Business Strategy

Business Strategy Questions

1.      Corporate Social Responsibility

Corporate Social Responsibility (CSR) is the consolidation of business activities and values, whereby the interests or welfare of all stakeholders including customers, employees, investors, the environment and the community are demonstrated in a company’s or organisation’s policies and actions (Grant 2005). CSR can also be viewed as the commitment or obligation of a company to take measures intended to protect and improve the society’s welfare along its own interests. CSR can be implemented at individual, management or a departmental level. The nature and scale of the benefits of Corporate Social responsibility for an  organisation varies depending on the nature of business. Fundamentally, corporate social responsibility involves the integration of the corporate self-regulation into the business model. In this regard, Grant (2005) points out that CSR acts as a self-regulation mechanism that is incorporated into the organizational processes and processes in order to monitor and comply with the law, uphold the ethical and moral standards as well international standards. The primary objective behind the use of CSR in the business model is to ensure that the firm is responsible for its actions.

Corporate Social Responsibility promotes the development of teams and expands both horizontal and vertical supporting industries (Grant 2005). Since organisations have a diverse pool of resources, tangible and intangible, societal goals can be attained with ease and while at the same guaranteeing profitability. Such resources include competencies, human resource, finance and functional expertise. Through CSR, it is possible to address environmental issues such as pollution and carbon emissions. Companies can commit themselves regular tree planting sessions as a measure of curbing global warning; this strategy can be helpful in appealing to ethical consumers who are committed to environmental conservation (Grant 2005).

Socially Responsible Organisations also benefit from the fact that their corporate brand is sold to the public. Reputation is one of the distinctive capabilities in resource-based approach of a company to attain a sustainable competitive advantage in a hostile industry. In the present business context, ethical business is increasingly becoming a core requirement for conducting a successful business. Whether it involves the development of products that are friendly to the environment or production processes that are environmentally safe by reducing greenhouse emissions and fossil fuel consumption, or adhering to the international labour standards, it is arguably evident that CSR have been integrated in almost every aspect of business. Contemporary consumers no longer consume the service/commodity itself; rather, they are more concerned with the values upheld by the corporation. This is what determines the meanings that consumers attach to brands such as eco-friendly products. This implies that CSR is one of the significant contributing factors that result to a good corporate reputation and image. In fact, CSR influences business aspects such brand preference, confidence of the investors, perceptions of the analysts, purchasing decisions by the prospective consumers and employee retention. The basic implication of this is that environmental responsibility can be exploited appropriately to establish a competitive advantage (Grant 2005). Failure to adopt CSR can impose devastating effects on the business, which can result to consumer boycotts, environmental damage and damage on the corporate reputation and image; all this have negative effects on the long term sustainability of the business.

Research also indicates that socially responsible companies benefit from a pool of competent employees. The underlying logic is that, most employees are attracted to such companies or organisations. In recruiting efficient and effective employees, the company would certainly improve its performance and productivity. High production at economical costs often results in diverse, quality and affordable products. The other impact of Corporate Social Responsibility is a better organisational environment. A corporate culture is usually a reflection of its internal structures, policies, values, beliefs and vision. A socially responsible organisation will consequently have a better working environment. This will in turn make employee hiring easy easier. Employees in such an environment are always motivated and efficient. Motivation and efficiency are vital elements in a company because they are integral parts of productivity. A better working environment also lowers absenteeism and employee turnover. Because of improvements in the social aspects of the business and the society, social problems such as drug abuse, crime, pollution, illiteracy and poverty will be eradicated. Consequently, less money would be spent or collected in terms of taxes and national budgetary allocation for social problems. Hence, social growth will create a better economic or business environment.

Organizations can use CSR to achieve and sustain their competitive position in the market place (Grant 2005). This implies that the firm can incorporate CSR in its corporate level and business level strategies as leverage for competitive advantage. Owing to the fact that it is becoming an ethical and business requirement for organizations to be responsible for their actions, it is crucial for an organization to use the opportunity that CSR presents to leverage their competitive position in the marketplace. Therefore, CSR is an opportunity for the firm to establish a competitive advantage, boost investor confidence, cost reduction strategy, enhance brand preference, comply with the government regulations and enhance its corporate image and reputation because of the moral and social responsibility, which are al vital in ensuring long sustainability for the organization

In spite of CSR being beneficial to society as well as the organization, the approach is usually criticised in perspectives such as the cost to society, profit maximization, costly social overhead and inadequate competencies and social skills. The main objective of many business organizations is profit maximisation. In that perspective, it is vital to meet its social responsibility while meeting social custom and law without compromising the desire to maximise profits for the  organisation’s shareholders. This can be achieved by aligning organisational operations to its corporate culture. The organisation can also train and equip the directly involved personnel with the necessary critical skills for problem solving. The company should also enlighten the society stakeholders that CSR is an approach of giving back to the society and not transferring the cost to society. Finally, in reference to high social cost, the company can strategically identify measures to leverage the cost of social responsibility to ensure that it operates efficiently sustaining its competitive advantage. This may be approached identifying and eliminating unnecessary costs in its internal environment.

2.      Corporate Mission and the Strategic Planning Process

According to Grant (2005), corporate mission is a statement that outlines an organisation’s purpose or reason for engaging it the underlying activity. It guides the activities or daily operation of a company. A mission statement also highlights the company’s overall goal, provide direction and guide critical decision-making. When establishing a business strategy for success, an organization needs to define its vision, mission, goals or objectives clearly. The organisation needs to identify how it is going to implement its wishes into realistic solutions in the presence of intense competition. The definition of clear and specific goals or objectives is pivotal for an organization to compete healthily.

Strategic planning is a business concept that consists of decision-making, strategy definition, analysis and actions an organisation undertakes in resource allocation with an aim of establishing and sustaining a competitive advantage. The concept entails three continuous processes, which are analysis, decisions, and actions. It involves the analysis of strategic goals (vision and strategic objectives), as well as, the internal or external environments of the organisation (Grant 2005). A corporate mission is central to strategy planning or formulation process because it gives a framework in which the strategy is formulated. After the analysis, leaders make strategic decisions. This covers local and international operations. Implementation of strategies requires effective allocation of the necessary resources. Therefore, strategic managers have to show how an organisation should compete to create and maintain the advantages in a marketplace.

The corporate mission’s statement emanates from the culture and the intended long-term goals of an individual, company or organisation that seeks to establish the business. Some of the elements that may be used to form a mission statement are beliefs, values, goals, resources, capabilities, objectives and experience. The statement describes the company’s present capabilities, stakeholders and its distinctive capabilities. Besides the company’s mission statement, other statements may exist at a location or departmental levels. In today’s dynamic and competitive business landscape, mission statement may be redefined to synchronise with business transformations. For example, in the event of acquisitions or alliances, a company may be forced to redefine its missions. Transformations in the underlying capabilities or technologies used to achieve goals and objectives of a company may lead to new mission statements.

Corporate mission is crucial because its core components shape the employee behaviour and the company’s operations (Grant 2005). Grant (2005) adds that the corporate mission is a critical element of the organisational culture, which provides a framework of running the business. In the business landscape, it is more disastrous not to have a vision or goals that failing to meet it. The statement also acts as a benchmark of measuring performance or success of the company. In order to achieve the goals, vision and objectives of a company, the mission must be instilled in all the stakeholders involved. Grant (2005) also asserts that the mission statement serves as the focal points the stakeholders to identify themselves with the company’s processes. He also highlights that it provides direction and unanimity of purpose to the stakeholders (Grant 2005). Corporate statements also stipulates and organisational working environment tone hence promoting both horizontal and vertical integration within the company.

By defining the core structures of the company, the statement helps all the stakeholders translate its objectives to actionable or feasible performance and cost related measures. Studies in strategy management indicate that organisations that have coherent, lucid and meaningful mission statements produce more that the average returns in shareholder benefits. As highlighted above, it is evident that articulate, feasible, credible, clear and coherent corporate mission statement provides a foundation for actionable parameters and performance of a company. To summarise, a corporate mission statement also provides all the stakeholders the reason for existing or working for an organization.

  1. 3.      A Resource–Based Approach to Strategic Development

Grant (2005) points out that, a resource-based approach focuses on the internal capabilities of the company in formulating strategy to achieve a sustainable competitive advantage within its industry or markets. In this regard, Z Company will need to identify the capabilities within its value chain to provide it with a competitive advantage. The resource-based approach deals with the company’s competitive environment but considers an inside-out approach, which implies that the company’s internal environment is the starting point of a resource view strategy. This is often considered as an alternative approach to Porter’s five forces framework, which takes the outside-in (industry structure) as its starting point.

One of the fundamental characteristic of strategy is that the organisational performance or capability relies on its resource capability (Grant 2005). This is the resource-based approach to strategic development. The resource-based approach of strategy is commonly associated with the work of Grant (2005). Resources are the inputs that enable the company to carry out its operations. The company resources and capabilities are pillars of strategic development because they provide the basic direction, and act as the primary source of profit for the company. Resources can be categorised, as be either tangible or intangible. Tangible resources are the physical assets owned by the company. They are further categorised into financial resources, human resource and physical resources. These include machinery, buildings and materials. The value of resources is only depicted when they are put in some productive use. Intangible resources include the knowledge and specialists skill within the company. It also comprises reputation and technological/intellectual resources.

Grant (2005) points out that in order for the company to compete effectively, it must possess certain attributes (competencies). Competencies are derived from the bundle of the company’s internal resources. The company’s distinctive capabilities in resource view strategy are derived from the company’s innovation, architecture and reputation. These attributes are associated to the links between the company and its stakeholders: shareholders, employees, customers and business partners. It is the nature of these relationships that gives the company its distinctive capability in strategic development through its reputation, innovation and architecture (Grant 2005).

The company’s architecture is made of the relational contracts within and outside the company. Architecture also refers to the company’s ability to create knowledge necessary to respond effectively to the dynamics of the external environment. Reputation is critical in markets where customers associate themselves to a product due to long-term experience. Therefore, the company should establish a long-term reliable relationship with its stakeholders to achieve a competitive advantage. A company’s ability to innovate also gives it a distinctive capability, which is approachable and sustainable (Grant 2005). The company can only attain a sustained competitive advantage if it implements a unique and un-imitable value creating strategy. For a resource-based strategy to achieve sustainable competitive advantage, it must be rare, valuable, and difficult to imitate and have no substitute.

The resource-based approach outlines a resource to be valuable if it can enable the company to formulate and successfully implement its strategies to improve its effectiveness or efficiency. These can be identified through SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis. According to Grant (2005), SWOT analysis defines the objectives of the company and identifies the external and internal factors that are vital in the achievement of Z company objectives. Although rare and valuable resources provide a conduit to competitive advantage, these resources should not be easily imitated by competitors for the company to generate above average returns. Imitation can be addressed if the company embodies social complexity, path dependency, unique location and casual ambiguity. According to Grant (2005), resource capability refers to the quality and quantity of a company’s resources and their potential to deliver the desired results. That is, the cluster of attributes possessed by the company which enables it to achieve a competitive advantage. Finally, a resource-based approach can achieve sustainable competition if there are no strategically substitutable valuable resources that are themselves imitable or not rare.

References List

Grant, RM 2005, Contemporary Strategy Analysis, 5th edn, Blackwell, Boston,MA.


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