EXECUTIVE SUMMARY: SHARED VALUE

The article has its core in busting the misconceptions that shroud the business world and their policies and practices when it comes to defining the appropriate corporate social responsibility of the firm. For most of the firms this starts with externalities and the pressure put on them by the government and social organizations and ends with an array of disjointed and incoherent activities which fill up their annual CSR report and acts as a cure to relieve the pressure and build their reputation of a caring organization. This is nothing but a feel good exercise as it not only fails to improve the economic or social conditions of the community in which they operate but also fails to enhance their competitive position in the market that they cater to. This article starts with statement which in itself is suggestive of the change which are required and which must be instituted if the companies want to have a sustainable and profiting business in the long run. The article reiterates the point that long gone are those days when businesses could see themselves as total unrelated and unconcerned with the needs, requirements and problems surrounding the community which they serve, today companies are quickly identifying and noticing that social needs and business gains are codependent and thats the core of the idea of Shared Value for it means to conduct business in such way as to enhance your profitability and at the same time improve the economic and social condition of the community in which they operate. Article implies that contrary to formal belief that social concerns and responsibility are an impediment to the profit margins of the company and are nothing but a necessary hole in the pocket for the sake of their business, they act as an opportunity for the businesses to reap benefits while being socially relevant and

responsible. There are several examples to support this view, number of companies like NESTLE, GE, WELLS FARGO, WALMART etc have modeled their businesses in such a way that benefit the society as well generate dividends for their shareholders in values far greater than before.

These societal benefits are not superficial and go far beyond the concept of REDISTRIBUTION where companies share a part of their business profit with their suppliers and communities in which they operate. This is about collaboration, co-creation of value, NESTLE for example provides financing, shares technology and help its suppliers in production of coffee which ensures that it will have uninterrupted supply of quality coffee, which means increased profits and this offsets the cost incurred in helping their suppliers, who are also more prosperous because their produce has increased in quality and quantity and in turn their income from its sale. Many other companies are realizing this very fast that they depend on the societal resources, infrastructure and people to ensure the sustainability and profitability of their business. Companies must recognize the social problem related to their line of business and address it such a way which increases their gains and makes a positive impact in society for example Microsoft has invested millions of dollars of money in educational institutes to improve the educational levels and conditions of these non performing school, this serves two purpose first improves the educational condition of the people as well provides competent and educated individuals which are productive to the companies when recruited. Similarly Marriott has started an initiative which provides unemployed individuals with basic level of the on the job training, this isnt just beneficial community service as

most these people are employed by Marriott which saves training cost and also the retention rate for these people is an impressive 61% after the 1st year. Companies must identify value chain activities like procurement, distribution, production where they can create shared value. Initiate working conditions to use resources like water and electricity are no longer considered a burden or external pressure but are necessary exercises to reduce cost and increase efficiency. Companies must realize that creating shared value is NOT PHILANTHROPY but is in their own self interest, if this becomes the norm then even the govt. can roll out policies which are supportive of these businesses and not restrictive and imposing. COMPARISON: The article STRATEGY and SOCIETY also stresses on the need of creating shared value and the integration of social needs and business gains but its main focus is on highlighting the interdependency between the corporate and society. The outside-in linkage talks about the factors such as human resource, rules governing the business, size and sophistication of the demand and the local availability of the supporting businesses whereas the inside-out linkage talks about the dependency of society on the business firms to improve economic conditions and income generation as well the impact of the businesses on the environment and resources. The article also highlights the difference between RESPONSIVE CSR and STRATEGIC CSR whereas the focus of the SHARED VALUE article is on defining how to create shared value by focus on social needs concerning your business and modeling your business in a way that its results in societal benefits as well as business gains for the concerned company.