Poverty as Business for the future/E/D/I


 oder ARMUT ALS BUSINESS DER ZUKUNFT

For the video with Prof. Stuart L.Hart:scroll down this page:

I’ve recently come across the following very interesting interview (It not not seem available anymore) by the NZZ journalist Marco Metzler in which Prof. Stuart L Hart from the Corell University answers questions about how it should be possible  in the future to help poor countries/people at the bottom of the pyramid protocol  and at the same time earn money. I’ve also prepared you a gap exercise with the above text. Click here http://www.langedi49.ch/POVERTY1.htm and you can reread the article and fill the missing words into the empty spaces and correct it online. Good luck!

Here below I’m going to summarize the interview.

Prof Hart says that large companies can actually focus business attentions on 1/3 of  the humanity that has been ignored in the past. According to  (gemäss/secondo)him it can be seen as a business opportunity to engage in local people, slums shanty towns or rural villages in the developing world.  Enterprises that improve peoples’ lives generate livelihood ( der Lebensunterhalt/sostentamento)for them and produce growth (das Wachstum/ crescità) and opportunities for the companies themselves.

How has this to be done?

For the professor it is clear that large corporations play a role in serving the poor. It can’t just be done through the development of products by people in Europe or America and then go to those poor countries and market them. This procedure does not work for a variety of reasons:

a) The typical product developer or marketer does not understand much about the local context.

b) To succeed it is required that people from the company develop partnerships on the grounds with NGOS and local players.

c) People from these companies have to live on the ground for a certain period of time to get immersed and become able to develop partnership with local people and cogenerate and co-create the business concept with those in the communities because they have a big influence over what  product  get developed and how that product is embedded in a larger business model  that really has value in the community and from their point of view.

MUTUAL VALUE HAS TO BE CREATED!

d)  Multinational companies have  to face these new challenges and develop new skills.(Fähigkeiten/capacità)

e)  Companies have to create entirely new markets that did not exist in the past. This takes new efforts. It is not enough to do  market research,

figure out the market work, set  prices and  start selling the product, Companies have to be engaged.

f) They have to develop a native capability of how to get embedded in the local community.

At the moment there are no big success stories with this approach! (das Vorgehen/procedere) There are, however,many initiatives.To be able to reach the poor people and have the price right is necessary but it is not sufficient.

The famous economist Milton Friedman seems to have said that there is a social responsibility of business to increase profit. Prof. Hart agrees with this but is of the opinion that  it’s the reverse, or more precisely that first you have to ask yourself  about the really important

problems to solve, such as, how we generate or grow a business that will benefit all constituencies ( die Teilnehmenr/parti)  or what the social or environmental problems are or what is to do that stakeholders, (die Akteure, attore) communities, customers, employees or suppliers can generate (machen/fare profit.

PROFIT IS FOR HIM A RESULT AND NOT THE CAUSE.

If a multinational goes to Brazil’s favelas to sell the products with local distributors the biggest part of the  profit goes to that company. Is there an incentive for the shareholder to maximize this marchin. How does this  give enough money to the poor without fair-trade?

There is a tendency of thinking in fixed pies (Kuchen/torte) according  to the professor.

If you enter into this low income space you have to accept  current reality the way  it is and try to sell into it, otherwise  you fall into the trap  ( die Falle/trappola) before mentioned . Then the company ends up just extracting.(gewinnen/estrarre) If you enter  it with the idea of creating something new and do it in a participative way, engage local communities in the development of the business and product then  it is possible you create a value proposition and change people’s lives in a way you wouldn’t have anticipated before.

YOU CREATE MORE VALUE FOR EVERYBODY

If multinationals go to new grounds where there are  already players so they need local partners. It also happens that local people get exploited by local vendors or predators (die Räuber/predatori) In microfinance it is known that local money lenders ask exorbitant rates (unerhört hohe  Zinsen/interessi esorbitanti). A lot seems to be premised on the idea that poor people have to pay a penalty; they get, in fact, the worst stuff for the highest cost.

To cut a long story short,  Prof .Hart admits that thousands and thousand of theses business would be needed in the future and the most successful ones would be mimicked.

Last but not least I would like to include a video where Stuart L. Hart, Prof. of Managment and Organisation speaks about sustainable

development which is certainly in connection with the above mentioned interview.:

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