School of Economics Shanghai University CSR and Strategy Instructor: Wang Hong School of Economics Shanghai University Supported by 2015 English Teaching of Corporate Social Responsibility Course Construction Project for Foreign Students in Shanghai Universities

Explain the role of a manager. Critique the objectives of a business. Learning objectives Explain the role of a manager. Critique the objectives of a business. Explain the decision-making process. Describe the principal features of a governance system. Understand the dimensions of risk and their implications. Construct a typology of risk. Where we have come from to our present CSR context economic history Governance/CSR gap Gaps for both US producers abroad and foreign producers selling in US But gap in expecations not just US or foeign market issue; domestic issues in China as well – local relevance of CSR Gap between CSR expectations and firm behavior

The tasks of a business manager

The objectives of a business A business manager must be concerned not just with the internal running of the business but also with the external environment in which the business operates - that is with customers and suppliers, with competitors, and with the market for the products or services supplied by the business. Where we have come from to our present CSR context economic history Governance/CSR gap Gaps for both US producers abroad and foreign producers selling in US But gap in expecations not just US or foeign market issue; domestic issues in China as well – local relevance of CSR Gap between CSR expectations and firm behavior

The role of a manager Decision making Performance evaluation Communication Control Planning

The decision making process Identify objectives Search for alternative courses of action Gather data about alternatives and evaluate Select course of action Implement decision Compare actual and planned outcomes Respond to divergence from plan

Corporate governance principles Transparency Accountability Responsibility Fairness Because we can’t accomplish objectives unilaterally

What is good corporate governance? Creating sustainable value Ways of achieving the firm’s goals Increasing shareholders’ satisfaction Efficient and effective management Increasing credibility Ensuring efficient risk management Providing an early warning system against all risk

Ensuring a responsive and accountable corporation Describing the role of a firm’s units Developing control and internal auditing Keeping a balance between economic and social benefit Ensuring efficient use of resources Controlling performance Distributing responsibility fairly Producing all necessary information for stakeholders Keeping the board independent from management Facilitating sustainable performance

Some long-term benefit of good governance Increasing the firm’s market value Increasing the firm’s rating Increasing competitive power Attracting new investors, shareholders and more equity More or higher credibility Enhancing flexible borrowing condition/facilities from financial institutions Decreasing credit interest rate and cost of capital New investment opportunities Attracting better personnel/employees Reaching new markets Relevant for same reasons but also may have direct impact on firms as they participate or are expected to participate

Risk management, governance and CSR Risk management has become an important aspect of business management and CSR has a role to play in this because a full understanding of CSR and its implications can reduce risk.

Three steps in dealing with risk Risk assessment Risk analysis Risk management

Risk management Risk avoidance Risk reduction Risk protection

A typology of risk

Risk, CSR and strategy The identification and management of risk is an important topic for managers at the present time and a great deal of time and effort is being devoted to developing risk management plans. Good governance reduces the exposure of a firm to a whole variety of risks. This is clearly recognized by investors and potential investors and so the cost of capital is lower if a firm has good procedures for its governance.

Conclusions CSR is now generally considered to be an integral part of strategy for any organization and built into the strategic planning process. There are many perceived benefits to an organization from this. Governance is also an integral part of this process. Increasingly, these have been built into both the strategic planning process and the risk management systems of an organization because it is clearly recognized that this will lower exposure to risk and therefore help to improve the performance of the organization. It is an area which is still developing.

Summary of key points There are a number of aspects to the role of a manager they involve making decisions and interacting with others. There are a number of objectives of a business that can be equally as important as maximizing profit; which of these takes priority depends upon the business and changes as circumstances change.

There are a number of steps in the decision-making process. Any governance system is based upon the same four principles and will address a range of points. There are a number of dimensions of risk and they have significant implications for a company. A typology of risk can be constructed which categories the risks as a precursor to addressing them.

Definitions of key terms and theories C____________ involves both the sender of information and its recipient and for the information to be of value it needs to be understood by the recipient as intended by the sender. C__________ _________ can be highly influential for firm performance, and is based upon four corporate governance principles. R____ can be evaluated and therefore planned for there are three steps in its treatment. R___ __________ has become an important aspect of business management and CSR has a role to play in this.