①Dalberg_130214 ADB IB workshop - Introduction to IB models_vF

7/29/2019 Dalberg_130214 ADB IB workshop - Introduction to IB models_vF

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What is an inclusive business?

ADB-IDB Inclusive Business Workshop

9:45 a.m. 10:45 a.m., Tokyo, Feb-Mar 2013


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In this session well focus on the questions below

WHATISANINCLUSIVEBUSINESS?

WHYSHOULDLARGECOMPANIESCHANGETHEIRBUSINESSMODELTOBECOMEMOREINCLUSIVE?

WHATARETHECHALLENGESTOINCLUSIVITY?


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What is an inclusive business?


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Are these inclusive businesses?

Source: Coca Cola case study from the Global Compact Network and Kennan Institute Asia; Nike case study courtesy internet med ia reports; Nestle case study courtesy ADB market scoping; Dalberg

research

Coca Cola is a major consumer of water

resources in Vietnam, leaving it open to

criticism, consumer boycotts and brand risk

Coca Cola invested USD 100,000 in the

Clean Water for Communities project to

provide clean water access to schools and

communities in 3 Vietnamese districts

The project resulted in a more positive

brand image for Coke, and broadly positive

press coverage

The project also provided access to clean

drinking water to 10,500 students and 1,000families

Now with the clean water project, we benefit

from clean qualified water. We are so happy; we

can use it directly for cooking and drinking.

There are two fountains, one for cooking and

drinking and another one for cleaning.

Beneficiary villager in Dao Xa Village

Nike experienced hyper competition and

falling demand, causing significant pressure

to increase margins through cost savings

As a result, Nike decided to sub-contract

product manufacturing to secondary

manufacturers in emerging markets such as

Cambodia and Vietnam

Benefits to Nike included cost savings due to

reduced wages, as well as reduced capital

expenditures

Low-income workers receive employment,

and small businesses get integrated into aglobal supply chain, resulting in higher

quality and standards

25% ofNestles global revenues depend on

coffee exports from Vietnam; investing in

capacitating coffee farmers is imperative to

secure a steady and robust supply of beans

Nestle directly purchases coffee beans from

farmers; additionally, to increase farmer

retention, Nestle provides important

technical training and assistance to promote

sustainable agriculture

Nestle was able to expand its supplier base,

and secured the supply of high quality beans

Benefits to the farmers included higheryields, better prices, and increased access to

training and finance

COCA COLA NIKE

The facts on the ground suggest there are still

enormous problems with these supply chains

and factories ... what is Nike doing to change the

picture and give workers more rights?.

Michael Posner, Human Rights First

NESTLE

Nestles plans, [of] improving post-harvesting

techniques like drying, are a good step in

promoting economic stability. If these are

addressed successfully, then the investment could

be very positive for Vietnamese coffee producers.

Pablo Dubois, International Coffee Organization

CORPORATE SOCIAL RESPONSIBILITY OUTSOURCING INCLUSIVE BUSINESS


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What are inclusive businesses?

Source: 1ADB definition of BoP; Dalberg research

PROFIT-MAKINGBUSINESSESTHATENGAGETHE BASEOFTHE PYRAMID (BOP) AS

SUPPLIERS, EMPLOYEES, DISTRIBUTORSANDCONSUMERS, INAMANNERTHATRESULTSINA

MEASURABLEIMPROVEMENTINLIVINGSTANDARDSOFTHOSEPOPULATIONS,

CONTRIBUTINGTOASYSTEMICREDUCTIONOFPOVERTY.

DEFINITION


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Who are inclusive businesses attempting to include?

BOP

USD 4/day or

less

TOP-TIER

BOP ISDEFINED1ASTHELARGEST, BUTALSOTHEPOORESTSOCIO-ECONOMICGROUPIN

THEWORLD, COMPRISINGINDIVIDUALSEARNING USD 4/DAYORLESS.

BASEOFTHE PYRAMID

Source: 1ADB definition of BoP; Dalberg research


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What does it mean to be inclusive?

Source: Dalberg research and analysis

Inclusive models seek to engage BoP actors across the business value chain in a manner that generates

positive financial and social returns

SUPPLIERS

EMPLOYEES

DISTRIBUTORS

CONSUMERS

1

2

3

4

VALUECHAIN FORTHE BUSINESS FORTHE BOP

Transparent, reliable supply chains

Cost savings due to local sourcing

Jobs and income

Stable prices for products

Training and skill development

Supply of talent at lower cost thanexists in developed wage markets

Secure, safe jobs and income Opportunity for social mobility,

where possible

Cheaper, more flexible, more

responsive distribution chains

Secure jobs, increased income,

better livelihood opportunities

Additional markets and revenue

streams

Increased access to safe, innovative

and affordable products


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How do you make businesses inclusive?

Source: Icons from www.thenounproject.com

MANUFACTURING

/ PRODUCTIONPROCUREMENT CONSUMERSLOGISTICSANDDISTRIBUTION

MARKETING /

AWARENESS AFTER SALES

Can we buy directly from local BoP

suppliers? Can we help increase vendor capacity by

investing in training?

Can we provide/facilitate access to finance

to vendors?

Are there non-traditional actors that can

help in raising awareness generation andmarketing efforts (E.g. government, civil

sector, NGOs, etc.)?

How do we use technology to provide better

aftersales support to the BoP? Can we work with BoP entrepreneurs to

help with aftersales support and consumer

feedback?

How can we optimize energy usage?

How can we build employee capacity by

investing in training and professional

development?

How can we customize benefits to suit low

income employees?

How can we minimize any negative impact on

the environment?

How do we provide access to information to our

logistics partners to help them become more

efficient?

Are there local networks that we can tap into

and develop for transportation and distribution?

Can we reorganise the business to enable work

with small orders/inventory sizes?

How do we make products more affordable?

How do we provide financing to BoP

consumers who cannot afford high up front

payments?

How do I ensure effective tailoring of

products to suit the BoP needs?


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Inclusive businesses are different from existing businesses

1Positive externalities encompass impact measure along Human Development Indicators

Source: Dalberg analysis and research

Market

returns

Below

market

Above

market

returns

Low HighPositive externalities 1

Inclusive

business

Mainstream

business

Large businesses can generate profit and

impact poverty by accessing new markets,

adapting products for BoP & reconfiguring to

an ethical, greener, more efficient supply chain

Social enterprise

Social enterprises and small

businesses seeking longer term and

scalable impact can better attract

capital and grow with a focus on

financial sustainability

COMPARINGDIFFERENTTYPESOFBUSINESSESACROSSMARKETANDSOCIALRETURNS

Market returns on the X-axis; Social returns on the Y-axis


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and also differ from CSR initiatives

Source: Dalberg research and analysis

Effective management of economic, social and

environmental impact

Brand-building and risk management

Employee and customer engagement

Investor relations

Profitability and long-term sustainability,

taking into account social and environmental

concerns

Engaging in new markets with a license to

operate

Does not generate any direct financial returns

Requires consistent on-going funding

Inclusive businesses aim to meet or exceed

cost of capital

Each activity is specifically designed to

generate social impact

Impact is limited by scale of investments and

donations

Social impact may be the objective, or simply

an outcome of the business activity, but must

be explicitly measured

Impact is achieved by scale which is directly

related to the success of the business

PURPOSE

FINANCIALRETURNS

SOCIALRETURNS

CORPORATESOCIALRESPONSIBILITY INCLUSIVEBUSINESS

A pharmaceutical company that donates

medicines to the government for

free/subsidized distribution to BoP

communities

A pharmaceutical company selling medicines

in affordable unit sizes, utilizing community

health workers to reach BoP populationsEXAMPLE


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Why should large companies change their business model to become more inclusive?

B b i i l i ki ith i t l 57% ( 3 9B


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BECAUSE being inclusive means working with approximately 57% (~3.9B

people) of the worlds population that otherwise remains poorly engaged

35%

65%

PRESENCEOF BASE OF THE PYRAMIDPOPULATIONS1INTHEWORLDIN 2012 (ESTIMATES)

Population in millions; Top-two countries in each region; Poverty line in 2005 PPP

Source: World Bank PovCalNet analysis tool accessed on 11 February, 2013; Dalberg research

EAST ASIAAND PACIFIC (BOP: 1251M)

Non - BoPBoP

88%

12%

EUROPEAND CENTRAL ASIA (BOP: 54M)

35%

65%

MIDDLEEASTAND N.AFRICA (BOP: 175M)

10%

90%

SUB-SAHARAN AFRICA (BOP: 778M)

68%

32%

LATIN AMERICAANDTHE CARIBBEAN (BOP: 196M)

6%

94%

SOUTH ASIA (BOP: 1544M)

The Base of the Pyramid populations identified here earn USD 4/day or less

Turkey: 13m

Russia: 8m

China: 831m

Indonesia: 217m

India: 1100m

Pakistan: 165m

Nigeria: 159m

Ethiopia: 80m

Brazil: 56m

Mexico: 29m

Egypt: 59m

Iraq: 22.7m

B S th l i k t h b t ti l di


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BECAUSE these low-income markets have substantial spending

power and are growing rapidly

45%

1,580B

34%

21%

Source: Regional market sizes from The Bottom 4 Billion, World Resources Institute (2008); Total household spending and growth from World Bank country-

level data; Dalberg research

REGIONAL MARKET SIZESAND BOP MARKET SHARE

Market sizes in USD billion (2008)

CHINA

INDIA

BRAZIL

USD 4/day and lessUSD 4/day - USD 8/dayUSD 8/day and more

718B

49%

36%15%

66%

974B

13%21%

14%15%

17%

Brazil IndiaChina

GROWTHINCONSUMERSPENDINGINSELECTEDECONOMIES

CAGR (2008-2012)

INDICATIVE


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BECAUSEtraditional markets are getting saturated

1 Figures are adjusted for cost of living variations across countries; only wage earners are counted; average world salary estimated for 72 countries on which

data was collected

Source: ILO; Dalberg research

AVERAGEMONTHLYSALARYACROSSCOUNTRIES1

USD (PPP), 2012

GROWTHINSPENDINGONCONSUMERDURABLES

CAGR

India

(2003-2009)

10%

USA

(1999-2009)

3.8%

3,263

3,065

2,903

2,522

778

609

295

279Philippines

Korea

1,480

India

Mexcio

UK

Japan

USA

Brazil

EMERGING

DEVELOPED

World

average

BECAUSE there are large opportunities in several BoP markets that I


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BECAUSE there are large opportunities in several BoP markets that

businesses can invest in and capitalize across the world

NOTE: Measures here are not comprehensive. Sizing the entire BoP market for impact investments is very difficult; thus only selected businesses within five

sub-sectors were analyzed in the JP Morgan report

Source: Survey of global impact investors and funds, Impact Investments: An Emerging Asset Class, JP Morgan (2010); Dalberg research

INDICATIVE

Housing

790210200190180100

Health

Education

Water and Sanitation

Finance

210 79010 190180 2000

Not measured

POTENTIALINVESTEDCAPITALREQUIREDTOFUNDSELECTED BOP BUSINESSESOVERTHENEXT 10 YEARS

All amounts in Billion USD

POTENTIALINVESTEDCAPITALREQUIRED (BILLION USD) POTENTIALPROFITOPPORTUNITY (BILLION USD)

$ 214B-$ 786B $ 177B-$ 648B

$ 5.4B-$ 13B $ 2.9B-$ 7B

$ 0.4B-$ 2B $ 0.1B-$ 1B

USD 176B

$4.8B-$ 10B $ 2.6B-$ 11B

NOTEXHAUSTIVE

BECAUSE engaging the BoP can spark innovation that not only overcomes


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BECAUSE engaging the BoP can spark innovation that not only overcomes

emerging market barriers

Source: Images from company websites; Dalberg research

SELECTEDEXAMPLESOFINNOVATIONATTHE BOP

PRODUCTS

Problem:

Electricity is expensive for BoP

Supply of electricity is unreliable

for majority of the BoP

population

Innovation:

Products and appliances that are

not dependent on grid

connectivity to operate

Products and appliances that

emphasize energy efficiency, and

entail minimal running costs

Examples include low-voltage

tablets (Aakash), LED lights

(Nokero 200), and refrigerators(GodrejsChotu kool)

SERVICES

Problem:

Up front ability to pay is low

Access to financial services is

limited or non-existent

Innovation:

Pay-per-use models that

prioritize increased access overasset ownership. E.g. Sarvajal for

drinking water, Ecotact for

sanitation

Mobile money platforms that use

local networks and mobile

technology to provide basic

banking services (deposits,

withdrawals, loan payments,

transfers, etc.) to under-coveredBoP. E.g. Safaricoms mPesa in

Kenya

BUT ALSO drives development of products with significant potential in richer


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BUTALSOdrives development of products with significant potential in richer

markets

Source: www.gehealthcare.com ; www.grameenamerica.com ; Dalberg research

LOW-COST ECG MACHINEBY GE

GE Medical Systems developed an

affordable, portable EKG machine

specifically for rural India to overcome

infrastructure and access challenges

The machine costs $2,500, compared to

$10,000 for standard machines in

developed markets

The new product has now been

successfully marketed in developed

markets

MICRO-LOANSIN AMERICABY GRAMEEN BANK

Grameen Bank pioneered the concept of

providing group-based micro-loans to

low-income households in rural

Bangladesh

The group-lending model for small loans

was replicated in urban America by

Grameen America, in 2008

Grameen America has reached 12,500

families and disbursed over USD 60m in

micro-loans

SELECTEDEXAMPLESOFREVERSEINNOVATION

INDICATIVE
http://www.gehealthcare.com/http://www.grameenamerica.com/http://www.grameenamerica.com/http://www.gehealthcare.com/


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BECAUSE markets have begun to reward inclusivity

Source: 1DJSI Review Results, 2012; 2NSE India, S&P equity indices 2012; http://www.ftse.com; Bloomberg; Dalberg research

PERFORMANCEOFGOOD COMPANIESONSUSTAINABILITY INDICES

Y-axis: Total return, USD

INDICATIVE

20

40

60

80

100

120

140

160

180

Jun-07

Jan-08

Aug-08

Mar-09

Oct-09

May-10

Dec-10

Jul-11

Feb-12

Sep-12

DJSI Sustainability Asia Pacific

MSCI Asia Pacific

DJSI Asia Pacific

20

40

60

80

100

120

140

160

180

200

Jun-07

Dec-07

Jun-08

Dec-08

Jun-09

Dec-09

Jun-10

Dec-10

Jun-11

Dec-11

Jun-12

Dec-12

S&P ESG India (USD)

S&P CNX Nifty (USD)

S&P ESG India

50

60

70

80

90

100

110

120

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

Mar-12

Jun-12

Sep-12

Dec-12

FTSE All world Index

FTSE4Good Global Index

FTSE4Good - Global

AND FINALLY BECAUSE for many large multinational companies being inclusive is


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ANDFINALLY, BECAUSE for many large multinational companies, being inclusive is

not a choice, its simply good business

1 The Economist (April 2010)

Source: McKinsey Quarterly; www.wikipedia .com; Dalberg research

COSTSAVINGS

EMPLOYEE

RETENTION

Inclusive business practices help build relationships and trust within the local community; this

provides the company with access to local pools of labor that are otherwise hard to find and

work with, enabling the company to save costs in the long run

The pool of qualified talent in developing markets is shallow there is strong demand and weak

supply of capable and skilled employees; losing talent is bad for business as recruiting (to refill

existing positions) and re-training are expensive

Businesses that adopt inclusive practices enhance their reputation and credibility within the

community, and inspire loyalty within their workforce, thereby increasing retention

LICENSETO

OPERATE

Protests and instability in the market hurts business; by taking substantive voluntary steps toinvest in the local environment and community companies can reduce reputational risks and

persuade governments and the wider public to allow business operations without interference or

obstruction

The worlds leading companies expect emerging markets to generate approximately 70% of global economic growth over the next few years1

companies that seek to effectively include underserved populations in these countries in their business models will benefit the most


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What are the challenges to inclusivity?

Companies face two important sets of challenges when trying to engage with


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the BoP

EXTERNALCHALLENGES

External factors including inadequate infrastructure and transportation, dispersed consumers, poor access to

information, products and finance, and lack of market information affect business growth and scale.

INTERNALCHALLENGES

Developing an inclusive business can challenge the existing operations, capacities and processes within a

business. This may lead to internal tension and opposition to change.

There are five critical market-based challenges that limit business EXTERNAL


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g

growth and scale

Source: Dalberg research

CHALLENGE IMPLICATIONSFOR BUSINESSES

Limited purchasing power, nofinancial access

Even inexpensive products and services may be unaffordable for the average BoPconsumer

BoP businesses find it difficult to increase capacity or achieve scale (including as

suppliers to other businesses)

Low education, awareness

and skills

Consumer willingness to pay suffers as they there is limited access to product

information, including availability, quality, usability, prices, etc

Suppliers, distributors and retailers may lack the knowledge and skills to deliver

quality products and services, consistently, and cost effectively

Hard to reach Standard distribution models are very costly and ineffective in reaching BoP

populations

Disaggregated, low-quality

supply chains

Procurement is inefficient, with presence of several intermediaries

Procurement is unreliable given poor infrastructure and limited capacity of SMEs

Poor market data andinformation

Businesses know very little about poor peoplewhat they prefer, what they canafford, and what products and capabilities they have to offer as employees, producers

and entrepreneurs

Innovative inclusive business models have tried to address market EXTERNAL


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barriers (1/2)

Source: Internet research; Company websites; Dalberg research

Limited

purchasing

power, no

financial

access

Purchase finance Focus on lowering transaction costs of consumer finance

and provide micro-loans to individuals/groups for small-

ticket purchases

Pay-per-use

Sachet model

Implement alternate payment models in which customers

pay for each use of the product, instead of owning it

Sell product in smaller unit sizes and lower prices

Supplier finance Incorporate B2B financing within IB models that engage the

BoP as suppliers, including trade finance, partnering with

commercial banks, etc.

Low

education,

awareness

and skills

Marketing /

awareness

Partner/co-invest with government bodies, donors, local

bodies to implement awareness and education campaigns

Up-skilling

De-skilling

Invest in technical training / professional development to

fill staffing needs

Disaggregate operations into discrete tasks that can be

performed by low or un-skilled BoP populations

BUSINESSMODELS DESCRIPTIONCHALLENGES EXAMPLES

MEKONG BAMBOO

Innovative inclusive business models have tried to address market EXTERNAL


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barriers (2/2)

Source: Internet research; Company websites; Dalberg research

BUSINESSMODELS DESCRIPTION

Hard to reach

Micro-entrepreneur/

micro-franchise

Partnerships

Increase points-of-sale in hard-to-reach areas by hiring and

developing the BoP as micro-level entrepreneurs andfranchisees

Build linkages with SMEs, rural NGOs and other businesses

etc. that are local to the target market, to leverage proven

networks and systems and reach BoP consumers

CHALLENGES

Disaggregated,

low-quality

supply chains

Direct purchase Purchase directly from BoP producers, and develop their

capacity through training and investment

BoP-owned

cooperative

Third-party

aggregator

Purchase from cooperatives or other apex organizations of

BoP producers, and collaborate with them to improve /

increase production capacity

Purchase from intermediaries that aggregate supply from

BoP producers

Poor market

data and

information

Various Emphasize establishing linkages and relationships with local

individuals and organizations in the business model, in

order to gain context and key market information.

EXAMPLES

Sarvajal uses a PAY PER USE model to provide low income and rural


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WHATWASTHEPROBLEM?

Rural access to clean drinking water is very poor, leading to a vast majority of all diseasesin India; Sarvajal wanted to develop a low-cost, market-based solution to increase access.

HOWWASITSOLVED?

Sarvajal used a franchisee-based model in which village-level entrepreneurs operated

solar-powered water purifiers for community access to clean drinking water

Community members used a pre-paid card to buy water from the entrepreneur; the card

is re-chargeable via the mobile phone

WHATWERETHEOUTCOMES?

Sarvajal supplies clean drinking water to more than 150 cities, towns and villages in

India at Rs. 0.25 0.50 per liter

Sarvajal has provided employment and income-generation opportunities to water

entrepreneurs in Indian villages

WHATWASLEARNT? Challenges of operating in rural environments can be overcome by innovatively and

effectively incorporating technology into the business model, e.g. for cashless payment

and re-charge, for aftersales servicing and quality monitoring, etc.

Identifying high-capacity entrepreneurs/franchisees is difficult and can often make or

break the business

Sarvajal uses a PAY-PER-USE model to provide low-income and rural

communities access to safe and clean drinking water

Photo courtesy www.images.google.com


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WHATWASTHEPROBLEM?

Guangshas construction workers were poorly trained, which led to a number of costlyon-site accidents

HOWWASITSOLVED?

Guangsha created free-tuition vocational schools at each construction site of more than

50,000 meters

Semi-permanent day laborers are required to pass four training exams in order to get

official Guangsha contracts

Training certificates are only valid for one year and must be renewed annually or at thestart of each project, whichever is sooner


In 2005, Guangsha had net profits of $19 million and an output value of $670.7 million

90% of students receive training certificate on their first attempt

WHATWASLEARNT?

Providing training for BoP employees can reduce costs, mitigate risks, and improve

employee retention

Training programs for BoP employees often require large upfront investments (e.g.

Guangsha invested $3.65 billion to start schools)

Guangsha Construction invested in UP-SKILLING its workers in China


Nestle established a network of MICRO-DISTRIBUTOR FRANCHISEES to expand


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WHATWASTHEPROBLEM?

Nestl could not reach BoP consumers because its typical distribution model using a full

truck would not work infavelas with narrow streets

HOWWASITSOLVED?

Nestl identified a network of distributors and micro-distributors who would buy

products and assemble assortments appropriate for distribution to micro-retailers in

favelas

Distributors also assembled pre-packaged kits for direct sales to families in their homes,

using trusted direct sales agents from local communities


Nestl increased sales among BoP consumers infavelas

Nestl created jobs by recruiting informal workers to become direct sales agents and

micro-distributors

WHATWASLEARNT?

BoP can be effective distributor of products to hard to reach communities

Hiring local staff (e.g. direct sales agents) with relationships of trust within the

community can increase direct sales to BoP consumers

Nestle established a network ofMICRO-DISTRIBUTORFRANCHISEESto expand

their reach among the urban poor in Brazil


Intel partnered with the Government of Vietnam to SPREADAWARENESSAND


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WHATWASTHEPROBLEM?

Intel wanted to increase penetration of its low-cost laptops within low-income

households in Vietnam

Poor awareness of IT and IT products among low-income households in Vietnam

HOWWASITSOLVED?

Intel worked with the Vietnamese Government to increase awareness of information

technology through programs on digital literacy, and by working directly with schools,

hospitals and offices, and by targeting small businesses and farmers in rural areas


Intel provided more than 100,000 affordable PCs to young Vietnamese people via a

government program

Increased technology access and IT awareness in more than 200 community centers

Adoption of Intel provided laptops in schools, hostpitals and government offices

WHATWASLEARNT?

Working with the Govt can be an effective means of encouraging product adoption,

while increasing awareness of potential benefits

Working with the Govt can open new doors to working with local product/service

providers, banks, etc .

EFFECTIVELYMARKETits affordable laptops within target populations


Starbucks secured its supply of quality coffee beans in Latin America by


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WHATWASTHEPROBLEM?

Consumers demand coffee with various combinations of the following characteristics:high quality, sustainable production, fair trade, traceability, and improved social

conditions in farming communities.

HOWWASITSOLVED?

Starbucks created the C.A.F.E. practices, which guide farmers to produce higher-quality,

environmentally friendly, sustainable coffee

Conservation International and other agencies help farmers implement C.A.F.E. practices Starbucks commits to purchase coffee from farmers who have a sufficiently high C.A.F.E.

score


By fiscal year 2007, Starbucks made 65% of its purchases from C.A.F.E. approved

suppliers and hopes to increase that percentage to 80% by 2013

WHATWASLEARNT?

Even without greater interaction, a commitment to purchase can serve as a powerful way

to engage BoP suppliers

Consumers in developed countries are increasingly interested in products that engage

the BoP in sustainable ways

Starbucks secured its supply of quality coffee beans in Latin America by

PURCHASINGDIRECTLYfrom smallholder farmers, and by investing in training



h


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the BoP

EXTERNALCHALLENGES

External factors including inadequate infrastructure and transportation, dispersed consumers, poor access to

information, products and finance, and lack of market information affect business growth and scale.

INTERNALCHALLENGES

Developing an inclusive business can challenge the existing operations, capacities and processes within a

business. This may lead to internal tension and opposition to change.

Companies need to be internally aligned around key elements of

h i l i b i i

INTERNAL


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the inclusive business opportunity


INCLUSIVE

BUSINESS

Ensure leadership

recognizes the value

of a broader set ofreturns from an IB,

and is committed to

a long term horizon

with respect to

investment and

impact

LEADERSHIP

Identify a social

need that intersects

with the companys

core capabilities,

and that can

generate an

acceptable rate of

return

BUSINESS

OPPORTUNITY

Ensure that all

sources of value are

identified andmeasured, and right

expectations are set

on time horizons

and incentive

structures

BUSINESS

CASE

Seek out

opportunities for

leveraging localproduct, services

and talent often via

key partnerships

RESOURCES

& CAPACITY

Understand and

manage local

perceptions andregulations; dont

over promise

RISK

Measure and

monitor

performance acrosspredefined financial

and social metrics

MONITOR /

EVALUATE

STRATEGY EXECUTION

There are some critical questions companies should ask

th l b f i ith B P k t

INTERNAL


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themselves before engaging with BoP markets


Is the senior management fully invested in the inclusive business opportunity, including

support for innovation and long-term view on profitability?

What are the core capabilities of the existing business that match to important BoP

needs and gaps?

Can we partner with the right organizations/networks to gain market knowledge,

access to supply chains and expertise, and to develop any additional skills, capacity

necessary to operate the IB?

Does the business plan incorporate a long-term view on profitability and include new

performance metrics and incentive structures aligned to the IB?

Are there any risks to the existing business (brand, reputation, product cannibalization)

arising from the inclusive business opportunity?

Leadership

1

Business

opportunity

2

Resources and

capacity

3

Business case

4

Risk analysis and

mitigation

5

Monitoring and

evaluation

6 What are the best and most transparent ways in which to collect and analyze data on

the predefined financial and social performance metrics, so as to effectively capture

and convey the broad range of IB impact?


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End of Session

Questions?

①Dalberg_130214 ADB IB workshop - Introduction to IB models_vF

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