CREATING SHARED VALUE

GROUP IV Abhishek Sharma Atul Mehta Charu Mehendiratta Gayatri Taneja Gunjan Sharma Isaac Joseph Rani Vishwakarma Tulika Kumar Vibhu Bhandari

CSR in todays world

Recognition exists among leaders & new model emerging but

overall framework still lacking. Social responsibility mindset having social issues on the periphery not core. Corp. responsibility programs treated as necessary expense to improve firms reputation. Business & Society have been pitted against each other: latter viewed as social costs & notion of externalities. With increasing competition resulting in commoditization, price cuts & small PLCs communities in which companys operate perceive less benefits as profits rise, more so feel that profits rise at their expense. Global organizations connect less with community as disparate activities are shifting frequently to increase OE. Scope of strategic thinking has contracted.

Concept of Shared Value

Can be defined as policies & practices that enhance competitiveness

of a company while simultaneously advancing the economic & social conditions in the communities in which it operates. Focuses on value perspective of societal issues. Shared value is not social responsibility, philanthropy or sustainability but a new way to achieve economic success. Learning how to create value is our best chance to legitimize business again. Emphasizes that societal needs, not only economic ones, define markets. Recognizes that addressing societal harms & constraints doesn't necessarily raise costs, because they can innovate using new technologies & operational methods . Shared value not about personal values or sharing but a redistribution approach: fair trade

Creating Shared Value

Companies have 3 distinct ways to create economic value by

creating social value: By re-conceiving products & markets By redefining productivity in the value chain By building supporting industry clusters at company locations Better connecting company success with societal improvement, opens ways to serve new needs, expand markets, gain efficiency & differentiate. Ability to create shared value applies equally to developing & developed economies though opportunities might differ. Healthier & more nutritious food, environment friendly products & power saving innovations help society gain a lot more as businesses become more effective than govt. & non-profits.

RE-Conceiving Products & Markets

Societies needs are huge & large chunk of basic needs haven't been

fulfilled. Emerging markets have a promise to reach billions but have huge needs which require modified products & different dist. Systems. Similar opportunities await underserved areas in developed countries: poor urban areas. Societal benefits of providing products suited to lower income & disadvantaged consumers can be profound, profits substantial.
Low priced cell phones with mobile banking Vodafones M-PESA in Kenya Thompson Reuters monthly service for farmers in India
Opportunities of creating value are dynamic needing continuous

exploration.

RE-Defining Productivity in the Value Chain

Companys value chain affects & is affected by societal issues. Opportunities for shared value arise because societal problems can

create economic costs in firms value chain. Most important, mutually reinforcing ways in which shared value thinking is transforming the value chain: Energy use & Logistics: Wal-Mart & Marks & Spencer Resource Use: Coca- Cola has reduced water consumption by 4% Procurement: Stance changed to improving supplier quality & productivity while ensuring volume. Nestl's- Nespresso. Distribution: iTunes, Kindle, Google Scholar & HUL-Proj. Shakti. Employee Productivity: Johnson & Johnson. Location: Oversimplified thinking is now being challenged. * These ways help reimagining value chains unlocking economic value previously missed.

Enabling Local Cluster Development

Productivity & innovation are strongly influenced by clusters as

no company is self contained. Inclusive of academic programs, trade associations & standards organizations. Deficiency in framework conditions around cluster create internal costs, conversely stronger local capabilities boost productivity. Shared value created by building clusters for productivity as well as filling gaps or missing intermediaries. Key aspect of cluster building is formation of open & transparent markets with fair prices, proper wages & encouraged suppliers. Firms growth has multiplier effects: as jobs are created in supporting industries, new companies are seeded & demand for ancillary services rises. Yaras efforts in Mozambique Initiatives to address cluster weaknesses are m

Shared Value in Practice

Creating SV presumes compliance with ethical standards as well as

mitigating any harm caused by business. Profits involving a social purpose represent a higher form of capitalism. SV blurs the distinction between profit & non-profit. Competitive advantages that arise out of SV will be more sustainable than cost & quality improvements. Will break cycle of imitation & zero sum competition. Avenues of creating shared value are mutually reinforcing & a SV lens can be applied to every major company decision. SV creation will involve heightened form of collaboration. CSV is very different & much above CSR. It leverages unique resources & expertise to create economic value by creating social value.

New Evolution in Capitalism

SV gives birth to profits which are there to stay, not temporary short

term ones. Pressure will always be exerted by capital markets to reap quick benefits at the cost of greater opportunities: this path must not be taken. A more sophisticated form of capitalism rather than the old predatory one is needed, one imbued with a social purpose: not out of charity but deeper economic understanding. Shadows Adam Smiths invisible hand-wider set of influences through self interested behavior. Social perspective will help govt.s move focus ahead of CSR activities. Narrow view must be replaced by stewardship of all forms of resources & next generation thinking on value chains.
to corporations to utilize skills, resources & capabilities in the socially best intentioned ways

**not all problems can be solved through SV, though it offers opportunities

CSV in Indian Context

Birla Group Pioneered the concept of creating social value by setting up Education institutions in India.
Bits Pilani - is one of the foremost premier institute in Technical education KK Birla foundation to promote Hindi literature

Gujarat Co-operative Milk Marketing Federation Ltd Started the White revolutions and set up the World famed Indian milk product brand Amul
Cooperative dairy development creating social value for all Strong enough to compete with International brand like Nestle

CSV in Indian Context

ITC e Chaupal More efficient supply chain aimed at delivering value to its customers around the world on a sustainable basis Unshackles the potential of Indian farmer who has been trapped in a vicious cycle of low risk taking ability > low investment > low productivity > weak market orientation > low value addition > low margin > low risk taking ability. This made him and Indian agribusiness sector globally uncompetitive, despite rich & abundant natural resources

CSV in Indian Context

ITC e Chaupal

Such a market-led business model can enhance the competitiveness of Indian agriculture and trigger a virtuous cycle of higher productivity, higher incomes, enlarged capacity for farmer risk management, larger investments and higher quality and productivity. Further, a growth in rural incomes will also unleash the latent demand for industrial goods so necessary for the continued growth of the Indian economy. This will create another virtuous cycle propelling the economy into a higher growth trajectory.

CSV in Indian Context

Jubilant Organosys

At Nanjangud, the Company has initiated a project jointly with the residents of the adjacent village and the local authority for supply of water through pipeline. Presently the village does not have arrangements of good quality potable water. The project requires part of the project cost to be borne by the villagers, while the government would pay the balance. The commitment of the villagers shall be met from contribution by the Company and the villagers themselves. The project would enable the villagers to get access to good quality water for drinking purpose. Presently this requirement is met through hand pumps, which draw ground water. Jubilant had initiated a demonstration project, which focussed on Jatropha Curcas plantation in the Gajraula region in the year 2003. Jatropha Curcas has been identified for India as the most suitable Tree Borne Oilseed (TBO) for production of bio-diesel.

CSV in Indian Context

Jubilant Organosys

The capacity of Jatropha Curcas to rehabilitate degraded or dry lands by improving soil's water retention capacity, makes it additionally suitable for up-gradation of land resources. With this objective, the Company has initiated this Project and has till date planted over 10000 plants in blocks and border plantation. The plantation is showing encouraging results and the yield of seeds is 2kg per plant. Now the Company is in a position to distribute saplings to the neighbouring community. The project thus has potential to support rural employment and increase income of the villagers. The Company is in the process of conducting a joint study with G.B. Pant University of Agriculture & Technology, Pant Nagar, to provide scientific backing for the project.

Critique
CSV calls for a lot of investment; not only financial but also in the

thought process. Trying to change the entire approach from a more compulsive to a proactive one is easier said than done. Financially too, the effect is long term through heavy investments. The governments & other non-profit institutions too must change with the changing efforts of firms. Unless the environment is encouraging; the efforts put in may not be fruitful.

critique