Shared value. a vision of new business

Currently, people are in a cycle of distrust of companies that are established in the world today, there is a degree of anger and disappointment among consumers, some of them fight every day to obtain quality products that impact in the environment as little as possible and with it, the concern has transcended towards society in general, as well as in governments, lately the effects of climate change are making human beings continue in the same way and way of living, to which they are becoming more aware of what it causes each time they buy a product and the repercussions that obtaining it entails.

That is why large companies, society and world leaders are taking measures to reduce the impact that they have on the environment, creating awareness and resuming the idea of being a sustainable world.

This article will try to explain why it is not only necessary to create awareness in already established industries that pollute and that only take measures to make their effects achieve a minimum impact, but to go beyond Corporate Social Responsibility, since many companies do so. They take it as a matter of compensating the damages that this can cause and give a little of what the company generates as support from society.

According to Michael Porter comments in his article “Creating Shared Value” (Porter & Kramer, 2011) that the main social, environmental and economic problems; They are due to businesses and companies that only seek their own benefit, without realizing that what happens later affects competitiveness and financial growth, this, because they have their expectations set in the short term.

Companies always seek to create "value" in their products, and that is done through the value chain that Porter provided. The crisis in values is forcing companies to look internally, redefine themselves and appeal to those principles that go beyond remuneration or only cost-benefit results.

"Shared value is not social responsibility or philanthropy and not even sustainability, but a new form of economic success." (Porter & Kramer, 2011)

Background

Michael E. Porter, professor at Harvard University, who writes very frequently in the magazine called, "Harvard Business Review." He is a strategist known worldwide and for his contribution to research on the "value chain" and "Competitive Advantage." (Díaz Cáceres N., 2015)

To begin, it will be known about the contribution that Porter makes about the value chain, for which Díaz quotes him in his article and makes comments about the constitution of the value chain, which will be detailed below.

Primary activities. In this type of activity, the product, its sale and the service after its sale are physically created.

For which five primary activities are involved:

Internal logistics: some operations are located such as reception, storage and distribution of raw materials such as:

Inputs and materials are received or stored Inventories are managed and controlled or in cases returned to suppliers

Operations (production): raw materials are processed to transform them into the final product such as: o Production and packaging o Repair / maintenance of equipment o Scheduling of dispatch vehicles

External logistics: storage of finished products and distribution of the product to the consumer.

Marketing and sales: activities where customers can learn about the product such as:

Promotion / Advertising or Sales Pricing Selection of distribution channels

After-sales or maintenance service: those activities aimed at maintaining and enhancing the value of the product, through the application of guarantees such as:

Facilities Repair and replacement supplies o Training in product use o Handling complaints and claims

Secondary activities: The primary activities are supported by the following activities, hence the name of secondary.

Organizational Infrastructure - Activities that support the entire business, such as planning, accounting, and finance.

General management o Planning systems o Financial and accounting management o Handling of legal aspects o Global quality management

Human resources management: search, recruitment and motivation of staff.

Recruit and select staff o Evaluate staff o Reward system o Training and development o Internal labor relations

Technology development, research and development: cost and value generators.

Expert knowledge Technological procedure and inputs

Mark R. Kramer co-founded FSG, a global social impact consulting firm, with Professor Porter and is its CEO. He is also a Senior Scholar in the CSR Initiative at the Harvard Kennedy School of Government. (Porter & Kramer, 2011)

In 2006, they introduce the concept of Shared Value, in the article Strategy and society, for 2011 they return to the article where it explains in a different way of seeing the corporate world, it says that not all problems will be solved when integrate shared value in their companies, rather try to include this concept in order to achieve economic value in the company and in society.

Porter and Kramer make the proposal to create shared value in companies, in which their objective is to create a new business awareness where the vision of their business activities can be renewed as well as the processes, for which they will have to take into account the social environment in which it operates, in order to benefit both parties, both the company and its environment, thus there would be a balanced development for both.

Likewise, they define shared value as "The policies and operational practices that increase the competitiveness of a company, while simultaneously improving the social and economic conditions of the communities in which it operates." (Porter & Kramer, 2011)

For which they mention that shared value can be generated as long as three steps are taken that will help to focus on what they want to achieve:

Reinventing products and markets:

With new innovative products With services that solve one or several social needs Better quality existing markets

In this section it can be considered that needs that have not been covered, mainly those that have a great impact on society such as health, housing, food, social protection, financial security and reducing damage to the environment should be addressed; at the same time of the benefits and alternative effects that this type of products and services could generate. It must take into account the constant technological changes, as well as economic development and changes in the preferences of society.

Redesigning productivity in the value chain:

With better quality of products and services Improving costs Improving product reliability Improving production processes Having better distribution systems Acting together to care for nature

Many of the social and environmental variables are affected by the value chain of companies, an example of this is the use of natural resources, as well as the conditions in which their collaborators are working, etc. That is the main reason for solving this type of problem that leads to generating economic costs to the value chain, such as reduction of transport routes, reduction of plastic in its packaging, reduction of atmospheric pollutants, among others.

3. Development of clusters to support the company.

What is a cluster?

According to Porter, a cluster "is a geographic concentration of interconnected companies, specialized providers, institutions such as universities, and business associations." (Porter & Kramer, 2011)

These companies can compete among themselves but at the same time collaborate with each other, they recommend that clusters be formed for each place where they intend to develop business activity, everything that involves around them will influence the way to reduce social, educational and social deficiencies. institutional institutions, at the same time the company will benefit, since this will make a source of productivity and internal cost reduction, the clusters are made up not only by other companies, but also by everything that exists around it so that it can take it to the success.

For example, a deficiency in the education of the employees who are hired generates a cost which is reflected in productivity and lack of training, among others.

That is why, with shared value, it is intended to generate a multiplier effector where not only the company wins, but everyone that contributes with it, likewise more jobs and a demand will be generated in a sustained way, achieving success.

Below is a graphical description of shared value:

Shared value graphic description

Figure 1 Shared value (Porter & Kramer, 2011)

Creating shared value can be the initiative to provide a solution, in addition to giving results and, above all, to distributing the wealth of the countries, thereby being able to make a more efficient economic development, achieving that society is included in the processes of the value chain of companies, will provide better benefits, because at the same time economic and sustainable value will be generated in the long term, companies must assume leadership where business and society are united to build development.

Other points to consider for the creation of shared value:

The company must demonstrate responsible behavior, where it is seen that compliance and sustainability of the production process can be guaranteed Provide value to the suppliers and workers that make up the company, in addition to strengthening its relationships with society Inspect the channels of participation that exist with society and strengthen ties aimed at a long term in which everyone benefits (communities and shareholders) Preserving and caring for the environment will be a fundamental part, it must be understood that towards the future the organization has going linked to the future of the planet Identify the needs that exist in society, the benefits and prejudices that the company's products or services can cause and the negative impact on the environment.It should be considered that the needs of society are changing as new technologies are created. Meeting new needs will also require new distribution and logistics techniques. Help its suppliers in order to avoid a risk in the company with which they can facilitate production resources and access to financing, sharing technology and transmitting knowledge.

It is sad to know that governments only focus their efforts on systematizing an ambiguous capitalist structure where the support and development of each company or industry is not equitable, definitely a clear example is Mexico, which opens more companies every day, regardless of the impact social and environmental that these come to have.

Mainly groups of entrepreneurs, should be made aware when carrying out their projects to do business with a view to global growth and together with society they can make a sustainable and lasting company, in addition to providing quality products and services.

Steps to create shared value

There are five steps according to (Díaz Cáceres N., 2015) to create a company with shared value.

Social purpose of the company: define the stakeholders and the mission of the company, make a vision beyond the generation of profits, also generate development, social, economic, educational. Analysis of the environment: an analysis of the environment with which the company interacts is carried out, thus being able to define needs that exist in the society close to it. Measurement: in order for shared value and its impacts to be determined, permanent measurement is necessary. Innovation structure An innovation structure must be implemented to avoid long-term risks. Procreate with clusters: It is necessary to extend these initiatives to the largest possible number of clusters, be they beneficiary communities, academia, strategic allies or suppliers, so that the importance of the process is transmitted to the entire environment.

CSR vs. Shared value

Social responsibility versus creating shared value

Figure 2 Differences between Corporate Social Responsibility and Creating Shared Value (Porter & Kramer, 2011)

Although for many they understand that shared value and social responsibility seem to be the same, Porter and Klamer make a big difference between each of them, making their concept of going beyond CSR to be better used by companies and entrepreneurs.

Michael Porter explains 10 phrases for which he generates a competitive advantage when using the concept of shared value: (Díaz Cáceres N., 2015)

Companies today are no longer seen as solutions for society, but as problems.The relationship of the profitability of business and society has very profound implications.We went from philanthropy to CSR and sustainability and now we have to move on to creation of shared value. Today, capitalism is almost a dirty word. We have to use capitalism to create social impact. To be honest, CSR has not brought the benefits of capitalism to society. Efficiency in the economy and the social process are not opposites. Businesses must reconnect the success of the company with social progress. We must create economic value that generates social benefits beyond the natural ones of the company. Shared value is not social responsibility, philanthropy, or sustainability. It is a new way to achieve financial success.Shared value is to create economic value from the generation of social benefits. Shared value is not theory, it is already a reality. Companies that don't embrace it will be left behind.

Benefits

Some of the benefits that can be considered when including the creation of shared value in business can be:

Greater productivity Being a profitable company Competent employees and committed to the company “sense of belonging” “they feel it as part of their life and help them achieve success” Less turnover and absenteeism (because the company is committed to their interests, they look after their integrity and their health (physical and emotional) Consumers prefer sustainable companies that set an example to follow, giving greater loyalty to their products Reducing waste, energy costs, costs in the distribution of goods, among others Produces greater innovation and inspiration to make new products and processes.

Shared value a new business vision

Large companies have chosen to include the creation of shared value within their operations, and these are among the best companies in all their aspects, an example of this is UNILEVER, NESTLÉ, GRISI, GOOGLE among many more, which little by little They have been integrated as the years go by since they consider that this philosophy has worked for these companies.

One of the main problems that companies have is resistance to change, and that is why they continue to do business in the same way for more than 50 years, that is why, in their desire to be only capitalists and obtain the greatest market volume, they have only created some of them to fail.

It is time to create new thoughts of change, the growth of a society is not only due to creating jobs, but also involving society to be part of the change, while some manage to grow by creating monopolies and becoming richer, others suffer from hunger and extreme poverty, it is really sad to see that we are not really human to see for others and only see for our own benefit, no matter who may be affected by it.

That is why a change must be generated in the way of conducting business creating shared value and generating economic, social, educational and environmental gains for all those involved, only in this way could we begin to generate development in the country, although unfortunately in Mexico like the story of the crabs in the bucket, you cannot see that someone is climbing or reaching the top, there are always people who drag them so that they cannot get there.

It will be difficult to come to terms with all the companies that are now only wanting to generate money for their own benefit, rather it is to make new entrepreneurs and future entrepreneurs aware of being part of their projects to society, helping them and giving them what is necessary so that can grow together, only then can their business success be maintained in the long term.

New entrepreneurs must have a vision of the true needs that exist and stop producing only new products, which, due to how demanding and changing consumers turn out to be, may not have long-term durability, that is why, with tools Like diving into the blue ocean and looking for something that no one else has done in addition to including innovations in their way of operation and together with the shared value since its creation, they will undoubtedly generate products and services with a high impact on the world. It's just a matter of going beyond the known and risking the unknown.

conclusion

Companies have had to take measures to compensate a little for the damages caused by the production and distribution of their products, which is why, together with governments and society, they have chosen to carry out a strategy to support society and the environment with the Corporate social responsibility, but this has not been enough since they have only taken it as one more requirement, leaving aside one of its main pillars which is business ethics, for example, companies that sell cigarettes, and that their social responsibility encompasses the support for the opening of clinics and studies on diseases caused by smoking, however, they leave pending the effects that this causes to the environment, as well as the damage to third parties, without them having to buy said product.

Creating shared value is not easy or cheap, but it is a great step towards generating better business coexistence by creating clusters for the benefit of all. Win-win would generate greater development and growth for the countries.

Entrepreneurs must take into account that starting new companies with shared value will be more profitable in the long term.

According to the sustainable. Blue ocean with innovations to meet a need that exists in society.

If at least our leaders had a vision of shared value, our world would be another, where we could all grow and have better opportunities.

Thesis proposal

Analysis of the value chain for entrepreneurial projects in the Orizaba area, to integrate shared value as a competitive advantage in their development.

objective

Provide entrepreneurs with a business vision beyond producing products and services that satisfy a need, but rather solving a social problem at the same time, being aware of the impact that its operation and distribution entails.

Keywords

Value, competitive advantage, cluster, sustainable, society, business.

Thanks:

Thanks be to God, to my family for being participants in this dream, in order to complete this postgraduate degree in Administrative Engineering, but above all to CONACYT for providing support to continue my studies.

I make special mention of the National Technological Institute of Mexico, Technological Institute of Orizaba, but above all to the subject of Fundamentals of Administrative Engineering, which Dr. Fernando Aguirre y Hernández teaches, for motivating and developing our potentials in the realization of this article but above all about the knowledge that I acquire in each of the topics to be investigated.