Strategic Management

UnitUnit--55Strategic Management Strategic Management

for Sustainabilityfor Sustainabilityfor Sustainabilityfor Sustainability

Dr. Prashant B. KalaskarDr. Prashant B. Kalaskar

Syllabus

• 5.1: Blue Ocean Strategy: Difference between Blue Ocean

& Red Ocean Strategies, Principles of Blue Ocean Strategy,

Strategy canvas & value Curves, Four Action Framework

• 5.2: Business Models: Meaning & components of

Business Models, New Business Models for InternetBusiness Models, New Business Models for Internet

Economy, E-Commerce Business Models & Strategies,

Internet Strategies for Traditional Business, Virtual Value

Chain.

• 5.2: Sustainability & Strategic Management: Threats to

Sustainability, Integrating Social & Environmental

Sustainability Issues in Strategic Management, Meaning

of Triple Bottom Line, People-Planet-Profits.Dr. Prashant B. Kalaskar

Market Scenario (Porter’s 5 Force Model)

• Competition is ever increasing.

• Companies are manufacturing similar products.

• Targeting to same set of customers.

• Limited number of customers leading to intense competition.competition.

• To sustain in competition, companies formulate either; Low Cost Advantage or Differentiation Strategy

• A cut throat competition resulting in Price War i.e. blood (red).

• Few companies experimenting with different market segment, are successful, rest are just competing

Dr. Prashant B. Kalaskar

Red Ocean vs. Blue Ocean Market Space

• Industries in existence today

• Known market space

• Industry boundaries are

• Industries NOT in existence today

• UNKNOWN and untapped market space

RED OCEAN BLUE OCEAN


• Industry boundaries are defined and accepted

• Competitive rules of the games are known

• Reduced profit and growth

untapped market space

• Rules of the game are WAITING to be set

• Opportunity for highly profitable growth

Red Ocean vs. Blue Ocean Strategy

Red Ocean Strategy Blue Ocean Strategy

Compete in existing market space Create uncontested market space

Beat the competition Make the competition irrelevant


Exploit existing demand Create and capture new demand

Make the value-cost trade-off Break the value-cost trade-off

Align the whole system of a strategic firm's activities with its choice of differentiation or low cost

Align the whole system of a firm's activities in pursuit of differentiation and low cost

VALUE INNOVATION!!

Value Innovation in Blue Ocean

Value innovation is the “new” strategic logic behind

Blue Ocean Strategy.

Instead of focussing on beating the competition, you Instead of focussing on beating the competition, you

focus on making it irrelevant by creating a leap in

value for buyers and creating uncontested market

space.


The Strategy Canvas

• Captures the current state of play in the market by

detailing the factors, players compete on in

product, service and delivery

• For example, the wine industry competes on price• For example, the wine industry competes on price

per bottle, refined image in packaging, marketing

strategies, aging quality of wine, prestige of

vineyard, complexity of taste and diverse product

range


The Strategy Canvas-Value Curves


Competitive Factors

The Strategy Canvas

• Each factor is plotted on the canvas, with a high

score reflecting the level of investment a specific

company makes in that factor (for example a high

score on price means that the price per bottle is score on price means that the price per bottle is

high)


Blue Ocean Strategy: The Core Principles

Reconstruct Market

Boundaries

… overcome believes

Reach Beyond


Reach Beyond

Existing Demand

… go for uncontested space

Get the Strategic

Sequence Right

… value [innovation] first.

VIVI

COST

VALUE

The Principles of Blue Ocean Strategy

1. Reconstruct Market Boundaries

2. Focus on the Big Picture, Not the Numbers (provide what is not provided & wanted by customers)

3. Reach Beyond Existing Demand (Non Customers)


3. Reach Beyond Existing Demand (Non Customers)

4. Get the Strategic Sequence Right

5. Overcome Key Organizational Hurdles

6. Build Execution into Strategy

1: Reconstruct Market Boundaries

Example-McDonald’s

� Look Across Alternative Industries

� Look Across Strategic Groups Within Industries

� Look Across the Chain of Buyers � Look Across the Chain of Buyers

[purchaser/user/influencer]

� Look Across Complementary Product and Service

Offerings

� Look Across Functional or Emotional Appeal to Buyers


4 Action Framework

New Eliminate

Create

Reduce

What Factors should be

Reduced well below

the Industry Standards


New value Curve

Eliminate

What Factors to be

Eliminated that

Industry has taken

Granted

Raised

What Factors should be

Raised well Beyond the

Industry Standards

Create

What Factors should

be Created that the

Industry Never Offered

4 Action Framework

1) Eliminate the Factors taken for Granted by Customers:

- In a particular industry, customers/market assumes

will be definitely part of the Product/Service

- Eliminate these factors, which are actually not - Eliminate these factors, which are actually not

deliver much value

For Example: Cirque du Soleil Circus

- Customers assumes to have animals as part of circus,

Cirque du Soleil targeted for creating entertainment

of Adults & Ladies


4 Action Framework

2) Reduce Factors below the Current Standard:

- Reducing the factors/features below the industry standard, so as to reduce the cost.

- These factors are still required by the industry, but not to the degree, they are offered presently to the degree, they are offered presently

Example: Nintendo Wii, company offers Video Games

Since the company targeting to Kids & Elderly audiences,

in these customers, top notch Graphics are not much

important. Below the average, graphic processing with

caricature images is much appealing to that market


4 Action Framework

3) Raise Factors that are currently not Meeting Market Desires:

- Raise the factors/features, well above the industry

standards to remove compromises that the existing

product/service forces customers to make.product/service forces customers to make.

Example: Apple introduced iPod, which made it easier to

carry all the music from PC, on the GO, so that

compromise in terms of number of songs is eliminated


4 Action Framework

4) Create Factors Never before Offered:

- A company should look to create features in their

product/services, that none of the company in the

industry has offered before.

- These are those features, which will definitely add

value to customers.

Example: Cirque du Soleil: Introduced Music, Songs,

dance, which scores over the Traditional Circus, which

adds value to attract Adult Women & Men as un

targeted customersDr. Prashant B. Kalaskar

Introduction To Commerce

• Commerce is the exchange of something of value

between two entities.

• That "something“ may be goods, services,

information, money, or anything else the twoinformation, money, or anything else the two

entities consider to have value.

• Commerce is the central mechanism from which

capitalism is derived.


What is “E-Commerce”?

• There are many different definitions and

understanding about E-Commerce.

• According to Frederick J. Riggins and Hyeun-Suk Rhee,

a recent pilot survey shows that some practitioners

and managers view it asand managers view it as

“ E-Commerce --> buying and selling goods and products

over internet.”

• However, researchers believe the E-Commerce

practice should include a wide variety of presale and

post-sale activities.Dr. Prashant B. Kalaskar

Definition of Electronic Commerce

A commercial Transaction takes place as-

• The Advertising & Searching Stage

• Ordering & Payment System

• Delivery Stage• Delivery Stage

• When all three or any one of the transaction

happens on internet is called as E. Commerce.


Benefits of E- Commerce (Benefits to Organizations)Benefits to Organizations)

• Market expansion to national and international markets

• Reduced cost of creating, processing, distributing,

storing and retrieving paper based information

• Reduced inventories.(Just-in –time manufacturing)

• Automated business processing & Cost-effective • Automated business processing & Cost-effective

document transfer

• Reduced time to complete business transactions,

speed-up the delivery time & Reduced transportation

Costs

• Improved customer service & Increased productivity


Benefits of E- Commerce (Benefits to Customers)Benefits to Customers)

• Transactions can be done 24 hrs a day, all year round

and from any location

• - Customer has more choices

• - Rapid inter-personal communications and information

accessesaccesses

• - Wider access to assistance and to advice from experts

• - Save shopping time and money

• - Fast services and delivery


Involved Parties in E Commerce

� In any of E Commerce business activity, 5 parties are involved

• The User

• The Merchant• The Merchant

• The Issuer

• The Acquirer

• The Certificate Authority (3rd & neutral party who

issues the certificate)


Print Slide


E-commerce Business Models: Definitions

• Business model

“Set of planned activities designed to result in a

profit in a market place/market space”

• Business plan• Business plan

“Describes a firm’s business model”

• E-commerce business model

“Uses/leverages unique qualities of Internet and

Web”Dr. Prashant B. Kalaskar

E-business Models

�A description of roles and relationships among a

firm’s consumers, customers, allies, and

suppliers that identifies the major flows of

product, information, and money, and theproduct, information, and money, and the

major benefits to participants, almost, over

Internet .


Supply Side of the Internet Economy

• Major groups of Internet and e-commerce firms

comprising the supply side include

– Makers of specialized communications components

and equipment (Modems, Cables etc.)

– Providers of communications services (Network Services)– Providers of communications services (Network Services)

– Suppliers of computer components and hardware

– Developers of specialized software

�E-commerce enterprises• Business-to-business merchants

• Business-to-consumer merchants

• Media companies

• Content providers Dr. Prashant B. Kalaskar

Business models: A Matter of Perspective

• The customer perspective

– Efficiency, responsiveness, security

– Anything valuable more than social contact & face-

to-face interactions?

• The business community perspective• The business community perspective

– Assets investment: current/tangible/intangible

assets

– Revenue flow: commerce/content/community/

infrastructure revenue sources

– Cost allocation: M/I/T categories


Key Components of a Business Model

Components Key QuestionsValue Proposition Why should customer buy from us..?

Revenue Model How will we earn/make money..?

Market Opportunity What Market space we are intended to serve & what is its Size.?

Competitive Environment

Who else occupies the intended Market Space..?Environment

Who else occupies the intended Market Space..?

CompetitiveAdvantage

What special advantage does our firm brings to the market space..?

Market StrategyHow do we plan to promote our Products to attract target

audiences..?

Organizational Development

What type of Organizational Structure is necessary to carryout the Business Plan..?

Management TeamWhat kind of experiences & backgrounds are important company

leaders to have..?


Component-1: Value Proposition

• Defines how a company’s product or service fulfills the needs of customers

• Questions to ask:– Why will customers choose to do business transaction with

your firm instead of another?your firm instead of another?

– What will your firm provide that others do not or cannot?

• Examples of successful value propositions:– Personalization/customization

– Reduction of product search, price discovery costs

– Facilitation of transactions by managing product delivery


Value Proposition by Home Shop 18.com


Value Proposition by Dell


Revenue Model

• Describes how the firm will earn revenue, generate profits, and produce a superior return on invested capital

• Major types:• Major types:

– Advertising revenue model

– Subscription revenue model

– Transaction fee revenue model

– Sales revenue model

– Affiliate revenue model


Revenue Generation by site2sms.com


Revenue Model Ex-Thro’ Subscription


Revenue Model Ex-Thro’ Transaction


Revenue Model Ex-Thro’ Adv. & Affiliation


Market Opportunity

• Refers to a company’s intended market space and overall potential financial opportunities available to the firm in that market space

– Market space

• Area of actual or potential commercial value in which company intends to operate

– Realistic market opportunity

• Defined by revenue potential in each of market niches in which company hopes to compete


Competitive Environment

• Refers to the other companies selling similar products and operating in the same market space

• Influenced by:– Number of active competitors– Number of active competitors

– Each competitor’s market share

– Competitors’ profitability

– Competitors’ pricing

• Includes both direct competitors and indirect competitors


Direct & Indirect Competitors

• Firms have both competitors (D & I)

• Direct: that selling similar products/services in

same market segment.

• Example: Priceline.com & Travelocity.com• Example: Priceline.com & Travelocity.com

• Indirect : may be in different industries but they

compete indirectly

• Example: Automobile manufactures and Airline

companies

• CNN & ESPNDr. Prashant B. Kalaskar

Competitive Advantage

• Achieved when a firm can produce a superior

product and/or bring product to market at a

lower price than most, or all, of competitors

– First mover advantage– First mover advantage

– Unfair competitive advantage

• Leverage: When a company uses its competitive

advantage to achieve more advantage in

surrounding markets


Competitive Advantage Thro’ Leverage


Market Strategy

• Plan that details how a company intends to enter a new market and attract customers

• Best business concepts will fail if not properly marketed to potential customersmarketed to potential customers


Part of FreshdirectStrategy , is to develop close supply chain

partnerships with


partnerships with growers and

manufacturers so it purchase goods

at lower prices directly from the

source. And lower prices to customer

.


• Plan that describes how the company will organize the work that needs to be accomplished

– Work is typically divided into functional departments– Work is typically divided into functional departments

– Hiring moves from generalists to specialists as company grows



• Typically , work is divided into functional departments, such as

Production Shipping Marketing Customer Support

Finance


Production Shipping Marketing Support

Finance

Jobs within these functional areas are defined,

Then recruitment begins for specific job titles and responsibilities


• Mostly , in the beginning those persons are hired who perform multiple tasks.

• For example: At start up a company have one marketing manager.


But after two or three year

A marketing position broken down into seven separate jobs done by seven individual.


•• Example: Ebay (an auctions site ) Founder

Pierre Omidyar

To help his friend PEZ


BUT within few months the volume of business exceeded .

What he alone could handle?

So he hiring people with more business experience to help out . Soon company had many employees, departments and business

managers.

Management Team

• Employees of the company responsible for making the business model work

• Strong management team gives instant credibility to outside investors

• Strong management team may not be able to salvage a weak business model, but should be able to change the model and redefine the business as it becomes necessary


Management Team

• Employees of the company responsible for making the business model work .

A strong Management Team


Outside Investors

Market Specific Knowledge

And Experience in Implementing business plan.

E-commerce Business Models

• A value chain that connects participants

• The path of goods in a supply chain

• The path of transactions in an exchange

• The path of information in a value chain• The path of information in a value chain

• Interdependencies / paths in a “value web”

– Ultimately, how you expect to make money


Categorizing E-commerce Business Models

� Based on the above criteria, e-commerce are classified as;

I. Business-to-Business (B2B) e commerce

II. Business-to-Consumer (B2C) e commerce

Consumer-to-Business (C2B) e commerce III. Consumer-to-Business (C2B) e commerce

IV. Consumer-to-Consumer (C2C) e commerce

V. Peer-to-Peer (P2P) e commerce

VI. M-commerce


B2B Business Model

� It is the largest form of today’s commerce � In this form the buyers and sellers are both business

entities and does not include individual consumer.


Advantages of B2B e-commerce

� Some advantages of B2B ecommerce are:

- Direct interaction with customers.

- Focused on sales promotion.

- Building customer loyalty.

- Savings in distribution costs

� Examples-

� commodityindia.com

� Indiaconstruction.com

� clickforsteel.com etc.

� IBM, HP, Dell, Intel etc.Dr. Prashant B. Kalaskar

Business-To-Business Model


2.Business-to-Consumer (B2C)e-commerce

� In this e-commerce type, business and consumers

are involved.

� Business sell to the public typically through

catalogues utilizing shopping cart software.catalogues utilizing shopping cart software.

� In Business-to Consumer (B2C) e commerce,

business must develop attractive electronic market

places to entice and sell products and services to the

consumer.


Business-to Consumer (B2C)

• B2C Transaction Process

Business-to Consumer (B2C) e commerce transaction process includes;

• Customer identifies a need.

• Searches for the product or services to satisfy their • Searches for the product or services to satisfy their need.

• Selects a vendor and negotiates a price.

• Receives the product or services (delivery logistics, inspection and acceptance).

• Makes payment.

• Gets service and warranty claims.Dr. Prashant B. Kalaskar

Websites that are engaged in (B2C)

Examples-� Travelocity.doc, � hotels.com, � rediff.com,� jaldi.com,


� jaldi.com,� indiatimes.com, � Jobclassfied.miday� Eg online classes� Drugstore.com� Wal-Mart.com� 1-800-flowers.com

3. Consumer-to-Business (C2B) e-commerce

� Also called demand collection model.

� Reverse auction

� It enables buyers to name their own price, often

binding, for a specific good or services generating

demand demand

� A consumer posts his project with a set budget

online and within outs; companies review the

customers’ requirements and bids out the project.

� Then the customer will review the bids and selects

the company that will complete the project.

� Eg .stock marketDr. Prashant B. Kalaskar

3. Consumer-to-Business (C2B) e-commerce

Examples-

� razerfinish.com,

� ReverseAuction.com,

� priceline.com are few of them


4. Consumer-to-Consumer (C2C)e-commerce

� It facilitates the online transaction of goods or services

between two peoples.

� However, there is not visible intermediary involved,

but the parties cannot carry out the transactions

without the platform, which is provided by the online

market such as eBay.

Examples:

� Advertisement of personal services over the internet.

� Selling of knowledge and experts online.


4. Consumer-to-Consumer (C2C)e-commerce

Examples-

� Baazee.com

� ICQ.com

� MSN.com

� ek.com.au


� ek.com.au

� careeron.com.au

� bidorbuy.com

5. Peer-to-Peer (P2P) e-commerce

� It is a technology in itself that helps people to directly

share computer files and computer resources without

having a central web server.

� To use this, both the peers should have to install the

software so that they can communicate on the software so that they can communicate on the

common platform.

Examples:

� Sharing of music’s, videos, and other digital files

electronically

• Examples- Facebook, youtube


6. M-commerce

� It refers to the use of mobiles devices for conducting

the transactions.

� The mobile device holder can connect each other and

can conduct the business.

� This is not really a type of e commerce but a � This is not really a type of e commerce but a

mechanism in transaction.

� Many M-Commerce applications involve internet

enabled mobile devices. If such transactions are

targeted to individual, to specific location, at specific

times, they are referred as location base ecommerce

(L- Ecommerce).Dr. Prashant B. Kalaskar

Other Examples of C2C, P2P & M. Commerce

Business Model Examples Description Revenue Model

Consumer-to-

consumer

eBay

Half.com

Quickrr.com

Consumers connect

with consumers to do

business.

Transaction fees

Peer-to-peer Kazaa

Cloudmark

Enable consumers to

share files via the web.

Subscription fees

Advertising


Cloudmark share files via the web. Advertising

Transaction fees

M-Commerce eBay Anywhere

PayPal Mobile

Checkout

AOL Moviefone

Extending business

applications using

wireless technology.

Sales of goods and

services

B2B and B2C constitute about 75% of the E-Commerce Market

Common modes of payment


Porter’s Physical Value Chains

• A series of value adding activities connecting a

company’s supply side to its demand side

• Analysis of the PVC has allowed managers to

redesign internal & external Processes to improve redesign internal & external Processes to improve

efficiency and effectiveness

• Series of activities that takes place in Physical Value

Chain is as shown in the diagram


Porter’s Physical Value Chain (PVC)


The primary value chain activities (Porter 1985)

• Inbound Logistics: the receiving and warehousing of

raw materials, and their distribution to manufacturing

as they are required.

• Operations: the processes of transforming inputs into

finished products and services.finished products and services.

• Outbound Logistics: the warehousing and distribution

of finished goods.

• Marketing & Sales: the identification of customer

needs and the generation of sales.

• Service: the support of customers after the products

and services are sold to them. Dr. Prashant B. Kalaskar

Supporting activitiesSupporting activities(Porter, 1985)(Porter, 1985)

• The infrastructure of the firm: organizational structure, control systems, company culture, etc.

• Human resource management: employee recruiting, hiring, training, development, and compensation.hiring, training, development, and compensation.

• Technology development: technologies to support value-creating activities.

• Procurement: purchasing inputs such as materials, supplies, and equipment.


Value Chain Definition

• Profit depends on its effectiveness in performing these activities �the amount that the customer is willing to pay for the products exceeds the cost of the activities in the value chain.

• A competitive advantage can be achieved by reconfiguring the value chainreconfiguring the value chain

• The value chain model is a useful analytical tool for defining a firm's core competencies and the activities:

–– Cost advantage:Cost advantage: by better understanding costs and squeezing them out of the value-adding activities.

–– Differentiation:Differentiation: by focusing on those activities associated with core competencies and capabilities in order to perform them better than do competitors.


Changes in Value ChainChanges in Value Chain((KalakotaKalakota & Robinson 2001)& Robinson 2001)

Core competence

of the company

Firm

infrastructure

and processes

Products &

Services

Distribution

channelsCustomers

Traditional value chain


Core competence

of the company

and outsourcing

Flexible

Infrastructure

and

processes

Products &

Services

Integrated

distribution

channels

Needs of

customer

Changed value chain

Digital Value Chain

• How business creates value in both the physical

and virtual level?

�Interpret differences and interactions among the

value adding events of the physical and virtual levelvalue adding events of the physical and virtual level

• Create valuable digital assets that change the

competitive dynamics of industries (Sviokla and Rayport, 1995)


Virtual Value Chain

• Rayport and Sviokla’s (1995) devised Virtual Value chain at Harvard Business School

• A virtual value chain consists of ‘‘gathering, organizing, selecting, synthesizing, and distributing organizing, selecting, synthesizing, and distributing the information’’

• Businesses has to integrate virtual chain activities with physical activities for offering customized products and services


Physical & Virtual Value Chain (PVC & VVC)

Support Activities

Gathering Organizing Synthesis Distribution

Inbound Operation Mktg. & Sls. ServicesOutbound

Support Activities

Gathering Organizing Synthesis Distribution

Virtual Value Chain

• Virtual value chain activities provide information

access to-

- Customers, Suppliers and Manufacturers and make

a large part of the transactions transparent.a large part of the transactions transparent.

• Physical value chain activities make it possible for

them to be realized by fulfilling customer orders

and assembling final products and services.


Mixing the Physical & Virtual

• Companies that do business in both the market place

and the market space exploit both the PVC and VVC

• To be successful, these chains must be managed

distinctly but in concert

• Companies that adopt value-adding information

processes generally do so in three stages

• Phases of Adoption of Value-Adding Information

Process

1) Visibility 2) Mirroring Capability 3) Value matrix


Phases of Adoption of Value-Adding Information Process

�Visibility: By using information businesses learn

the-

- Ability to view physical operations more

effectively.

- This means that the foundation for the virtual - This means that the foundation for the virtual

value chain is used to co-ordinate the activities of

the physical value chain.

- Furthermore, with the assistance of IT, it is then

fully possible to plan, implement, and assess

events with greater precision and speed.Dr. Prashant B. Kalaskar

Stages of Adoption of Value-Adding Information Process

�Mirroring capability: Businesses duplicate their

one’s physical activities for virtual, by producing a

parallel value chain in the marketspace.

� In other words, the business moves the value adding

activities from the marketplace to the marketspace

�Ex- In banking, whereas banks offered a limited portfolio of

services


Stages of Adoption of Value-Adding Information Process

�Value Matrix –(New customer relationships ) Companies

use the flow of information in their virtual value chain to

create new customer relationships by delivering value to

customers in new ways

�Businesses presents value to their customer by new means

and in new fashions. and in new fashions.

�IT creates value in the marketspace. The new relationship

between business and customer is strongly based on using

IT.

�This implies that products and services are presented by IT

and part of these products and services are in the form of

bits.– E.g. FedEx, package tracking Dr. Prashant B. Kalaskar

Process of PVC & VVC

Buyer’s Virtual Value ChainSupplier’s Virtual Value Chain

Profit

Margin

Profit

MarginInformation

Flow

Information

Flow

Virtual Value Chain Virtual Value Chain


Value Chain of BuyerValue Chain of Supplier

Profit

Margin

Flow Flow

Profit

Margin

Physical Value Chain Physical Value Chain

Process of PVC & VVC

Buyer’s Virtual Value ChainSupplier’s Virtual Value Chain

Digital Content Networks

Virtual Value Chain Virtual Value Chain


Value Chain of BuyerValue Chain of Supplier

Networks of Physical Objects

Networks of Service Providers

Networks of Physical Objects

Networks of Service Providers

Physical Value Chain Physical Value Chain

Business and E-commerce Strategy

BusinessStrategy

Business Goals, Plans & Policies


CompetitiveStrategy

E CommerceStrategy

E-commerce Strategy

• An e-commerce strategy is a general formula for

how a business is going to use computer networks

and information systems to compete in a global

marketspace.

• To build an e-commerce strategy requires two

views of an organization’s strategy: what it wants

to do (conceptual) and how it will do it

(technology strategy).


E-commerce Strategy

• One strategy being used by many companies is

customer relationship management (CRM) which

enables them to create one-to-one marketing

experiences for their customers.

• Other e-commerce strategies include virtual • Other e-commerce strategies include virtual

showrooms, increased channel choices, wider

component choice, and use of mobile technology.

• Mobile commerce is the use of laptops, mobile

telephones, and personal digital assistants to connect to

the Internet and Web to conduct many of the activities

associated with e-commerce.Dr. Prashant B. Kalaskar

Maintenance of Relationship in E Commerce


Sustainability

• What is Sustainability:

“A strategy (Course of Actions) by which

communities seek economic development communities seek economic development

approaches that also benefit the local

environment and quality of life”


Sustainability

“Sustainability Is a process of achieving human development”

�Contributed through effective management of

1) Social1) Social

2) Economic and

3) Environment benefits


Global Drivers of Sustainability

• Increasing Industrialization

• Proliferation & Interconnection of Civil Stakeholders

• Emerging Technology• Emerging Technology

• Effects of Globalization:

- poverty,

- inequity,

- population explosion


Triple Bottom Line (TBL / 3BL)

• The triple bottom line is synonymous with

sustainability and corporate social responsibility

reporting.

• TBL a framework for measuring business • TBL a framework for measuring business

performance

• Triple bottom line accounting is a framework to

take into account not just financial outcomes but

also environmental and social performance.


Triple Bottom Line Considerations

� Save costs by making reductions to

environmental impacts and treating employees

well

� Increase revenues by improving the environment � Increase revenues by improving the environment

and benefiting the local economy

� Reduce risk by engaging stakeholders

� Boost their public reputation by increasing

environmental efficiency


Triple Bottom Line Considerations

� Develop human capital through better human

resource management

� Improve access to capital via better governance

Create additional opportunities from community � Create additional opportunities from community

development and environmental products


Concept of Triple Bottom Line

• The concept behind the triple bottom line is that equal consideration is given to;

1) Economic,

2) Ecological and 2) Ecological and

3) Social aspects of business performance reporting.


Economic Consideration

• It concern an organisation’s direct and indirect impacts on;

1) The economic resources of its stakeholders and

2) Economic systems at the Local, National, and Global levelsGlobal levels

Economic indicators included are;

� Wages, pensions & other benefits paid to employees;

� Monies received from customers and paid to

suppliers; and

� Taxes paid and subsidies receivedDr. Prashant B. Kalaskar

Environmental Indicators

• Economic Indicators concerns an organization's impact on;

�Living and non-living natural systems, including eco-systems, land, air and water.

Economic Indicators includes;Economic Indicators includes;

� Impacts of products and services on;

- energy, material and water use;

- greenhouse gas and other emissions;

- effluents and waste generation;


Social Indicators

Concern an organisation’s impacts on;

�The social sys-tems within which it operates

social indicators are grouped into three clusters:

1) Labour practices (e.g. diversity, employee health & safety)

2) Human rights (e.g. child labour, compliance issues)

3) social issues (e.g. bribery & corruption, community relations


Triple Bottom Line Reporting

“At its narrowest, TBL reporting is a framework for

measuring and reporting corporate

(organizational) performance against economic,

social and environmental parameters”social and environmental parameters”

A move from one dimensional economic reporting

to three dimensional economic, social and

environmental reporting


Three pillars of TBL


PEOPLEPEOPLE

PLANET

PROFIT

PEOPLE

• "People" (human capital) pertains to fair and

beneficial business practices toward labour and the

community and region in which a corporation

conducts its business.conducts its business.

• A TBL company conceives a reciprocal social

structure in which the well-being of corporate,

labour and other stakeholder interests are

interdependent.


Planet

• "Planet" (natural capital) refers to sustainable environmental practices.

• A TBL company endeavors to benefit the natural resources as much as possible or at the least do not harm and curtail environmental impact.harm and curtail environmental impact.

• A TBL endeavor should carefully manage its consumption of energy and non-renewable and

• Reducing manufacturing waste as well as Converting waste to less toxic before disposing of it in a safe and legal manner.


Profit

• "Profit" is the economic value created by the

organization after deducting the cost of all inputs &

the cost of the capital tied up.

• It therefore differs from traditional accounting

definitions of profit.definitions of profit.

• In the original concept, within a sustainability

framework, the "profit" aspect needs to be seen as

the real economic benefit enjoyed by the host society.

It is the real economic impact the organization has

on its economic environment.


ITC’s Triple Bottom Line

1) Economic:

• Market Capitalization: over $ 45 billion

• Turnover: over $ 7 billion

• Growth: 26% compound annual growth in total • Growth: 26% compound annual growth in total

shareholder returns over the last 17 years

30,000 employees: ITC group provides direct

employment to more than 30,000 people



2) Social:

• Creating community assets - Strengthening the agri

production base of nearly 4 lakh farmers

• Educating 3,00,000 children - ITC’s primary education

initiative has educated over 3,00,000 childreninitiative has educated over 3,00,000 children

• Empowering 4 million farmers - ITC’s globally

acknowledged e-choupal initiative is the World’s

largest rural digital infrastructure

• 40,000 sustainable livelihoods for rural women - ITC’s

women’s empowerment initiative has created nearly

40,000 sustainable livelihoodsDr. Prashant B. Kalaskar


3) Environmental:

• Water positive - 11 years in a row

• Carbon positive - 8 consecutive years

• Solid waste recycling positive - for the last 6 years

• Soil & moisture conservation to 1,16,000 hectares- ITC’s • Soil & moisture conservation to 1,16,000 hectares- ITC’s

watershed development initiative brings precious water to

more than 1,16,000 hectares of moisture-stressed areas

• 40% renewable energy - more than 40% of ITC’s total energy consumption is from renewable sources greenest luxury hotel chain

• 1,42,000 hectares greened - ITC’s social and farm forestry initiative has greened over 1,42,000 hectares


For Any Query…..For Any Query…..For Any Query…..For Any Query…..

Dr. Prashant B. KalaskarDr. Prashant B. KalaskarDr. Prashant B. KalaskarDr. Prashant B. Kalaskar

M: M: M: M: 9975770407, 9975770407, 9975770407, 9975770407, 7350520025735052002573505200257350520025M: M: M: M: 9975770407, 9975770407, 9975770407, 9975770407, 7350520025735052002573505200257350520025

[email protected]@[email protected]@sinhgad.edu

[email protected]@[email protected]@gmail.com

Strategic Management

Documents

Transcript of Strategic Management