GGSR Chapter 2 2nd Sem 23 24

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STRATEGIC MANAGEMENT OF

STAKEHOLDER
RELATIONSHIP
CHAPTER 2
APPRECIATION

• CSR is an “ongoing commitment” of organizations.


• This is to ensure accountability to the stakeholders its existence has an impact
on.
STRATEGIC CSR EXPLAINED

It is a process in which businesses evaluate their various stakeholders’ changing


demands and how these demands are to be met or satisfied.
NOTE: In creating a Strategic CSR, it must involve a thought-out planning and
execution.
Whatever the company’s plans have on its CSR, it cannot be effective unless the
strategy aligns its stakeholder concerns with corporate goals.
STRATEGY
• It is defined as a plan of action taken to achieve objectives.
• It involves three (3) steps: FORMULATION, IMPLEMENTATION and EVALUATION.
STRATEGIC
MANAGEMENT

It is the process of creating a


competitive advantage over its
competitors and sustaining this
advantage long term.
PROCESS OF STRATEGIC
MANAGEMENT
ESTABLISHED
GOALS

This is initially performed by


creating and / or clarifying your
business vision / mission and
identifying goals / objectives.
VISION
• What the company envisions itself to be in the future or to become
EXAMPLE OF VISION

• Take note that Vision & Mission


are two different things.
ANOTHER EXAMPLE OF VISION

Check this Vision Statement from


Pepsi and compare this with the
previous one.
MISSION

It describes what the company is all


about, who they are, what and how
they do things, and for whom
• Desired outcomes of planning,
broader than objectives
OBJECTIVES
Aimed targets that are needed to
achieve goals
SCAN
ENVIRONMENT

• Perform a thorough analysis and assessment of


the INTERNAL and EXTERNAL
environment of the company.
EXTERNAL
• Looks at the external opportunities and threats, given the dynamics of a particular industry
INTERNAL
Looks at a company’s strengths and
weaknesses by assessing its resources
FORMULATION

• Develops top-level strategies that


can be trickled down to the rest of
the organization.
IMPLEMENTATION
Executes developed plans by providing detailed
objectives and action plans
Measures and assesses results, and recommends changes for improvement if
necessary.
Who are • Are individuals or group of people who can be affected by
the activities engaged in by corporations in achieving their
stakeholders? goals.
KEY STAKEHOLDERS

They are shareholders


• Investors;
• Owners;
• Partners; or
• Anyone who has a financial stake in
the company;
• Customers;
• Employees;
• Suppliers; and
• Society (Gov’t, Civil Society,
Institutions.
Example of how stakeholders
are affected by mgt decision

• New Coke
• In 1985, in an attempt to re-energize its brand, Coca-Cola
announced the unthinkable: It was changing its formula
for its original Coca-Cola for the first time in 99 years.
Often referred to as New Coke, the reformulated beverage
was met with outrage from consumers who wanted their
old Coke back. And 79 days later, Coca-Cola gave
consumers their wish. To resolve the situation, Coca-Cola
Classic -- aka original Coke -- was sold alongside New
Coke, which later was rebranded as Coke II before it was
discontinued. But that wasn't the end of New Coke. In
2019, as a result of Coca-Cola's partnership with Netflix's
"Stranger Things," which featured New Coke throughout
its season three episodes, the beverage company released a
limited run of 12-ounce cans of New Coke that were
available as part of a bundle from CokeStore.com/1985.
STAKEHOLDER
THEORY
• This theory states that companies are
responsible for generating reasonable profits
for their shareholders but should also be
responsible for their stakeholders’ well-
being.
• See the illustration as provided in the book
with regard to industrial waste.
Stakeholder Theory
Example

• To illustrate, when a manufacturing


company produces industrial waste and
dumps it into a river, residents affected by
this unethical practice will demand the
proper disposal of chemicals as it affects
their right to clean air and water.
Stakeholder Theory
Example
• Employees of the company may also
be exposed to the toxic chemicals in
making the product and have the
right to demand protective gear and
processess that will not be harmful to
them.
• Note: These residents and
employees do not have any financial
or managerial participation except
maybe buying the products or
helping produce them, but their
concerns should be heard and be a
part of the company's decisions.
Stakeholder Theory
Example

• This is a moral claim exercised by


a stakeholder, and forms part of a
company's desired ethical
behavior.
STRATEGIC CSR

Note: In the early years of CSR, programs


were designed and developed with
minimal stakeholder engagement.
Strategic CSR starts within an organization
when it embeds and aligns its CSR
initiatives as part of the company's overall
strategy.
This simply means that a company's
objectives, strategies and core values take
into consideration the impact its operation
have on the stakeholders.
Encircled at right are the core or critical
parts of a strategic CSR framework:
STRATEGIC CSR

Similar to the process of strategic planning, an effective CSR strategy would entail performing the
following steps:
1. Identify the goals/objectives of the company.
2. Scan the environment by looking at the internal and external situations by which the company
operates.
The internal assessment looks at the vision, mission, resources, strengths and weaknesses of the
company.
The external assessment looks at the needs of the stakeholders, considering the given opportunities
and threats that are in line with corporate goals and objectives.
Note: Step 2 provides a foundation and aids in developing a strategic CSR program.
STRATEGIC CSR

3. Formulate a CSR strategy that is aligned


with corporate operations.
The company must identify how they will
approach their CSR initiatives (corporate
donation, work with foundations, or
intermediaries) and programs (single,
focused or multi-program activities), and
understand the needs of your target
beneficiaries.
STRATEGIC CSR

4. Implement the CSR program with


consistency
Cohesiveness of the entire process is
an important element of strategic
CSR.
STRATEGIC CSR
5. Evaluate the program if it has achieved its
desired objectives and outcomes.
If not, remedial efforts.
SUCCESS
INDICATORS

• For CSR to be strategic,


companies must manage
stakeholder relationships
effectively, for social
responsibility is primarily about
stakeholders' well-being.
ALIGNMENT OF CSR WITH BUSINESS STRATEGY

CSR

MARGINAL OR NEEDLESS SPENDING


SECONDARY; WITH LITTLE IMPACT ON
NOT PART OF THE CORE STAKEHOLDERS
BUSINESS

GROWING & PROFITABLE


BUSINESS & SATISFIED
STAKEHOLDERS
LEADERSHIP

• Passion: Most importantly-follow the lead of


"Management's Heart." Authenticity is key.
When you see that Management's heart is the
one leading, and when you keep the
community's best interest upfront - everything
becomes natural, cohesive, and authentic. It
becomes a value-added experience, not just for
the beneficiaries, but also for your own
employees.
• NOTE: A champion is necessary for CSR to
thrive in organizations.
• Support from top management is also a critical area since
LEADERSHIP resources usually will be coming from the board or
executive management's approval.
EMPLOYEE ENGAGEMENT

• One of the ways on how CSR can


be strengthened is through
employee volunteerism.
• This can be done through the
giving out of incentives.
• Positively influence employee
attituted and behavior at work.
• Apart from feeling good about
helping the community, employees
involved in CSR develop better
morale and feel proud of their
workplace.
COLLABORATION

• When organizations opt to work


together, they build social capital as
relationships develop over time.
COMMUNICATION
• Informing the various stakeholders on these success stories, no
matter how small will increase public trust and legitimacy.
VALUE CREATION

• The ultimate goal of business is to


create sustainable value for its
stakeholders.
• Companies that create value for
stakeholders through sustainable use
of natural resources, risk reduction,
reputation, trust, benevolence,
transparency, collaboration and many
more value-added initiates will have
truly performed their roles as ethical
and legitimate corporations in our
society.

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