Strategy & Society“The Link Between Competitive Advantage & Corporate Social

Responsibility”(Porter Kramer Strategy Society)

Group 6 :Angie Pritta C.

Niken Dian Permata SariReni Hapsari

Satya Mahardika

...Prolegomenon...

• CSR has emerged as an inescapable priority for business leaders in every country

• The fact is, the prevailing approaches to CSR are so fragmented and so disconnected from business and strategy as to obsecure many greatest opportunities for company to benefit society

• When looked at strategically, CSR can become a source of tremendous social progress.

...The Emergence of CSR...

• Public issues :– Nike consumer boycott in the early 1990– Shell Oil’s decision to sink the Brent Spar got

Greenpeace protest in 1995– Fast food and packaged foo companies are now

being held responsible for obesity and poor nutrition

...Prevailing Justifications for CSR...

• Consideration of company doing CSR :– Moral obligation– Sustainability– License to operate– Reputation

Prevailing Justification for CSR• LISENCE-TO-OPERATE- Tacit or explicit permission from govt, communities and other

stakeholders.- Offers a concrete way of identifying social issues that matter to its

stakeholders.

• REPUTATION- CSR will improve company’s image, strengthen brand and raise the value

of stock.- Studies on companies social reputation on consumer purchases and stock

market performance have been inconclusive.

Prevailing Justification for CSR

• All the four school of thought focus on the tension between business and society rather than their interdependence

• They are not tied to the strategy and operations of the company and thus are not sufficient to help the company identify, prioritize and address social issues that matter it the most/where it can create a biggest impact

• Results : Thus they neither create a meaningful social impact nor strengthen firms long term competitiveness.

Integrating Business and Society

Both business decisions and social policies must follow the principle of shared value.

SUCCESSFUL CORPORATION HEALTHY SOCIETY

Looking Inside-Out : Mapping The Social Impact of the Value Chain

Every activity in company’s value chain touches communities in which the firm operates, creating positive or negative social

`consequences.

Looking Outside-In : Social Influence on Competitiveness

1. The quantity and quality of available business inputs.

2. The rules and incentives that govern competition.

3. The size and sophistication of local demand.

4. The local availibility of supporting industries.

CHOOSING WHICH SOCIAL ISSUES ADDRESS

Creating a Corporate Social Agenda

• Responsive CSR• Strategic CSR

An affirmative corporate social agenda moves from mitigating harm to reinforcing corporate strategy through

social progress.

Responsive Corporate Social Responsibility

1. Acting as a good corporate citizen.Being a good corporate citizen [A Sine Qua Non of CSR]

– Comply with society’s expectations• (e.g. law, custom, ethics)

2. Mitigating existing or anticipated adverse effects from business activities.

– Minimize and mitigate any negative impacts of value chain activities by adopting a checklist approach to CSR.

Strategic Corporate Social Responsibility

• Select a small number of initiatives whose social and business benefits are large and distinctive – “an explicit and affirmative corporate social agenda”– Ideally, these become a social dimension to the value proposition of the company

leading to Creating Shared Value.– Michael Porter, Mark Kramer,

– Harvard business Review, January, 2011

Strategy must go beyond best practices. It is about choosing a unique position – doing things differently from competitors in a way that lower costs or better serves a particular set of customer needs. Many opportunities to pioneer innovations to benefit both society and a company’s own competitiveness can arise in the product offering and the value chain.

• Toyota response to concerns over automobile emissions. Toyota Prius, the hybrid electric/gasoline vehicle, is the first in a series of innovative car models that have produced competitive advantages and environmental benefits.

• Voted 2004 Car of the Year by Motor Trend magazine, Prius has given Toyota a lead so substantial that Ford and other car companies are licensing the technology. Toyota has created a unique position with customers and is well on its way to establishing its technology as the world standard.

Creating social dimension to the value proposition

• Value propositon– - Qualitative– - Quantitave

Organizing for csr

- Strategy is always abot making choice, and success in csr is no different.- Its about choosing which social issues to focus on.

The moral purpose of business

- Perceiving social responsibility as building shared value rather than as damage control as a PR campaign will require dramatically different thinking in business.- Csr will become increasing important to competitive success.