.

Distressed Securities

These are securities of companies that are in financial distress or near bankruptcy. Investment strategies using distressed securities exploit the fact that many investors are unable to hold below investment grade securities because of investment policy or regulatory restrictions. Also, comparatively few analysts cover distressed securities markets and bankruptcies, resulting in unresearched investment opportunities for knowledgeable investors willing to do their homework.

(SIDEBAR)

The 5 Most Common Hedge Fund Investment Strategies

These investment strategies are the ones most often used in managing a hedge fund.

Equity Hedge

In these strategies, fund managers hold both long and short positions mainly in stocks and stock derivatives (options). An equity hedge fund may be global, industry or country-specific, hedging against downturns in stock markets by taking a long position or shorting stocks or stock indexes that the fund managers believe are overvalued.

Equity Market-Neutral

An investment strategy in which the investor seeks to obtain the same return regardless of the performance of the broader market. There is no single way of executing a market neutral strategy, but it usually involves taking a combination of a long (ownership) position and a short position (the investor borrows and sells a security but has not yet replaced it with an equal number of shares). For example, an investor could take a long position on one market index while also taking a short position on a similar index.

Merger Arbitrage or Risk Arbitrage

An investment strategy that is meant to generate gains with little or no risk. When a publicly traded company is acquired, the acquiring company makes a tender offerto the current shareholders, inviting them to sell their stock at a price usually above the quoted price on the market. As soon as the tender offer is announced, arbitragers will rush in and purchase the security on the open market then turn around and sell it directly to the acquiring company for the higher price.

Convertible Arbitrage

The purpose of convertible arbitrage is to take advantage of a market situation where investors believe that the securities are priced lower they are worth. It involves two simultaneous moves on investments: taking a long position on a company’s convertible security,* while at the same time taking a short position on the company’s stock.

*Any type of security that can be exchanged for other types of securities issued by the same company – for example, bonds issued by a company that are convertible into shares of common stock.

Global Macro

Macro fund managers anticipate such events and shifts and profit by investing in financial instruments whose prices are most directly influenced by these trends. Macro funds participate in all major markets (stocks, bonds, currencies, commodities) though not always at the same time, and often use borrowed funds and financial derivatives to enhance the profit potential of market moves.

Corporate Social Responsibility

 Winners and losers when a company embraces corporate social responsibility

TABLE OF CONTENTS

Name                                                                            Executive Summary                                      Aims & Objectives                                         Literature Review

3.1.  Introduction

3.1.1.  What is Corporate Governance?

3.2.  What is CSR and the origin of CSR

3.3.  Principles of CSR

3.4.  Importance of CSR

         Analysis & Discussion

4.1.  Drivers of CSR

4.2.  CSR and Brands

4.3.  CSR  Reporting & its Standards

4.3.1.  Drivers of CSR Reporting

4.3.2.  Economic Dimensions of CSR reporting

4.3.3.  Issues of CSR reporting

         Future of CSR

         Conclusions                                                                                          Recommendations             References   

1.    EXECUTIVE SUMMARY

Corporate Social Responsibility has been a much debated and contested subject in business. This paper tries to address the ways in which current emphasis on corporate social responsibility has driven and still drives different organizations to adopt corporate social responsibility practices worldwide. The debate has however always been whether organizations follow CSR because they have a certain responsibility towards the environment they’re working for, or the motive behind their doing good to the society is essentially something else. For getting an in depth understanding of CSR, thorough research has been conducted through the literature till date. Thus this report explores an academic study and a robust understanding of CSR like what CSR means in different countries i.e. national and international as well as organizational contexts, what its underlying principles are, what are the drivers of CSR and how CSR is adopted in various organizations and eventually how CSR affects them. The aim of the report is to explore the different facets and perspectives of CSR rather than fathoming if CSR is right or wrong. This study would finally be able to give a clear understanding of the area and help anyone interested in CSR to make their minds as to what is good or bad about a particular approach. To achieve this, a number of organizations and their key personnel’s who have put efforts into developing and implementing CSR policies in their businesses are enlisted.

2.    AIMS and OBJECTIVES

The aim of this report is to gain insight on the issue of Corporate Social Responsibility in the world of business today. The main objective of writing this report is to take the readers to a new platform where they are able to differentiate whether it is good or bad to incorporate and adopt corporate social responsibility and corporate sustainability as one of the key strategies in their business agenda. I am a qualified accountant in business and an expert in Finance and business management and have been approached to throw light on the research question posed. Corporate Social Responsibility is a subject of discussion throughout the globe as the world is run by different governments, big businesses and it is the responsibility of these entities to keep in mind the impact of their activities to their environment and the society. Many books, articles, journals have been written and conferences and debates held over the issue of corporate social responsibility.

This paper examines the benefits and disadvantages of corporate social responsibility by taking live examples from the corporate world. The other main objective of writing this paper is to make recommendations to new companies looking at adopting CSR according to their needs and requirements. The idea is to gain insight on the merits and demerits of CSR activities.

In this report we highlight:

Principles of Corporate Social Responsibility and its Reporting The development of CSR- How CSR has evolved over decades Live examples from the business world  The future of CSR

The report is based on:

A detailed brief on the existing literature through books, journal articles, World Wide Web, articles, newspapers, reports and conference proceedings. We would discuss the role of government for helping improvising an environment for corporate social responsibility Internet-based research to identify concrete examples of initiatives by the government, entrepreneurs, Non-governmental organizations (NGOs), public sector officials and Institutions that set standards for corporate social responsibility and its reporting.

The kind of approach taken towards this study is qualitative and descriptive through the secondary data that has been sought and analyzed pertaining to the research question. A lot of publications had to be gone through from books to journals to newspapers to articles for the research as CSR is an enormous topic. This paper is a product and output of this research though a lot more could have been discussed and have written about but the word limit still remains deficient of the scope of the subject matter and also due to the constraint of time, I attempt to produce to you this paper in my own best possible way.

3.    LITERATURE REVIEW

3.1.    INTRODUCTION:

As the time is passing many companies are realizing the importance of maintaining ethical practice and following the accounting standards. In the recent past many companies have already come under the scanner and have been exposed for their unethical practices and lack of transparency in their accounting standards. One of the recent examples of a company coming under the ethical scandal is the case of Enron. According to Luo (2005), Epstein and Hanson, (2006) there have been an increased focus on the following the corporate governance practices due to these disclosures. The policy enforcing bodies have also become stricter and set more stringent rules for the policies that are being set henceforth.  These standards are now enforced keeping in mind the demands for disclosure from all the stakeholders, government, shareholders, and other regulatory bodies. Efforts are being made to strengthen the corporate governance by focusing on the reporting mechanism, audits being conducted regularly and having regulatory bodies to inspect the follow-ups of company’s internal processes, work culture, managing the employees and their grievances, etc. According to the study by Carroll (1999) the term CSR is quite ‘elusive’ and in the words of Carroll “the term is a brilliant one; it means something, but not always the same thing, to everybody”

Most of the literature that has been available on corporate governance and CSR has treated both as separate topics for discussion. Both the topics are very much relevant to the multinational companies and are trying to pose challenges to the companies. Adhering to these standards is one of the most challenging experience for the multinational companies. Many studies are also done by the researchers like Rossouw, (2005); Kimber and Lipton, (2005); Wieland, (2005); Welford, (2007) who have indirectly tried to link the corporate governance and the CSR activities of the company. Some researchers like Ryan (2005) have suggested that the corporate reforms and restructuring are a part of the efforts of the companies to follow closely the business ethics and realize their social responsibilities. There have been different studies conducted by Rossouw, (2005); who suggest that the roles of socially responsible investors and shareholder activism and employee relations are all interlinked to the corporate governance and the CSR activities of the companies.

3.1.1.     What is Corporate Governance?

There have been different interpretations of Corporate Governance among the companies. Over the years the meaning of the term corporate governance has widened and has covered a wider range of issues under it. According to Shleifer & Vishny (1997)

“Corporate governance deals with the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment. How do the suppliers of finance get managers to return some of the profits to them? How do they make sure that managers do not steal the capital they supply or invest it in bad projects? How do suppliers of finance control managers?”

A study by Luo (2005) and Monks & Minow (2004) have mentioned a list of people who are involved in the process and who would be affected by the company’s corporate governance and CSR activities. According to them it starts from the internal customers of the companies i.e. directors, managers, employees of the company followed by customers, shareholders, creditors, suppliers, regulatory bodies, etc. According to the study by Claessens (2003), Word Bank document, there are three different sets of relationships which the companies have to take care of. They are the relationship of the shareholders and creditors, relationship of the financial markets and the institutions and the relationship with the employees. According to Claessens the term Corporate Governance would also include the corporate social responsibilities and the cultural and the environmental aspects of the company.

The Ethical Investment Research Services, Maier (2005) has given a much broader definition of corporate governance which clearly shows the inclusion of Corporate Social Responsibility within the parameters of corporate governance.

 “Corporate governance defines a set of relationships between a company’s management, its board, its shareholders and its stakeholders. It is the process by which directors and auditors manage their responsibilities towards shareholders and wider company stakeholders. For shareholders it can provide increased confidence of an equitable return on their investment. For company stakeholders it can provide an assurance that the company manages its impact on society and the environment in a responsible manner”.

Accoriding to the study conducted by Charkham (2005) the broadening of the term of Corporate governance has made the companies take notice of many factors within the company and the surrounding environment. The companies not only need to be profitable but also need to take care of the social and the ethical aspects followed with in the company. This has become more or less an obligation for the companies irrespective of it being labeled under the CSR activities or not.

Corporate Governance & Corporate Social Responsibility 

There is some co-relation between the corporate governance and the CSR activities that a firm indulges in. As per the definitions that we have seen above, CSR is a part of the corporate governance policies of the company. But the extent to which the corporate governance and the corporate social responsibilities are related are dependent on the way these two terms are defined by any of the companies. There have been many interpretations of corporate governances and CSR among the corporate. So it’s necessary for the companies to have a clear understanding of both the terms and convey the same message across all the communication channels. However there is one common platform on which corporate governance and CSR meet. They both focus towards the ethical, social and environmental implications of the company’s policies and activities on the future activities. At present the attention of the companies towards these aspects are voluntary. The effect of the voluntary actions has been emphasized by Carroll (1999) in the study and the impact of ethical, social and environmental aspects on the business of the company. 

The interlinking of corporate governance and CSR is also dependent on the scope that a company defines. In the opinion of Deakin & Hobbs (2007) the CSR is often limited to the external issues that the companies have to address. Most of these causes are the companies are focusing on are related to the ethical issues like fair trade, environmental problems, etc. However there are a few countries in which the internal aspects of CSR are also taken care of. As per the European Commission (2003), there are few countries which take care of the internal aspects like the working condition of the employees, their issues and concerns, rights of equality within the company, equal respect to the women employees, etc.

The companies need to focus on the internal and external aspects of the CSR activities and both together would come under the corporate governance policies of the company. It’s the company who needs to decide the scope of activities that it needs to indulge in. As per the study of Freeman & Reed (1983) the stakeholder’s perspective was included to help the companies decide the scope of involvement in the internal and external CSR activities and the responsibilities that the companies should undertake. Thus the companies need to go beyond the normal objective of just profit making and try to incorporate the interest of a larger audience. The companies are compelled to broaden their focus and look at the long term benefits of these activities. Thus, the companies are also considering the interest of the people other than the stockholders, therefore taking into view the demands of all the stakeholders of the company. According to Freeman (1984) the stakeholders have been defined as, “any group or individual who can affect or is affected by the achievement of the organization’s objectives”.  Following the stakeholder’s perspective would increase the complexities for the companies. As the number of stakeholders increases, there are chances of conflicting interest and may pose challenges to the companies following this approach (Daily et al., 2003).

3.2.   Definition : Corporate Social Responsibility

Corporate Social Responsibility (or CSR as we call it throughout the paper) is a concept that has become quite familiar in the world of business today. (Asongu, 2007)CSR has become a global phenomenon and an interesting topic which continues to grab the attraction of audiences across the world like writers, analysts, governments, think tanks, non-governmental organizations, many of whom believe that CSR is irrelevant to business through those like Milton Friedman (1970) who do realize its relevance but believe that it is bad for business, to the large number of authors who believe CSR is definitely of strategic importance to business.

CSR is one of the important principles on which modern business is built. We now-a-days hear that big companies are adopting a more socially responsible behavior towards the world around, their environment, i.e. the society at large. (2007, p. 122)In the view of Visser, Matten, Pohl & Tolhurst, the concept of CSR is another name held for the belief that the ever-growing numbers of citizens have towards modern businesses, they now believe that modern businesses have a responsibility towards the society that goes beyond their obligations of generating and maximizing profits for the shareholders or financers (investors) in the firm and this responsibility of businesses is towards the societal stakeholders, to typically include employees, consumers, the community at large, government and the natural environment. CSR is an idea that does apply to organizations of all size but the focus lies only on large organizations or corporations rather than small and middle-sized enterprises (SME’s) as large firms are more visible and have more power. With power come responsibility, and thus these large corporations do become more vulnerable to criticism.

(Hancock, 2005, p. 5) “CSR as defined by Nigel Griffiths, MP Parliamentary under Secretary of State for Construction, Small Business and Enterprise, is about the way businesses account of their economic, social, and environmental impacts in the way they operate- maximizing the benefits and minimizing the downsides”. Crowther & Aras (2008) believe that every corporation has a CSR policy which is accounted in their annual report giving details of their activities and even though anyone is able to recognize and differentiate between activities that are socially responsible and activities that are not socially responsible it is not necessary that each one of us would agree on what is socially responsible and what is not socially responsible, and although we all tend to recognize this, we still do not have a common definition for CSR. Thus there are different definitions to CSR in the globalised world, though a common definition in the words of Mallen Baker, a writer, commentator and strategic advisor on corporate social responsibility and chief executive of Business Respect is – ‘CSR is a way of self regulation adopted by companies through which they are able to have a positive impact on the society.’

Also known by terms like, Corporate Citizenship, Corporate Responsibility Sustainable Responsible Business (SRB) and Corporate Social Performance (CSP), CSR is a voluntary decision taken by corporations, it is integrated into the strategic model of business in the form a self regulating mechanism that lets them monitor and ensure their adherence to ethical standards, law and international norms. Fundamentally, CSR is governed by the Triple Bottom Line (TBL) i.e. People, Planet, and Profit. By incorporating CSR policies, businesses embrace their responsibility towards the environment, consumers, employees, stakeholders, suppliers, communities and the other members of the community, and contribute to their social obligations by promoting and encouraging community development and eliminating the practices that harm it.

(Baker) In the view of Baker, we would now look at what CSR is perceived as, by the different societies across the world. In the US, CSR is defined in terms of a philanthropic model. In Philippines, “CSR is about business giving back to the society”. The European model of CSR is more sustainable as it focuses on operating in a socially responsible way complemented by investment in communities. (2005, p. 7) According to Lord Tim Clement-Jones CBE, Chairman, DLA Upstream, there exist three views in which CSR is defined i.e. a skeptic view, a utopian view and a realist view.  CSR is looked at critically in the skeptic view, Milton Friedman.

 (Visser, Matten, Pohl, & Tolhurst, 2007) The most comprehensive definition of CSR is given by Archie Carroll (1979) which included: “the social responsibility of business encompasses the economic, legal, ethical and discretionary or philanthropic expectations that society has of business at a given point of time.”  (Crane, Matten, & Spence, 2008)Whilst Carroll’s definition of CSR is arguably the most commonly cited definition, it remains contested, and the heterogeneity of CSR definitions has continued to be apparent. Thus different writers rather than defining CSR on the basis of responsibilities, seek to include definitions based on the different opinions on CSR evident. An example to include is a definition by Matten & Moon (2004a) which says that “CSR is a cluster concept which overlaps with such concepts as business ethics, corporate philanthropy, corporate citizenship, sustainability, and environmental responsibility. It is a dynamic and contestable concept that is embedded in each social, political, economic and institutional concept”.

Another very aptly put definition of CSR- (Visser, Matten, Pohl, & Tolhurst, 2007, p. 123) “CSR is all about performance in a variety of social and environmental topic areas that usually embrace issues such as philanthropy, diversity, socially responsible investing, human rights, business ethics, environment, workplace issues, sustainability, corporate governance and community development”.(More definitions are given in Appendix 1)

Origin and Growth of CSR

CSR has been around for 50 years now. Rather more pertinently, CSR has been there ever since commerce began. (Asongu, 2007) “While some authors do believe that CSR is a relatively new concept, CSR is perhaps as old as business itself and in some societies one cannot do without being socially responsible”. (Lord Tim Clement-Jones CBE, 2005) Though traditions of corporate philanthropy date back to the Victorian Era where Quaker companies like Cadbury’s, Rowntrees and Hershey’s always worked towards improving their employees’ standard of living along with developing the communities they lived. (Henriques, 2003) In the seventeenth century, the East India Company’s concerns about their excesses were also commonly expressed. Thus it is seen that CSR was carried out in a paternalistic form where it was initiated by the owners of the firms, while if we see today CSR is practiced by corporations that owned by the shareholders and run by employed managers.

Though CSR in not a new phenomenon, it has been under much retrospection over the last decade. Much has been talked about and written about CSR. We would be now taking a look at how the

Government’s Role in CSR:

(Visser, Matten, Pohl, & Tolhurst, 2007) CSR now-a-days is not only a topic for the business community, but the governments too are progressively getting involved in promoting and fostering CSR, like most notable UK government with its CSR Minister – Nigel Griffiths, and the European Union with its White Papers and the recent European alliance for CSR. As already earlier stated that CSR is fundamentally about good business, to achieve this bottom line it is the government that comes into the picture. (Hancock, 2005)In the view of John Hancock, “the role of the government is essentially to provide the right conditions and policy frameworks so that the contribution of business is maximized. This regulatory framework devised by the government forms the baseline for corporate behavior, while CSR is what companies adopt voluntarily to raise their performance beyond minimum legal standards. Therefore governments are those entities that set decent standards or codes of conduct while stimulating companies to raise their performance beyond those levels”. (2008, p. 11)For example, in issuing the US Apparel Code of Conduct, the US government provided a regulatory basis for CSR in overseas supply chains.

(Crane, Matten, & Spence, 2008, pp. 10,11) The other role of Governments or the public sector is itself being socially responsible in their undertakings. In most industrialized or developed countries, it is seen that governments are responsible for 40 to 50 per cent of the Gross Domestic Product (GDP) as governments in these countries still supply a large number of goods and services themselves. Furthermore, given the size of public bodies and their agencies, it is believed that the demands for CSR are more pronounced and are likely to have an impact on the society which is far greater than the impact of a large corporation. Thus accordingly governments are also expected to operate in a socially responsible manner as the corporations. More and more they’re also facing similar environmental as well as social demands for more responsible, accountable and transparent behavior. And hence many of CSR ideas have been developed and implemented by governments across the world. Thus there has been a steady rise in social reporting and auditing, by these public bodies. An example is of a publicly funded UK media organization, the BBC that now publishes an annual CSR report.

(2008, p. 11)Another role that governments are playing is that of multipartite initiatives to expand and extend CSR, such as the UN Global Compact, which is a set of principles issued by the United Nations for voluntary adoption by corporations globally. We would discuss about the role of UN Global Compact in detail later in this paper.

3.3.    Principles of Corporate Social Responsibilities:

Many companies are adapting to the CSR idea and are involved in some activities that they consider to be CSR. However there has been a lot of uncertainty the has surrounded this term and its necessary to have a clear idea to be able to measure it later on. According to David Crowther & Guler Aras, there are three main principles of CSR. They are Sustainability, Accounting and Transparency.

Sustainability

As the word sustainability suggests, sustainability is all about the decisions taken at present in a company and its impact on the future. Sustainable development is both possible and desirable by most of the companies. So, firms should make a conscious effort to invest in technology and in development towards the society. As per the study by Zwetsloot (2003) every company needs to continuously invest in technology and be actively involved in continuous improvements and innovations to be able to have sustainable development. 

A detailed study is done on sustainability and published in the Brundtland Report published in 1987. As per the Brundtland Report the sustainable development has been defined as

“Development which meets the needs of the present without compromising the ability of the future generations to meet their own needs.” 

As per the Brundtland Report there have been other report formats also that have been developed and the concept of Triple Bottom Line has evolved from this report. Most of the companies now consider that focusing on the economic, social and environmental aspects is sufficient for the companies to sustain themselves. However, in the present scenario these three parameters under Triple Bottom Line are considered to be insufficient and are not accepted to be the only aspects to sustainable development. The study by David Crowther & Guler Aras has redefined the components of sustainability. First parameter is societal influence, which is defined as the measure of societal impact on the companies, stakeholders influence and their future actions. Second, is the environmental impact, which considers the influence of the company’s decisions and actions, taken at present on the surrounding environment. Third, is the Organizational culture, which is defined as the relationship of the company with its employees and other internal stakeholders. The fourth and final parameter that is used to ensure sustainability of the organization is the financial parameter. This is defined as the amount of return that the company generates for the investment that they have done and the risk taken by the company. All these parameters ensure a fine balance between sustainability and sustainable development of the company.

Accounting & Transparency

There is a great emphasis on the ethical aspects of the company and this in turn demands the company to be accountable to its internal customers i.e. employees, its external employees and the stakeholders. Businesses attempts to maximize profits as their first and foremost goal, however now days companies cannot just stop at that. They have to focus on the ethical and the social factors also equally and ensure the they maintain transparency in their accounting systems and the policies that they follow in the companies. According to the study by Crowther, David (2005) ethics is a natural and structured process of acting in line with the moral judgments’, standards and rules. As ethics is a very subjective topic is it difficult to define it accurately and its implication for each and every company could be different. Companies need to follow business ethics and need to maintain a certain standard, as the companies who don’t follow ethics and don’t maintain honesty would be far away from achieving their goal and keeping their stakeholders satisfied (Aras, 2006). Most of the consumers believe that the companies which maintain the ethical standards are having more open accounting standards and are transparent in their processes. Accountability of such companies is considered to be much higher than the other companies.

There are four main imperatives that the companies need to pursue while practicing the CSR. They are maintaining the minimum legal, economic, ethical and philanthropic aspects that are expected by the customers and stakeholder.

3.4.   Importance of CSR

There has been extensive research on Corporate Social Responsibility and the all the aspects and roles where the organizations could be benefited. Many great scholars and researchers have quoted CSR to be one of the firm’s strategies to derive benefit from its customers, ultimately resulting into the gains or profits for the companies. In the opinion on Michael Porter (Michael E. Porter & Mark R. Kramer ,2002) CSR and related philanthropy is a major source of deriving competitive advantage from the consumers and finally helps the firm’s bottom line. Most of the researchers have felt that this link, could be helpful for the companies to make a positive impact on the customers, employees and suppliers to a certain extent. As per the study conducted by Daniel W. Greening & Daniel B. Turban, (2000), CSR could also help the companies to attract better and high quality talent as their future employees. According to Peter Navarro (1988), corporate indulge into CSR as a part of their brand building exercise, to increase its visibility in the eyes of the investors and other stakeholders, to appeal to a wider set of customers, to spread good will of their brand name in the market, etc. As the times have changed where all the stakeholders demand a greater amount of transparency and visibility in the system, most of the corporate have started becoming open about the CSR activities that they indulge in and advertise them too. This has helped the firms in gaining public attention and subsequently gains. The firm is undoubtedly benefited in one way or the other; however this is not the focus and the main reason why they should indulge in CSR. The firms should have strong faith in the act of doing well, not just for themselves and their immediate intermediaries but all the stakeholders of the firm. Evaluators should also consider the good that these firms are doing towards and society and not just focus on the profits incurred by the firms. Over the period of years all the organizations have realized the necessity of CSR being an integral part of their corporate philosophy. Many studies have supported and emphasized the role of CSR benefiting the company also though the focus of the company may just be to help the society at large.

4.      ANALYSIS & DISCUSSION

Now that we are aware of the basic principles of CSR and its basis let us try to understand the basic drivers of CSR, for companies to adopt CSR practices.

4.1.  Drivers of CSR:

The catalytic forces of the Exxon Valdez oil spill, Shell’s Brent Spar oil spill and (Reis, Dayr; Betton, John; Pena, Leticia, 2004, p. 5) the hanging of Ken Saro-Wiwa, the writer and champion of Ogoni rights in the Niger Delta were the main causes that ignited the Corporate Social Responsibility movement.  The forces that are driving CSR today are essentially due to the overwhelming shift in the interaction of the state, the individuals, and the market. The core drivers of CSR are the growth in stakeholder expectations, the responsibility for the supply chains, the diminishing role of the state and the increasing pressure from the shareholders. (2004, p. 1) An article by Reis, Betton and Pena indicates that stakeholders of businesses that are affected by the management’s decisions have come into the mainstream by voicing their ever growing interest in the workings of the corporations and is forming different stakeholder groups which include employees, consumers, activists, community members, shareholders. Also chief executives and politicians both are recognizing that their good relations with their own as well as other countries would determine their future environment. They have realized the benefits of an open country and are thus involving stakeholders in its decision making process as well as are being accountable to them.

(Mr. Doug Miller, 1999) According to the survey by Environics’ Millennium on Corporate Social Responsibility conducted on approximately 25000 citizens from 23 different countries found that 20 per cent of consumers were content and suitably rewarded or fell short and therefore punished by the companies based on their perceived social performance, also the majority of them wanted that companies should highlight their social and environmental goals rather than their economic goals. (Ltd., 2001) It also reported that companies that did not address social responsibility held their market share at risk.

Another driver of CSR is the shrinking/diminishing role of the state, and it is also linked to the growth in stakeholder expectations. (Ayres, 1997)Political theorist Jeffrey Ayres comments “globalization, by weakening the powers and capacities of the state to intervene in traditional areas of social, political, economic, and cultural concern, has in turn reduced the attractiveness of the state as the locus for dissent”.

The basic drivers for propelling the CSR practice in the companies are as discussed below:

Maintaining Quality Employees:

It has become an essential factor for all the companies to retain their employees and maintain a certain quality of the employees. Most of the companies are finding it difficult to manage the attrition rate of their companies as employees are opting for companies that have better social visibility and are actively involved towards the betterment of the society. According to a survey reported in International Business Report (IBR) in 2008, most of the companies cited employee retention as one of the major drivers for CSR activities. The companies have indicated this factor as a driver for CSR across a wide range from 53% being the factor for countries in Hong Kong to 89% in the companies located at Denmark. While some employers in certain countries face the problem of skill shortage, while in other countries there is a major problem to retain the employees.

According to Moller, Jan Hetland from Grant Thornton, Denmark

“Business ethics is a key factor for recruitment and retention in Denmark’s tight labour market. Privately held businesses ignoring CSR issues are facing future skills shortages that will threaten their global competitiveness.”

Denmark is considered to have the lowest rate of unemployment.

Managing Cost:

It is necessary for every country to manage its expenses and try to reduce the costs whenever possible. One of the ways of keeping the company expenses in check is by maintaining good quality standards and following the standard operating procedures. In today’s competitive world managing the levels of carbon dioxide emission in the environment would also save a considerable cost to the country. More than 50 % of the countries responded this driver to be of foremost importance to indulge in CSR activities. More than eleven countries have rated cost management as the most important driver for CSR activities. Brazil and India are among the top two countries with 89% and 85% respectively for cost management as the most important driver.

Brand Building

Many companies believe that indulging in CSR activities would bring a lot of fame to the companies. This can go a long way in promoting a company’s brand name and thereby helping the company in brand building exercise. It has also been noted that the attitude of the people changes towards a company if it indulges in any CSR activities. 56% of the countries considered positive attitude and brand building to be an important driving factor for CSR. In some countries like Mexico and Greece, this is the driving factor for a company to indulge in CSR contributing to 85% to 89% while in countries like France this factor contributes to only 27% among the drivers. It is interesting to note that brand building is a drive which comes after employment and cost management for most of the companies. This implies that companies are moving towards ethical practices for employee welfare and cost management and giving more importance to these aspects than public image and brand building of the company. A contrasting factor is that as the companies expand and move towards global markets, brand name and public opinion would matter much more than for the smaller companies.

Tax benefits

 Many countries believe in indulging in CSR activities for tax relief. Tax benefits were cited as the largest incentive any company could get in countries like Brazil and Vietnam. Many companies who would like to be publicly listed have to maintain transparency in their taxations and have standard employment practices. In Brazil this is prerequisite for any company to have public listing, which is desired by most of the companies.

Investor relations

Some countries consider maintaining investor relations as an equally important factor and in an effort to do so these companies comply by the ethical business practices. It has been seen that Vietnam is one of the countries which gives Investor relations considerable importance as compare to other countries. Most of the emerging countries like India, Philippines, Brazil, Turkey are giving importance to investor relations. About 60% to 70 % of the respondents in these countries consider it to be a driving factor for a company to invest in CSR activities. These countries believe that it’s the investors who would help the company to expand, would give the necessary boost to the company to compete with the competitors and to make necessary reforms in the company to meet the changing needs of the customers.  However, this is not a very strong drivers for other countries that already have a established network and have managed their companies for a number of years.  For the developed countries like Singapore, United States, countries of Europe and Japan this is a very mild factor and only 10 to 25% of the respondents of these countries have mentioned Investor relation to be a factor for the companies to indulge into CSR activities.

Government pressure

Many countries are realizing the importance of the pollution that is being caused by the companies and the amount of destruction that these countries are causing to the world and its environment. Government is also stepping in actively in many of the countries and is taking the initiative to reduce the carbon emission from the companies and involve themselves in activities that nullify their effect of carbon emission.

According to Dato’ Narendra Jasani from Grant Thornton, Malaysia

“Private businesses in Malaysia are being forced to change their products and services to reduce their environmental impact. Businesses satisfying the global demand for more ethical production and delivery are best placed to capture the rapidly growing market generated by discerning consumers and multinationals.”

Saving the environment was considered to be a driver in only the emerging countries like Brazil and India, where nearly 75 to 85% of the respondents mentioned this to be a factor. However in developed nations like United States only 21 % of the respondents mentioned the environment to be a driver.  Government pressure to ensure the standards was the least motivating factor among all for the countries. Less than one third of the respondents of the developed countries mentioned government to be one of the factors for the CSR activities that the companies engage in. Though the impact of government pressure is less, it should try to increase its efforts to ensure that maximum companies comply with the standards and adopt the CSR activities.

Some of the causes in which companies commonly invest under CSR are as listed below

Donating to good causes Diversity/equality in the workplace Flexible working Waste management and energy efficiency Global Warming Animal adoption Children’s Hospitals Children in Need Arthritis

CSR Segmentation Map

According to an interesting report by Monitor (2001) on Corporate Social Responsibility, the CSR companies could be classified into two different categories according to the activists with two distinct opinions of looking at the corporate. The developed countries have higher inclination towards social and environmental causes and have taken many CSR initiatives.  One group of people who belong to the Conventional Activists believe that every company should fulfill all their operational activities and  responsibilities in their normal course of business like taking care of their employees, following processes that are environment friendly, etc. The other group of people i.e. Social Activists, believe that companies should go beyond their normal operational processes and should take active initiatives in social, environmental and ethical issues. For the social activists it’s much more than the operational responsibilities that the companies need to fulfill while for the traditional and conventional and traditional activists fulfilling the operational responsibilities is of utmost importance.

High expectation for operational responsibilities

Low expectation for operational responsibilities

High expectation for Citizenship Responsibilities

Low expectation for Citizenship Responsibilities

Traditional

Conventional

Social Activists

High level of Action

Low level of Action

4.1.1.     Benefits corporate have over non-governmental organizations

Most of the researchers conclude that the corporate do get benefits from the CSR activities that they carry out. Irrespective of the objective that a company sets out for their CSR activity, they are bound to benefit and gain higher profits either directly or indirectly. Some companies may only take up CSR activities for the benefits of the society at large. One question that could arise in our minds could be – who exactly is the beneficiary of the CSR activity in the company. It could be the consumer, shareholder, employee or the top management or it could also be all of them.  Let us now see the benefits that the corporate would gain and the competitive advantage that they garner by indulging in CSR activities.

Below, we consider several of the most important competitive advantages corporations are likely to have in the market for altruism: using economies of scope to lower costs of delivering public goods, bundling charitable and regular goods to reduce free riding, using diversification to tailor public good delivery to market demand, reducing agency costs through competitive pressures, and providing positive network externalities in warm glow.

Economies of Scope.

 Most of the corporate try to offer better products and large bundle of benefits to the producer. Most of the corporate are already present in the business of that particular and have an established set up in terms of factory, supplies, manufacturers and the latest technology to develop the product. This helps the companies to have economies of scale and can offer the same product at a much more competitive price as compare to others who newly try to enter into this product or government organizations and non-profit organizations who don’t have prior experience in that product. The basic reason for this is that, companies that are already in the business of a certain product would have the expertise and could have higher efficiency for procuring the best raw materials and at the cheapest available price also greater efficiency would be maintained during the manufacturing process, better technology for packaging and other processes. Thus companies having higher efficiency would save a substantial amount during the manufacturing process. This benefit can be passes on to the consumers also. As per the study conducted by researchers, many of the corporate are already enjoying these benefits due to the economies of scope.

A very good example as cited by the researcher is the case of Starbucks. Starbucks already has a well established network and fleet of outlets through which they can offer coffee produced by the farmers in far-off places and in developing countries a fair chance to sell their products and follow all the Fair Trade standards. The premium that is charged by the consumers is utilized towards the development of the producers in every respect and provides them an opportunity to develop themselves, have better working conditions, avail the basic facilities for the production and develop schools and other educational institutions to increase the literacy levels of the people in the developing country. The premium that is offered to the producers and the minimum rate that the retailers agree upon to pay the produces as per the Fair Trade Standards would be much higher if offered by a brand that is already having its business in the same line of product than government or other non-profit organizations trying to help these producers. Starbucks would not need to invest any additional amount in setting up a distribution channel as they already have a very efficient distribution model in place. However some part of the premium that is collected by the government or other non-profit organizations would be needed for investing in the distribution channel. The premium that Starbucks are able to charge for such products is more than double that of their competitors. This benefit is directly passed on to the producers. This is one of the ways to motivate the farmers to work hard and produce better quality products with an incentive to receive welfare for themselves and the society around them in terms of better education, medical facilities, infrastructure, better quality raw materials and equipments to enrich their experience and improve their quality of life. Starbucks may or may not be earning any monetary profit by offering such products under their product range, but the good-will that they create thru such CSR activities in minds of the consumers and the ‘feel-good’ factor that they are able to generate in the minds of consumers, shareholders, employees and others by offering such products is immense. It’s only due to the economies of scale that they are able to facilitate the producers with an aid of such magnitude.

Bundling

Most of the corporate have the advantage of already having an established product line. The corporate can bundle two products or can offer two different services by combining both of them and this would result in benefiting the consumers as well as the producers.

The corporate bundle the products in such a way that they would be offering higher product values to the consumers at a lower price. If any consumer would have to buy the product individually they would have to pay much more than the amount that they pay as in the case of the bundled product. The bundling effect enables the consumers to indulge in some charity activity along with having their regular product and this combination turns out to be inexpensive for the consumers. Most of the companies follow one of the two strategies for bundling the product. They either bundle the products with low value to the products with higher value or bundle a subsidiary product to enhance the value of the main product.  Companies generally bundle products with a very high demand and that with less demand together. This ensures that the products with low demand are also sold due to the demand for the other product. Consumers would opt for these bundled products as the overall cost to the consumers for a bundled product is much less than the individual prices of the products. Continuing with the Starbucks case, they offer a product complying with the Fair Trade standards. This product, offered at a premium to the consumers, apart from providing coffee of a different style also combines an opportunity for the consumers to donate towards the development of the underdeveloped. If any consumer would have tried to have both the products individually, it would have cost him much more. As suggested by Geo. L.J. (2005), the bundling effect enjoys the benefits that the companies derive due to economies of scope. Thus the consumers enjoy more of the services or products keeping the price as constant. From this it can also be inferred that bundling changes the relative price of the individual product.

Studies conducted by Henderson, M. T, et.al.  (2009) indicates that it’s due to the economies of scope that the companies benefit so much and are able to pass on the benefits to the consumers. This is overall helping to reduce the free riding on other consumer’s contribution to the public good.  

Diversification:

The corporate are generally have the tendency to follow consumer the consumer centric approach and make sure that the product is accepted by the consumers, if required by modifying the product and customizing it to suit their needs. This enables the companies to generate the required profits and sustain themselves amidst competition. The same policy is adopted by the companies in case of the CSR activities also. The non-profit organizations and government when indulging in CSR activities only focus on the good for the society and let go the profit that they could derive from their activities. Government and non-profit organizations, beyond a point cannot customize their products or diversify into other related products to serve the customer needs as they lack the experience that corporate would have. This would also ensure that the companies have a competitive advantage for these products over their counterparts. Also taking an early initiative for a certain product category would also ensure the company of the first mover’s advantage. Most of the companies can also choose from the cause that they would like to support and which would be closely related to the existing business line of the companies. There is a plethora of causes that could be supported. The researchers have indicated that most of the companies that indulge in CSR have taken up to support the causes like providing the basic facilities to the developing nations, basic infrastructure, medical aid, ensuring sufficient nutrition by providing quality food etc. The consumers also would get a larger choice of products to choose from as different companies are involved in different CSR activities.  The company’s focus on these products just as they focus on any other product of their company. This focused approach ensures that the quality of the product offered does not suffer in any respect. The competition in these products among companies is also very healthy, ensuring that the consumers get the best of the products at competitive rates. As there are and more companies are entering into the CSR the companies would need to not just keep track of what they are offering the customers, but also of what they are unable to offer these customers. These products also compete among themselves for the market share and profitability of the company. If every firm decides to contribute in one way or the other by diversifying their product range a large number of products would be available to the customers to choose from and would do a lot of good to the overall society.

Agency Costs :

Most of the non-profit organizations and the charitable trust collect the donation amount from most of the donors and allocate a certain percentage of these funds for the general administration of the organization and the expenses of the employees. As these organizations are not oriented towards making profits from the services that they offer, these organizations are not self sustaining. So a part of the donations is naturally devoted towards their requirements. However in the case of profit making companies, they are already self sustaining and are not dependent on the sale and profits of the CSR activities to cover their daily expenses. Also as they are focusing on the profits that these activities generate, they are better equipped in sustaining themselves. Most of the customers and other stakeholders who invest in the development of the society would like the amount to be best utilized and be assured of it reaching the right hands. In case of the companies, they are already being scrutinized by different organizations and institutions for each and every activity they do. So, the CSR activities details would also be scrutinized and they would ensure that there is no lapse in the funds being utilized judiciously. The stakeholders and consumers can demand a number of requests for disclosures increase the transparency of the accounting system followed in the company. Such restrictions and demands cannot be made in the case of non profit organizations and government organizations. In case the companies do not follow the set standards, the company could get into many legal hassles. To avoid this most of the companies follow the accounting and reporting standards and maintain a high level of transparency in their records by having regular reporting and audits of their processes.  As per the study by Theodor Baums et al. (1994) there are many reasons to choose the corporate.

Most of the nonprofit organization work with the objective of doing good to the public, but have been on the receiving end of a lot of criticism from all the direction due to lack of standard rules and regulations that are followed by them. Also according Ron, Nixon (2008) most of these charitable organizations lack accountability. Greenlee, Janet suggests that these organizations are not governed properly, which ultimately would be the reason for a lower amount of utilization of the funds towards the cause and more of it being wasted towards administrative and other expenses. As these intermediaries are reducing the benefit being transferred to the needy, the corporate channel is a much more efficient way of transferring the same in all respects. Thus, the corporate are a better choice to directly provide the benefits to the society than the charitable organizations.

Network Effect

Most of the corporate are already having a well established network and channel and could easily continue this CSR activity through the same channel. This would considerably reduce the investment that these companies would require for the distribution and to provide the necessary reach to the products. Companies can also take advantage of the scale of economies that they have and the wider access to the market that they could provide as compare to the charitable organizations. The companies could focus on improving their efficiency and profitability as they are disclosing their investments and returns and profitability of the activities in the reports that they generate periodically. This is one of the major incentives for the corporate to improve their existing processes, as the results are visible one and all.

4.2.   Brands following CSR in practice

Many companies realizing the importance of CSR activities are indulging in CSR activities, not just as a side function, but have tried to make it an integral part of their business strategy and marketing campaigns. The companies have already taken up CSR initiatives on a large scale and have scaled substantial heights.

Many big brands are following the corporate and ethical practices. Let’s take an example of some of the famous brand names known all over the world, and understand the CSR practices that they follow. A cause supported by one of the MNCs is the monitoring of working conditions in factories in developing countries by clothing and footwear manufacturers. After negative press coverage exposed Nike’s use of factories with unsafe conditions and employment of children, consumers demanded better working conditions for workers in developing countries. 81 The government or nonprofits could have been used to satisfy this altruistic demand, but the most efficient mechanism for delivering this public good was through a for-profit corporation.

Many companies have altered their product offerings or innovated in such a way that the new product that is offered is more focused towards a sustainable environment. The hybrid car that is developed is an example of such innovation in the automobile industry.

The hybrid cars enjoy the benefits of economies of scope that the companies already have. As per the changing demand of the consumers with respect to the environment and the other social or cultural aspects, the company is customizing their products and is producing new and innovative designs that is more environment friendly and are more acceptable to the changing taste of the consumers.85 Hybrid car is a unique combination of bundling a fuel efficient car with appropriate investment by the company in technology and research work. Here the company uses the bundling of two services or products to maximize the benefit to the consumers and the company. The consumers can consider buying such products and donating a part of the amount towards the research and development activities. They benefit that the customer would get would be much more as the combined price of a hybrid car with fuel efficiency and donation towards the cause would be much more than the amount the consumer has paid for the bundled product. The premium that is charged for the hybrid car can be used for any cause, in this case being for research. This additional cost can be best utilized by the companies that are already into the field of manufacturing the cars, than the government or the charitable organizations, who would have to set up the facilities and make a lot of investments before being able to pass on the benefits to the producers. 89

CSR Initiatives by McDonalds

Many big brands have realized its responsibilities and have supported different causes under its CSR initiatives. Let’s see some of the brands and the CSR initiative taken by them. McDonalds is a very famous and well known brand name across the world and has taken several CSR initiatives. These initiatives have helped different causes in different ways.

Cause Promotion

Cause Related Marketing

Social Marketing

Corporate  Philosophy

Community Volunteering

Socially Responsible Business Practices

Description

Supporting social cause through promotions, to raise funds increase awareness, volunteering

Donating a percentage of revenues to a specific cause, based on product sales

Supporting

behavior change campaigns

Making direct contribution to a charity or cause

Providing voluntary services in the community

Adapting and conduction discretionary business practices and investments that supports social causes

Example

McDonalds sponsored the Olympic Youth Camp program held in 2000 in Sydney, Australia

McDonalds earmarked 1$ for children’s causes from sale of Big Macs and other items on World Children’s Day, November 20, 2002

McDonalds promoted timely childhood  immunization

Ronald McDonald House offers places to stay for families with seriously ill children

McDonalds provided means for professionals and volunteers on September 11 disaster site

McDonalds changed to recycled- content packaging and reduced packaging material

* Source: Kotler, P., & Lee, N. (2005), “Corporate Social Responsibility-Doing the Most Good for Your Company and Your Cause”.

4.3.   CSR Reporting and its Standards

The essence of responsibility is accountability or reporting. CSR reporting practices are more prevalent in countries like Japan and UK

As we have already discussed the nature of CSR and how it can prove to be profitable for businesses, we would now be discussing the most important part of forming an effective CSR strategy. Though companies today are aware of the fact that they should start acting on their CSR agenda, still a number of questions like what should companies decide to do and what approach to take for the development of an effective social responsibility strategy, leaves them perplexed.

CSR has been developing at a fast pace and along with it are the increasing number of frameworks and codes that surround it. These frameworks and codes have delivered a variety of guidelines and approaches that are different for the diverse businesses operating in the globalized world. On one level, there is a proliferation of individual company codes of conduct and company value statements which outline the standards of functioning for their employees as well as suppliers, while on a broader level, there is an assortment of external auditable standards which allows companies to counter and gauge their commitment to social and environmental responsibilities.

There is a rise in the various governmental as well as non-governmental organizations (NGO’s) along with businesses that have constructed a series of frameworks or guidelines that companies can follow to seek, and measure their commitment to socially responsible business practices.

This section focuses on the different types of codes and guidelines for developing CSR strategies. (Leipziger, 2003, p. 36)In his book, The Corporate Responsibility Code Book, Leipziger has identified a scale within the CSR field that runs from values and principles to codes of conduct and norms to standards. Values and principles are the internal character of an organization that determines and gauges its workings while codes of conduct provide a set of rules of the action and behavior which are scrutinized internally in an organization. (Burchell, 2008, p. 120) ‘In contrast to both values and principles and codes of conduct, standards have a far more expansive purpose applying broadly across geographic regions and industry sectors. In this way they are not solely the realm of an individual company or indeed the business sector itself, but become a more broad-ranging, consensual multi-stakeholder process’.

We would first be looking at what Codes of Conduct are and what their main purpose is. Codes of Conduct are essentially guidelines to the internal stakeholders of a firm which clearly define what the

A contract is a law between the parties, which can acquire force only by consent. It is the consent that makes the law as between the parties, conveyed in the legal instrument called contract agreement. Agreement takes the place of the law because it is the express understanding of parties superseding such understanding as the law would imply. Contract documents are complementary and mutually explanatory; what is called for by one is as binding as if called for by all. They are to be read in conjunction with other parts of the document and shall be construed in accordance with the laws of the State.

It is the intent of the contract documents to describe a functionally complete project to be constructed in accordance therewith. For instance any reference to standard specification, whether such reference, be specific or by implication, shall mean the latest standard specification in effect at the time of tender submission. If said standard specification, is amended, revised or otherwise changed subsequent to the tender submission, the contractor shall notify the engineer who may direct compliance under this clause. Most construction contracts use standard terms and have other special or bespoke terms supplementing them, particularly bill of quantities, specifications, and drawings. In these circumstances, the bespoke terms will prevail over the standard terms, unless the printed terms clearly stated otherwise. The reason is fairly prosaic, namely that the courts will give effect to their words which the parties have chosen for their contract.

When there is an inconsistency which can not be reconciled, then the earlier clause will prevail over the later one. The whole idea of this ruling is to avoid disturbing their obligations through the addition of later wording. This is in accordance with the doctrine of repugnancy where the courts will not give effect to a term of the contract if it is repugnant to the primary obligation as set out in the contract documents. However the better view today is that the parties should construe the contract as a whole and deal with the inconsistencies on their individual merits.

It is ambiguity that usually invites interpretation. Ambiguity is defined as capable of bringing more than one meaning when viewed objectively; be them “patent ambiguity” resulting from the language of the contract or “latent ambiguity” when the language is applied to a factual situation.  Conversely, however, contractual language is unambiguous when it has a definite and precise meaning, unattended by any danger of misconception in the purport of the contract itself. In all cases the contract documents are read together and the engineer shall instruct what is to be applied. Equally if matters of interpretative doubt exist between the general conditions and conditions of particular application, it would be the conditions of particular application that take precedence since they have been amended to suit the particular contract. Whenever an ambiguity or discrepancy is identified at the time of tender, which is readily apparent on the face of the documents and should have been capable of identification and clarification, the matter should be cleared with the engineer. Proceeding to a contract with a known and recognized ambiguity is to invite contention and probable loss on the part of the contractor. The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other.

The engineer shall make his own interpretation based not only between two documents but also within documents. If the contractor can demonstrate the existence of the ambiguity or discrepancy, which he could not foresee at the time of tender, he ought to be reasonably compensated. Because the ambiguity is of a latent nature and it will thus not have been possible to resolve at the time of tender, then the engineer is required to certify the contractor an additional sum as may be reasonable to cover such cost actually suffered. Accordingly, the criteria that influence the admission of such cost into account are therefore threefold; whether such cost has been incurred in the opinion of the engineer, the contractor could not anticipate the cost and the contractor had a valid reason not to anticipate such cost. The engineer is usually empowered to decide on the extent of the contractor’s capacity to foresee any ambiguity and thereby the cost effect on the contract. However, the tender shall be deemed to allow for the requirements of the tender drawings, specifications and bill of quantities, all of which form part of the tender document. In the event any discrepancy between the details of drawings and the descriptions in the specifications or in bill of quantities is found, then such items shall be deemed to have been priced in accordance with the description of the bill of quantities, unless stated otherwise.

Court is not generally entitled to ‘go behind’ the contract to determine the parties’ intentions but within the four corners of the contract. Court is not generally entitled to have regard to extrinsic evidence in determining what the parties’ true intentions were. What this means is that documents, correspondence, draft agreements or discussions during the course of negotiations cannot be relied on to ascertain the parties intentions and therefore the parties’ obligations, unless the parties have expressly adopted those documents as forming part of the contract. The usual argument from the employer that the contractor should have reasonably assumed a fair projection on price increases beyond the original contract completion so that the price quoted for should be comprehensive enough to include a certain period of extension can be considered as a pure subjective interpretation that goes beyond four corners of the contract. There are exceptions, however. For instance the time is of the essence meaning that any violation of deadlines will amount to a breach of contract. “Time is of the essence” can be presumed in some contracts but typical construction contracts are not in essence of time since the failure to meet scheduled completion does not invalidate the contract or is not the sole reason to terminate the contract.

In commercial contracts the parties usually intend the works to be completed by an agreed date. In many contracts the date for completion will be stated as an express term. The term “time at large” is not a legal term, but describes the situation where there is no identified date for completion, either by absence from the contract terms or arising from events and the operation of law. Time is said to be “at large” because the time or date for completion is not fixed before carrying out the work, but determined after the work has been completed. 

Some contracts contain ‘an entire agreement clause’ which states the parties’ intention that the written documents comprising the contract record the whole agreement between the parties. These clauses are generally taken as conclusive evidence that the written document represents the entire agreement between the parties. The provision of a geotechnical report at tender stage by one party and reliance on it by the other is an example. If the geotechnical report provided by the engineer is included in the contract documents; the contractor has relied on the report; and the report is incorrect in its description of site conditions, then the contractor will likely be able to rely on the latent condition provisions in the contract where conditions differed from those stated in the report. If the report did not form part of the contract documents the contractors claim may be much more difficult.  Another example is where a document has been provided to define the scope of works and the contractor has priced and tendered for the work accordingly. Problems often arise when a number of documents (including plans and drawings) are provided but only some are specifically incorporated into the contract as contract documents. If the contractor has priced the job based on non-contract documents and those documents are inaccurate or inconsistent with the contract documents, then the contractor may be left without any recourse.

Construction contracts set forth the rights and obligations of the parties when conditions encountered during the performance of the work differ from those which were envisaged at the time the parties entered into the contract. The three most common contractual provisions we often come across are the “differing site conditions” clause, which creates a right to claim; the “site investigation” clause which limits the right to claim; and the “disclaimer clause” which attempts to prevent any claims. The concept of “foreseeability” has been used for over a century as a legal test for liability. It is a concept used to limit the liability of a party for the consequences of his or her acts to consequences that are within the scope of a foreseeable risk, which of course embodies a subjective standard, ie the way the engineer decides. The test of entitlement is foreseeability, i.e., that which is foreseeable by an experienced bidder does not qualify whereas that which is not, and which was not actually foreseen, does.

The issues related to letter of intent are many. Letter of intent is a statement of intention that outlines an intended agreement between two or more parties.  Letters of intent can be used for a number of purposes; as a ‘comfort’ letter, that without more will not form any type of contract or as a preliminary contract between the parties. The function of letter of intent may even go up to the extent of a commencement order. In determining whether or not the letter should be construed as a binding contract, we must keep in mind that the ‘primary test as to the actual character of a contract is the intention of the parties, to be gathered from the whole scope and effect of the language used, and mere verbal formulas, if inconsistent with the real intention, are to be disregarded. It does not matter by what name the parties chose to designate it. But the existence of a contract, the meeting of the minds, the intention to assume obligations, and the understanding are to be determined in case of doubt not alone from the words used, but also the situation, acts, and the conduct of the parties, and the attendant circumstances.

Hence, the person interpreting the contract should give effect to the literal meaning of the words.  The “rule” that words must be given their ordinary and natural meaning means that the law does not easily accept that people have made linguistic mistakes, but on the other hand, if one would conclude from the background that something has gone wrong, the law will not attribute to the parties an intention which they plainly could not have had.  They will also attempt to give effect to the whole of the document and to try to give meaning to every word.  There is naturally the scope for interpretation, but it is not generally permitted, under English canons of interpretation to find meaning when none exists or to look behind the words to find the true intentions of the parties. The basic approach is literal, not purposive.  In other words, the law is to read, word for word and should not divert from its true meaning. This is why we often include a ‘definitions’ section within a contract to explicitly define the most important terms used throughout. But some contracts fail to define a particular term. The plain meaning rule attempts to guide that turns on the meaning of a term not defined by the contract, or on that of a word found within a definition itself. According to the plain meaning rule, absent a contrary definition within the contract, words are given their plain, ordinary and literal meaning. If the words are clear, they must be applied, even though the intention of the parties may have been different or the result is harsh or undesirable. The literal rule is what the law says instead of what the law means.

In law, the Golden rule allows the interpreter to depart from a word’s normal meaning in order to avoid an absurd result. It is a compromise between the literal rule and the mischief rule explained below. Like the literal rule, it gives the words of a contract their plain, ordinary meaning. However, when this may lead to an irrational result that is unlikely to be the initial intention, the judge can depart from this meaning. If the word only has one meaning, but applying this would lead to a bad decision, the judge can apply a completely different meaning. The grammatical and ordinary sense of the words is to be adhered to, unless that would lead to some absurdity or inconsistency with the rest of the instrument, in which case the grammatical and ordinary sense of the words may be modified, so as to avoid any absurdity or inconsistency, but not farther. The second use of the golden rule is in a wider sense, to avoid a result that is repugnant to accepted public norms, even where words have only one meaning. No one should profit from a crime, and so used the Golden rule to prevent an undesirable result.

The mischief rule attempts to determine the mischief and defect that the contract in question has set out to remedy, and what ruling would effectively implement this remedy. The application of this rule gives the judge more discretion than the literal and the golden rule as it allows him to effectively decide on the intent. Repugnancy in a contract must be reconciled, if possible, by such an interpretation as will give some effect to the repugnant clauses, subordinate to the general intent and purpose of the whole contract. In essence, where two clauses of contract appear to be contradictory, the court should attempt to reconcile conflicting clauses so as to give effect to whole of instrument, assuming that is possible within framework of general intent of the contract.

The blue pencil doctrine gives courts the authority to either strike unreasonable clauses from a noncompete agreement, leaving the rest to be enforced, or actually modify the agreement to reflect the terms that the parties could have – and probably should have – agreed to. Courts generally put the blue pencil down and refuse to enforce noncompete agreements imposing unreasonable restraints. Moreover, courts have indicated a greater willingness to refuse to reform agreements that are not reasonable on their face. A classic example is where some contracts have been drafted in a one sided language biased towards the employer. There are contracts with full of eventualities subject to penalty imposition, instead of delay in scheduled completion owing to contractor own delays. However, courts are reluctant to use the blue pencil and strike off such clauses provided the intention is exactly the same the parties had in their minds that was entered into a contract without coercion.

Also, the tendency to use ‘without prejudice’ is seen in much contractual correspondence. It should be noted that if a letter is written ‘without prejudice’, the rule of thumb is that it is privileged and cannot be used in court as evidence. This is a statement set onto a written document such as a letter, which qualifies the signatory as exempt from the content to the extent that it may be interpreted as containing admissions or other interpretations which could later be used against him or her.

In case of a doubt, a contract is construed against the interests of the author of the contract, according to contra preferentum rule. This rule provides that an ambiguous term will be construed against the party that imposed its inclusion in the contract – or, more accurately, against the interests of the party who imposed it. Therefore, the interpretation will favour the party that did not insist on its inclusion. The rule only applies if, and to the extent that, the clause was included at the unilateral insistence of one party without having been subject to negotiation by the counter-party, which is often the case in construction where the parties agree on standard forms of contract. Additionally, the rule only applies if the court determines the term to be ambiguous, which often forms the substance of a contractual dispute. The reasoning behind this rule is to encourage the drafter of a contract to be as clear and explicit as possible and to take into account as many foreseeable situations as it can. Additionally, the rule reflects the court’s inherent dislike of standard-form take-it-or-leave-it contracts, also known as contracts of adhesion. The court perceives such contracts to be the product of bargaining between parties in unfair or uneven positions. To mitigate this perceived unfairness, legal systems apply the doctrine of contra preferentem; giving the benefit of any doubt in favour of the party upon whom the contract was foisted. Contra preferentem also places the cost of losses on the party who was in the best position to avoid the harm. This is generally the person who drafted the contract. An example of this is the insurance contract where the insurance company is the party that is completely in control of the terms of the contract and is generally in a better position to, for example, avoid contractual forfeiture.

The parol evidence rule is the legal application of a rule of evidence in contract cases that prevents a party to a written contract from contradicting (or sometimes adding to) the terms of the contract by seeking the admission of evidence outside to the contract. This means that oral terms and conditions made before execution of the written contract that contradict its express terms are inadmissible. In order for this rule to be effective, the contract in question must be a fully integrated writing; it must, in the judgment of the court, be the final agreement between the parties (as opposed to a mere draft, for example). One way to ensure that the contract will be found fully integrated is through the inclusion of a merger clause, which recites that the contract is, in fact, the whole agreement between the parties.

Parties tend to define, contest and dispute each other arguing that the terms have been implied in the contract so that they are inherent obligations on the part of the contractor or employer. A term may either be expressed or implied. An express term is stated by the parties during negotiation or written in a contractual document. Implied terms are not stated but nevertheless form a provision of the contract. There are many ways a term can be implied. Terms can be implied in fact. The Privy Council established a five stage test in BP Refinery Western Port v. Shire of Hastings; Reasonableness and equitableness, Business efficacy, Obviousness, Necessity, Clear expression and Consistency. The implied term must be reasonable and equitable. The implied term must be necessary for the business efficacy of the contract. For instance, if the term simply causes the contract to operate better, that does not fit this criterion. The term must be so obvious that it goes without saying. Furthermore, there must be one and only one thing that would be implied by the parties. The term must be capable of clear expression. No specific technical knowledge should be required. The implied term may not contradict an express term. The term must be necessary to ensure reasonable or effective operation of a contract. Terms can also be implied in law. These are terms that have been implied into standardized relationships. Liverpool City Council v. Irwin established a term to be implied into all contracts between tenant and landlord that the landlord is obliged to keep the common areas in a reasonable state of repair. Terms can also be implied by custom or trade. One is generally bound by the custom of the industry that one is in. To imply a term due to custom or trade, one must prove the existence of the custom, which must be notorious, certain, legal and reasonable. A custom can be incorporated into contract only if there is nothing expressly or impliedly in the terms of the contract that prevent its inclusion. Customs can often be a part of a particular trade or business sector, but to have effect they must reinforce and assist the agreed contractual terms.

Generally, any term to be implied must not contradict any express term of the contract. Where a term is implied to fill a gap in the contract so as to give effect to the presumed intention of the parties, the term is implied in fact and depends on a consideration of the language of the contract as well as the surrounding circumstances. A term will be implied only if it is so necessary that both parties must have intended its inclusion in the contract. The fact that it would be reasonable to include the term is not sufficient for the implication, as the courts will not re-write the contract for the parties. Terms may also be implied because this is required statutorily, or on public policy considerations.

A contract comprises the construction, completion and maintenance of the works and everything needed to fulfil the same including labour, materials, plant etc irrespective of whether they are temporary or permanent in nature and whether specified or reasonably inferred from the contract. This clause sets out in too general terms the output expected in execution of the contract. The word ‘everything’ is sufficient to dispel the limitations to fulfil any contract requirement.  The phrase ‘reasonably inferred’ covers every minor detail necessary for the satisfactory execution of the contract beyond what is expressly stated in various parts of the contract document. Any work, materials or equipment that may reasonably be incidental or anecdotal from the contract as being required to produce the intended result will be supplied whether or not specifically called for. Notations, details or other descriptions which apply to one of a number of situations, materials, processes or work items shall apply to all except as specifically stated otherwise.

Exception clauses that seek to exclude or limit a contracting party’s liability are commonly, but not exclusively, found in standard form agreements. The English Unfair Contract Terms Act 1977 either invalidates an exception clause or limits the efficacy of such terms by imposing a requirement of reasonableness. Whether an exception clause will have its intended effect depends on a number of factors. The threshold requirement is that the clause must have been incorporated into the contract. There are generally three ways in which such incorporation may occur. Where a party has signed a contract which contains an exception clause, the signatory is bound by the clause, even if he or she had not read or was unaware of the clause. An exception clause may also be incorporated, in the absence of a signed contract, if the party seeking to rely on the clause took reasonably sufficient steps to draw the other party’s attention to the existence of the clause. The determination of this issue is heavily dependent on the facts of the particular case. Finally, exception clauses may be incorporated because there has been a consistent and regular course of dealing between the parties on terms that incorporate the exception clause. Even if no steps were taken to incorporate the clause in a particular contract between such parties, it may have been validly incorporated by the parties’ prior course of dealing.

As a general proposition, only persons who are party to a contract may enforce rights or obligations arising from that contract. This is sometimes referred to as the ‘privity rule.’ A third party who is not privy to a contract is generally not allowed to bring any legal action in his or her own name for breach of contract against a contracting party who fails to perform his or her contractual obligations, even if such failure of performance has caused the third party to suffer a loss. However, there is no clear definition as to when a person is or is not privy to a contract. Generally, a party who is an offeror or offeree will be privy to the contract. However, it seems that merely being mentioned in the contract is not enough. It is, nevertheless, possible to have a multilateral contract where there are multiple offerees (one or more of whom accept the offer on behalf of the others) or where there are multiple offerors (one or more of whom make the offer on behalf of the others). In either case, each offeree or offeror is a joint party to the contract and the privity rule will not apply to them. In construction contracts this rule is more likely to apply to one party’s unilateral terms i.e. bespoke construction contracts / bespoke amendments to standard forms of contract. These often seek to give a distinct advantage to the proffered over the other party. However it is doubtful that this rule would be applied to un-amended industry recognised standard forms of contract such as FIDIC or JCT. Whilst selected for use by the employer, these are not unilateral, being negotiated by representatives from all sides of the industry.

Good faith and fair dealings is another concern. It is common for lengthy negotiations to be written into a heads of agreement document that includes a clause to the effect that the rest of the agreement is to be negotiated. Although these cases may appear to fall into the category of agreement to agree, Courts will imply an obligation to negotiate in good faith provided that certain conditions are satisfied. Negotiations were well-advanced and the large proportion of terms have been worked out; and there exists some mechanism to resolve disputes if the negotiations broke down. The test of whether one has acted in good faith is a subjective one; the cases suggest honesty, and possibly also reasonably.

An incomplete agreement also cannot amount to an enforceable contract. Agreements made ‘subject to contract’ may be considered incomplete if the intention of the parties, as determined from the facts, was not to be legally bound until the execution of a formal document or until further agreement is reached. If a contract specifies “subject to contract”, it may fall into one of three categories: The parties are immediately bound to bargain, but they intend to restate the deal in a formal contract that will not have a different effect; or the parties have completely agreed to the terms, but have made the execution of some terms in the contract conditional on the creation of a formal contract; or it is merely an agreement to agree, and the deal will not be concluded until the formal contract has been drawn up.

There are contingent conditions under two categories: condition precedent and condition subsequent. A condition is an event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due. Conditions precedent are conditions that have to be complied with before performance of a contract. With conditions subsequent, parties have to perform until the condition is not met. Failure of a condition repudiates the contract but is not to necessarily discharge it. Repudiation will always give rise to an action for damages. The term subject to contract ought not to be confused with agreements which contemplate that a later agreement will be made of a more formal variety but where nonetheless the parties wish to bind themselves in the meantime.

A condition precedent need not be explicitly described as such in a contract. But the existence of one term as an explicit condition precedent may by negative implication make other terms promises and not conditions. However, a party may waive a condition precedent to its own performance; however, it may also withdraw that waiver before the other party has acted in reliance on that waiver. A condition precedent clause, sometimes called a ‘time bar’ clause, is a provision of a construction contract which requires the giving of a notice by the contractor, usually within a specified period of time, for any matter that may give rise to a claim for additional time or money. The intention of such clauses is that a failure to issue the required notice will have the effect that the contractor’s rights in respect of that matter will be lost.

Where a contractor’s claim is rejected on the grounds that it has failed to serve appropriate notices, the contractor will often argue that the employer’s position is contrary to the “prevention principle”. Put simply, the prevention principle is based upon the established rule in common law jurisdictions that no person can take advantage of the non-fulfilment of a condition, the performance of which has been hindered by himself. In the 2007 case of Multiplex Construction v Honeywell Control Systems the court noted that “one consequence of the prevention principle is that the employer cannot hold the contractor to a specified completion date if the employer has by act or omission prevented the contractor from completing by that date. Instead time becomes at large and the obligation to complete by this specified date is replaced by an implied obligation to complete within a reasonable time”. Whether the prevention principle will defeat a properly drafted condition precedent clause has been examined in a number of cases.

There are conditions of satisfaction that lay down a one of contractor’s fundamental obligations under the contract. The contractor shall execute and maintain works in strict accordance with the contract to the satisfaction of the engineer. He shall obtain instructions only from the engineer and the engineer’s representative subject to limitations. Further the contractor is also bound to follow instructions irrespective of whether such instruction is issued under the contract or not. Such instruction can be on any matter whether mentioned in the contract or not. An element of contradiction therefore exists within the clause since the contractor shall only follow the contract in carrying out works without going out of what is prescribed in the contract. However, the contractor cannot be asked to carry out works, which are legally or physically impossible. The contractors must at all times record this distinction.

The contractor is obligated to justify any physical or legal impossibility, which prevented working on site against such instruction to proceed with work. This clause allows the engineer to adopt a ‘criteria of satisfaction’ in deciding whether work has achieved a particular standard. However, such statements of opinion, satisfaction or approval will not be final or binding on the parties without express and clear provisions in the contract. Satisfaction does not constitute approval of works, for instance in the clause for setting out. The question remains then to what extent statements of satisfaction are binding on the parties and the standard to be adopted. It is suggested that if the contract does not contain an objective standard to be applied, it may be that the parties intended that the standard of satisfaction is that of an objective engineer in which case the decision has to be reasonable. If instead the intention was that the engineer should adopt his own standard, then the requirement is likely to be that the decision must be made in good faith. However, the modern trend is to rely on quality assurance systems for checking of drawings and designs, and to adopt objective testing standards instead of the subjective opinion of the engineer.

It is presumed that a contract will be interpreted so as to be internally consistent. A particular section of the contract document shall not be divorced from the rest of the contract document. The ‘ejusdem generis’ rule applies to resolve the problem of giving meaning to groups of words where one of the words is inherently unclear. It must be given a meaning of the “same kind” as the word of established meaning. This is particularly the case when two or more words are conjoined, i.e., linked by the word “and,” as opposed to placed in a disjunctive relationship, by the word “or,” where the interpretation of two or more words might be different depending on the circumstances . As such, various canons give common sense guidance to interpret the meaning of clauses. The same word used in one place in a contract should be given the same meaning throughout the document. The word “may” is permissive and not obligatory. The word “about”, “approximately” or “almost” do not constitute any guarantee that the signatory will meet or exceed estimates worded in such a fashion unless performance falls significantly short of these estimates.

Handwritten or typewritten clauses take precedence over printed clauses. This for two reasons: written clauses are posterior to printed clauses, and, secondly, written words are the immediate language selected by the parties themselves to express their meaning, while the printed words are a general formula applicable to all parties. Where the rule applies, the special clause will override the printed clause to the extent of the inconsistency. The special clause however only takes precedence when it is in direct contradiction with the printed clause.

Recitals may be resorted in case of ambiguity. Usually the articles of agreements or recitals are no more than the standard printed forms where we get evenly and uniformly the same content irrespective of the individual contract. The recitals can not be resorted to if the express words of the contract are clear or there is no doubt about what they mean. However, in modern law the extrinsic evidence are sometimes looked into find the intension of the parties, so is the recitals having similar preference.

In conclusion, a contract will be read as a whole. No one should construe words in a vacuum but consider all background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract. A contract must receive such an interpretation as will make it lawful, operative, definite, reasonable, and capable of being carried into effect, if it can be done without violating the intention of the parties. “It can neither be uncompromisingly literal nor unswervingly purposive; the instrument must speak for itself, but it must do so in-situ and not to be transported to the laboratory for microscopic analysis” according to Sir Thomas Bingham.

Many Universities and non profit organizations are involved in quality radiology education to bridge the gap between the demand and supply of qualified radiologists all over the world. Online education and distance learning facilities are also available these days, which ensures radiology education to all eligible candidates transcending the barriers of space and time. Some of the subjects included in the course include anatomy,   Neuro radiology, Medical Physics and  Pathology among others.

Online radiology community is another common platform where radiologists can brace up with the latest developments and innovative discoveries in this field. You can share information and experiences on this platform. Get on top of job openings and outsourcing possibilities, which ensure a lucrative career right in your home town. In outsourcing, radiology images are sent to various centres all over the world for analysis and deciphering  and the results are transmitted back to the physician within the turn around time. It saves a lot of time and effort of the physician , who can devise the most appropriate treatment method that suits the specific disease condition of the patient. It ensures greater patient care and high precision diagnosis.

There are various specialties of radiology products such as MRI Scan, CR scan and X rays, with unique features and advantages. While CT scan and MRI scan gives out multiple sliced images of high clarity, fluoroscopes  are used to analyze and interpret the disease conditions of the soft tissues in the body. It goes without saying that the advent of radiology products and software has triggered a digital revolution in the diagnostic field.

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INTRODUCTION

This paper is the first part of a two part analysis. The two parts are:

A Comparison of Elements of Style in Quranic Stylistics Part1. It deals with the stylistics analysis of verses 1-22 of surah Al-Mursalat.

A Comparison of Elements of Style in Quranic Stylistics Part2. It deals with the stylistics analysis of verses 23-50 of surah Al-Mursalat.

This writer will highlight the differences and similarities of the seventy-seventh surah from The Message of the Quran -English language translation of the meaning of the Quran by Muhammad Asad and The Holy Quran -English language translation of the meaning of the Quran by Abdullah Yusuf Ali.

Each verse translated by each translator is put one after another. Each verse from the seventy-seventh surah, Al-Mursalat, translated by Muhammad Asad is marked (B) by MA and is put first, followed by the same verse translated by Abdullah Yusuf Ali which is marked (B) by AYA.  This writer then looks closely at each translator’s style of translating the same original text (the Quran) while examining the language features.

The first noticeable thing that this writer came across is that Muhammad Asad begins his book on the left with pages running from the left side to the right side of his book whereas Abdullah Yusuf Ali begins his book from the right with pages running from the right side to the left side of his book. It is a known fact that any book written in Arabic, including the Quran in its original text, has its pages running from the right to the left side of the book as The Holy Quran -English language translation of the meaning of the Quran by Abdullah Yusuf Ali.

THE STYLISTIC ANALYSIS OF THE SEVENTY-SEVENTH SURAH, AL-MURSALAT BY MUHAMMAD ASAD AND ABDULLAH YUSUF ALI

Both Muhammad Asad and Abdullah Yusuf Ali have translated the title of Al – Mursalat to be “Those Sent Forth”.

(B) by MA             

IN THE NAME OF GOD, THE MOST GRACIOUS, THE DISPENSER OF GRACE :

(1)     CONSIDER   these [messages] sent forth in  waves

(2) and then storming on with a tempest’s force!

(3)Consider these [messages] that spread [the truth] far and wide,

(4)thus separating [right and wrong] with all clarity,

(5) and then giving forth a reminder,

(6) [promising] freedom from blame or [offering] a warning!

(B) by AYA

In the name of Allah, Most Gracious, Most Merciful.

1.      By the (Winds) Sent Forth

      One after another (To man’s profit);

2.   Which then blow violently

      In tempestuous Gusts;

3.  And scatter (things)

     Far and wide;

4.  Then separate them,

     One from another;

5.  Then spread abroad

     A Reminder;

6.  Whether of Justification

     Or of Warning ;

Analysis: The first six verses of surah seventy-seven by Muhammad Asad is divided into two sentences. The first sentence comprises of verses one and two and the second sentence comprises of verses three to six. Abdullah Yusuf Ali, on other hand, does not make any special distinction or mark of any new sentence.  Every verse is numbered and verse forty marks Section two of Surah Al – Mursalat.

(B) by MA

(1)         CONSIDER  these [messages] sent  forth in  waves

(2) and then storming on with a tempest’s force!

(B) by AYA                       

1.  By the (Winds) Sent Forth

     One after another (To man’s profit);

2.  Which then blow violently

     In tempestuous Gusts,

Analysis: Muhammad Asad and Abdullah Yusuf Ali make a link with the first lines of the first verse and the title of this surah. “Consider these [messages] sent forth in waves” by Muhammad Asad and “By the (Winds) Sent Forth ” by Abdullah Yusuf Ali. The title of this surah, “Those Sent Forth”, is specifically related to the first lines of the first verse of the two translated versions. 

(B) by MA

(1)  CONSIDER  these [messages,] sent forth in waves

 (B) by AYA

1.      By the (Winds) Sent Forth

     One after another (To man’s profit);

Analysis: Both translated versions want to put across the meaning of continuity.  Muhammad Asad uses “in waves” and Abdullah Yusuf Ali uses “One after another” (an idiom) to describe continuity. Verse one of both versions do not differ much in meaning. They  appeal for the preparation of the Day of Judgement which is bound to come.

(B) by MA

(2)  and then storming on with a tempest’s force!

(B) by AYA

2.  Which then blow violently

      In tempestuous Gusts,

Analysis: Both translated versions explain the gradual strong move of the messages of God to destroy evil.  Both translated versions use cohesive links to begin verse two – “and then” in Muhammad Asad’s translated version and “which then” in Abdullah Yusuf Ali’s translated version. “Storming on” by Muhammad Asad and “blow violently” by Abdullah Yusuf Ali have the same effect in meaning but different vocabulary is used. The word “tempest” is used in both translated versions but in different forms “with a tempest’s force!” in Muhammad Asad’s translated version and “In tempestuous Gusts” in Abdullah Yusuf Ali’s translated version. Where meaning is concerned, gusts give a slightly stronger effect of a sudden, violent rush of wind. Both translated versions do not differ much in meaning. They put across that strong wind and rain effect.  This effect is further accentuated by the word “force” in Muhammad Asad’s translated version and by the word “Gusts” in Abdullah Yusuf Ali’s version.  Verse two of both versions do not differ much in meaning. They relate the impact of the Quranic revelations as a whole. These revelations or messages carry the principles of right conduct.

(B) by MA

(3)Consider these [messages] that spread  [the truth] far and wide,

(B) by AYA

3.  And scatter (things)

    Far and wide;

Analysis: Muhammad Asad begins a new sentence with the same few words as the first sentence, “Consider these [messages]….”  Abdullah Yusuf Ali continues the metaphor of the “Winds” that scatter things far and wide.  He uses the conjunction “And” to begin verse three. Muhammad Asad and Abdullah Yusuf Ali both use the idiom “far and wide” in verse three.  However, Muhammad Asad uses “the truth” that are spread “far and wide” and Abdullah Yusuf Ali uses “things” that are scattered far and wide”, the former being more literal and the latter more of an interpretation. Verse three of both versions do not differ much in meaning. They give the picture of Allah’s messages being distributed.

(B) by MA

(4)thus separating [right and wrong] with all clarity,

(B) by AYA

4.  Then separate them,

     One from another,

Analysis: The word ’separate” appears in both translated versions but in different forms. Muhammad Asad uses “separating” and Abdullah Yusuf Ali uses “separate” Muhammad Asad goes on further to explain separating right and wrong. This writer feels that the words, right and wrong , do make a difference in clarity. Although Abdullah Yusuf Ali uses more idiomatic expressions, he may have lost some readers where clarity is lacking. Here, this writer feels that  Abdullah Yusuf Ali’s version can definitely be appreciated by readers of higher level of competence in the English language. Abdullah Yusuf Ali uses another idiom to describe “separate them, One from another”.  Muhammad Asad uses “thus” and Abdullah Yusuf Ali uses “then” as conjunctions to begin the fourth verse. The “then is used as a substitute word for adverb expressions of time. It means that after this, “then” that happens. In the case of this verse, after scattering things far and wide, “then” separating them one from another happens. The “thus” is used to show a logical consequence in a formal way. In other words, “thus” evokes a causal concept. In the case of this verse, the messages that spread the truth far and wide will therefore in itself consequently separate one from another. Verse four of both versions do not differ much in meaning. They tell of the separation of  good and evil among men– the believers and disbelievers.

(B) by MA

(5)  and then giving forth a reminder,

(B) by AYA

5.  The spread abroad

     A Reminder,

Analysis: The words ” a reminder ” are used in both translated versions.  “Spread abroad” is another idiom that Abdullah Yusuf Ali uses. Muhammad Asad uses “and then” and Abdullah Yusuf Ali uses “Then” as conjunctions to provide cohesion to begin verse five. Verse five of both versions do not differ much in meaning. They tell that the believers and disbelievers will receive a reminder.

(B) by MA

(6) [promising] freedom from blame or [offering] a warning!

(B) by AYA

6.   Whether of Justification

      Or of Warning; –

Analysis: The conjunction “or” is used in both translated versions to introduce alternatives. Muhammad Asad puts it as “[promising] freedom from blame or [offering] a warning!” and Abdullah Yusuf Ali puts it as “Whether of Justification or of Warning;”. Verse six of both versions do not differ much in meaning. They tell that the reminder that the believers and disbelievers will receive will be one of either justification for the believers and of warning for the disbelievers.

(B) by MA

(7)     BEHOLD,  all   that  you  are   told  to  expect  will  surely come to pass.     

(B) by AYA

7.      Assuredly, what ye are

        Promised must come to pass.

Analysis: Verse seven marks a new section in Muhammad Asad’s translated version.  Abdullah Yusuf Ali does not mark verse seven as a new section in this surah. This writer notices that Muhammad Asad seems to break a surah up into smaller portions as if to deal with clarity more closely. Abdullah Yusuf Ali has broken up this surah of fifty verse into two sections. Verse seven tells one of the Day of Judgement which is bound to come.  Muhammad Asad uses “you” whereas Abdullah Yusuf Ali uses “ye” to refer to the reader, the former adhering to Modern English whereas the latter adhering to Classical English. Both translated versions use somewhat the same words to carry the meaning across. Verse seven of both versions do not differ much in meaning. They tell the believers and disbelievers to expect the promised Day to come. The Day of Judgement is bound to come.

(B) by MA

(8) Thus, [it will come to pass] when the  stars are effaced,

(9)  and when the sky is rent asunder,

(10)  and when the mountains are scattered like dust,

(11) and when all the apostles are called together at a time appointed .….

(B) by AYA

8.    Then when the stars

       Become dim;

9.    When the heaven

       Is cleft asunder;

10.  When the mountains are

       Scattered (to the winds) as dust;

11.  And when the messengers

       Are (all) appointed a time

      (To collect);

Analysis: Verses eight to eleven are descriptions of the signs of the Day of Judgement.

(B) by MA

(8)Thus, [it will come to pass] when the stars are effaced,

(B) by AYA

8.  Then when the stars

     Become dim;

Analysis: Muhammad Asad uses the conjunction “thus” and Abdullah Yusuf Ali uses “then” to begin verse eight. “Thus” holds a formal way of presenting a logical consequence or causal concept and “then” holds a time concept or used as a substitute for adverb expressions of time. Muhammad Asad uses more forceful words than Abdullah Yusuf Ali about the stars – “effaced” and “become dim” respectively. Both the translated versions do not differ much in meaning. They want to put across the fact that the stars will disappear. Verse eight of both versions do not differ much in meaning. They inform about the first sign of the Day of Judgement described in this surah. The stars will lose their shine and lustre and will disappear from the sky.

 (B) by MA

(9)  and when the sky is rent asunder,

(B) by AYA

9.  When the heaven

     Is cleft asunder;

Analysis: Muhammad Asad uses “the sky” and Abdullah Yusuf Ali uses “the heaven” to describe up above where the stars appear. The word “asunder” is used in both translated versions to put across the meaning of torn up to bits and destroyed like in a big explosion. Muhammad Asad begins verse nine with the conjunction “and” whereas Abdullah Yusuf Ali uses “when”. Verse nine of both versions do not differ much in meaning. They tell what will happen to what is above us or to where the stars appear –the heavens or the sky. It will all explode.

(B) by MA

(10)  and when the mountains are scattered like dust,

(B) by AYA

10.  When the mountains are

       Scattered (to the winds) as dust;

 Analysis: Similar words are used in verse ten in both translated versions.  Again, Muhammad Asad uses the conjunction “and” to begin the verse whereas Abdullah Yusuf Ali uses “when” to begin the verse. In Muhammad Asad’s version, “when” appears following “and”. It normally appears without “when” repeated in the next clause. In other words, When the sky is rent asunder and the mountains are scattered like dust…..  In Abdullah Yusuf Ali’s version, the conjunction “and” is not there to provide that smoother effect. Verse ten of both versions do not differ much in meaning. They give the picture of the huge masses of sand (mountains) being uprooted and fly about in the wind like dust.

(B) by MA

(11) and when all the apostles are called together at a time appointed …

(B) by AYA

11.  And when the messengers

      Are (all) appointed a time

      (To collect);

Analysis: Muhammad Asad begins verse eleven in the same way as Abdullah Yusuf Ali – “and when”.  Muhammad Asad uses “the apostles” and Abdullah Yusuf Ali uses “the messengers” to refer to the Prophets, one being a paraphrase of the other.  Both translated versions use similar words to put across the same meaning. In Muhammad Asad’s versions, “when” appears again. In Abdullah Yusuf Ali’s version, the conjunction “and appears to give that cohesive effect. Verse eleven of both versions do not differ much in meaning. They say that the Prophets or Messengers who have lived and died at different times will all gather on the Day of Judgement.

(B) by MA

(12)  For what day has the term  [of all this] been set?

(B) by AYA

12.  For what Day are these

       (Portents) deferred?

Analysis: Both translated versions ask what day do the signs in verses eight to eleven mark? Muhammad Asad uses “the term [of all this]” and Abdullah Yusuf Ali uses “these (Portents)” to mean omen or signs. Both translated versions begin with the same few words – “For what day”.  The letter “d” in “Day” is capitalized in Abdullah Yusuf Ali’s version to reemphasize this special “Day”. Verse twelve questions and verse thirteen answers in both versions. As a matter of paraphrasing, The Day of Judgement or The Day of Decision or The Day of Distinction or The Day of Sorting out, are all synonymous expressions. This verse of both versions do not differ much in meaning. They tell when the good will be separated from the evil.

(B) by MA

(13) For the Day of Distinction [between the true and the false]!

(B) by AYA

13.  For the Day of Sorting out.

Analysis: Verse thirteen answers verse twelve.  Muhammad Asad uses “the Day of Distinction” and Abdullah Yusuf Ali uses “the Day of Sorting Out”.  Both translated versions mean “the Day of Judgement”.  Muhammad Asad goes on to further explain this “Day of Distinction” with “[between the true and the false]!”. Verse twelve questions and verse thirteen answers in both versions and they do not differ much in meaning. They tell that The Day of Judgement is when the believers (good) will be separated from the disbelievers (evil).

(B) by MA

(14) And what could make thee conceive what that  Day of Distinction will be?

(B) by AYA

14.  And what will explain

       To thee what is 

       The Day of Sorting out?

Analysis: Verse fourteen of both translated versions reach out to disbelievers to believe.  This address is in a question form.  Both translated versions begin verse fourteen with “And what ….” to provide cohesion. Muhammad Asad who usually adheres to Modern English has made use of “thee” to refer to the disbelievers. It gives a Classical English effect and the sound of appeal comes through. Verse fourteen in both versions do not differ much in meaning. They appeal to the disbelievers to believe.

(B) by MA

(15)Woe on that Day unto those who give the lie to the truth!

(B) by AYA

15.  Ah Woe, that Day,

       To the Rejecters of Truth!

Analysis: Verse fifteen of both translated versions is a warning to disbelievers if they continue to disbelieve.  The word “woe” is used in both translated versions. According to the Oxford dictionary, woe means bitter grief. This writer feels that woe also carries a streak of disappointment in its meaning. Although this warning can sound stern, it can still carry a form of persuasive, warning tone. Muhammad Asad uses “those who give the lie to the truth!” and Abdullah Yusuf Ali uses “the Rejecters of Truth!” to mean the disbelievers. Muhammad Asad who usually adheres to Modern English has made use of “unto”. It does give that Classical English effect. Abdullah Yusuf Ali who usually adheres to Classical English has made use of simply “to”. In comparison, the “to” does give the Modern English effect. Furthermore, in Abdullah Yusuf Ali’s versions, the word “Ah” precedes the word “woe”. This gives a sadder, perhaps an even more disappointed tone to this warning. Here, this writer feels that Muhammad Asad, in his effort to provide an interpretation rather than a literal translation, has complicated the expression to label the disbelievers. This writer further adds that Abdullah Yusuf Ali, simply but aptly labels the disbelievers-“the Rejecters of Truth”. Verse fifteen of both versions do not differ much in meaning. They carry the first warning of ten repeated warnings. These warnings contain the essence of this surah. They aim to reach out to the disbelievers to turn to Allah in humility and repentance. The analysis of this first warning  (in verse fifteen)  provides the basis of analysis for the rest of the remaining nine same warnings throughout this surah. This writer will make a back reference to verse fifteen whenever appropriate.

(B) by MA

(16) Did We not destroy [so many of] those [sinners] of olden days? (17) And We shall let them be followed by those of later times: (18) [for] thus do We deal with such as are lost in sin.

(B) by AYA

16.  Did We not destroy

       The men of old.

       (For their evil)?

17.  So shall We make

       Later (generations)

       Follow them.

18.  Thus do We deal

        With men of sin.

Analysis: These three verses appear in one paragraph in Muhammad Asad’s translated version whereas Abdullah Yusuf Ali puts them numbered one after another. These arrangements clearly put forth the narrative prosaic style of Muhammad Asad and the poetic-like style of Abdullah Yusuf Ali.

(B) by MA

(16) Did We not destroy [so many of] those [sinners] of olden days?

(B) by AYA

16.  Did We not destroy

       The men of old

       (For their Evil)?

Analysis: Using the past tense, The /d/ alliteration is felt in reading this verse to plod on a reminder in a question. The /d/ in “did”, “destroy”, “olden”, “days” is felt in the pronunciation of each word. This effect is felt more so in Muhammad Asad’s version who managed to use more /d/ words without changing the meaning of the verse. Verse sixteen of both translated versions do not differ much in meaning as they tell one of “those [sinners of olden days]” by Muhammad Asad and “The men of old (For their Evil)” by Abdullah Yusuf Ali to mean the sinners of the past who have been destroyed by God. Both translated versions start the question in verse sixteen with the same few words – “Did We not destroy …..” “We” is used to refer to God in both translated versions. “We” can either be used to be inclusive or exclusive of the listener or in this case, the reader. For this verse, “We” excludes the reader because “We” means God’s doing through the Prophets, excluding the believers or disbelievers (humans). This puts across the meaning that God has been around since the beginning of time and that nothing or no one has been able to destroy or defeat God. Thus, in effect, it emphasizes further on God’s everlasting strength and that we (humans) are indeed weak. Verse sixteen of both versions do not differ much in meaning. They remind all that sin and corruption will bound to lead to suffering and punishment as it happened to the sinners of the past.

(B) by MA

(17)And We shall let them be followed by those of  later times:

(B) by AYA

17.  So shall We make

       Later (generations)

      Follow them.

Analysis: Both translated versions use the future tense to show the continuity or timelessness of God’s law. This same law will apply in the future.  “We” is used to refer to God in both translated versions and to exclude the reader. Verse seventeen of both versions do not differ much in meaning. They tell that as for the sinners of later times, the same, that is, suffering and punishment will befall on them as it happened to the sinners of the past.

(B) by MA

(18) [for] thus do We deal with such as are lost in sin.

(B) by AYA

18.  Thus do We deal

        With men of sin.

Analysis: Using the present tense, both translated versions tell that the sinners who are described as “such as are lost in sin.”  by Muhammad Asad and “men of sin” by Abdullah Yusuf Ali are being dealt with the same way now. This writer feels that Muhammad Asad, in his attempt of an interpretation of the expression label for sinners, has complicated the clarity of the label. Abdullah Yusuf Ali, on the other hand, in the simplicity of a literal translation, has come up with an expression label to serve its purpose- “men of sin”.  The “thus” used in Abdullah Yusuf Ali’s version, carries the causal concept and begins a new sentence in this verse. Muhammad Asad begins the verse with the conjunction [for] to provide cohesion.  The next few words – “thus do we deal with …. ” are repeated in Abdullah Yusuf Ali’s version. The “We” here again is a personal pronoun to include God and the Prophets, excluding the reader. Verse eighteen of both versions do not differ much in meaning. They underscore the fact that sin and corruption prepares its own destruction.

(B) by MA

(19) Woe on that Day unto those who give the lie to the truth!

(B) by AYA

19.  Ah woe, that Day,

       To the Rejecters of Truth!

Analysis: Verse nineteen is the same warning to the disbelievers as in verse fifteen.  This warning is repeated for the second time. Verse nineteen of both versions do not differ much in meaning. They call out to the disbelievers to turn to the right path.(Refer to verse fifteen for a more complete analysis)

(B) by MA

(20)  Did We not create you out of a humble fluid, (21)  which We then let remain in [the womb's] firm keeping (22) for a term pre-ordained?

(B) by AYA

20.  Have We not created

       You from a fluid

       (Held) despicable? –

21.  The which We placed

        In a place of rest,

       Firmly fixed,

22.  For a period (of gestation),

       Determined?

Analysis: Muhammad Asad writes verses twenty to twenty-two to be in one paragraph whereas Abdullah Yusuf Ali writes them numbered one after another. These arrangements put forth the narrative prosaic style of Muhammad Asad and the poetic-like style of Abdullah Yusuf Ali. These three verses do not differ much in meaning. They remind one of our humble beginnings and that none should be arrogant.

 (B) by MA

(20)  Did We not create you out of a humble fluid,

(B) by AYA

20.  Have We not created

       You from a fluid

       (Held) despicable? -

Analysis: The  past tense is used in both translated versions.  Verse twenty in Muhammad Asad’s version is only part of a question whereas verse twenty in Abdullah Yusuf Ali’s version has already formed the whole question.  “We” is used in both translated versions to refer to God, excluding the reader, because although conception is brought about by the act of sexual intercourse of a man and a woman, conception can only occur if God wills it.  Conception is described as “a humble fluid” by Muhammad Asad and “a fluid (Held) despicable” by Abdullah Yusuf Ali. Abdullah Yusuf Ali uses the word “despicable” to describe and to humiliate humans’ contribution  to conception.  Verse twenty of both versions do not differ much in meaning. They aim to put man back in his place and remind man of his humble beginnings.

(B) by MA

(21)  Which We then let remain in [the womb's] firm keeping

(B) by AYA

21.  The which We placed

       In a place of rest,

      Firmly fixed,

Analysis: Verse twenty-one in Muhammad Asad’s version still has not formed the question.  The whole question is formed with verse twenty-two.  Abdullah Yusuf Ali begins to form part of the second question in verse twenty-one and will complete the whole question in verse twenty-two.  Muhammad Asad mentions “womb” and seems to go straight to the point, whereas Abdullah Yusuf Ali metaphorically describes the womb as “in a place of rest”. This writer feels that through his words, Abdullah Yusuf Ali seems to give more respect and appreciation to the carrier of the child.  Both translated versions do not differ much in meaning. They try to put across the silent, protected growth of man in his mother’s womb.

(B) by MA

(22)  for a term pre-ordained?

(B) by AYA

22.  For a period (of gestation),

       Determined?

Analysis: Muhammad Asad completes the question with verse twenty-two.  Abdullah Yusuf Ali completes the other part of the second question. According to the Oxford’s dictionary, preordain means determined beforehand and gestation means the process of carrying and being carried in the womb between conception and birth. Again, Muhammad Asad goes straight to the point as in the previous verse and Abdullah Yusuf Ali exhibits more care and caution in his choice of words, perhaps to suit the context of mother and child. This writer adds that she prefers Abdullah Yusuf Ali’s style of language for verses twenty to twenty-two. Both translated versions do not differ much in meaning. They put across in different words the nine months and ten days that God has set for the pre-natal period. Verse twenty-two of both versions specifically points out the determined period of time in the womb which man ourselves have no control of and are unconscious about.

CONCLUSION 

In this paper, the two sets of Meccan surah from the two versions of the English language translations of the meaning of the Quran by Muhammad Asad and Abdullah Yusuf Ali were compared.The seventy-seventh surah, Al-Mursalat translated by Muhammad Asad  and Abdullah Yusuf Ali was marked (B) by MA and (B) by AYA respectively. Similarities and differences were found.

This Part 1 analysis deals with verses 1-22 of surah Al-Mursalat. Part 2 analysis deals with the verses 23-50 of surah Al-Mursalat.  

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