1. A R N A B PA R M A N I K ( 1 3 P 1 2 9 )
H I M A N S H U K A S H YA P ( 1 3 P 1 4 2 )
K A R T H I C S U B H R A M A N I A M ( 1 3 P 1 4 7 )
S A N D E E P C H AT T E R J E E ( 1 3 P 1 6 5 )
S H W E TA V E R M A ( 1 3 P 1 7 0 )
V I K R A N T S H A R M A ( 1 3 P 1 8 0 )
GROUP – 9
CREATING SHARED VALUE

2. Current Practice
• Companies viewed to prosper at the expense
of community
• Optimize short term financial performance
• Lead to
– Depletion of natural resources
– Viability of suppliers reduces
– Stinted social progress

3. Shared Value
“Involves creating economic value in a way that
ALSO creates value for society by addressing its
needs and challenges.”
The purpose of the corporation must be
redefined as creating shared value, not just
profit per-se.

4. Moving Beyond Trade-Offs
• Neo classical thinking – social improvement
eg. safety/hiring disabled imposes constraint
on the corporation
• Externalities – arise when firms create social
costs that they do not have to bear eg.
pollution.
Thus society must impose taxes to
internalize these externalities.

5. Competitive Advantage & Social Issues

6. The concept of shared value :
• recognizes societal harms as internal costs and
addresses them
• need not raise cost, since firms can innovate
and increase their productivity
• is about expanding the total pool of economic
and social value
Fair Trade Perspective Shared Value Perspective
Increase proportion of
revenue to farmers by paying
higher prices
Improve growing techniques,
strengthen local cluster to
increase farmer’s efficiency,
yield, sustainability
Farmer’s income increase by
10-20%
Farmer’s income increase by
300%
Studies on
Cote d’Ivoire
cocoa farmers

7. • Increasing competition and performance
pressure lead managers to
– Personnel reduction
– Relocation to low cost region
• The results are
– Price competition
– Commoditization
– No innovation
– No competitive advantage
Roots of Shared Value

8. • Firms need community to create demand,
provide critical public assets & supportive
environment
• Community need firms to provide jobs and
wealth creation
• Interdependence means public policies
undermining productivity are self-defeating
• Companies have failed to grasp the
importance of the broader business
environment

9. • http://youtu.be/aUdPDVO-toM
Michael Porter’s insights on shared value

10. How Shared Value is Created
Reconceiving
products and
markets
Redefining
productivity in
Value Chain
Building
supportive
industry clusters

11. Reconceiving Products & Markets
Companies have lost sight of basic question:
“Is our product good for our customers.”
• Food companies concentrate on taste and
quantity to drive consumption. Should refocus on
the fundamental need of better nutrition.
• Intel and IBM are using digital intelligence to
economize power usage.
• GE’s eco-magination products grossed $18billion
sales in 2009

12. Redefining Productivity Value Chain

13. Enabling Local Cluster Development
• Clusters foster logistical efficiency, drive
productivity & ease of collaboration
• Nestle Nespresso’s productivity improved by
building agricultural, tech, financial, logistical
firm capabilities in each coffee region
• Most successful cluster development
programs are ones that involve collaboration
within private, govt., NGOs & trade agencies.

14. CSR SHARED VALUE
CREATION
Focus on reputation, have limited
connection to business
Integral to profitability and competitive
positioning
Discretionary/ in response to external
pressure
Integral to competing
Separate from profit maximization Integral to profit maximization
Impact limited by corporate footprint/
CSR budget
Realigns the entire company budget
Eg. Fair trade purchasing Eg. Transforming procurement to increase
quality and yield

15. Next Evolution of Capitalism
• Growing social awareness of employees and
citizens, increased scarcity of resources will
drive CSV
• CSV represents a broader conception of Adam
Smith’s invisible hand
• Business school curricula need to be broaden
to include CSV concepts.

16. • http://youtu.be/4pcO-AxBrog
A recap of shared value