CSR and Strategic Management: Analysis of Expolanka Holdings Plc

This report explores the significance of Corporate Social Responsibility (CSR) in strategic management, particularly within the context of Expolanka Holdings Plc, a Sri Lankan company. It delves into the evolution of CSR principles, examining various approaches and theories such as the stakeholder approach and the triple bottom line theory, which guide managers in achieving organizational goals effectively. The analysis incorporates data from academic journals, online resources, and organizational websites. The report further discusses issues faced in CSR implementation, evaluates the effectiveness of CSR practices, and assesses the impact of CSR on realizing business goals. It also compares CSR with mergers and acquisitions as a facet of strategic management, explores its relationship with Blue Ocean Strategy and Five Forces analysis, and highlights the importance of CSR in building public relations and fostering stakeholder engagement for long-term sustainability and societal progress.

Running Head: STRATEGIC MANAGEMENT 0
STRATEGIC MANAGEMENT

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EXECUTIVE SUMMARY
This report outlines the significance of CSR in the strategic management of an organization.
It also stated the evolution of CSR principles in an organization. The research will also state
various approaches and theories such as stakeholders approach and triple bottom line theory,
which works as a guidance for the manager in the achievement of goal effectively.
The data is also collected from various sources such as academic journals, online resources,
organization websites, etc. The company selected is Expolanka Holdings Plc, which is based
in Sri Lanka.

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Table of Contents
PART ONE................................................................................................................................3
Introduction............................................................................................................................3
Definition and Overview........................................................................................................3
Origin and arguments for its creation.....................................................................................4
Evolution and adaption CSR..................................................................................................6
Relevancy of the concept in today’s world............................................................................8
Comparison of CSR with Merger and Acquisition as a facet of Strategic Management.......8
CSR and Blue-Ocean Strategy...............................................................................................9
CSR and Five Forces............................................................................................................10
PART TWO.............................................................................................................................11
Issues faced in CSR implementation....................................................................................11
Evaluation of effectiveness of CSR practice........................................................................12
Impact of CSR in realizing business goals...........................................................................13
Conclusion................................................................................................................................14
References................................................................................................................................15

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PART ONE
Introduction
CSR stands for Corporate Social Responsibility and it plays a significant role for the
organization in these recent years of the globalization. With the handling of business
operations, many organizations now also need to consider the various necessary prescription
related to government and social concerns (Lindgreen and Swaen, 2010). This report outlines
how companies in Sri Lanka realize the role of business in society in respect with their
business perspectives. In addition, an analysis of existing perceptions of the social role of
business in respect with the establishing sustainability and development is also made in the
context of Sri Lanka. By fulfilling the social responsibility, businesses can make a balance
between the profits making activities and social welfare activities. In this report, a
comprehensive analysis is made related to the prominent firm of Sri Lanka, which endures
sustainable development and ethical behaviour. It is necessary that the organization follow
various standards of ethics under their operating activities (Dahlsrud, 2008). In the more
detailed analysis, there is an understanding of the nature and avenues of practices of CSR in
Sri Lanka. In fulfillment of the desired roles and objectives, it is also explored the various
social engagement activities undertaken by the business firm. Some of the organization also
uses CSR for the promotion of their vision in account of several stakeholders connected to
the organization other than shareholders and investors. In the connection with the corporate
social responsibility, various theories are also been propagated which can be used by the
business entity to solve several issues and thus increase the overall performance of the
business firm.
Definition and Overview
In order to gain better insights into the various CSR plans in Sri Lanka, it is important to
describe existing activities, approaches and other theories. Many organizations believe and
focus on the general aspects of the corporate social responsibility such as good corporate
governance, standard ethical practices, transparency in operations and operating business in a
profitable manner. However, the necessary area of engagement includes community
involvement, good employee practices and reporting, and evaluating performance on a

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continuous basis (Alvarez, 2015). Many experts differentiated CSR on the basis of two areas
i.e. one perceive as a well-being for the society while other sees as a benefit for the business
only and leave community backside. Sri Lanka boasts of a rich legacy of corporate
philanthropy. As per many business firm philosophies, the CSR is driven by the conventions
and they perceive CSR as an important practice, which can fulfil the modern needs of the
society. On the other hand, various traditional corporations operate in Sri Lanka are directed
by formal policies with some degree of elasticity to outfit the requirements of the business
enterprise. With the help of CSR activities, one can perceive the organization ability in
relation to image building, getting new customers base, and the rise in the market share
against various industry players and competitors. An organization can face and solves various
commitment issues if they build better relationship with the communities and also get
surrounded by them in relation to various activities. As per the various researches and studies,
it can be said that resources that are based or build on socially responsible entities gives
superior motivation, commitment and loyalty and it is directly connected with the business
growth and productivity (Gupta, and Kumar, 2013). For an organization, there are varieties of
CSR engagements that the company needs to be highlighted. The main aspects of these
events include education, unemployment, livelihood, safety awareness, etc. The logical
aspect of this report is to explore the influence of this planned and tactical move as a tool of
success for the business enterprise and also imitates over the need for progression while
employing CSR activities by the administration of the firm.
Origin and arguments for its creation
Corporate Social Responsibility was evolved back in 60 years. In the year 1900-1966,
Morrell Herald also mentions the corporate social responsibilities in the books of social
responsibilities of organization (Vazir et al, 2008).
Social responsibility history started back in 19th Century. However, many critics contended
that the real intervention of the corporate social responsibility is started in the year 1950. But,
Caroll diverged with the idea as during the era of 1800, the supervisor or employer were
more apprehensive with the employees and were researching out various ways so as to make
them more productive for the business enterprise.

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In Great Britain, the employed factory system can be seen as a good sign of starting the
practice of corporate social responsibility. Many thoughts and view put forward in relation
with the women and children employment in the factories. Due to this, many reformers feel
that this employment will cause various social problems and issues such as poverty, child
labour and rise of slums. These social problems happening in the factories help the society to
understand the need for the protection of the employees from the various labour issues and
thus take necessary actions considering both social and business aspects (Dhaliwal et al.
2012). The companies’ employees working conditions can be improved with some of the
areas getting improvement in the provision of hospitals, bathrooms, and hospitals-clinics.
The case of the corporate philanthropy was evolved from the idea of corporate social
responsibility. Acknowledging the previous time, it was said that there were more generous
relations between the supervisors i.e. managers and employees. On corporate philanthropy,
two legal aspects and cases were also discussed by Wren with the evolvement of the first case
in 1883 (Hahn, 2013). In this case, the organization i.e. West Cork Railroad Company
follows several steps in compensating their employees who lost their jobs with the dissolution
of the business firm. However, this compensation action is not supported by Lord Justice
Byron as he believes there is no connection between the charity and the business. He also
stated that the business money should be used for the purpose of the business only.
Another case was related to Steinway, the court permitted a piano manufacturer to build the
church and school on the adjoining land of the workplace for their employees. According to
the court, it will help in enhancing employee relations.
Both the above cases reflect that the individual and organization behaviour is directed
towards enhancing the position of the employees, however, the judgments of both the cases
were different (Hiller, 2013). This clears the decision related to the philanthropy approach
that those individuals who know the importance of this approach faces difficulty in making
understand the meaning of this approach on the community.
Many sceptical business individuals argued that in business, profit is the main aspect and not
any welfare of the society or community. On the other hand, various shareholders take part in
the business and the business enterprise uses the money of the company for the works related
to the corporate social responsibility (Calabrese et al. 2013). This seems to be a theft as the
organization is using the money of the shareholders; therefore, it is the business enterprise is
not allowed to use the money of an external source.

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Many individuals believe that the primary responsibility of the business is to make product
according to the needs of the customers. The manager needs to find out the ways in the good
sake of the business enterprise rather than relating to the functions for the betterment of the
society. In handling of the various social issues, managers are not much expertise. Therefore,
the exact social issues of the society may not acknowledge by the managers. If they focus on
the enhancement aspect of the society, they would not able to devote the necessary time in
the major functioning of the organization, which they have been hired.
The industrial activities create huge amount of pollutants in the organization and this need to
be compensated by the organization as this has a severe impact on the various being on nature
and people (Calabrese et al. 2013). The organization cannot pollute the environment for the
sake of their own personal objectives. This makes the importance of the corporate social
responsibility to eradicate the damage to society.
With the help of corporate social responsibility, public relations can be built and sustain
effectively (Dhaliwal et al. 2012). If the business enterprises do something good for the
society, it will be highlighted in the society and thus gain huge recognition in the external
market and nations. If the organization looks for the social problem, the stakeholders will get
impressed and could make partnership with the company in future.
Evolution and adaption CSR
(Source: Cheng, Ioannou and Serafeim, 2014)

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In the older age, people engaged in philanthropy try to enhance the working condition of the
workers. In respect to this, they also try to solve small social problems in relation to the
employees of the business enterprise. However, the organization come at the position of
globalization and does also operate on an international level. The focus areas shifted from
narrow to wider in respect with philanthropy approach to a global business player and get the
position of citizenship. Later on, the citizen follows CSR principles for the betterment of the
community and society. In addition, the organization can use CSR tool as a business strategy
rather than just for the enhancement of the society (Korschun, Bhattacharya and Swain,
2014). Many organizations realized that the opting CSR activities are not just good for cost
cutting but they can also gain money from the market with the help of corporate social
responsibility (Lund-Thomsen and Lindgreen, 2014). Moreover, the final phase of the CSR
can help the organization in the longer-term sustainability. By implementing the principles of
CSR, the organization can reach mutually beneficial solutions (Boulouta and Pitelis, 2014).
This shows that the organization in the market does not just operate for the profit making but
they also act as a responsible citizen that works at full pace for the progress of the society.
This responsibility is also connected with their future growth.
The approach of corporate social responsibility has been adapted in these following theories –
 Stakeholder theory – the best aspect of this theory is that this theory first relates
prevention not cures (Brammer, Jackson and Matten, 2012). The first evaluation will
be made on those actions, which have a significance negative impact on society. The
focus will be on stopping of those actions before starting of implementation by the
business enterprise. Therefore, the company will be benefitted as they will get relief
from spending extra amount for the purpose of cure and thus that money can be
transferred to the betterment of society. This will also help the company to save their
name from tarnishing in the market. The business enterprise can focus on welfare of
the society rather than thinking of other aspects.
 Triple bottom line theory – In this theory, there are three types of sustainable
considerations, i.e. economic, environmental and social sustainability.
For sustaining themselves economically, the company follows the principles of corporate
social responsibility (Gimenez, Sierra and Rodon, 2012). The organization business will
help them to be recognized in the external market. The corporate social responsibility will
help them in sustaining themselves as the people will able to see the operations of the

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company and this will make the organization grow. In last, the aspect of environment
sustainability will lead to maintaining healthy operations for the business and thus
benefits the society as a whole.
Relevancy of the concept in today’s world
For getting insights about the relevancy of CSR in today’s world, a research was made to
explore if the individuals of the society feel that there is a requirement of this approach for
the business. The war between the government and Liberation Tigers of Tamil Eelam (LTTE)
has a huge impact on Sri Lankans. In the year 2001, Norway as a facilitator tries to extend
help so as to bring peace to the country (Svensson, 2009). However, the entire was broke
down in the year 2003 and when the people have no idea about the functions of the corporate
social responsibility when they asked. However, some of the felt that with the continuous
operations of the business the company need also to concern about the social cause.
Moreover, they are not having a full confidence over their ability as they felt that these
organizations are working to exploit the customers and also harms the cultural values of the
society. In that period, it was found that many organization are involved in some kinds of the
charitable activities, however, there were not any proper strategy or policies related to the
corporate social responsibility for those business enterprises (Kim, Park and Wier, 2012).
They not know the process of the betterment of the nation but they want to.
Comparison of CSR with Merger and Acquisition as a facet of
Strategic Management
A business goodwill is more important than financial prosperity. There are various threats to
long-term sustainability such as mergers, acquisitions and business scandals. CSR is more of
management approach and philosophy. It also plays a crucial role in the merger and
acquisitions. Various research also tried to bring a relation between the corporate social
responsibility to that of merger and acquisitions. However, the factual reality is that those
companies are more involved in merger and acquisition who faces governance issues. One
can analyse with the help of this example. In Brazil, the private firms like Shell Do Brasil, an
oil company and RedeGlobo (Media Company) join to help the nation in restoring of Christ

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the Redeemer, the statue in Brazil in the year 2010 (Mendis, 2016). The contribution of both
companies in fulfilling their CSR role can be associated with another strategic approach like
merging and acquisitions (Rajapakse and Manamperi, 2015). In restoring the statue, both the
companies help each other including the people of Brazil. This partnership not only helps the
company in fulfilling their CSR role but also support them in manages of extra finances for
the corporate social responsibility. The company also gets the good name in the market and
public as that statue represents the public interest in Brazil.
In addition, there are some cases also where the private players of the industry use CSR in a
wrong manner (Rodrigo and Arenas, 2008). There was a case where one organization has
provided contaminated milk to the poor section of the society and that too at a significant
amount of price. This makes the people ill, the same organization provide them medicines
from their pharmaceutical division, again at a low price. One can analyse, that the
competition is now prevailing at a very high height and also some of the organizations are
steadily forgetting the basic business ethics in the light of corporate social responsibility.
CSR and Blue-Ocean Strategy
The value creation is the origin of blue ocean strategy. This strategy is created when the
business enterprise understood the significance of innovation that can lead in creating value
for both organization and consumer. This strategic framework i.e. value innovation which
entails over two pronged step where an organization build various factors while creating new
innovative products and solutions with an aim of positioning in an uncontested market
place (Alvarez, 2015). Managers play a vital role in strategic decision making for the
accomplishment of sustainable growth. Moreover, the high growth organization focus on
innovation aspect rather than competing with their rivals in the industry. It can be said that
both CSR and Blue-Ocean strategy are similar in some manner as they both focus on the
creation of value for the organization and the society. In either of the cases, if the client's
commitments are built effectively, organization will keen focus on the improvement of the
product in addition to innovation (Wang et al. 2016).

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CSR and Five Forces
Both CSR and Five Forces are interrelated. One of the most significant aspects of this
economic stability is the globalization, which raises the power and wealth of the various
international businesses. However, some complexities can be seen in CSR due to the
differences in cultures as the behaviour of people differs according to the respective regions.
CSR will assume to be more important in the perspective of the strategic management
(Dacin, Oliver, and Roy, 2007). Both of the above approaches are directed toward greater
social responsibility. However, these approaches can differ on the industrial basis, but both
have a significant impact on the profitability because they affect the prices capital investment
in respect with necessary strategic decisions as per the organization structure.
Rajapakse and Manamperi (2015) also further states in respect with significance of the
corporate social responsibility as mentioned the Sri Lankan companies in the article, ‘The
Title How Do Sri Lankan Companies Perceive Corporate Social Responsibility? An
Empirical Study of the Motivations Underlying CSR Projects and Reporting By Sri Lankan
Companies’. In their research, a survey is conducted based on twenty companies involved in
CSR activities. According the companies, there were several reasons to follow the principles
of corporate social responsibility like pressure of the stakeholders, issue of the annual or
monthly report in the public, government interventions, etc.
It is also known that many organizations fail to recognise that CSR is a blessing for them or
burden. However, due to the globalization and modern civilization, every organization
understands the significance of CSR towards the sustainable growth of the business.
Moreover, stakeholders are influencing the business enterprises to mention the CSR activities
in their annual report (McWilliams and Siegel, 2011). They believe that this will help the
business to behave ethically and also improve the various aspects of the society. Therefore, it
can be expected that the business enterprises will fulfil their social responsibility with full
responsibility so that to formulate overall growth.

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PART TWO
Issues faced in CSR implementation
In Sri Lanka, Expolanka Holdings Plc. is a popular name that is involved in many CSR
activities like solving environmental problems by reducing the carbon footprints. However,
the organization faces some challenges while the employment of corporate social
responsibility. One of the major challenges was in the form of regional consideration in
which various religious beliefs of Sri Lankans are influencing the professional idiom and this
can be seen across the different sectors as per the religious observance (Dissanayake et al.
2016). In Sri Lanka, around eighty percent of the population is Buddhist. Some of the
activities by the company cause impediments and exerted influence in the relief activities.
This makes Explolanka Holdings perform their business operations by considering various
religious sentiments (Patel, 2017). The other challenge is the difference between the rich and
poor as in Sri Lanka, there is a huge space between the line of rich and poor and this also
influence the CSR activities of the firm. Most of the activities of the companies are directed
by this principle. They do not focus on the reduction of poverty in society. However, the firm
researched various issues of the environment, but they need to involve some of the
community services.
The next challenge is the victims’ expectations as there were various natural disasters flawed
in Sri Lanka. The victims of droughts, floods affect a lost and it can be said that the support
of nature to Sri Lanka was not extended. Therefore, Expolanka Holdings Plc. Need to focus
on various rehabilitation projects by altering their basic primary activities in respects to the
victims of natural disasters (Tschopp and Huefner, 2015). The other challenges are also
related to this only i.e. influence of disasters. Generally, the mitigation of disasters is the
responsibility of many aid agencies and the public sector. Moreover, the country had faced
immense magnitude of floods and disasters before. However, later on, Expolanka Holdings
Plc. came up with many ideas such as de-salivation of plants to control the crises.
The next challenge is the government role where ministry of social service calls the shots in
respective with the disaster management. Various disaster related concern and issues are
handled by the National Disaster Management Centre, however, they also know that private