The way of managing a company, as well as the needs that arise over time, have been changing. Taking into account that each time the resources in the environment are less, apart from the fact that macroeconomic difficulties are more lasting and frequent, companies must have another approach, not only in making money, but they must be interested in contributing something to society and the improvement of the environment, in order to have a better future for the next generations.
Michael Porter and Mark Kramer in 2011 mentioned something about business that goes like this: “The competitiveness of a company and the health of the communities where it operates are strongly intertwined. A business needs a successful community, not only to create demand for its products, but also to provide critical public assets and an environment that supports the business. A community needs successful businesses that provide jobs and wealth creation opportunities for its citizens. "
The projects to create shared value are a commitment to doing the right thing and in the long term, they are a winning strategy, so we must continue supporting sustainable businesses that add value to the communities in which they operate.
All this originates from the formation of a global economy without a parallel development of global public institutions to regulate it and the awareness of the environmental impact of economic activity has changed society's expectations about the conduct of companies. Therefore, since there are no common standards for all countries or a global authority, society has mobilized through non-governmental organizations, in order to denounce bad practices through social networks.
Then the shared value aims to renew the business strategy with the aim of expanding business possibilities while contributing to improve the standard of living of the companies' stakeholders (Pes Angel 2015. Four-leaf clovers. Ed LID). In short, it focuses on the win / win philosophy for both the organization and its environment.
Companies can create opportunities to generate shared value in three main ways: rethinking products and markets, redefining productivity and the value chain, and developing local clusters.
RECOGNIZE PRODUCTS AND MARKETS
You have to develop a product or service that meets a social need. There is a huge opportunity to open up new markets serving clients who are generally not very well taken into account, where they can focus on focusing on the health sector, better housing, helping the elderly, better nutrition, less environmental damage, creation of new fuels, etc.
This gives way to innovation either to redesign or create new products and / or services capable of satisfying these needs, which at some point may become marginalized.
Business results and social results when applying Shared Value
REDEFINE PRODUCTIVITY IN THE VALUE CHAIN
The value chain is a form of business activity analysis through which we decompose a company into its constituent parts, seeking to identify sources of competitive advantage in those value-generating activities. This competitive advantage is achieved when the company develops and integrates the activities of its value chain in a less expensive or better differentiated way than its rivals.
This point is based on increasing the productivity of the company or its suppliers, addressing the limitations, social and environmental in the value chain. An example is Walmart, by reducing packaging and improving delivery, it saved $ 200 million in distribution costs, while increasing the number of weekly shipments.
Some of the most important ways that shared value is reinforced in the value chain are shown in the following areas:
- Energy use and logistics Resource use Supply Distribution Employee productivity Location
The value chain displays the total value, and consists of the value and margin activities (www.webyempresas.com).
Margin: It is the difference between the total value and the collective cost of performing the value activities.
Value Activities: These are the different activities carried out by a company. They are divided into two broad types:
Primary Activities: The primary activities in the value chain are the activities involved in the physical creation of the product, its sale and transfer to the buyer, as well as post-sale assistance. They are in turn divided into the five generic categories.
Internal logistics: The first primary activity in the value chain is internal logistics. Companies need to manage and administer in some way the activities of receiving and storing the raw materials necessary to make their product, as well as the way to distribute the materials.
Operations: The next stage in the value chain is operations. Operations take the raw materials from inbound logistics and create the product. Naturally, the more efficient the operations of a company, the more money the company can save, providing added value in the bottom line.
External Logistics: After the product is finished, the next activity in the value chain is outbound logistics. This is where the product leaves the center of production and is delivered to wholesalers, distributors, or even end consumers depending on the company.
Marketing and Sales: Marketing and sales is the fourth primary activity in the value chain. Here you have to be careful with advertising expenses, which are a fundamental part of sales.
Services: The final activity in the value chain is service. Services cover many areas, ranging from the management of any facility to customer service after the sale of the product. Having a strong service component in the supply chain provides customers with the necessary support and trust, which increases the value of the product.
Support Activities: In the Michael Porter Value chain, support activities are those that sustain the primary activities and support each other, providing purchased inputs, technology, human resources, and various company-wide functions. The dotted lines reflect the fact that sourcing - purchasing - technology and human resource management can be associated with specific primary activities, as well as supporting the entire chain.
Results of Shared Value for the company and the social environment
DEVELOPMENT OF LOCAL CLUSTERS
Its structural conditions (related companies, suppliers, public goods, educational quality, institutions, etc.) can be beneficial or harmful for each company. It can make an invaluable contribution by helping to build better niches for industrial specialization through initiatives that improve structural conditions.
Strong local clusters with capable suppliers can improve company productivity by providing greater supply chain efficiencies with less environmental impact and better access to expertise.
The success of all of them lies in the infrastructure and companies that surround it. Innovation and productivity are influenced by the geographic concentrations of firms, related companies, logistics infrastructure services, among others.
Developing a local cluster or niche of expertise helps strengthen the link between the success of a business and the success of the surrounding community.
Benefits of developing Shared Value
HOW TO DEVELOP SHARED VALUE
According to Mark Kramer and Smith, there are five steps to develop shared value, these are:
- See social needs as job opportunities Trigger specific innovations Rethink employee roles Measure to unlock shared value Redefine the purpose of the company
However, there are problems that arise when developing the shared value strategy. One of them is that there is no single solution for social issues, nor is the position of each stakeholder the same. Second, the company runs the risk of being involved in the political and social debate on the different alternatives, on a discussion that is not part of its objective. The third is that there are no win / win solutions.
To measure shared value, Porter mentions four phases:
PHASE 1: IDENTIFY THE SOCIAL ISSUES TO ADDRESS
At this stage, the problems that society is currently facing must be identified, choose the unprotected sectors and prioritize them in order to solve them little by little through shared value, at first special attention is paid to what that can be classified as urgent.
PHASE 2: CARRY OUT THE BUSINESS CASE
In this phase a report is made, this writing must contain the objectives, justification, possible costs, methodology, goals and all the planning related to the implementation of the shared value.
PHASE 3: MONITOR THE EVOLUTION OF PROGRESS
This stage aims to measure the achievement of the proposed objectives, the report prepared in step 2 can be taken as a reference.
PHASE 4: MEASURE RESULTS AND USE THE DATA TO DEVELOP NEW VALUE
In this last step, the results achieved are validated, if the derivations of the activities were positive, the budget can be authorized to continue generating value.
SHARED VALUE AND CORPORATE SOCIAL RESPONSIBILITY
According to the secretariat of economy, corporate social responsibility is defined as the active and voluntary contribution to social, economic and environmental improvement by companies, with the aim of improving their competitive and value-added situation and their added value. With this definition, it is similar to that of shared value, but they have different approaches even though they contribute towards the same direction.
Shared value (CVC) should replace corporate social responsibility (CSR) as a guide for companies' investments in their communities. CSR is primarily focused on reputation and has a limited connection to the business, which makes it difficult to justify and sustain in the long term; while CVC takes advantage of the unique resources of a company to create economic value creating social value, and is an integral part of the profitability and positioning of a company. Here is a comparison table, where the differences of both are shown.
| CORPORATE SOCIAL RESPONSIBILITY | SHARED VALUE |
| Courage: do good. | Value: economic and social benefits in relation to costs. |
| Citizenship, philanthropy, sustainability. | Joint creation of value between the company and the community. |
| Discretionary or in response to external pressure. | Integral part of the competencies. |
| Unrelated to profit maximization. | Part of profit maximization. |
| The agenda is determined. | The agenda is specific. |
| Impact limited by company footprint and budget. | Realign the entire budget of the company. |
CONCLUSION
Shared value in companies is an innovative and very interesting strategy, since with this the environmental elements that surround it are benefited, satisfying the needs that are emerging in society and in the environment, such as job creation, reforestation. of forests, less pollution, development of events for young people, among others.
If we compare this new way of approaching the objectives of the company, with the objectives of decades ago, there is a great difference due to the concern of social welfare, in the same book of the goal of Goldrath he mentions that the objective of any organization is the to earn money, and if he is partially right, because if he does not win then he would not stand on his own and go bankrupt, although we must not focus on making money, if there are habits and customs that harm the environment where they are.
Observing the shared value and corporate social responsibility, it is difficult to know which actions fall into shared value and which fall into social responsibility, in my opinion, some actions can fall within these two concepts, since by more action of philanthropy and support of the environment is done so that they also recognize this organization that contributes in the social environment, and thus has better prestige.
GRATITUDE
I want to first of all thank my parents, since while I did not have the support of Conacyt, they supported me financially, while I was here in Orizaba.
To Conacyt for the support they are giving me and my colleagues so that we can continue studying a postgraduate degree, the institution and postgraduate academic body, without them I would not have prepared adequately to be able to reach the first semester. To Dr. Aguirre of the FIA subject, for being a professor with a teaching approach very different from that of most of the professors that I have had throughout my student life. To my colleagues, since until now we have been united and we support each other if one does not understand the issues or to deliver any documentation.
BIBLIOGRAPHY
Gonzales Herrera 2011. Shared value and its importance in the business world
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www.gob.mx/se/articulos/responsabilidad-social-empresarial-32705
www.luisarimany.com/la-cadena-de-valor/
www.webyempresas.com/la-cadena-de-valor-de-michael-porter/
www.webyempresas.com/que-es-el-valor-compartido/
King Núñez 2012. Shared value. Michael Porter's theory.
Pes Angel 2015. Four-leaf clovers. Ed LID
Rojas Gutierrez 2016. Concept of shared value by Michael Porter.
