Every company has a value chain—and all competitive advantage derives from activities within the value chain. Building on Michael Porter’s decades of work in corporate strategy, the framework for Creating Shared Value analyzes the value chain from the perspective of societal as well as economic value.
The Value Chain
Shared Value in the Value Chain
A company’s value chain inevitably affects—and is affected by—numerous societal issues, such as natural resource and water use, health and safety, working conditions, and equal treatment in the workplace. Opportunities to create shared value arise because societal problems can create economic costs in the firm’s value chain.
The following are some ways in which shared value thinking is transforming the value chain, which are not independent but often mutually reinforcing.
- Procurement that enhances supplier capabilities and efficiency
- Improving energy, water and resource efficiency across the value chain
- Minimizing logistical intensity
- Improving employee health and safety
- Enhancing the productivity and wages of lower income employees
- Recruiting that represents the diversity of customers and the communities where a company operates
More about the value chain