Full Answer Section

1. Long-Term Impact on Brand Reputation: While short-term financial gains may be tempting, long-term damage to the company’s reputation could outweigh these benefits. A company known for its inclusive mission may lose customer loyalty and face negative public opinion.
2. Legal and Ethical Implications: The CEO must consider any potential legal or ethical implications of the board’s decision. This may include antitrust concerns, consumer protection laws, and corporate social responsibility standards.

A Possible Course of Action

The CEO could propose a compromise that balances the company’s financial interests with its social mission. For example, he could suggest:

• Subsidized Memberships: Offering discounted memberships or financial assistance to low-income individuals and communities.
• Community Partnerships: Collaborating with local organizations to provide free or low-cost memberships to underserved populations.
• Targeted Marketing: Focusing marketing efforts on higher-income demographics while maintaining a presence in low-income areas.

Supporting Evidence from Academic Research

Numerous studies have shown the positive impact of corporate social responsibility on a company’s reputation, customer loyalty, and financial performance. For instance, research by Sen, Bhattacharya, and Korschun (2010) found that consumers are willing to pay a premium for products and services from companies that are perceived to be socially responsible.

Conclusion

While the board’s decision to raise membership fees may be financially sound, it is essential to consider the broader implications for the company’s reputation, social impact, and long-term sustainability. By prioritizing the company’s mission of inclusivity and exploring alternative strategies, the CEO can make a positive impact on both the company’s bottom line and its social legacy.