Michael Porter is an important businessman, well known also as the father of strategy or father of the field of modern strategy born in the United States in 1947.
He is the leading writer on different topics such as: Competitive strategy, competitiveness and the economic development of nations, states and regions, and the application of the principles of competition to social problems such as health, the environment and corporate responsibility.
He is the author of 18 books and more than 125 articles. He has a different way of thinking led to the development of new initiatives that have had a great long-term impact in Central America.
How to generate shared value?
Among the best known contributions of Michael Porter to the Administration, is the development of a new term that he called Shared Value:
“They are business practices that increase the competitiveness of the business while improving the social, environmental and economic conditions of the communities in which it operates” (Porter, 2008).
Shared value suggests that benefits that are tied together in a social purpose can enable companies to grow while advancing in society. Frame the company's mission and goals in a new way. All winnings are not equal. Those in which society advances are better and those who are detrimental to society are inferior. The concept of shared value and its label advances in the practice of management by objectives and can change the relative perception of business and its role in creating social good.
Importance of shared value
For the Chamber of Commerce of Bogotá, shared value is mainly important in knowing how it is used correctly. Shared value is the maximization of company profits from the generation of economic, social and environmental value among stakeholders (Bogotá Chamber of Commerce, 2008).
Clusters
The word Cluster comes from the English language and it is literally translated into Spanish as a group or cluster (Aaker, 2001). This term is mainly used to address a concentration of interconnected companies and institutions in the economic activity they carry out, geographically close to each other. Cluster participants work jointly and collaboratively in identifying and improving economic, environmental and social conditions. They are a way of materializing the principle of governance.
Value chain model
Michael Porter proposed in his article for the Harvard Business Review a new model called the Value Chain Model, where he describes how the activities of a company develop. Which is composed of different links that form an economic process.
The value chain begins with the raw material and reaches the distribution of the finished product. Value is added in each link, which is the amount that consumers are willing to pay for a product or service.
Then a cycle is created where it is possible to optimize the production process, reducing costs and seeking efficiency in the use of resources are usually the main objectives.
The main result of a value chain is that the company manages to expand its image, making it possible to achieve a strategic advantage.
Value chain categories
Within the value chain, two types of activities that produce added value to the organization are categorized, which are primary activities and support activities.
- Primary activities: They are those that encompass the activities of the physical creation of the product, and there are 5 primary ones:
- Logistics o Operations o External logistics o Marketing and sales o Service
Within these 5 primary activities, activities related to the reception, storage and distribution of raw materials are carried out. Within the operations are the activities related to the processing and transformation of raw materials into the final product form. External logistics refers to the storage and distribution of finished products. Marketing is primarily about disseminating the main characteristics of the product to the media so that buyers can buy the product. And finally the service that is in charge of the activities associated with the provision of services to enhance or maintain the product.
- Support activities: they are divided into 4 different categories:
- Supply: which is the function of buying supplies or raw materials. Technology development: its main function is to group activities in a general way in efforts to improve the product and the process. Organization infrastructure: can be planning, accounting and finances, which are activities that provide support to the entire company. Human resources management: it is the search, hiring, training and development of personnel.
Although its scope is not that great, it also has the potential to affect social problems and influence the strategic decisions of organizations (Kramer, 2011).
Help with social programs, such as:
- Have substance and impact Draw on company assets and capabilities Adjust company and business values Contribute, in part, by enhancing the brand, both externally and internally.
conclusion
Shared value consists of making a profit for the purpose of launching initiatives that have the dual purpose of making profits and creating value in the business-related community from the start. The development of clusters is very important, since always within the shared value we work to improve the economic, environmental and social conditions of the region.
One of the most important and useful challenges for companies today is that it is necessary to innovate and always make the right changes to remain valid among consumers, since today's globalization means that only companies with sufficient skills can stand out in the market, and thus become a sustainable company.
Bibliography
- Aaker, D. (2001). Creating Shared Value vs. Leveraged Social Programs. Harvard Business Review, 14-15. Chamber of Commerce of Bogotá. (2008). Retrieved from http://www.ccb.org.co/Preguntas-frecuentes/Clusters-y-Valor-CompartidoKramer, M. (2011). Shared Value. Harvard Business Review, 1-2 Porter, ME (2008). Competitive strategy: Techniques for the analysis of industrial sectors and competition. Mexico: Grupo Editorial Patria; thirty-eighth impression.
Thesis topic
Implement the shared value strategy as a tool to boost the competitiveness of the company.
Thesis objective
Improve the social, environmental and economic conditions of the communities where the company operates, as a plan of the shared value method in the organization.
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