BATANGAS STATE UNIVERSITY - TNEU

MALVAR CAMPUS

Module 7
CHOOSING AND IMPLEMENTING
SSM STRATEGIES
Week 13-14
INTRODUCTION
This chapter discusses the key strategic
management processes and practices for long- term
strategic management (SSM) strategies in
businesses. Strategic managers have strategic
choice, allowing them to choose their
competitive environments, tactics, performance
criteria, and structures. They must align their
strategies, structures, and processes with
various ways for firms to prosper in a particular
environment.
1 Identifying which portfolio
best suit business’
SSM strategies
2 Employing SSM Value Systems in the
business

3 Knowing which pursuits are better than

profit

4 List the different designing self-

renewing learning structures

5 Learn how to establish

transformational change process
 BATANGAS STATE UNIVERSITY - TNEU
MALVAR CAMPUS

CHOOSING PORTFOLIO OF SSM

STRATEGIES
Strategic managers in SSM identify, analyze, and select
viable strategies at functional, competitive, and
corporate levels to achieve t r iple- bottom- l
performance goals in a ine
sustainability- r ich business
environment.
 BATANGAS STATE UNIVERSITY - TNEU
MALVAR CAMPUS

ENTERPRISE RESOURCE PLANNING

SYSTEMS
Enterprise resource planning ( ERP) systems have evolved f rom specialized
software for specific tasks to complex standardized systems that cover various
aspects of an enterprise' s value chain. These systems aim to
relationships with stakeholders and promote manage f low
organization. knowledge ERP systems are usedincreasingly
to enforce within the
sustainability initiatives and provide a contact stakeholders.
channel with
Carbon is
r ecogn ized as a vit al r esou r ce, and or gan izati on s mus t pr ov ide r eli able data on car bo n
f oo tpr i nts and t r ade s to pr omo te car bo n labe li ng . Tr anspa r enc y is cr ucial in
ER P sys tems , as lead ing sus tainab ilit y compan ies commun icate their successe s and
cha ll enge s to s takeho lder s . Howeve r , integr ati ng sus tainab ilit y into ER P sys tems can
be cos tl y, intr us ive, and dis r up ti ve. SA P and O r acle hav e intr oduce d car bo n emiss ion
managemen t too ls du e to incr ease d consume r and r egu lator y demands . I ntegr ati ng
sus tainab ilit y data into ER P sys tems is cr ucial f or f or mulati ng and implemen ti ng
sus tainab ilit y managemen t s tr ategies ( SSM ) .
 BATANGAS STATE UNIVERSITY - TNEU
MALVAR CAMPUS

FULL- COST ACCOUNTING SYSTEMS

Sustainable Supply Management ( SSM) requires reliable, t imely f inancial data
t ha t re f l ec t s t he t rue econom i c , soc i a l , and envi ronm en t a l cos t s of
m anuf ac t ur i ng, de l i ver i ng, consum i ng, and di spos i ng of goods . Trad i t i onal
accoun t i ng m e t hods ar e i nadequa t e f or SSM due t o t he i r di scoun t i ng me t hods , whi c h
ar e use l ess f or prov i di ng l ong- t er m f i nanc i a l perspec t i ves . To addres s
this, " full- cost accounting" systems have been created, accounting for both
short- and long- term economic, social, and environmental costs of doing
business. These programs aim to fully incorporate economic, social,
environmental parameters, social
and give and environmental considerations
primary importance, account for both current and future costs, and represent
long- term f inancial results. The Association of Chartered Certified
Accountants ( ACCA) is a group committed to research and development of
full- cost accounting, helping organizations integrate sustainability into their
core business strategies, develop measurement protocols for carbon and
greenhouse emissions, develop sustainability reporting tools, and improve
individual f i rm footprint analysis accuracy.
 BATANGAS STATE UNIVERSITY - TNEU
MALVAR CAMPUS

SSM REPORTING
Accurate reporting of a f i rm' s social and environmental performance is crucial
f or engag i ng st akeho l der s and enhanc i ng i t s l egi t i mac y i n soc i e t y. The ACCA
recom m end s t ha t sust a i nabi l i t y repor t s shoul d cove r com prehens i bl e
i nf orm a t i on, respon d t o st akeho l de r i nqui r i es, ensur e da t a cont i nui t y and
com parab i l i t y, and descr i be a l l ac t i vi t i es, produc t s, processes , pol i c i es,
program s , and per f ormanc e t arge t s re l a t e d t o i mpl ement i ng SSM st ra t egi es. Som e
sust a i nabi l i t y repor t s ar e manda t ory, suc h a s t he U. S. EPA' s Toxi c Re l eas e
I nven t or y ( TRI ) repor t . However , many corpora t i ons ar e t aki ng a m ore
proac t i ve approach , crea t i ng de t a i l e d soc i a l and envi ronm en t a l per f orm anc e
repor t s. Ext erna l sust a i nabi l i t y i ndi ce s l i ke t he Dow Jone s Sust a i nabi l i t y
I ndex and t he chem i ca l i ndus t ry' s Respons i bl e Car e Gui de l i ne s
are used to benchmark performance and identify performance gaps
strategies. The Global Reporting Initiative in SSM ( GRI) is a
sust a i nabi l i t y repor t i ng, wi t h i t s G 3 gui de lsignificant
i ne s cover iinitiative
ng econom iin c out com es ,
l abor prac t i ces , huma n r i ght s, decen t work, envi ronm en t , soc i e t y, and produc t
respons i bi l i t y.
 BATANGAS STATE UNIVERSITY - TNEU
MALVAR CAMPUS

SSM AUDITING
Social Social Management ( SSM) auditing evaluates a f i rm' s
economic, social, and environmental performance throughout i ts
value chain, aiming to close sustainability performance
gaps. Responsibility auditing, which uses external
benchmarks and internal performance data, assesses
employee practices, community relations, environmental
performance, and quality performance. I t compares these areas
to the f i rm' s vision, values, and mission to identify
performance gaps. Integrating sustainability into functional
level support systems is crucial for SSM decision making, but
presents challenges in implementation.
 STRATEGIC CHOICE AT
THECOMPETITIVE LEVEL

Competitive level managers need dynamic

skills to adapt resources to market
segments' opportunities and challenges.
These core competencies enable SBUs to
identify strengths, weaknesses,
opportunities, and threats (SWOT) in their
market segments. A successful strategy
requires finding a strategic match, building
sustainability-based processes, and
dynamic skills to manage the strategic fit
between external and internal variables.
FIGURE 40 . COMPETITIVE LEVEL STRATEGIC CHOICE
 BATANGAS STATE UNIVERSITY - TNEU
MALVAR CAMPUS

STRATEGIC CHOICE AT THE

CORPORATE LEVEL
Hamel and Prahalad ( 1994 ) developed a conceptual
portfolio management tool to assist managers
making strategic decisions by in focusing
opportunities to generate value through a company'
on s
portfolio of Strategic Business Units ( SBUs). This
approach contrasts with t raditional methods that
consider l ines of business as separate entities.
 STRATEGIC CHOICE AT
THECOMPETITIVE LEVEL
Core competencies are essential value-creation
capabilities for organizations, and identifying them is
crucial for determining opportunities. A matrix can be
used to identify existing and new competencies and
industries, with each quadrant having a distinct
strategic implication. Strategic choice should focus on
building new competencies to compete in future
industries and creating new products and services by
redeploying or recombining current competencies to
address gaps in traditional markets. Strategic
managers should enlarge their opportunity horizon and
develop current and future capabilities to position the firm
to create new market space. The Hamel and Prahalad
framework helps organizations reconceptualize
their core competencies and lines of business to create
the desired future. Strategic decision-making
ultimately determines an organization's
performance or failure, and involves objectively
assessing potential strategies and
evaluating quantitative external and internal data.
FIGURE 41 . CORPORATE PORTFOLIO OF CORE
COMPETENCIES
 BATANGAS STATE UNIVERSITY - TNEU
MALVAR CAMPUS

Instilling SSM Value System

The importance of rational quantitative analysis in successful
strategic decision- making is emphasized, and establishing a
sustainability- centered value f ramework should be the f i rst step in
implementing effective sustainability- focused management ( SSM)
initiatives. This involves embedding sustainability into an
organization' s core value system, providing strong foundations
for the f i rm' s sustainability efforts. Values are long- lasting,
emotionally charged abstractions of topics that people care
about, and their significance depends on individual'
the s
complete system of values.
Strategic managers' principles affect their decisions at two
stages: as data f i l ters and as decision shapers.
centered values
Sustainability- are necessary for identifying and and
understanding SSM opportunities creating and
implementing SSM strategies that capitalize on these
opportunities. Companies' ideals are deeply embedded in their
culture, with core values being valuable and difficult to alter.
Instrumental values make core values usable, making them
more easily implemented.

Managing with values requires a willingness to encourage open

dialogue on all organizational levels around the f i rm ' s purpose and
values. To survive in today' s sustainability- centered business
environment, organizations must ingrain sustainability deeply into
their core values and purpose, surrounding this core value with
relevant instrumental values.
Enterprise strategy is an overarching
values- based strategic f ramework that
allows a f i rm to answer i ts
fundamental ethical question: "
do we stand What for?" By examining
the fi serves how i stakeholders,
ts
strategic
rm managers can facilitate the
development and implementation of a
network of instrumental values
centered on a core value
sustainability, analyze of how
environmental issues relate to
social and
activities, and account for the rapidly their FIGURE 42 . STANDING FOR SUSTAINABILITY

growing social and environmental

concerns of their stakeholders.
 BATANGAS STATE UNIVERSITY - TNEU
MALVAR CAMPUS

Creating Meaning beyond Profit

Successful SSM implementation requires
organizational commitments to profit, people, and
the environment. Companies must consider factors
beyond f inancial viability, such as social and
ecological good. Strategic managers who value
sustainability are more l ikely create
sustainability- centered value systems, tying
economic success to serving to society and the
ecosystem. This approach brings deeper meaning to
organizations.
 BATANGAS STATE UNIVERSITY - TNEU
MALVAR CAMPUS

Spiritual Foundations of SSM

Strategic managers are increasingly pursuing
Sustainability Management ( SSM) as a means to
achieve a higher purpose and deeper significance in
their organizations. SSM is a metaphysical
phenomenon that focuses on the pursuit of a higher
level of human consciousness, which includes a belief
in a high quality of l i fe for posterity. This can
greater social e cological
bring and meaning to
organizations, enhancing their commitment to
sustainability.
Organizations need to improve spiritual skills to develop
execute strategies that have more value for their and members
stakeholders. Spiritual intelligence ( SQ) has gained attention
and as an
intelligence that helps humans solve problems of value
meaning by integrating internal and and external experiences.
allows humans to be creative, use their SQ imaginations, and think
outside the box, facilitating the dialogue between reason and
emotion. I t is a t ranscendent intelligence that enables people and
organizations to serve higher purposes.

SQ equips strategic managers to lead the t ransformation of an

organization to SSM, guiding them through t ransformational
processes that create spiritual capital. Spiritual capital is a higher-
level, intangible form of capital that serves fundamental human
needs beyond the organization. Building spiritual capital usually
begins with the personal disposition of top managers to commit
their organizations to a larger purpose and must permeate an
organization' s culture before i t can provide real value.
 BATANGAS STATE UNIVERSITY - TNEU
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Spiritual Capabilities and Sustained

Competitive Advantage
Managers develop strategic skills to maintain the
t ranscendent mission of their organizations by establishing
spiritual capital through t ransformational change processes.
These abilities serve as the cultural foundation that holds the
entire business ecosystem together, instilling an ethos that t
ranscends, sustains, and enriches all members' resources. This
deepens strategic managers' awareness and dedication
to sustainability and the importance of contributing to
humanity' s efforts to meet the needsfuture
of
generations. The resource- based view current
of the f i and
rm ( RBV)
highlights the competitive essence of spiritual capabilities,
which are valuable, rare, and difficult to imitate. Spiritual
capital generated by spiritually driven t ransformation
processes instills the spirit within the environment and i ts
members, making them the cornerstone of SSM leadership.
 BATANGAS STATE UNIVERSITY - TNEU
MALVAR CAMPUS

Designing Self- Renewing Learning

Structure
Strategic managers should create a
sustainability- centered value system and build
spiritual capabilities to improve t r iple- bottom- l
performance.
ine Peter Senge suggests learning
organizations, which can
adapt and re- create
themselves, are ideal for integrating sustainability
into business organizations. These organizations
encourage a spiritual view of l i fe and purpose,
operating directly out of their essence, allowing
them to thrive in turbulent environments.
 BATANGAS STATE UNIVERSITY - TNEU
MALVAR CAMPUS

Principles of Self- Renewing Structures

Org a n i z at i o n a l st ru c t u re s v a r y i n sh ap e a n d si z e , wit h fo u r fo rm s
i d e nt i fi e d b y M i nt z b e rg : mec h a n i st i c , p rofe ssi o n a l , d i v i si o n a l , a n d
a d ho c ra ci e s . As st ru c t u re s p rog re s s f ro m mec h a n i st i c t o o rga n i c , t h e y
b e c o m e mor e a d ap t i v e a n d se l f - re ne wi ng . In t o d ay ' s ra pi d l y c h an g i n g
c o - e v ol u t i o n a r y se l ec t i o n - a d ap t a t i o n c y cl e s , f i rm s n e e d t o a d o p t
se l f - re ne wi n g st ru c t u re s t h a t a r e f l e x i bl e a n d a d ap t a b l e t o n e w
v e nt u re s , sh i ft i n g c o mp e t i t i v e p ressu re s , a n d d i sru p t i v e t e c hn o l o g i e s .
Vo l be rd a a n d Lewi n ( 2 0 0 3 ) d i sco v e re d t h re e c o mmo n p ri nc i p l e s
fo r c rea t i n g a n d mai n t a i n i n g se l f - re ne wi n g o rga n i z a t i on s : man a g i n g
i n t e rn a l ra te s o f c h an g e , o p t i mi z i n g se l f -
organization, and synchronizing concurrent exploration and
exploitation. These principles emphasize the importance
managing internal change, optimizing self- organization, of
balancing exploitation and exploration efforts. Overemphasis and on
exploitation can lead to the " competence t rap" where
organizations protect short- term gains but fall behind competitors in
innovation, while overemphasis on exploration can lead to the "
renewal t rap" where organizations expend energy and resources
on future innovations but lose their current market identity.
 BATANGAS STATE UNIVERSITY - TNEU
MALVAR CAMPUS

Structuring for Innovation

Disruptive technologies are new technologies that
t ransform industries, economies, and ecosystems,
creating new market space and contributing to global
sustainability. They offer socio and eco- effective
solutions for developing sustainable in products and
services emerging markets, serving untapped
customers.
EXAMPLE:
Health Point Services has capitalized on the growing
demand for healthcare in underdeveloped and developing
markets by partnering with NGOs provide affordable
healthcare to through electronic medical records and video
t e c hnol ogy . Th e c om pa n y ha s e s t a bl i s he d E He a l t h Poi nt s ,
offe ri n g c ons ul t a t i on s f o r onl y a dol l a r , di a gnos t i c t e s t s f o r l e s s
t ha n f i f t y c e nt s , c l e a n wa t e r f o r f i v e c e nt s , a n d he a l t h
e duc a t i o n on - s i t e . Thi s i nnova t i v e bus i ne s s m ode l , ba s e d on
s ust a i na bi l i t y - ba s e d i nnova t i on , a i m s t o e nt e r Sout he a s t As i a n
a n d La t i n Am e r i c a n m a r ke t s . By a dopt i n g na t ur e - ba s e d
de si gn , He a l t h Poi n t c a n i ns pi r e m a na ge r s t o r e t hi n k bus i ne s s
m ode l s and de ve l o p i nnova t i v e s us t a i na bl e pr oduc t s a n d
s e rvi c e s .
 BATANGAS STATE UNIVERSITY - TNEU
MALVAR CAMPUS

Establishing Transformational Change

Process
Transformational change is a process that leads
organizations to change core values and
strategies, t ransforming
their their perception of the world
and their role in i t . This change is essential for
strategic managers and organizations to become
agents for social change. Organizations can
between the adaptive, incremental road
choose or the
t ransformational change road. The incremental road is
effective in implementing basic practices of
sustainability management, but i t may not lead to to a
fundamental t ransformation a sustainability-
centered value system.
On t h e ot he r ha nd , t h e t r a ns f or m a t i ona l c ha ng e r oa d
provi de s t h e unde r l yi n g c ogni t i v e f ounda t i on s f o r t hi nki n g i n
t e rm s o f s us t a i na bi l i t y , m a ki n g i t a m or e na t ur a l a n d l ogi c a l
proc e s s f o r orga ni z a t i ons . Appr e c i a t i v e i nqui r y ( AI ) i s a
popul a r t r a ns f or m a t i ona l c ha ng e pr oc e s s t ha t f oc us e s o n t h e
posi t i v e c or e of a n orga ni z a t i o n or c om m uni t y , e xpl or i n g
unconditionally positive questions that strengthen i
capacity to apprehend, anticipate, and ts heighten positive
potential. By using alongsid other organizational
change
AI processes, the topmanagement e team can shepherd
the vision of becoming an agent for social change.