Jake Johnson

Jan. 9, 2022
Prof. Suiter
Project #1

Elect to study one of the three companies (Cemex, Grameen Bank, or

Hindustan/Unilever), reading all of the materials provided. Use the following questions
to guide your reading/study, and respond to each with an essay of the prescribed
length.

1. What is the purpose/mission/goal of your chosen company in entering the Base of the
Pyramid (BOP) environment? In other words, why did the company choose to operate in
the BOP setting? To what degree would you characterize the company as successful or
unsuccessful in achieving its purpose/mission/goals? (200 - 400 words)
The purpose of The Grameen Bank of Bangladesh entering the Base of the Pyramid
environment is to help alleviate the dangers and challenges associated with poverty. Their
mission is to provide loans to the poor in order to establish credit for those in poverty, which
helps to increase long-term income for the poor - since they will not have to pay extreme
interest rates. Traditionally, banks did not lend to poor people since they were deemed
financially unstable and did not have credit scores. However, the Grameen Bank successfully
was founded specifically to lend to poor people - only after Dr. Muhammad Yunus lent money to
those in poverty out of his own pocket. The bank grew from there and has become a very
successful example for alleviating poverty in the world, and many other nations look to it as an
example for dealing with poverty. It is successful in several ways. With a loan recovery rate of
97% and nearly 9 million loanees, I would have to argue that, financially, this bank is successful.
In addition, this bank is successful because it implements the use of social collateral, which
allows for groups of people to apply for loans, thus eliminating much of the risk of individual
responsibility. Simply because of these two reasons I think that Grameen Bank has been
extremely successful. If that hasn’t persuaded you to believe the same, according to the article,
“It [the Grameen Bank] is credited with proving that the poor are bankable; the Grameen model
has been copied in more than 40 countries; it is the most widely cited development success
story in the world.”

2. What ethical dilemmas or challenges have arisen as the company has conducted
business at the BOP? Provide a minimum of three specific examples of ethical issues
mentioned in the materials assigned. Be sure that these are ethical challenges, not
merely logistical, operational, or strategic business challenges. (300 - 600 words)
The first ethical challenge that arose before the company even existed was approaching poverty
with a for-profit mindset that would create a win-win situation for those in poverty and the
owners of the for-profit company. To me, it is an ethical grey area for wealthy people to grow
more wealthy off the money of those in poverty. Should a company, especially one that is
marketing to those in poverty, be a for-profit company? How will they ethically price their rates,
products, and services to ensure they receive a profit but also don’t stiff the poor? At what point
will they charge fees to the poor for late payments? What happens if the poor can’t pay the
loans back? Will there be legal action taken against the poor? There are many questions
surrounding the ethics of the bank, and as a result, the bank has received much criticism from
people in Bangladesh. However, they are a for-profit company and must make money for their
own sustainability. Another issue that arose was that the banks charged interest rates to people
in extreme poverty. This, according to the article, “follows the oppressing model of capitalism.
The poor people are getting exploited when they are made bound to repay the loan with
interest.” Again, Grameen Bank has been criticized for its interest rates on impoverished people.
The third issue that arose in Bangladesh was because of the empowerment of women. With
96% of its loanees being women, the bank has received criticism about not offering a fair
chance to men. However, this criticism came mostly from rural religious leaders in Bangladesh.
With Bangladesh being an Islamic nation, the question must be asked, should the bank try to
change social norms? Or is that the job of society as a whole, and businesses should not try to
stir social change.

3. Expand on your answer to #2 above, by explaining how the company

overcame/attempted to overcome the ethical issues that arose. What factors contributed
to the company's success/failure in doing so? Which ethical issues continue to pose a
challenge to the company moving forward? (300 - 600 words)
In light of Grameen Bank’s ethical issues they faced and are facing, the bank has been able to
maintain popularity among the poor and worldwide by solving these ethical issues. Firstly, I think
that the Grameen Bank is perfectly able to be a for-profit business for the poor. They are offering
the same products and services as typical banks, and are treating the poor people the same as
normal banks treat wealthy customers. There should be no discrimination based on how much
money people have or don’t have, and I think the bank is doing a great job in tackling that issue.
The second issue they are facing is criticism for charging interest rates on those in extreme
poverty. Again, I think that there should be no discrimination in how people are treated for loans.
Plus, the fact of the matter is, when poor people are given handouts, it creates a sense of
dependency in their minds. They become dependent on handouts, and most of the time will not
think of new, creative solutions to solve their problems. However, with the bank charging interest
rates, those in poverty will have to work together in the social units they have formed to get the
loan to repay the loan. When they work together, they will think creatively and have more
responsibility. The bank is doing a good job of giving people loans as a means of income, and
the people have to pay the loans back (just like working for yourself and paying taxes would be).
The final issue that the bank has faced is the issue of traditionalism in the rural parts of
Bangladesh. By the bank giving loans to mainly women, they can be seen as discriminating
against men. However, in order to be progressive and advance society, sometimes businesses
and people need to push social boundaries to new limits. The only issue that I see posing
threats currently is the issue of interest rates. Money will always have ethical issues tied to it.

4. What do these ethical dilemmas and the corresponding actions of your chosen
company offer (in terms of learning) to other organizations that are considering entering
the BOP? Please highlight what you believe are the two most valuable generalizable
takeaways that can inform future ethical business decisions. (200 - 400 words)

Grameen Bank offers many examples of insight into entering the Base of the Pyramid as a
business. The bank was able to think creatively and come up with solutions to the issues of
poverty and lack of opportunities for those in poverty. One of the most valuable takeaways from
Grameen Bank is this: Poor people will oftentimes work very hard for what they need, especially
if they are given the opportunity. They will think of creative solutions to their problems, and just
because they are in different situations than wealthy people means they will have a different
perspective on how to approach and solve their issues. Give a person an opportunity, and they
will work hard. Give a group an opportunity, and they will work together and possibly work even
harder. Another takeaway that we can see is to not let criticism get in the way of doing business.
No matter what you do, there will always be someone who gets offended or will oppose what
you’re doing. However, this bank was able to overcome criticism, has become extremely
successful, and has changed the world by offering products to people in extreme poverty.