...Policy Assignment: “Creating Shared Value” CITIBANK & HSBC 9/26/2013 D Siddhartha Reddy-014 PGDM-Finance Executive Summary How to reinvent capitalism and unleash a wave of innovation and growth by Michael Porter and Mark Kramer Shared Value is a new form of capitalism. The idea of shared value was initially explored by the authors in December 2006 HBR. Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. In the article Porter & Kramer criticize neoclassical thinking on the trade-off between societal needs and economic success, and the way the concept of ‘externalities’ have shaped corporate and policy strategy. Article says that corporations should aim at creating shared value rather than only profits; this would lead to innovation and redefining of the capitalism, which as it stands is at logger heads with the society and looks at CSR as a philanthropic act done to please others. Article also questions the current perspective of viewing maximization of economic value of firm and achieving social obligations as a tradeoff. Article says that companies do face several internal cost caused due to social harms created by the company’s activities which comes back to bite the economic value created by the companies. Shared value then has not to be looked at as ‘sharing’ value which is already created by companies with society; rather it is increasing the pie of value created by respecting the mutual...
Words: 1920 - Pages: 8
...Creating Shared Value Sean Brady Capella University October 28, 2012 Creating Shared Value In the article creating shared value the authors, M. Kramer and M. Porter discuss the current state of business value creation; and the efforts that need to be taken to create shared values. Currently businesses primarily concern themselves with profits and view value creation in such a way that they do not fully take advantage of their full potential. Additionally, the government has implemented policies that have only exasperated the drive from shared value creation. “Shared values form the basis for all relationships wherever we go in business and in life, we bring are own values along as well. When others share our values, this becomes a powerful and attractive force to bind us closer together. Shared values form the very basis for every relationship.” ("Shared," 2012) This is the very point that is made in this article; the business should not focus only on itself. When making decisions the business should look at its community and what it can do for that. “The concept of shared value resets the boundaries of capitalism. By better connecting companies' success with societal improvement, it opens up many ways to serve new needs, gain efficiency, create differentiation, and expand markets. The ability to create shared value applies equally to advanced economies and developing countries, though the specific opportunities will differ. The opportunities will also differ markedly...
Words: 634 - Pages: 3
...Unit 3: Creating Shared Value 1 Running Head: Unit 3: Creating Shared Value Global Economic Environment Shirl Williams Unit 3: Creating Shared Value Unit 3: Creating Shared Value 2 Many companies came about out of a need or a means for products to be sold and or obtained, but often companies could not thrive on their own. Many companies were able to help the community grow by supporting and patronizing one another. So if a restaurant needed fresh produce it would use the local farmer or produce market to obtain the produce in turn the farmer might eat at the restaurant. The farmer and the restaurant might hire locals and neighbors to help the community. That would not only build each others business but build the community. Porter and Kramer advise, “A shared value perspective, focuses on improving growing techniques and strengthening the local cluster of supporting suppliers and other institutions in order to increase farmers’ efficiency, yields, product quality, and sustainability. This leads to a bigger pie of revenue and profits that benefits both farmers and the companies that buy from them.” (p. 5) When you have the support of those who are around you and share those same values, it’s difficult for all not to grow. Shared value raises the income level of society. There is a saying that states, “Where there is unity there is power.” That is a shared value system. Someone else said, “If everyone...
Words: 597 - Pages: 3
...Kramer define “shared value”? Contrast this with the approach advocated by Friedman, and the “corporate responsibility’ mindset which followed. According to Porter and Kramer, shared value involves creating economic value in a way that also creates value for society by addressing its needs and challenges. Shared value is a new way to achieve economic success. (Harvard Business Review) Friedman talks about social responsibilities of a company. According to him, social responsibility of the organization is only towards its shareholders. Its main focus is to engage in activities to maximize profits and return some portion of it to the shareholders as a reward for the risk they took in investing in the company. 2. Is “Fair Trade” consistent with the concept of shared value? Is traditional philanthropy consistent with this concept? Why or why not? Yes. Fair value is consistent with the concept of shared value where it focuses on economic value along with addressing the needs of the society. Traditional philanthropy is more like making donations, focusing on meeting the needs of the society through monetary gifts. So, I would say, philanthropy is not exactly consistent with shared value. 3. Porter and Kramer discuss three ways in which shared value is created. Discuss each and provide at least one example of each approach. There are three ways to create shared value. * Reconceiving products and markets. * Redefining productivity in the value chain ...
Words: 690 - Pages: 3
...A company's culture is often buried so deeply inside rituals, assumptions, attitudes, and values that it becomes transparent to an organization's members only when, for some reason, it changes." ~ Rob Goffee Managementul valorii și cultura organizației Cea mai importantă resursă a unei organizații sunt angajații săi. Este un postulat spre care nu ne vom îndrepta critic în acest eseu. Spre deosebire de paradigmele dezvoltate în decurs de trei veacuri în care resursele materiale și sau financiare constituiau inputul cel mai important, al unei organizații sau întreprinderi, paradigma actuală în ce privește managementul resurselor îl constituie prioritatea acordată resursei umane. Pe plan global din ce în ce mai multe companii depind de procesul cunoașterii și implicațiile sale ca resursă primară în dezvoltarea sau chiar supraviețuirea acestora ca organizații solide. Competiția globală este dură. Atragerea, angajarea și păstrarea celor mai talentați oameni în organizație este cheia dezvoltării acesteia. Managementul defectuos în HR provoacă pierderi imense companiilor. Studiile arată că jumătate dintre lideri eșuează în primele 18 luni de “misiune” și, în general, jumătate din totalul noilor angajați părăsesc locul de muncă în primele 120 de zile.. Angajații motivați și activi permit companiilor să fie cu cel puțin 20% mai profitabile decât competitorii. Optimizarea tuturor resurselor dintr-o organizație este obligatorie. De aceea este critic să fie angajați candidați...
Words: 1954 - Pages: 8
...rates currently running at 98.4 percent, and the bank has been profitable in every year of its existence except 1983, 1991 and 1992. The socially-oriented organizations in the Grameen Group now range from the country’s largest phone company to one supplying affordable healthcare. The Group’s on-going experience (over almost 30 years) of building firms whose purpose is to alleviate poverty has led to the emergence of the concept of ‘social business’, which can be viewed as still being under construction. Established multinational companies (MNC) have recently shown some interest in the Grameen experience and in its fight against poverty as part of a more general emphasis on corporate social responsibility (CSR). However shareholder value maximization remains the rule in the capitalist system, and e clearly e the reconciliation of this with social objectives is often problematic. Thus, although advocates of CSR like to propose that companies should be measured by a ‘triple bottom line’ of financial, social and environmental benefits, ultimately only one bottom line usually matters: financial profit. However, research has shown that, if managed strategically, CSR projects can indeed pay off, both socially and financially.1 In the midst of the current financial and economic crisis, some companies have begun to question their role more fundamentally and seem to be awakening to social change issues. Some pioneering established companies have sought to implement more pro-active ...
Words: 4189 - Pages: 17
...Corporations can create shared value by using their core capabilities in ways that contribute to both social progress and economic success. Some developing countries have experienced phenomenal economic growth, but that growth has not been inclusive. In recent decades, developing countries have experienced a rapid rate of economic growth. Although this has led to higher incomes and better health for many Developing countries, we still have far to go to make this growth truly inclusive. Developing countries are expected to fall short on several Millennium Development Goals: by 2015, it is expected that 40 percent of Developing countrie’s children will remain undernourished, and Developing countries will have progressed only halfway toward its goals for decreasing infant mortality. Inequality, poor public health, and environmental degradation will increasingly constrain their economic growth. Corporations play a critical role in achieving inclusive growth. Government is often seen as the answer to society’s problems, but spending by the Government of Developing countries alone will likely be insufficient to address these critical issues. governments can encourage contributions from the private sector by passing legislation and using its purchasing power to create a supportive, enabling environment. Philanthropy can also help catalyze change, but charity has a limited ability to sustainably achieve scale. The private sector, however, possesses skills and technologies necessary...
Words: 7401 - Pages: 30
...Incorporating sustainability and Responsible Business Behaviour into the Core Business by Creating Shared Value: Inclusive Business Core Values Our mission is to create an initiative that combines social responsibility, sustainability and business strategy Training Proposed Strategies Teach them basics of selling Commercial knowledge and book keeping To make them full fledged micro-entrepreneurs Affect Make them economically and socially independent Cognition Belief in win-win model for both: the company and rural people Action Providing necessary infrastructure and training to ladies Outcomes Improved living standards of poor families increased brand awareness and loyalty in rural areas increasing bottom-line by improving sales growth Profit Sharing Key Attitudinal Barriers Reluctant Profit Sharing-Putting One self before Others Proposed Strategies Increased social awareness coupled with practical experience. Affect Awareness and empathy toward problems plaguing the country Cognition Belief in society first Action Rural empowerment, CSR activities, Rural livelihood generation Outcomes Increased rural penetration Greater CSR activities Inclusive growth Increased per capita income Perception of Selling Method Proposed Strategies Good packaging Hoardings/advertisements Improved communication of selling points Affect Improved perception of brand Goodwill and trust Cognition ...
Words: 420 - Pages: 2
...Commercial and social enterprises must be re-integrated together. Most companies are still stuck in the "corporate social responsibility" mode of thinking, where social issues are marginalized. We lack is an integrity guide framework. Pathway to solve the problem is that the principle of shared value: companies create value for society to deal with social challenges, meet the social needs of the process, thus creating significant economic value. Business must reconnect business success with social progress. Opportunity already exists, but companies ignored. Business have become commercial, not because of its charitable donations, but because the business is to deal with the most pressing issues of social powerful force. It is the time to meet the new concept of capitalism, which means companies must be redefined as creating shared value, not profit itself. This will drive the next wave of innovation and global economic growth (Porter & Kramer, 2011). Learning how to create shared value is the best business opportunity to regain legitimacy. Literature review Companies that create value for society need to deal with social challenges, to meet the social needs, creating significant economic value (Porter & Kramer, 2011). The commercial must reconnect...
Words: 2723 - Pages: 11
...Creating Shared Value by Michael E. Porter and Mark R. Kramer January, 2011 The capitalist system is under siege. In recent years business increasingly has been viewed as a major cause of social, environmental, and economic problems. Companies are widely perceived to be prospering at the expense of the broader community. Even worse, the more business has begun to embrace corporate responsibility, the more it has been blamed for society’s failures. The legitimacy of business has fallen to levels not seen in recent history. This diminished trust in business leads political leaders to set policies that undermine competitiveness and sap economic growth. Business is caught in a vicious circle. A big part of the problem lies with companies themselves, which remain trapped in an outdated approach to value creation that has emerged over the past few decades. They continue to view value creation narrowly, optimizing short-term financial performance in a bubble while missing the most important customer needs and ignoring the broader influences that determine their longer-term success. How else could companies overlook the well-being of their customers, the depletion of natural resources vital to their businesses, the viability of key suppliers, or the economic distress of the communities in which they produce and sell? How else could companies think that simply shifting activities to locations with ever lower wages was a sustainable “solution” to competitive challenges? Government...
Words: 1443 - Pages: 6
...Nestlé is now the largest food company in the world , thanks to its $92 billion in revenue and $9.4 billion in profit, owning nearly 8.000 brands . Being aware of the size and the influence of this multinational company is crucial for understanding why it is so important to talk about its impact on both the society and the planet. Nestlé shares on its website the annual report on corporate social responsibility (which is referred to as CSV, “Creating Shared Value,” a concept first introduced by M.R. Kramer), this paper will analyze the data presented in the 2015 version of the document. A letter from the CEO and the chairman introduces the annual report. This letter has an institutional approach and serves as “cover page” of the document,...
Words: 934 - Pages: 4
...Shared Value Creation; Revolution or Rhetoric? Abstract The concept of Creating Shared Value(CSV), was made popular in a Harvard Business Review(2011)by M. Porter and R Kramer defines as, policies and operational practices that enhance the competitiveness of the company while transforming social problems which is related to the corporation into business opportunities and simultaneously yield greater profitability(Porter, Kramer,2011). As it sounds, it is a seductive promiseand has so far received obscene attention in the business markets and among business educators. Both authors seeks to regain trust in “business and society who has pitted against each other so long” …”Learning how to create shared value is our best chance to legitimize business”(Porter, Kramer, 2011) is how companies were viewed as prospering at the expense of the community. With both aims of evaluating and analysing the concept of creating shared value, in this paper, we suggest how CSV can help businesses harness its full potential by simply creating economic value while simultaneously creating value for society. Focusing on making the right kind profits, companies should look beyond just merely maximum profits but also integrates social benefits at the same time; starting a positive cycle which reconnects business with society. In CSV, it represents a new approach for businesses moving beyond CSR approaches in the past. However promising this bold new approach is, it has also created polarized...
Words: 2295 - Pages: 10
..."Ultimately, all human beings share core universal values, and apparent differences are merely variances of practices or interpretation." The Pursuit of Universal Shared Values Throughout the twentieth century, philosophers have struggled to understand the nature of human morality, namely, the underlying values that form it. Which factors form the basis of our conception of what is ‘right’ and ‘wrong’—‘good’ and ‘bad’? Do we all share certain values, or some approach, that helps us come about our moral judgments? Is there a universal ‘good’ and ‘bad’? This is really the crux of it, is it not? This essay will present the argument that the pursuit of human happiness—or at least perceived happiness—is the only value that can be considered universal amongst all human beings, and that the differences and conflicts between us stem from different interpretation’s of happiness and the means that should be taken toward its actualization. That is to say that something is ‘good’ to the extent to which it enables perceived happiness, or, disables a lack of perceived happiness. The universality of this value will be suggested to extend to all sentient beings, regardless of human intelligence and the capacity to reason. This essay’s thesis is in agreement with the proposed statement that, “ultimately, all human beings share core universal values, and apparent differences are merely variances of practices or interpretation,” however not to the extent that the ideas of philosophers John...
Words: 1473 - Pages: 6
...It is a central tenet of advocates of the concept of corporate social responsibility (CSR) that corporations receive a social sanction from society that requires that they, in return, contribute to the growth and development of that society. There is little argument as to the existence of this sanction but considerable debate as to whether it requires more of the corporation than the obvious: enhancing the society by creating and delivering products and services consumers want, providing employment and career opportunities for employees, developing markets for suppliers, and paying taxes to governments and returns to shareholders and other claimants on the rents generated by the corporation. For those with a narrow conception of CSR, the corporation has little, if any, obligation to the society other than the creation of economic rents that can accrue to the stakeholders with recognized rights to those rents. For those with an expansive view of CSR, the corporation should serve as an instrument of public policy by other means. For those seeking a compromise, CSR is something in between these two extremes. The discourse between the two extremes has, to some extent, taken on the characteristic of a religious debate, since little fact or science has been brought to bear that would reveal what the costs and benefits of CSR truly are. This has arisen not simply because many of those involved in the debate have a vested interest in the outcome and “From...
Words: 1038 - Pages: 5
...Server Virtualization and Consolidation - A case study Ravi G Singh Consulting IT Specialist – System p rsingh@us.ibm.com Special Notices This document discusses Server Virtualization and Consolidation designed and implemented by the author for an IBM Customer. This document is presented “As-Is” without any warranty, guarantee or assurances of any kind, either express or implied. IBM does not assume responsibility for the statements expressed herein and it reflects the opinions of the author. If you have questions about the contents of this document, please direct them to the author at rsingh@us.ibm.com. Author is not responsible for errors in this document that may result in any kind of inaccuracies. Acknowledgements Thanks to John R Hock, IBM Certified IT Specialist – System p - Advanced Technical Support Americas (ATS) for reviewing this White Paper. Thanks to the customer and IBM team for their contribution and support to this project. Trademarks The following terms are registered trademarks of International Business Machines Corporation in the United States and/or other countries: AIX, AS/400, DB2, IBM, Micro Channel, MQSeries, Netfinity, NUMAQ, OS/390, OS/400, Parallel Sysplex, PartnerLink, POWERparallel, RS/6000, S/390, Scalable POWERparallel Systems, Sequent, SP2, System/390, ThinkPad, WebSphere. The following terms are trademarks of International Business Machines Corporation in the United States and/or other countries: DB2 Universal Database, DEEP BLUE...
Words: 6610 - Pages: 27
