1 Module 1 – Corporate Governance and Organizations

2 Module 1 – Corporate Governance and Organizations

Lesson 2:
STRATEGIC MANAGEMENT OF STAKEHOLDER RELATIONSHIP

SPECIFIC LEARNING OUTCOMES

In this lesson you should be able to:
1. explain what is strategy and the process of strategic management;
2. identify the different steps in the process of strategic management;
3. explain the process or steps of strategic planning as an effective CSR strategy and the stakeholder
theory; and
4. discuss the alignment of CSR with business strategy.

PRE-ASSESSMENT
INSTRUCTION. Write T if the statement is true and F if the statement is false.
______1. Strategy is a plan of action taken to achieve objectives.
______2. Establish goals are finally performed by creating and/or clarifying your business vision/mission
and identifying goals/objectives.
______3. Scan environment perform a thorough analysis and assessment of the internal and external
environment of the company.
______4. Formulation executes developed plans by providing detailed objectives and action plans.
______5. Implementation measures and assesses results, and recommends changes for improvement if
necessary.
______6. One of the key arguments used in understanding CSR is the stakeholder theory.
______7. One of the ways on how CSR can be strengthened is through employee volunteerism.
______8. CSR can be operated and implemented in a vacuum.
______9. Communication performs an important role in managing stakeholder relationships.
______10.The ultimate goal of business is to create sustainable value for its stakeholders.

LESSON MAP
Strategic
Managment of
Stakeholder
Relationship

Stakeholder Alignment of CSR

What is Strategy Strategic CSR with Business Leadership
Theory Strategy

Figure 1 shows the subtopics to necessary in organizational structure

3 Module 1 – Corporate Governance and Organizations

CORE CONTENTS

ENGAGE: PICTURE ANALYSIS

Activity 1:
1. What is implied in the picture?
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________

EXPLORE: READING CONCEPTS

WHAT IS STRATEGY?
A strategy is defined as a plan of action taken to achieve objectives. The process of the strategy
involves three steps: formulation, implementation, and evaluation (David, 20217) Strategic management is a
process of creating a competitive advantage over its competitors and sustaining this advantage in the long
term. Below presented is the process of strategic management.

Establish
goals/objectives
and scan
environment

Formulation Implementation Evaluation

4 Module 1 – Corporate Governance and Organizations

Establish goals – This is initially performed by creating and/or clarifying your business vision / mission
and identifying goals/ objectives.
1. Vision: what the company envisions itself to be in the future or to become
2. Mission: describes what the company is all about, who they are, what and how they do
things, and for whom
3. Goals: desired outcomes of planning, broader than objectives
4. Objectives: aimed targets that are needed to achieve goals
Scan environment – Performs a thorough analysis and assessment of the internal and external
environment of the company.
1. External: looks at the external opportunities and threats given the dynamics of a particular
industry
2. Internal: looks at a company’s strengths and weaknesses by assessing its resources

 Formulation – develops top-level strategies that can be trickled down to the rest of the
organization

 Implementation – executes developed plans by providing detailed objectives and

actions plans

 Evaluation – measures and assesses results, and recommends changes for

improvement if necessary

WHO ARE THE STAKEHOLDERS

Stakeholders are individuals or groups of people who can be aff3cted by the activities
engaged in by corporations inn achieving their goals Key stakeholders are shareholders (investors,
owners, partners, or anyone who has a financial stake in the company), customers, employees,
suppliers, and society (government, civil society, institutions).

STAKEHOLDER THEORY
One of the key arguments used in understanding CSR is the stakeholder theory. This theory
states that companies are responsible for generating reasonable profits for their shareholders but
should also be responsible for their stakeholders’’ well-being (Freeman, 1984).
To illustrate, when a manufacturing company produces industrial wastes and dumps it into a
river:
 residents affected by this unethical practice will demand the proper disposal of chemical
as it affects their right to clean air and water.
 employees of the company may also be exposed to the toxic chemicals in making the
product and have the right to demand protective gear and processes that will not be
harmful to them.
5 Module 1 – Corporate Governance and Organizations

 these residents and employees do not have any financial or managerial participation
except maybe buying the products or hoping produce them, but their concerns should
be heard and be a part of the company’s decisions.
 this is a moral claim exercised by a stakeholder, and forms part of a company’s desired
ethical behavior.

STRATEGIC CSR
Strategic CSR starts within an organization when it embeds and aligns its CSR initiatives as
part of the company’s overall strategy. This simply means that a company’s objectives, strategies, and
core values take into considerations the impact its operations have to on the stakeholders. Encircled
below are the core or critical parts of a strategic CSR framework:

r
Internal Analysis External Analysis

Goal/Objectives

Vision / Mission Industry

Dynamics
Core values
Stakeholder
Culture Issues and
Formulation Concerns

CSR

Implementation

Evaluation

Similar to the process of strategic planning, an effective CSR strategy would entail performing
the following steps:
1. Identify the goals / objectives of the company.
2. Scan the environment by looking at the internal and external situations by which
the company operates.
6 Module 1 – Corporate Governance and Organizations

The internal assessment looks:

 vision,
 mission,
 resources,
 strengths, and
 weaknesses of the company,
External assessment looks:
 needs of the stakeholder, considering the given opportunities and threats that
are in line with corporate goals and objectives. Step 2 provides a foundation
and aids in developing a strategic CSR program.

3. Formulate a CSR strategy that is aligned with corporate operations. The company
must identify how they will approach their CSR initiatives (corporate donation, work with
foundations, or intermediaries) and programs (single, focused, or multi-program activities),
and understand the needs of your target beneficiaries.

4. Implement the CSR program with consistently, meaning, programs are aligned with
the company’s goals/objectives. Cohesiveness of the entire process is an important
element of strategic CSR. This would come to fruition when CSR is embedded in tie
operations.

5. Evaluate the program if it has achieved its desired objectives and outcomes.
Should there be gaps and inconsistencies in the plan and executive of the program,
remedial efforts, or ways to improve, these initiatives should be undertaken.

Success Indicators
For CSR to be strategic, companies must manage stakeholder relationship effectively, for
social responsibility is primarily about stakeholders; well-being.

ALIGNMENT OF CSR WITH BUSINESS STRATEGY

In the beginning, some companies may engage CSR on a superficial level, meaning, such
activities are of a marginal or secondary position and are not part of their core business strategy.
Companies may be needlessly spending of CSR section above, it is vital that focusing on particular
objectives in consonance with corporate strategy will yield the best results: a growing and profitable
business and satisfied stakeholders (McElhaney, 2009; Hildebrand, Sen, & Bhattacharya, 2011).

Leadership
“Passion: Most importantly – follow the lead of “Management’s Heart.” Authenticity is the key.
When you see that Management’s heart is the one leading, and when you keep the community’s best
interest upfront – everything becomes natural, cohesive, and authentic. It becomes a value-added
experience, not just for the beneficiaries, but also for your own employees”, according to Mr. Chito
Bauzon, AVP – CSR Marketing, SM Cares (SM Supermalls).
7 Module 1 – Corporate Governance and Organizations

Employee Engagement
One of the ways on how CSR can be strengthened is through:
 employee volunteerism.
 companies pave the way for employees to engage in the programs voluntarily, and
some companies even given incentives to employees who participate in these
activities.
 a company’s CSR activities positively influence employee attitude and behaviour at
work (Chaudhary, 2017).
 apart from feeling good about helping the community, employees involved in CSR
develop better morale and feel proud of their workplace.

Collaboration
CSR is not and cannot be operated and implemented in a vacuum:
 It will take cooperation from various institutions to make it work effectively and efficiently.
 The role of government in CSR is to ensure that the very essence of corporations is to
provide for the common good, which pertains to stakeholders Civil society’s CSR role is to
ensure that they, as stakeholders to serve as watchdogs in the monitoring and
implementation of CSR.
 Businesses or corporations must be consciously aware of the impact of their activities on the
public, including all primary and secondary stakeholders (Hudtoahan, 2009).
 government alone cannot solve and provide the needs of its people and therefore needs
partners in doing this Synergy that is needed to allow strategic CSR to come into efficient
fruition as suggested by Friedman (1970).
 Alliances or partnerships with government, civil society, business, and all stakeholders are
important sources of legitimacy.
 Trust is also essential. When organizations opt to work together, they build social capital as
relationships develop over time.
 Social capital is an interconnected network of relationships in society that benefits everyone.

Communication
Success stories must be encouraged. Communication performs an important role in
managing stakeholder relationships. By communicating the success of a company’s CSR initiatives,
Estanislao (2017) stated it would have an immediate effect on strengthening buy-in within the
company and encourage participants to perform better. Furthermore, informing the various
stakeholders on these success stores, no matter how small, and increase public trust and legitimacy
8 Module 1 – Corporate Governance and Organizations

Value Creation
The ultimate goal of business is to create sustainable value for its stakeholders.
 Companies, now more than ever, must be aware of how they operate in today’s volatile and
uncertain environment and how they eventually affect our daily lives.
 Chandler (2019) encourages companies to understand their roles in society and their
responsibilities to society.
 The role of business in society is ever-changing because it is going beyond the creation of
economic and financial wealth as it is rightfully shaping our values and, importantly guiding
public pricy (Zadek, 2017).
 Engaging in commerce and generating profits is not bad. It is good and needed for human
progress and development.
 The basic problem is when individuals or companies are focused on profit maximization.
From this, there are many other issues, such as externalization of operational costs, greed,
and corruption among others.
 Companies that create value for stakeholders through:
 sustainable use of natural resources,
 risk reduction,
 reputation,
 trust,
 benevolence,
 transparency,
 collaboration,
 and many more value-added initiatives will have truly performed their roles as ethical
and legitimate corporation in our society.

EXPLAIN: DISCUSSING CONCEPTS Deep

INSTRUCTIONS: Answer the following questions below.
1. Who would you consider society’s stakeholders?
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________

2. Is it important to manage relationships with the various stakeholders of the company: Why?
____________________________________________________________________________________
____________________________________________________________________________________
______________________________________________________________________________
3. What is the purpose of the strategy?
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
9 Module 1 – Corporate Governance and Organizations

4. How can oen create value for a company?.

___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________

EXTEND: TAKING OPINIONS

INSTRUCTIONS: Answer the following questions below.
1. What are some of the questions that the CEO needs to clarify with her chosen partner inb their initial
meeting?
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________

2. How can the CEO be assured that her contribution/donation will be put to fair use? Clarify how she
can demand accountability from the foundation based on the mini case study presented?

___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________

3. Discuss corporate social responsibility and ethical behavior of enterprises.

___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________

EVALUATE: DEEPENING UNDERSTANDING

INSTRUCTIONS: Answer the following questions below.

1. Identify and explain the three steps in the strategic planning process.

____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
2. Explain the Stakeholder Theory.

____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________

3. Explain how the CSR can be aligned with the Business Strategy.
10 Module 1 – Corporate Governance and Organizations

____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________

TOPIC SUMMARY

In this lesson, you learned that:

 Strategy is designed as a plan of action taken to achieve objectives.
 The three process in the strategic planning are: Formulation, implementation, and evaluation.
 Establish goals are initially performed by creating and /or clarifying your business vision/mission and
identifying goals/objectives.
 Scan environment perform a thorough analysis and assessment f the internal and external
environment of the company.
 Stakeholders are individuals or groups of people who can be affected by the activities engaged in by
corporations in achieving their goals.
 Stakeholder theory states that companies are responsible for generating reasonable profits for their
shareholders but should be responsible for their stakeholders’ well-being.
 Strategic CSR programs in the early years were designed and developed with minimal stakeholder
engagement.

POST-ASSESSMENT
INSTRUCTION. On the space provided, supply the word/group of words/phrase being described /defined:
________________1. It is a plan of action taken to achieve objectives.
________________2. They are finally performed by creating and/or clarifying your business vision/mission
and identifying goals/objectives.
________________3. It is perform a thorough analysis and assessment of the internal and external
environment of the company.
________________4. Develops top-level strategies that can be trickled down to the rest of the
organization.
________________5. It executes developed plans by providing detailed objectives and action plans.
________________6. It measures and assesses results, and recommends changes for improvement if
necessary.
________________7. It states that companies are responsible for generating reasonable profits for their
shareholders but should also be responsible for their stakeholders’ well-being.
________________8. One of the ways on how CSR can be strengthened is through..
________________9. Another way on how CSR can be strengthened.
________________10. Performs an important role in managing stakeholder relationsships.
11 Module 1 – Corporate Governance and Organizations

REFERENCES

 Aune, B. (2014). Kant’s theory of morals. New Jersey, USA: Princeton University Press.
 Chandler, D (2019). Strategic corporate social responsibility: Sustainable value reason. CA, USA:
Sage Publications, Inc.
 Chaudhary, R. (2027). Corporate social responsibility and employee engagement: Can CSR help in
redressing the engagement gap? Social Responsibility Journal, 13 (2), 223-338.
 David, F.R., & David, F.R. (2016). Strategic management: Concepts and cases. Essex, England:
Pearson Education Limited.
 Davis, J., Schoorman, F.D., & Donaldson, L. (1997). Toward a stewardship theory of management.
Academy of Management Review, 22(1), 20-47.
 Delos Santos, Danilo Lorenzo S. and Ng, Leveric T. (2021). Good Governance and Social
Responsibility. Rex Book Store, First Edition.