Session Title:
Managing Business at the BOP

Date of talk or publication:
2005

Speaker Name / Title:
James Austin, Gabriel Berger, Maria Cristina Fedato, Rosa Maria Fischer, Francisco Leguizamón, Gerardo Lozano, Patricia Márquez,

Organization:
The Social Enterprise Knowledge Network (SEKN)

Description:
The experience of eleven companies operating in Latin America revealed distinct economic roles for consumers, suppliers, and business partners in low-income sectors and raised the following questions. What leads companies to address low-income groups? What challenges must they overcome? What management practices do they employ to overcome them? What social and economic value have these engagements generated?  Among the reasons given by companies for engaging the poor were pursuit of business opportunities, emergence of contextual threats, and experience with philanthropic ventures. Whatever their reasons for engaging the poor, all of these businesses had to overcome significant individual and organizational culture gaps.  A starting point to transcending such barriers was to connect with the low-income sector via the company’s own workforce, ties with nonprofit organizations, and links with community leaders. Social sector organizations can offer distinctive knowledge, competencies, and credibility to companies seeking to explore business opportunities with low-income consumers, suppliers, and service providers. The experience of the subject companies suggests that productive and mutually beneficial business value chains can be established with the low-income sector. But to overcome economic, physical, and social barriers companies must forge new strategies, alter business structures, develop new products and services, and place low-income sector protagonists on an equal footing with traditional consumers or business partners. The latter might entail providing a means for the poor to effectively make long-term commitments and organize themselves as they join the new value chain and close monitoring of the governance of these new relationships. Indeed, the engagement process might well involve nurturing new sets of stakeholders.