CSR in Action

CSR in Multinational Companies
 Radically improving the lives of billions of people and help create a more stable, less dangerous world does not require MNCs to spearhead global socialdevelopment initiatives for charitable purposes.  They need only act in their own self-interest. How?

CSR in Multinational Companies
 C.K Prahalad and Allen Hammond (Serving the World’s Poor Profitably, 2002)  By stimulating commerce and development at the bottom of the pyramid.

Bottom of the Pyramid
>$20,000 $2,000- 20,000 100 million 200 million

4 billion
< $2,000

Misconceptions in the BOP Market
 Companies take the assumption that the poor have no money.  Companies assume that people with such low incomes have little to spend on goods and services and what they do spend goes to basic needs like food and shelter.  People assume that the goods and services sold in the developing world are cheap and, hence there’s no room for a new competitor to come in and turn a profit.

Misconceptions in the BOP Market
 They also assume that various barriers to commerce (i.e. corruption, illiteracy, inadequate infrastructures, currency fluctuations, bureaucratic red tape) make it impossible to do business profitably in these regions.  Conventional wisdom says that people in the bottom of the pyramid markets cannot use advanced technologies.  The highly charged issue of exploitation of the poor.

Advantages of Serving the Poor
 New source of revenue growth • Example: Suvidha, ATM-based banking of Citibank in India.  Reduced Cost  Cheap labor pool  Maintaining a low cost structure • e-Choupal agribusiness information kiosks  Innovation

Strategies for Serving BOP Markets
 Change in attitude and practices of the executives.  Educate the managers through engagement with the local population.  Companies will need to make structural changes  Set up R&D units in developing countries that are specifically focused on local opportunities.  MNCs should consider creating a business development task force aimed at the BOP market • i.e. HP’s e-Inclusion division

Strategies for Serving BOP Markets
 Foster partnership with local small entrepreneurs  MNCs to take on mentoring roles  Companies will need to make structural changes  Set up R&D units in developing countries that are specifically focused on local opportunities.  MNCs should consider creating a business development task force aimed at the BOP market • i.e. HP’s e-Inclusion division

Is Serving BOP Markets Worth the Effort?

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