Business Procurement and Contractual Practice: CSR and Local Content

This report delves into the critical aspects of business procurement and contractual practices, primarily focusing on corporate social responsibility (CSR) and local content clauses. The first part of the report provides a comprehensive overview of CSR, discussing its principles, practices, importance, and impact on companies operating in the international construction market. It explores how businesses can integrate CSR into their operations and the benefits derived from it, such as improved brand value and organizational growth. The report then examines local content clauses, particularly their advantages and disadvantages within construction contracts, using Sri Lanka as a case study. The advantages include decreased unemployment and proper resource allocation, while the disadvantages involve potential technological limitations and a shortage of skilled employees. Furthermore, the report touches upon the challenges of expanding business operations, specifically within the Gulf region, though the details of these challenges are not fully elaborated in the provided text. Overall, the report offers valuable insights into CSR and local content, providing a foundational understanding of their significance in the context of business procurement and international construction.

BUSINESS
PROCUREMENT AND
CONTRACTUAL
PRACTICE

TABLE OF CONTENTS
QUESTION 1..................................................................................................................................3
Corporate social responsibility (CSR).........................................................................................3
Principles and practice of CSR....................................................................................................3
Importance of CSR......................................................................................................................5
Impact of CSR.............................................................................................................................5
QUESTION 5..................................................................................................................................6
Advantages and disadvantages of local content clauses..............................................................6
QUESTION 6..................................................................................................................................8
Challenges in expanding across the Gulf region.........................................................................8
REFERENCES..............................................................................................................................12

QUESTION 1
Corporate social responsibility (CSR)
This statement is completely true that, CSR (corporate social responsibility) has grown
very effectively over the past 10 years. Currently top-level management of most companies are
fully aware about the importance of CSR, and this is the main reason that, currently many o
businesses has taken steps towards considering corporate social responsibility (POPESCU,
2017). The CSR is generally a way or method to different businesses or enterprises for working
in the public welfare or social welfare. In this situation, when businesses do work in the social
welfare by fulfilling social responsibility, then they able to improve their brand image also in the
market place. Different people or customers in the market are also fully aware about the concept
of corporate social responsibility, in which these people like to purchase or buy products and
services only through those companies or ventures which systematically fulfils their CSR
(corporate social responsibility) in market. That’s why nowadays, every business gets influenced
to fulfil corporate social responsibility their respective target markets.
Before fulfilling corporate social responsibility in the market, there are existing
management have to deeply understand different aspects of corporate social responsibility. For
example; principles, practice, importance and impact of CSR. A business which operates at the
international level should properly understand these all aspects of CSR, because after knowing
these all aspects, that business can simply fulfil CSR in the market place. In this dynamic world,
there are lots of businesses in marker are taking huge advantages through this corporate social
responsibility. This is the main reason that, this is very important responsibility to each and every
business. There are principles, practice, importance and impact etc. these all aspects of corporate
social responsibility have been discussed below;
Principles and practice of CSR
There are lots of principles and practices available here of corporate social responsibility,
in which every business or company in the market should be followed these all principles and
practices of corporate social responsibility (Tshilo and Van Niekerk, 2016).
Consider human rights policy

This is one of the main principles of corporate social responsibility. According to this
principle, there are upper management of every company have to consider human rights policy
while running is business operations in the different segments of the market. Basically, when any
company considers human rights policy, then it can indirectly fulfil its corporate social
responsibility in market. A company always has various employees, in which existing
management of that company need to provide them the basic human rights. For example; right of
safety, right to speak, right to communicate etc. In the customers’ context, the company need to
give them rights like; right to take information about product, right to choose product or service
etc. This principle generally gives opportunity to a company for running its business operations
in very ethical manner.
Safety, health and environment
A company or business always responsible to consider this principle as well, because this
is the prime obligation to a company for making that culture within its business environment
which cannot harm safety and health aspects of different people (Colonnelli and Ntungire, 2020).
According to this principle, there are businesses in market should avoid to give such tasks to its
various employees which are fully unsafe and inappropriate for their health. By following this
factor, a company will indirectly fulfil the obligations of employee health and safety act. Of
course, there are various companies exists in the market which always have different risk tasks
and operations, in which existing management within these companies need to provide proper
precautions to its various employees while conducting various risky tasks and operations. On the
other side, businesses also need to avoid producing such services and products which can
negatively affect safety and health aspects of customers.
Social contribution charter
The principle of social contribution charter is also a key principle in corporate social
responsibility. According to this principle, there are upper management within each and every
busines has to make a charter of social contribution. In this charter, a business needs to mention
it’s all activities which it will do in the social welfare. For example; the business or venture can
mention that, it will be opened free schools, colleges or hospitals in the terms of fulfilling
corporate social responsibility. On the other side, businesses can mention in charter that, they
will plant many plants to make natural environment better (Hanak and Korytarova, 2019). So

that, existing management of a business should consider these principles and practices to fulfil
their CSR in very systematic manner.
Importance of CSR
Corporate social responsibility is generally very beneficial to different companies and
enterprises, in which some key importance of CRS has been mentioned below;
Improves brand value: Corporate social responsibility plays very excellent role to a company in
improving its brand image or brand value in the selected segments of market. According to
different business experts, when any company fulfils corporate social responsibility in the
market, then people get impressed through that company. After this, people in the market started
to build good and positive perception about the company, so that this factor can highly contribute
in improving brand value of that company in the market.
Improves quality of products and services: This is another major importance of corporate social
responsibility that, this helps to a company in improving its quality products and services as well.
According to the health and safety principle of corporate social responsibility, a company has
always required to produce quality products and services, because products and services with
poor quality always negatively affect customers’ health and safety aspect, so that this factor
impact to a company to produce or develop only quality products and services, because this is
also a key social responsibility.
Contributes in organisational growth: This is very important in the terms of organisational
growth as well (Flynn and Davis, 2017). This is the main importance of CSR that have impacted
top-level management of different companies to do work in the social welfare by fulfilling
corporate social responsibility. When company fulfils CSR in market, then it will able to attract
lots of customers towards own brand. So that, after attracting lots of customers towards own
brand, any company can simply growth itself in market place.
Impact of CSR
There ate CSR highly affects to the business environment of companies which are
operating in the international constructed market. Currently there are lots of companies exists in
the United Kingdom which runs their business operations in international market, like; Marks
and Spencer, Tesco, British Petroleum etc, in which existing management within these all

companies have to take steps towards fulfilling CRS in very systematic manner. Mostly
companies which operates their business activities at international level need to use the concept
of corporate social responsibility in its workplace. This is very essential steps towards a business
for putting very excellent and positive impression on people in country where it wants to expand
own business operations. Different businesses which runs their business operations at
international level are fully responsible to work in social or public welfare in those all countries
where they operate their business operations (Josephson and et.al., 2019). In this situation, CSR
is the only thing to different businesses to do this in very systematic manner. With the support of
corporate social responsibility, a company enable to put very positive impression on different
people in the market. This is the main reason that, corporate social responsibility very positively
affects various businesses in the international constructed market place.
QUESTION 5
Advantages and disadvantages of local content clauses
Local content clauses are very beneficial in a construction contract for a project in a
country which currently has in its developing stage, like; Sri Lanka. This is an island country in
south Asia which has not much population, but local government of this country pus its huge
efforts for developing their country to stay with this modern world. So that, currently here is
local government works with many foreign contractors to who belongs to different nations and
countries. In this situation, before sign contract with these all foreign contractors, local
government of this country always clarify that, during the construction process, every foreign
construction company have to use large number of Sri Lankan people as human resources. This
is really beneficial to this host country, because any foreign contractor uses large number of Sri
Lankan people in its different operations of construction, then local government of this country
will able to provide proper employment opportunity to its lots of people. However, these local
content clauses not all time provides appropriate return, it means, these clauses have some
disadvantages as well (Van Den Hurk and Verhoest, 2016). So that, some key advantages and
disadvantages of these local content clauses has been discussed below;
Advantages of Local Content Clauses

Decreases levels of unemployment: There are local content clauses highly contributes in
decreasing levels of unemployment, in which with the support of these clauses, local government
of Sri Lanka can generate great employment opportunities. Basically, when outsider contractor
came in this hosting country, then local government will mention one thing their common
contract that, the contractor needs to use maximum number of Sri Lankan people in their daily
operations while working in this country. By taking this step, the Sri Lanka will simply decrease
levels of unemployment within its country.
Proper allocation of resources: Local content clauses are very beneficial in the terms of proper
allocation of resources. Currently Sri Lanka has enough resources which can contribute in the
operations of contractors (Waigwa and Njeru, 2016). In this situation, while sign contract with
different foreign contractors, existing local government of this country have to mention on thing
their common contract that, when contractor came in Sri Lanka, then it will be required to use
maximum resources of Sri Lanka. Reason is, if contractor will self-owned resources or
machineries in operations of Sri Lanka, then local government will require to pay huge fund in
the terms of foreign exchange to that contractor. So that, with the support of local content
clauses, this country will enable to approach different contractors to use only Sri Lankan
resources while conducting their operations in this country.
Disadvantages of Local Content Clauses
Lack of new technology: Lack of technology is one of the key disadvantages of these local
content clauses. Suppose, when local government of Sri Lanka mention this term or condition in
common contract that, foreign contractors need to use maximum Sri Lankan resources while
conducting their different operations. So that, this thing will be restricted to these contractors to
use their modern or nee technology, because currently Sri Lanka has not enough resources
relating to modern technology. In this situation, local government of this country need give some
relaxation to these foreign contractors. For example, Sri Lankan government can give chance to
foreign contractors to use some percentage of their self-owned resources (Khalikova and
Leybert, 2019). By taking this decision, local government of Sri Lanka will enable to use modern
or new technology as well.

Shortage of skilled and talented employees: A contractor always try to hire different skilled and
talented employees within its business operations to achieve its decided target in decided time
period. In this situation, when foreign contractors came in this hosting country to work, then they
will be restricted to use their own employees while conducting their different operations just
because of local content clauses policy. But then it is very hard to a foreign contractor to hire
different skilled and talented employees within this country, because currently the Sri Lanka
have in its developing stage, so that existing companies of this country has already facing issue
relating to shortage of skilled and talented employees (DAMTE, 2018). So that, this factor can
negatively affect to the performance and productivity aspects of contractors, and at the end these
contractors will not able to do work as government of Sri Lanka expected.
These all are some key advantages and disadvantages of local content clauses.
QUESTION 6
Challenges in expanding across the Gulf region
A private construction company based in Cairo, Egypt which currently operates
throughout its home country with four main regional offices. Currently this constriction company
has gained very high success in Egypt, so that upper management of the company has decided to
expand its business operations in other countries of Gulf region. Nowadays, this company has a
workforce of 14000 staff or employees who always puts their huge efforts in existing workplace.
The construction company mainly works in different sectors, like; infrastructure, energy and
buildings etc. Current goal of this company is to expand its business operations, but top-level
management of this company should be aware about different challenges which company will
face while expanding own operations of business in other countries of Gulf region. In this
situation, there are upper management of this company need to take action towards effectively
dealing with challenges which it will face in the process of business expansion (Pedro and
Macário, 2016). In the series of business expansion challenges, some key or prime challenges
has been discussed below that existing construction company can face in while expanding its
operations.
Finding appropriate resources

This is one of the key challenges that construction company can face while expanding its
business operations in different countries of Guld region. Basically, a company always have full
knowledge in own home country about how to arrange different resources, but in the case of new
country or new place, a business need to conduct deep market research for finding productive
ways to arrange different appropriate resources. In this situation, upper management within
Egyptian construction company can face this challenge that is relating to resources, so that
before starting its operations in other Gulf countries, company need for conducting strong market
research to find out proper ways which will give required and appropriate resources to this
construction company within other Gulf countries. However, this is really tough challenge to this
company, because many of countries within the Gulf region has in their developing stage. In
means, only few countries exist within this region which has well-developed economic system,
so that it is very tough challenge to arrange appropriate resources within under-developed and
developing countries of Gulf region (Zetterberg and Wojcik, 2017). The company need to make
an effective pre-plan for systematically dealing with this challenge in business expansion
process.
Strict government policy
Currently Kuwait, Bahrain, Iraq, Qatar, Oman, Saudi Arabia and the UAE
(United Arab Emirates) etc. are some key countries within Gulf region, in which many of
countries has very strict government policies which mainly not favourable to this Egyptian
company. Strict government policies mean, many times governments within many countries has
imposed very huge taxation rates on outside businesses or companies which wants to expand
their business operations in these countries. Sometimes, government within counties imposed
some strict rules and regulations on MNCs. In this situation, while expanding business
operations in Gulf countries, that Egyptian construction company will need to follow all policies
of local governments where it will be expanded its business operation, no matters these policies
are strict or favourable. Basically, strict government policy of a country gives tough challenge to
a company in systematically running its business operations. For example; government within
some Gulf countries not allows businesses to give jobs to women, in which this type of policies
give challenge to find appropriate employees in the workplace (Ghazali, Abd Rashid and
Sadullah, 2018). Reason is, sometimes, woman has more effective workability than man. There

are existing management within this Egyptian company need to take decisions towards
systematically dealing with this challenge as well.
Financial challenges
Currently the company is using lots of funding sources within its home country Egypt,
because existing management of this company is completely aware about the potential funding
sources in its home country. Basically, funding sources helps to this company for fulfilling its
funding requirements. In this situation, while expanding business operations in other Gulf
countries, this company can face different challenges relating to financial aspect. So that, upper
management of this company need to give order to research and development (R&D) team for
conducing extra-ordinary research activities in these other Gulf countries to find out very
appropriate sources of funding here for the company. Of course, this is very challenging and
tough task to this Egyptian company, but after conducting excellent market research, this
company can simply enable to use various funding sources within this company.
Currently in Egypt, there are banks, investors, financial institutions, friends and family
etc. key potential funding sources to company (Bruno and et.al., 2018). However, this is may not
possible that, company can enable to raise fund from these all sources in these countries as well,
because banks and financial institutions many of Gulf countries not believe providing funding
facility to companies which came from outside. This is the main challenge to the company, in
which existing management of company have to convince these banks and financial institutions
to provide fund. Currently this is the only way to company for achieving appropriate funding
sources while expanding business operations in these countries.
Challenges relating to people management
The company of Egypt can face challenges relating to people management also while
expanding its business operations in other countries of Gulf region. Suppose, when company will
be started its business operations in these countries, then HRM (human resource management) of
company will need to put its huge efforts for systematically hiring different employees in these
countries. According to different business reports, currently many Gulf countries suffers from
shortage of employees, so that many people of Asia came here to get appropriate employment. In
this situation, when this Egyptian company expand its business operation in these countries, on

that time top-level management of company will need to manage people or employees who came
from different provinces. This is really tough task to the company, because currently this
company manages people or employees who generally came from only its home country Egypt
(Cheng and et.al., 2018). In this situation, upper management at existing Egyptian company need
to take quick actions towards developing some effective strategies which can contribute in
managing different people or employees while expanding business operations in these Gulf
countries.

REFERENCES
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