Creating Shared Value

Creating Shared Value

The article, “Creating Shared Value”, authored by Michael Porter and Mark Kramer describes shared value as a new form of capitalism. As I understand it, they believe there is a connection between creating social or societal needs and economic success, and how the concepts of these externalities have shaped corporations and policy strategy. Analyzing social needs as business opportunities, shared values presents a new way for companies to discover new products and markets, increase productivity in the value chain, and improve the social conditions that define their competitive context. As a result of this, companies are increasingly more on the hook and are encouraged to be at the forefront of developing ways to bring the business and society back together to generate productivity and expand their markets. Kramer and Porter believe in order to assess and address changes in the global societal environment and to create shared value, systematic stakeholder engagement with non-market stakeholders such as community members, neighbors or NGOs should be a standard element of daily business. In the cases of Revlon Inc. V. MacAndrews & Forbes Holdings and Ebay v Craigslist the legal precedence indicate that fiduciary duties for traditional corporations may constrain directions may constrain directors to pursuing a narrow view of the corporation’s interests. Under the Benefit Corporation legislation businesses can now pursue practices that are more sustainable financially for the environment, and for communities. Further, throughout the article the authors’ cite countless examples of where creating shared value is happening and proving to be successful. For example, “Intel and IBM are devising ways to help utilities harness digital intelligence in order to economize on power usage” and “Wells Fargo has developed a line of products and tools that help customers budget, manage credit and pay down debt” are a couple scenarios of shared success cited in the article (Kramer & Porter).

The thought of shared value, in contrast, lends credence that societal needs and not just conventional economic needs are what defines markets. It also recognizes that social harms or weaknesses tend to create internal costs for firms, which come in the form of wasted energy or raw materials, costly accidents, and the need for remedial training to compensate for shortcomings in education. To that end, addressing societal harms and constraints don’t really cause overhead for organizations. With new technologies and inventions they have the ability to improve operating methods, and management approaches. As a result, they experience increased productivity and expansion in their markets.

What Every CEO Needs to Know about Nonmarket Strategy

The article, “What Every CEO Needs to Know about Nonmarket Strategy” discusses how trans-governmental networks and domestic regulatory agencies have emerged in a number of areas alongside more conventional corporations. The article argues how broad observable patterns of global governance results from specific structure of domestic societal variables in leading markets against the dynamics of a worldwide market. In other words, a firm not only maintains its relationships with its customers, suppliers and competitors, but also with governments, regulators, non-government organizations (NGOs), the media and society at large no matter what. Evidence has shown that global governance in the fields of securities, Internet domain names, intellectual property, and hedge funds broadly support this argument. Executives have realized the difference between markets and non-markets and thus taking an integrated and tactical approach to building sustainable competitive advantage. For example, Toyota Motor Corporation’s hybrid car. Thru successful lobbying, they were able to get their Prius into a program granting low emissions vehicles access to the state’s carpool lanes even with only a single occupant. Support from environmental groups made it easy for legislators to endorse the venture, which cleaned up the environmental credentials for the state of California. They later was able to win the right for their customers to park at public meters in Los Angeles and other cities.

View of the Nonmarket Environment of Business

In both of the articles, the authors’ view law and regulations as necessary. In fact they have found ways to make the and regulations work to the advantage of the corporation by not just striving to position themselves in the market but look to ways they can shape the market in which they compete. As the article “What Every CEO Needs to Know about Nonmarket Strategy” states, “In politics, if you are not at the table, you are on the menu!” Basically, in both articles there