CHAPTER 4CSR AS BUSINESS STRATEGY

How

CSR is integrated into Business strategies

CORPORATE TRENDS ON CSR

• Over the last decade, there is an increased “corporate giving” • Increased CSR initiatives

• Increased establishment of a corporate social norm to do good
• Most noticeably the transition from simply giving to giving as a strategy

ESTABLISHMENT OF A SOCIAL NORM TO DO GOOD
• Good Works = Good business: not only it is appropriate for the company to give back to the communities in which it operates, it is also SMART business. Healthy communities are important to the well being of the society and the overall communities • They can provide an environment that helps companies such as American Express grow, innovate, and attract outstanding talents. ---AMERICAN EXPRESS

ESTABLISHMENT OF A SOCIAL NORM TO DO GOOD

• There is a difference between a good and a great company. A good company offers excellent products and services. A great company also offers excellent products and services but also strives to make the world a better place. • Ford Motors Company CEO

A SHIFT FROM OBLIGATION TO STRATEGY
• There is a shift in making long term commitments to a specific social issues and initiative • It is a change from providing more than cash contributions • It is all about sourcing funds for philanthropic budgets, forming strategic alliances • Doing all of these and at the same time advancing business goals.

THE TRADITIONAL APPROACH
• CSR or doing good is all about fulfilling an obligation only

• Commitments were more of short term
• There was also the tendency to avoid issues concerning core business products to avoid any controversies such as being self serving • Choices about which issues to support and sponsors to be given were heavily influenced by preferences (wishes) of senior management and directors • Rather than choosing because of needs to support strategic business goals • “to do good, as easily as possible”, the result, simply give money or write a check

THE TRADITIONAL APPROACH
• Most donors would already be satisfied with being one of the corporate sponsors • Visibility for efforts made to help was not the goal or concern • Few attempts about integrating coordinating CSR programs with other corporate strategies and business units such as marketing, human resources and operations • There was little evaluation of the outcome for the business or social cause • Simply trust that good happened

THE NEW APPROACH
• Becomes the new model of “corporate giving”

• it is a strategic approach that will affect what are the cause/social issues to support; how to design and implement the program; how to evaluate outcomes • Business decision making reflects increased desire in “doing well and doing good”

THE NEW APPROACH
• Corporations are already picking a few strategic areas of focus that fit with corporate values • Selecting initiatives and programs that support business goals • Choosing social issues related to core products and core markets • Supporting social issues that provide opportunities to meet marketing objectives: increased market share; building the desired brand image/ identity

THE NEW APPROACH
• Choosing social issues based on their potential for positive support in times of corporate crisis • Involving many departments in the selection process. To have support in designing and implementation of programs • Taking on social issues the community, customers and employees care most about

THE NEW APPROACH
• In this new model, long term approach for commitments such as: corporate expertise; technological support; access to services; donation of retired company equipment • More efforts to share distribution channels (logistics) with cause partners; volunteer employee time, integrate these social causes in marketing, corporate communications, human resources, form strategic alliances with external partners. • Evaluating is very important in making corrections and public reporting answering the question: “what good did we do” • “doing all we can to do the most good, not just some good”

WHY DO GOOD AS A STRATEGY?
• “doing good” = engaging in CSR makes your business “look good” to potential customers, investors, financial analysts, annual reports, in the news • A study done by Business for Social Responsibility (non profit global organization) • The following are the benefits for business who are socially doing good

• Increased sales and market share
• Strengthen brand positioning • Enhance corporate image and clout • Increase ability to attract, motivate, and retain employees • Decrease operating cost • Increase appeal to investors and financial analyst.

INCREASED SALES AND MARKET SHARE
• Study conducted by Cone/Roper showed that there is significant benefits for companies involved in a social cause. • Cause oriented marketing activities had the strongest impact on people

• Consumers prefer companies that share their values and take action.
• Consumers are attracted to a company if they have positive feelings about or affinity toward the social cause supported by the company

STRENGTHEN BRAND POSITIONING
• Marketing efforts containing a larger amount of social content will gain more positive effect on brand judgment. • These marketing efforts should contain initiatives that are meant to make tangible improvements to social welfare

• For example: a program that would make a donation to an environmental organization for every purchase.
• Or. . . . • A program that would give free toys for every purchase. • KFC: a donation will be made for every upsize of a drink

IMPROVE CORPORATE IMAGE AND CLOUT
• Companies that demonstrate they are engaging in practices that satisfy and go beyond regulatory compliance requirements are being given less scrutiny and more free rein by the government

INCREASED ABILITY TO ATTRACT, MOTIVATE AND RETAIN EMPLOYEES
• Employees working in companies with cause related program are likely to say that they are proud of their company’s values • a company’s commitment to a certain cause can also be a factor for employees in deciding which company to work for

• In choosing for a company to work for, people also look at the corporate culture
• People will refuse to work for companies with negative corporate citizenship practices

DECREASED OPERATING COST/EXPENSES
• Decreased cost in operations can come from grants and incentives as a result of implementing a CSR project • Example: companies who adopt environmental projects can reduce waste, reuse materials, recycle and conserve water and energy • Can also potentially reduce advertising expenses as a result of increased free publicity • Example: The Body Shop active campaign against using animal testing. The World Business council for sustainable development wrote an article about it. • “the body shop was launched on the basis of fair prices for fairly produced cosmetics” • This generated so much FREE favorable publicity. There was no need to advertise.

INCREASED APPEAL TO INVESTORS AND FINANCIAL ANALYSTS
• There are reports that involvement in CSR may increase stock value of the company • This is because of the ability to attract new investors and reduce exposure to risk in the event of management crisis.

• This is because companies that are less exposed to social, environmental, and ethical risks are valued more by the market.

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