Business Environment | Assignment 2

Roll 101
Priyesh Sawlani

SHARED VALUE: CREATING A NEW MANAGEMENT DISCIPLINE
Business, in its true sense, is the only institution in the society which can create value. However, the
institutions like the NGOs and the Government do create value, but their task is more with deploying
resources, but true creation of value, is only done by business.
Society and business are two inseparable and complementary elements. Business cannot function
without society, nor will the society have value creation without business. Therefore, it is important,
that business has a healthy community for its smooth working. But, ironically, there are widespread
societal issues present in the society and businesses are expected to solve these issues. But in fact,
businesses are not only blamed of not solving these issues, but also create some of these issues. There
are also blames where businesses have flourished at the expense of the society. Hence, here comes the
profound challenge for the businesses- disconnect between the success of society and the success of the
businesses. Not only are these blames scaring the businesses, there are also some issues beyond control
which are posing a challenge.
Young people, the most sought after professionals, are now considering more of societal jobs, rather
than corporate jobs. This wind of change has concerned companies with the issue of acquiring young
and fresh blood for their organizations. Also, more of public opinion is getting into the corporate sphere,
which makes investing in business a questionable activity.
However, with these changes occurring in the business environment, there have also been changes in
the ways of serving the society. From philanthropy to corporate social responsibility, now is the era of
shared value. While philanthropy concerns only of the percentage of profit deployed towards the
society, CSR is more concerned with this resource deploying, but in compliance to societal and ethical
standards. So, CSR turns to be the umbrella concept for philanthropy.
However, shared value takes into account both these concepts, adding a new one too. Shared value
brings in the concept of economic value clubbed with societal value.
The benefits: three. Firstly, the more an organization gets into shared value, more societal problems are
solved. Because, shared value is not only about creating value for the society, but also for the
organization itself. For instance, ITCs e-choupal has helped farmers get better prices and practices for
themselves, it has also helped the company to impact its inbound logistics in a positive manner.
Secondly, shared value does not depend on personal values. As this concept brings in dual benefit, it is
the company who is interested more and it is not affected by the personal values of the stakeholders.
Thirdly, it raises the companys image in the market. More the society impacted more reputation it
gains.
It has been widely said that the greatest scope of innovation today are the societal issues. It is important
to realize that at the time a product is thought of, it should touch the societal needs. It is important to
shift from conventional practices to societal issues. To transform the management practices is the
utmost need of the hour.
There has also been a debate on whether environment as a concept is external or internal to the
business. It is indeed both. An organizations performance truly depends on what it does internally, how
its ecosystem functions- the supporting institutions. But now, it has also incorporated what it does in
the community. This concept is best practiced by social entrepreneurs, who constantly earn and reinvest
in the society.
Therefore, on a concluding note, shared value is the new buzz, which would incorporate a new
management discipline in itself.