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/