Corporate Responsibility - business enabler in emerging markets (Detecon Executive Briefing)

8/8/2019 Corporate Responsibility - business enabler in emerging markets (Detecon Executive Briefing)

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Detecon International GmbH 10/2008 1 www.detecon.com

Miriam Mertens Reza Moussavian

[email protected] [email protected]

Corporate Responsibility -business enabler in

emerging marketsCorporate Responsibility (CR) is en vogue. Many business leaders

and multinationals acting in emerging markets decorate themselves

with CR activities presented as an act of charity. Only a few

corporations have identified its business potential. This Detecon

Executive Briefing outlines a new approach for telecom operators in

emerging markets to pursue innovative integral Corporate

Responsibility aligned with business strategy and operations.

> Executive Briefing


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Corporate Responsibility business enabler in emerging markets

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Telecommunications in emerging markets

Increasing ARPU expectations and the triple-digit growth rates of mobile subscriptions are

encouraging more and more international operators to invest into emerging markets. In

developing countries telecommunication providers are confronted with the question as to

how and to what extent they can and want to contribute to the economic welfare of the local

society. An integrated corporate responsibility strategy can help operators to create

sustainable business, build trust with local stakeholders, and thereby establish a broadly

accepted license to operate, to the benefit of the corporation as well as the surrounding

society. With respect to corporate responsibility three central questions arise:

Is CR an unavoidable expenditure needed to comply with moral and legal

obligations, or is it an opportunity to enable business success?

Should CR be clearly marked as charity and social sponsoring, or should it be

linked to core business?

Can CR foster competitive advantage and support strong moves towards

sustainability?

From one-off charity to balanced business

CR as a business success factor is a long-term process which can be defined in four steps.

It is essential that the correct starting point is assessed, and that the right, comprehensive,and compelling strategy is defined.

Step 1 - Stand-alone CR: Usually driven by social values and business ethics, stand-alone

CR can be characterized as corporate philanthropy. It has a pure charity focus and aims to

give something back to society. The focus is merely on good citizenship by donation and

accompanying action-related communication.

Step 2 - Chartered CR: At the next level of CR, social activitiesare leveraged in order to

improve brand preference and familiarity. It can also be determined by a legal or

regulatory license obligation, often communicated to the public as corporate donations,

scholarships sponsoring, aid supports or other prominent engagements. Since the CR

activities are not linked in any way to the offered products and services, the positive impacton brand awareness or company image might still be limited.

Step 3 - Functional CR: Various business functions are aligned with internal or

external CR guidelines. These functions may include finance, technology, sales, marketing,

human resources and product development. The widely known case of combined micro-

finance, micro-crediting and mobile payment services, offered by Grameenphone,

Safaricom, MTN and others, fits into this category. Another case concerns operators

struggling with unreliable power supplies in emerging markets. They make use of renewable

energy sources to increase energy efficiency and network reliability. In addition, and this is

where the CR link plays in, the network sites become energy hubs, ideally points of sale

(for rural areas) and device charging spots, overcoming one of the biggest barriers to mobiletelephony in emerging markets.


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Step 4 - Integral CR: This step is achieved when CR becomes a core element of thebusiness strategy and spans all business functions. Social entrepreneurship becomes a

leadership style, performance measures and balanced scorecards reflect social and

environmental commitment, marketing and sales are used as a means of community

building, supported by Green ICT- climate neutral, eco-compliant technology operations with

staff motivated by the sustainability cause. The organization evolves into an integral CR

entity.

In the following section exemplary opportunities and measures for each business-related CR

maturity level - chartered, functional and integral CR - are presented.

Fig. 1: Corporate Responsibility Maturity Model

Corporate Responsibility Maturity Model Charity only

Corporate philanthropy, charityfocus

No or poor (PR) connection to corebusiness

Chartered CR PR focus, selective business units

engaged C(S)R manager assigned

Functional CR CR products, segments, sales

channels Integral CR

Business strategy outlines CR askey element, part of corporate goalsand vision

CR is organization driven (ratherthan leadership)

Time

short-term mid-term

low

medium

high

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enefit

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Charity only

Chartered CR

Integral CR

Functional CR

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Time

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medium

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CRb

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Charity only

Chartered CR

Integral CR

Functional CR

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Time

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CRb

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Charity only

Chartered CR

Integral CR

Functional CR

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Chartered CR - Commit to community

Organizations aiming at chartered CR should utilize social marketing campaigns to induce

customer preference for their brand and products. Consumers are becoming more aware of

the environmental and social implications and consider them in their buying decisions.

Such a shift to ethical consumerism should be reflected in marketing strategies. Social

sponsorship such as the support of universities with joint projects, on-the-job training for

graduates, supply of technical expertise for public institutions, or the facilitation of research

centers can be a powerful tool since the sponsored association can be used for brand

endorsement, which provides more credibility than advertising messages.

Functional CR - Explore innovative customer touch points

Functional CR looks at the different business areas within an organization and aligns them to

positively impact society. In sales for example student organizations in universities or

medical clinics in rural areas can be used as sales channels. While the operator gets access

to previously untapped customer segments, they also contribute to the economic

development of these segments and benefit from the accompanying positive brand

perception.

These Private Public Partnerships with needy, but pivotal, organizations can drive a

profitable business if they are offered franchises for points of sale within their organizations

using a special commission scheme. An alternative model would be to give theseorganizations space for offering important basic services, health services for example, at the

operators point of sale. Customers are drawn into the shop while the non-profit

organizations benefit from floor space and infrastructure.

Integral CR Tap the bottom of the population pyramid

Fully integral CR is achieved if the products and services offered are CR compliant. Profit

generation and the achievement of a positive impact on society or environment go hand in

hand - the ultimate art of corporate responsibility practice.

In developing countries the poorest class of society is not often considered sufficiently in

profit-generating business models. The development of products for this segment of the

population not only taps a new revenue source, but also contributes to their economic and

social advancement. Developing this market requires a change in conventional

segmentation. The customer base in emerging markets can be characterized by two main

groups: One can afford sophisticated ICT services, is largely saturated and often carries two

to three mobile numbers. The other group is too poor to afford a SIM card, let alone acquire

a handset. Since more than of world population belongs in this long-neglected segment,

the bottom of pyramid, this is where future subscriber growth will be determined and is

hence where more attention should be paid.


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Corporate Responsibility - business enabler in emerging markets (Detecon Executive Briefing)