Inclusive Business Models – Course Outline (2020)

Course Title: Inclusive Business Models

Course Type: Elective
Credits: Three (20 sessions of 90 minutes)
Class Size: 75
Faculty Instructor: Sourav Mukherji - Professor, Organization Behaviour, IIM Bangalore
[email protected];

Course Description:

This course discusses the business models of organizations that address the life and livelihood needs of
the economically impoverished population, popularly known as “bottom / base of the pyramid” (BoP), as
their primary business objective in a financially sustainable manner. According to World Bank
Development Indicators, globally about 11% people live under extreme poverty, while in India, close to
85 million people lived below $1.25 per day on purchasing power parity. Reduction and removal of
poverty has been identified as a critical challenge of this century and nation states, institutions,
organizations and individuals have started to get engaged with this problem at multiple levels. However,
there have been voices such as that of Professor C K Prahlad who argued that unless profit seeking
enterprises are creatively engaged with addressing the needs of the poor, the objective of poverty
reduction will remain unachievable.

In this course the students will debate and discuss whether business enterprises can address the needs
of the poor in a financially sustainable manner, as a for-profit business. We call such businesses
“inclusive business” – ‘inclusive’ because they address the needs of the poor and ‘business’ because
they are financially self-sustainable / profitable. By means of analyzing a series of real life case studies of
such inclusive businesses, as well as by listening to social entrepreneurs who are running inclusive
businesses, the course will reveal the various challenges that are embedded within such business
models and some of the creative means by which social entrepreneurs have dealt with such challenges,
sometimes successfully and sometimes not.

Course Objectives:

The objective of this course is threefold.

a) It is not expected that students of this course will join inclusive businesses1. However, many of them
will be joining profit seeking enterprises that consider the poor as potential consumers, producers
and supply chain partners. Some of the students will also work for investing or consulting
organizations that have practices focused on BoP segments. This course will provide a rich
understanding of the challenges of such endeavours.
b) Many profit seeking organizations today have evolving practices within the domain of Corporate
Social Responsibilities (CSR). Some of these would involve working with inclusive businesses as
partners and complementors. This course will enable students to understand what kind of CSR
activities will create greater impact. Many organizations are also looking at integration of their CSR
activities with their main line of business – an endeavour that is close in philosophy (though not
similar) to the concept of inclusive business model.

1
Though it will be wonderful if this course inspires some of you to join or start social enterprises / inclusive
businesses
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 Inclusive Business Models – Course Outline (2020)

c) Finally, this course seeks to sensitize students to a reality of emerging economies such as India and
the world that remains largely unarticulated and ignored in most of the other courses taught in MBA
curriculum. While the reality of poverty, hunger, illiteracy, exploitation and denial of basic human
rights is rather bleak, the case studies that will be discussed in this course will hopefully introduce
the students to the inspirational dimension of certain businesses that are working hard to improve
living conditions of those who are poor, hungry, illiterate and often exploited.

While all the case studies discussed in this course are from the Indian subcontinent (India, Nepal and
Bangladesh), the principles of making education or healthcare inclusive or generating livelihood
opportunities for marginal farmers are somewhat universal. Therefore, while conditions in a favela of
Sao Paulo is likely to be different from a jhopdi in Dharavi , Mumbai , it is expected that international
students taking this course will be able to apply its learning in contexts that they want to engage with,
be it Africa, South America or South East Asia.

Expectation from Students:

Every session in this course will have cases or papers as prerequisite reading. The classes will largely
comprise debates and discussions related to the cases and other reading material. Therefore, students
need to come prepared to class, having gone through and reflected on the readings. The students’
preparation will be a significant factor determining the quality of classroom discussion. It is expected
that students who are genuinely interested in knowing about inclusive businesses will be taking this
course and will do justice to their curiosity through sustained passion for learning and scholarly
endeavors. I will be delighted if you go beyond the reading material and bring in new examples and
viewpoints to enrich and enliven the classroom discussion.

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 Inclusive Business Models – Course Outline (2020)

Assignments & Evaluation:

The assignment and evaluation components are explained below. Considerable evaluation is based on
group-based activities and all group members will be awarded the same grades for group-based
activities. Students should form groups to ensure that there is maximum diversity along every dimension
in the groups.

1. Living under INR 40 per person a day – Students are expected to live a day spending on food what a
person living below the poverty line spends for all of his / her expenses during a day. In India, this is
fixed roughly at INR 40. This exercise can be done individually or in groups. Students will make a
presentation in class about how they spent their day and what was the learning as well as submit a
two-page writeup (Group / Individual assignment: 10 marks).

2. Profiling person who is poor. In India, a person is considered poor if the household income is less
that INR 5000 per month. Each of the team members are expected to identify at least three poor
person / households and create their profile based on the guidance given. Subsequently, the group
will synthesize these profiles, identify the similarities and differences and make presentations in
class2.
Group assignment, 20 marks
Additional inputs for this exercise will be provided in class if needed. Groups will be evaluated for
their synthesis and insights from interacting with their subjects as well as their creativity in
presenting their findings. The felt needs of the poor can act as starting point of final assignment
where the groups are expected to create business plans addressing the needs of the poor

3. Take home assignment of case analysis / answering a question

Individual assignment, 20 marks
Additional instructions will be provided along with the cases.

4. In class assignments (at least three) on application of reading material / Class participation
Individual assignment, 30 marks

5. Developing an inclusive business model - business plan presentation in class and submission of brief
report. The business plan should clearly address the dimension of inclusivity (whose need it is
addressing and how) and financial viability (source of revenue and potential for profitability), apart
from indicating how scalable it is. The report is optional. Teams will be evaluated based on their
effort, novelty of the idea and depth of analysis
Group assignment, 20 marks

2
Given the present pandemic situation, students need not travel for this exercise. They can interview people who
visit their houses or live close by such as security guards, cooks and house- helps. If students find it difficult to
carry out any of these assignments because of the pandemic, I will modify the assignment on a case to case basis
so that students do not face any inconvenience or risk their health
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 Inclusive Business Models – Course Outline (2020)

Outline of Sessions,3

Session 1: Introduction to the course

Course philosophy, roadmap, setting expectations

What are inclusive businesses? Why do we need them? How are they different from Social Enterprises,
not-for-profits and corporate social responsibility?

Pre-class reading: None

Session reading: Social Entrepreneurship: Creating New Business Models to Serve the Poor

Session 2: The Debates about Base of the Pyramid

Is there really a fortune at the Base / Bottom of the Pyramid?

Pre-class reading: Diageo Case Study – How do you judge Diageo’s effort in serving the BoP?
Session reading:
1. Fortune at the Bottom of the Pyramid (C K Prahlad & S Hart)
2. Mirage at the Bottom of the Pyramid (A Karnani)

 Students use one of the days of this or next weekend living under INR 30 or equivalent a day

Session 3: Inclusive Healthcare

Need and challenges of building inclusive healthcare models in India. Comparing and contrasting
different healthcare models. Why are there so many different models? Which one is the best?

Pre-class reading: Case of Vaatsalya Hospitals

In class screening of videos: Aravind Eye Hospital and Narayana Hrudayalaya

Session 4: Inclusive Education

Can education be offered to the poor in a financially sustainable manner? What are the various models
and what are their advantages?

Pre-class reading: Case: Gyanshala

Session Reading: 1. Bunker Roy and Barefoot College
2. The Talent is Out There
In class screening of videos: Gyanshala and Barefoot College

Session 5: Living One Day below Poverty Line (Assignment presentation)

Students present to class / submit writeup based on their experience of living under INR 40 or
equivalent, either individually or in groups. (This is a graded assignment. The exact mode of evaluation
will be decided based on number of students / groups)

3
Some of these topics, especially those towards the beginning, might take more than one session. Moreover, the
sequence of the topics might also be changed marginally depending on availability of guest speakers
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 Inclusive Business Models – Course Outline (2020)

Session 6: Microfinance – Necessities and Controversies

Role of microfinance in improving conditions of the poor and the controversies about microfinance.
Discussion about Grameen Bank and comparing them with Microfinance Institutions in India

Pre-class reading: Case: Rang De

Session readings:
1. Commercialization of Microfinance in India (M S Sriram)
2. Capitalism vs. Altruism: SKS Rekindles Microfinance Debate
3. Microfinance needs Regulation (A Karnani)

Session 7: Agricultural Extension Services – Making Smallholder Farmers Sustainable

Establishing linkages between farmers and markets – who creates value and who captures value? What
are the advantages or disadvantages of being smallholder farmers?

Pre-class reading: Case: IDE Nepal

Session reading:
1. Micro-irrigation to Beat the Monsoon
2. Of Luxury Cars & Lowly Tractors (P Sainath)

Session 8: Rural BPO

Leveraging Information Technology enabled services (ITES) to create livelihood in rural India in a
sustainable manner

Pre-class reading: Case: RuralShores

Session 9: Profiling the Poor

Student presentation (group exercise) based on their field visits for Profiling the Poor

Session 10: Profiling the Poor - Continued

Student presentation (group exercise) based on their field visits for Profiling the Poor

Session 11: Creating Social Business

Can large corporations play a part in creating inclusive business models? What are its advantages and
disadvantages?

Pre-class reading: The case of GNFC’s Neem initiative

Session 12: Providing Energy Access to the Poor

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 Inclusive Business Models – Course Outline (2020)

What role does access to energy play in improving lives and livelihood of the poor? What are the
sustainability challenges of creating energy solutions for the poor?

Pre-class reading: Case: SELCO

In class screening of video on Selco
Session reading:
1. Rising Sun: India’s Solar Power Initiatives are Shining Brighter
2. Solar Lamps Light up Rural Lives

Session 13: Improving Conditions of Informal Labourers

Employment conditions in India’s informal sector and possibility of interventions to improve their
economic conditions. Is it possible to build a profitable business?

Pre-class reading: Case: Labornet

Session reading: The Informal Sector of India’s Economy (Outcast Labor in Asia: J Bremen)

Session 14: Inclusive Supply Chains for Agricultural Products

Challenges of creating inclusive supply chain. Can large organizations play any role in inclusivity?
Pre-class reading: Case: Reliance Retail’s Banana Value Chain
Session reading: Creating Shared Value (Harvard Business Review, M E Porter & M R Kramer, January –
February 2011)

Session 15 & 16: Guest Speaker Sessions

Topics and speakers to be decided. These sessions might happen anywhere during the course,
depending on the convenience of the guest speakers

Session 17: Impact Analysis

Why measurement of impact is important? What are the challenges of measuring impact? How is
impact measured?

Pre-class reading: Making Better Investments at the Base of the Pyramid (Harvard Business Review, Ted
London, May- 2009)

Session 18: Presentation of Business Plan by Students - 1

Session 19: Presentation of Business Plan by Students - 2

Session 20: Review & Conclusion

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 Inclusive Business Models – Course Outline (2020)

How was the experience of the course? What has been the key learning? How can we do it better?
What does it take to be a Social Entrepreneur? Where does an MBA fit in?
What would you do if you want to be a Social Entrepreneur?

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Books as reference material:

1. Microfinance for Bankers & Investors : Elisabeth Rhyne, Tata McGraw Hill, 2009
2. Capitalism at the Crossroad : Stuart L Hart, Wharton School Publishing, 2007
3. Inclusive Value Chains in India : Malcom Harper, World Scientific, 2009
4. Building Social Business : M Yunus, Public Affairs, 2010
5. Creating a World Without Poverty : M Yunus, Public Affairs, 2007
6. Banker to the Poor : M Yunus , Penguin Books, 1999
7. How to Change the World: David Bornstein, Penguin Books, 2005
8. Development as Freedom: Amartya Sen, Oxford Press, 2000
9. The Power of Unreasonable People: J Elkinton & P Hartigan, Harvard Business Press, 2008
10. The Fortune at the Bottom of the Pyramid: C K Prahlad, Wharton School Publishing, 2005
11. Out of Poverty: Paul Polak, Barret Kohler Publisher, 2008
12. Poor Economics: A V Banerjee & E Duflo, Random House, 2011
13. A World of Three Zeroes: M Yunus, Hatchette India, 2017
14. Social Enterprises and Sustainable Business Models: The Case of India: Edited by Anirudh Agrawal
and Payal Kumar, Palgrave Macmillan, 2018
15. Social Entrepreneurship: Working Towards Greater Inclusiveness: R K R Kummitha, Sage, 2016
16. Social Enterprises in India: Madhkar Shukla, Sage, 2020

Additional Notes:

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 Inclusive Business Models – Course Outline (2020)

Project Report

The duration of the presentation will be communicated once the exact number of groups is ascertained.
The idea of the report is to provide all the supplementary data / information that the team feels is
relevant for the faculty member to appreciate their business model, yet they did not have time to
explain during the presentation. The report need not be an elaborate one. I am even okay if the teams
put the slides in the report with detailed explanations and add whatever else is necessary – there is NO
extra marks for the report. It will be viewed as an additional component of the business plan
presentation so that we, the evaluators, understand what we might have missed during the face-to-face
presentation session.

Presentation on Lives of the Poor

The objective of this project is to make the student understand the socio-economic realities of the poor,
become sensitive to their context, get insights about the various tradeoffs that they make in their daily
struggle for existence. These activities are meant to provide the students ideas about the inclusive
business model that they are supposed to develop as the final course project. Therefore, the
presentations will be evaluated based on their Content (about 50% weights), Creativity (about 30%) and
Communication (about 20%). Contents that synthesize the observations and generate ideas about an
inclusive business will be given maximum credit.

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 Inclusive Business Models – Course Outline (2020)

Understanding the Needs of the Poor through Qualitative Survey

The purpose of this survey is to understand how the poor lead their lives, what are the various
challenges they face, the tradeoffs they make while overcoming these challenges and their aspirations in
terms of their and their families’ lives and livelihoods. Since most of us are lucky not to have firsthand
experience of such lives, the interactions are expected to provide you with an opportunity to
understand and appreciate their realities. Therefore, you will gain maximum insights when you make
the interviewees comfortable and enable them to speak as much as possible. The nature of questions
should be exploratory rather than leading or directive. Finally, please be respectful of the fact that the
interviewees have high opportunity cost of the time they spend talking to you and are thus doing you a
favour by spending that time with you. Examples of questions that might be asked are as follows:

1. What are the jobs that you perform / that you are engaged with? How do you distribute time across
these jobs? What is the need for doing multiple jobs (if applicable)? What is the nature of your
typical day?
2. How did you get to these / this line of work? When did you start doing this work?
3. Tell us about your family. What kind of jobs do any other family members do?
4. What do you want your children to do when they grow up?
5. Do you interact with your family in your native area? How often do you visit them? How often do
they visit you?
6. A lot of people give or loan money to relatives and vice versa. Do you do the same? Can you depend
on your relatives for financial support?
7. Did you have any major unanticipated expense in the past few years? What are they?
8. Did you ever need to borrow for meeting expenses? From whom did you borrow?
9. What kind of houses do you stay at? What are the facilities that the house has (water, electricity,
sanitation, LPG connection)?
10. What are the assets that you have in your house? What are those that you would like to buy / plan
to buy in future?
11. What do you use your phone for? What do you watch on TV?
12. What do you worry about?
13. What are your aspirations? If there is one way in which you could be different five years from now,
what would it be? What would you like to change about yourself or your lives?
14. Are you aware of any programmes that the government has launched that might help people like
you?
15. Are you able to save any money? Where do you keep your savings? Have you been to a bank? Do
you know about benefits of savings in a bank or a post office?

While you would like to know the sources of income and expenditure of the family, try to estimate the
same from various answers rather than asking them directly, since not all of them might be comfortable
giving the figures. Overall, you should be able to understand the various factors that enable and
constraint them in their lives, how they have arrived at this stage of their lives and where they are
headed. These should give you some idea about formulating your business plan that would address the
needs of the poor
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