Summary of Creating Shared Value

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Summary of Creating Shared Value A new form of capitalism is shared value; explored by Porter and Kramer in the Harvard Business Review beginning in 2006. In the article, Creating Shared Value, Porter and Kramer criticize the trade-off between neoclassical thinking societal needs and economic success, as well as the way the externalities have shaped corporate and policy strategy. The authors explain that “shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success” (Porter & Kramer, 2011, pg. 64). Companies can create value opportunities by reconceiving products and markets, redefining productivity in the value chain, and by enabling local cluster development along with removing government implications. Reconceiving Products and Markets Businesses can reinvent products to meet societal needs which are the consumer’s greatest unmet needs; products “good” for the customer. By doing this not only does the business benefit, so does society. Examples of industries succeeding in reconceiving their products are markets are food companies making products that have nutritional value and banks offering products and assistance in paying down their debts (Porter & Kramer, 2011, pg. 67). Redefining Productivity in the Value Chain In redefining productivity in the value chain, the industry usually take on the “externalities” within the organizations own internal costs. For example, Wal-Mart was able to lower carbon emissions and save $200 million in costs by simply reducing their packaging and changing their delivery routes (Porter & Kramer, 2011, pg. 69). Porter and Kramer also gave several examples of creating shared value within the entire supply chain with energy usage, logistics, resource use, procurement, distribution, employee productivity and location. All showed “there is a

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