Corporate social responsibility hierarchy

Economic responsibility- Legal responsibility- Ethical responsibilities- Discretionary responsibility

(responsibilities that society imposes on you)
Example: Ikea has a sustainability manager, therefor sustainability is considered to be an important
issue.
Ikeas corporate social responsibility: making sure there is a supply of wood for their own business,
CSR is
-

A fluid concept
An integral element of the firms strategy (having a sustainability manager, someone responsible
means it is an integral part) It is not about charity
Way of maintaining the legitimacy of a firms action in the larger society (looking at all
stakeholders, customers, suppliers, everyone who has a stake in the corporation)
How well a firm has been able to navigate stakeholder concerns while implementing its business
model (is everyone happy?)
CSR is a source for competitive advantage, weeds you out from competition which is the goal
Key element of business strategy
CSR ultimately originates with modern-day leaders who view their roles as stewards
CSR is influencing legal system, law is being used to try and hold US firms accountable. If you do
not follow legal system, you may be subject to prison.
Learning portfolio:
4 paragraphs 5 sentences each
What you are learning in class: example the IKEA movie: what did you observe in that film?
1. About experience
2. Reflection on the film: actually for self-interest: what is your own opinion
3. Abstract concept: relate concepts to what you are actually working (self-interest or moral
reason for sustainability is an important concept that is written in the book)
4. Final paragraph: how do you apply it in practice? (This concept is being implementing like
that)
IKEA: doing lots of things to reduce cost of operation, because they need to be sustainable.

Growing green reading from textbook:

Becoming green (corporate social responsible) doesnt happen overnight, organizations go
through a process. Stages that organizations go through to become sustainable.
Strategies
Accentuate

An accentuate strategy involves playing up existent or latent green attributes in your current
portfolio. Example: papers who used to be recycled but not advertised (now companies are
advertising it)
Companies that have green products that do not even advertise it. (arm and hammer, now
advertising their bicarbonate de soude as being green)
Green approach is growing. If you do not have green products you will not survive in the market.
Acquire
If your portfolio has no obvious candidates for accentuation, a good alternative I to buy
someone elses green brand. Many high profile green acquisitions have been made since 2000,
including body shop by LOreal.
Architect
For companies with a history of innovation and substantial new-product development assets,
architecting green offerings- building them from scratch- becomes a possibility.
In the case of Ikea, they were artchitecting a product. Or we can say they are accentuating
(NOW they claim to be using sustainable wood, they have been using it for 20 years) Or they
acquired LED light bulbs.
In IKEA`s case they do all 3.
Are you the right talent for the organization to hire?
Not looking at degree but at value systems people have and their opinions

GET THE RIGHT TALENT

Its a waste of time to market green consumers, because they are suspicious of the motives.
Is this statement true? How will people know you offer green products if you don`t tell them?
Greenness is far down the list of qualities people seek in the products they buy.
Is this statement true? Higher in priorities now than was 20 years ago. Perceived value of green
products is high. Demand is so high for green products that the supply runs out.

The core issue here is identifying how green is relevant to creating value for customers.
Not only about customers, but also how businesses manage. The core is not only customers.
Many other reasons for going green.
Oath for new mangers to do no harm to the environment? Would such an oath work?
It would be really hard.

WEEK 2- Tuesday class

Poverty graph- Population living on less than 1$ a day, stats Canada 2007.
2.6 billion people live on less than 2$ a day.
The world economic pyramid
Developed market (75-100 population in million)
Emerging markets (1500 1750)
Developed markets: 4,000 (BOP)
What does it mean to be poor? Discussion
Daily life of a poor person- trying to find food and water for the day, shelter to live in.
Struggle to support family and children. Poor health due to malnutrition- underweight
Uneducated.
Do not care about things like fashion.
Videos: Slum manila
What do we see in picture of slum? Discussion
-slums close to urban city centers
No pluming, running water, garbage disposal and things we are used to.
Community looks down on them
as uncomfortable as it is for us to watch it, they are comfortable they smile and have fun.
They do business, have phones, etc.
Because they are not accustomed to luxury they are fine with it.
Dominant logics of MNCs
(slides on courselink)
Assumption:

The poor are not our target consumers, they cannot afford our product. Implication: Our cost
structure is a given, with our cost structure we cannot serve the BOP market.
The poor do not have use for products sold in developed countries. Implication: The poor might
need sanitation but cannot afford detergent in the formats we offer. Therefore there is no
market in BOP.

Only developed countries appreciate and pay for technological innovations. The BOP

Video 2- El ultimo Mercado

Businesses need to open markets to poor people
There is money at the BOP. The market is actually huge.
Multinational corporation
The poor are brand-concious

Slide with prices (selling shampoo for .4 cents, .1 for matches)

Assumption: At these low prices, you cannot sell.
You need to find a way around it, take away the limitations.
If you have to make a biscuit for 10 cents, you have to make it unhealthy- is this ethical?

3 principles:
1. Affordability (without compromising quality or efficacy)
2. Access (consider where the poor live and their work patterns)
3. Availability (cash on hand at a given point in time. Cannot defer buying decisions. Availability
(distribution efficiency) is key consideration in serving the BOP consumers.
Can create new markets, but must consider variability in cash flows, difficult access to traditional
markets for goods and services oriented towards the top of the pyramid.
Need to Completely change the way you do business.
The involvement of the private sector at the BOP can provide opportunities the the development of new
products and services.
Innovative products that add value- es nutritional value based ice cream, protein rich pizza.
Dignity and choice: When the poor get converted into consumers that acquire attention
Trust is a Prerequisite: Deep and traditional mistrust between BOP and large firms, Firms must focus on
building trust between themselves and the BOP.

WEEK 3- Tuesday class

Chapter 3: Who`s responsibility?
Read chapter 7- case on starbucks for thursday

Paper topic- What is the responsibility of business?

Synthesize concepts
Argument that corporate social responsibly is going to cause a distraction
If everyone in the world is going to consume, we need 3 earths. Not sustainable consumption
We need to change the way we do business. this is considered a distractive business model.
Conceptual tools for paper that we can use- Model by Stuart L. Hart. Sustainable Value Framework
Strategies for Sustainable Value
Look at what organizations do, and their future.
IKEA: doing lots of things to reduce cost of operation, because they need to be sustainable.
Corporate social resp is not an evolution, its a distraction.
Its not just the responsibility of the corporation, but the stakeholders as well. (consumers pushing
organizations to become more socially responsible)
Is the resp of the business just making money, or does it go beyond?
Is profit the end or the means?
Chapter 3- articles, read them and then synthesize your thoughts. Rational or economic arguments for
this.

Week 3 Thursday class

How do you propose a new strategy?
Strategy and society: The like between competitive advantage and CSR?
The competitiveness of companies depends on:
-Value that is perceived for their products vs competitive products
-By doing something better or different than other companies
-Depends on the market they are in (monopoly, etc)
-Size of competiveness
-Industry in which they operate
-Skills levels
-Safe working conditions
-A sense of equal opportunity (people are motivated and engaged if they sense equality)
-Engagement
-Low level of pollution
-Reputation
-Efficient use of resources

A healthy society depends on:

-Businesses that can create wealth
-Sust use of natural resources
-Low level of pollution and env deg
The value chain:
-Inbound logistics
-Operations
-Outbound logistics
-Marketing and sales
-After sales services
-Support functions

-To come up with strategy, Look at value chain and see where the company interacts with society
Generic social issues: good citizenship vs responsive CSR
Value chain impact: mitigate vs innovate
Competitive position: philanthropy vs CSR

What starbucks has done:

-Fair trade, since the beginning. this helps the business and helps them compete
-Business choice, and by choosing fair trade it makes sense.
Long term supply (going to farmers and pay them an average price)
Help their reputation- LEGITIMACY
economic reason for CSR- GUARANTEES THE SUPPLY
coffee has higher quality than timmies- legitmicacy
Looking at value chain, makingchoices helping them become more completitve (ex macdonald moving
to fair trade) trying to innovate
Mitigating or innovative? More mitigation, did not develop a new product. Did not solve any issue
Selling the experience
More mismangement than using CSR to complete product.
Helps them secure supply. Starbucks not only seres coffee but coffee beans. They have the supply and
so they can do that. By doing that they help societies in which they are operating
But is fair trade even good? Advantages vs disadvantages.
Cons: limits innovation
What can I do to make sure society is healthy and benefits
Ex Is ebola and AIDS a business issue?

**Apply value chain to proposal

Go through evaluation of operation
Mitigating vs transforming