Creating Shared Value, ITC, and Chevrolet

Elaine Zhang

94811 Strategy Development

Prof Tim Zak

Blog Post #6

In "The Big Idea: Creating Shared Value", Porter and Kramer pose the idea that the best companies always try to incorporate social value in their business strategies. Even though historically policy makers have viewed business and society as diametrically opposed, they claim, we need to outgrow this trade-off mindset that this is a zero-sum game. The pie could not only be redistributed, but could also be expanded. The companies that understand the synergies between corporations and society would stand out in the long run and be more sustainable. 

ITC, a global conglomerate and one of India's biggest companies, has demonstrated the rewards of adhering to the principle of shared value. Having started out as a tobacco company, it branched out into the agricultural, paper and perhaps dairy industries. It has successfully used the value chains between these enterprises to increase their profits and engage the local communities. For instance, they started making textbooks using environmentally sustainable paper because they have invested a lot into promoting green agricultural technology. Thus they have a competitive advantage in providing cost-effective wood pulp for manufacturing paper. Similarly, they would have a competitive advantage in the dairy industry because their livestock initiative has inadvertently boosted the milk production of farmers in India. 

Porter and Kramer maintain that the globalization of companies has led to a loss of cultural identity and a detachment to local communities. Now able to outsource labor all over the world, companies now have trouble calling a specific city home. However, ITC has juggled this balance really well by investing in care and support for the Indian economy. Chairman Deveshwar claims that companies are now all naked on the global stage and under close scrutiny by stakeholders regarding their every strategy and move. Thus they really take measures to ensure that Indian farmers, who are producers of their products, are well taken care of and could find ways to make their own work more efficient, accomplishing a win-win situation. 

These articles reminded me of a recent Chevrolet initiative in China that also seeks to create shared value. They pioneered a taxi service that takes Chinese high school students to their college entrance exams, arguably one of the most important days of their lives. Due to the high volume of traffic, some students miss their exams and suffer an incredible loss. Chevrolet allows parents to pre-schedule a taxi and chauffeur that accompany a student from home to exam center on the day of the test, relieving much stress for students and parents alike. The service became very popular in China due to it meets the universal need of parents to provide the best for their children's futures. I think it's a great example of a large corporation creating a shared need between business and society: boosting Chevrolet's profits and image while meeting a real but underserved social need for security. There are indeed business strategies that they could have taken that are at odds with social benefits but it was definitely wiser of them to choose one that overlaps with social benefits.