CSR - Chap 7-9

Profit

Residual of revenues minus costs; primary measure of the value a firm creates for itself and society.

Profit Maximization

Strategy focused on achieving the highest possible short-term profit, often at the expense of long-term sustainability.

Profit Optimization

Balancing profit with stakeholder needs to achieve a sustainable, long-term outcome rather than an absolute maximum.

Strategic CSR

Aligning profit-making with social responsibility to create long-term stakeholder value and firm viability.

Capitalism

Economic system characterized by market interaction, mobile labor, private capital, and competition-driven innovation.

Competition (in capitalism)

Market force that drives innovation, lowers prices, reallocates resources, and is often resisted by incumbent firms.

Stakeholder Activism

Efforts by stakeholders—often amplified by the internet—to hold firms accountable to societal values and ethics.

Stakeholders as Market Makers

Concept that firms and stakeholders co-create value by continually balancing self-interest with societal interests.

Production Value

Value created by the firm during the production process; can be positive, neutral, or negative.

Consumption Value

Value realized by the customer when using a product or service; can also be positive, neutral, or negative.

Next Billion

Emerging market segment of underserved consumers expected to enter the global middle class by 2050.

Bottom of the Pyramid (BOP)

Prahalad’s idea that serving low-income populations can open large, vibrant markets for innovative firms.

Inclusive Innovation

Developing products and services tailored to underserved populations to improve access and social outcomes.

Sustainable Living Plan (USLP)

Unilever’s strategy to double revenue while halving environmental impact, later expanded to ‘Planet & Society.’

Enlightened Capitalism

Business approach that integrates CSR deeply into operations to gain competitive advantage while benefiting society.

Voluntary CSR

Discretionary corporate initiatives to address social issues, allowing flexibility and innovation.

Mandatory CSR

Government-imposed requirements intended to ensure firms meet minimum social and environmental standards.

Behavioral Economics

Field combining economics and psychology to study real-world decision-making influenced by emotions and biases.

Nudge

Subtle policy or design that steers choices predictably without restricting freedom of choice.

Choice Architecture

The environment in which decisions are made; mapping it helps influence better behavioral outcomes.

CSR Accountability

Process by which firms set goals, measure progress, and communicate CSR performance to stakeholders.

Standardization (CSR)

Creating common metrics and definitions to compare CSR performance across firms and industries.

Certification (CSR)

External validation that a firm’s CSR practices meet specified standards, enhancing transparency and trust.

Labeling (CSR)

Displaying CSR credentials on products to inform consumers of social or environmental standards met.

Greenwashing

Misleading claims that exaggerate or falsify a firm’s environmental or social responsibility.

Lifecycle Pricing

Incorporating extraction, production, use, and disposal costs into product prices to reflect true social and environmental impacts.

Externality

Positive or negative effect of a transaction on third parties not directly involved in the exchange.

Scope 1 Emissions

Direct greenhouse-gas emissions from sources owned or controlled by the firm.

Scope 2 Emissions

Indirect emissions resulting from the generation of purchased energy consumed by the firm.

Scope 3 Emissions

All other indirect emissions across a product’s lifecycle, including supply chain and end-of-life disposal.

Emissions Trading System (ETS)

EU carbon-pricing scheme that sets a market price for emissions to encourage reductions.

Environmental Profit & Loss (EP&L) Account

PUMA’s framework assigning monetary value to a firm’s environmental impacts—‘pricing natural capital.’

Extended Producer Responsibility (EPR)

Policy taxing producers for environmental costs of their products to encourage sustainable design.

Sustainable Competitive Advantage

Unique resources, competencies, or positions that allow a firm to outperform rivals over the medium to long term.

Vision

Statement of what a firm ultimately aspires to achieve.

Mission

Description of what a firm will do to realize its vision.

Strategy

Plan outlining how a firm will achieve its vision within its competitive environment.

Tactics

Day-to-day actions taken to implement strategy.

Strategic Analysis

First stage of corporate strategy: assessing internal and external environments.

Strategy Formulation

Designing courses of action to achieve objectives based on analysis.

Strategy Implementation

Executing formulated strategies through aligned structures, resources, and actions.

SWOT Analysis

Framework identifying Strengths, Weaknesses, Opportunities, and Threats.

Resource Perspective of Strategy

View that a firm’s unique resources and competencies are the primary source of advantage.

Industry Perspective of Strategy

Porter’s view that industry structure shapes firm performance more than internal resources.

Core Competency

Capability that is widely applicable, valued by customers, and difficult for competitors to imitate.

Porter’s Five Forces

Model analyzing supplier power, buyer power, new entrants, substitutes, and industry rivalry.

Creating Shared Value (CSV)

Porter’s concept of boosting competitiveness by solving social problems through business strategy.

CSR Threshold

Point at which meeting stakeholder expectations becomes essential to firm survival and strategy.

Hybrid Business Strategy

Combines low-cost and differentiation to serve specific market niches more effectively.

CSR Filter

Conceptual screen for evaluating strategic and tactical decisions based on stakeholder impact.

Resource Constraints

Limits posed by available human, social, and financial capital when setting strategy.

Policy Constraints

Internal rules and cultural norms shaping how a firm operates.

Environmental Constraints

Legal, technological, economic, and cultural factors outside the firm that affect strategy.

Competitive Context

External environment—including customers, competitors, technology, and regulators—that frames strategic choices.

Make-or-Buy Decision

Choice between developing a capability internally or acquiring it externally based on speed and strategic importance.

CSR Report

Document outlining a firm’s CSR goals, progress, and accountability to stakeholders.

CSR Audit

Independent assessment verifying a firm’s CSR practices against objective standards.

Social Mission (of firm)

Underlying societal purpose every firm serves, varying in degree and execution.

High CSR Threshold Firm

Company whose business model makes it heavily dependent on meeting stringent stakeholder expectations (e.g., Walmart on cost).

Low CSR Threshold Firm

Company whose brand is intrinsically values-driven and thus more vulnerable to stakeholder criticism (e.g., The Body Shop).

Stakeholder Backlash

Negative reactions from stakeholders when a firm fails to meet evolving expectations, threatening reputation and operations.

Carbon Pricing

Policy approach that assigns a cost to carbon emissions to internalize climate impacts.

Natural Capital

World’s stocks of natural assets—air, water, biodiversity—viewed as economic resources that need valuation.

Market-Based Economy

System in which prices and production are determined by supply and demand with minimal central planning.

Optimum (Decision-Making)

Relative balance of outcomes acceptable to different stakeholders, not necessarily an absolute maximum.

Alignment of Vision, Mission, Strategy, Tactics

Ensuring all levels of planning and action are coherent while still respecting stakeholder expectations and external constraints.