Friday, June 15, 2007

Quantifiable Business Value required for Social Development in Emerging Markets

Increasingly, multinational corporations are required to justify business investments in developing countries as having benefits for local populations, and likewise, philanthropy departments are asked to demonstrate the business rationale for philanthropic programs. IDG news recently discussed how some corporations are managing to achieve this delicate balance better than others. Recognizing and quantifying a blended value for these types of investments is necessary as technology companies search for near- and long-term growth opportunities in lower-income markets around the world where infrastructure is weak and educational programs are limited. For years, technology companies have addressed these issues through philanthropic or corporate social responsibility projects. As developing countries become increasingly attractive consumer markets, however, social development initiatives married to the company’s core products and services are proving to be sound strategic business investments.

The shift from philanthropy to sustainable business investments, or “social innovation,” may be here to stay, according to Unilever’s Chief Executive Patrick Cescau. Recently, Cescau even suggests that corporate social responsibility (CSR) may, in fact, be dying out. By addressing socio-economic conditions with their products and services, companies are both identifying next-generation consumers and discovering novel, low-cost ways of using technology.

Business managers sometimes find resistance to focusing company resources on emerging-market business growth due to the challenge of quantifying the opportunities and benefits. Managers responsible for growth in emerging markets will gain greater traction internally by demonstrating the business value of social development initiatives. These investments must be measured on the basis of market size, financial opportunity and alignment with current business systems and goals. By applying business rigor to social development initiatives, companies can ensure their sustainability and ultimately maximize the benefit to the target markets.

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