NEW WORLD DEVELOPMENT: BALANCING SUSTAINABILITY AND
FINANCIAL STABILITY CASE STUDY SOLUTION
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SYNOPSIS
On January 2, 2023, Adrian Cheng, executive vice-chairman and chief executive officer (CEO) of New
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World Development Co. Ltd. (New World Development), faced a pivotal moment. With travel between
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Hong Kong and Mainland China set to resume, opportunities and challenges emerged. Despite Cheng’s
environmental, social, and governance (ESG) efforts, concerns over New World Development’s financial
sustainability loomed, exacerbated by negative cash flow. Should ESG spending be cut to fuel post-
lu
pandemic investments? Could New World Development leverage its COVID-19 ESG image as a
competitive advantage? As Cheng grappled with these questions before the board meeting on February 23,
So
2023, the company balanced financial stability with the potential for sustainable innovation.
OBJECTIVES
• Understand sustainability management practices and the impacts of sustainable values in developing
an organizational strategy.
• Assess a company’s mission and values and identify its key competitive advantages.
• Understand how to prioritize ESG spending when a company has poor financial performance relative
to competitors.
• Analyze how a company addresses value propositions, value creation, value delivery, and value
captured to sustain its business by applying the sustainable business model innovation framework.
• Formulate a strategy that benefits both the company and society/communities.
The Case Solution Starts From page 6
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ASSIGNMENT QUESTIONS
1. Did New World Development have competitive advantages in 2022 and early 2023? If so, what were they?
2. How has New World Development developed its value proposition, value creation and delivery, and value
capture for a sustainable business model? Would you have taken the same approach? Justify your answer.
The Case Solution Starts From page 6
,3. Suggest possible strategy(ies) to innovate New World Development’s sustainable business model after
the COVID-19 pandemic.
4. How would you prioritize spending in the four key business priorities mentioned in case Exhibit 3
(Green, Wellness, Smart, Caring)? Why?
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ANALYSIS
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1. Did New World Development have competitive advantages in 2022 and early 2023? If so, what
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were they?
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So
The Case Solution Starts From page 6
,2. How has New World Development developed its value proposition, value creation and delivery,
and value capture for a sustainable business model? Would you have taken the same approach?
Justify your answer.
(see Exhibits -2 and -3).
First, New World Development sets and defines a clear value proposition—i.e., the description of a
sustainable value. Cheng and his employees have always adopted a 3Ps (profit, planet, and people) approach
in their business units and marketing communications. The firm has created a shared value and vision called
Sustainability Vision 2030 (SV2030) and shows a strong organizational culture to achieve its SDGs. For
example, it publicly discloses the mechanisms and results of stakeholder engagement and has a
sustainability committee to govern and lead the firm.
Second, New World Development creates sustainable value for a wider audience and considers essential
resources, activities, and partnerships to deliver it. All of these activities are disclosed to the public with
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transparency and guarantee ethics. For example, the firm has initiated Build for Good and Share for Good to
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address social or economic problems during an economic downturn; provides cybersecurity training to
employees to protect customer data and privacy; implements programs to improve energy efficiency and water
m
efficiency and reduce waste; and assesses and monitors the social and environmental impacts of its suppliers
and other stakeholders in the supply chain. It also offers flexible work arrangements for employees.
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Lastly, measuring the impacts of sustainable initiatives can support the company’s business. For example,
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So
The Case Solution Starts From page 6
, EXHIBIT -2: FRAMEWORK FOR SUSTAINABLE BUSINESS MODEL INNOVATION
VALUE PURPOSE / GOVERNANCE:
VALUE PROPOSITION
PROPOSITION GOVERNANCE Mission/Ethics/Transparency
VALUE CUSTOMER INTERFACE STAKEHOLDER
CREATION (Segment/Customer ENGAGEMENT: SALES
AND VALUE Relationship/Channel) & MARKETING
DELIVERY
KEY ACTIVITIES STAKEHOLDER
ENGAGEMENT:
REPORTING AND
COMMUNICATION
KEY RESOURCES OPERATIONS: PEOPLE
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KEY PARTNERS STAKEHOLDERS:
Investors, Shareholders,
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Suppliers, Government,
External Agencies,
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Media Academic
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OPERATION:
CORPORATE FINANCE
tio
lu
So
The Case Solution Starts From page 6
FINANCIAL STABILITY CASE STUDY SOLUTION
e
pl
m
Sa
SYNOPSIS
On January 2, 2023, Adrian Cheng, executive vice-chairman and chief executive officer (CEO) of New
n
World Development Co. Ltd. (New World Development), faced a pivotal moment. With travel between
tio
Hong Kong and Mainland China set to resume, opportunities and challenges emerged. Despite Cheng’s
environmental, social, and governance (ESG) efforts, concerns over New World Development’s financial
sustainability loomed, exacerbated by negative cash flow. Should ESG spending be cut to fuel post-
lu
pandemic investments? Could New World Development leverage its COVID-19 ESG image as a
competitive advantage? As Cheng grappled with these questions before the board meeting on February 23,
So
2023, the company balanced financial stability with the potential for sustainable innovation.
OBJECTIVES
• Understand sustainability management practices and the impacts of sustainable values in developing
an organizational strategy.
• Assess a company’s mission and values and identify its key competitive advantages.
• Understand how to prioritize ESG spending when a company has poor financial performance relative
to competitors.
• Analyze how a company addresses value propositions, value creation, value delivery, and value
captured to sustain its business by applying the sustainable business model innovation framework.
• Formulate a strategy that benefits both the company and society/communities.
The Case Solution Starts From page 6
, e
pl
m
Sa
n
tio
lu
So
ASSIGNMENT QUESTIONS
1. Did New World Development have competitive advantages in 2022 and early 2023? If so, what were they?
2. How has New World Development developed its value proposition, value creation and delivery, and value
capture for a sustainable business model? Would you have taken the same approach? Justify your answer.
The Case Solution Starts From page 6
,3. Suggest possible strategy(ies) to innovate New World Development’s sustainable business model after
the COVID-19 pandemic.
4. How would you prioritize spending in the four key business priorities mentioned in case Exhibit 3
(Green, Wellness, Smart, Caring)? Why?
e
pl
m
ANALYSIS
Sa
1. Did New World Development have competitive advantages in 2022 and early 2023? If so, what
n
were they?
tio
lu
So
The Case Solution Starts From page 6
,2. How has New World Development developed its value proposition, value creation and delivery,
and value capture for a sustainable business model? Would you have taken the same approach?
Justify your answer.
(see Exhibits -2 and -3).
First, New World Development sets and defines a clear value proposition—i.e., the description of a
sustainable value. Cheng and his employees have always adopted a 3Ps (profit, planet, and people) approach
in their business units and marketing communications. The firm has created a shared value and vision called
Sustainability Vision 2030 (SV2030) and shows a strong organizational culture to achieve its SDGs. For
example, it publicly discloses the mechanisms and results of stakeholder engagement and has a
sustainability committee to govern and lead the firm.
Second, New World Development creates sustainable value for a wider audience and considers essential
resources, activities, and partnerships to deliver it. All of these activities are disclosed to the public with
e
transparency and guarantee ethics. For example, the firm has initiated Build for Good and Share for Good to
pl
address social or economic problems during an economic downturn; provides cybersecurity training to
employees to protect customer data and privacy; implements programs to improve energy efficiency and water
m
efficiency and reduce waste; and assesses and monitors the social and environmental impacts of its suppliers
and other stakeholders in the supply chain. It also offers flexible work arrangements for employees.
Sa
Lastly, measuring the impacts of sustainable initiatives can support the company’s business. For example,
n
tio
lu
So
The Case Solution Starts From page 6
, EXHIBIT -2: FRAMEWORK FOR SUSTAINABLE BUSINESS MODEL INNOVATION
VALUE PURPOSE / GOVERNANCE:
VALUE PROPOSITION
PROPOSITION GOVERNANCE Mission/Ethics/Transparency
VALUE CUSTOMER INTERFACE STAKEHOLDER
CREATION (Segment/Customer ENGAGEMENT: SALES
AND VALUE Relationship/Channel) & MARKETING
DELIVERY
KEY ACTIVITIES STAKEHOLDER
ENGAGEMENT:
REPORTING AND
COMMUNICATION
KEY RESOURCES OPERATIONS: PEOPLE
e
pl
KEY PARTNERS STAKEHOLDERS:
Investors, Shareholders,
m
Suppliers, Government,
External Agencies,
Sa
Media Academic
n
OPERATION:
CORPORATE FINANCE
tio
lu
So
The Case Solution Starts From page 6
