Shared Values

1926 Words Oct 9th, 2013 8 Pages
Business Policy Assignment: “Creating Shared Value”
CITIBANK & HSBC

9/26/2013
D Siddhartha Reddy-014
PGDM-Finance

Executive Summary
How to reinvent capitalism and unleash a wave of innovation and growth by Michael Porter and Mark Kramer
Shared Value is a new form of capitalism. The idea of shared value was initially explored by the authors in December 2006 HBR. Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. In the article Porter & Kramer criticize neoclassical thinking on the trade-off between societal needs and economic success, and the way the concept of ‘externalities’ have shaped corporate and policy strategy. Article says that corporations
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GE reinforced its R&D to meet this decision of enhancing the products to provide better health to the world around. The business goals of GE are to create 100 new products by 2015, enter new markets and realize revenues. The social goals are to decrease cost by 15 percent, increase access by 15 percent and also increase quality by 15 percent.
There are three main ways companies can create shared value opportunities, all of them are mutually reinforcing

Re-Thinking Products and Markets * Societal needs are the greatest unmet needs in society * When businesses build products around society, then both business and society benefit.
Redefining Productivity in the Value Chain * Productivity and societal progress heavily linked – so called ‘externalities’ usually become internal costs to the firm. * Growing consensus that major improvements in environmental performance can often be achieved with better technology at nominal incremental cost and can even yield net cost savings through enhanced resource utilization, process efficiency, and quality. * Costs must be looked at in a long term perspective, and no longer short term
Enabling Local Cluster Development * Success of every company is affected by the supporting companies and infrastructure around it. Productivity