A review of "sustainability vision" as corporate strategy in Africa, in the context of the opportunities provided by the prevalence of malaria

Steenkamp, Daniel (2009-03)

Thesis (MBA)--Stellenbosch University, 2009.

Thesis

ENGLISH ABSTRACT: Companies are confronted with a global market that is becoming increasingly saturated. With free trade agreements allowing more competition into the traditionally lucrative Western markets and economic recessions impacting the spend-ability of these markets, there is mounting pressure to consider other market opportunities. Statistics reveal that the traditional bottom of the economic pyramid actually contains a potentially very profitable market, with a purchasing power parity of $12.5 trillion. To address this market, prospective companies will have to rethink conventional business strategies, moulded to the specific target market requirements. The gradual shift in focus to the bottom of the economic pyramid, also serves to emphasise the need of sustainable development of impoverished communities. By raising communities out of poverty, they are liberated to partake in trade, respond to opportunities and experience growth in self esteem. Whilst aid organisations play an important role in establishing this freedom, rethinking business processes could result in more sustainable impact on communities. This feeds into the concept of creating a sustainability vision, where the corporate vision should readdress not only the product but also the markets they seIVe. It should direct the company toward the solution of social and environmental problems and meet the unmet needs at the bottom of the economic pyramid. In the context of Africa's geographical, political or social milieu, it is evident that the continent offers unique challenges for engaging in trade. There are various attempts to address these, but Africa is still deemed one of the most difficult environments in which to establish operations. Africa also offers unique opportunities though, for those companies willing to rethink the conventional. Two companies saw the opportunity in malaria, a disease associated with impoverished communities. Africa has the perfect breeding ground for the P. fa/ciparum strain of malaria, which is incidentally also the most lethal. The strain has developed resistance against current medication, which makes it extremely difficult to cure and control. It is estimated that malaria costs African governments up to $12 billion per year and results annually in a penalty of 1.3% less economic growth per person than could be expected in the absence of malaria. The two companies, on different ends of the supply chain, have been reviewed in the light of the defined sustainability vision principles and the context of their strategic operations. Though not without critique, and admittedly still in the early phases of some of their processes, they have demonstrated that the concept of a sustainability vision in the African context is viable and that it is feasible to create wealth whilst serving the poor.

AFRIKAANSE OPSOMMING: Maatskappye word voortdurend gekonfronteer met markte wat neig om versadig te word as gevolg van vryhandelsooreenkomste wat kompetisie stimuleer en ekonomiese resessies wat vrye kontantvloei - en gevolglik koopgewoontes - be·invloed. Daar is dus groeiende druk om voorheen ongekarteerde markte te ondersoek. Kontra verwagting toon nuwe statistieke dat die tradisionele basis van die ekonomiese piramide 'n potensieel baie winsgewende mark inhou, met koopkrag van $12,5 triljoen. Om hierdie mark te betree, word van maatskappye verlang om konvensionele besigheidstrategiee in heroorweging te neem en dit te vorm na gelang van die spesifieke konteks van hul teikenmark. Die stelselmatige skuif in fokus na die basis van die ekonomiese piramide het die noodwendige gevolg om die belang van ontwikkeling in agtergeblewe gemeenskappe te benadruk. Deur gemeenskappe te verlos uit die juk van armoede, word self-waarde gestimuleer en hulle die geleenlheid gegun om deel te neem aan aktiewe handel, wat ekonomiese groei tot gevolg he!. Welwillendheids-organisasies speel 'n belangrike rol in die opsig, maar besighede het die potensiaal om 'n meer blywende ekonomiese impak te maak. In die lig hiervan, word die konsep van 'n volhoubare visie benadruk, waar dit gestel word dat 'n maatskappy se visie beide die produk en die teikenmark in herwoorweging moet neem. Dit moet die organisasie lei om sosiale- en omgewingsprobleme aan te spreek en voorheen onvoorsiene behoeftes op die basis van die ekonomiese piramide te bevredig. Teen die agtergrond van Afrika se geografiese, politieke en sosiale milieu, is dit duidelik dat die kontinent unieke uitdagings bied vir voornemende handel. Verskeie pogings word aangewend om dit die hoof te bied, maar Afrika word steeds gesien as een van die moeilikste kontekste om besigheid in te doen. Afrika offer wel ook unieke geleenthede vir maatskappye wat bereid is om hul konvensionele banderings in herwoorweging te neem. Twee maatskappye het die geleentheid raakgesien in malaria, 'n siekte wat normaalweg met agtergeblewe gemeenskappe geassosieer word. Afrika bied die perfekte teelaarde vir die P.falciparum variant van malaria, wat toevallig ook die mees dodelike variant is. Die malaria variant het weerstand opgebou teen tradisionele voorskrif-medikasie. met die gevolg dat dit besonder moeilik is om te voorkom en te beheer. Gesaghebbende bronne skat dat malaria Afrika-regerings tot $12 miljard per jaar kan kos, en jaarliks lei tot 1,3% minder ekonomiese groei as wat verwag sou word in die afwesigheid daarvan. Twee maatskappye is geevalueer in die lig van die ge'identifiseerde volhoubare visie beginsels en die konteks van hul operasionele bedrywighede. Hoewel hulle benadering nie sonder kritiek is nie, en sommige strategiee nog die toets van tyd moet deurstaan, stel hulle goeie voorbeelde van die potensiaal om rykdom te skep, terwyl die gemeenskap in nood ook gedien word. Dit benadruk die potensiaal vir 'n volhoubare visie, ook in die Afrika konteks.

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