***Week 5 - Business & Poverty

Question 1

Meaning of globalisation

Answer 1

• social orders than transcend political, cultural, economic and georgraphics boundaries

Question 2

benefits to emerging economies

Answer 2

1) Winners: Developing Countries
- Marketing creation at home CARS
- job creation
- 6-10% growth, quality of life, living standards
2) Losers: Developing countries
- poverty gap
- pollution
- urbanisation (moving to city)

Question 3

Business relationship to poverty: tool & agent

Answer 3

• Development tool (not responsible +-outcome, business as development tool makes products available in developing economies)
• Development agent (+ action, makes products needed and of us, often motivation by stakeholder concerns and external pressure)
  Blowfield & Murray p82

Question 4

Business relationship to poverty: 3 things

Answer 4

1) Business as cause (labour exploitation, pollution, corrupt governance)
2) Business as victim (HIV/AIDS, corrupt governance, poor infrastructure)
3) Business as solution (microfinance, bottom of pryamid, good/services for unserved markets)

Question 5

Business as a solution (pyramid)

Answer 5

• richest at top of prymaid, mass production, low cost help poor,

Question 6

Micro finance

Answer 6

• small scale loans at affordable interest rates(short term money farmers harvest, start up business)
• standard chartered (since 2005 lent over $1 billion, 43 partners, providing over 14 countries)
• criticized target poor high interest (exploit)

Question 7

Consumerism/served markets

Answer 7

• bring high quality products more adorable for poorer consumers, prevents local monopolies working as cartels
• competition from multinationals help lower prices, standard of living and provide new employment op Prahalad 2006

Question 8

BOP (bottom of pyramid) criticisms

Answer 8

• • fortune found at bottome called ‘mirage’ market too small monetarily to be v profitable for multinationals Karani 2007
• focus on helping poor develop own businesses buy from them rather than selling Karnani 2007

Question 9

Fair trade….

Answer 9

• trade themselves out of pov, higher price

- cooperatives bring groups of producers and farmers together help produce to market without middlemen

Question 10

Advantages of fair trade

Answer 10

• pay fair trade min price, protects sudden changes in market price
• Pay fair trade premium, help improve environmental and social conditions in the local community
• Pay up to 60% of contract price in advance (so can invest in crops)
• Enter into long-term contracts (promote confidence, training staff)

Question 11

Fair trade criticism

Answer 11

1) not offer radical enough alternative (power, selling same buyers) to traditional capitalism Benn & Bolton 2013
2) Little protection over local law Haight & Henderson 2013
3) only accounts small percentage global trade Benn & Bolton 2013
4) Buy quality rather than fair trade Haight & Henderson 2010

Question 12

CSR as a response

Answer 12

• companies take all benefits and no responsibility for negative consequences
• businesses engagement with pov alleviation often bound in self interest

Question 13

Additional reading - Business & Poverty

Answer 13

1) Bangladesh, panel data Found that it raises per capita household consumption for both participants and non participants (Khandker SR 2005)
2) unlikely have a positive impact on poorest unless specifically seeks reach them through appropriate product design and targeting (Wright, 2000)
3) gringo 1988, only buy from factories or co-operatives visited in person (child labour, equity and working environments
4) face to face study receptive towards both fair trade and shade grown coffee labels willing pay higher premium (Loureiro ML, 2005)