Shared Value in Practice - The Case of Coca Cola's Community Initiative in Brazil
Introduction
Shared value involves the application of corporate policies which are meant to enhance a firm’s competitiveness while still advancing the social as well as the economic conditions of the societies where the firm operates. According to Porter and Kramer, the concept of shared value posits that not all profit encourages equity (Kramer & Porter, 2011). As such, only profit that leads to shared value will make the company and the society to grow together. Therefore, the incorporation of issues of the society and the company strategy will lead to great transformations that will improve the thinking of the management. This makes scholars such as Porter and Kramer to argue that shared value models are an illustration of the next level of capitalism (Kramer & Porter, 2011). There are tremendous merits and demerits of applying the concept of shared value. Shared value has been seen to take root in corporate social responsibility in the recent past and this can be linked to the Coca Cola community in Brazil.
The core premise of shared value
The main premise behind creation of shared value is that the health as well as the competitiveness of a firm as well as the well-being of the communities that are around it depend on each other (Pfitzer, Bockstette, & Stamp, 2013). That is, there is need to recognize the connection between economic and social progress and how such connection can yield growth of capitalism across the globe. Shared value can be created in many ways. Firms can create shared value through reconceiving the markets and products that they sell. For instance, a company can meet the needs of the society while at the same time creating new markets and new products and also reducing the costs via innovation. Companies can also redefine their productivity in the value chain.
A firm will be able to improve its quantity, quality of cost of the materials that they use for their products while at the same time stewarding for the preservation of the natural resources from which these materials originate (Pfitzer, Bockstette, & Stamp, 2013). This will be a good way to foster social and economic development. There is also the ability to create local cluster development. Firms do not work in isolation from their own environment. As such, for them to thrive and compete, they need to have reliable suppliers and roads, railways and other infrastructure that is functioning properly. Therefore, shared value can be utilized to enable access to talent and also have a legal system that is predictable.
There are numerous other corporate responsibility approaches that put business in conflict with the communities in which they operate. Thus, shared value tends to cut down these conflicts by fostering the idea that none can exist without the other and hence they both can survive for mutual benefit. Shared value acknowledges the trade-off that exists between …
