It is well known today and since time immemorial that companies have had as their main objective to earn money at any cost, however there are many factors on which they must focus in order to achieve this goal, that is why in this In the increasingly changing world, organizations must have a greater focus on their workers, the community that surrounds them, the environment and others, and in order to achieve that organizations comply with the aspects just mentioned and others Different strategies must be approached to reach the goal on the ideal path, thus reducing some factors such as unnecessary resources and downtime or leisure.
That is why Michael Porter saw the need to create the concept of shared value so that all organizations that wish to apply it can have the economic success they seek without neglecting the social responsibility they have with the environment that surrounds them.
WHAT IS SHARED VALUE?
Seen in a general way, the concept of shared value is when an organization sees itself in the task of creating some type of benefit for society and the environment that surrounds it, giving value and benefit to the organization as well. This is how a company must recognize the success they have had, focusing on the progress of society.
However, if we adhere to the definition of the creators of this concept, which are Porter and Kramer, we can say that “the creation of shared value are: the operational policies and practices that improve the competitiveness of a company, while helping to improve the economic and social conditions of the communities where it operates. Creating shared value focuses on identifying and expanding the connections between economic and social progress. Shared value recognizes social needs and not just conventional economic needs, they define markets.
Even so, companies do not have social welfare as their main ideology, importing only their own benefit, striving for the financial growth of the organization having a short-term benefit, neglecting that organizations that have some interest in the welfare of society can generate a profit and long-term success.
However, it is necessary to mention that the creation of shared value is not the solution to all the problems of companies or society as a whole, but it does achieve the power to have mutual economic value.
In this way, it is known that there are two ways which can be used to generate shared value in the following ways:
- Reinventing products and markets, redefining productivity in the value chain (Díaz Cáceres & Castaño, 2013)
Below is a brief explanation of what each of the ways in which shared value can be created encompasses.
REINVENTING PRODUCTS AND MARKETS
Within this area, what organizations must do to focus on different aspects that society has to satisfy in order to be comfortable, among which are health, housing, nutrition, help the elderly, improvement of financial security, lower environmental impact. That is why within the ideology of CVCAn invitation is made to those in charge of the companies to see themselves in the task of carrying out some innovation in their products or in their distribution methods. In the same way, the senior managers of the organizations are encouraged to take an interest in the needs of society in order to have a plus or a differentiation in the market.
Usually focusing on the needs of markets that are not paid as much attention, requires that the products which are being traded in that area be designed or improved or even that the distribution processes be modified. By making this type of modifications, different types of results can be obtained, including that innovation can be applied to different types of markets such as emerging and traditional markets.
An example that can be taken of this type in order to cover the market is the microcredits that can be provided to the population to counteract poverty or the needs of a country or population sector in a specific area. Among the examples that can be given within this type of product innovation is that of a bank in Bangladesh which was established so that it could provide bank loans to poor people in the country, this bank was founded in the year 1983 by Muhammad Yunus.
Little by little this idea of microcredits has been adopted by different banking organizations in different countries around the world.
REDEFINING PRODUCTIVITY IN THE VALUE CHAIN
The string is a method defined in the same way by Michael Porter in his book
"Competitive Advantage" which was published in the year 1985; This concept has been widely used due to its great impact in the field of strategic planning analysis.
This aims to be able to maximize the value of organizations by reducing costs. What could be said in other words, that companies acquire value for customers, which in other words is establishing an acceptable margin between those who accept to pay for a product or service and the costs that are involved in acquiring the offer.
However, this concept in practice has brought with it a reduction in the technological processes for the elaboration of a product, directly affecting the quality of the products, including the generation of higher costs due to the change of processes to the companies. This is why Michael Porter indicated in 2011 that to avoid this it is necessary to include CVC in the value chain, which helps to recognize that companies are affected by many social issues such as:
- Natural resources Water Health Safety at work Equal opportunities in jobs (Vidal, 2011)
CORPORATE SOCIAL RELATIONSHIP AS A PRECESSOR OF CVC
Before you can make a comparison between CSR and the CVC must know where the corporate social relationship comes from and what it is.
"Corporate social responsibility is a term that, applied to the business sphere, deals with a responsibility of an ethical nature, understood as the responsible management of business organizations." (finance.com, 2013)
The RCS is that ideology established by Michael Porter which establishes all those responsibilities that a company must assume before society, since all these responsibilities are required by the law of each country, because they are part of its function or business organizations they adopt it as part of them in order to distinguish themselves from the other organizations with which it competes in a given market.
CSR, after being a factor that was imposed by the laws of the countries, has become such an important ideology for corporations that it has become a priority for many business leaders. However, for this ideology to be applied in a correct way, it is necessary to monitor and pressure the organizations, among those who most pressure organizations to carry out these activities are the government, different groups of activistsand means of communication to guarantee that organizations will respond to the social consequences that their activities unleash on the environment and on society itself. However, the efforts by the different groups that have just been mentioned have not been entirely favorable due to two circumstances that have arisen.
- Confrontations between business and society, when the two are completely independent, pressure companies to think about CSR in generic ways, rather than in a way appropriate to the strategy of each firm. The authors propose new ways of looking at the relationship between business and society, which does not threaten corporate success and social welfare as a zero-sum game. (Díaz Caseres & Castaño, 2013)
It is for these two fundamental aspects that Porter and Kramer six years later create the Creation of Shared Value (CVC), with which organizations are expected to adhere in a more responsible way to the needs of human society.
COMPARISON BETWEEN CSR AND CVC
As mentioned previously, the application of CSR was not as easy as the authors hoped when publishing it, however years later they implemented a new ideology which would bring with it the ability to solve all application problems that were difficult to follow. with the previous model; Below is a comparative table of what each of the Porter and Kramer ideologies consists in general aspects.
COMPARISON BETWEEN CSR AND CVC
As could be seen in the previous diagram, there are a large number of differences between each of the processes established by Porter and Kramer, mainly observing that the benefits in the CVC are a little broader than those that can be denoted in the RSC; Among the factors that stand out most in this differentiation is that the CVC has a greater focus on what social communities are and what they need.
EXAMPLE OF APPLICATION OF CVC IDEOLOGY
As previously seen, the ideology of creating shared value brings many benefits both to the company and to society and it is because of them that some companies worldwide have chosen to apply CVC within their organizations.
Such is the example of Nestlé, which is a company dedicated to the creation of different types of food products, among which is a wide range of brands, however, what they focus on is the development of the following products:
- MilkPapillasCerealsCereal barsCoffeeIce creamCulinariesChocolatesPet foods
It is important to note that this company of Swiss origin has chosen Porter's ideology within its daily activities, promoting the importance of society and its needs for them.
“Creating shared value is our way of doing business and our way of connecting with society. At Nestlé we are convinced that in order to grow, it is necessary for the communities we serve and with which we work to also prosper; a healthy population, a stable economy, and optimal business performance are mutually reinforcing. For more than 140 years, at Nestlé we have supported this philosophy with initiatives that promote rural development and environmental care; as well as the nutrition, health and well-being of consumers. " (Nestlé, 2013)
As can be denoted in the ideology of the Nestlé company, the idea of applying the CVC Porter principle is because they have a very particular interest in the environment that surrounds them as well as in their clients trying to provide the best sustainability of the environment., rural and all the factors that can be found with respect to the health of society.
Nestlé focuses in more detail on six aspects that they consider general for a correct application of the CVC, which are:
- NutritionWaterEnvironmentRural developmentOur peopleResponsible sourcing
A brief description of each of the aforementioned concepts will be mentioned below.
NUTRITION
Within the nutrition section, they support the infant sector, focusing on the section on children in the breastfeeding stage with the support of APROLAM
In the same way, they are interested in that children at an early age do not consume too many sugars which can lead to a state of obesity, that is why 98% of their products are low in saturated and trans fats, sodium and added sugars.
And in the same way, they have formulated about 130 products to improve the nutritional profile of the people who consume them.
WATER
Within this section, Nestlé seeks to reduce water consumption in its plants, thus conceiving a 41% savings per ton of product. That is why they have managed to save 363,000 m 3 of water by 2013.
ENVIRONMENT
Within this section, they have managed to optimize the consumption of natural resources to 50% in the Toluca plant, which is now supplied with coffee bagasse. Likewise, now 95% of the waste they generate is reused in some production cycle inside and outside Nestlé plants. And they have also managed to stop generating 35% of total CO 2 thanks to the use of wind energy.
RURAL DEVELOPMENT
In this section Nestlé has managed to allocate more than 89 million pesos a year to optimize the development of rural communities. In the same way, in 2013, 59 million pesos have been allocated to promote milk production.
OUR PEOPLE
In this regard, the objective of Nestlé is to keep its employees happy while maintaining their rights as people intact, in the same way they do not promote the work of infants in key raw materials and also seek the safety and protection of the health of the employees.
RESPONSIBLE SUPPLY
Nestlé's objective in this section is to be able to ensure that the supply methods are applied in a responsible manner, following a methodology within which it begins with the teams that are dedicated to purchasing tasks and, as a consequence, is executed by the suppliers, thus guaranteeing compliance and continuous improvement of the requirements that Nestlé makes of its suppliers. Among the issues that should be highlighted and maintained in this segment is maintaining health and safety, continuing with established labor standards, maintaining business integrity and preserving the environment.
CONCLUSION
As the aspect created by Michael Porter and Kramer could be seen, it is an ideology that should be implemented by all companies worldwide and for which there should be organizations which will ensure that this concept will be carried out in a responsible and bold so that it could be guaranteed that society had a benefit to such a degree that it was somewhat comparable with the benefits obtained by business organizations.
REFERENCES
- Díaz Caseres, N., & Castaño, CA (August 8, 2013). org. Retrieved on February 4, 2016, from http://www.spentamexico.org/v8n2/A5.8(2)82-100.pdfcom. (October 24, 2013). finance.com. Retrieved on February 4, 2016, from http://www.finanzas.com/aula-accionista/20131024/responsabilidad-social-corporativa-2526954.htmlNestlé. (2013). com.mx/csv. Retrieved on February 5, 2016, from https://www.nestle.com.mx/csvPorter, M. (2011). Creating Shared Value. Harvard Business Review, 17 Vidal, I. (2011). Porter and Kramer's Principle of Shared Value. Barcelona: CIES-University of Barcelona.
CVC: Creation of Shared Value
Plus: Feature that adds to normal or what corresponds
CSR: Shared social responsibility
Activist: Who actively participates in the propaganda of the social group to which he belongs fighting for social or political changes.
APROLAM: Maternal Prolactance Association
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