Introduction
How many times have we seen a company that only cares about itself and its shareholders and puts society, the environment and even the country's economic problems aside? Because precisely that attitude is the source of many problems, problems created by the lack of interest of companies towards these variables, society, environment and economic problems. Companies must find the balance between business success and social balance, since they are not alone and no matter how much it weighs them, the society that surrounds them, which in many cases are their own clients, can determine the success or failure of the business. herself.
Unfortunately capitalism generates few rich, extremely rich and many poor, extremely poor. Large companies are generally located in areas far from the large suburbs, "far from urban areas", but very close to the lower class that has to endure environmental, visual, auditory and olfactory pollution, to say the least. Hence, companies feel they have a certain social responsibility towards the community, and in a certain way the shared value is according to (Alvarado, 2012) a readaptation of it, however they are not the same thing, since while social responsibility has a philanthropic objective, shared value seeks a competitive advantage through a business strategy.
Social responsability
(ISO, International Organization for Standardization, 2010) The international standard ISO 26000 is a guide on social responsibility, it promotes the understanding and implementation of it. It is created to work in any type of company, whether public or private; in any country, whether developed or developing and in transition economies. It is important to mention that it is a voluntary guide, not a requirement, so that companies are not obliged to comply with it and according to (Vivanco, 2012) ISO 26000 itself defines it as: “the responsibility of an organization in the face of the impacts that their decisions and activities cause society and the environment, through transparent and ethical behavior that: contributes to sustainable development, including the health and well-being of society;take into consideration the expectations of your stakeholders; comply with applicable legislation and be consistent with international standards of behavior; is integrated into the entire organization and is put into practice in its relationships "
It is based on 7 fundamental interdependent subjects, which are: Organization, labor practices, human rights, environment, fair operating practices, consumer affairs, active participation and community development.
Social responsibility must be closely related to its core business1 and at the same time be integrated with stakeholders, so that the value sought can be added, whether social, economic or environmental for both parties. In such a way that while the company in a certain way ensures its sustainability and success, it contributes to the development of the community in which it operates.
(Ubaldi, Maria Rosa Rullo, 2013) During the World Forum for the Creation of Shared Value organized by the Inter-American Development Bank and Nestlé that took place in Cartagena last November, Porter said: philanthropy is a gift, social responsibility Business is an expense and the creation of shared value has to do with opportunities, growth and productivity, which lead to sustainable development.
Shared value
Creating shared value as a result of re-conceiving products and markets according to (Porter, 2014) refers to market share, increased income and profitability obtained thanks to the social, environmental and economic benefits generated based on the goods or services of the company; On the other hand, the creation of shared value as a result of the redefinition of productivity in the value chain has to do with the improvement in internal operations that reduce costs, give access to inputs, as well as the quality and productivity obtained thanks to environmental reforms, resource optimization, investment in human capital, supplier capacity among other areas and, finally, the creation of shared value as a result of the facilitation of the development of local clusters,It implies correcting the external environment of the company by strengthening the various local suppliers, as well as the institutions and local infrastructure that support investments in the community, in order to achieve the productivity of the company.
Creation of shared value
Michael Porter and Mark Kramer devised the theory of shared value, that is, it implies the creation of social and economic value2 in the societies where companies are established, that is, for a company to prosper in the long term, the community where it is established. Develops must also prosper, but for this the company must strive to: develop goods and / or services that satisfy the requirements of society, both developed and developing countries; make the value chain more efficient and finally, optimize the conditions for the socioeconomic development of the town, that is, improve the areas with the greatest potential to seek the well-being of the community, for example: drinking water, rural development, nutrition, health and wellness,since all three are indispensable for any community.
(Alvarado, 2012) It is essential that the company that wishes to create or implement a shared value is consistent with its own organizational principles and symbolizes a responsible identity by endorsing its sustainability and behavior, however, it must also ensure that it does not contravene any type of legislature and that its conduct favors the environmental and social environment of the region, without harming the economy of the organization.
(Vivanco, 2012) Porter and Kramer state that the starting point in creating value is for companies to identify the needs of society, as well as the benefits and negative effects that their products and services can generate, and define the creation of shared value such as "the policies and operational practices that increase the competitiveness of the organization, while in a parallel way optimize the socioeconomic conditions of the communities in which it operates", in the words of (Hernández, 2013) seeks to "reinvent capitalism" and cause innovation and growth in companies, that is, create a competitive advantage that has an impact on customers, suppliers and on society itself. To achieve the above, the company must:
- Manifest responsible behavior, endorsing compliance and sustainability of the production process, Recognize the company's workforce and the various suppliers that make up the company and at the same time, improve or if possible, strengthen relations with civil society, Have as a corporate principle the Protection of the environment.
If companies are not aware of the damage they are causing to the planet, not only will they have economic losses, but it can also have repercussions in terms of supplies of raw materials and energy, hence the importance of companies starting to innovate now improve their value chain, that is, companies must find their own blue ocean3, that is, create their own market, demand and obtain higher returns by differentiating themselves from the competition.
(Vivanco, 2012) It tells us that the creation of shared value is not a redistribution of the value of the company, its purpose is to expand the scope of the social and economic value of the interest groups, call them suppliers, clients and society. In itself, the growth and development of clusters where the company is located is promoted, which gives it the possibility of increasing its efficiency, productivity and, therefore, sustainability in its production chain.
The Societé de Produits Nestlé SA or as we commonly know it, Nestlé is a company committed to shared value and has invested a lot to implement it, in such a way that (Nestlé Chile, 2011) ensures that by complying with its business principles, laws and codes of conduct are a first step to reach shared value, however sustainability is necessary, that is, the protection of the environment for the future and finally the creation of shared value, which in its case is the contribution of drinking water, nutrition and rural development for the communities where it is located. In this way, the company, as you can see, is successful in the long term, it generates value for its shareholders, which is its primary objective and at the same time creates value for the society in which it develops.
Example of shared value creation, Nestlé Chile
As part of its philosophy of creating shared value (Nestlé Chile, 2011) it permanently promotes various practices such as neighbors in action, children in action, healthy schools and the environmental sustainability program of dairy farms to contribute to improving social conditions, economic and environmental aspects of the community where it is located and at the same time strengthens the competitiveness of the company.
One of the strategies of shared value is "neighbors in action", which was born in 2007 in the community of Peñaleón, as a program of promotion, intervention and community empowerment to lead a healthy life, through good nutrition and physical activity.
After 5 years, he has achieved changes in habits towards a healthy life, the level of sedentary lifestyle, overweight and obesity have decreased in the lowest segments of the population.
Levels of shared value reinvention of products and markets Porter and Kramer assure that "the starting point in the creation of value is that companies identify the needs of society, as well as the benefits and negative effects that their products and services can generate"
Currently, society has begun to become aware of the planet and of people with fewer opportunities, in such a way that aspects such as health, social protection, housing, financial security, food and environmental sustainability have taken on great importance, hence the importance that organizations question whether their profitability and good / service provided to society are really adequate or good for society and its consumers.
The objective is for companies to be able to identify the needs of society without neglecting the pros and cons that their goods or services may have against the community where they are inserted, it should not be forgotten that these needs fluctuate based on technological advances, economic development and changes in the predilection of society. In such a way that companies must redefine their products or services to generate differentiation and replenishment in the markets or, as W. Chan Kim and Renée Mauborgne conceive it, innovate to create a new market, with a new demand without competition, but the end is himself, keep moving.
The connection between competitive advantages and social issues
First of all, you have to understand what competitive advantage is, so (economia48.com, 2009) explains that Michael Porter created the competitive advantage model and defines it as the value that a company is capable of creating for its customers, in the form of prices lower than those of competitors for equivalent benefits or by the provision of differentiated products whose revenues exceed costs. On the other hand (Villalobos, 2012) mentions that the model handles 5 fundamental forces for the industry, which it must learn to handle in order to survive in the market, which together with good decision-making increase the profitability of the organization. In such a way that the 5 forces that Porter exposes are:
Threat of new competitors and within this point, there are factors such as economies of scale, experience curve, absolute cost advantage, product differentiation, access to distribution channels, brand identification, government barriers, retaliation and unnecessary investment or capital requirements.
Threat of possible substitute products, the factors that influence this threat are availability of substitute products, price difference between the product offered and the substitute, level of differentiation perceived by the consumer between both products and costs for the customer.
Bargaining power of suppliers, the factors that influence this force are the concentration of suppliers, importance of volume for suppliers, differentiation of inputs, exchange costs, availability of substitute inputs and impact of inputs
Bargaining power of customers, concentration of customers, volume of purchases, differentiation, information about the supplier, brand identification, substitute products
Rivalry between existing competitors, the influencing factors are concentration of companies in the market, diversity of competitors, cost conditions, product differentiation, switching costs, business groups, demonstration effects, exit barriers.
On the other hand, the main social issues, according to (Vivanco, 2012) are: environmental impact, access to supply and roads, skills of workers, safety and health of workers, use of water and use of energy.
(Porter, 2014) It tells us that for each shared value opportunity, it is necessary to identify and monitor the social repercussions and the company itself in such a way that the parallel objectives are to address the social problem and at the same time optimize the performance of the organization.
By re-conceiving the products and markets, the benefits of the company are: increase in income, market share, and market growth, which leads to greater profitability, in such a way that the social results are: better customer service, better nutrition and education.
By redefining productivity in the value chain, the benefits obtained by the company are: increased productivity, reduced operating and logistics costs, assured supply, increased quality and profitability, which results in the following social results: reduction in the consumption of energy, water and raw materials, better skills of the employees and therefore an increase in their income.
By allowing the development of clusters, the benefits obtained by the company are: reduced costs, assured supply, optimization of the distribution infrastructure, better access to human resources and increased profitability, which results in a social result: better education and health, greater job creation and increased income.
Redefining productivity in the value chain
(Vivanco, 2012) Mentions that most of the environmental and social variables are affected by the organization's value chain, such as the management of working conditions, available natural resources and the principles of equality and justice in the environment labor. All this gives room for shared value since by reducing the degree of environmental pollution, costs are also reduced for concepts such as efficiency and savings in indirect expenses. However, few companies have been concerned and concerned with implementing shared value in their organizations.
Some areas of opportunity to create shared value in the value chain are: Use of energy and logistics, Use of resources, Obtaining, refers to aggressively negotiating prices with suppliers, adequate use of outsourcing, in general, increasing access to inputs and technologies to transform the productivity of both the company and its suppliers, Distribution, integrating the value chain, Employee productivity Location, refers to establishing in a sustainable way in the community where the Company impacts.
Development of clusters where the company is inserted
(Vivanco, 2012) He mentions that Porter and Kramer point out that business success is closely related to the environment that surrounds the company, on the other hand, productivity and innovation are influenced by the development of clusters, which are a set of interrelated companies and associations, whose comparative advantages based on geographical location, carry out associated industrial activities and obtain benefits as a result of their common and complementary characteristics.
Clusters are not only for profit-making organizations, since they also occur in educational institutions, trade associations and all those organizations related to the production chain.
It is important that clusters develop in an open and transparent market, hence the importance of strategic alliances to ensure efficient and reliable suppliers, in such a way that according to the theory, income would increase as well as the purchasing power of the consumers.
When organizations build clusters, a positive “snowball” effect is generated, that is, it has a multiplier effect, since sources of employment are generated and demand grows steadily, generating business and social success.
Shared value measurement process
(Porter, 2014) Although the measurement of shared value is still in its infancy, large corporations such as Nestlé and Coca-Cola are implementing the four-step process to generate additional value from measurement; This process must be integrated with the business strategy in such a way that it is not only a “simple” measurement of the company's performance.
Identify social problems, it is about identifying and prioritizing the social problems of the community where the company intends to develop, which constitute opportunities either to reduce costs, increase income or both, the product will be a list prioritizing the social problems that the company you can undertake through a strategy of shared value.
Present a justification of the case, after the identification of the social impact on one or more levels of shared value (re-conceive products and markets, redefine productivity in the value chain and allow the development of clusters), we proceed to elaborate the justification based on a prior investigation and analysis of the benefits of the shared value strategy, that is, of how progress or improvement in social matters will directly affect the performance of the organization. The costs of the strategy must be identified to make the decision to continue with it or not.
Keeping track of progress refers to making a comparison between what you want and actual progress. Tracking of inputs, financial results and performance, business activities, and all revenues and costs inherent to the strategy should be included.
Measure the results and use the knowledge acquired to generate more value, the objective in this last step is to certify the link in advance between the social benefits and those of the company and thus be able to check if there were positive repercussions for both parties
In order to generate shared value through its measurement, it is imperative to understand the social results of investments in the company, in addition to analyzing and optimizing the results of the company based on the results obtained in the social sphere.
Example of measurement of shared value, Coca-cola Brazil
Coca-Cola's collective initiative aims to create shared value by increasing the chances of obtaining employment for low-income youth, and at the same time strengthening the company's distribution channels and the brand's image with the aim of increase local sales of the product.
- Step 1-Identify the needs of society: the need to develop skills among low-income youth was identified in order to obtain a job in the future Step 2- Justify the case: Coca-Cola decided to use its value chain and together with local organizations, it trains local youth for 2 months in the activities of a retail store and links the youth with an entrepreneur with the same activity so that the youth can have work experience and give some ideas for improvement. The company's rationale was that small entrepreneurs could improve their operations with the support of the practitioner, which would lead to an increase in sales and a greater penetration among consumers in the same market segment Step 3-Track progress:Progress is measured on a monthly basis, by monitoring the interns and participating entrepreneurs. A costing of the effort deployed is also carried out to ensure its effectiveness and efficiency. Currently Coca-Cola operates 135 collectives throughout the country, each of them has 500 young students Step 4- Measure the results and use the knowledge acquired to generate more value: Coca-Cola used 4 key indicators: placement of young people in jobs, self-esteem of the boys, company sales and connection with the brand. The initiative has been very successful, approximately 30% of the interns manage to place themselves in Coca-Cola or with a partner and 10% start their own business thanks to the micro-credits granted by the same company, which is profitable to from the second year.Sales of the company's products have increased and there is a greater connection with the brand.
Conclusions
Companies in Mexico are still not aware of the importance of this great tool, it is true that it is a strong investment, but the retribution both socially, environmentally and economically for the same company is even greater.
Once companies in our country become aware that in addition to obtaining an economic benefit they can support society, without taking responsibility from the government, they will be able to be seen in a better way by society, since in many cases the consequences of their actions against nature, its own employees and in general against the environment itself, it causes them to have a decline in their profits.
Bibliography
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