STRATEGY AND SOCIETY: THE LINK BETWEEN

COMPETITIVE ADVANTAGE AND CORPORATE

STRATEGY
Michael E. Porter
&
Mark R. Kramer
The Emergence of CSR
Increasing attention to CSR from
governments, activists, media, and others
Companies are being held accountable.
For example, Nike faced an extensive
consumer boycott after New York Times
reported abusive labor practices in early
1990s

Four prevailing justifications for CSR
Moral obligation
Companies have a duty to be good citizens and to do the right
thing
Sustainability
Meeting the needs of present without compromising the ability of
future generations to meet their own needs
License to operate
Every company needs tacit or explicit permission from
government to do business
Reputation
To justify CRS activities on the grounds that activities will improve
companies image
Presumption of Conflict
Traditional approaches assume that companies
and society are in conflict
Pits business against society
A zero-sum game
This is counterproductive, since the two are
interdependent
Companies fail to recognize the importance of
CSR in their strategies
Proactive Framework
In the past, CSR was treated more as an unavoidable cost
Better if viewed as a potential competitive advantage
Presents a framework
To identify possible social consequences of action
To discover opportunities to benefit society and themselves
To discover CSR initiatives to address
To find the most effective way to do so
Categorizing Corporate Social issues
Strategic Approach to CSR
Generic Social
Impacts
Value Chain Social
Impacts
Competitive Context

Good citizen

Mitigate harm from
value chain

Strategic
philanthropy

Responsive
CSR
Transform value
chain activities

Strategic
CSR
Framework for Strategy and Society
Looking inside out: Identify positive and
negative social impacts of activities engaged in
while doing business
Looking outside in: Societal impacts on a
corporations competitive context and success
in what it does
There will be points of intersection where
there could be problems and/or where there
could be opportunities
Porters Generic Value Chain
Looking Inside Out: Managing social
impact of value chain activities
Porters Diamond Framework
Looking Outside In: Social influences on
competitiveness
Context for Firm
Strategy and
Rivalry
Related and
Supporting
Industries
Factor (Input)
Conditions
Local Demand
Conditions
Integrating Strategy and Society
Responsive CSR
Act as a good corporate citizen
Mitigate harm from value chain activities
Strategic CSR
Identify a small number of social impacts where the
company
Can make a significant contribution to society while
improving the
Long-term competitiveness of its business
Create a social dimension to the value proposition
Benefits of the Integrative Framework
Identifying the points of intersection
Choosing which social issues to address
Creating a corporate social agenda
Responsive CSR
Strategic CSR (when CSR is incorporated into
strategy)
Creating a social dimension to the value
proposition >>such that the value it offers to its
customers also has a positive social impact

Strategic CSR
Integrating External Context and Strategy:
Nestl in India
Nestl entered Moga in 1962, when the region
was in severe poverty
Local milk supply was hampered by small
parcels of land, poor soil, periodic droughts,
animal disease, and lack of a market
Nestl established local milk purchasing
organizations in each town
Strategic CSR
Integrating External Context and Strategy:
Nestl in India
Nestl invested in improving competitive context
Collection infrastructure such as refrigerated dairies
was accompanied by veterinarians, nutritionists,
agronomists, and quality assurance experts to assist
small farmers
Medicines and nutritional supplements to improve
animal health
Monthly training sessions for local farmers
Wells to secure water supply for animals were dug
with financing and technical assistance from Nestl

Strategic CSR
Integrating External Context and Strategy:
Nestl in India
Nestl has built a productive milk cluster
in Moga sourcing milk from 75,000
farmers through 650 dairies
Moga has much improved social
conditions and a far higher standard of
living
Nestl has developed a long-term
competitive advantage in the milk cluster
in numerous developing countries

Organizing for CSR
Unify corporate giving and CSR
Engage operating management in identifying value
chain impacts and social dimensions of the competitive
context
Incorporate social performance metrics into overall
business measurement
Measure the social impact of company activities, not
just stakeholder satisfaction
Companies need to shift CSR from a fragmented,
defensive posture to an integrated, affirmative
approach
The Moral Purpose of Business
The most important thing a corporation can do for
society is to contribute to a prosperous economy
Corporations are not responsible for all the worlds
problems, nor do they have the resources to solve them
all
Business has the tools, capabilities, and resources to
make a far greater positive impact on social issues than
most other institutions
Business is more transparent and more accountable
than most foundations and NGOs
Addressing social issues through shared value strategies
will lead to self-sustaining solutions
Thank You
Submitted by:
Group 3 | Section C
Amit Agarwala 12P124
Apoorva Dave 12P133
Mayank Sharma 12P150
Rajesh Kumar Chaudhary 12P158
Rishabh Nagori 12P163
Varun Gopal 12P174