Introduction
In today's changing world, SMEs are the most affected and prone to disappearing because they do not change or adopt new strategies as quickly as the environment demands, fortunately new theories, strategies and very promising philosophies have emerged in recent years that apparently, the application of these in companies will become their lifeline, for this reason it is vitally important to know more about these new trends, which on this occasion is the shared value, created by Michael Porter and Mark Kramer, it will be seen how this theory demands a change of three hundred and sixty degrees of the company and everything that makes it up, and that the implementation of it brings with it a wide range of benefits for all those involved, of course, its implementation in companies is not an easy task.
How did shared value come about?
It all started with philanthropy, since the help that was wanted was provided to others without expecting anything in return, then it turned to assistance, with which a little support was provided to people without solving their underlying problems, later came social marketing with which it was intended to influence the behavior of society to increase its well-being, later came corporate social responsibility and with it the creation of foundations by companies to support social causes and finally the shared value arrived.
The term shared value was used for the first time in the Harvard business magazine, in an article called "Strategy and Society: The link between competitive advantage and corporate social responsibility" at the end of 2010, this being taken up and explained at the beginning. of the year 2011, in an article written by Michael E. Porter and by the engineer and business philosopher Mark R. Kramer, at the Kennedy School of Harvard University, called “ Creating Shared Value: Redefining Capitalism and the Role of organization in society ”. Porter and Kramer are recognized as the fathers of shared value within business strategy.
Michael Eugene Porter
What is shared value?
Shared value is a revolutionary theory that involves making a three hundred and sixty degree change in everything related to the company, since companies must redefine their products and their value chains, to satisfy social needs and at the same time generate greater income for them. Porter and Kramer defend shared value and say that shared value or Shared Value is a novel way of managing the company aimed at creating value for all those involved and not only for the entrepreneur and shareholder.
This implies that companies generate a change in their way of thinking and acting, support the community, suppliers and the environment to solve their problems and that these contribute to improve the corporate situation and therefore generate extra value to the company represented in a good image and an organizational prestige that will produce a magnificent business reputation that makes the difference against competing industries.
How to create shared value in organizations?
Porter and Kramer propose the virtuous circle company-society, which involves that the operational methods and practices increase the competitiveness of a company, and at the same time modernize the economic and social conditions of the communities in which it works, to induce the transformation of the company, destroy the “win win” model by changing it to “win, share and win”.
For a company to meet the virtuous circle, it requires:
• Externalize a responsible and honest behavior, which guarantees the maintenance of the balance between the company and the environment in the production process.
• Give value (support in problematic situations) to the suppliers and employees involved and consolidate relations with society.
• Make long-term investments that benefit the community and the company's shareholders.
• Caring for and safeguarding the environment since any company is closely related to the future of the planet.
• Change the mindset of all company personnel including CEOs in order to implement this circle.
Porter and Kramer state that, for the creation of the virtuous circle between the company and the community, there are 3 routes or paths that a company can take. Each of these routes are part of the virtuous circle of company-society shared value, since the theory expresses that by improving in one area, new areas of opportunity are generated in the others (Trujillo Arias CI, 2012).
These routes are:
• Redesign of products and markets: companies must first identify all the social needs, benefits and damages that the products or services produced by the company can cause to verify if and what changes should be made.
• Redefinition of productivity in the value chain: today there are many companies that try to contribute to the improvement and preservation of the environment by making changes in factors such as raw materials, energy, logistics, location, resources.
• Development of clusters1 in local companies: this is because the companies are not self-sufficient and require others to remain.
Companies that use shared value
Nestle
Nestlé is the best and clearest example of shared value in a company, some of their contributions are mentioned below.
Rural Development (Nestlé, Rural Development, 2012)
Within this theme, different activities and support programs are carried out for the rural sector, mainly for primary producers. The supports consist of preparation of techniques, credits, and negotiation agreements that allow improving and strengthening the income of producers and their permanence in their activities. Among the products that are supported are:
Coffee
• Support for orchards, all this thanks to technical and administrative training for owners and staff. All this will allow increasing the variety of producers.
• Benefited states: Veracruz, Puebla, Chiapas, Toluca, Guerrero.
• Support for the coffee sector in Tezonapa Veracruz.
• Creation of Shared Value in Numbers: An investment of 898 million pesos in a huge coffee plantation in Toluca, 4000 small producers in the rural sector have been supported and approximately 4 million species have been improved (King Nuñez, 2012).
Milk (Nestlé, 2012)
• Continuous improvement in milk production processes.
• Among the main achievements in this production sector are: Importation of livestock approximately 2,300 units, 4,300 favored owners, 230 million pesos in investment, support programs, credits and training, increase in productivity in the last decade in 238%.
Environment and water (Nestlé, Environment, 2012)
Supporting the ecosystem is essential, which is why Nestlé, through the creation of shared value, has undertaken the task of carrying out activities in favor of the environment such as:
• Formation of the NEMS system (Nestlé Environmental Management System), which is a project through which the development and advances in the natural environment that are located in the infrastructure of Nestlé and its associates can be inspected.
• Nestlé's main achievements in this area are: Reduction in water waste by 46% in a period of 8 years.
• 39% decrease in energy expenditure in a period of 7 years.
• 75% recycling of surplus resources in production in the last 3 years.
Continual improvement:
• Certification of the type of: Clean industry
• Processing plants in water treatment
• Reforestation at the Santa María Puebla facilities.
• Director and creator of the GEMI and ECOCE projects
Nestlé has achieved achievements in the modifications and variation of products, adapting them to the needs of sectors of the population such as:
• Manufacture of products reduced in fat, sugar.
• Addition of vitamins and nutrients in the products.
Nestlé has created the Nestlé Fund for Nutrition Foundation and thereby achieved:
• Investment of approximately eighty million pesos in the foundation
• Support for professional study programs in the area of nutrition and obesity
• Talks about nutritional issues
• Preparation of content on the subject of food and nutrition.
Benefited through the creation of shared value
The main beneficiaries in the creation of shared value by Nestlé are (Nestlé, 2012):
Advantages of shared value
Implementing shared value in companies brings with it many advantages such as:
- Preservation of the environment
- The loyalty and unconditional support of your employees
- The improvement of the quality of life of the communities
- The awareness of people
- Lower costs
- Increase in the productivity of the company, among others.
conclusion
The application of shared value is initially taking place in transnational companies and with this it was possible to see how many benefits have been obtained in these years, however it is necessary that SMEs are also interested and encouraged to introduce shared value in their companies, Since with this we all win and it is proven that it is a good option and change that brings with it multiple advantages, also people in general can and must join this new theory, since with this we will encourage SMEs to venture in the same way. This theory still needs to grow more but without a doubt it is going very well.
Note: important videos related to this topic are attached.
Thesis: implementation of shared value in company X.
Objective: analyze organization X and implement shared value in it to obtain greater benefits.
Bibliography
King Nuñez, KI (March 5, 2012). Gestiopolis. Retrieved on October 11, 2012, from gestiopolis.
Nestle. (October 11, 2012). Nestle. Retrieved on October 11, 2012, from Nestlé:.
Trujillo Arias, CI (March 9, 2012). Gestiopolis. Retrieved on October 11, 2012, from gestiopolis.
Wikipedia. (September 20, 2012). Wikipedia. Retrieved on October 10, 2012, from wikipedia:
Footnote:
1. The clusters according to the online dictionary are a set of companies, agents or organizations that transgress in the development of a product or in the presentation of a service and that are geographically close.
