Critically analyze the following article Essay Example

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    Management
  • Document type:
    Assignment
  • Level:
    Masters
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Critical Analysis of an article

Michael Porter and Mark R. Kramer (2011) ‘ creating shared value: How to reinvent capitalism and unleash a wave of innovation and growth, Harvard Business Review, January-February, P 63-77.

Introduction

Sustainable development is one that is capable of satisfying the immediate needs of the people around without compromising the needs of other people in different parts of the world as well as future generations (Tebo, 2005). The role of sustainability is to ensure that there is a sustainable system where the business, community and the environment are able to mutually benefit (Paine, 2003). According to the article by Michael and Mark, businesses have been blamed for being the main cause of problems in society, environment and the economy. This is due to business activities that fail to look at the broader community focusing only at business prosperity (Michael & Mark, 2011). This essay will critically analyze five key points from the article by Michael and Mark ‘creating shared value: How to reinvent capitalism and unleash a wave of innovation and growth’ as well as its future and areas that need improvement in it.

Most business management uses outdated social corporate responsibility which leads to society well being placed in the peripheral. Business should embrace the concept of shared values (CSV) to enable then create economic value and manage the society needs as well as challenges. Sustainability management is a concept that involves the whole organization (Van Kleef & Roome, 2007). Each of the firm departments should be able to apply appropriate instrument that will enable sustainability (Michael & Mark, 2011). Adoption of CSV should be utilized by all departments in a firm to ensure that the business is in harmony with the community and the environment (Relph, 2006).

Key points

The journal article has several key points which can help in unleashing growth and innovation. The key points are; companies and social responsibility, the concept of shared value, creating shared value, the role of social entrepreneurs, and differences between the concept of shared value and corporate social responsibility.

Company social responsibility

Business is expected to have a social responsibility in their operations. This is through performing their activities without exploiting the society and the environment to their advantage. According to Utting (2005), business is expected to meet the needs for the community without compromising the needs for future generation. At the moment, business is monitored on the way in which they carry out their operations (Waldman, Siegel & Javidan, 2006). Businesses have to take the responsibility of their actions impacts to the society. The organizations have to adopt sustainability in order to include the social and environmental concerns on their business operations (Michael & Mark, 2011).

Concept of shared value

This is corporate policies that ensure there is a competition enhancement while advancing the social and economic conditions of the immediate community. This should occur simultaneously during business operations (Ulrich & Norman, 2003). The policy is carried out under capitalism in addressing the social problems. The companies are shifting from using the corporate social responsibility to the concept of shared values (Woodside, Francesca & Michael, 2008). This is by realizing that the profit that is achieved through the use of creating shared value is able to empower society which leads to the company fast expansion (Michael & Mark, 2011).

Creating shared value

This involves the ability of the company to create economic value through enhancing the society value. This is done by the firms through creating supportive industries in company surroundings, redesigning their products and markets and changing their value chain productivity (Biswas, 2013). Shared value creation is based on fact that improving value in one sector increases value in another.

Role of social entrepreneurs

This involves the understanding that the task of finding the solutions which are profitable to social problems involves different players. This is a generation of entrepreneurs who are focused in developing new product ideas that are able to meet the social needs. The measurement of social entrepreneurship is based on the ability of creating a shared value (Michael & Mark, 2011).

Differences between CSR and CSV

The concept of shared value is able to supersede that of corporate social responsibility. Corporate social responsibility focuses on firm reputation and less on business. In the case of the concept of shared value, it focuses on integral business profitability and competition. It looks at firm unique capability to create both economic and social value (Michael & Mark, 2011).

Critical analysis

Company social responsibility has failed for most companies. This is through the use of outdated approaches that are more concerned with value creation. Most of the firms have ignored the community and environmental needs (Nan & Heo, 2007). The government has made the problem worse by addressing the social problems at the expense of the business. The concept of social responsibility should be addressed through shared values that enhances that value for society and business. This enhances capitalism principles. Michelini (2012) argues that using the concept of shared value, the firm is capable of increasing the competition and advances social and economic conditions. There is a need for business to understand there can be no progress if the social value is not enhanced. According to Jackson & Nelson (2004), this is supported by the fact that having a well off community enables fast business growth. To create shared value, business must look at the suitability of their product to consumers, redefine productivity and enable support for the business around it (Walsh, Weber & Margolis, 2003). In the business world, no firm can make it alone. The success of a business is influenced by the surrounding infrastructure (Waddell, 2007). There is also need for the business to emulate social entrepreneurs. According to Alvord, Brown & Letts (2004), these are other players who are keen in providing solutions to social problems. This is a group that is not locked in the traditional thinking and has the capability to create shared value fast. There is a need for the firm to adopt the concept of shared values as opposed to company social responsibility. These are two concepts, each having its own focus and strategy. Kapelus (2004) stresses that using the concept of shared value; the firm can be able to create value by utilizing the firm unique resources to both business and society. As opposed to the concept of corporate social responsibility, CSV is vital for the business profitability and its competitive position (Michael & Mark, 2011).

Conclusion

The journal article has been able to address the issues that are associated with the collapse of capitalism in business. This is by looking at the concept of corporate social responsibility and the concept of shared values. From the journal article, it’s evident that the concept of shared value supersedes that of corporate social responsibility. The journal article has been able to fully illustrate the associated benefits with adoption of the concept of shared value (CSV). This is done through accepting that though not all business problems can be solved by the concept of shared value, the concept gives more value to business and enable it to earn respect from the society.

References

Alvord, S. H., Brown, L. D & Letts, C. W 2004, ‘Social entrepreneurship and societal

transformation’, Journal of Applied Behavioral Science, 40, 260–282.

Biswas, A. K. 2013, Creating shared value: impacts of Nestlé in Moga, India.

Jackson, I. A., & Nelson, J. 2004, Profits with principles: Seven strategies for delivering value

with values, New York, Doubleday.

Kapelus, P 2004, ‘Striving for responsible competitiveness: Companies will have to lead by

example’. Finance Week, Vol. 30, no. 2, p. 36-38.

Michael, Porter & Mark R. Kramer, 2011, Creating shared value: How to reinvent capitalism and unleassh a wave of innovation and growth, Harvard Business Review, January- February, p. 63-77.

Michelini, L 2012, Social innovation and new business models creating shared value in low

income markets, Berlin, Springer.

Nan, X & Heo, K 2007, ‘Consumer responses to corporate social responsibility (CSR)

initiatives’, American Academy of Advertising, Vol. 36, no. 2, p. 63-74.

Paine, L 2003, Value shift, New York, McGraw-Hill

Relph-Knight, L 2006, Sustainability is integral to top-level leadership, Design Week, Vol. 21, no.18, p. 6-9.

Tebo, P 2005, Building business value through sustainable growth. Research Technology Management, Vol. 4, no. 5, p. 28–32.

Ulrich, D & Norman S 2003, Why the bottom line isn’t! how to build value through people and organization, Hoboken, N.J.: Wiley.

Utting, P 2005, ‘Corporate responsibility and the movement of business’, Development in Practice, Vol. 14, no.3, p. 375-388.

Van Kleef, J & Roome, N 2007, ‘Developing capabilities and competence for sustainable business management as innovation: A research agenda’, Journal of Cleaner Production, Vol.15, no.1, p. 38–51.

Waddell, S 2007, ‘Realizing global change: Developing the tools; building the infrastructure’, Journal of Corporate Citizenship, Vol. 26, no.1, p. 69–84.

Waldman, D. A., Siegel, D. S., & Javidan, M. 2006, ‘Components of CEO transformational leadership and corporate social responsibility’, Journal of Management Studies, Vol. 43, no. 8, p. 1703-1725.

Walsh, J. P., Weber, K & Margolis, J 2003, ‘Social issues and management: Our lost cause

Found’, Journal of Management, Vol. 29, no. 6, p. 859-881.

Werther, W. B., Jr., & Chandler, D 2006, Strategic corporate social responsibility, New

York: Sage Publications.

Woodside, A. G., Francesca, G. & Michael, G 2008, Creating and managing superior customer

Value, England, Emerald.