Competitive Advantage and CSR
This article mainly focuses on the role of commercial entities in improving the welfare of the surrounding communities. Companies have a responsibility of taking care of communities around so that they benefit from their daily operations. Giving back to the society allows organizations to win the trust of the people and establish a strong brand image and realizing a good working environment for the business to thrive. Giving back including creating jobs for the locals, protecting the environment by emitting treated and safe effluents into the air and sponsoring several development projects in the community. Through these initiatives, a company is able to have an edge over its competitors in the market.
Because of the competitive nature of the market, every company must fight for a share through strategic plans, which add value to members of the community since they are the main consumers. This is what wins the people around as they get convinced that you are concerned with their welfare and not just making abnormal profits. Importantly, these firms can add value to the community through trainings, to equip members with skills to earn them a living. They could also help the people understand the need to investment their resources for future returns.
With this approach, it becomes easier to transfer knowledge and gives companies the wheel power to operate in other geographical locations as they allow local community to participate in the running of the firm. The ultimate goal of such activities is establishing a competitive advantage over other players in the market and remaining relevant in meeting the needs of the people. DreamWorks is one of the companies, which have perfected the art of giving back, by equipping Los Angeles students with film production skills to enable them secure jobs in the industry. This further strengthens a cordial relationship between the firm and the community. In the end, the company gets a platform to rise and dominate the market by outshining competitors and enjoying market loyalty.
Customers always provide companies with ideas about demand trends in the market. This ensures that the firm delivers target solutions to the needs of customers and gains a cutting edge brand recognition in the market. This also increases the demand for the products.
In the context of fighting for the market share, competition breeds innovation for companies to remain relevant in meeting the needs of customers at all times. With innovation, comes high quality, which in turn wins the loyalty of customers. Through training of locals, organizations also meet the rising demand for skilled employees to drive their operations.
Moreover, giving back to the society spurs donor funding, thus attracting capital within the organization. This is essential in boosting the activities of the local community and tames the problem of free rider problem. Through improved grant recipients, the community will realize impact cost for all the funds. Innovation and advancement of knowledge critically addresses social issues within the community. For instance, IBM launched a project to develop websites for the local community.
It is worth noting that integration of local communities in organization’s activities further cements a mutual relationship between the two parties. For this to come true, firms must ensure healthy communities that support market performance by providing enough raw materials without undermining the environment. In the absence of such agreement, the community is likely to frustrate operations of the company. Thus, a good relationship has to exist, to establish a firm foundation for corporate social responsibility. In both cases, the company should adopt an approach that guarantees opportunities both sides.
The inside out linkage is vital in strengthening these mutual relationships between commercial organizations and local communities. For example, it is the role of the firm to ensure that its products meet the needs of customers holistically at all times. This calls for investment into value chain innovations, which creates room for improved social value with the aim of taking over the market by edging out other players that may pose a threat.
For this mutual relationship to thrive, the need for standards and regulations cannot be overemphasized. This will ensure that every sides benefits without cases of exploitation. Through this, the firm will get leverage to extend their market share and meeting the demand of customers.
In summary, companies cannot avoid having relationships with communities within which they operate. This is necessary for effective exploitation of available materials and winning the loyalty of the people thus promoting competitive advantage for the firm. While this is the case, there has to be regulations, which protect the community from exploitation by commercial entities, which may tailor the relationship to favor their operations at the expense of the plight of the locals. Fair relationships ensure economic empowerment for the two parties. When a company has an excellent CSR, it will always have an upper hand in the market because of the loyalty from customers.