PURPOSE:The concept of creating shared value (CSV) was articulated by Michael Porter and Mark Kramer. They describe it as “Creating economic value in a way that also creates value for society by addressing its needs and challenges. Businesses must reconnect company success with social progress. Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success.”34 This approach to business is especially relevant in today’s business world as the connection between businesses and their customers becomes stronger through social media attention and easy access to information on the internet. Many customers not only care about the product or service value but also want to know how the company operates and what it stands for. From the company’s perspective, it is also very important to understand that not all profit is equal. Porter and Kramer state, “Profits involving a social purpose represent a higher form of capitalism—one that will enable society to advance more rapidly while allowing companies to grow even more. The result is a positive cycle of company and community prosperity, which leads to profits that endure.” Explain the limitations and role of management accountant in shared value. Also the example given. EXAMPLES OF CREATING SHARED VALUEAdidas Group is partnered with Nobel PeacePrize winner Muhammad Yunus and hismicrofinance organization. This partnershipallows Adidas to offer very low-cost shoe options measures of environmental footprint.to poor people in Bangladesh. The shoes alsoprotect people from disease." Measures ofsuccess might include the number of shoes sold,the number of microenterprises supported, andthe profitability of the venture.trained and employed within Coca-Cola's valuechain, partnerships with local nongovernmentalorganizations, tonnage recycled, and otherCoca-Cola's Coletivo initiative in Brazil createsshared value by increasing the employabilityand life skills of low-income young adults. Oneprogram trained them to work at the Rio 2016Olympic games, giving them valuable workexperience. In return, Coca-Cola benefits bystrengthening the workforce and local economyin Brazil and improving its value dhain. Anotherprogram connects harvesters in the AmazonRainforest to Coca-Cola suppliers and promotesconservation. Potential measures of success forthe Coletivo include number of young adultsNestlé, one of the world's largest foodand beverage companies, depends on areliable supply of high-quality raw materials,often produced by farmers in low-incomecommunities. Nestlé implemented a ruraldevelopment strategy, recognizing that farmersearning decent incomes in thriving communitieswould be able to supply more and betteragricultural goods. Nestlé employs morethan 1,100 agricultural staff and works withan additional 10,600 support staff across theworld to train farmers, provide them with bettertechnology, and assist farm communities in localdevelopment projects. Measures of successinclude the number of development projects,farmers assisted, tonnage produced, and qualitymeasures for farm produce. Limitations: CSV requires a change inmind-set from focusing primarily on profitsto a higher level of thinking about meetingsocietal needs and being sustainable. Therewill always be tension within a businessbetween its economic and social goals.Often, when the choice presents itself,leaders will choose the economic goals (i.e.,higher profits).Role of the management accountant:Management accountants can identifyparts of the organization's value chain thatmay have opportunities for creating sharedvalue, such as clustering the company'sand suppliers' operations near each other.Management accountants can play a vital rolein CSV especially in the area of measuringshared value.10 .

Management accounting is a discipline where accounting, finance and management all are combined to…

PURPOSE:The concept of creating shared value (CSV) was articulated by Michael Porter and Mark Kramer. They describe it as “Creating economic value in a way that also creates value for society by addressing its needs and challenges. Businesses must reconnect company success with social progress. Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success.”34 This approach to business is especially relevant in today’s business world as the connection between businesses and their customers becomes stronger through social media attention and easy access to information on the internet. Many customers not only care about the product or service value but also want to know how the company operates and what it stands for. From the company’s perspective, it is also very important to understand that not all profit is equal. Porter and Kramer state, “Profits involving a social purpose represent a higher form of capitalism—one that will enable society to advance more rapidly while allowing companies to grow even more. The result is a positive cycle of company and community prosperity, which leads to profits that endure.” Explain the limitations and role of management accountant in shared value. Also the example given.

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 1EB: Assume you have been hired by Cabelas Sporting Goods. As part of your new role in the accounting...