Creating Shared Value Michael E. Porter, Mark R. Kramer; Harvard Business Review Summary The article “Creating Shared Value“, written by Michael E. Porter and Mark R. Kramer and published in the “Harvard Business Review“ in January 2011 deals with the idea of innovating the purpose of a corporation and their relationship to the government and social environment in order to identify unknown customer needs and expand the total pool of economic and social value. In the introduction the authors explain that the problem of the contemporary, narrowed capitalistic conception is the reduced trust that people have in business, which is seen as the reason for all kinds of environmental, societal and economic problems. In this neoclassical view, …show more content…
New distribution methods are developed to create shared value and lower environmental costs, e.g. iTunes or Kindle. Instead of holding down wage levels and diminishing health costs, many companies have learned that increasing the satisfaction and the welfare of their workers have a more positive impact on their results then called savings. Because of high transportation and energy costs, a firm's location gains more and more in importance and now all steps of the value chain tend to be closer together. The third way to create shared value, after Kramer and Porter, is enabling the local cluster development. A cluster, a geographic concentration of businesses and institutions, is seen as a necessary condition to maintain productivity and competitiveness because no company can be self-contained. So business is dependent on their environment, e.g. consisting of infrastructure and supporting companies, and has to work on it. A lack of framework conditions arise internal costs, such as costs of logistics or the possible pool of workers, and has to be identified and mended by the company. Another key condition is the formation of open and transparent markets. As mentioned before, the company's success is
Successful firms capitalize on economies of scale & scope, create management structures and invest in research & development
Having ability to use resources across more effectively (transfer of human capital, utilising group’s plants, facilities and services) that would lead to creating various synergies and benefit from economies of scope.
China’s underdeveloped infrastructure, in particular the land transport system and connection between different forms of transportation, slowed down distribution, increased logistic costs, and finally hindered expansion into rural regions (p.13). As a result of this slow transportation, Wal-Mart’s two distribution centers couldn’t serve the entire country adequately. On the other hand, these distribution centers were significantly underused due to small amount of stores. Consequently, the retailer couldn’t benefit from cost saving through its distribution approach (p.14). Furthermore, communication with the retailer’s 15,000 local suppliers was inefficient and costly due to the lack of an information-technology network (p.14).
The main purpose of the Integrative Learning Project (ILP) is to introduce an authentic or fabricated company/industry to research. The company’s organizational setting includes the mission statement of the company, who the internal/external customers are, what aspects can
The expectation that businesses behave responsibly and positively contribute to society all while pursuing their economic goals is one that holds firm through all generations. Stakeholders, both market and nonmarket, expect businesses to be socially responsible. Many companies have responded to this by including this growing expectation as part of their overall business operations. There are companies in existence today whose sole purpose is to socially benefit society alongside businesses who simply combine social benefits with their economic goals as their company mission. These changes in societal expectations and thus company purpose we’ve seen in the business community over time often blurs the line of what it means to be socially
According to study of Hill and Jones (2013), value creation frontier refers to the maximum amount of value that the products of different companies within an industry can provide to customers at any one time using the different business models. To reach the value creation frontier, the company must pursue one or more of the four building blocks of competitive advantage, which are innovation, quality, customer responsiveness and efficiency. The concept provide four basic ways to
The main strengths in the production sector are manufacturing for medical devices, drugs & pharmaceuticals, and manufacturing support and weaknesses are the research and development cluster and logistics cluster. The main strengths in the service sector are patient care and education and weaknesses are marketing, human resources, consulting services, laboratories, and financial resources. There are regional externalities, defined by Kitson as “resources that reside outside of individual local firms but which are drawn on directly or indirectly by those firms and which influence their efficiency, innovativeness, flexibility, dynamism, productivity and competitive advantage. A few examples of regional externalities are quality and skills of the labor force, the extent, depth and orientation of social networks and institutional forms, the range and quality of cultural facilities and assets, the presence of an innovative and creative class, and the scale and quality of public infrastructure. He states that the more localized the industrial clusters are, the more intense the interaction will be between Porter’s components of his “competitive diamond” (social embeddedness, existence of facilitative social networks, social capital, and institutional structures) which will increase
Capitalism is many things. It is a system of opportunity, and advantages; it is a system with the massive potential gains, as well as the possibility of insurmountable losses. From an ethical outlook, capitalism exudes both good and evil simultaneously, this paper does not look to confirm nor deny any of these truths about capitalism. What is important, rather, is that from a progressive standpoint, the demanding nature of the capitalist society’s consumer, in hand with the constant fluctuation
Capitalism has been the subject of ethical criticism since it was first introduced into society. I defend the morality of capitalism because it gives people incentive to work, establishes a web of trust between them, satisfies their material well-being, and generates a wide spectrum of prosperity.
Theorists began to recognize capitalism as pre-industrial society developed economically and major social changes began to occur. Modernization resulted in industrialization, urbanization and bureaucratization as the workplace shifted from the home to the factory, people moved from farms into cities where jobs were more readily available and large-scale formal organizations emerged. Classical theorists’ observations addressed numerous facets of social organization and interaction that came about as a result of modernization; however this essay will focus on their ideas regarding capitalism and the capitalistic society. Over
Capitalism started up as a system of investing and sharing money in order to increase the value of resources in the future. Capitalism was just an economic system, but then soon turned into a complex system of ethical practices. Harari defines capitalism as, “a set of teachings about how people should behave, educate their children and even think” (Harari 314). This economic system evolved along with the people that were endorsing it. Capitalism enables the rich to get richer, while the poor continue to get poorer. There are many benefits to capitalism, but there are downfalls as well, and these downfalls tend to be masked because of the rapid speed capitalists grow at. Harari first presents a definition for capitalism, and soon goes into great detail on why capitalism, while fast paced and unforgiving, is able to stand unwavered while other productions fail.
Increasingly globalized distribution systems present obstacles to promoting sustainability and justice in the distribution of goods. It is harder to track the location and conditions under which products are made and harder to hold decision makers accountable along the way.
Capitalism is a subject that can be considered deeply controversial. There are many who tout the benefits that capitalism provides to the economy and the progress of human society. There are others who decry that it is a system which promotes selfish motives and extols profits above honesty and genuine goodness. This essay will examine the claims of each and will reach to conclude the answer to the question “is capitalism good?”
Harvard Business School professor Rosabeth Moss Kanter was interviewed by The Boston Globe, and she was asked about the impact on society when companies serve the social good. A company should "use its clout for social good," Kanter explained, and by serving society a company can "enrich and inform its business strategy" (Weisman, 2009). Can a vanguard company make money and serve a social purpose are those goals compatible? Kanter replies to that question by pointing out that IBM and Procter & Gamble are "highly sustainable" and very profitable companies and the "…idea of serving society is embedded in the way they think about innovation" and the way they strategize moving into new markets (Weisman, p. 1).
2. The reason of why distribution is such a key element of IKEA’s value chain.. 2