Sustainability Test Two

Question 1

What is creating shared value

Answer 1

CSV pushes beyond profit redistribution model and elevates social goals to the strategic level. It’ about finding the business case where business and societal interests align. Moving from capitalism 1.0 to capitalism 2.0 where markets are defined by social needs, societal benefits provide firms with profits, profits are intertwined with societal goals, and firms expand the profit pool

Question 2

What is redistribution of profit vs expanding the profit pool

Answer 2

Redistribution of profit is taking some of the profit from the business and giving it to lower level employees. For example, Starbucks charging $5 for a coffee and giving the farmer 10 cents per cup vs before they have 5 cents per cup. Expanding the profit pool is making the total profit bigger before you slice it.

Question 3

How can a company expand the value pool?

Answer 3

Reconceiving products and markets: explore societal needs for differentiation, repositioning, and new market opportunities
Building supportive industry clusters: build ecosystem infrastructure and support organizations around you
Redefining productivity in the value chain: reconfigure value/supply chain to reduce social/ecological issues that increase costs
Some examples are Canadian Tire upgrading to LED lights saving the company millions and benefiting the environment, Walmart reducing packaging size which reduces travel delivery saving them millions and lowering carbon emissions, Vodafone investing in online banking in Kenya ended up being one of their more profitable ventures

Question 4

What is value creation vs value capture

Answer 4

Value creation = sustained revenue
You can create value by creating revenue
Value capture = sustained profit
Value capture is achieved through competitive advantage. Things tend to be a competitive advantage hen they are causally ambiguous (you can’t tell why you’re good at something), sociall complex, and path dependent