Islamic Voice A Monthly English Magazine

July 2006
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Case Study

Corporate Social Responsibility
By A Staff Writer



Muslim business houses can empower the deprived sections by making efforts to close the gap between the rich and the poor.


Muslim business houses and entrepreneurs must learn from the examples of companies like Hindustan Lever Limited (HLL) and other companies,about corporate social responsibility. Just handing out a cheque and proclaiming financial support is no longer enough to contribute in the social sector.


Companies like HLL are giving corporate social responsibility as much importance as their business projects. They intend to actively contribute to the social and economic development of the communities in which they operate. In doing so, these companies want to build a better, sustainable way of life for the weaker sections of society and raise the human development index of the nation.


C. K. Prahalad, professor of corporate strategy at the University of Michigan Business School in his latest book, The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits, argues that: “Multi-national companies not only can make money selling to the world’s poorest, but also that they must undertake such efforts as a way to close the growing gap between rich and poor countries”.


According to Prahalad, strategies aimed at the bottom of the pyramid will, by necessity, create jobs and improve incomes among those people, helping to slow and possibly even reverse the widening income gap.


HLL’s experiment, named Project Shakti, was piloted in Nalgonda district in 2001. It has been scaled up and extended to over 5,000 villages in 52 districts in Andhra Pradesh, Karnataka, Gujarat and Madhya Pradesh with around 1,000 women entrepreneurs in its fold. The vision is ambitious: to create by 2010, about 11,000 Shakti entrepreneurs covering one-lakh villages and touching the lives of 100 million rural consumers.


What is Project Shakti all about? HLL has operated Project Shakti through self-help groups (SHG). Andhra Pradesh was chosen for the pilot project as it has the most number and better established SHGs - there are about 4.36 lakh SHGs in AP covering nearly 58.29 lakh rural women. How it works:


Typically, a woman from a SHG selected as a Shakti entrepreneur receives stocks at her doorstep from the HLL rural distributor and sells direct to consumers as well as to retailers in the village. Each Shakti entrepreneur services 6-10 villages in the population strata of 1,000-2,000 people


A Shakti entrepreneur sets off with 4-5 chief brands from the HLL portfolio - Lifebuoy, Wheel, Pepsodent, Annapurna salt and Clinic Plus. To get started, the Shakti woman borrows from her SHG and the company itself chooses only one person. With training and hand-holding by the company for the first three months, she begins her door-to-door journey selling her wares. On an average, each member, makes a turnover of Rs 10,000-Rs 25,000 a month earning a profit of Rs 1000-Rs 2,500 a month, an average return of 10 per cent.


The objectives of Project Shakti, is to create “income-generating capabilities for under-privileged rural women by providing a sustainable micro-enterprise opportunity” and to improve rural living standards through “health and hygiene awareness”. Having perfected the model in Nalgonda, in 2003 HLL plans to extend Shakti to a 100 districts in Madhya Pradesh, Gujarat and Uttar Pradesh.


Through a combination of micro-credit and training in enterprise management, these women from self-help groups have turned direct-to-home distributors of a range of HLL products.


The fortune at the bottom of the pyramid proves that the future will develop from serving the poor, because the innovations that are developed are superior– top quality, low price, high volume and world-scale. Only the best innovations will work for both sides of the equation, those in poverty and those in the “developed” countries. New products and services that improve the lives of poor people make the world a safer place, while protecting and conserving the earth’s resources.


When the corporate world recognises the fact that they cannot survive in the market neglecting the deprived sections of the society, Muslim business houses should also pay more attention to these sections, so that the ultimate objective of uplifting the community is achieved.