Corporate Social Responsibility in Strategic Management

COLOGNE BUSINESS SCHOOL (CBS)

New Strategic Management Thinking – CSR in Strategic Management

Term paper for “Corporate Social Responsibility”

Winter Semester 2015

Lecturer: Prof. Dr. René Schmidpeter

Sarah Goldberg

MA15 in International Business/ International Trade and Emerging Market

Student-No.: 1155500050

Table of Contents

1.New Strategic Management Thinking        

1.1 Strategic Fit        

1.2 Impact of CSR        

1.2.1 Economical Impact        

1.2.2 Societal Impact        

1.3 Examples of Implementing CSR in Strategic Management        

1.3.1 Example of Royal Dutch / Shell        

1.3.2 Procter and Gamble        

1.3.3 Daimler AG        

2.Conclusion        

3. References        

4. Appendix        

Figures

Figure 1: Strategic Fit        

Figure 2: Consume of energy sources        

Figure 3: Example of Pampers        

1.New Strategic Management Thinking

The new evolutionary era of strategic management started. Companies are more involved in social and global responsibility than previously, because the society and the value change is going on and more and more people are interest in corporate social responsibility and clamour this also from the firms. This chapter will illustrate which kind of impacts can influence the strategic management and how companies should react to those. Furthermore, the different levels in the strategic fit and their repercussions to the daily business life. In the end of this chapter some outstanding examples and implementation of CSR in the strategic management will be exemplified. This chapter conduces to show how huge the presence of CSR is and how the global change in that regard is.

1.1 Strategic Fit

“Strategic fit is about matching the resources and activities of a firm to the external environment in which the firm operates” (Frynas & Mellahi, 2015, p.42). This is essential for every operation of the company, including all CSR activities. Strategic fit belongs to the strategic planning, which is a fundamental in strategic management. The strategic fit is divided into three levels which are illustrated in the Figure 1.

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The first level, the sub-system fit, coordinates tasks for example within the Intra-Planning Fit. This fit checks, if every single element in this department matches together and modify it, if its necessary. Furthermore, it is possible through the sub-system fit, to eliminate interface problems and communication complications. The second stage is the intra-system fit, which is located in the middle of and enterprises activities. The task of this interface is to align all the sub-system fits together and also among themselves. In addition, the intra-system fit checks, if every single element and activity of any strategy mate together. This make it possible to adjust individual measures according to time and to resources correctly and without any problems in the interface. The sub-system fit and the intra-system fit are those levels which are operating in the internal business of a company, but the last level, the system- environment fit deals with the external factors. “Studies show that scanning of the […] environment can especially help firms to improve performance in dynamic business environments “(Frynas & Mellahi, 2015, p.41). The system-environment fit analyse the appreciable environment, to identify chances and risk for the company. His primarily function is the coordination between the enterprise and its environment. This is the main area where the rudiments of CSR are made, because the environment has a huge impact on the business life cycle and if the society wants more sustainable and renewable goods. So the firms have to face this new challenge with the help of CSR. “Achieving strategic fit, now or in the future is the primary task of management. Management´s role, therefore, is to manage the interdependencies that exist between situation, strategy, culture and leadership style” (Chorn, 2007, p.23). There are also a lot of problems in achieving strategic fit, for example, the complexity of strategic planning, the nature of strategy development (human resource), the variety of processes, levels and styles of strategies and also the integration process in the daily business life (Janatifar, Bakhitari & Daneshpajooh, 2014, p. 1461).

1.2 Impact of CSR

Global changes and the new way of thinking in all areas of todays life make it important to adapt strategies to the new challenges. This have an impact on CSR and how companies should react to those. According to this we can differ between two main impacts: The economical impact and the societal impact. Both of those exhibit different issues and defiances which should be take in consideration according to implementing and dealing with corporate social responsibility.

1.2.1 Economical Impact

Internal and external impacts can be differentiated in relation to economical impact of CSR. The significance of CSR become more important since people show more interest in social and environmental operations.