Fortune 500 Company is a list which is compiled by Fortune magazine each May by ranking the top public and private corporations in the United States. The organizations finding themselves in this list are those that have high gross revenue. In addition, these companies are quite critical in the US economy as they are very influential in the global trade considering that they contribute highly to the Gross Domestic Product of the globe (EBSCOhost, 2012). Furthermore, these corporations have a significant role in determining the government policies recognizing their contribution to the American economy. This essay will pick Berkshire Hathaway as one of the corporations which are a regular in the Fortune 500 Company and examine its strategic philanthropic activities. More so the article will analyse these philanthropic activities affect its profits, brand, image, turnover and society as well as disadvantages and associated costs experienced by the company as a result of its charitable activities.
Berkshire Hathaway Fact File
Berkshire Hathaway Inc., one of the American multinational conglomerate companies which have its headquarters in Omaha, Nebraska, USA. This multinational corporation is constantly featuring in the Fortune 500 list over the years. This multinational company has a long, successful story having started operations around 1839 as a textile manufacturing company. Over the years the textile manufacturing company merged with other companies to form what is now Berkshire Hathaway. This company is run by Warren Buffet who began running it from 1965 up to date. Warren Buffett is the President and the company’s Chairman of the Board. Berkshire Hathaway operates now owns a diverse range of businesses including retail, confectionery, railroad jewelry sales, home furnishings, insurance encyclopedias, vacuum cleaners, newspaper publishing, manufacture of uniforms, regional gas and electric sales (Irwin, 2015).
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Berkshire Hathaway Strategic Philanthropy
Most companies in the US have taken up philanthropic activities which are viewed as a means of giving back to the community for being part of a company’s success story. The Berkshire Hathaway Company is not left behind in such philanthropic activities where it donates many billions of donations to charities. Furthermore, according to Baron and Lachenaur (2016), Warren Buffett the Company’s President is on record for pledging to donate 99% of his fortune, which is about $ 66.4 billion which is majorly in Berkshire stock for philanthropic causes. This is to be done through the Bill and Melinda Gates Foundation so as to help in the enhancement of health care, improvement of education and a reduction of the extreme poverty faced by most of the population of the globe. More so, Warren Buffett has been giving donations to Bill and Melinda Gates Foundation in addition to other four foundations since 2006 with the total donations totalling to $21.5 billion as per the year 2016 (Baron, & Lachenauer, 2016). Further, Warren Buffett joined hands with Bill Gates in encouraging other billionaires like themselves to give donations to change the world and make it a better place. As a result of their contribution, Giving Pledge was born, and much more billionaires heeded the humanitarian cause.
Impacts of Berkshire Hathaway strategic philanthropy on its profits, brand, image, turnover and society as a whole
The philanthropic activities adopted by Berkshire Hathaway Company have many impacts on the various aspects surrounding its operations. As discussed earlier, this company is very keen on giving back to the society through donations to philanthropic causes. This company is very profitable and giving back to the community work towards improving the business’s profits, turnover, brand, image and the society as a whole. According to Robins (2015), giving back to the society through philanthropy may work toward alleviating the company’s profit and image when done properly and this has led to many companies including Berkshire Hathaway to be engaged in philanthropy. Ultimately the society which benefits from the investments in education, health care, and poverty eradication appreciates this company more and are likely to purchase more of their products as well as recommend others to invest in this corporation.
Disadvantages and associated costs experienced by Berkshire Hathaway as a result of its strategic philanthropy practices
The philanthropic practices conducted by Berkshire Hathaway apart from helping in building the brand and image of the company are not always a smooth sailing. This is because it comes with a few disadvantages and associated costs here and there. According to Baron & Lachenauer, 2016 some critics feel that the continuous and eventual contribution of large donations will work to then disadvantage for this company which took so many years to build. The critics believe that Warren Buffett is gambling with the company’s fortunes through his philanthropic spirit which could see him undermining the company’s control and ownership which for years have been the company’s success pillars. Consequently, giving up of such posts could ultimately lead to the company’s downfall majorly contributed by the liquidation of a company's shares by the outside investors allowed in through the donations (Baron, & Lachenauer, 2016).
In conclusion, the Fortune 500 list, which is a comprehensive list of the successful US companies and which is published every May is crucial in painting a clear picture of the companies contributing to the US economy GDP. Berkshire Hathaway Inc. which features in this list annually is a major multinational corporation with interests in various business operations. This company is keen on giving back to the society through philanthropic activities in five foundations, including Bill and Melinda Gates Foundation. However, in as much as this philanthropy helps in building its brand, image and increasing profit it may have negative consequences through the surrendering of control and ownership to outside investors.
References
Baron, J. & Lachenauer, R. (2016). Warren Buffett’s Risky Final Bet. Harvard Business Review. Retrieved from https://hbr.org/2016/04/warren-buffetts-risky-final-bet-2.
Irwin, N. (2015). Why Warren Buffett is Worth $72 Billion and You’re not: Two Theories on Berkshire Hathaway. New York Times . Retrieved from https://www.nytimes.com/2015/03/03/upshot/why-warren-buffett-is-worth-72-billion-and-youre-not-two-theories-on-berkshire-hathaway.html?_r=0.
Robins, R. (5 May 2015). Does Corporate Social Responsibility Increase Profits? Business Ethics. Retrieved from http://business-ethics.com/2015/05/05/does-corporate-social-responsibility-increase-profits/.
EBSCOhost. (2012). The Data: Global locations of the Fortune 500 companies . Retrieved from http://connection.ebscohost.com/c/articles/77276926/data-global-locations-fortune-500-companies.
