June 14, 2013

Seven steps toward CSR strategy

Step One. Analyse social issue opportunities, competitive environment, and nonmarket stakeholders including potential creation of competitive advantage

Porter and Kramer (2006) have developed an approach for how firms can identify relevant issues central to the firm's business. The firm should first look "inside-out" by examining its own value chain. Each elements of the value chain had significant social and environment impacts. The primary activities of inbound logistics, operations, outbound logistics, marketing and sales, and after-sales service all provide clues as to the potential impacts of the firm on society. Strategy has examined the impact of managerial perception on decision-making, given bounded rationality; it is inevitable that managers across firms have varying understandings of the market environment.

Step two. Analyse firm resources and capability to see whether the firm can take advantage of those opportunities

The resource based view (RBV) of the firm assert that competitive advantage depends on firm resources, which according to Barney include "all assets, capabilities, organisation processes, firm attributes, information, knowledge, etc. controlled by a firm that enable the firm to conceive of and implement strategy that improve performance."

Step three. Evaluate firm identity (corporate culture, value, etc.) in terms of social needs and opportunities.

When firm decides to engage in social strategy its success or failure inevitably depends on firm characteristics and behaviour that can be recognized as corporate culture, firm strength and weaknesses.

Step four. If the firm does not have requisite resources and capabilities, determine the means and cost of acquiring them. They may consider alliances and collaboration.

Within the social strategy, firms then have the option either to outsource social action through charitable contributions, to internalize social projects by undertaking them in-house or to collaborate with other allies. The incorporate activities within the firm's value chain or buy from a supplier, is at the heart of corporate social strategy.

Step five. Create a plan integrating issues, stakeholders, identity, resources, competitive environment and expected outcomes.

Step Six. Implement the plan

Social strategy requires solid and long-term investment in values, including participative management practices.

Step seven. Measure and evaluate performance

The key difference between business strategy and social strategy is the differing way in which they measure performance and order activities. The real option of methods of evaluation is especially relevant to the valuation of social projects. It requires careful evaluation of the costs and effectiveness of social projects of the firm.

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