Analysis of Integration in Esquel

Esquel-Integration of Business Strategy and Corporate Social Responsibility As we can learn from the case, despite of the awards Esuqel had got for its CSR efforts, Esquel integrated business strategy and CSR very successfully to achieve its business goal, which is “sustainable growth and prosperity of the company, people and host communities”. We will analyze the drives behind this integration and how Esquel made it work so successfully. 1.Catalyst for Integration

Through the analysis of the case, we mainly believe that the catalyst for integrating CSR and business strategy can be described from three aspects: customer, social policy and business goal. (1) Customer: As we know, the ultimate goal of Esquel is not to sell products but to serve customers, and the ones their customers serve: end consumers. Consumers now are not like whom in the past years only cared about things like price, quality, time-to-market. Now more and more customers are asking for value-added or green products which mean environment protection during production process, healthy concern and good work condition and welfare for workers. So a winning strategy is the strategy which cares about not only direct consumption-linked factors but also societal needs. (2) Social Policy: From the development history of Esquel, we can learn that it was very good at capturing opportunities derived from the development of China or following the guidance of government policy.

In 2003,the concept of scientific development was proposed and in 2005,the campaign to establish a harmonious society begun. Under this condition, there’s reason for Esquel to emphasize more in CSR and consider deeply integrate it into business strategy to build its competency in the future. (3) Business Goal: The business goal of Esquel which was set by CEO Margie was to guarantee sustainable growth and prosperity of the Company, its people and host communities. In order to achieve this goal, the integration is a must-to-do thing. If the business strategy and CSR are separated from each other, then it can’t be sustainable growth since the investment in CSR will generate high cost but low benefit to the company.Little resources can be transferred into value chain although the company may gain some social reputation. Giving all above reasons, it’s a good choice for Esquel to begin its integration of business strategy and CSR activities. 2.Process for Esquel’s Integration

Generally speaking, Esquel did the integration following these four aspects: Shared-Value, Structure, System and Strategy. Firstly, CSR was ingrained in the culture at Esquel. The company’s “eCulture” which included “Ethics, Environment, Exploration, Excellence and Education” supplied a solid foundation of CSR activities by setting up shared-Value. In the meanwhile, the CEO of Esquel emphasized a lot in CSR and helped strengthen the culture. Secondly, the company formally established a dedicated Corporate Social Responsibility Department in 2003.An organizational structure for integrating CSR and business strategy was formed.

Thirdly, Esquel adopted several actions to establish a system to manage CSR activities. For example, the CSR department worked with customers to do CSR audits and Esquel committed to meet the international standards as well as customer standards. Lastly, in the strategy aspect, Esquel scrutinized every process in the supply chain to ensure it created a positive impact for both the business and society in which it operated. Also, it tried to adopt a win-win strategy to maintain the sustainable development derived from the integration. 3. Synergy from Integration

Using the above chart, we can describe the synergy between CSR activities and Value Chain. Esquel’s CSR activities will produce different resources for business while these resources will directly improve the performance of every process in value chain. For example, taking care of employees through improving work conditions and welfare will produce human resource for production activities. By attracting best laborers, the productivity and quality will be improved. Environment protection will supply a better environment to produce high quality cotton as materials. Furthermore, sometimes the CSR activities created resource for Esquel as complement for current resources. For example, Esquel’s good practice in CSR helped it form reputation resources. The good reputation of the company and its products will directly increase sales and customer loyalty.

4. Relust of Integration-Form an Ecosystem to Achieve Sustainable Growth Through the mechanism and synergy from the integration, an eco-system can be formed to achieve a sustainable growth. Esquel adopted CSR activities linked to business strategy and invested in stake holders like society, employees and etc. Resources were generated to support the value chain to produce high quality and value-added product for customer. Then when the company got profit, it can reinvest in CSR to form a virtuous cycle and achieve sustainable growth. 5. Key Success Factors to Maintain Ecosystem

From our perspective, there’re some key success factors for Esquel to maintain such an ecosystem. (1) Culture. Margie has established a quite strong culture in Esquel to make all people feel pride and responsible for the customer, supplier and local communities. Also, eculture can be a guidance to ensure the CSR activities compliance with business strategy. (2) Control. Esquel has a high control in every process of supply chain which ensures it benefit both business and society. Also the CSR department served well as an internal CSR auditor to monitor business activities. All of these controls will guarantee the interest of all stake holders will be protected.

(3) Complement. Esquel focuses on the CSR activities which could leverage resources as complements for its value chain to create value-added product and gain profit. Only a profitable business will reinvest into CSR activities. (4) Collaboration. In every CSR activity, the collaboration of dual parties is very important as guarantee to generate certain resources. For example, the collaboration between Esquel and local government became a key point for Esquel to gain resources what it wanted. Through above analysis, we can learn that Esquel’s successful integration of business strategy and CSR attributed to both process of integration and formation of ecosystem. Also,if any company wants to do such an integration, it should follow these key factors.