What is Corporate Social Responsibility? - InnoTrain CSR

and documented along the entire value chain, for example with sustainability
reporting. For companies benefiting strongly from their market value, a lack of
knowledge about the details of the value chain represents a high risk due to the
pressure from the media and public associated with scandals. US billionaire and
major investor Warren Buffett brings it to the point: "It takes ten years to establish a
positive image for a company but only ten seconds to loose it."
However, advantages along the value chain are found for example for small and
medium-sized enterprises (SMEs) as suppliers of large operations. With growing
calls for transparency and CSR in large companies which are much more heavily
scrutinised by the media, NGOs and the public than small enterprises, SMEs are able
to position themselves as safe and sustainably reliable partners in the competition of
suppliers thanks to their own CSR strategy. As well, with the socially and
ecologically-focused consumer group of LOHAS (Lifestyle of Health and
Sustainability), companies with a responsible value chain or one consistently focused
on the region, are increasingly gaining importance. An important aspect that is in
favour of a value chain within a specific region is to keep the transport of
merchandise low. It allows for both cost and energy efficiency.
The value chain concept illustrates the added value for the consumer based on all
corporate activities used to create the final customer product or the final service. As
regards to competition, the value chain can be focused on achieving a competitive
edge through cost leadership (price/costs, standard production) or follow a
differentiation strategy (performance/quality, uniqueness/CSR) within the industry.
The value chain is comprised of primary and secondary activities which may develop
within and outside of a company.
Aside from the production, primary value chain activities include the logistics or
service, i.e. direct performances used for the physical alteration of the product, such
as for example
� conversion of raw materials
� customer service after selling products
Secondary value chain activities are used for the conservation of the primary
activities, for example
� procurement management
� technical processing
� Human resources management
Methods for the value chain analysis can comprise an internal cost analysis, internal
differentiation analysis and a vertical correlation analysis. This is how competitive
advantages can be generated with the components of the value chain, mainly cost
The project "InnoTrain CSR" is organized by GILDE GmbH and has been funded with support from the European Commission. This publication reflects the
views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein. 12/2010
,
InnoTrain CSR
www.csr-training.eu