Information and news about business

Barclays_Invests_Base_of_Pyramid
Last Thursday, in a session aptly named “Creating Business at the Base of the Pyramid,” leaders in world of business, academe and activism convened at the Clinton Global Initiative (CGI) to discuss issues faced by those at the base of the  so-called human pyramid. The base consists of over half of the world’s population; those who live on less than five dollars a day.

CGI effectively demonstrated that a business’s profits are not in conflict with investment in the lives of those at the bottom of the pyramid, but rather are in line with them. With companies such as Barclays, the Western Union and the Ooredoo Group (formerly known as Qtel Group) on the frontlines fighting against global poverty, the paradigm has shifted from the base of the pyramid being viewed as an isolated market, to seeing their potential as consumers and active participants in a globalized economy. Though one may be weary of profit-driven corporations exploiting the vulnerable, all three companies exemplified creating shared value with a sustainable and mutually beneficial approach.

For example, Barclays’ partnership program with Plan UK and CARE International called “Banking on Change,” provides rural villages the ability to start businesses and save money through village savings and loans associations or VSLA’s. This “savings-led micro-financing” started in 2009 with a ten million pound grant from Barclays, and has reached 513,000 individuals with 25,000 VSLA’s in eleven different countries. Moreover, recognizing the disproportionate amount of women at the base of the pyramid, out of the 513,000 members which comprise these VLSA’s, eighty percent of them are women who are now economically empowered and financially liberated.

Group Chief Executive of Barclays, Antony Jenkins, recounted the story of a woman in Uganda, who as a member of a VSLA used a loan to buy cows, sell their milk, purchase a small hotel and eventually send her children to college. While 600 VSLA’s have linked back to Barclays with formal bank accounts, the story above along with countless others shows how business can help break the cycle of poverty and create new jobs while maintaining profitability. Both Western Union and the Ooredoo Group represented at the CGI presented similar examples of how their business models could effectively be customized to fit the needs of the base of the pyramid, provide shared benefits to all sides and increase economic activity for the poor.

With a clarity only those with an outside perspective could give, the only two non-business members of the session warned of touting business as a cure-all for poverty. Both Esther Duflou, a Professor of Poverty Alleviation and Development at MIT, and Bunker Roy, the founder and director of a NGO that works to establish sustainable growth and solutions to poverty from within rural communities, called the Barefoot College, emphasized that without the right environment and approach real progress will not be made. Esther advised that the correct policy framework is essential to the alleviation of poverty, while Bunker Roy declared that the only true way to integrate and lift the base of the pyramid out of poverty is to acknowledge, value and utilize the inherent traditional knowledge within each rural community.

While business may provide a way to combat global poverty, it is only one piece of a complex puzzle. By harmonizing public, private and charitable entities with the interests and abilities of the people at the base of the pyramid, the full potential of each individual can be realized in the global economy. The models of success CGI presented will hopefully inspire and convince other key players in the world of business that the potential inherent at the bottom of the economic pyramid is enough to mutually benefit all sides. Regardless of professional affiliation or motivation, the improvement of half of the world’s living conditions is simultaneously an improvement to the global economy as well as an endorsement of the belief that as equal human beings, we all deserve a level of human dignity and economic security.

– Jacob Ruiz

Sources: Barefoot College, Clinton Global Initiative, Barclays, Plan UK, Care International

Walmart Failing India Russia Asia
Walmart has sales reaching over $135 billion in 26 countries outside the United States making it the world’s biggest retailer. It’s also the world’s largest public corporation when ranked by revenue.

It has shattered the expectations of many small businesses that have either opened in a Walmart’s vicinity or have had a Walmart take over the local community. It’s a seemingly unstoppable force in the retail business. But looking abroad to several of the world’s largest economically sound countries, not a single Walmart store can be found.

On October 9, 2013, Walmart announced that it was breaking up its corporate partnership with Bharti Enterprises, which hints to the dissolving of its vision of opening up hundreds of stores throughout India. Scott Price, head of Walmart Asia, referred to the breakup being fueled by “poor investment conditions.”

This is a deeper issue than pro-small business owners and supporters celebrating over this breakup. When an individual, group, or corporation ascends to the heights that Walmart has in its respective niche, competition has no choice but either to compete and take a tiny share of the market or to hope that the empire crumbles.

While this decision by no means points to Walmart losing its stranglehold on the retail market, it sends a sign to most investors looking to put money in Southeast Asia. If Walmart is backing out and cannot make a steep, yet potentially rewarding investment, how can others?

Russia is another market Walmart has not tapped. For six years, Walmart has been in talks with a Russian-based company to join a partnership that would ease Walmart’s entry into the bureaucratically strict nation. Germany and South Korea are without Walmart stores, as well. Walmart was present in both nations until 2006 when it shut down all operating stores.

For Germany, it was a rather strange issue that possibly stems from cultural and sexual repression. German men did not like when Walmart clerks handed their groceries to them and smiled as they were leaving the store. They believed the friendliness was a sign of flirting which made them uncomfortable. South Korea has also found it hard to house a Walmart chain, as it preferred to stock electronics and clothing as opposed to food and beverages, which can be bought at local markets.

This is not a loss for Walmart as much as it is a rattling in its marketing process. This shake up abroad almost seems like collusion between governments not wanting to take away domestic profits from local businesses, and can anyone blame them?

– Sagar Jay Patel

Sources: Business Week, New York Times
Photo: Chieforganizer.org

Industrial_Revolution_II
Although it goes against the conventional wisdom of globalized business, a new business model looks to spend more money, not less, on its employees. Fostered by celebrity activist Matt Damon and led by Rob Broggi, a hedge fund analyst, Industrial Revolution II (IRII) sets its sights on evolving the clothing world into an industry with a conscience.

Previously working for Raptor Capital and Tudor Investment Corporation (one of the top hedge funds in the world), Broggi vaulted himself into an industry that combines garment manufacturing with humanitarian mindfulness.

Creating its first garment factory in Haiti, Industrial Revolution II plans to improve workers’ standard of living in a variety of ways. First, IRII pledges to invest 50% of its profits into health and education programs within the local community. On top of that, IRII will treat its workers humanely and provide safe work conditions.

Opposed to the current model of manufacturers focused on the cheapest labor possible to increase production at the most profitable rate, IRII sees both a niche and room for improvement.

What makes Broggi’s endeavor revolutionary in comparison to clothing competitors is his attention to his employees’ wellness.

IRII believes this improvement in health and working conditions will increase workers’ capabilities and production. When it’s all said and done, IRII anticipates its sales to be as competitive, in both price and quality, with other major brands.

What makes Broggi and Damon confident in IRII’s model is their focus on social purpose. With humane conditions, they believe that if they attain competitiveness their benevolent work will tip them over the edge in shoppers’ eyes. “If you can offer the same quality product at the same price you are going to win a tie-breaker nine out of 10 times” IRII’s CEO said.

That’s assuming it can compete with the businesses now dependent on child workers, cheap labor, and terrible conditions to continue their cost effectiveness.

According to Broggi, increased quality of life and improvements to health and education programs will enhance his workers’ productivity and lower turnover rates. With lower turnover rates, IRII can invest more in training its workforce, which promotes greater quality clothing.

Damon and Broggi believe that  healthy and better trained workers with an incentive in the company’s profits will jump-start productivity and increase the quality of products, giving the major labels, quite literally, a run for their money.

With history and ethics on their side, Damon, Broggi, and their new founded workers hope to lead the garment industry as a new model to reduce poverty and increase profits. If successful, they may pull millions out of severe poverty.

– Michael Carney

Sources: Boston Common, Industrial Revolution II
Photo: Heritage Daily

Corporate Social Responsibility
Corporate Social Responsibility (CSR) is a term that is becoming more and more common in the workplace. According to Mark Whitman of Sustainable Business Forum, a study by MIT in 2011 showed that sustainability is a permanent part of about 70 percent of corporate outlines.

This is more important than just adjusting for corporate philanthropy. As it turns out, Whitman said, doing good is good for business as well. There are several large benefits of CSR.

1.) Corporate Social Responsibility is good for business:

According to Better Business Journey, a Small Business Consortium from the United Kingdom, “88% of consumers said they were more likely to buy from a company that supports and engages in activities to improve society.” Furthermore, according to Simply CSR, customers do not accept “unethical business practices,” and using CSR methods can effectively increase customer retention and win business that is entirely new.

According to One4All, an organization committed to informing companies about CSR, a Harvard University study found that companies that are stakeholder-balanced “showed four times the growth rate and eight times employment growth when compared to companies that focused only on shareholders and profit maximization.” As it turns out, important stakeholders expect corporations to become socially responsible. Customers, consumers, and investors expect a corporation to “understand and address” relevant social issues.

2.) Talented employees want Corporate Social Responsibility:

Aside from customers, practicing CSR helps a company retain valuable employees as well. Whitman said that 53 percent of workers said that “a job where I can make an impact” was necessary to maintain workplace happiness. Furthermore, Whitman said, 35 percent would take a pay cut “to work for a company committed to Corporate Social Responsibility.”

According to Jeanne Meister for Forbes, “employees now want more from their employer than a paycheck. They want a sense of pride and fulfillment from their work, a purpose and importantly a company’s whose values match their own.” She said CSR is crucial to attracting talented employees to a corporation.

3.) Implementing Corporate Social Responsibility sets you apart from your competition:

Simply CSR said that using Corporate Social Responsibility improves a business’s reputation and standing within public forums. Companies that strive for a unique ethical standpoint are set apart from the rest in the eyes on consumers, according to John Paluszek of the Santa Clara University Markkula Center for Applied Ethics. Branding an organization as ethical builds a positive reputation.

In an interview with Forbes in May, Garratt Hasenstab, Director of Sustainability at the Verdigris Group, a real estate development and consulting firm, said that they save money by operating efficiently, but that they believe setting a good example is the greatest benefit. They have inspired other organizations to do the same, Hasenstab said.

“Our CSR policy is at the core of our daily operations and guides our future progress,” Hasenstab said. “Our clients want to work with us because we are focused on a healthier and more productive world.”

– Alycia Rock

Sources: Simply CSR, Forbes, Sustainable Business, One4All CSR, Forbes Corporate Responsibility
Photo: Global MED

Vistaar_Finance
Small businesses in India are finding a friend in the Vistaar Finance Organization. Since 2010, the Bangalore based company has reached out to an often overlooked demographic with innovative credit and lending programs focused on rural and semi-urban markets. With a customer-centric approach, the organization has quickly become a valuable asset to growing small businesses in India.

Vistaar also holds itself to a set of ethical values in its work. Founded on the belief that creating new economic opportunities can enrich the lives of a community, Vistaar promises service free from discrimination of race, caste, or religion. Vistaar also endorses the principles of the Smart Campaign, which include the promise of transparency, responsible pricing, and the prevention of over-indebtedness. Sandeep Fairas, a nominee director of Vistaar, has said that “Lack of access to basic services for any individual is really an issue of discrimination and must be challenged. It is imperative that we leverage the power of markets to scale and provide access to life changing services to millions of individuals and communities.”

Fairas is also the founder of Elevar Equity, a key investor in Vistaar. Vistaar has invested over Rs. 227crs (US $36 million) in small businesses across India. With 51 branches currently, and continued support from Elevar Equity and others, Vistaar is seeking to expand to 180 branches within the next few years.

– David Smith

Sources: Vistaar Finance, The Economic Times

Serengetee Shirts Fighting Poverty Style Fashion Africa
What happens when activism and fashion unite? Serengetee, an apparel company with a good-humored name, was created last year by five college students with an innovative goal in mind.

The company’s tagline, “Wear the world,” certainly rings true. Serengetee currently has 32 partners to whom it donates 13 percent of its proceeds for every shirt or pair of shorts sold. Each piece of clothing comes with a unique pattern representative of the country it benefits, juxtaposing the clothings’ all-American style.

For instance, sales of “Azul Calavera,” which feature smiling decorative skulls amid a floral backdrop, go toward Soles4Souls, which collects and distributes shoes to impoverished people around the world.

“Kruger,” meanwhile, showcases sunset hues and adorable sketches of elephants, tribal warriors, and gazelles, and benefits the TLC Children’s Home—an organization that provides free care and support to abandoned South African children.

Other buyers can purchase “Managua,” a popular rainbow-striped pattern inspired by the natural scenery in Nicaragua, which benefits Pencils of Promise, a non-profit group dedicated to improving access to worldwide education.

 

The Future of Serengetee

 

Since its recent beginnings, the company has donated over $30,000 to causes in over 28 developing countries. The company has even been briefly overwhelmed from the support it has received – following immense social media buzz,  orders were backlogged earlier this spring.

Serengetee founders are now prepared for future surges in sales as their public profile continues to rise. They have reached back to their undergraduate roots by employing college representatives from campuses nationwide to promote the Serengentee vision.

With a plethora of trend-setting designs and charitable causes to choose from, it is hard not be charmed by the idea of making the fight against global poverty a primary fashion statement.

– Melrose Huang
Sources: Serengetee, Forbes, Yahoo
Photo: Serengetee