Social Research Digest – June 2012
In this report, Corporate Citizenship analyses a number of multinational companies’ Inclusive Business models in emerging and developing markets. Corporate Citizenship looks at the motivations behind the business models, the role of partnerships, financing and profitability, as well as challenges.
- An increasing number of multinationals are enhancing social and economic benefits through their core businesses by the adoption of Inclusive Business models.
- The opportunities Inclusive Business present for global companies are significant.
- It can drive product and service innovation, provide access to new markets, help differentiation from competitors and strengthen brand reputation.
- On the sourcing and supply side, benefits include cost reductions, secured access to critical raw materials and visible supply chains.
- In addition, by contributing to local economic growth, the company strengthens its license to operate in the country and facilitates positive relations with key stakeholders such as the government and local authorities, ensuring a longterm presence in the market.
- Inclusive Business models have spread opportunities to poor and disadvantaged people through job creation, regular income generation, connection to markets, access to education and training, as well as access to finance.
- However, Inclusive Business success stories are still few and challenges remain significant.
- Companies have told us about the difficulties they face in understanding the markets, developing effective marketing channels, challenging distribution networks and regulatory hurdles.
- Businesses should take the following steps when exploring and building Inclusive Business models:
- Conduct a socio-economic impact assessment. As a starting point, explore the socio-economic impact of your company’s activities and operations in a given market. Such assessment will further your understanding of the actual value your company spreads across the value chain.
- Assess opportunities across the value chain. Following the socio-economic impact assessment, take a value chain approach assessing the opportunities of your business. Where across the value chain could social and economic benefits be further enhanced?
- Focus on core competencies and strengths. What are the core skills of your business, and how can you apply them to address societal and development challenges through your business activities?
- Leverage the skills and expertise of your CSR department, to develop and test innovative ideas and business models.
- Get senior management on board. At the start of your Inclusive Business journey, ensure that senior management are involved from the idea stage through to implementation. This is crucial for the long-term success of the business model.
- Decide on the commercialisation of the business model early on. The options to commercialise the business model should be integrated in the strategy from the beginning.
- Explore funding opportunities. Explore funding opportunities in the emerging social investment landscape, including development agencies, foundations and international organisations. Explore partnerships. Take a collaborative approach and explore partnerships with government agencies, NGOs and local grassroots organisations. Cooperate with local partners who have a deep understanding of market conditions, as well as insights on consumer needs and behaviour.
- Invest in understanding the local market context. A valuable approach can be to tap into local networks to gain market understanding and insights, both at an initial product development stage, but also throughout the process identifying marketing channels and distribution methods.
- Develop a robust performance measurement system. Incorporate social, environmental and economic Key Performance Indicators (KPIs) and targets with longer-term Return on Investment (ROI).