NESTLE & concept of "shared value" by Porter & Kramer (2011) Essay Example

  • Category:
    Management
  • Document type:
    Essay
  • Level:
    Masters
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    2
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Nestle and the concept of shared value

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Nestle and the concept of shared value

Introduction

In a generic sense, the concept of shared value can be perceived as operating practices as well as policies which are central in improving the competitive niche of a company while concurrently enhancing the socio-economic conditions in the communities in which the company operates. In this case, shared value creation can be viewed to focus on the identification and expansion of the connection between economic and societal progress (Porter & Kramer, 2011, p. 6). The perception in this concept is shared by Hartman and Werhane (2013, p. 37) that there is a linkage between economic value and societal value as opposed to traditional philanthropy. In this sense, value can be perceived to be co-created (Vargo & Lusch 2004, p. 11) and thus a company might be best to perceive itself as a ‘participant’ in the community as opposed to conceiving itself as the center of the community. In trying to put into practice the principle of shared value, profit making companies engaging in strategic CSR have chosen to execute new hybrid business models which include inclusive business model and social business model (Michelini & Fiorentino, 2012, p. 561).

Nestle has been on the forefront in the promotion of shared value among its diverse stakeholders. Nonetheless, this paper will explore some novel approaches which can be implemented by Nestle in its efforts to increase shared value creation.

Shared value creation at Nestle

Firstly, despite the fact that Nestle works with a network of R&D centers towards achieving various objectives, for instance, plant breeding and selection aimed at offering increased choices on plant varieties to farmers, it ought to integrate local farmers in research and development undertakings towards coming up with relevant farming practices, for instance, developing drought resistant seeds. The centrality of R&D in the promotion of agricultural productivity and surmounting the environmental challenges posed by climate change has been recognized by various governments around the world. This is exemplified in Malaysia where currently there are more than 40 agencies which are involved in agricultural R&D including private sector laboratories and research universities (Rahman, 2012, p. 31).

In this case, the collaboration of Nestle with local communities in agricultural R&D practices will increase the quality and quantity of raw materials being supplied to the company and on the other hand elevate the level of skills and knowledge among the local communities which is at the heart of shared value as opposed to the current system which excludes the input of the farmers from the R&D activities.

Secondly, the shared value approach of Nestle in different regions around the world has seen increased efforts by the company into ensuring that conditions and wages of the workers meet the mandatory industry standards. Nonetheless, this company has a deficiency of a compliance strategy of ensuring that all the stakeholders adhere to the set standards on minimum wages and working conditions of the workers. In this case, Yapp and Fairman (2006, p. 43) determined that a compliance strategy is credited for culminating in the adoption of a more conciliatory, flexible approach which is at the enforcer’s disposal when confronted with non-compliance.

Therefore, the adoption of a robust compliance strategy will be integral in ensuring that the interests of the workers who are part of the larger community are advanced by all the stakeholders, for instance, the sugar milling companies and on the other hand, Nestle will greatly benefit with a more enhanced reputation on promoting workers’ welfare among its stakeholders which is key to its competitive advantage in the market. This shared value approach is central in the work by Porter & Kramer (2011) with different studies having found out that company decisions to adopt certain compliance practices, for instance, in environmental management are under direct influence of the desire to enhance or maintain relations with their communities (Delmas & Toffel, 2004, p. 213).

Thirdly, it is imperative to be cognizant of the fact that in its adherence to the shared value principles as envisioned by Porter & Kramer (2011), Nestle has made different efforts to respect the rights of indigenous people in different areas where it operates. This is founded on the backdrop of massive marginalization of the aboriginal populations from the mainstream societal infrastructure, for instance, the marginalization of the Aboriginal Torres Strait Islanders from the Australian healthcare system as evidenced by Duckett (2008, p. 323).

In the efforts to address these trends, Nestle has committed towards making interventions which will enhance health, nutrition, food security, access to water and education among other aspects of wellbeing in these communities. However, in order to realize the full spirit of shared value, Nestle ought to increasingly involve the indigenous people in the research and actions to address most of the aforementioned issues.

This is founded on the findings by various scholars, for instance, Bailie and Paradies (2005) that the research which is valued and embraced by the indigenous people is community-controlled, multi-disciplinary, focused on interventions and which is transferred back to communities and into policy. In this case, Nestle ought to increasingly involve the indigenous populations in their intervention efforts to solve these impediments. This fact is revealed by Clapham (2011, p. 45) who determined that aboriginal medical services personnel for instance have a core role to play both as partners as well as drivers in medical research and interventions in these communities.

This novel approach of incorporating the members of the indigenous populations in the intervention efforts by Nestle suits into the principle of shared value according to Porter & Kramer (2011) based on the fact that the community will benefit from greater knowledge and skills in problem solving while the company will economically benefit from increased acceptance in these communities which will increase the penetration of its products.

Conclusion

The preceding analysis has explored the definition of the shared value concept according to Porter & Kramer (2011). Additionally, it has examined some novel approaches which can be adopted by Nestle, for instance, institution of a more robust compliance strategy, integration of indigenous populations in its research and interventions aimed at solving diverse challenges confronting members of these communities as well as greater entrenchment of the farmers in the R&D activities towards coming up with relevant farming practices.

References

Bailie, R. & Paradies, Y., 2005, ‘Adapt or die: Epidemiology and Indigenous health research’,

Australasian Epidemiologist, Vol. 12, No. 1, pp. 24–30.

Clapham, K., 2011, ‘Indigenous-led Intervention Research: The Benefits, Challenges and

Opportunities’, International Journal of Critical Indigenous Studies, Vol.4, No. 2, pp. 40-48.

Delmas, M., & Toffel, MW., 2004, ‘Stakeholders and environmental management practices: An

institutional framework’, Business Strategy and the Environment, Vol. 13, pp. 209–222.

Duckett, SJ, 2008, ‘The Australian health care system: reform, repair or replace?’, Australian

Health Review, Vol. 32, No. 2, pp. 322-339.

Hartman, LP., & Werhane, PH., 2013, ‘Proposition: Shared Value as an Incomplete Mental

Model’, Business Ethics Journal Review, Vol. 1, No. 6, pp. 36–43

Michelini, L., & Fiorentino, D., 2012, ‘New business models for creating shared value’, Social

Responsibility Journal, Vol. 8, No. 4, pp.561 – 577.

Porter, M & Kramer, M., 2011, ‘Creating Shared Value’, Harvard Business Review, Vol. 89, No.

1 / 2, pp. 62–77.

Rahman, ZA., 2012, ‘Agricultural research and development in Malaysia’, International Society

of Southeast Asia Agricultural Sciences, Vol. 18, No. 2, pp. 22-33.

Vargo, SL & Lusch, RF., 2004, ‘Evolving to a New Dominant Logic for Marketing’, Journal of

Marketing, Vol. 68, pp. 1–17.

Yapp, C., Fairman, R., 2006, ‘Factors affecting food safety compliance within small and

medium-sized enterprises: implications for regulatory and enforcement strategies’, Food Control, Vol. 17, pp. 42–51.