OPTION FOR THE BOTTOM OF THE PYRAMID

Moral Theories and Principles MBM - 102

“Let us not belittle our fellow countrymen depicted by poverty, for these are not problems but opportunities to empower, alleviate

and bestow effective solutions.”

Elcid Aleman

Option for the Bottom of the Pyramid

FACES OF POVERTY

Option for the Bottom of the Pyramid

Report Agenda

The Business Role in Alleviating

1 Definition of Poverty 6 Poverty

2 Poverty Status 7 Causes of Poverty

3 Purpose and Trend 8 Dependency Theory

4 Development Programs 9 Preferential Option of the Poor

5 On Social Justice 10 Examples

Option for the Bottom of the Pyramid

DEFINITION

What is Poverty?

Poverty is a human condition of having insufficient resources or

income. In its most extreme form, poverty is a lack of basic human

needs, such as adequate and nutritious food, clothing, housing, clean

water, and health services.

Option for the Bottom of the Pyramid

POVERTY STATUS

While the world is globalizing and the mainstream media in many developed

nations are pointing out that economies are booming, half the world or

nearly three billion human beings live on less than two dollars a day.

Option for the Bottom of the Pyramid

POVERTY STATUS

The gross domestic product (GDP) of the poorest 48 nations (that is, a quarter of
the world’s countries) is less than the wealth of the world’s three richest people
combined.

Democratic Republic of Congo

Zimbabwe

Liberia

Guinea-Bissau Carlos Slim Helu Bill Gates

Net Worth: $53.5 billion Net Worth: $53 billion
Source: Telecom Source: Microsoft
Somalia Residence: Mexico Residence: U.S.

Comoros

Solomon Islands

Niger

Ethiopia
Warren Buffett
Net Worth: $47 billion
Source:Investments
Central African Republic Residence: U.S.

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POVERTY STATUS

In the area of education, adult literacy improved to 79% from 48% over a 25-year

period, and yet nearly a billion people entered the 21st century unable to read

a book or sign their names.

Option for the Bottom of the Pyramid

THE PURPOSE

Option for the bottom of the pyramid does not mean a dole-out approach
to poverty reduction. It is the promotion of pro-poor economic growth with
the private business sector as leader.

World bank Chief

Economist Nicholas
Stern and other stop the method of “fish giving” and
researchers in improve the “fishing skills training”
business.
development
economics
concurred to:

Option for the Bottom of the Pyramid

THE PURPOSE

South Korea Taiwan Malaysia

Thailand Indonesia Singapore

The economic development of those Asian nations mentioned above is

characterized as “pro-poor growth”.

Option for the Bottom of the Pyramid

POVERTY TRENDS IN THE PHILIPPINES

35
30
25
20 2000
15 2003
2006
10
5
0
Families Individuals

NATIONAL STATISTICAL COORDINATION BOARD

Option for the Bottom of the Pyramid

United Nations Development Program

United Nations Children’s Fund, which provides food,

medicine, and education programs for children worldwide.

United Nations Food and Agriculture Organization, which

supports increased agricultural productivity and improved
food distribution and nutrition.

Millennium Development Goals, a universal and urgent call to action has been
made to achieve a 50% reduction in poverty by the year 2015

Option for the Bottom of the Pyramid

On Social Justice
Less
Fortunate

Least
Advantages

Greatest benefits should go to the four L’s

The Last

The Lost

This requirement of social justice is realized in the fundamental principle

otherwise known as the preferential option for the poor, which is a kind of
empowerment for those in the bottom of the pyramid.
Option for the Bottom of the Pyramid
The Business Role in Alleviating Poverty

1. Reputational capital.

The first reason has got to do with the quality of a company’s environmental and community
management that provides a good indicator of the overall quality of its business.

2. Sustainability premium.

It seems that the social and environmental sustainability forms part of a firm’s competitive
advantage, which is actually linked to profitability. The company’s share in citizenship,
particularly in the role of business in reducing poverty, creates a sustainability premium on
earnings due to higher stakeholder satisfaction, reduced cost of transaction, and guaranteed
quality human capital coupled with reduced social risks.

3. Social investment.

The allocation of business resources will not be driven only by shareholder value but also by
stakeholder value. It is now imperative for business to see its role in poverty eradication as a
“social investment” rather than a simple act of philanthropy.

Option for the Bottom of the Pyramid

Causes of Widespread Poverty

1. One undeniable factor is the unequal distribution of global resources.

2. Favorable trade means that developed nations are able to get inexpensive
natural resources from poorer countries in Asia, Africa, and Latin
America, including oil for power, ores and minerals for manufacturing
durable goods, and manufactured goods made by low-wage workers in
factories operated by multinational corporations.

3. Some people see neocolonialism effecting the uneven distribution of

resources around the world, which helps explain why fewer people are
becoming wealthier while a disproportionately larger population is
becoming poorer. This cause of poverty, experts say, is called global
inequality.

Option for the Bottom of the Pyramid

Causes of Widespread Poverty

Option for the Bottom of the Pyramid

Dependency Theory

Dependency theory says that poor (and the poor nations), who are beggars, depend
on the rich (and the rich nations), who are donors, in an endless cycle of begging
and donating.

If the poorer nations are not given the sufficient means to produce their own food, if
they are not allowed to use the tools of production for themselves, it is a possibility
that poverty will continue.

Option for the Bottom of the Pyramid

Preferential Option of the Poor

1. More than dole-outs. The principle goes beyond doling out company donations as an
act of philanthropy. Leading and cutting-edge corporations and enterprises have graduated
from that.

2. Transcends public relations. Option for the dirt-poor surpasses the key result areas of
the public relations office. It is more than corporate-image building that ends up neatly in an
increase in sales. CSR champions do not do what is good and ethical primarily to project
angelic images. It is “beyond form” and publicity gimmick.

3. Genuine commitment to grassroots development. The only motivation why we opt for
the poor is to prevent the widening gap between the haves and have-nots, to arrest the
growing gap between the elite and the masses (Narayan et al., 2000). The only underlying
motive is to serve, “serviam,” as written in the coat of arms of Jaime Cardinal Sin, former
archbishop of Manila.

4. A personal philosophy. It is a philosophy rooted in business ethics. A moral leader,

seeing abject poverty, cannot but opt for those who have less in life. But this principle is
also by-product of the evolution of CSR, from company philanthropy to direct social
engagement.

Option for the Bottom of the Pyramid

Preferential Option of the Poor

5. Corporate decision. Preferential option for the poor is a personal choice of an individual.
Besides being a personal disposition, however, it can also be a corporate decision of any
business community concerning the issue of ownership, use, and sharing of goods and
resources. Not only the boss but the whole company may opt for the poor, hence corporate
social responsibility and corporate citizenship.

6. Also an opportunity. The “option” or “love of preference” is a choice, a decision, a

special form of primacy and an opportunity as well in the exercise of other-centeredness.
The company decides in favor of the poor, and grabs the opportunity to alleviate poverty.

7. But not exclusive. This preferential option is neither an exclusive nor an excluding
interest, in such a way there’s no more room for those who are not poor. The corporate
decision to opt for the poor excludes no one and, far from being a sign of particularism or
sectarianism, it can manifest the universality of the company’s vision-mission.

8. Witness to human dignity. Finally, preferential option for the poor is a kind of
witnessing. When the company opts for the poor it gladly affirms that the homo sapiens is
worth for what he/she has, and that “being” is more important that “having”. This principle
can finally demonstrate the truth that human dignity cannot be destroyed in whatever
situation of poverty, rejection, or powerlessness to which the poor has been reduced
(Narayan et al, 2000).

Option for the Bottom of the Pyramid

Business Opportunity for the Bottom of the Pyramid

Coimbatore Krishnarao Prahalad

The business option for the bottom of

the pyramid, as proposed by C.K.

Prahalad (2005), is a revolutionary

strategic model for alleviating world

poverty and is a win-win relationship

between business and the poor.

The emergence of the four billion people, the bottom of the pyramid, whom

Prahalad calls the tier 4 market, is a global opportunity for businesses.

Option for the Bottom of the Pyramid

Example

Hindustan Lever Ltd (HLL) is India's largest Fast Moving Consumer Goods
(FMCG) company.

Nirma, the proverbial ‘Rags to Riches’ saga of Dr. Karsanbhai Patel

Option for the Bottom of the Pyramid

This is Reality 101

Option for the Bottom of the Pyramid

Points to Ponder

There is undoubtedly so much potential

wealth at the bottom of the pyramid, but

businesses must begin to articulate

strategic plans that will facilitate the

harnessing of these resources.

Option for the Bottom of the Pyramid

THANK YOU AND GOOD EVENING!
Option for the Bottom of the Pyramid