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Module 2

The document discusses the concept of value creation and how it has evolved from short-term financial gains to prioritizing stakeholders over the long term. It emphasizes achieving balance between short-term profits and long-term value through transparency, accountability, and ethics. Inclusivity and investing in communities can enhance social impact and differentiate businesses in competitive markets.

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Janice Yeong
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0% found this document useful (0 votes)
19 views5 pages

Module 2

The document discusses the concept of value creation and how it has evolved from short-term financial gains to prioritizing stakeholders over the long term. It emphasizes achieving balance between short-term profits and long-term value through transparency, accountability, and ethics. Inclusivity and investing in communities can enhance social impact and differentiate businesses in competitive markets.

Uploaded by

Janice Yeong
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Module 2: Critical Thinking

Pui San Yeong

Colorado State University Global

MKG310: Introduction to Marketing

Instructor: Professor Joseph Neptune

Mar 31, 2024


In the swiftly changing and highly competitive world of business we navigate today, the

concept of value creation has evolved substantially from traditional, narrow definitions inclined

towards short-term financial gains. In our contemporary context, value creation embodies a more

comprehensive viewpoint. This perspective emphasizes not only the importance of foresight and

sustainability, but also the necessity for amplification of value over the long term for all parties

involved (Goedhart & Koller, 2020). This all-encompassing perspective recognizes that the

process of value creation is not confined to the benefits for shareholders alone. On the contrary, it

extends to a wide array of stakeholders. This diverse group includes not only customers but also

employees, suppliers, and the broader communities within which these businesses operate. By

prioritizing the interests of this diverse group of stakeholders, companies can pave the way for a

more sustainable growth model. Such a model is not only beneficial in the long run, but it also

ensures value is created and shared equitably among all parties involved (Business Roundtable,

2020).

The article underscores a critical aspect, which is the compelling necessity of achieving a

subtle equilibrium between the yields of short-term profits and the creation of long-term value.

The magnetic pull of immediate monetary rewards can often be quite strong, presenting a potent

temptation for businesses. Nevertheless, it is vital that these businesses resist the lure of such

short-sighted strategies that could potentially undermine their long-term viability, thereby

causing detriment to the interests of their stakeholders.


In the grand scheme of things, it is not just about surviving the present, but also about

thriving in the future. Therefore, the onus is on these businesses to make informed decisions that

place a high premium on aspects such as transparency, accountability, and ethical practices. Such

an approach not only adheres to the principles of good governance but also fosters a sense of

trust among investors and other key stakeholders. This trust is not built overnight but is a result

of enduring relationships nurtured over time. The significance of these relationships is immense

as they contribute substantially to the creation of sustainable value over the long run. This is a

perspective that resonates strongly with the insights provided by Goedhart and Koller (2020),

emphasizing that the route to long-term prosperity in business is through the consistent and

ethical creation of value.

Furthermore, inclusivity emerges as a fundamental driver of long-term shareholder value.

By acknowledging and accommodating the diverse needs and interests of stakeholders,

companies can enhance their social impact, cultivate positive community relations, and

differentiate themselves in a crowded marketplace [Business Roundtable, 2019]. Through

investments in sustainable growth and alignment of business practices with broader societal

interests, companies can catalyze economic development, elevate living standards, and create

opportunities for individuals. This ripple effect creates a mutually beneficial scenario where both

the company and its stakeholders thrive together (Goedhart & Koller, 2020).

A compelling example of a company embodying these principles is Patagonia. Renowned

for its steadfast commitment to environmental sustainability and social responsibility, Patagonia

exemplifies long-term value creation by prioritizing the interests of a wide spectrum of

stakeholders in its decision-making processes. Through its marketing endeavors, Patagonia


effectively communicates its sustainable practices and ethical values, resonating with consumers

who prioritize sustainability (Business Roundtable, 2019). This comprehensive approach not

only enhances Patagonia's brand reputation but also solidifies its position as a pioneer in

responsible business practices. This exemplifies how a focus on stakeholder value and inclusive

value creation can serve as a cornerstone for success in today's fiercely competitive business

landscape.
References

Goedhart, M., & Koller, T. (2020, June 16). The value of value creation. McKinsey &

Company. https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-

insights/the-value-of-value-creation

Monbiot, G. (2021, August 25). Capitalism is destroying the Earth. We need a new human right

for future generations. The

Guardian. https://www.theguardian.com/commentisfree/2019/mar/15/capitalism-

destroying-earth-human-right-climate-strike-children#:~:text=We%20need%20a%20new

%20human%20right%20for%20future%20generations,-This%20article%20is&text=The

%20young%20people%20taking,the%20young%20and%20the%20unborn.

One year later: Purpose of a corporation - business roundtable - Purpose of a corporation.

(2020, September 18). Business Roundtable - Purpose of a

Corporation. https://purpose.businessroundtable.org/

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