...Creating Shared Value Sean Brady Capella University October 28, 2012 Creating Shared Value In the article creating shared value the authors, M. Kramer and M. Porter discuss the current state of business value creation; and the efforts that need to be taken to create shared values. Currently businesses primarily concern themselves with profits and view value creation in such a way that they do not fully take advantage of their full potential. Additionally, the government has implemented policies that have only exasperated the drive from shared value creation. “Shared values form the basis for all relationships wherever we go in business and in life, we bring are own values along as well. When others share our values, this becomes a powerful and attractive force to bind us closer together. Shared values form the very basis for every relationship.” ("Shared," 2012) This is the very point that is made in this article; the business should not focus only on itself. When making decisions the business should look at its community and what it can do for that. “The concept of shared value resets the boundaries of capitalism. By better connecting companies' success with societal improvement, it opens up many ways to serve new needs, gain efficiency, create differentiation, and expand markets. The ability to create shared value applies equally to advanced economies and developing countries, though the specific opportunities will differ. The opportunities will also differ markedly...
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...Corporations can create shared value by using their core capabilities in ways that contribute to both social progress and economic success. Some developing countries have experienced phenomenal economic growth, but that growth has not been inclusive. In recent decades, developing countries have experienced a rapid rate of economic growth. Although this has led to higher incomes and better health for many Developing countries, we still have far to go to make this growth truly inclusive. Developing countries are expected to fall short on several Millennium Development Goals: by 2015, it is expected that 40 percent of Developing countrie’s children will remain undernourished, and Developing countries will have progressed only halfway toward its goals for decreasing infant mortality. Inequality, poor public health, and environmental degradation will increasingly constrain their economic growth. Corporations play a critical role in achieving inclusive growth. Government is often seen as the answer to society’s problems, but spending by the Government of Developing countries alone will likely be insufficient to address these critical issues. governments can encourage contributions from the private sector by passing legislation and using its purchasing power to create a supportive, enabling environment. Philanthropy can also help catalyze change, but charity has a limited ability to sustainably achieve scale. The private sector, however, possesses skills and technologies necessary...
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...Incorporating sustainability and Responsible Business Behaviour into the Core Business by Creating Shared Value: Inclusive Business Core Values Our mission is to create an initiative that combines social responsibility, sustainability and business strategy Training Proposed Strategies Teach them basics of selling Commercial knowledge and book keeping To make them full fledged micro-entrepreneurs Affect Make them economically and socially independent Cognition Belief in win-win model for both: the company and rural people Action Providing necessary infrastructure and training to ladies Outcomes Improved living standards of poor families increased brand awareness and loyalty in rural areas increasing bottom-line by improving sales growth Profit Sharing Key Attitudinal Barriers Reluctant Profit Sharing-Putting One self before Others Proposed Strategies Increased social awareness coupled with practical experience. Affect Awareness and empathy toward problems plaguing the country Cognition Belief in society first Action Rural empowerment, CSR activities, Rural livelihood generation Outcomes Increased rural penetration Greater CSR activities Inclusive growth Increased per capita income Perception of Selling Method Proposed Strategies Good packaging Hoardings/advertisements Improved communication of selling points Affect Improved perception of brand Goodwill and trust Cognition ...
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...Creating Shared Value by Michael E. Porter and Mark R. Kramer January, 2011 The capitalist system is under siege. In recent years business increasingly has been viewed as a major cause of social, environmental, and economic problems. Companies are widely perceived to be prospering at the expense of the broader community. Even worse, the more business has begun to embrace corporate responsibility, the more it has been blamed for society’s failures. The legitimacy of business has fallen to levels not seen in recent history. This diminished trust in business leads political leaders to set policies that undermine competitiveness and sap economic growth. Business is caught in a vicious circle. A big part of the problem lies with companies themselves, which remain trapped in an outdated approach to value creation that has emerged over the past few decades. They continue to view value creation narrowly, optimizing short-term financial performance in a bubble while missing the most important customer needs and ignoring the broader influences that determine their longer-term success. How else could companies overlook the well-being of their customers, the depletion of natural resources vital to their businesses, the viability of key suppliers, or the economic distress of the communities in which they produce and sell? How else could companies think that simply shifting activities to locations with ever lower wages was a sustainable “solution” to competitive challenges? Government...
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...Nestlé is now the largest food company in the world , thanks to its $92 billion in revenue and $9.4 billion in profit, owning nearly 8.000 brands . Being aware of the size and the influence of this multinational company is crucial for understanding why it is so important to talk about its impact on both the society and the planet. Nestlé shares on its website the annual report on corporate social responsibility (which is referred to as CSV, “Creating Shared Value,” a concept first introduced by M.R. Kramer), this paper will analyze the data presented in the 2015 version of the document. A letter from the CEO and the chairman introduces the annual report. This letter has an institutional approach and serves as “cover page” of the document,...
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...It is a central tenet of advocates of the concept of corporate social responsibility (CSR) that corporations receive a social sanction from society that requires that they, in return, contribute to the growth and development of that society. There is little argument as to the existence of this sanction but considerable debate as to whether it requires more of the corporation than the obvious: enhancing the society by creating and delivering products and services consumers want, providing employment and career opportunities for employees, developing markets for suppliers, and paying taxes to governments and returns to shareholders and other claimants on the rents generated by the corporation. For those with a narrow conception of CSR, the corporation has little, if any, obligation to the society other than the creation of economic rents that can accrue to the stakeholders with recognized rights to those rents. For those with an expansive view of CSR, the corporation should serve as an instrument of public policy by other means. For those seeking a compromise, CSR is something in between these two extremes. The discourse between the two extremes has, to some extent, taken on the characteristic of a religious debate, since little fact or science has been brought to bear that would reveal what the costs and benefits of CSR truly are. This has arisen not simply because many of those involved in the debate have a vested interest in the outcome and “From...
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...CREATING SHARED VALUE BUSINESS POLICY ASSIGNMENT - 2 Executive Summary Creating Shared Value - Reinventing Capitalism By Michael Porter & Mark Kramer According to Michael Porter and Mark Kramer, "Creating Shared Value" can be defined as Policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. The concept of shared value which focuses on the connections between societal and economic progress has the power to unleash the next wave of global growth. Shared value involves creating economic value in a way that also creates value for society by addressing its needs and challenges. The purpose of the corporation must be redefined as creating shared value, not just profit per se. This will drive the next wave of innovation and productivity growth in the global economy. Moving Beyond Trade‐Offs Solving social problems has been ceded to governments and to NGOs. Corporate responsibilities programs a reaction to external pressure have emerged largely to improve firms’ reputations and are treated as a necessary expense. Fair trade aims to increase the proportion of revenue that goes to poor farmers by paying them higher prices for the same crops. Though this may be a noble sentiment, fair trade is mostly about redistribution rather than expanding the overall amount of value created. The Roots of Shared Value A business needs a successful community...
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...Creating Shared Value MBA6008, Global Economic Environment June 6, 2014 The article “Creating Shared Value“ is a business concept created by the Harvard Business Review and written by Michael Porter and Mark Kramer on January 1, 2011. The article deals with the idea of innovating the purpose of a corporation and their relationship to the social environment in order to identify unknown customer needs and to expand the relationship with the communities in order to be mutually dependent. Porter and Kramer urge leaders to recognize that "shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success". They advocate that creating shared value will drive the next wave of innovation and growth in the global economy (Porter & Kramer, 2011). Several large corporations have already started implementing a shared value initiative – such as Google, IBM and Wal-Mart (Porter at el, 2011). Shared value creates economic value for the corporation through innovations that address society's needs and challenges. Companies create shared value in three ways: 1. By redefining products and markets 2. By redefining productivity in the value chain 3. By enabling local cluster development 1Arguably, products and markets are the greatest unmet needs in the global economy (Porter at el, 2011). Too many companies fail to reevaluate their strategy and ask themselves if their product is right for the customer. 2A company’s...
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...Commercial and social enterprises must be re-integrated together. Most companies are still stuck in the "corporate social responsibility" mode of thinking, where social issues are marginalized. We lack is an integrity guide framework. Pathway to solve the problem is that the principle of shared value: companies create value for society to deal with social challenges, meet the social needs of the process, thus creating significant economic value. Business must reconnect business success with social progress. Opportunity already exists, but companies ignored. Business have become commercial, not because of its charitable donations, but because the business is to deal with the most pressing issues of social powerful force. It is the time to meet the new concept of capitalism, which means companies must be redefined as creating shared value, not profit itself. This will drive the next wave of innovation and global economic growth (Porter & Kramer, 2011). Learning how to create shared value is the best business opportunity to regain legitimacy. Literature review Companies that create value for society need to deal with social challenges, to meet the social needs, creating significant economic value (Porter & Kramer, 2011). The commercial must reconnect...
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...Porter’s article Creating Shared Values was an eye opener to businesses on how effective or less effective their business strategies and economic structure were. Companies were so busy trying to get short term financial performance that satisfying the customers’ needs and wants was far from in reach. This caused a tremendous number of trade-offs between economic efficiency and social progress. The theory creating shared value was designed to bring a balance between business organizations, customers and the health of the communities. There was a great need to make sure that all the different connections between social and economic views would dominate the new ideals in economic growth and capitalism. Capitalism is an unparalleled vehicle for meeting human needs, improving efficiency, creating jobs, and building wealth. But a narrow conception of capitalism has prevented business from harnessing its full potential to meet society’s broader challenges (Porter & Kramer, 2011 pg. 62-77). They feel that the new outlook on capitalism has sparked society to see things differently to cater to society’s needs because it is growing and larger, while customers, staff and younger people are requesting the companies to step up to the plate. By companies redesigning their strategies this will drive the next wave of innovation and productivity growth in the economy. Companies are stuck in “Social Responsibility” mindset. The solution lies in “Shared Value” which involves creating economic...
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...Shared Value Creation; Revolution or Rhetoric? Abstract The concept of Creating Shared Value(CSV), was made popular in a Harvard Business Review(2011)by M. Porter and R Kramer defines as, policies and operational practices that enhance the competitiveness of the company while transforming social problems which is related to the corporation into business opportunities and simultaneously yield greater profitability(Porter, Kramer,2011). As it sounds, it is a seductive promiseand has so far received obscene attention in the business markets and among business educators. Both authors seeks to regain trust in “business and society who has pitted against each other so long” …”Learning how to create shared value is our best chance to legitimize business”(Porter, Kramer, 2011) is how companies were viewed as prospering at the expense of the community. With both aims of evaluating and analysing the concept of creating shared value, in this paper, we suggest how CSV can help businesses harness its full potential by simply creating economic value while simultaneously creating value for society. Focusing on making the right kind profits, companies should look beyond just merely maximum profits but also integrates social benefits at the same time; starting a positive cycle which reconnects business with society. In CSV, it represents a new approach for businesses moving beyond CSR approaches in the past. However promising this bold new approach is, it has also created polarized...
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...The Big Idea: Creating Shared Value Rethinking Capitalism by Michael E. Porter and Mark R. Kramer January–February 2011 ‐ http://hbr.org/2011/01/the‐big‐idea‐creating‐shared‐value/ar/pr What Is “Creating Shared Value”? - Policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. The concept of shared value—which focuses on the connections between societal and economic progress— has the power to unleash the next wave of global growth. An increasing number of companies known for their hard‐nosed approach to business—such as Google, IBM, Intel, Johnson & Johnson, Nestlé, Unilever, and Wal‐Mart—have begun to embark on important shared value initiatives. But our understanding of the potential of shared value is just beginning. There are three key ways that companies can create shared value opportunities: • By reconceiving products and markets • By redefining productivity in the value chain • By enabling local cluster development Every firm should look at decisions and opportunities through the lens of shared value. This will lead to new approaches that generate greater innovation and growth for companies—and also greater benefits for society. Creating Shared Value & ‘Developing countries’ - Solving social problems has been ceded to governments and to NGOs. Corporate responsibilities programs—a reaction to external p...
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...CREATING SHARED VALUE IN THE SUPPLY CHAIN-‐ THE NESTLE COCOA PLAN SUBMITTED BY: KUSHAL RAMESH (001753444) SUPPLY CHAIN MANAGEMENT 6210 CREATING SHARED VALUE IN THE SUPPLY CHAIN-‐ THE NESTLE COCOA PLAN INTRODUCTION Nestle was founded in 1866 by Henri Nestle. It has its headquarters in Vevey, Switzerland. Nestle is today the world’s leading nutrition, health and wellness company. Nestle employs 339000 people worldwide and has 442 factories in 86 countries. Nestle’s products include baby food, bottled water, breakfast cereals, coffee and tea, confectionery, dairy products, ice cream, frozen food, pet foods, and snacks. Creating Shared Value: Nestle aims to create value for society and shareholders in the areas where the company can have the biggest impact-‐ nutrition, water and rural development. These are core to its ...
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...Developing a Shared Vision Developing a Shared Vision at Grand Park Alternative School Research has shown that a critical factor among successful leaders is a clear and focused sense of values (Peters, 1987). I believe that becoming an effective leader is an inside-out process. Therefore the first step in implementing a change in my work environment is ensuring that my values are appropriate for student success at my school (Sarason, 1982). Without firm core beliefs, any leader is perceived as inconsistent and untrustworthy and unlikely to be willingly followed. So answering the internal question “Who am I?” is a crucial to developing a shared vision at my school. Who am I? During the course of my personal “value” inventory I determined that I am an educational leader who promotes the success of all students by facilitating the development, articulation, implementation, and stewardship of learning that is shared and supported by the school community. I strive to reach a balance of head, heart and hands that will allow me to engage and to inspire students and teachers to accomplish phenomenal things without hurting their chances for success. With my personal values identified, I can better initiate a process of determining who we are as a school and how things will be done here (Hord, Rutherford, Huling-Austin, & Hall, 1987). The Shared Vision The next step is to create a shared vision with others. The purpose of creating a shared vision is to involve...
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...Kramer define “shared value”? Contrast this with the approach advocated by Friedman, and the “corporate responsibility’ mindset which followed. According to Porter and Kramer, shared value involves creating economic value in a way that also creates value for society by addressing its needs and challenges. Shared value is a new way to achieve economic success. (Harvard Business Review) Friedman talks about social responsibilities of a company. According to him, social responsibility of the organization is only towards its shareholders. Its main focus is to engage in activities to maximize profits and return some portion of it to the shareholders as a reward for the risk they took in investing in the company. 2. Is “Fair Trade” consistent with the concept of shared value? Is traditional philanthropy consistent with this concept? Why or why not? Yes. Fair value is consistent with the concept of shared value where it focuses on economic value along with addressing the needs of the society. Traditional philanthropy is more like making donations, focusing on meeting the needs of the society through monetary gifts. So, I would say, philanthropy is not exactly consistent with shared value. 3. Porter and Kramer discuss three ways in which shared value is created. Discuss each and provide at least one example of each approach. There are three ways to create shared value. * Reconceiving products and markets. * Redefining productivity in the value chain ...
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