group 3_csr
TRANSCRIPT
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STRATEGY AND SOCIETY: THE LINK BETWEEN COMPETITIVE ADVANTAGE AND CORPORATE STRATEGY
Michael E. Porter&Mark R. Kramer
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The Emergence of CSR
Increasing attention to CSR from governments, activists, media, and others
Companies are being held accountable. For example, Nike faced an extensive consumer boycott after New York Times reported abusive labor practices in early 1990s
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Four prevailing justifications for CSR
Moral obligation
• Companies have a duty to be good citizens and to do the right thing
Sustainability
• Meeting the needs of present without compromising the ability of future generations to meet their own needs
License to operate
• Every company needs tacit or explicit permission from government to do business
Reputation
• To justify CRS activities on the grounds that activities will improve companies image
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Presumption of Conflict
Traditional approaches assume that companies and society are in conflict
Pits business against societyA zero-sum gameThis is counterproductive, since the two are
interdependentCompanies fail to recognize the importance of
CSR in their strategies
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Proactive Framework
In the past, CSR was treated more as an unavoidable cost
• To identify possible social consequences of action• To discover opportunities to benefit society and themselves• To discover CSR initiatives to address• To find the most effective way to do so
Better if viewed as a potential competitive advantage
Presents a framework
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Categorizing Corporate Social issues
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Strategic Approach to CSR
Generic Social Impacts
Value Chain Social Impacts
Competitive Context
Good citizen Mitigate harm from value chain
Strategic philanthropy
ResponsiveCSR
Transform value chain activities Strategic
CSR
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Framework for Strategy and Society
Looking inside out: Identify positive and negative social impacts of activities engaged in while doing business
Looking outside in: Societal impacts on a corporation’s competitive context and success in what it does◦There will be points of intersection where
there could be problems and/or where there could be opportunities
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Porter’s Generic Value Chain
Looking Inside Out: Managing social impact of value chain activities
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Porter’s Diamond Framework
Looking Outside In: Social influences on competitiveness
Context for Firm Strategy and Rivalry
Related and Supporting Industries
Factor (Input) Conditions
Local Demand Conditions
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Integrating Strategy and Society
Responsive CSR
• Act as a good corporate citizen• Mitigate harm from value chain activities
Strategic CSR
• Identify a small number of social impacts where the company• Can make a significant contribution to society while improving the• Long-term competitiveness of its business• Create a social dimension to the value proposition
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Benefits of the Integrative Framework
Identifying the points of intersectionChoosing which social issues to addressCreating a corporate social agenda
◦ “Responsive CSR” ◦ “Strategic CSR” (when CSR is incorporated into
strategy)Creating a social dimension to the value
proposition >>such that the value it offers to its customers also has a positive social impact
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Strategic CSRIntegrating External Context and Strategy: Nestlé in India
Nestlé entered Moga in 1962, when the region was in severe poverty
Local milk supply was hampered by small parcels of land, poor soil, periodic droughts, animal disease, and lack of a market
Nestlé established local milk purchasing organizations in each town
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Strategic CSRIntegrating External Context and Strategy: Nestlé in India
Nestlé invested in improving competitive context– Collection infrastructure such as refrigerated dairies
was accompanied by veterinarians, nutritionists, agronomists, and quality assurance experts to assist small farmers
– Medicines and nutritional supplements to improve animal health
– Monthly training sessions for local farmers– Wells to secure water supply for animals were dug
with financing and technical assistance from Nestlé
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Strategic CSRIntegrating External Context and Strategy: Nestlé in India
Nestlé has built a productive milk cluster in Moga sourcing milk from 75,000 farmers through 650 dairies
Moga has much improved social conditions and a far higher standard of living
Nestlé has developed a long-term competitive advantage in the milk cluster in numerous developing countries
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Organizing for CSR Unify corporate giving and CSR Engage operating management in identifying value
chain impacts and social dimensions of the competitive context
Incorporate social performance metrics into overall business measurement
Measure the social impact of company activities, not just stakeholder satisfaction
Companies need to shift CSR from a fragmented, defensive posture to an integrated, affirmative approach
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The Moral Purpose of Business
The most important thing a corporation can do for society is to contribute to a prosperous economy
Corporations are not responsible for all the world’s problems, nor do they have the resources to solve them all
Business has the tools, capabilities, and resources to make a far greater positive impact on social issues than most other institutions
Business is more transparent and more accountable than most foundations and NGOs
Addressing social issues through shared value strategies will lead to self-sustaining solutions
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Thank You
Submitted by:Group 3 | Section C
Amit Agarwala 12P124Apoorva Dave 12P133
Mayank Sharma 12P150Rajesh Kumar Chaudhary 12P158
Rishabh Nagori 12P163Varun Gopal 12P174