Executive Interviews: Interview with Ravi Ramamurti on Bottom of the Pyramid
November 2008
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By Dr. Nagendra V Chowdary
Dr. Ravi Ramamurti CBA Distinguished Professor of International Business & Strategy, and Director of the Center for Emerging Markets at Northeastern University.
That said, one should not discount
the significance of important social or
environmental trends. On the social
front, consider, for instance, the
implications of an aging demography
in Europe, North America, Japan
and even in China. India, on the
other hand, is expected to have a
growing population and an
expanding labor force for several
more decades. Thus, the effect of
demographics will be quite different
in different countries. The aging
consumer in the West will present
one set of opportunities and threats to
firms, while the explosion of young,
up-and-coming consumers in
countries like India and Mexico will
present another.
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Similarly, in terms of the natural
environment, there is now a strong
'green' movement not only in Europe
and Japan but also in the US. This is
likely to produce a string of new
technologies and products, and bring
about a whole new industries
designed to minimize the carbon
footprint of production, distribution,
consumption, and post-consumption
disposal. Companies in India may feel
less affected by this trend, because
India's official stance has been that rich
countries are responsible for spoiling
the environment and should therefore
lead in its clean up. However,
enlightened Indian firms will
recognize that the global 'green' trend
could create opportunities for them as
well, in India and around the world.
Suzlon Energy is a good illustration:
wind energy makes great sense in
India, for well-known reasons, and
through its imaginative strategy
Suzlon has found a way to emerge as
one of the world's top-5 wind energy
companies. As for the mismatch observed in the
McKinsey study between action to
address observed trends and results,
one possible explanation is that
responding to long-term trends does
not yield high returns in the short
run. Thus, while 'green
technologies' may be a sound
investment in the future, firms may
find that the payoff from such
investments comes slowly, because
the adoption of new technologies
usually follows an S-shaped curve. On the whole, therefore, I don't find
McKinsey's findings particularly
surprising or alarming. -
Do you foresee an increasingly
decreasing role of multilateral
international bodies like, WTO
(with the rise of regional and
bilateral trade agreements and
perennial showdown at recent
meetings, including impasse at Doha
round of talks), UNO (with private
sector assuming a great role at
humanitarian activities for
instance, Bill and Melinda Gates
Foundation, Clinton Global
Initiative, etc., and increasing role of
Social Entrepreneurship Initiatives
and Microfinance Initiatives), the
IMF and the World Bank? Yes. Multilateral institutions like the
WTO are on the wane, not because
they have become less useful but
because the US no longer stands
behind them the way it did in earlier
decades. On trade, for instance, many
countries, including the US, have
become enamoredwith bilateral deals
and are soft-pedaling the Doha
Round of multilateral talks. India,
too, is beginning to push for bilateral
deals, like the one just concluded
with ASEAN. As I said earlier, there
is a conflict between the desire of
countries to trade with other
countries and their willingness to
cede some of the sovereignty
necessary to manage the resulting
interdependence. Countries feel that
bilateral deals give them greater
control of their own destiny. But, as
Jagdish Bhagwati and others have
argued, in the long run
multilateralism is preferable, because
it results in simpler rules and fewer
distortions. The rise of NGOs, on the other hand,
does not undermine multilateral
institutions, because there is enough
work for everyone. Development is
such a big challenge and governments
have proven to be so incompetent at
doing their part that we should be delighted to have more hands on
deck. This will result in healthy
competition among NGOs for funds,
clients, and public support in areas
such as healthcare, micro-lending,
and education. NGOs can also give
government departments a bit of
competition, thereby exposing
governmental inefficiencies and poor
standards of service and turning
public monopolies into potentially
competitive markets. This has to be
good for the average citizen. What according to you is the new
economic consensus and the new
business order? Do you see the rise
of business diplomacy? Do you see a
greater role for government in
business, positively of course? This issue comes up for heated debate
every few years. It comes to the fore
whenever there is an economic crisis,
such as the Enron scandal, the dotcom
bubble, or the current subprime
and credit crisis in the US. Where
simple greed and corruption on the
part of firms or senior managers are
involved, all will agree that the guilty
should be punished. But such crises
often also lead to broader soulsearching
about how capitalism
works, about government's role in it,
and the obligations of business to
society. A common question is
whether firms should be accountable
only to their shareholders or they
should be accountable to all
stakeholders, including customers,
employees, and the communities in
which they operate? The answer to
this question has spanned the full
range from Milton Friedman's famous
view that "the social responsibility of
business is to make a profit," to the
opposite view that companies exist no
more for shareholders than for other
stakeholders. In between are people
who believe that managers should
'balance' the competing interests of
stakeholders and do what is best for
society as a whole, whatever that
means.At the end of the day, I believe that
firms should pursue their enlightened
self interest. This means thinking
long term rather than short term. It
means taking account of the needs and
obligations to all stakeholders, not just
shareholders. It means doing what is
right, rather what one can get away
with, and so on. None of this is
inconsistent with long run growth
and profitability and therefore with
earning returns for shareholders.
1.
Bottom of the Pyramid Case Study
2. ICMR
Case Collection
3.
Case Study Volumes
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