Capitalism Under Siege,Mpob Ppt

8/3/2019 Capitalism Under Siege,Mpob Ppt

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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Struck in Outdated approach to value creationo Optimizing short term performance rather than long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 &

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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 &ethical 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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Capitalism Under Siege,Mpob Ppt

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