CREATING SHARED VALUE (CSV)

MEANING
The concept of shared value can be defined as policies and operating
practices that enhance the competitiveness of a company while
simultaneously advancing the economic and social conditions in the
communities in which it operates. Shared Value creation focuses on
identifying and expanding the connections between societal and
economic progress.
The concept rests on the premise that both Economic and Social
progress must be addressed using value principles. Value is defined
as benefits related to cost, not just the benefits alone. Value creation
is an idea that has long been recognized in business, where profit is
revenues earned from customers minus the cost incurred. However
business have rarely approached societal issues from a value
perspective but have treated them as peripheral matters. This has
obscured the connections between economic as well as social
concerns.
In the social sector, thinking in value terms is even less common.
Social organizations and government entities often use success solely
in terms of the benefits achieved or the money expanded. As
governments and NGOs begin to think more in terms, their interest
in collaborating with business will inevitably grow.
This perspective has permeated management thinking for past 2
decades. Firms focused on enticing consumers to buy more and more
of their products. The results were often commoditization, price
competition, little true innovation, slow organic growth and no clear
competitive advantage.
HOW SHARED VALUE IS CREATED ?

1. Reconceiving Products and Markets

Meeting societal needs through products and addressing unserved or

underserved customers.
EX:-Novartis: To reach customers without health access in rural
India, Novartis offers a portfolio of affordable and appropriate
medicines tailored to common regional health issues, which is
increasing regional sales and doctor visits.

2. Redefining Productivity in the Value Chain

Changing practices in the value chain to drive productivity through
better utilizing resources, employees, and business partners.
EX:-Walmart: By reducing packaging and improving delivery
logistics, Walmart saved $200M in distribution costs while growing
the quantities being shipped.

3. Enabling Local Cluster Development

Improving the available skills, supplier base, and supporting
institutions in the communities where a company operates to boost
productivity, innovation, and growth.
EX:-Chevron: To build prosperity in the region and improve its
operating environment, Chevron's “Partner Initiatives in the Niger
Delta” uses a data-driven approach to identify new market
opportunities and local solutions to unemployment in the region.
 CASE STUDIES

HOW GODREJ GROUP CREATES

SHARED VALUE.
Consider the Godrej Group, a major Indian conglomerate with diverse
holdings across real estate, consumer goods, appliances, and agricultural
products. Godrej targets 15 to 20 percent annual growth, yet widespread
skill shortages among India’s youth present a serious threat to achieving
its goal. Indians between ages 15 and 24 comprise the fastest growing
segment of the population, representing 30 percent of the labor force,
and yet they are three times more likely to be unemployed, often because
they lack marketable skills . These issues are a problem not only for
Godrej companies, but also for their suppliers and distributors.

In response, the Godrej Group set a goal of training one million urban
and rural youth in employable skills by 2020. Each company has
developed a portfolio of modular training programs that equip
underemployed youth with skills relevant to its industry. These
programs are intensive but short term, flexible in schedule, and offered
across India. Godrej’s consumer goods company, for instance,

Godrej Consumer Products Limited (GCPL), provides thousands of rural

youth with basic education in channel sales, as well as English,
mathematics, work ethics and other soft skills. The results have been
impressive. Two-thirds of graduates have found placement in consumer
goods and agriculture-related subsidiaries and distributors. Through
these and similar programs, GCPL is expanding its distribution channels
to reach more customers. It is also becoming an integral partner in
training India’s underemployed youth.
NESTLE – CREATING SHARED VALUE IN INDIA

Nestle stands out in the “Shared Value” world since its work
in MOGA, Punjab, precedes contemporary business trends
by five decades. The slow pace of economic development
created significant shortfalls in the delivery of services that
hurt the depressed region of Punjab.
Nestlé set up in MOGA in 1961 and, recognizing Punjab’s
unfulfilled milk-producing potential, its local initiatives were
designed to improve dairy producers’ capacities in order to
provide higher-quality products in larger volumes to the
MOGA factory.
Sustained over half a century, these have had a significant
and cascading impact not only on the dairy industry but on
social mobility and the economy at all levels. The initiatives
and assistance have given Nestlé significant competitive
advantages. Moreover, they have generated substantial
wealth through mutually beneficial synergies with suppliers,
employees and communities. Nestlé’s success and trusted
position within both the industry and communities are
derived from its transparent, fair and timely payment
system for the farmers who provide its factory with milk.
Nestlé makes all efforts to purchase a farmer’s entire
output, however big or small, as long as it meets Nestlé’s
stringent quality standards. Farmers are paid fortnightly,
guaranteeing them a regular income. Given the
continuous demand for milk, that is the basis of a long-
term relationship with Nestlé.