Block 7: Implementing strategy and stakeholder management

Learning Objectives

1. Distinguish the difference between strategy implementation and

execution.
2. Describe the interdependence of strategy formulation and execution.
3. Discuss the implementation framework and the implementation gap
4. Discuss stakeholder management within a strategy context
5. Identify key stakeholders in a strategy.
6. Identify and discuss stakeholder interests.
7. Apply stakeholder mapping

***Even the best –conceived strategies may result in dismal performance, if not
executed proficiently.

Defining Strategy, Implementation and Execution

 Strategy- set of actions taken by top managers to achieve superior profits

and outperform competitors
 Focuses on long term implications and success rather than the short term,
to ensure growth in future
 It needs managerial commitment for consistent and well considered
choices
 So, better conceived company strategy and the competency in which it is
implemented, the more likely it will thrive beyond competitors

Strategy implementation vs strategy execution

Management must first:

1. Formulate a strategy,
2. Then implement the strategy
3. Then execute the strategy

Formulation

 Deciding what needs to be done

 Involves developing the - vision, mission, external threats and
opportunities and internal strengths and weaknesses,
 Choosing a strategy based on the SWOT/ PESTEL analysis – helping
deciding what to do

LO1: Distinguish the difference between strategy implementation and

execution.

Implementation

 The process of implementation is moving an idea from the concept to

reality by developing a plan
 Implementation becomes the action plans- what you need to do to achieve
the strategy formulated
Execution

 Strategy execution is then the:

 Carrying out the plan- Act, manner or style of executing those processes
by means of actions, maneuvers and behaviours.
 IOWs- The activities you undertake to turn your implemented strategy into
commercial success.

Challenges in formulation to implementation

 Implementation problems can arise

 Because of the shift in responsibility from strategists to divisional/
functional managers
 So divisional/ functional managers need to be involved in both formulation
and implementation stages, so the strategies don’t come as a surprise
 Managers and employees may be driven more by their self-interests than
by organizational interests

Implementation Strategies

 Implementation varies substantially among different types of organization

 Examples include:
o Changing sales territories
o Adding new departments
o Closing facilities
o Hiring new staff
o Developing new employee benefits
o Changing the pricing strategy
o Establishing new cost-control procedures etc…

Challenges to strategy implementation Allio, 2005 (required reading)

LO2: Describe the interdependence of strategy formulation and
execution.

Interdependence of Strategy Formulation and Implementation

 Neither formulation nor implementation can succeed without the other

 Successful firms are those that evaluate and adjust their strategies and
execution according to the feedback from the implementation process
itself
 “Harrington (2006:374) states that strategy implementation is an iterative
process of effecting strategies, policies, programs and action plans that
allow a firm to utilise its resources to take advantage of opportunities. This
phase in strategic management incorporates tactics stipulated in an
organisation’s strategic plans with others that emerge through interaction
with the organisations external environment. The strategy implementation
phase usually entails the review and reformulation of deliberate strategies
while allowing for emergent strategies to evolve and corrective actions to
be applied.

LO3: Discuss the implementation framework and the implementation

gap

The implementation process

Implementation Barriers

Internal barriers External barriers

 Resources: financial>> budget  Government over-regulation
 Human: inadequate skills  Market Dynamics
 Role ambiguity  Conflicting stakeholder interests
  Organisational culture : risk
averse

Implementation Gap

 Disconnect between the strategists and the “implementers”-middle

managers/ line employees
 Employees are not aware or do not understand the strategy
 Strategy is never implemented
 If employees lack knowledge about the strategy - leads to poor or no
implementation which leads to poor performance

Mankins & Steele’s Outline Seven Rules for Successful Strategy

Implementation

 Keep it Simple
 Challenge Assumptions
 Speak the same language
 Discuss resource deployment early
 Identify priorities
 Continuously monitor performance
 Develop execution ability

Also see Allio (2005) Best practices for implementing strategy: ten
practical guidelines pg. 15-21

1. Keep it simple: Implementation of even the most straightforward

strategy tends to be a complex affair, requiring the intricate and dynamic
interplay of people, resources, and market forces. Paradoxically, one of the
most effective management tools is ‘‘simplicity’’ – the distillation of
disparate elements into a single, coherent document and game plan.
Unfortunately, keeping it simple is easier said than done: the leader’s
challenge is to edit, refine, and prioritize so that his team can pay
attention to the right things at the right time.
2. Establish a common language: Different interpretations of the
language used to describe strategy hopelessly confound implementation
efforts. Before implementation starts, strategy managers should carefully
define and review the key terms used to drive implementation to help
ensure that everyone’s singing from the same choir book.
3. Delineate roles, responsibilities, timeframes: The format shown
above asks the strategy manager to identify the five to seven major
programs required to implement strategy. While this manager is
responsible for guiding the overall process, he is not intended to be the
sole implementer; rather, each program is likely to have its own
designated steward (who may in turn count on additional staff to help
him). Implementation often calls for cross-functional support and
collaboration.
4. Devise straightforward quantitative and qualitative metrics: In
general, the sharper the metrics, the easier it is to monitor performance
(and justify investment!)
5. Balance short term with longer term: Most managers front-load their
implementation worksheets with short-term targets; a natural tendency,
as the future is fraught with uncertainty. Healthy implementation plans
balance the short with the longer term and strive to portray the full arc of
the implementation process.
6. Be precise, use action verbs: Strategy and implementation programs
describe what we ‘‘do,’’ so it’s not surprising that we advocate the use of
action verbs. Unfortunately, the passive voice plagues the contemporary
business world.
7. Use a common format to enhance clarity and communication:
Many managers opt to create their own summaries of programs, in
formats they invent or import (often reflecting their comfort level with a
particular software program, or preexisting data). It may sound pedantic,
but insisting on a common implementation format doeswonders to
streamline communication and pinpoint emerging issues.
8. Meet regularly, but in structured, time-limited sessions:
Implementation plans are destined to change: customer and competitor
responses, technological advances, and resource allocation shifts will all
impact the timing, and in some cases, the scope of implementation
programs.
9. Anchor implementation activities in the firm’s financial
infrastructure: budget, metrics, rewards. It seems axiomatic that the
actions and resources required to implement a strategy must be reflected
in the firm’s budget – and yet, surprisingly, many firms fail to closely link
the two activities.
10.Be prepared to consistently manage the implementation process:
We can segment implementation into three phases, as shown in Figure 5:
 Phase 1: kickoff – program ratification: The management
team’s reasoned attack plans describing how they propose to bring
a strategy to life should be captured and presented to the CEO
within the two weeks immediately following the workshop.
 Phase 2: mid-stream implementation: Efforts to implement two-
to three-year strategic plans typically flag after six months. Several
original assumptions may have proven off-base, or competitive
realities may have shifted since the beginning of the cycle; despite
best efforts, programs, dates, and milestones will no longer be well-
calibrated.
 Phase 3: finale: By the end of the implementation cycle, most
teams have encountered significant unforeseen obstacles, and have
prevailed against many. A common pitfall is to neglect to celebrate
the successes – especially in light of encroaching new strategic
initiatives.
Strategy Implementation Framework

Basic activities of strategy implementation involve:

 Establishment of objectives
 Formulation of policies for the imputation of strategies
 Allocation of resources
 Actual performance of tasks and activities
 Leading and controlling the performance of activities or tactics at various
levels of the organization.

Objectives are essential for strategy implementation because:

 Guides on how to allocate resources

 Mechanism to evaluate managers
 Effective for monitoring progress towards achieving goals
 Help to determine organisational, divisional and departmental priorities
 Keep the strategic plan on track

Self study (The best objectives have several characteristics incommon. They are
all SMART + C)

Characteristics of the best objectives: SMART+C

 Specific: tell how much of what is to be achieved by when. (Ex. 40%, what
behaviour, by 2020)
 Measurable: information concerning the objective can be collected,
detected, or obtained from records. (at least potentially)
 Achievable: not only are the objectives possible, but it is also likely that
the firm will be able to pull them off.
 Relevant: (Relevant to the mission). The firm has a clear understanding of
how these objectives fit in with the overall vision and mission of the group.
  Timed: the firm has developed a timeline by which the objectives will be
achieved.
 Challenging: the objectives stretch the group to set its aim on significant
improvements that are important to stakeholders of the firm.

Purpose of objectives

Please read this- middle of page 87 of 124

 Serve as guidelines for action- directing and channeling efforts and

activities of organizational members
 Source of legitimacy in an enterprise by justifying actions to stakeholders
 Serve as standards of performance
 Employee motivation and identification
 They give incentives for managers and employees to perform
 Become a basis for organizational design

Implementation levers- Critical variables of implementation

1. The Structure- The manner in which, responsibilities, people and tasks

are organised. Includes- Authority, hierarchy, units, divisions and
coordinating mechanisms. Know “the chain of command”, know they are
accountable to, who they are responsible for
2. People and rewards- People implement strategies, successful
implementation depends on having right people, trained/ skilled to support
successful implementation. Rewards (incentivize) can accelerate or
undermine strategy implementation
3. Systems- Are the organizational processes and procedures used for daily
operations- resource allocation systems, budgeting, distribution etc- What
systems are currently in place to facilitate the strategy?

LO4: Discuss stakeholder management within a strategy context

Stakeholder Management

 The ability to form, maintain positive relationships with these stakeholders

and managing their expectations is known as stakeholder management
 Stakeholder engagement:
o Through communication management can uncover unforeseen risks
o Creating the right perception enhances success
  In practice the meeting the goals or needs of all stakeholders is unrealistic
 Therefore, companies need to decide – identifying “the most important
stakeholder” and prioritize strategies to meet their needs
 Stakeholder analysis is key for the identification process

LO5: Identify key stakeholders in a strategy.

Stakeholder analysis

1. Identify your stakeholders

2. Identify stakeholder interests and concerns
3. Identify the claims stakeholders are most likely to make about the
organization
4. Identify the stakeholder’s who are important from the organization’s
perspective (stakeholder mapping)
5. Identify the resulting strategic challenges

LO6: Identify and discuss stakeholder interests

Stakeholder Interests

 It is impossible to satisfy all your stakeholders’ interests

 Some of the ways the interests manifest are as follows:
o Economic interests- may be perceived as greedy/ selfish but they
are also legitimate- companies need financing to survive, results in
the ability to do good (hire more, employee wellbeing, CSR)
o Governmental interests- Good for society but stringent
regulations may hurt profits of small business especially
 Legislation/ Legal concerns to be considered (Ombudsman-
investigates complaints)
o Social interests- May do well for both company and community
(e.g security concerns, environmental)

Stakeholder Interests- Common conflicts

 Pursuit of short-term profits at the expense of long-term investments

 Investing in growth strategies that requires more funds through share
issue/ loans risking financial security and independence
 Going public on securities exchange brings unwelcome openness
 Expanding into mass market may lead to reduction in quality
 In multinational organisations conflict arising from differences between
host country and company head office

LO7: Apply stakeholder mapping

Stakeholder Mapping

Step 1 Determining influence on strategy formulation: Which

stakeholders are/ should be involved or consulted in strategy
formulation?

Organisational stakeholders- top-level, middle or frontline (low level)

workers?
Capital stakeholders- Affect the availability of capital – shareholders, venture
capitalists, banks etc.
Product market stakeholders- Are those whom the company shares its
industry- suppliers/ distributors or customers
Social stakeholders- External groups and organisations that may be affected
by or exercise influence over firm strategy and performance- unions,
government and activist groups

Step 2 Determining effects of strategic decision on the identified

stakeholder

Determine the stakeholders who are most important based on how the firm’s
strategy impacts the stakeholders (directly or indirectly)
Direct stakeholder claims are made by those with their own ‘voice’. These
claims are usually unambiguous and are made directly between the
stakeholder and the organisation.
Indirect stakeholders claims are made by those stakeholders unable to make
the claim directly because they are, for some reason, inarticulate or
‘voiceless’. This does not invalidate their claim however.

Step 3 Determining stakeholder power & influence on strategic decision

Power- ability of individuals or groups to persuade, induce or coerce others

Not just on hierarchy but also a function of resources controlled, know-how
or networks they are part of. (See sources of power exhibit 7.1)
Determine the degree to which a stakeholder group can exercise power and
influence over the decisions of the firm
What type of power is it- Direct control, veto power, nuisance, indirect
influence or no influence?
 Although stakeholders affected by firm’s decisions often have power and
influence over those decisions, this is not always the case i.e Employees
(directly effected by the firm’s decision but no say in decisions)

Stakeholder mapping can help in three aspects of the coalition building

process:

 Analysing who the key blockers or facilitators of a strategy and

developing the appropriate response
 Repositioning of certain stakeholders: for example to lessen the
influence of a key player or to ensure there are more key players who will
champion the strategy ( crucial in the public sector context)
 Maintaining the level of power of some key stakeholders, for example
the endorsement or support by powerful supplier or customer may be
critical for the success of a strategy

Strategy formulation vs Strategy Implementation according to

(Wheelen et al. 2018)

Strategy Formulation Strategy Implementation

Strategy Formulation is often referred Strategy implementation is the sum
to as strategic planning or long-range total of the activities and choices
planning, is concerned with required for the execution of a
developing a corporation’s mission, strategic plan. It is the process by
objectives, strategies, and policies. It which objectives, strategies, and
begins with situation analysis: the policies are put into action through
process of finding a strategic fit the development of programs and
between external opportunities and tactics, budgets, and procedures.
internal strengths while working
around external threats and internal
weaknesses.
Block 8: Business Ethics, Corporate Governance & Corporate Social
Responsibility

Learning Objectives

1. Describe the evolvement of business ethics.

2. Discuss the role of business ethics in crafting and executing strategy.
3. Explain drivers of unethical business strategies and behaviour.
4. Identify ethical business standards that managers need to consider in
maintaining favourable business practice.
5. Discuss the importance of governance in a business environment.
6. Identify characteristics of good corporate governance.
7. Discuss the king codes and the king iv framework.
8. Assess the role of integrated reporting in executing strategy.
9. Identify the key aspects of sustainable business practices.
10.Evaluate the importance of environmental sustainability in crafting and
executing strategy.
11.Discuss the relationship between the concept of corporate social
responsibility and the triple bottom line.
12.Explain the components of a corporate social responsibility strategy.
13.Differentiate between creating shared value, corporate social
responsibility and philanthropy.

LO1: Describe the evolvement of business ethics.

BUSINESS ETHICS
  Ethics concerns principles of right or wrong conduct.
 Business ethics deals with the application of general ethical principles
tothe actions and decisions of businesses and the conduct of their
personnel- why?
 Because business actions have to be judged in the context of society’s
right and wrong
 “Business ethics should be considered within the governance of an
organisation, with specific focus on strategy; ranging from protecting
shareholder wealth or developing governance systems, to sustaining
environmental performance and social responsibility”- Robertson
(2008:746)

LO2: Discuss the role of business ethics in crafting and executing

strategy.

WHERE DO ETHICAL STANDARDS COME FROM?

School of ethical universalism- Believes fundamental concept of right and

wrong are universal and transcend culture, society and religion- We agree that
exposing employees to harmful /toxic chemicals or products sold to customers
known to be unsafe or harmful is unethical- strength here is – collective views
puts clear boundaries on what is right or wrong

Ethical Relativism- Differing religions, customs and cultures give rise to

multiple beliefs of what is right and wrong- So whether a business-related
behaviour is right or wrong depends on prevailing local ethical standards.
“onesize fits all is inappropriate”. Local ethical standards take precedent over
ethical standards of company home- create conflict. Weakness- Gives rise to
ethical dilemmas/problems- Use of underage labour / accepting bribes/
kickbacks.

Social contracts theory- Ethical principle based on collective views of multiple

societies to form a social contract to be observed by all. (1) A ltd number of
universal ethical principles that are widely recognized and place legitimate
boundaries on behaviors in all situations. (2) Additionally, circumstances of local
cultures, traditions and values further prescribe what is ethically permissible
behaviour
  Kick back and bribes- may be observed in some countries however- major
religious and moral schools of thought condemn this behavior. Therefore,
an MNC can conclude there is a universal ethical principle observed here
and must comply irrespective of what local customs or sales behavior is

Ikea’s global supplier standards maintaining low costs while fighting

the root cause of child labor- key findings

 Encourages high ethical standards among its suppliers, including

standards concerning the issue of child labour
o Would threaten/ cancel contracts if suppliers were guilty of anything
unethical
o Random audits of third-party partners- but this was not getting to
the root cause
 Developed a new code for suppliers- which addressed social, safety and
environmental issues across its purchasing model
 If there was a slip up with supplier- would tackle the cause/ address the
systemic issues
o Provided technical expertise, training programs to develop suppliers
o Ikea Foundation –Unicef partnership to address these issues
o Through this approach reduced risks involved with working with
suppliers in developing nations

LO3: Explain drivers of unethical business strategies and behaviour.

Drivers of unethical strategies and business behaviour

 Deliberate oversight or self dealing eg. Insider Trading- exchanging

information to gain advantage on stock market or in mortgage lending
practices led to US crises
 Responsible corporate governance and oversight needed by company’s
corporate board to guard against self dealing- managers using position for
self interest than those of firm rules to increase oversight and reform
policies
 Key personnel pressured to meet sale and profit expectations of
shareholders- “to do what ever it takes” to protect reputation or protect
compensation. Eg. Diamond Foods falsified costs to boost earnings and
stock price. “Short-termism”- focus on the ST performance at the expense
of LT strategic objectives. Cutting ethical corners puts shareholders at risk.
Costly- pay fines as a result
 Company culture puts profits and performance ahead of ethics-
“Everybody does it” or “It’s okay to bend the rules to get the job done”.
Winning at any costs creates an unethical culture.

LO4: Identify ethical business standards that managers need to

consider in maintaining favourable business practice.
Why should company strategies be ethical??

1. The moral case for ethics- Because strategy that is unethical is morally
wrong and reflects badly on the strategy of the company and
personnel
 In reality an ethical strategy is the product of managers who are of
strong moral character.
 Managers with high ethical principles are usually advocates of a
corporate code of ethics and strong ethics compliance
2. The business case for ethics- An ethical strategy can be good business
and serve the self interest of shareholders
 Unethical practices only damages reputation and have costly
consequences

Costs companies incur when ethical wrongdoing is discovered

CONSEQUENCES OF ETHICALLY QUESTIONABLE STRATEGIES

Why and how ethical standards impact the tasks of crafting and
executing strategy?

 The Enron scandal resulted in the passing of the Sarbanes-Oxley Act of

July 2002. This signalled the US government’s intent to stop poor
corporate governance.
 There is a difference between having a code of conduct because it is
mandated and ethical standards that truly guide strategy and conduct
 Executives truly committed to a high standard ethics ask the following
questions:
o Is what we are proposing fully compliant, is there any ambiguity?
o Is there any aspect of the strategy (policy or operating practice)
that appears ethically questionable?
o Is there anything in the proposed that customers, employees,
shareholders, suppliers, competitors, regulators, community,
activists, media might consider ethically questionable?

Board of Directors

 As representatives of the shareholders, directors have both the authority

and the responsibility to establish basic corporate policies and to ensure
that they are followed.
 The board of directors, therefore, has an obligation to approve all
decisions that might affect the long-term performance of the corporation.
 This means that the corporation is fundamentally governed by the board
of directors overseeing top management, with the concurrence of the
shareholder.

LO5: Discuss the importance of governance in a business environment.

Corporate Governance

 The system by which organisations, particularly business corporations are

directed and controlled by their owners” ( Carpenter & Sanders, 2009)
 Corporate governance sets down guidelines to discipline organisations and
ensure that the goals of owners and managers are aligned, thereby setting
the organisation on the road to sustainable success.
  “The role of how board of directors approve top management decisions
that affect a company’s long-term performance in the benefit of the
shareholder”
 “ Is the way in which boards oversee the running of a company by its
managers, and how board members are in turn accountable to
shareholders and the company. This has implications for company
behaviour towards employees” shareholders, customers and banks” OECD
(The Organisation of Economic Co-operation And Development)

Corporate Governance - IODSA

 King Code was stimulated by the concern for competitiveness of the South
African private sector following the admission of the country to the global
economy after the collapse of apartheid.
 South African corporations was exposed to a new political system, rapid
trade liberalisation, demanding international investors, emerging market
challenges and rapid regulatory reform.
 In view of this, corporate governance, with its focus on quality of decision-
making and corporate monitoring, impacts both on stability and growth
prospects.

LO7: Discuss the king codes and the king iv framework.

King IV Code of Good Corporate Governance

 Exists to achieve governance outcomes.

 To ensure that the application of the principles achieves specifically
identified outcomes, including:
o ethical culture
o good performance
o effective control, and/or
o legitimacy
 “From a strategy and performance point of view, King III encouraged the
Board to play a prominent role in the strategy-development process. This
has been controversial in that many Board members felt that
management should develop the strategy, with the Board providing
oversight to the process. King IV clarifies this position and specifically
requires the Board to approve the formal strategy and then provide
oversight over the policies and plans that are developed from the
approved strategy.” (NOSA,2017)

Importance of governance in business environment

 Provide guidelines for governance structures, ethical conduct and

performance measurement, and reporting
 Good corporate governance plays a vital role in underpinning the
integrity and efficiency of financial markets.
 Poor corporate governance weakens a company’s potential and at worst
can pave the way for financial difficulties and even fraud. If companies are
well governed, they will usually outperform other companies and
will be able to attract investors whose support can help to finance
further growth.

LO6: Identify characteristics of good corporate governance.

King Code Characteristics of Good Corporate Governance

 Discipline: behavior that is universally recognized and accepted to be

correct and proper, e.g., ethical conduct
 Transparency: independent source making sense of company
performance and actions, e.g., integrated report
  Independence: minimize or avoid conflict of interest ,e.g., non-exec
directorship and sub-board committees
 Accountability: management accountable for their decisions, e.g.,
investor relations feedback
 Responsibility: corrective action for mismanagement, e.g., disciplinary
hearing
 Fairness: equal consideration for shareholders, e.g., AGM and proxy forms
 Social responsibility: consideration for environmental and social issues,
e.g., social investments

Agency Theory

 Principal (shareholder) appoints an agent (management) to perform tasks

relating to business performance.
 The essence of corporate governance is controlling the point at which
there is a separation of the principal and agent’s perspective- conflict of
interest- Where the agent is seen as self seeking/ self interest (The Agency
problem)
 The solution to the agency problem is to find ways to benefit shareholders
and stakeholders, ensuring that shareholders get positive returns on their
investment, while the resources and profits managed by corporate
executives protect the interest of the shareholders
LO8: Assess the role of integrated reporting in executing strategy.

Underpinning philosophies of King IV

 Integrated report: Communication about how an organization’s

strategy, governance, performance and prospects in the context of the
external environment lead to the creation of value over short, medium and
long term
 Integrated reporting: Is a process founded on integrated thinking that
results in an integrated report by an organization about value creation
over time – communication on value created
 Integrated thinking underpins:
o Seeing the organization as an integral part of society- corporate
citizen
o Stakeholder inclusive approach
o Sustainable development
o Integrated reporting
Corporate Governance is related to strategy in these ways: several
ways:

 The organisational vision and mission should be reflected in its strategy-

by doing so an organisation sets the scene for responsible business aims,
practices and general conduct
 Economic, social and environmental objectives have to be formulated as
part of the organizational strategy- this ties in with a balanced view of
profitability and performance
 The execution of strategy should be monitored and controlled by
management and BoD
 The board to ensure that executives are appropriately penalized for failure
or rewarded for success
 Ultimately, the BoD have a duty to shareholders- in overseeing
managements handling of a company’s strategy making and strategy-
executing process

Corporate Governance and Strategy

Corporate governance is related to strategy in several ways:

LO12: Explain the components of a corporate social responsibility
strategy.

Corporate Social Responsibility (CSR)

Is a firm’s duty to operate in an honorable manner, provide good working

conditions for employees, encourage workforce diversity, be a good steward of
the environment, and actively work to better the quality of life in the local
communities where it operates and in society at large

The Five Components of a Corporate Social Responsibility Strategy

CSR Strategy is the combination of socially beneficial activities the company opts
to support with its contribution of time, money and other resources
The Triple Bottom Line: Excelling on Three Measures of Company
Performance

LO11:Discuss the relationship between the concept of corporate social

responsibility and the triple bottom line.

The Triple Bottom Line (TBL) is a framework that encourages businesses to

focus on three critical performance areas: People, Planet, and Profit. This
approach goes beyond traditional financial performance by measuring a
company’s social, environmental, and economic impacts.

Here’s a breakdown of each TBL component:

1. People (Social Responsibility)

This component measures the social impact of a company’s activities on
employees, customers, suppliers, and the broader community. It includes
fair labor practices, community engagement, customer satisfaction, and
initiatives that improve societal well-being. Essentially, it looks at how the
business contributes to social equity and support.
2. Planet (Environmental Responsibility)
The environmental impact assesses how a company’s actions affect the
environment. This includes evaluating resource use, waste management,
emissions, and overall sustainability practices. Companies are encouraged
 to minimize their ecological footprint by using eco-friendly materials,
reducing emissions, conserving energy, and managing waste responsibly.
3. Profit (Economic Responsibility)
Unlike traditional financial profit, the TBL profit component considers
economic performance from a broader perspective, emphasizing not just
financial gains for shareholders but also economic benefits for society. This
can include job creation, fair wages, economic contributions to the
community, and a business model that supports sustainable growth.

The Triple Bottom Line aims to create a balanced approach, where a business
achieves profitability while also contributing positively to society and minimizing
its environmental impact. It has become a popular framework in sustainable
business practices, guiding companies toward long-term value creation that
benefits all stakeholders.

What do we mean by sustainability and sustainable business practices?

 Sustainability: Is the relationship of a firm has with its environment and

its use of natural resources to preserve and promote longevity
 Sustainable business practices
o Are those practices of a firm that meet the needs of the present
without compromising the ability to meet the needs of the the
ability to meet the needs of the future.
o Changing how they do business
 An environmental sustainability strategy consists of a firm’s
deliberate actions to protect the environment, provide for the longevity of
natural resources, maintain ecological support systems for future
generations, and guard against endangerments leading to the ultimate
destruction of the planet.

LO9: Identify the key aspects of sustainable business practices.

Some key aspects of sustainable business practices:

 Helping to keep the Earths natural resources within levels that can be
replenished via the use of sustainable business practices
 Containing the adverse effects of greenhouse gases and other forms of air
pollution to reduce adverse effects e.g climate change
 Greater reliance on sustainable energy sources e.g solar
 Use of recyclable materials
 Sustainable methods on growing food
 Habitat protection, Environmentally sound waste management practices
etc.

LO10: Evaluate the importance of environmental sustainability in

crafting and executing strategy.

The importance of environmental sustainability in crafting and

executing strategy
  CSR & environmental strategies that provide social benefit and fufill
customer needs may contribute to competitive advantage
o E.g Ford has a sustainability strategy to lower carbon emissions
produced both competitive advantage and environmental benefits
(Green image- attracted eco conscious buyers)
 CSR and environmental strategies are likely to contribute to competitive
advantage- linked to important resources and capabilities or value chain
activities
o E.g Whole Foods sources from local farmers, all products used are
biodegradable, spoilt food sent to compost center rather than
landfills

Sustainable Development Goals (SDGs)

What are the common drivers of CSR?

 Business values/ moral imperative

 Reputation
  Regulatory pressure
 Stakeholder pressure
 Strategic benefit

CSR Strategy and other perspectives

 A company’s CSR strategy is defined by the specific combination of

socially beneficial activities the company opts to support with its
contributions of time, money, and other resources
 Creating Shared value involves creating economic value in a way that also
creates value for society by addressing its needs and challenge

CSR Strategy and other perspectives

What is ESG?:

ESG stands for Environmental, Social, and Governance, and it represents a

set of criteria used to evaluate a company’s overall impact on society, the
environment, and how well it is governed. ESG has become a vital framework for
assessing and guiding responsible corporate behavior, often used by investors,
stakeholders, and companies themselves to inform sustainable strategies.

CSR Strategy and other perspectives

What is Impact Investing?

“Impact investments are investments made with the intention to generate

positive, measurable social and environmental impact alongside a financial
return.”
The moral case CSR and environmentally sustainable business practices

 The business must not only act in a manner that benefits the owner, but
all stakeholders- it is the right thing to do
 Being civic- minded, having decency which contributes to society’s well
being should be expected of any business- being a corporate citizen
 Business operates an “implied social contract” with society- society grants
the business to operate in exchange the business is obligated to act as a
responsible citizen- promote general well- being of society and doing no
harm

The business case CSR and environmentally sustainable business

practices

 Increase buyer patronage- gives the business a competitive advantage

as consumers prefer business that are good corporate citizens
 Reduces the risk of reputation-damaging incidences- Companies who
put less importance on social responsibility are more prone to scandals or
incidences that could damage their reputation
 Can lower costs and enhance employee recruiting and employee
retention- Employees want to work for companies with good reputations.
Results in lower costs for staff recruitment and training
 Opportunities for revenue enhancement- Companies striving to be
innovative leads to new products and opportunities for revenue
enhancement. E.g the hybrid/ electric car or innovative ways to increase
revenue e.g Tyson Foods using animal waste to make fuel or Mighty House
of Soap converting used cooking oil to household cleaning products
 Well-conceived CSR strategies and sustainable business products
are best for long term interests of shareholders- The four preceding
cases contribute to the economic value created by the company and
improve its profitability, winning contracts and increases share price and
enhances earning per share

LO13: Differentiate between creating shared value, corporate social

responsibility and philanthropy.