Corporate Responsibility and Society MNGT 5990

Corporate Responsibility and SocietyMNGT 5990

Fall 2013 - Shanghai, PRCRobert Serben, Ph.D.

Week 4 –Strategic Context

MNGT 5990. Corporate Responsibility and Society

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This week

Continuation of “complexity”

Sustainability

“Green washing”


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Ideally, strategy should….

Vision: Why the organization exists

Mission: What will do done to attain vision

Strategy: How to achieve vision and mission

Tactics: Actions to implement strategy

Alig

ned

…appeal to multiple stakeholders


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Ideally, strategy should be….

• Simply expressed• Reflective of reality• Measurable• Executable• Known by stakeholders But…


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…things are changing

Economist Intelligence Unit. "The Complexity Challenge: How Businesses Are Bearing Up." The Economist, Spring 2011. Web. 29 May 2013. <http://www.managementthinking.eiu.com/complexity-challenge.html>.


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Not everyone understands



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What’s going on



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Strategy and CSR

Strategies are executed in a stakeholder environment

Customers

SuppliersCommunity

Employees

Competitive environment

Strategy


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CSR filter

1) Strategies are executed in a stakeholder environment

2) As the condition of stakeholders change, the definition of social harm may change

Benefit: CSR filter keeps strategic plans in tune with evolving stakeholder concerns


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Strategic CSR

SCSRStrategy CSR

Strategy: how a business competes in the marketplace

CSR: Considers the impact on stakeholders

SCSR: intersection of the two

WHY?

CSR filter

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3

2


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Five driving forces of CSR

1. Growing affluence2. Ecological sustainability3. Globalization4. Free flow of information5. Value of brands


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The CSR hierarchy – p.6

Economic Responsibilities

Legal Responsibilities

Ethical Responsibilities

DiscretionaryResponsibilities

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R


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Affluence


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Affluence

By 2030, the World Bank estimates there will be some 1.2 billion middleclassconsumers globally and overall emerging markets will play a largerrole.

Economist Intelligence Unit. "Service 2020: Megatrends for the Decade Ahead." The Economist, July 2011. Web. 29 May 2013. <static.bdo.uk.com/.../Service_2020_megatrends_for_the_decade_ahead....>.


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Sustainability

• “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

– Gro Harlem Bruntland. 1987 Bruntland Report


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Costa Coffee


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http://www.costa.co.uk/costa-coffee/responsible-coffee/




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What companies can do in the future to remain competitive (2020 Megatrends)

• “Recognize that service will be the most important competitive differentiator in the future. 55% of respondents expect to compete on service in 2020, well ahead of quality (33%) and price (9%)

• Track feedback and complaints. 48% more of those companies that provide excellent service have developed proper feedback and complaints systems in place. They're also more likely to use them for identifying service weaknesses.

• Empower your employees. 76% of leading companies have devolved decision making to their staff, compared with 44% of the others. They prioritize training and defining service standards and goals over investing in standardized service processes.

• Look at information-enabled customers rather than technological changes. In other words, the technology behind social media is secondary to what it allows customers and organizations to do.”


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Ecological sustainability

Climate change Resource depletion


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Remember - Walmart and sustainability

• Walmart’s environmental goals– “To be supplied 100% renewable energy – To create zero waste– To sell products that sustain our resources and

environment”


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The “market” for sustainability

• “Perhaps more interesting is the fast emerging trend of sustainability being seen as a source - even the source -of revenue and business growth.”

– Accenture. "Long-term Growth, Short Term Differentiation and Profits from Sustainable Products and Services. a Global Survey of Business Executives." Accenture, 2012. Web. 29 May 2013. <www.accenture.com/.../PDF/Accenture-Long-Term-Growth-Short-Term-...>.


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Accenture. "Long-term Growth, Short Term Differentiation and Profits from Sustainable Products and Services. a Global Survey of Business Executives." Accenture, 2012. Web. 29 May 2013. <www.accenture.com/.../PDF/Accenture-Long-Term-Growth-Short-Term-...>.


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Accenture. "Long-term Growth, Short Term Differentiation and Profits from Sustainable Products and Services. a Global Survey of Business Executives." Accenture, 2012. Web. 29 May 2013. <www.accenture.com/.../PDF/Accenture-Long-Term-Growth-Short-Term-...>.


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Globalization – and local

1. Industrialization 2. International trade 3. Globalization

Time/extent of globalization

Stak

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der a

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info

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Internet growth

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Free flow of information

• Empowered consumers

• Increased the influence of NGOs

• Enhanced the power of the media

Stakeholder perspective– in action

May 15, 2013http://abcnews.go.com/Blotter/wal-mart-fires-supplier-bangladesh-revelation/story?id=19188673



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Free flow of information• “Businesses spend millions to cultivate the

reputations; now consumer evaluations can make or break them instantly.”– Amazon.com – ratings– iTunes Apps – ratings– Service companies - ratings


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Value of brands

• Positive brand building– The body shop

• Brand insurance– Nike

• Crisis management– Tylenol – 1982


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Brand valuations

Web location: http://www.slashgear.com/apple-and-google-rated-as-top-two-most-valuable-global-brands-22283092/


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“Green washing”

• An abuse of CSR• Definition:

– The act of misleading consumers regarding the environmental practices of the company or the environmental benefits of a product or service. (p.109)


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Green washing

• Six “sins”– Hidden trade-off– No proof– Vagueness– Irrelevance– Fibbing– Lesser of the two evils

– Web location: http://sinsofgreenwashing.org/findings/the-seven-sins/index.html

http://sinsofgreenwashing.org/findings/the-seven-sins/index.html

http://sinsofgreenwashing.org/findings/the-seven-sins/index.html


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Green washing – consequences?“The notion of green washing was born from a critical view of companies’ environmental responsibility and focuses on why the public should be skeptical of companies’ green claims. The term was coined in the 1980s by Jay Westerveld who saw the inconsistency in hotels that didn’t have recycling programs but encouraged the reuse of towels (Romero, 2008). Westerveld accused hotels of making false claims about being environmentally responsible because hotels only adopted environmentally responsible practices that would reduce costs.”

Derville Gallicano, Tiffany. "A Critical Analysis of Green washing Claims." Public Relations Journal 5.3 (2011): 2. Web. 24 May 2013

The Strategic CSR model – page 111Vision statement

Mission statement

External environment

Internal competencies

Corporate operations

Strategy

Strategic imperatives

Strategic initiativesMNGT 5990. Corporate Responsibility and

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Sustainability

• Australia will begin pricing carbon in July 2012• Australian firms feel less prepared now than last year

for a low carbon future• More Australian firms are taking action to prepare

for carbon pricing….• Carbon pricing is here to stay… Price uncertainty…

biggest barrier to progress• The corporate carbon agenda has shifted towards

cost reductionEconomist Intelligence Unit. "Cleaning Up: Australia's Readiness for a Low Carbon Future. 2012 Progress Report." The Economist, May 2012. Web. 29 May 2013. http://www.managementthinking.eiu.com/cleaning-2012-progress-report.htmlMNGT 5990. Corporate Responsibility and

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Risk management

www.hks.harvard.edu/m-rcbg/.../workingpaper_10_kytle_ruggie.pdf


From the syllabus – course grading

COURSE REQUIREMENTS: Points Possible a. Class Attendance 300 b. Team course project 300 c. Participation in class discussions 300 d. The Final Examination 300


Weeks 7 and 8

• Week 7 – September 28– Team presentations

• Week 8 – October – Review for final exam


Online documents MNGT 5990 - CORPORATE RESPONSIBILITY AND SOCIETY End of course team presentati on Background : Precision Munich is a maker of scienti fi c and industr ial measurement equipment for the energy producti on industry. Headquartered in Munich, Germany, the company i s 150 years old and pr ivately owned by the Gruber family . It currently has offi ces and operati ons in Canada , the United Kingdom, Norway, Saudi Arabia, Kuwait , Venezuela, and the United States. Its client l i st includes some of the largest oil and natural gas producti on companies in the world . Precision Munich’s fi e ld producti on and refi nery instruments measure gas and oi l well pressure, fl ow, and temperature. At the retail gasol ine outlet , Precision Munich’s inst ruments measure inventory levels and fl ow volumes. The company’s products have “set the standard” for measurement in the producti on of petrochemica ls and high tech carbon based polymer products . Al l of the company’s products are note d for durabil ity, accuracy, and a low level mainte nance. Because of their super ior products , experti se, and experience, Precision Munich received approval from the Chinese government to open an offi ce in Shanghai and begin commercial operati ons in China . At th is point, Precis ion Munich’s sole c l ient is China Petrochemical Corporati on (Sinopec Group) . (Website : htt p://www.sinopecgroup.com/englis h/companyprofi le/Pages/default2012.html ) German companies are noted for the importance they place on the technical competency of their business executi ves. In keeping with this traditi on, the German executi ves opening the Shanghai offi ce are a mixture of scienti sts , engineers , and petrochemica l e xperts . In keeping with the broader German commercial culture, Precision Munich’s executi ves support business having a social responsibi l ity to the societi es in which they are acti ve. However, al l the executi ves are new to China and unfamil iar with how to construct a soc ial responsibi l ity program strategy appropriate to China. To insure a proper start to the constructi on of a corporate social responsibi l ity strategy, Precis ion Munich has contacted your fi rm (a CSR consultancy) for an initi al presentati on o f thoughts on seven (7) ques ti ons they’ve sent to you. Presentati on : Your team wil l assume the role of a CSR consulti ng fi rm headquartered in Shanghai. The questi ons from Precis ion Munich your team wil l address are:

1 . Should Precision Munich have a CSR program in China? If “yes,” why? If ‘ no,” why?

2. What objecti ves should Precision Munich’s CSR strategy in Ch ina pursue? 3. How wil l Precision Munich know if it is making progress?

MNGT 5990 Corporate Responsibil ity and Society Note to c lass for week 4 For this week – We will conti nue our look at CSR complexity in CSR. P lease be prepared to share with the c lass your v iews on the fo l lowing fi ve questi ons.

1. What industry does you company parti cipate in? (For, example, this might be informati on technology, or it coul d be constructi on.)

2. What change or changes are going on in that industry that may aff ect your

company’s business strategy?

3. Can you descr ibe your company’s business st rategy?

4. Which stakeholders might your company’s business strategy aff ect?

5. Do you bel ieve your company be able to meet the needs of its stakeholders in its business strategy?

Later in the c lass , we wil l form teams for the course presentati on. The case f or that presentati on is avai lable to you on l ine along with this week’s PowerPoint presentati on. You wil l have ti me in class to work on the team presentati on.


Team presentation – week 7

Presentation structure: Your team will offer a PowerPoint presentation to address seven CSR strategy questions. The PowerPoint will act as guide the audience’s visual guide to your presentation. You will have up to 20 minutes for your presentation. At the conclusion of your presentation, your team will offer to address questions from either the professor or class members.



PowerPoint format: Every team presentation will have a title slide with the title of your presentation, the name of your firm, the number of your class team. • The second page will contain the name

(printed in English) and student number of you team.

• Every PowerPoint slide will be numbered.



Evaluation Your team’s presentation will be evaluated on:

– Participation in the presentation by all team members

– Quality and specificity of information presented in the questions addressed by your presentation

– Use of course concepts and principles in the presentation



A copy of your team’s presentation will be sent to the professor prior the Saturday it is presented



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Next week

Documents

Corporate Responsibility and Society MNGT 5990