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Just as you would have a great <keyword id="2393475" type="UNKNOWN" weightage="100" keywordseo="business-sense">business sense</keyword> to make it big in the world of old and <a href="http://www.businessinsider.in/Here-are-10-things-that-can-help-your-startup-sail-in-first-365-days/articleshow/48958098.cms">new businesses</a>, you also need another most important skill. Conventional <keyword id="441510" type="UNKNOWN" weightage="100" keywordseo="business-models">business models</keyword> may not agree with this, but as time and the way businesses are conducted have changed; a good exit strategy is the most imperative aspect of doing business. 
 
However, exit is often seen as a counter-productive is the most misunderstood aspect. But, experts will tell you that planning your exit strategy well in advance, even as you are a <a href="http://www.businessinsider.in/Five-smart-roads-that-can-raise-money-for-your-startup/articleshow/48987379.cms">well-funded startup</a>, is something imperative and a step every <keyword id="2556805" type="POSITION" weightage="100" keywordseo="smart-entrepreneur">smart entrepreneur</keyword> will have to eventually take – sooner the better because you are still at a point when you can help things from spiraling into the centre of gravity. 
 
An exit strategy is important to ensure you have left the place hale &amp; hearty, made a name and a reputation for yourselves in the world of business and that you are now ready to leave the warmth of a well-oiled startup in order to start something more exciting, and may be even better! It keeps the juices flowing, both within you and within the company you so dearly loved! 
 
Let go, the keyword, can give a fresh lease of life for everyone involved. 
 
In some ways, if you observe the investor predicament, not exiting would mean no returns on their investment and this is bad for business. 
 
When exits don’t happen as planned, or without making it an issue of discussion, or an important agenda in the meeting, no-exit means no returns for investors. Having some minority or majority share in a company, with no exit in sight is much like fishing in icy waters. You have no clue what’s down there, and if there is anything down there worth your time and energy at all. 
 
Founder of highly successful <a href="https://www.cbayscribe.com/cbaysystems/india.htm">CBay Systems</a>, V. Raman Kumar, makes a candid point when he says: “Keeping your investor happy and being disciplined is important. The right money at the right time and right exit strategy at the right time is crucial.” 
 
Here are a few exit strategies that can help you make that right decision at a time when you deem it right. Do it fast, and do it swiftly! 
 
IPO way 
IPO exit is the most preferred and safe way of exiting in the current scenario if you plan for it. But, it is also important to remember that only small percentage of startups exit this way. It is imperative to structure your business in such a way that an IPO exit can not only be hassle free, but also the most convenient way of doing it! 
 
Aim big, and go big or as they say, just go home! Your energies should be focused on product/service or customer segment that will generate large numbers of users and swift growth. 
 
Liquidate 
This is something a lot of entrepreneurs can never get it right. One of the most conventional and most often overlooked exit strategy is call it quits, hang up the boots and take a hike in the woods. It’s easy, and natural. Everything comes to a natural end and there’s no worry about handing over the keys to someone else. If you liquidate, the money usually gets repaid to the creditors and then is shared among co-workers, or whoever stayed back to switch off the lights and shut the systems down. 
 
Sell, sell and sell 
You are high-strung about whatever you set up that you didn’t train sights enough to notice if someone else could have reared the dream with as much passion or wanted to possess it as much as you did. 
 
When time is ripe for exit, consider who you could sell the business to. It could be an external person, or your own co-workers with dreamy eyes. Someone can bring fresh blood and make the business go up on the charts again, while you go chasing new dreams; not a bad idea at all! 
 
Steer towards lifestyle 
This model, which has the legendary <a href="http://fourhourworkweek.com/">Tim Ferriss</a> for the most prominent name, suggests that your exit strategy should be to set up a corporation to scale down the losses. Once your business reaches the desired scale at any particular time, you should plan to live off the cash flow without hands-on involvement. In this phase, you need to focus on promising niche segment of the market, cut the spending and tap funding sources for fresh investment if need be. 
 
Merger and acquisition 
This would normally mean going into a similar company or allow your business to be bought by a larger company that can benefit from the merger and acquisition. This is the most important and most beneficial situation where both companies win, combine resources and grow into something more that can change the direction of the market. 
 
(Image Credits: Thinkstock)

Here are 5 exit strategies for great business acumen

Nonprofit Business Models

Sustainable Business Models

Reinventing success: Companies like Amazon and IBM that transformed their business models

<ul class="summary-list"><li>An evaluation process helps develop <keyword id="94495" type="ENTERTAINMENT" weightage="60" keywordseo="Innovation">innovation</keyword> programs that align with long-term organizational goals.</li><li>Selecting and pursuing the best innovative ideas requires the input of everyone in the leadership team.</li><li>Starting with an innovation blueprint can create a framework to move from idea to reality.</li></ul>Nothing propels a company more quickly than <a href="https://www.entrepreneur.com/topic/innovation">innovation</a>, and nothing stifles it more quickly than a "that's how we've always done it" attitude.News startup Axios is an excellent example of a company breaking barriers and thinking outside the box. The company is <a href="https://www.wsj.com/articles/axios-wants-to-help-companies-write-like-its-reportersfor-10-000-a-year-or-more-11610632800?mod=business_lead_pos6">making a big bet</a> that other companies will pay to learn how to write like Axios reporters. The new communications platform, AxiosHQ, launched in February and enables companies to send Axios-style, just-the-facts internal newsletters. Its cost? At least $10,000 annually. It remains to be seen whether executives will be willing to invest that kind of money, but it's a fascinating proposition.What does it take for organizations to vet, approve and develop similarly innovative ideas? The answer is not simple, and it varies from company to company. Innovation efforts get plenty of lip service, but it's much harder to perfect a process for selecting and implementing top ideas.<h2>No magic wand for innovation</h2>In the same way that data-driven decisions run many aspects of an organization, leaders need to use data to create a rubric for vetting innovative ideas. This enforces discipline and keeps everyone on the same page.Without an evaluation process, innovation programs become short-sighted and may fall out of alignment with long-term organizational goals. Having an organized process also removes emotion from decision-making to keep project focus and dollar spend as data-driven as possible.For innovation to succeed, leaders also have to be aligned around critical factors. This forms a living rubric that can be adapted throughout the organization as <keyword id="6355515" type="UNKNOWN" weightage="60" keywordseo="business">business</keyword> needs shift and evolve. Generally, some sort of innovation leader - a chief innovation officer, a chief <keyword id="6363690" type="UNKNOWN" weightage="100" keywordseo="Strategy">strategy</keyword> officer or a business unit leader - will lead this team to ensure the process runs smoothly and stays on track.When we developed our rubric at Coplex, we struggled to find a technical solution that was flexible enough while still enabling us to manage our ideas. We ended up building one ourselves. We now use this tool to drive the underlying engine of our entire idea management process, and it works because effective innovation strategy always starts at the top. Bring your entire leadership team together from the beginning of the process to discuss priorities and foster conversations about ideas, outlining your concrete vision along the way.Here are three ways to evaluate your innovation ideas and create a framework to make them a strategic reality:<h2>1. Create an innovation blueprint</h2>Before you begin to gather ideas from your team, you have to first come up with a blueprint - such as <a href="https://www.thinkwithgoogle.com/future-of-marketing/creativity/8-pillars-of-innovation">Google's Eight Pillars of Innovation</a> - that defines the initiative's overall structure. This helps put up guardrails around the problem spaces the organization is willing to play in and, more importantly, which problem spaces are off-limits.An innovation blueprint consists of three distinct components: statement, antithesis, and thesis. Your statement defines your company's ambitions and outlines why you believe in what you're doing, why now is the best time to do it and what makes you the best candidate for the job. From here, develop an antithesis that defines the problems, business models, and core technologies you don't intend to address. Why? It removes distractions and keeps the focus on priorities. Finally, create a thesis that gives you a clear lens into how you'll invest in problem spaces, business models, and technologies to create the change you want to see.<h2>2. Define innovation themes</h2>Once you've developed a solid blueprint, it's time to identify the themes of problem spaces you intend to solve. This step will define the categories in which your innovation ideas should fall while clearly outlining how your solutions could come into play.Think of this as similar to how the National Association of Engineers (NAE) outlines the many challenges left to overcome in its field. In its report on the <a href="http://www.engineeringchallenges.org/challenges.aspx">grand challenges of engineering</a>, NAE defines themes (e.g., joy, sustainability, health, and security) as areas ripe for innovation and abundant with opportunity.The core reason for taking this approach? It allows you to consider potential ways to innovate beyond what the organization had imagined before - and to set goals with those parameters in mind.<h2>3. Map measurement criteria back to a rubric</h2>Once you've defined your innovation themes, it's time to develop the criteria you'll use to measure your success. Global design firm IDEO made it a goal to <a href="https://creativedifference.ideo.com/#/">quantify innovation</a> by looking at its clients' internal team dynamics as well as other companies focused on innovation. The firm identified six areas key to innovation and then sent its survey, coined "Creative Difference," to larger organizations to understand how team members were performing when it came to innovation. Once the survey was complete, IDEO sent results with tangible innovation metrics and recommendations on how to follow and meet them moving forward.As you define how you measure innovation and create your unique rubric, keep in mind that you aren't limited to traditional metrics. Feel comfortable being creative and innovative as you decide on those! It's possible to measure everything from societal impact and economic value to organizational scale and new market discovery.The process of pursuing innovative ideas requires much more than a quick brainstorming session or selecting an appealing idea from a list. By creating an underlying philosophy and structure governing the prioritization of ideas that flow through an organization, you can retain control over your innovation program's outcomes instead of leaving anything to chance.

3 ways to evaluate new business ideas and grow your company

Thomson ReutersTesla CEO Elon Musk.Over the past few years, as its sales and stock have risen, Tesla's core business model has been shifting.The carmaker was founded in 2003 with the basic goal of bringing an exciting all-electric vehicle to market. It succeeded, and under CEO Elon Musk (who started out as just an investor) the company has grown to sell nearly 100,000 vehicles a year, the newest of which are equipped with semi-self-driving technology. To drive this growth, Tesla also invested in a far-flung network of fast-charging stations.About a year after the launch of the Model S sedan in 2013, Tesla's business plan began to undergo modifications. An energy-storage business was launched, and in 2016, Tesla merged with SolarCity. The first Tesla solar product, the Solar Roof, officially went on sale last week. Meanwhile, Tesla continued to build a massive battery factory in Nevada.There are useful connections and synergies among these various businesses, and they both fit with and enable Musk's master vision for a fossil-fuel-free world.Unfortunately for Tesla, though, the company could be playing a transitional role in the broad disruption of traditional mobility than many analysts and experts now think is underway.<h2>Tesla is the bridge</h2>Andy Kiersz/Business InsiderTesla's surging market cap.In this story, Tesla is an innovator that proved it was possible to start a new car company after the globe hadn't really seen one for decades; Tesla also revived the electric car, which had languished for a century after losing out to the internal-combustion engine.Tesla is a bridge between the old ways and the news ways, with a foot in each camp - and potentially the inability to prosper in the new world that it made possible. Remember that once you've crossed a bridge, you don't need it anymore. It's in the past.In a research note published Monday downgrading Tesla to "equal-weight" from "overweight," Morgan Stanley analyst Adam Jonas argued that competition will soon arrive for Tesla, but that the competition might not look like what everyone thinks it would be:What Jonas leaves unspoken is the emerging idea that replacing the traditional automobile with something better is rapidly being supplanted by the notion than physical transportation is far less lucrative than the activity of passengers inside the vehicles.<h2>Silicon Valley getting out of cars</h2>Benjamin Zhang/Business InsiderIs Tesla in trouble?"Big tech companies have gone cold on being assemblers," Ewen Cameron Watt, a Senior Adviser at Blackrock, said in an interview. "They want to be data managers. It's all about the data and connectivity," Cameron, who is also the co-author of a study from the Blackrock Investment Institute titled "Future of the vehicle - Winners and losers: from cars and cameras to chips."Tesla isn't ignoring this opportunity - machine learning from its fleet of Autopilot-enabled vehicles is serving up a massive amount of real-world information about self-driving technology. But Tesla is also trying to do several things at once, just when it comes to the auto side of its business.It's trying to produce and sell big-ticket luxury cars, service them, launch a cheaper vehicle, and provide widespread fast-charging. Forget adding semis and pickup trucks to the mix, as Musk has said Tesla will - executing on just one of its existing challenges would be impressive.However, Tesla's traditional competitors are already good at all those things, while Tesla's tech rivals now appear uninterested in replicating Tesla's experience.<h2>Narrative vulnerability</h2>In response, Tesla is trying to exploit the elasticity of its business model, which may or may not be there to exploit. Thus far, developing new lines of business hasn't hurt Tesla, but the company's historic financial underperformance has been masked by a surging stock price and the company's ability to access the capital markets for billions in ongoing funding, despite the carmaker being 13 years old, with an IPO staged in 2010.Tesla's vulnerability is unique: I call it "narrative vulnerability." Electric cars are yesterday's story. The new story is about self-driving systems and Big Data.The problem with narrative vulnerability is that once it takes hold, Tesla's only way to deal with is to adjust its story. Tesla has been able to do that, up to a point. But at some point, the features of its new story won't fit with a very different narrative. The critical issue is that Tesla will always be tied to cars: designing them, building them, selling them. In that respect, it could wind up a victim of its spectacular success. This column does not necessarily reflect the opinion of Business Insider.<h3>More from Matthew DeBord:</h3><ul><li><a href="http://www.businessinsider.com/tesla-business-model-in-trouble-2017-5" rel="nofollow">Tesla's business model could be in trouble (TSLA)</a></li><li><a href="http://www.businessinsider.com/morgan-stanley-adam-jonas-downgrades-tesla-stock-2017-5" rel="nofollow">A major Tesla bull just downgraded the stock, and shares are sliding (TSLA)</a></li><li><a href="http://www.businessinsider.com/ford-gt-review-pictures-2017-5" rel="nofollow">The new $400,000 GT is the greatest car Ford has ever built (F)</a></li><li><a href="http://www.businessinsider.com/tesla-solar-roof-elon-musks-best-product-2017-5" rel="nofollow">Elon Musk has discovered a new passion in life - and it could be Tesla's best product yet (TSLA)</a></li><li><a href="http://www.businessinsider.com/why-uber-wont-be-a-monopoly-2017-5" rel="nofollow">Uber wanted to be a monopoly - but it may have to settle for the next best thing</a></li></ul>Get the latest Tesla stock price<a href="http://markets.businessinsider.com/stock/TSLA-Quote"> here.</a> <h3>NOW WATCH: <a href="http://www.businessinsider.com/everything-we-know-tesla-solar-roof-elon-musk-2017-5">Elon Musk just revealed the final details of Tesla's Solar Roof - here's everything you need to know</a></h3> Please enable Javascript to watch this video

Tesla's business model could be in trouble

<a href="http://www.businessinsider.in/searchresult.cms?query=paytm&amp;sortorder=effectivedate">Paytm</a>’s journey and its business model have made it to <a href="http://www.businessinsider.in/searchresult.cms?query=harvard+business+school&amp;sortorder=effectivedate">Harvard Business School </a>as a case study. Yes, <keyword id="6357120" type="UNKNOWN" weightage="20" keywordseo="PayTM">Paytm</keyword> has been included as a case study by the India Research Center of the <keyword id="70846" type="ORGANIZATION" weightage="20" keywordseo="Harvard-Business-School">Harvard Business School</keyword>. 
 
The study will focus on Paytm’s journey from being an online recharges platform to now India’s largest <a href="http://www.businessinsider.in/searchresult.cms?query=mobile+payments&amp;sortorder=effectivedate">mobile payments platform.</a> 
 
<a href="http://www.businessinsider.in/searchresult.cms?query=vijay+shekhar+sharma&amp;sortorder=effectivedate">Vijay Shekhar Sharma</a>’s Paytm focus on enabling offline payments even for the smallest retailers and businesses by using smartphones and QR codes has disrupted the payments ecosystem in India and now is a part of the case study. 
 
The study titled ‘Paytm: Building a Payments Network’ is currently in the process of being published and will be available for teaching purposes both within and outside Harvard. 
 
“For us, the journey to enable fellow countrymen with digital payments and become a part of financial inclusion has only started right now. It is truly a privilege to have it become a part of the curriculum offered by the prestigious institute,” said Sharma. 
 
Meanwhile, Professor Sunil Gupta of Harvard Business School said Paytm is revolutionizing payments in India and it is a shining example of India's digital future. 
 
Paytm is soon going to launch its <a href="http://www.businessinsider.in/searchresult.cms?query=paytm+payments+bank&amp;sortorder=effectivedate">Paytm Payments Bank</a>.

Paytm’s business model will be taught at Harvard Business School

<ul class="summary-list"><li><keyword id="107096" type="COMPANY" weightage="60" keywordseo="Tesla">Tesla</keyword> owners have found parts inside their <keyword id="4684024" type="PERSON" weightage="60" keywordseo="Model-y">Model Y</keyword> cars held on by straps that don't appear to be standard. </li><li>In forums, some owners said the parts looked like someone had "made a run to Home Depot to make Q2 numbers."</li><li>It isn't clear how widespread the possible use of the non-standard parts is, or if they can cause any issues with the cars' performance. </li></ul>Some <keyword id="4441623" type="PERSON" weightage="60" keywordseo="tesla-model-y">Tesla Model Y</keyword> owners have made an interesting discovery when exploring the inner bowels of their vehicles."Someone made a run to Home Depot to make Q2 numbers," someone said on the Tesla Motors Club forum last week, along with a photo of what appears to be a cooling unit held in place by plastic straps and faux wood.The user said it wasn't in an easily accessible place, beneath the vehicle's frunk insert, but they were already diving into the car's innards to fix a separate issue when they found the straps."I wouldn't recommend doing it just to look for this," they said. But it didn't stop others from searching and following up with their own found examples.<a href="https://www.thedrive.com/tech/36274/tesla-model-y-owners-find-cooling-system-cobbled-together-with-home-depot-grade-fake-wood">According to The Drive</a>, the part in question is the car's Liquid Cooled Condenser, which is responsible for not only making sure the battery doesn't overheat but also cooling the powertrain and cabin air conditioning as well. The site also uncovered several YouTube videos that show a more form-fitting covering holding the part in place.Tesla did not respond to a request for comment from Business Insider.To be sure, it's not clear if the materials have had any effect on the cars' operation, although Car and Driver <a href="https://www.caranddriver.com/tesla/model-y">also</a> called some elements of the Model Y build quality into question in its review of the car.

Some Tesla Model Y owners say they've found parts in their cars that look like 'someone made a run to Home Depot'

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image">Thomson ReutersResidents shop at Walmart as the store prepares for Black Friday in Los Angeles, California.</div></div></div>This week, Walmart's shares crashed after the company reported a disappointing profit outlook.Profits <a href="http://www.bloomberg.com/news/articles/2015-10-14/wal-mart-tumbles-after-predicting-drop-in-fiscal-2017-earnings">will fall</a> 6% to 12% next year, the company said.And the retailer's situation is likely to get worse rather than better, according to many analysts.Until now, Walmart has been able to make huge profits by keeping worker wages low and using its size to negotiate cheaper prices than competitors, <a href="http://www.thestreet.com/story/13325724/2/wal-mart-s-entire-business-model-is-being-smashed-to-pieces.html">Brian Sozzi at The Street</a> writes.But the <keyword id="6354851" type="ORGANIZATION" weightage="100" keywordseo="Retail">retail</keyword> landscape is changing, and Walmart is increasingly irrelevant."New guidance reflects that Walmart's competitive edge - historically largely assortment and price - has faded relative to purveyors of extreme value (warehouse clubs, hard discounters) or extreme convenience (dollar stores, hard discounters), as e-commerce has neutralized the impact of selection," Goldman Sachs analyst Matthew Fassler wrote in a note to clients.As competitors like Costco, Aldi, Trader Joe's, and Family Dollar crowd the space, the idea of visiting a Walmart is less compelling to price-conscious consumers.The retailer has been pouring billions of dollars into ecommerce in an attempt to play catch-up to Amazon. But this is another measure that is hurting profits, according to Sozzi.<div class="KonaFilter image-container display-table"><div><div class="image on-image">AP</div></div></div>Walmart also can't continue to offer the low wages that helped it succeed for so long.The retailer has raised its pay to a minimum of $9 an hour because it discovered it was cheaper to offer higher wages than to train new workers who left for better opportunities."Turnover in the retail sector has been steadily rising and now stands 5% a month," <a href="http://www.bloomberg.com/news/articles/2015-03-06/why-retailers-are-suddenly-desperate-to-keep-their-least-valuable-workers">notes Bloomberg</a>. "At that rate, if Walmart's workforce were to hold to the national average, over a full year it would be losing 60% of its sales staff."In addition to being costly, Walmart's high turnover led to complaints about customer service.It's increasingly clear that Walmart's profit model is unsustainable, <a href="http://www.businessinsider.com/analysts-say-wal-mart-over-earned-2015-10">according to analysts at Stifel</a>."The market is reacting to meaningful evidence that WMT has substantially over-earned," Stifel analysts wrote on Wednesday, referring to the company. "WMT calls out specifics of wage and price investments - and yes these are discrete actions taken by WMT; but we believe they are just symptoms of where WMT sits in its history."Walmart CEO Doug McMillon defended his company's position in a statement."These are exciting times in retail given the pace and magnitude of change. We have strengths and assets to build on and are making progress to position the company for the future," McMillon said. "We're encouraged by recent customer feedback and will continue to get stronger." <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/surprising-millennial-brands-favorites-dell-mcdonalds-jcpenney-walmart-2015-8">The most surprising brands millennials love</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="gwb2l5djpf59vINJljM3hv2W96JkP2mP" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

Walmart's entire business model is crumbling

Does <keyword id="6354632" type="COMPANY" weightage="60" keywordseo="Social-media">social media</keyword> have a glass-ceiling problem? Even as companies rush to exploit social media in every conceivable way, a report from The <a href="http://www.conference-board.org/publications/publicationdetail.cfm?publicationid=2332" target="_blank">Conference Board and the Rock Center for Corporate Governance</a> at Stanford University finds that senior executives don’t seem to take the results seriously — if they look at them at all. For example:
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• Fewer than 24 percent of companies report that senior management sees reports gleaned from social media metrics; even fewer (14 percent) build it into their KPIs.
• Twenty percent say social media information is too low-level for senior management, and 32 percent say it’s too low-level for board members.
Ironically, senior executives are actually more likely than the population at large to use social media (see table). So if they’re laggards, it’s not because they’re unfamiliar with the platforms. More often, surveys find, companies simply fail to collect social media data, and when they do, they’re unlikely to pass it up the chain of command. In those rare cases in which companies collect it and senior execs see it, they say they find it helpful. The lesson here? To paraphrase a classic <a href="http://www.tvfanatic.com/quotes/shows/seinfeld/episodes/the-bubble-boy/" target="_blank">“Seinfeld”</a> joke, it’s not enough to read the tweets; you have to analyze the tweets.
#antisocial

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<div class="addendumtitle">THE PLUS</div>
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“One key reason the lead decision makers aren’t up to speed,” theorizes consultant <a href="http://holtz.com/blog/business/should-c-suites-and-boards-of-directors-be-exempt-from-social-media-trainin/4023/" target="_blank">Shel Holtz</a> on his blog, “is that, despite any [social media] training given to employees, the board and C-suite rarely undergo any training themselves. When was the last time you took a training course [and saw] an executive VP among the other students? Somehow . . . membership in the upper echelon of the corporate org chart seems to confer special status that assumes you can no longer benefit from a training program.”
 
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Too Many Top Executives Aren't Taking Social Media Seriously 

If Indian companies were to start identifying the socio-environmental problems that intersect with their business, and begin addressing them as potential business opportunities, it would not only help them make more profitable businesses out of this approach, but at the same time contribute to making the society become a better place to live in. As ideal as it may sound, senior <keyword id="53675" type="ORGANIZATION" weightage="100" keywordseo="harvard">Harvard</keyword> fellow and founder at FSG, Mark Kramer, see exactly this approach as the way forward for a growing and evolving India. 
 
Defining this concept in 2011 <a href="http://www.businessinsider.in/searchresult.cms?query=Harvard+">Harvard </a>Review article as “<a href="http://hbr.org/2011/01/the-big-idea-creating-shared-value">Creating Shared Value</a>”, professors Michael E Porter and Mark R Kramer advice companies to find the synergy or overlap between a successful business and a successful society. Yes, it sounds good in theory, but many do not understand how it can be brought into practice. Here’s how: 
 
The first is to reconceive products or the markets they serve. One can begin by creating products that address social and environmental issues or by expanding into new markets to sell its products or services. Significantly, Shared value can become a lot easier if both are done simultaneously. Say for example, if there is a drug store company that is present in several locations where there aren’t enough grocery stores. Even as you won’t have thought of selling food but you can see there is untapped demand for it in your region, and since people don’t have access to grocery stores, they may not have access to healthy food at all. Lack of <a href="http://www.businessinsider.in/searchresult.cms?query=nutrition+">nutrition </a>is a potential social problem in this region in such a situation. As a retail company, you can create a section of your stores that can sell food products high in nutritional value. By way of this, you are tapping the pent-up demand and giving people a reason to come to your store. If you succeed in this, you have created good new products and solved a social problem of nutrition while also tapping an untapped market that wasn’t being served by grocers earlier. 
 
The second option is for companies to redefine productivity in their value chain. For example, you are a coffee importer. You buy from coffee farmers who need tools, know-how and access to money or capital to improve their productivity. If you can improve their productivity, you can decrease cost for yourself. So you could offer farmers a long term contract providing them assurance that you will buy from them if they make investments in the farms. As part of the agreement, you can provide them training and access to the latest farm techniques and technologies. It will decrease your cost and provides you stable access to coffee products. Porter and Kramer say that to increase productivity, energy use and logistics, use of resources, procurement policies, distribution, employee productivity and location are important factors that need be considered. 
 
The third way is for companies to build supportive industry clusters. So instead of selfishly focusing on having a major chunk of the pie, the focus is on enlarging the pie so that everyone gets larger chunks. So, like in the <keyword id="6357722" type="COMPANY" weightage="100" keywordseo="silicon-valley">Silicon Valley</keyword>, there are several <a href="http://www.businessinsider.in/searchresult.cms?query=technology+companies">technology companies</a> that create computer hardware and software programs. Because of the specific skill set required to run them, each of them requires a highly talented workforce. In an odd way, it’s easier for them recruit talent if they are located near each other. Also, some of the best universities like Stanford and Berkeley also lie extremely close to this region, that is let’s not forget the global hub for venture capital. All of this is an ecosystem that supports strong technology infrastructure and is itself a cluster. Companies can create shared value if they focus on developing these clusters, they can play a role in strengthening weak infrastructure and supporting strong components of the cluster. 
 Mark Kramer simplifies it for us: “When you have found a way to sell new products to low income population in emerging markets (smaller portions, informal distribution system etc), you are reaching a new market. When you have found a way to differentiate your product by let’s say, increasing its nutritional value or lowering fats and sugar, that is <keyword id="2203961" type="UNKNOWN" weightage="100" keywordseo="Creating-Shared-Value">creating shared value</keyword> in the product market. When you have reduced your energy requirements or water use, it is redefining productivity in the value chain. And when you have strengthened the communities where you operate, you have taken the responsibility of the cluster as a whole.”

3 ways how corporate companies can switch to a CSV business model

When Samoa Air last week announced it was going to start charging people for airline tickets based on their weight -- a concept that Samoa Air CEO Chris Langton defended in news reports as "the fairest way of traveling with your family or yourself" -- it set off a flurry of comments, some supportive, some not.
Under Samoa Air's plan, customers are now required to estimate their weight when they book their flight online, and then to weigh in when they arrive at the airport. That number determines the price they will pay and also how much space they will get once they board the plane. "You travel happy, knowing full well that you are only paying for exactly what you weigh ... nothing more," the Samoa Air website says.
Established in 2012 as the national carrier of Samoa, the airline connects the Pacific Ocean islands domestically using small propeller planes that seat between three and 10 people. It recently began offering international <keyword id="6367662" type="UNKNOWN" weightage="60" keywordseo="flights">flights</keyword> on larger planes to American Samoa.
Estimates of price per pound vary with the length of the trip. According to The Wall Street Journal, customers flying to American Samoa will pay 92 U.S. cents a kilogram, or 42 cents a pound, for each flight. A kilogram equals 2.2 pounds. "It's a pay by weight system and it's here to stay," Langton told the Journal. As an example of the new policy, he estimated that a 160-kilogram person on Samoa Air will pay four times as much as a 40-kilogram person, but he or she would also get more space.
One reason for the new policy may be the fact that Samoa has the fourth highest obesity rate in the world. Estimates of the percentage of obese people in the population range from 55% to 60%.
The 'Private Lives' of Customers
Although Langton says that the new policy has received a favorable reaction from consumers, it raises some interesting questions, including: Is this discrimination or a smart <keyword id="232730" type="POSITION" weightage="60" keywordseo="business-model">business model</keyword>? Are there better ways to achieve the same objective? And will other airlines adopt a similar approach? 
Wharton marketing professor <a href="https://marketing.wharton.upenn.edu/profile/187/">John Zhang</a>, acknowledging that he is not a lawyer, suggests that charging passengers based on their weight does not fit the legal definition of discrimination based on race, age, sex, nationality, religion or handicap. Indeed, he says, "a small airliner like Samoa with propeller planes can make a legitimate business case to charge passengers based on their weight: A small plane can reach carrying capacity either because it is cubed out [i.e., running out of space] or grossed out [i.e., reaching its weight limit]. In the case of carrying passengers, both dimensions can be maxed out to the detriment of an airline's profitability."
Samoa Air's new policy does, however, suggest possible price discrimination given that different customers with different characteristics are charged different prices, Zhang says, although he does not believe that "price discrimination is the main motivation behind the new pricing policy -- for two reasons. First, there is no evidence that the travelers who weigh more tend to be less price-sensitive so that a firm could make more profits by charging them more. Second, there are many other ways to do price discrimination more effectively and efficiently if capacity is not an issue."
The fact of the matter is that "petite passengers have been subsidizing overweight passengers when the ticket price is weight blind," Zhang notes. "Such a practice becomes untenable or even unfair when 55% of a country's adult population is obese."
Wharton health care management professor <a href="https://hcmg.wharton.upenn.edu/profile/1518/">Mark V. Pauly</a> makes the point that "in small planes, total weight does matter, so rather than carry fewer passengers, it seems that paying for excess weight is tailoring price to cost; it costs the airline more to take a person who weighs twice as much and so displaces another regular-sized paying customer."
Although people will object, he says, "in an unregulated but competitive market, the general principle is that firms can set the terms of a transaction, and buyers are free to accept [those terms] or not. The key will be if there is competition among airlines or other methods of transportation [so that] people have an alternative. I'm not sure how it is different from charging you for another seat if your cello flies with you."
Samoa's model is "an example of businesses trying to maximize profits," Pauly adds. "When you sell services, the cost often depends on the 'private lives' of customers ... like whether they use their rental car for racing. So this may make sense.... Ethicists will doubtless be upset, but I do not think economists generally will." 
The Perception of Fairness
Given the somewhat controversial nature of Samoa Air's move, are there other ways the airline could achieve its goal without focusing on a person's weight? As Wharton marketing professor <a href="https://marketing.wharton.upenn.edu/profile/228/">Gal Zauberman</a> notes, "consumers will likely react negatively to having to pay for something that they see as part of who they are."
From the perspective of a "behavioral researcher, what you have to think about is whether there is a better way to do the same thing but frame it differently," he says. "One option is instead of charging per pound, have a baseline price design for heavy people and then give discounts either in the form of a reduced fare or extras, such as free checked luggage, to those who weigh less."
If you do want to charge per pound, he adds, "another option might be that the price is for your total weight, not just how much you personally weigh. You will be allowed a max weight of yourself, your carry on and your checked luggage. If you are a heavy person with only a small carry on, you might pay less than the small guy with the large suitcase. This will make your weight less explicit while accomplishing the same objective."
Under the new policy, passengers with baggage that is over the weight limit pay at the same rate as their personal weight.
Wharton marketing professor <a href="https://marketing.wharton.upenn.edu/profile/202/">Deborah Small</a> agrees that there may be "more tactful ways" to accomplish the same goal. For example, Samoa Air could have child discounts (in fact, children under 12 are charged 75% of the adult rate) "or they could even have discounts for low-weight people. The point is that it's achieving the same objective but framing it in a way that is perceived as fairer and that doesn't penalize an already stigmatized group in society."
She also points out that the new policy "is a form of price discrimination which is common in many forms," including student discounts for tickets, early bird specials offered by restaurants on weeknights and dynamic pricing by airlines based on when consumers buy their tickets. "What's interesting to note about such discrimination is how it is perceived by customers."
Small recently taught a class in which students discussed the Coca-Cola Company's plans to use vending machines that would change the price of a can of soda depending on the weather. On warmer days, the price would go up, and on colder days, it would go down. "That makes perfect sense from an economic [standpoint]," Small says, "but customers were very upset that the company would take advantage of their thirst on hot days." The launch was called off.
Consumers have "a relationship with firms, and their expectations are much like their expectations in any interpersonal relationships," Small says. "When a firm acts in a way that violates the social rule of treating people fairly, consumers get offended." So it's fine for a restaurant to offer a discount to people on a relatively uncrowded Tuesday, but if the restaurant tried to add a surcharge to people eating there on a busy Saturday, that would be considered unfair.
"The fairness of these [deals] is not objective. It's subjective," she adds. "It's hard to say if something is truly fair. It's whether the customer perceives it to be fair. Often just the way you frame a pricing scheme affects the perception of fairness."
In a comment made to Reuters news agency last week, Samoa Air's Langton suggested that "the industry has this concept that all people throughout the world are the same size," adding that airplanes "always run on weight, irrespective of seats." He also noted that, in some cases -- including families with small children -- the new policy could make it cheaper to fly. 
Mass Weigh-in
Is it likely other airlines will follow Samoa Air's <keyword id="6363690" type="PERSON" weightage="60" keywordseo="strategy">strategy</keyword>? Zauberman thinks not. "The key is that this is a small airline, and implementing this on a large scale, for airlines like the new United or Delta, will be much more complicated and unlikely to catch on any time soon." Zhang agrees, mainly because the modern jet passenger airplanes "are rarely cubed out or grossed out -- the load factor for passenger airlines is about 80% today -- and it is a lot easier to focus on inventing new fees."
The Journal article suggests that the major airlines would avoid this type of strategy because of concerns over price discrimination, but also points out that some carriers in the U.S., including Southwest Airlines, "require passengers who can't fit in a regular coach seat to buy an extra ticket when flights are full. They don't, however, charge passengers per kilo or pound." Other news reports suggest the nightmare that would ensue if, on large crowded flights, hundreds of passengers were required to weigh in at the airport.
Is Samoa Air's new policy one more example of a company inserting itself too far into people's health and habits? Companies, Zhang says, "are in the business of interfering with people's private lives."
Now Read: <a href="http://www.businessinsider.com/tips-on-negotiation-2013-4">Emotions And Momentum Are The Biggest Causes Of Bad Negotiating </a>This story was originally published by <a href="http://knowledge.wharton.upenn.edu/" target="_blank">Knowledge@Wharton</a>.

Why Charging Fat Passengers More Is Totally Defensible

<ul><li>For the first time, cigarette business contributed to less than half of ITC’s total sales. </li><li>Since 1996, the non-cigarette business grew 21-fold. </li><li>Tough regulations and tax are posing challenges to the company’s cigarette business. </li></ul>It took over two decades but Indian Tobacco Company or ITC successfully transitioned from selling cigarettes to other businesses like fast moving consumer goods like wheat flour, ready-to-eat foods, shampoos and soaps amongst others. For the first time in its century-long history, cigarette business contributed to less than half of its total sales. For the financial year that ended in March 2019, the cigarettes business accounted for 45.8%, as per<a href="https://brandequity.economictimes.indiatimes.com/news/business-of-brands/how-itc-s-strategy-to-reduce-revenue-dependency-on-cigarettes-worked-in-its-favour/69781151"> an ET report</a>. ITC has since diversified into hotels, agriculture and FMCG. It now has successful brands under its kitty like Ashirwaad, the consumer wheat flour brand, Yippee which is a ready-to-eat snacks brand, Bingo chips and Vivel; apart from incense sticks. Moreover, ITC’s chain of hotels has 90 hotels in India, and is expanding internationally too. Since 1996, the non-cigarette business grew 21-fold, and it is also pushing in money behind it. As much as 80% of capital deployed is flowing into other businesses. Up in Smoke The 109-year-old company which started as Imperial Tobacco Company while the country was still under British rule, shed its reliance exclusively on tobacco 60 years into business. The company had predicted decades back that times will get tough for this business, and moved into other areas. And, its predictions have come true, affecting its flagship business. Tough regulations and taxes in the industry are posing challenges to the company’s cigarette business with over 15 popular brands that include Gold Flake, Navy Cut, Players, Scissors and Capstan. “A punitive and discriminatory taxation and regulatory regime, together with sharp increase in illegal trade in recent years, continue to pose significant operating challenges to the legal cigarette industry in the country,” ITC said in its annual report, released on June 13. The taxation on cigarettes after the implementation of Goods and Services Tax, went up by 20%. Between 2011-12 and 2017-18, the tax on cigarettes has trebled. In fact, cigarettes are the most taxed tobacco item, as it is 55 times higher than other tobacco products, effectively turning smoking, unaffordable.

As cigarette business goes up in smoke, ITC pads itself with candy and curds

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div></div></div>Bernie Sanders ripped Wells Fargo following <a href="http://www.businessinsider.com/wells-fargo-ceo-john-stumpf-senate-baking-committee-hearing-scandal-2016-9">testimony</a> by its CEO over millions of fraudulent accounts opened by bank employees."Let's be clear, the business model of Wall Street is fraud," the Vermont senator <a href="https://medium.com/@SenSanders/wells-fargos-business-model-is-fraud-d19fb6fbe0a8#.pu31ehcy2">wrote in a blog post published on Medium</a> Tuesday."There is no better example than the recently-exposed illegal behavior at Wells Fargo."During his testimony in front of the Senate Banking Committee, CEO John Stumpf admitted that he and other senior executives were made aware of the account-opening scheme in 2013.Sanders says the Wells Fargo scandal is "not an aberration," laying out the bank's <a href="http://www.businessinsider.com/why-wells-fargo-keeps-getting-into-trouble-2016-9">history of abusing its customers</a> and getting slapped with multiple ines.No major Wall Street executive has been prosecuted despite big banks having paid more than $200 billion in fines and settlements since the 2008 financial crisis, Sanders noted.The former presidential candidate, who vowed to <a href="https://berniesanders.com/issues/reforming-wall-street/">break up big Wall Street firms</a> throughout the Democratic primary, forcefully criticized what he called a"two-tier justice system" that treats the poor and the wealthy differently.<div></div>In a <a href="http://www.sanders.senate.gov/download/sanders-letter-on-wells-fargo-to-cfpb-and-occ?inline=file">letter</a> sent to financial regulators who fined Wells Fargo, Sanders asked whether any criminal inquiries were pending."Your agencies recently fined Wells Fargo $100 million, and $35 million, respectively, for illegally opening up deposit accounts and taking out credit cards for customers without their knowledge or consent," Sanders wrote."Wall Street won't change until we make it clear that no bank is too big to fail and no CEO is too big to jail." <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/joe-biden-protester-hillary-clinton-campaigning-2016-9">'My friend died': Watch this emotional exchange between Joe Biden and a protester</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="hjbDJvNTE6gjqyZA08Fn3nBfA3YI403q" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

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