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By:
SIMRAN KAUR
ANUBHAVRASHMI
DARSHAN
MUKUL ARORA
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Overview of the Case Study What is Capitalism
Why is Capitalism under Siege
Corporate Social Responsibility
Creating Shared Value (CSV)
o What is Shared Value
o How CSV is Created and in how many ways it can be created
o How we can Implement CSV
o Importance of CSV
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o Role of Social Entrepreneurs
CSV Implications for Govt. and NGOs
o Govt. Regulation and CSV
Creative CSV in Practice
How CSV differs from CSR
Next Evolution in Capitalism
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What is Capitalism?
An economic system in which the means ofproduction are privately owned and operated forprofit.
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CAPITALISM Unparalleled vehicle for meeting human needs
Creates job and builds wealth
Capacity to produce goods and services are owned andcontrolled by individuals or groups
Profit Motive
The profit motives provides powerful incentives for the
steady expansion and improvement of production Produces higher standard of living.
ensures the most rational & efficient allocation of capital
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CSR(corporate social responsibility) The term "corporate social responsibility" came in to
existence late 1960s
Process in which Companys voluntarily do somethingfor the well being of Society
Emerged largely to improve companies reputation
Treated as necessary expense
In response to external pressure More the companies embrace it, more they are blamed
for societys failure
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Introduction of CSR in a CapitalistEconomy
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Present view of Capitalist system &
PROBLEM NOWADAYS Business is seen as the major cause of social,
environmental and economic problem
Companies make profit on the expense of society
Civil Society addresses social weaknesses at the
expense of business
Tradeoff between economic progress & social progressinstitutionalized
Leading to diminished trust in business
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Cont Companies remain struck in Social Responsibility
mind set
Struck in Outdated approach to value creationo Optimizing short term performance rather than long
term success
o Ignoring Customer needs
Narrow conception of capitalism
Business and Society pitted against each other Societal benefits is inversely proportional to Economic
growth
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Saving Capitalism Companies must take lead in bringing business and
society back together
Businesses must reconnect company success and social
progress
Solution to all this lies in Principle of shared values
A Concept called CSV: Creating shared values
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A SOLUTION TO THE CURRENT PROBLEMS
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What is shared value? Policies & operating practices that enhance
competitiveness
simultaneously advancing economic & socialconditions in communities in it operates
Focuses on connections between societal & economicprogress
Has power to unleash the wave of global growth both economic and social progress must be addressed
using value principles
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The concept-shared value Recognizes societal needs, social harm or weakness
frequently create internal costs for firms
Addresses societal harms & constraints doesnt raisecosts as they can innovate through new technologies
operating methods & management approaches
increase productivity & expand their market
Focuses on growing technology & strengthening localcluster
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How shared value is created? There are 3 distinct ways to create it:
1. reconceiving products & market2. Redefining productivity in the value chain
3. Enabling local cluster development
Each of these is part of the virtuous circle of sharedvalue improving value in one area gives rise toopportunities in the others.
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Reconceiving products & market Many companies have lost sight of basics:
Is our product good for our customers?
Or for our customers customers?
Can our products incorporate greater social benefits? Demand for products & services that meet social needs is
rapidly growing.
Companies like Intel & IBM are devising ways to help
utilities harness digital intelligence to economize on powerusage
By this whole new avenues for innovation open up &creates shared value
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Addressing the societal concerns
and issues Great opportunities in disadvantaged communities
and developing countries.
Example. Low price cell phone that provide mobilebanking and weather and crop updates
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COMPANYPRODUCTIVITY
IN VALUE CHAIN
EnvironmentalImpact
Supplier Accessand Viability
Employee Skills
Worker SafetyEmployee
Health
Water Use
Energy Use
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Ways to transform shared value
into value chainEnergy use &
logistics
energy use is reexamined.
Resulted improvements through better technology, recycling, etc.
logistics redesigning to reduce shipping distances, improving vehicle routing.
Resource use
enabled by improving technology
Utilization of water, raw materials, packaging, expanding recycling & reuse
WALMART saved $200 million by reducing its packaging & cutting deliveryroutes
Procurement
with increasing access to input, technology, companies improve suppliers quality,productivity & efficiency.
Capable local suppliers avoids costs & reduces cycle time, increase flexibility,enable innovation.
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Distribution
Can drastically reduce paper & plastic usage as shown by iTunes, kindles. HUL empowered underprivileged female entrepreneurs by creating door to door
service in Project SAKTI. This project accounts for 5% of HULs revenue
Employeeproductivity
Awareness about positive effects that living wages, safety, wellness, training of
employees have on productivity By investing in employee wellness programs JOHNSON & JOHNSON saved $250million on health care costs.
Location
By opening local processing plants processing & shipping costs have been reduced.
Capable local suppliers reduces cycle time, increases flexibility & enable innovation When firms buy locally, suppliers get stronger, increase their profit, hire more people
& pay better wages-benefiting the community
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Local cluster development It forms open & transparent markets
Amplifies connection between its success & itscommunity success
Local clusters boots productivity Poor public education imposes productivity &
remedial-training costs
Poverty limits demand for products & leads toenvironmental degradation, high security cost &unhealthy workers.
Often done in partnership like partnership with NGOs
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Local clusters enables fair markets which allows company tosecure reliable supplies & give suppliers better incentives forquality & efficiency
Helps in developing positive cycle of economic & social
development To support these clusters companies need to identify gaps &
deficiencies in areas
then to focus on the weakness that represents the greatest
constraints to companys productivity & growth Most successful ones are those which involve collaboration
within private sector, govt, trade associations & NGOs
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Example-Nestles Nespresso Nestle established local facilities to measure the quality of
coffee at point of purchase
This allowed to pay a premium for better quality directly togrowers & thus improve incentives.
Greater yield per hectare & higher production qualityincreased growers income.
It built agricultural, technical, financial & logistical firms
Its efforts led to increase access to essential agriculturalinputs.
It worked in partnership with Rainforest alliance, an NGO,to teach farmers more sustainable practices that makes
production reliable. 25
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Implications for government & civil
society Regulators would accomplish much more by focusing on
measuring environmental performance
Introducing standards, support technology that promotesinnovation, improve environment & increase competition
CSV cuts across traditional divide b/w responsibility of business& those of govt or civil society.
From societys perspective: what matters is the benefits delivered
by companies that are best positioned to achieve most impactfor least cost rather than which company is creating it.
CSV guides the use of resources across all areas of societalconcern.
Partnership brings in NGOs & govt to improve local cluster &
upgrade value chain 26
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Government regulation & shared
value Regulation is necessary for well functioning markets.
Regulations that enhance CSV set goals & simulate innovation
Such regulations characteristics are:
1. Set clear measurable social goals; where appropriate set pricesfor resources that reflects true costs
2. Set performance standards but doesnt prescribe the methodsto achieve them
3. Define phase-in-period for meeting standards which reflectsinvestment or new product cycle
4. Universal measurement & performance reporting systems
5. Efficient & timely reporting of results, which can be audited bygovt.
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Shared value in practice Not all profits are equal.
Profits involving social purpose represents higher form ofcapitalism
Creating shared value presumes compliance with law ðical standards
Highlights human needs to be met, large new market to beserved, internal costs of social & community deficits
Opens many new products to be offered, new ways toconfigure value chain
More sustainable, quality improvements
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CSR v/s CSVCSR CSV
Value: doing good Value: economic and societalbenefits relative to cost
Citizenship, philanthropy,sustainability
Joint company and communityvalue creation
Discretionary or in response toexternal pressure
Integral to competing
Separate from profit maximization Integral to profit maximization
Agenda is determined by externalreporting and personal preferences
Agenda is company specific andinternally generated
Impact limited by corporatefootprint and CSR budget
Realigns the entire company budget
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Ways of implementingThere are 3 avenues for creating shared value:
1. Enhancing the cluster
2. New products & services that meet social needs orserve overlooked market
3. New value chain configurations will create demandfor equipment & technology
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Next evolution in capitalism Focuses companies on right kind of profit- profit that
creates societal benefits
More sophisticated form of capitalism, one imbued
with a social purpose Recognition of new and better ways to develop
products, serve markets & build productive enterprises
Societys overall interest would be served
New approach to managing that cuts across disciplines B- schools curricula will need to be broaden in no. of
areas
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Conclusion Not all societal problems can be solved by Shared
Value solutions but it offers the opportunity to utilizethe skills, resources & management capability to lead
social progress in better ways.
In the process, business can earn the respect of societyagain.
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