BS NCP- 2

Submitted byPuja Pallavi Section- G 10bsphh010573

Q1. Differentiate between strategic innovation and business model innovation. Explain the same for the company of your choice. Ans: 1 Innovation leads to strategic renewal leads to perpetual growth. In an ever-changing economy, just focusing on product innovation is simply not enough. Innovation is a broad concept, including process innovation, social innovation, environmental innovation but also very important business innovation. Companies relying on growth by product innovation can easily be caught into their present business model. According to business strategist, Rowan Gibson, perpetual growth requires perpetual renewal. Its the only way to maintain continuity in a discontinuous world. And the fuel for renewal is innovation. Not merely innovation on the surface but deep, strategic innovation at the level of the core business model is necessary. Superficial kinds of innovation lead only to short-lived success, and in the worst case they may be followed by disastrous failure. A company that has done this really well is Britain's Tesco. Over the years, Tesco has not only continuously innovated within its traditional supermarket business, but has also innovated around its core business model - adding a string of non-traditional businesses, from petrol sales in the mid1970s to financial services, travel, legal advice, telecom and internet services, music downloads, gas and electricity, and online grocery today. This ability to gradually reinvent itself and its industry has helped turn Tesco into one of the largest and most successful retailers in the world. Perpetual growth requires perpetual renewal. It's the only way to maintain continuity in a discontinuous world. And the fuel for renewal is innovation. Not merely innovation at the margins but deep, strategic innovation at the level of the core business model.
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Business Model Innovation (BMI) refers to the creation, or reinvention, of a business itself. A business model innovation results in an entirely different type of company that competes not only on the value proposition of its offerings, but aligns its profit formula, resources and processes to enhance that value proposition, capture new market segments and alienate competitors. Strategic innovation Innovative strategies alone - without changes to either the underlying technologies or the products and services sold to customers - drive the success of many companies, such as Ikea. Strategic innovation is about innovating the strategy itself. It consists of the following:
1. Redefinition of the customer base - that is, how do we dramatically expand the size of the

market? For example, Apple made personal computers for individuals at a time when computers were used by corporations, scientific establishments, educational institutes and governments.
2. Reinvention of the concept of customer value - that is, how do we dramatically change the

value customers receive? For example, as well as selling hardware, IBM moved into supplying total business solutions.
3. Redesign of the end-to-end value chain architecture - that is, how do we dramatically

improve the efficiency of the end-to-end value chain from suppliers to customers? For example, Ikea uses standardization (meaning making one type of a product) as a route to become the worlds largest furniture retailer. For suppliers and customers, Ikea's standard flat pack furniture enables efficient transportation of these items.

In a world that is changing rapidly and in unpredictable ways, strategic innovation becomes vital to adapt to change. We know business model innovation when we see it and some business model innovators such as Ikea has become global market leaders. Also, there is good evidence that business model innovators have superior performance compared to other forms of innovation. The companies Ikea is a great example of successful strategy. This leads to the question of whether business model innovation and strategy are really just the same thing? Certainly successful business
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models should also have sound strategic principles behind them and one of these is the central concept of fit. This is an old idea made popular by Michael Porter in the 1980s and it is really about lining up all of your business operations behind a central logic of value creation. Using Ikea as an example of strategic fit, the fundamental logic of the business model is creating value through economies of scale. Large self-service stores in near wealthy population centers, products with shared components and flat-pack design all support the logic. Often when we see businesses getting into trouble it is because they are trying to mix different value propositions together or the established business model gets surpassed by others with better business models with superior value propositions. In my opinion, a good business model like Ikea can demonstrate how all of the components of the porters diamond model fit together and reinforce each other. Ikeas business vehicle is organic growth which gives them control over the operation. Their differentiators are well designed products at a competitive price and staging of growth has been rapid to capture scale. Fit can also be a source of competitive advantage because it is hard to replicate. Organizations are complex beasts and making everything work together takes time, effort and leadership.

I think incremental business model innovation is the same as executing a good strategy. The strategy is well thought out and successfully planned and implemented. However, I think that strategy and business model innovation diverges when we talk about radical business model innovation. This is because strategy is still based upon conventional thinking about planning, prediction and measurement. Moving to very different business models needs the tools and concepts from innovation management rather than predictions and plans from strategy textbooks.
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The potential of business model innovation is enormous. One of the most basic definitions of innovation is doing something different in a way that creates value. Innovation managers have focused on the doing something different part of the definition but we are a bit fuzzy about the value thing. When we take an innovation and build a reinforcing set of activities around it that are underpinned by a central customer value proposition then we really have the whole innovation thing working- and the observation that business model innovators top the class becomes perfectly understandable. Strategy and innovation can actually work together. They are two sides of the same coin. It worked in the case of IKEA.

Q2. What is the strategic purpose of CSR? When does it add value to an organization and when it does not? Are there any alternatives for CSR to make a strategic differentiation for an organization? Ans: 2 Strategic CSR Corporate Social Responsibility (CSR) is an organizations obligation to consider the interests of their customers, shareholders, employees and ecology and to consider social and environmental impact of their business activities. By incorporating CSR into core business processes, organization can achieve ultimate goal of achieving both social and corporate value. Strategic CSR is a business strategy that is integrated with core business objectives and core business competencies to create business value and positive environmental value, and is embedded in day-to-day business culture and operations By taking a strategic approach, companies can determine what activities they have the resources to devote to being socially responsible and can choose that which will strengthen their competitive advantage. By planning out CSR as part of a companys over all plan, organizations can ensure that profits and increasing shareholder value dont overshadow the need to behave ethically to their stakeholders.

Strategic CSR provides companies with solutions for: Balancing the creating of economic value with that of societal value How to manage their stakeholder relationships (especially those with competing
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values)

Identifying and responding to threats and opportunities facing their stakeholders Developing sustainable business practices Deciding the organizations capacity for philanthropic activities

CSR can be used as a talent attraction and retention strategy if it is communicated clearly to potential and current employees and they can engage in it. A conversation needs to occur at a deeper level so that the CSR startegy can serve to provide for these genaral objectives. CSR can be used as a strategy to open up new markets for energy-efficient products, for eg. Is it penetrating new customer segments or grabbing market share from competitors, and if so, which market segments? CSR can be used to grab market share from competitors if communicated effectively to customers who care about environment friendly product lines. CSR can be both a risk mitigation strategy and an opportunity seeking strategy and leaders should look for intersection between business and social or environmental returns. CSR will not be fully embraced and executed with as much as sales and staff management until it is built into the recognition and performance appraisal sydtem for a companys employees.

Strategic CSR by Square Group

Square Group is a large Bangladeshi company involved in a diversified range of products and services for both domestic and export markets. The Group operates a number of manufacturing facilities including pharmaceuticals, toiletries, chemicals, and consumer food-products. Square's presence is strongly felt in the rural area. One in 10 households in the town include a Square employee, and including suppliers and related business activity, the employment impact of the company is overwhelming. Square Group is a model corporate citizen supporting community infrastructure and services and providing exemplary employment benefits to its workers. To maintain a skilled and loyal workforce, Square Group invests in rural community development and has particularly worked to make the company a women-friendly employer. To recruit and retain female workers, Square designs its work environment and benefits to address the needs of women. The workforce of the Square Group comprises around 26% women. The employee turnover rate for women is very lowalmost zero. Women may have a few other
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employment opportunities but they can migrate to larger urban areas to expand opportunities. Given its location, Square could likely attract and retain workers even with lower standards in the work environment but the company goes far beyond the minimum required to attract and retain female workers; this is a good example of CSR paying dividends for the company's operations. Overall, one can conclude that the work-environment and policies of the Square Group have gained the company an extremely loyal workforce. Square employs women in all sorts of jobs, including non-traditional positions, such as petrol-pump attendant. Merit is the basis for employment and promotion, which reduces the potential for discrimination in employment. Employment-benefits at Square Group meet and exceed local requirements and are comparable with international standards. This is notable since full compliance and the quality of benefits are extremely rare in Bangladeshi companies. Some of Square's benefits include: bonuses (five, including appropriate religious festivals); paid leave; performance bonus; profit-sharing; retirement benefits; healthcare facilities; interest-free loans; education loan for dependants; and meals at factory cafeteria. Particularly to meet the needs of female workers, square provides transportation for women to and from their homes in the villages and the factories. This ensures that women can get to work in a safe environment free from harassment. Women are also provided with housing as a preferential benefit to encourage female workers. Most of these benefits go beyond legal requirements and have been designed to benefit the workforce, thereby earning their loyalty. The CSR programs of Square reach beyond the factory-door. The company has strategically invested in community development and improvement of public services and infrastructure. Square realized that the lack of high-quality education could become a constraint to attract and keep skilled employees. To address this, the company has made a number of investments in education. For example, the Square Kindergarten incorporates a modern curriculum and facilities and is open to the children of employees, management, and the general community. As such, it helps break down barriers and bond the community together. The CSR activities of Square are meant to improve the educational opportunities, helping to keep skilled workers in rural areas; they are also meant to improve the level of technical and communication skills among the future workforce of Square. There has been no quantitative study on the impact, which would likely take many years to manifest. The CSR activities of the Square Group can be categorized as strategic initiatives that greatly benefit the community while addressing priorities for the company. Improvements in the education and
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sanitation systems make the district more attractive for workers and their families and for other businesses and reduce migration to urban areas. A commitment to a family-friendly workenvironment and on-time provision of employee-benefits attracts skilled workers to the company. The case studies presented above highlights how strategic CSR that are integrated into core business activities to promote long-term sustainable incomes to excluded groups and provide the skills and experience necessary to maintain income, living standards, and health. Strategic CSR works on both direct benefits and integration of CSR practices into core business operations. Strategic CSR adds value to the organization when it is attached to the companys core business and its goal and objectives.

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