Strategic Management

Unit Unit--5 5
Strategic Management Strategic Management

for Sustainability for Sustainability for Sustainability for Sustainability
Dr. Prashant B. Kalaskar Dr. 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 Internet Business 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 BottomLine, People-Planet-Profits.
Dr. Prashant B. Kalaskar
Market Scenario (Porters 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
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.
VI VI
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-McDonalds
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. Belowthe 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 customers
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 two information, money, or anything else the two
entities consider to have value.
Commerce is the central mechanism from which
capitalismis 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 as and 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.
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
accesses accesses
- 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 firms business model
E-commerce business model
Uses/leverages unique qualities of Internet and
Web
E-business Models
A description of roles and relationships among a
firms consumers, customers, allies, and
suppliers that identifies the major flows of
product, information, and money, and the product, 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
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 Questions
Value 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..?
Competitive
Advantage
What special advantage does our firm brings to the market
space..?
Market Strategy
How 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 Team
What kind of experiences & backgrounds are important company
leaders to have..?
Component-1: Value Proposition
Defines how a companys 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 companys 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 competitors 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 & ESPN
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 customers marketed to potential customers
Part of Freshdirect
Strategy , 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
.
Organizational Development
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 todays 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.
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.
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 market
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 musics, 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).
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
Porters Physical Value Chains
A series of value adding activities connecting a
companys 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
Porters 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.
Supporting activities Supporting 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 chain reconfiguring 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 Chain Changes in Value Chain
( (Kalakota Kalakota & Robinson 2001) & Robinson 2001)
Core competence
of the company
Firm
infrastructure
and processes
Products &
Services
Distribution
channels
Customers
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 level value 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 Svioklas (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. Services Outbound
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.
Stages of Adoption of Value-Adding
Information Process
Mirroring capability: Businesses duplicate their
ones 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
Process of PVC & VVC
Buyers Virtual Value Chain Suppliers Virtual Value Chain
Profit
Margin
Profit
Margin
Information
Flow
Information
Flow
Virtual Value Chain
Virtual Value Chain
Value Chain of Buyer
Value Chain of Supplier
Profit
Margin
Flow Flow
Profit
Margin
Physical Value Chain
Process of PVC & VVC
Buyers Virtual Value Chain Suppliers Virtual Value Chain
Digital Content Networks
Virtual Value Chain
Virtual Value Chain
Value Chain of Buyer
Value Chain of Supplier
Networks of Physical Objects
Networks of Service Providers
Networks of Physical Objects
Networks of Service Providers
Business and E-commerce Strategy
Business
Strategy
Business Goals, Plans & Policies
Competitive
Strategy
E Commerce
Strategy
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 organizations 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.
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) Social 1) 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 organisations direct and indirect
impacts on;
1) The economic resources of its stakeholders and
2) Economic systems at the Local, National, and
Global levels Global 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 received
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 organisations 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
PEOPLE PEOPLE
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.
ITCs 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 - ITCs primary education
initiative has educated over 3,00,000 children initiative has educated over 3,00,000 children
Empowering 4 million farmers - ITCs globally
acknowledged e-choupal initiative is the Worlds
largest rural digital infrastructure
40,000 sustainable livelihoods for rural women - ITCs
womens empowerment initiative has created nearly
40,000 sustainable livelihoods
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- ITCs Soil & moisture conservation to 1,16,000 hectares- ITCs
watershed development initiative brings precious water to
more than 1,16,000 hectares of moisture-stressed areas
40% renewable energy - more than 40% of ITCs total
energy consumption is from renewable sources greenest
luxury hotel chain
1,42,000 hectares greened - ITCs social and farm forestry
initiative has greened over 1,42,000 hectares
ForAnyQuery.. ForAnyQuery.. ForAnyQuery.. ForAnyQuery..
Dr. Prashant B. Kalaskar Dr. Prashant B. Kalaskar Dr. Prashant B. Kalaskar Dr. Prashant B. Kalaskar
M: M: M: M: 9975770407, 9975770407, 9975770407, 9975770407, 7350520025 7350520025 7350520025 7350520025 M: M: M: M: 9975770407, 9975770407, 9975770407, 9975770407, 7350520025 7350520025 7350520025 7350520025
pbkalaskar@sinhgad.edu pbkalaskar@sinhgad.edu pbkalaskar@sinhgad.edu pbkalaskar@sinhgad.edu
prashantkalaskar007@gmail.com prashantkalaskar007@gmail.com prashantkalaskar007@gmail.com prashantkalaskar007@gmail.com

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Unit Unit--5 5

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