Strategy and Society Porter

1. STRATEGY AND SOCIETY
The link between competitive advantage and
Corporate Social Responsibility
Section C – Group 2
Avishek Dasgupta - 13P
Ashir Madaan - 13P
Kanika Virmani - 13P146
Rahul Aggarwal- 13P
Siddharth Gautam - 13P
Tarun Gupta - 13P177

2. Introduction
This article presents a new way to look at the
interdependence of business and society and
shows that corporate success and social welfare
are not a zero sum game.
• Governments, activists and the media hold companies
responsible for social consequence of their activities
• Growing Publicity given to company rankings on performance of
their CSR despite their questionable methodologies
• Led to fragmented approaches to CSR which are disconnected
from business and strategy
• CSR can be much more than a cost, a constraint and can be a
source of opportunity, innovation and competitive advantage

3. Emergence of CSR
• Public Responses:
• For Nike, NY Times reported abusive labor practices
at its Indonesian suppliers in 1990s
• Shell Oil’s decision to sink the Brent Spar, an
obsolete oil rig in the North Sea led to Greenpeace
protests
• Pharmaceutical companies expected to respond to
the AIDS pandemic in Africa even though it was far
removed from heir primary product lines and
markets
• Fast food and packaged food companies held
Responsible to obesity and poor nutrition

4. Emergence of CSR
• Activists targeting big corporations
• Activists tend to target the most visible or successful
corporations to bring attention to an issue, irrespective
of impact
• Nestle, world’s largest purveyor of bottled water
became a major target in the global debate about
access to fresh water
• Governmental regulations
• In UK, companies have to disclose ethical, social and
environmental risk in its annual report

5. Corporate attitude towards CSR
• Currently, most CSR activities are done only for public
relations and media
• Led to glossy CSR reports that showcase companies’
social and environmental good deeds
• Non coherent framework for CSR activities
• Philanthropic initiatives are expressed in terms of dollars
or volunteer hours spent but almost never in terms of
impact

6. Prevailing justification for CSR
Moral Obligation
• Achieving commercial success in a way that honors ethical
values and respect cultures, communities and natural
environment
• It doesn’t tell how to balance one social benefit against
another or against its financial cost
Sustainability
• Meeting needs of present without compromising on future
• Companies should operate in ways that secure long term
economic performance and avoid social detrimental short
term behavior
• It doesn’t say anything as to how the tradeoff is to be made

7. Prevailing justification for CSR
License 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
• Though it fosters a constructive dialogue, companies often transfer
their CSR agendas to outsiders
Reputation
• Used to justify CSR initiatives on the grounds that it 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

8. 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
Result:
Thus they neither create a meaningful social impact nor
strengthen firms long term competitiveness

9. Integrating Business and Society
(Porter and Kramer’s theory)
Large level of
Interdependence
between Business and
Society
Both business decisions and social policies must follow the
principle of shared value creation
Value Chain impact on
CSR Activities
• Every aspect of a company’s value chain comes in
contact with the society either in a positive or negative
manner.
• A company can strategise its CSR through mapping its
value chain touch points on society
Inside Out Linkages Outside In Linkages
Impact of a value chain
activity of a company on
the society
Influence of external
social conditions on
organization
Successful
Companies
Healthy Society

10. Mapping Company Value Chain To
CSR: Looking Inside
Inbound
Logistics
Operation
s
Outbound
Logistics
Marketing
and sales
After
Sales
Service
Firm Infrastructure
Human Resource Management
Technology Development
Procurement
Support
Activities
Primary
Activities
Transportation
Impact - Emissions,
Congestion,
Accident
Biodiversity
impact,
Energy &
Water Waste
Transport
Impacts,
Improper
packaging
Pricing ,
False
Advertise
ments
Disposal of
Obsolete Products,
Customer Privacy

11. Mapping the Diamond to CSR: Looking
outside
Rules and
Incentives that
govern
competition
Local Demand
Conditions
Local availability
of Supporting
Industries
Quality of
Business Inputs
• Availability of Human
Resources
• Access to research
Institutions and
universities
• Efficient Physical
Infrastructure
• Fair Competition
(absence of trade
barriers)
• IP Protection
• Transparency (Financial
Reporting)
• Rule of law
• Sophistication of Local
Demand
• Regulatory Standards
• Unusual Local needs
that can be served
nationally
• Availability of Ancillary
Industries
• Presence of Clusters
• Presence of Related
Firms

12. Choosing which social issues to
address
Generic Social
Issues
• Social Issues
that are not
significantly
affected by a
company’s
operations
• Has no material
effect on long
term
competitiveness
Value Chain Social
Impacts
• Social issues
that are
significantly
affected by a
company’s
activities
• Touch points
between society
and value chain
Social Dimensions
of Competitive
Context
• Social issues in
the external
environment that
significantly
affect drivers of
competitiveness
• Effects are
generally long
term

13. Creating a Corporate social agenda
An affirmative Corporate Social Agenda moves from mitigating harm to
reinforcing corporate strategy through social progress
Responsive CSR
• Good corporate citizenship
• Mitigating harm arising from firm’s value chain
activities
Strategic CSR
• Transform value-chain activities to benefit society
while reinforcing strategy
• Strategic Philanthropy that leverages capabilities to
improve salient areas of competitive context
• Closer the social issue – greater the leverage

14. Creating a social dimension to the
value proposition
Unique Value
Proposition
Lies at the heart of every strategy. A set of needs that
only the company can meet
The Most Strategic CSR occurs when a company
adds a social dimension to its value proposition
Whole Foods
Market
Unique Value
Proposition
Social
Dimension
• Critical analysis of procured ingredients to weed out
unhealthy or environmentally damaged ones
• Use of Unbleached and Unbromated Flour
• Use of Environment Friendly energy
• Turning Bio-Degradable waste into Biofuels
Sell, Organic, natural and healthy food products to
customers who are passionate about food and the
environment

15. Strategic CSR
• Adding a social dimension to value proposition and
making social impact integral to its overall strategy
resulting in competitive advantage
• Why social value proposition is important?
• Increasing Government Regulations
• Exposure to criticism
• Consumer’s attention to social issues

21. Organizing for CSR
Create shared value which should be viewed like R&D, a long
term investment in company’s future competitiveness
Shift focus from an emphasis on substance rather than
image
Measure social impact rather than stakeholder
satisfaction
CSR needs to be incorporated in the job profiles
Choose which issues to focus upon

22. Moral Purpose of Business
What CSR is not
•Making philanthropic
contributions
•Undoing business wrongs
What CSR is
•Choosing a set of societal
problems that we are best
equipped to resolve
•Finding a fit between
strategy and social
responsibility
•Creating shared value to
lead to self sustaining
solution.