Growing Your Business While Embracing CSR - A Razer Case Study
Disclaimer: This article was written based on publicly-available information. Razer was not contacted for this article.
Many of us are familiar with Razer Inc. (“Razer”) as one of the top global gaming hardware companies. During this COVID-19 crisis, Razer moved out of the gaming space to help Singapore and South East Asia combat the virus by manufacturing and distributing surgical masks. This is, without a doubt, an excellent display of corporate social responsibility (“CSR”) by a local company for its home country.
However, as a business, did Razer benefit from its CSR activities? And how was it able to pivot into mask manufacturing? Let us examine this from the perspective of intangible assets.
Figure 1: Timeline of selected COVID-related announcements from Razer
On 19 March, Razer announced that it will be converting some of its manufacturing lines in China to produce surgical masks.1 2 The first batch of masks was shipped within 2 weeks.3 Subsequently, on 1 April, to boost supply and avoid supply chain disruptions, Razer announced that it will be setting up Singapore’s first fully automated mask production and packing line3, which it completed in just 24 days.4 How was Razer able to pivot from the manufacture of gaming hardware to surgical masks so rapidly?
While having existing physical assets (e.g., manufacturing equipment) was important, it was the exercise of intangible assets, both its own and others’, that enabled the pivot. For the manufacturing facilities in China, Razer relied on its engineers’ deep engineering know-how (a key intangible asset for many companies) to adapt its physical assets (i.e. the manufacturing equipment) and enable the manufacturing pivot. For the automated mask production facility in Singapore, Razer was able to accelerate its completion by tapping on the engineering know-how its partner, Sunningdale Tech, which was in the space of medical devices and manufacturing consultancy5, to repurpose an existing facility to set up the automated plant.
In leveraging both its own and its partner’s intangible assets to adapt the company’s physical assets, Razer also grew its own intangible assets at the same time. Apart from acquiring manufacturing know-how, Razer also garnered much positive publicity that went towards strengthening its brand and reputation (another key intangible asset). Furthermore, Razer would have accrued goodwill from individuals beyond its traditional gamer demographic, which will help grow its business as explained below.
On 13 May, Razer announced that it will be distributing free masks through a network of vending machines.6 Anyone with its e-wallet app, Razer Pay, will be entitled to one free mask. From the perspective of intangible assets, how did Razer as a business gain from this exercise?
Since the launch of Razer Pay and Razer Fintech in 2018, Razer has been actively taking steps to enter the fintech space, such as leading a consortium to apply for a full digital banking licence in Singapore.789 However, Razer Pay has not been able to attract as many users as other e-wallet apps in Singapore by growing through Razer’s own channels, which traditionally targeted gamers.10
The mask distribution exercise provided an opportunity for Razer to turn this around. By requiring the download of Razer Pay to obtain the masks, the company created a channel to significantly expand the base of users for its e-wallet. With a bigger base of users, Razer would be placed in a stronger position to encourage merchants to transact through Razer Pay.
And indeed, on 27 May, Razer announced that it will be working with hawkers as well as small and medium-sized merchants to offer Razer Pay as a payment channel. To incentivise customers to patronise stores that adopted its e-wallet, Razer offered one free mask a day to any customer that made a purchase above $5.11
While engaging in CSR (e.g., offering free surgical masks, helping merchants transit to e-payment), Razer effectively expanded its network of merchants and customers on Razer Pay app, a key intangible asset for any fintech business. Razer was also able to reach an entirely different demographic of users it may not have been able to access through its traditional gaming channels. At the same time, with all the positive publicity garnered, Razer continued to grow its brand and reputation.
By shrewdly putting intangible assets (both its own and others’) into good use, Razer was able to grow its portfolio of intangible assets further while engaging in CSR. These intangible assets will continue to provide Razer with significant business value even after the COVID-19 crisis ends.
Figure 2: Representation of how Razer leveraged on intangible assets to grow its own intangible assets further.
You can do the same. It all starts with being able to clearly identify and understand your company’s intangible assets. This understanding will put you in good stead to capture new opportunities, whether during or after this COVID-19 period (see this article on how you can re-imagine your business with IA even during normal times). This is exactly what we at IPOS International help companies to do. If you would like to find out more, feel free to reach out to me at email@example.com.
Stay safe, and let us hope this virus can be overcome sooner than we expect.
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