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Creating Shared Value

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Melanie Roy

on 9 November 2012

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Transcript of Creating Shared Value

by Michael E. Porter and Mark R. Kramer Creating Shared Value Who is aware of the
concept of
"Creating Shared Value?" Some more things to remember about creating Shared Value CSV vs. CSR
Government regulation and shared value Creating Shared Value - "Creating shared value is a strategy for developing the future market while also strengthening economies, the market place, communities and corporate coffers

- Identify and expanding connections resulting in an increasing profit for an entity

- Companies must be 'good' corporate citizens and comply with societies standards

- Being environmentally responsible is NOT expensive
- Companies can innovate numerous ways
- Technologies
- Operating methods
- Management Approaches Video This video will roughly explain exactly what shared value is and the importance of it Some Key Points... - There is sufficient link in needs of a company and the needs of society

- Businesses rely on a community to create demand

- Community relies on successful businesses to provide jobs and wealth which create opportunity for its citizens

- Companies can stretch their market, consumers and differentiate themselves

- Creating shared value is about expanding the total pool of economic and social value 1.Reconceiving products and markets 2.Redefining productivity in the Value chain 3. Building Supportive industry cluster development Creating Shared Value Vs. Corporate Social Responsibility Government Regulation and Shared Value 5 Key Regulation which allow for shared value

1. Clear measurable social goals
2. Set performance standards, but not the methods to achieve them
3. Define the phase in periods for meeting standards
4. Universal measurements and performance standards
5. Efficient and timely reporting of results Necessary for well functioning Markets “Successful corporations need a healthy society”

-Identifying the points of intersection

-Choosing which social issues to address

- Creating a corporate social agenda

-Integrating inside-out and outside in practices

-Creating a social dimension to the value proposition The Key Forward - Integrating Business and Society “efforts to find shared value in operating practices and in the social dimensions of competitive context have the potential not only to foster social and economic development but to change the way companies and society think about each other..”

Businesses need to move away from “corporate social responsibility” and think in terms of “corporate social integration” Cluster development Success is partly driven by other firms and the community that surrounds them Businesses need to identify inadequacies and gaps -
Distribution channels
Market organisation
Educational institutions
Quality standards Identify weaknesses and deficiencies

Charaterise areas able to best influence the cluster More Information - Clusters are effective in all growing regional economies and are pivotal in the success of productivity, innovation and competitiveness
When there are weaknesses in the cluster it inflicts greater cost to a business and other associated companies Clusters So what does reconceiving products and markets mean? Products need Redesigning products due to continually changing societal needs Is our product good enough for customers and our customers' customers? Clusters - Continued * Clusters not only improve the productivity of a business but also attends to the lack of success and deficiency in their surrounding communities

* Clusters expand the connection between private success and community success

* The growth of a business not only has powerful effects on the company itself but also to thier surrounding community

* E.g: The growth of a company provides the community with more jobs and a greater demand for suppliers More info ... * Open and transparent markets ensure suppliers have an incentive to produce quality and reliable products as they are receiving a fair price for their goods and services

* Shows economic and social development * Creating shared value will be more successful is incorporated by collection action

* Collaborating with partners, the private sector, trade organisations, governments and non-government organisations

* Collaborations allows the sharing of inflicting costs, gaining support and additional knowledge and skills Case Study - Yara Fertilizer * Yara is the world’s largest fertilizer company and has invested $60 million to improve road and ports in Mozambique and Tanzania

* Collaboration with local governments and also the Norwegian Government

Expected benefits in Mozambique:

* 200,000 farmers in the region will benefits in terms of productivity and profit

* 350,000 new jobs will be created for the region

* Advantages to the community, agricultural cluster and the company Yara through growth About Reconveiving Products Organisations are shifting their attention to more disadvantaged areas Case Study -
Vodafone and Kenya Redefining the Productivity chain * There is a need for companies to provide society with their changing needs and wants

* With Innovation comes more incurred costs

* By redefining the productivity chain companies aim to decrease these costs whilst also acting in the best interest of societies needs and wants - Which often include concern for the natural environment Focus areas - Defining productivity in the Value chain 1. Energy use and Logistics
2. Resource Use
3. Procurement
4. Distribution
5. Employee Productivity
7. Location Can you think of any examples? Case Study - Procurement BSFA Brazil
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