TM 251 T E C H N O L O G Y E N T R E P R E N E U R S H I P

RRL R E V I E W & C R I T I Q U E
C R E AT I V E PROMOTING DEVELOPING INDUSTRIES
AND

FOR:
SMALL IT SCALE
BASED

MICRO

&

ENTERPRISE

DEVELOPMENT

(UNIDO) GLOBAL OPPORTUNITY AGRO-ENTERPRISE

AND AND

FOR

SERVICES (WORLD BANK) SYSTEMS DEVELOPMENT

IN

AGRO-FOOD

TRANSITION COUNTRIES (WORLD BANK) THE NEXT BILLIONS:

IN

UNLEASHING BUSINESS POTENTIAL

U N TA P P E D M A R K E T S ( W O R L D E C O N O M I C F O R U M )

GLOBAL IT REPORT 2009-2010 (WORLD ECONOMIC FORUM)

Table of Contents

Creative Industries and Micro & Small Scale Enterprise Development (UNIDO)

1.1 Summary...............................................................................................................3 1.2 Critique..................................................................................................................3 2 Global Opportunity in IT based Services (World Bank)....................................7 2.1 Summary...............................................................................................................7 2.2 Critique..................................................................................................................9 3 Promoting Agro-Enterprise and Agro-Food Systems Development in Developing and Transition Countries (World Bank)..............................................11 3.1 Summary.............................................................................................................11 3.2 Critique................................................................................................................13 4 The Next Billions: Unleashing Business Potential in Untapped Markets (World Economic Forum)..................................................................................................15 4.1 Summary.............................................................................................................15 4.2 Critique................................................................................................................17 5 Global IT Report 2009-2010 (World Economic Forum)...................................19 5.1 Summary.............................................................................................................19 5.2 Critique................................................................................................................21 6 Team Conclusions and Recommendations....................................................23 7 Bibliography...................................................................................................25

Bibliography

1 CREATIVE INDUSTRIES AND MICRO & SMALL SCALE ENTERPRISE DEVELOPMENT (UNIDO)
1.1 SUMMARY
The main objective of the study is to explore the possibilities of Creative Industries as a gateway to promoting the growth of Micro and Small Scale Enterprises (MSE) in rural and poor communities and to the economy through employment of jobs and income generation. It seeks the attention of policy makers, development specialists and other business and finance sectors who share the same goal in promoting economic growth, innovation and competitiveness through entrepreneurship and building creative communities to improve peoples welfare. There are thirteen economic sub-sectors grouped under Creative Industries; advertising, art and antiques, architecture, crafts, design, designer fashion, film, interactive leisure, music, performing arts, publishing, TV and radio mainly focusing on the craft sector because of its functionality in operating in both rural and urban areas. Moreover, producers penetrate the market in developing and developed countries at the level of MSEs. Case studies from Thailand, Pakistan and Iran were presented to establish the different channels from which Creative Industries were promoted as well as discussion of the definition and analysis of Craft Creative Industry using the systems approach and value chain concept. Creative Industries was defined as the industries that produce tangible and intangible artistic and creative output which can possibly generate income through exhaustion of cultural assets and production of knowledge based goods and services. The key inputs of Creative Industries are skill, creativity and talent. This industry operates through Creative clusters which is a combination of production and distribution activities within a common structure having the capability of promoting activity, researching applications and distribution systems and those under the sponsorship of public and private financing. Policies play an important role in the Creative Industries by providing the strategic framework in which opportunities can be recognized and barriers to growth can be prevented. UNESCO proposed a conceptual framework for policy making to promote the growth of Creative Industries. The Value chain model for Craft Creative Industries was explained to give a clearer picture and understanding of how the industry operates. The chain has three major components. First are the inputs, which mainly are the pre-existing elements in a region (cultural heritage, tradition, history) human resources and technology. Second is the manufacturing of products which is composed of processing and production activities. The last and the most critical component are the marketing and markets. For the efficient flow and operation of the value chain, services must be backed up by polices. The interplay of these internal and 1

external forces and its impact in the industry explained the findings on the present state of creative industries for each case. Among the three cases, Thailand is the most successful in the promotion and operation of MSEs Creative Industries in rural areas. Success of OTOP, a project designed to help the rural communities make use of their cultural heritage, talents and resources in transforming these into well crafted products can be attributed to strong support networks particularly their national government along with associations formed with public and private sectors. One major issue however is their lack of method of monitoring, evaluating and measuring the number of participants employed in the project and how products perform in the market. Pakistan, on the other hand is a case of a country whose crafts tradition is rich and diverse but has been neglected. Its four core products remain constrained by heavily relying on intermediaries from the start of the purchase of raw materials to the marketing of end products. There is poor access to working capital despite availability of micro-credit lines, Local NGOs however, are willing to revive the craft sector through creative industries through the revitalization programs. Zarbaft textile is one of Iran's core craft products that has a great potential in the local and foreign markets. Based on the analysis of the present state of this industry, despite the constraints, the craft activities of the region have possibilities of being turned into creative industries with an arising interest among skilled workers and NGOs to hold workshops and continue developing their crafts. The cluster concept was proposed to be a means of reviving the craft sector, consequently applying Creative Industries. In gearing towards success of the action plans, participation of both private and public sectors were required. The conclusion concentrated on six important points. First, in order for Creative Industries to flourish, there must be continuous investment in the strengthening of the education and values system and give emphasis to culture and creative industries. Second, policies formulated should be geared towards improvement and development of Creative Industries potentials. Third, as human capital and human resource development are important components of the craft value chain system, training and education should include the concept of creativity in the education system. Fourth, MSEs can find its way to the national and export markets through innovation, market knowledge and entrepreneurship. Fifth, an efficient value chain system is where there is an awareness of market opportunities and development of products through innovation and creativity which can be best achieved if there is a good knowledge of the market. And lastly, UNIDO should provide support to MSEs in business services, product

development, quality management and strengthening of internal and external linkages.

1.2 CRITIQUE
UNIDOs intent in conducting this study is to primarily promote the Micro Small Enterprises through Creative Industries. The paper did a good job in presenting cases with different scenarios where people and entities can learn from the experiences told by each country. It is in the analysis of the structure, strengths, and constraints of the industry which served as a basis for the proposals of growth movement and development plans for the countries under study. As Creative Industries has become an emerging sector in improving the overall welfare of the economy, it is important to make an assessment of the internal and external factors that impacts this industry. However, the paper could have provided a better analysis on the contribution of Creative Industries in the selected countries under study if it provided more statistical data to support and justify these claims and findings. The Philippines per se, is a country rich with cultural heritage and a vast pool of talents and resources which have potentials for improving the employment level and overall income of the country. Project Jobs Fit, a study conducted by the Department of Labor and Employment sees creative industries as a major provider of productive opportunities for appropriately-skilled and qualified Filipino workers in this decade. Results of the study also show that creative industries are anticipated to drive employment growth faster than the gross domestic product in the long run. In the next three to four years, it is expected that exports of creative industry products will go up by 50 percent as most sectors will be aggressive in driving the sector's growth. According to Cesar S. Tolentino, a competitive intelligence research consultant and industry specialist, the bigger components of the creative industries grew by more than 10 percent per year from 1999 to 2008. Game development, independent film, music products and television programming are the products of these industries. Game development in particular as cited by Tolentino is generating an annual growth rate of more than 50 percent. As understood in the cases, the value chain plays an important role in the present status of the industry and how it fared over the years. To mention, Pakistan and Irans industries were constrained by several critical factors mostly attributed to the financial, product development, and marketing issues which caused their stagnation because of the inefficient movement of the value chain system. Thus, the need to create policies arise which will recognize the opportunities that can possibly be gained from any level in the chain and impediments which can stifle the growth of the industry. These salient points on policy formulation were clearly emphasized all throughout the paper. Noteworthy to mention that in this study, two organizations, UNESCO and the European

Parliament are aimed at setting policy frameworks that will support and strengthen Cultural and Creative Industries. Given that strategies are devised to facilitate efficient value chain movement but no policies for control and performance measurement, the action plan will still remain futile. Moreover, policies, no matter how apt they are if not implemented accordingly will always lead back to disequilibrium in the value chain. In the Philippines, initiatives to formulate a Philippine Creative Industries concept embodying our economic structure and culture has already started through the three organizations formed, each having a different objective to pursue. These were discussed in another study done by Cesar Tolentino entitled A Primer on Creative Industries and Digital Content Products and Services. These organizations are the Philippine Services Coalition whose mandate is to enhance and develop Philippine trade in services and the National competitiveness Council which address the improvement of the competitiveness of the country. The Creative Industries Task Force is commissioned to assist DTI, CCP in the promotion of an international promotional plan that will result in a shift from a primarily services driven economy to creative driven economy. Moreover, Bill 1064, which talks about the Creative Industries Council has already been passed to Senate. Creative Industries is a sector that can easily be subjected to changes and dynamism. Part of its success is still attributed to the pool of creative people forming the industry. Thus, continuous investment on the enhancements of talents and skills, culminating activities and educational learning that will tap the potentials that are yet to be honed should be an advocacy to foster the growth of this industry. In the Philippines, There are already ongoing programs in Technical Education and Skills Development Authority (TESDA) and Commission on Higher Education (CHEd) for expanding the formal courses that cater to building the workforce for the future that will serve the creative industries.

2 GLOBAL OPPORTUNITY FOR IT BASED SERVICES (WORLD BANK)

2.1 SUMMARY
The objective of this study is to help policy makers in taking advantage of the global opportunities in IT-based services. Analysis and policy advice presented in this study are based on inputs from consultants, policy experts, and industry leaders; including work conducted by McKinsey & Company under a recent consulting engagement with the World Bank and the Information for Development Program (infoDev). Two IT-based service industries were defined to have the potential in global market opportunities in trade: IT services and IT-enabled services (ITES). In general, IT services include IT applications and engineering services, while ITES involves a wide range of services delivered over electronic networks. Global opportunities in IT application services involve traditional services, system integration, application development and maintenance, and consulting. IT engineering services, on the other hand, involves mechanical design and production, embedded software, and plant engineering. While ITES is difficult to distinguish in the market from IT services, ITES global opportunities are more focused in knowledge process outsourcing, horizontal (e.g. call centers) and vertical (e.g. banking) processes. However, according to McKinsey estimates for IT services and Gartner Research (2008a) and National Association of Software and Services Companies (NASSCOM-Everest 2008) for ITES, while the demand for IT services and ITES is very high, only a small percentage of this potential has been realized. This study has discussed the key factors in assessing the strengths and weaknesses of countries in IT and ITES and the relevant policy options for them to implement. Based on quantitative analysis of historical facts, developing IT services and ITES provides a positive economic impact to developed (e.g. Canada and Ireland) and developing (e.g. India, China, Mexico and the Philippines) countries. In a recent study of the service sector, 70 percent of employment and 73 percent of gross domestic product (GDP) in developed countries and 35 percent of employment and 51 percent of GDP in developing countries (UNCTAD 2008) are accounted to IT-based services. The expansion of IT services and ITES has provided these countries a wide range of economic and social benefits. In India, the Philippines, and Ireland, for example, the industry has created jobs, raised incomes, and increased exports and GDP. It also provides a positive influence on the status of women as they account for a high percentage of total professionals and technical workers in the IT services and ITES with the highest-paying jobs than in most other sectors of the economy. It can also catalyze fiscal, regulatory, and legal reforms whereas innovations and reforms are being extended to other sectors of the economy. Finally, success in IT services and ITES present opportunities for repositioning the image of a country, a branding effect that has

profound implications like India, being the global leader in IT and ITES services, gives more receptive environment for entrepreneurs. A Location Readiness Index (LRI) was developed as a modeling tool by McKinsey & Company for the World Bank and infoDev to help countries identify their areas of relative strengths and weaknesses in terms of IT and ITES, and thus direct their efforts to interventions that will have the greatest impact on their likelihood of success. The LRI is a diagnostic tool that measures a countrys 9 strengths and weaknesses in six important categories: talent pool size and quality, cost, quality of infrastructure, environment, risk profile, and market maturity. The governments extensive commitment and support plays a crucial role in developing IT services and ITES industries. While opponents of industry-specific policy point to the dismal record of governments in supporting specific sectors, and emphasize that the task is best left to markets, proponents of targeted industry support point out that (a) countries that have succeeded have generally seen their governments making deliberate interventions to catalyze growth of the sector; (b) many of the policy enablers needed by the IT services and ITES industries involve no-regret interventions that also benefit the rest of the economy; and (c) a broader approach to policy, aimed at the overall business environment and not at the IT services and ITES industries specifically, is likely to miss key interventions and be out of sync with the dynamic needs of these industries. This study provides a discussion of available policy options such as the following: (1) Policy Options for Nurturing and Expanding the Talent Pool availability of employable talent by improving education; (2) Policy Options for Reducing Costs reducing bureaucratic cost requirements to IT companies; (3) Policy Options to Address Infrastructure Barriers governments creating an enabling environment for establishing competitive and effective markets in order to attract investment, extend infrastructure access, and improve service quality; and (4) Policy Options to Improve the Broader Business Environment - freeing parts of the IT services and ITES industries from burdensome regulation and, in some cases, providing support from a state agency that has the mandate and the authority to guide businesses through the bureaucratic labyrinth that still exists in many countries. In summary, developing IT services and ITES would provide positive economic impacts to developed and developing countries and this development requires an extensive commitment and support from the government and all sectors.

2.2 CRITIQUE
Unquestionably, global opportunity in IT-based services is constantly growing. However, growth is limited as most countries are not able to provide the demand in workforce that meets the required skills set by the market. As a result, the potential global opportunities are not being realized. Countries with large talent pools have the advantage in attracting IT services and ITES companies because large companies prefer to source services from locations where scalability is feasible. In the case of India, they have established the branding effect wherein the country is known for providing workforce with profound technical competency in IT. In fact, India produces 500,000 engineers every year that provides the workforce demand of the market. It also attracted investment from IT services and ITES companies. By seizing the global opportunity in IT-based services definitely boosted the countrys economic growth primarily in increase in employment rate and GDP. Since then, India had been the leader in all IT and ITES services globally. In 2007, the Philippines had overtaken India as the top global business process outsourcing destination (ITES). It initiated by supplying the required workforce of the BPO market, thus, increasing investments of IT services and ITES companies. With the commitment and support from the government, the education was aligned to provide the required skill set in the BPO market, primarily in English communication and basic IT technical skills. Hence, the Philippines has adopted the policy option for nurturing and expanding the talent pool. If its government will continue to be proactive in supporting IT services and ITES industries, then this country has the potential to follow the footsteps of India and eventually be the top destination for IT services and IT globally. To start with, the government can consider focusing on other policy options like reducing cost by decreasing taxes shouldered by IT companies or addressing infrastructure barriers by creating an environment that will attract investors. Possibly, in addition to the policy options mentioned in the study and to the six important categories in the Location Readiness Index (LRI), the strength of developing a sound innovation in IT-based services should also be considered. This can be achieved by promoting research and development in private and public sectors that will nurture radical and incremental innovations in IT-based services. In fact, besides Indias advantage of possessing profound technical skills among the other developing countries, it was able to provide innovations that also create new IT-based services and new markets. In contrast, the Philippines focuses mainly in ITES and not in producing innovative IT-based services. Nonetheless, it holds the potential to excel in this field but needs the drive and commitment from its leaders in promoting and supporting innovation nationwide.

In conclusion, given the importance of skills as a driver of growth of the IT services and ITES industries, a focus on quality of education in close alignment with local and global industry needs is essential. Therefore, the governments extensive commitment and support plays a crucial role. This study promotes awareness on how to take advantage of the global opportunities in IT-based services that could eventually lead to economic growth and global competitiveness.

3 PROMOTING AGRO-ENTERPRISE AND AGRO-FOOD SYSTEMS DEVELOPMENT IN DEVELOPING AND TRANSITION COUNTRIES (WORLD BANK)

3.1 SUMMARY
The paper outlines a framework of the World Bank Group (WBG) that will facilitate the improvement and transformation of the agro-food systems; and economic development in client countries. A comprehensive rural development strategy was developed by the WBG called Rural Development: From Vision to Action (VtA). The objective is to develop the agro-food systems as a dominant income generating system and a foundation for economic growth that will help alleviate poverty among the poor farmers and other rural communities. . Agro-enterprise systems are the entities, organizations, movements, and other interactions that occur outside the actual production or off-farm. Countries that have demonstrated the industrialization and modernizations of the agroenterprise include Israel, Taiwan, China, Thailand, and Brazil. Their advancements have made it possible for these countries to build up on new skills and knowledge; and improve practices. The primary elements for the building blocks of agro-food systems include (1) rules and regulations, (2) enterprises and entrepreneurs, and (3) organizations and organizational forms. The initial groundwork of any strategy is a comprehensive analysis of opportunities, restrictions, conflicts, and viable solutions that will make up the systems perspective of the interacting activities, institutions, and activities. This shall also take into consideration the different circumstances of each country in terms of demography, geography, political and social conditions, per capita income, business environment, and history. The focused themes for the agro-food development support shall be (1) food security; (2) food safety; (3) competitiveness; (4) smallholder and SME market integration; and (5) risk management. Both the public and private sectors must participate in the market movement, implementing a variety of measures that will transform the rules of the game, build up on capabilities, and equal the distribution of assets. One of the trends that have had a great impact on Agro-Food Systems is market liberalization and agro-enterprise privatization. The withdrawal of direct involvement of the state in agribusiness has prospered in the 1990s due to high costs and failures of the countries political and economic objectives. Presently, there are still some developing nations where the agro-food systems remain under the control of the state due to weak privatization environments. And to achieve market liberalization, it requires reengineering of the entire farm-factorybuyer supply chain and finding alternatives for previously performed public services. The principal reason for transformation is to position agro-food systems to center on consumer needs and requirements. Consumer demands in the last ten years are increasing and diversely focusing on health, sustainability, animal welfare and other consumer concerns.

Industrialization and Globalization have had huge impacts on agribusiness. Emerging technologies are able to provide better product quality and improvement on food safety. It has to be noted though that these require higher capital investments. Developing countries need to be more globally competitive. These are the nations who are skilled, knowledgeable, and well informed with the trends and technological advancements in the industry. They have to understand the growing needs of consumers, utilize technology, and meet the demands in terms of quantity and schedules. The challenge here is to be able to include the poor farmers and other rural communities to participate in this market environment. Possibly the only way that the poor communities will benefit from these transitions is if there will be public interventions that will allow them to have a voice and increase their participation in the process that shape and define the rules of the game Among the recommendations for the WBG includes disseminating information to client countries and partners that agro-food systems can be a major source of economic growth and a high income generating livelihood. This includes partnering with governments to implement strategies and policies for the agribusiness that supports macro analysis, regulation and competition. WBG should also form collaborations with other organizations with common interests (such as U.S. Agency for International Development US AID, Canadian International Development Agency - CIDA, and Food and Agricultural Organization - FAO) to form a common framework for their programs. There is no standard external support solution that will ensure a successful transition. In recent agro-enterprise developments, the focus has been on modifications on credit policies and other components to benefit rural communities and encourage project developments from the private sector. Improvements and increase in global competitiveness of agro-enterprise and agro-food system will establish a strong foundation that will help alleviate poverty, directly and indirectly, in developing and transition economies.

3.2 CRITIQUE
The strategy and objectives of the World Bank Group to boost the agri-food systems serves as a channel and an opportunity for member countries to maximize the potential benefits of agribusiness. Different countries have demonstrated an increase industrialization and modernization through agroenterprise activities. One very crucial recommendation that was mentioned in

the paper is disseminating the benefits and potentials of the agriculture industry to governments and other partner organizations. This campaign must be extended to other sectors of society outside the agriculture industry of the client country. The Philippines is considered an agrarian country in which agriculture is a main source of livelihood. Therefore, there is a need to promote and encourage the people, including the youth, to be involved in the development to help further strengthen the industry. External support from international organizations alone is not enough to help transform and improve the agro-food systems here in the Philippines if the agriculture industry per se is not given emphasis and importance. There are several issues that must be addressed in order to benefit from the external aid of the World Bank Group. Agriculture sustainability in general should be the focus of government efforts and external aids from international organizations. There are several factors that contribute to the problems of sustainability. This includes education, environmental concerns, population growth, and political conditions among others. The paper has mentioned that WBG has limited staff that has private agribusiness experience and/or analytical specialty in this area. Agriculture here in the Philippines is not a popular choice in terms of college education. Among the popular college degrees belong to the medical fields, education, arts, engineering, and banking and finance industries. Though there have been efforts on improving the industry in terms of infrastructures, policies, programs, and funding in the last ten years, these efforts were not enough for agriculture to equal or even come close to the top choices in terms of college education. Another area of concern is the need to address environmental issues. This includes soil erosion, water depletion, water pollution, and destruction of natural habitats due to urban developments. This will require other government agencies to be involved in addressing these problems. Efforts of the WBG to help advance the agro-food systems will be ineffective if these issues are not dealt with. The nations efforts for modernization and industrialization must take into consideration of how it will affect our environment. The increasing population of the Philippines is also a major concern of the agriculture industry. This must be simultaneously addressed by other government agencies. Even its agricultural sector has not been able to supply the food demands of the nation. The government is forced to import rice and other staple foods from other countries. Efforts on upholding the agriculture business will not be realized if this country is not able to control its population growth.

Another challenge for the Philippines is the political instability; and graft and corruption. These are major setbacks to its economic growth and will hinder the country to take advantage of external supports. As an example, in the recent months, its government has been involved in the misuse of donated funds from United Nations. This has placed the Philippines in a bad light among the international community. These political conditions are contributing factors that further increases the marginalization of poor and rural communities. Considerably, the Philippines will fully benefit from external assistance programs of WBG if government will not be directly involved in the negotiations and implementation of programs. The governments role should be limited to policy making and reforms, and public interventions to allow the poor community to have a voice in the agro-food systems. Getting the rural communities and others sectors who belong to the low-income bracket to participate in the decisions making, processes, and interactions still remains a challenge. Policies and strategy implementations must be focused on the benefiting the poor and small businesses. Both the public and the private sector should be active in upholding and encouraging agribusiness. Education and training are key factors in achieving the transformations and success. Goals and objectives of external assistance for the industrys developments from international organizations will be easily met if there will more people involved and interested in the industry.

4 THE NEXT BILLIONS: UNLEASHING BUSINESS POTENTIAL IN UNTAPPED MARKETS (WORLD ECONOMIC FORUM)
4.1 SUMMARY
World Economic Forum has released a research report on a new innovative approach in capitalizing the potential of the below-the-poverty market through 1

The Next Billions: Unleashing Business Potential in Untapped Markets in January 2009. According to this report, despite the economic downturn, companies can find growth opportunities among the 3.7 billion people at the base of the pyramid (BOP) which is the worlds low-income population, earning $8 or less per day, where most are located at Asia, Africa and Latin America. The report has mentioned that awareness, recognition and understanding of the BOP group and development of products and services have led the way to a new approach in looking at profitable business. With the support of the multinational firms, this below-the-poverty population can give birth to the future batch of global success by being sources of economic development and social transformation. This secures a companys position in the increasingly competitive emerging markets just as importantly provide an essential service that improves livelihoods and lifestyles of the poor members of society. The report presented several examples of successful business ventures across different industry sectors that have adopted BOP strategic concepts based on a survey drawn in 2008 from consultation with business leaders and stakeholders, and a review of over 200 case studies. One example is Unilevers campaign in India in promoting proper hygiene by visiting villages and educating consumers on the health benefits of its soap through the micro-entrepreneurs Project Shakti a distribution network of village women. Companies like Unilever that are first to establish sustainable, profitable and scalable business models to include the BOP has created a competitive advantage by securing market share and gaining loyalty of consumers and producers. Personal interviews of The Boston Consulting Group have found that there are substantial untapped opportunities for companies that are willing to think differently about how to approach the BOP market. Innovative companies are adopting new mindsets to effectively serve and engage the BOP as consumers, producers and entrepreneurs, which in turn help raise the standards of living in developing countries. Companies often find success through working closely with local communities. New opportunities can be tapped by adopting new strategies to discover hidden value and new business partners at the BOP. Telecommunication companies, for example, has developed (1) technologies that lower unit costs and enable service provision in remote areas; (2) applications that provide cash transfer or information services; and (3) sales strategies that expand usage in partnership with local entrepreneurs. WEF described that by changing the perspective of companies, non-traditional business models can be created to target the BOP through the adoption of innovative strategies that can benefit both the companies and the local communities. It has outlined strategies and noted the potential of the BOP market that has seen 8% growth rates in recent years. It stated several examples of

company strategies that all developed business models based on a redesigned innovation framework composed of five principles these are; (1) creation of lifeenhancing offerings products and services that are produced with the aim of enhancing the economic status of the poor; (2) reconfiguration of the product supply chain distribution networks that ensure effective management of pricing, stocking and service; (3) education through marketing and communication marketing programmes that are created to provide information of a companys products and services and the benefits of using these products; (4) collaboration to form non-traditional partnerships partnering with local communities and organizations that are done to maximize all possible resources and local knowledge while providing income to the BOP; (5) unshackled organization companies that have a strong and structured commitment in servicing the needs and demands of the BOP through excellent leadership and commitment from all stakeholders However, BOP markets present unique challenges. To overcome obstacles, companies can enter into new alliances with other industries or stakeholders. It includes governments that can strengthen policy and tax incentives, and provide hard and soft infrastructures for BOP business engagement as well as NGOs and donors and other civil society and community organizations that can help broaden consumer acceptance by creating BOP awareness about product benefits. Bringing different partners together can unleash possibilities that could not be realized by groups working alone.

4.2 CRITIQUE
World Economic Forum (WEF) is an independent, non-profit organization based in Switzerland that aims to improve the state of the world by encouraging world leaders to partner in shaping global, regional and industry programs to address the challenges of the 21st century by tackling immediate problems and shaping solutions to global issues. Yearly, top business leaders from its 1,000-member companies, international political leaders, selected intellectuals, NGOs, religious leaders and journalists meet to discuss the most pressing issues facing the world, including health and the environment (www.weforum.org).

The Philippines is also a partner of WEF. Current President Benigno Aquino III has directed the National Competitiveness Council to set a goal in making the Philippines rank in the top one-third of the World Economic Forum Global Competitiveness Report by the end of his term in 2016 (GMA News 2011). WEF proves that it has a great influence globally that most economies and organizations use its standards as a unique benchmarking tool for national growth. WEF foundation releases a series of research reports and engages its members in sector specific initiatives. One of these is The Next Billions: Unleashing Business Potential in Untapped Markets in January 2009 under the theme Shaping the Post Crisis World. This report was developed by the WEF Forum in partnership with The Boston Consulting Group and Bill & Melinda Gates Foundation. This report has shared substantial information on how to alleviate poverty through economic development and social transformation. In the Philippines alone, Asian Development Bank has estimated that 27 percent of Filipinos or about 23 million live below the Asia-Pacific poverty line which is $1.35 a day (Dumlao, 2008). The Next Billions states that the base of the pyramid (BOP) is a huge undertapped market with an opportunity to capitalize in bringing basic services to the poor and therefore create profit. Since this is a product of a research survey on multinational, regional companies and social entrepreneurs who have pioneered the creation of their own BOP business models, it then illustrates that it is the private sector companies, rather than NGOs and philanthropists, that have the ability to best meet the BOP needs. These innovative ideas are possible grounds for money-making-business models that multi-national companies like Unilever, General Mills, Procter and Gamble pursue capitalism at its best to create solutions to societal problems of the poor; generate profit to make these undertakings sustainable; provide capital to invest on growth; and attract investors while partnering with the local communities. A growing number of global companies are now drawn to the idea that money can be made through the development and marketing of products and services at the BOP level. This report emphasizes that companies can discover new markets with possible growth potentials and at the same time aim to gain a socialeconomic impact. The report cited three levels of BOP depending on income. The highest level can generate significant flexible income and the mid-range level largely spends on essentials while the lowest level struggle to meet basic needs. These standard BOP markets are to be found in India, Brazil and also the Philippines where there are some degree of connection with the global market. Common characteristics of these markets are lack of infrastructure, inefficient system of government, and legal and political uncertainties. The five principles presented as a framework for

innovation has been proven to be applicable to all three levels of BOP and to standard BOP markets. However, it would be helpful to gain knowledge in how to apply the standard BOP principles in hostile and disaster areas. BOP practitioners could gain insights in penetrating possible markets like Burma or North Korea, where the state heavily restricts the rights of most of its citizens or to BOP places that have recently suffered from natural disasters. Information in adopting the BOP principles in places with extreme hardship where most or all variables are totally non-existent as a first step towards return to normalcy, apart from providing relief, can be an excellent tool in helping improve the lives of people. In the Philippines, multi-national companies like Manila Water Company and Smart Communications Inc. have benefited from business models redesigned to suit its local BOP market. These companies saw business opportunities by finding solutions to common problems of the local communities. According to Jaime Zobel de Ayala II, Chairman of Manila Water, only a small portion of Manilas population had access to potable water. When Manila Water was privatized, it has provided water to 99 percent of Manila citizens 24/7 which resulted in $50 million profit per year (V. Katsuri Rangan and Michael Chu, 2008). Smart Telecom on the other hand, is the Philippines leading wireless company with roughly 12.5 million Global System for Mobile Communications (GSM) by creating innovative products and services like telecom in sachets purchase of their products in small amounts, designed specifically to capture and retain the BOP market (www.iese.edu). Companies involved with the BOPs should keep in mind that (1) BOP principles should be applied to stimulate growth in poor communities design products and services with value creation and not just aim for scale and profit; (2) BOP frameworks must incorporate the creation of sustainable product and service innovations that could leapfrog current technologies; and (3) programs must be continuously created and developed to encourage sustainability of the BOP business models in order to accelerate the impact and scale of innovation strategies.

5 GLOBAL IT REPORT 2009-2010 (WORLD ECONOMIC FORUM)

5.1 SUMMARY
The Global IT Report has been issued yearly since 2001. The report assesses the information and communication technologies (ICT) industry on its own as well as in relation to other industries and presents the Networked Readiness Index (NRI) for different nations every year in its publication. The Global IT Report 2009-10 is divided into four parts with several sub-chapters. The four parts of the report are as follows: (1) The Networked Readiness of the World in 200910, 3

ICT, and Sustainability, (2) Best Practices in ICT to Foster Growth and Competitiveness: Selected Case Studies, (3) Country/Economy Profiles and (4) Data Presentation. ICT sustainability is the main focus of this report and its effect on the environmental, industrial and social sustainability. Data presented in this report was gathered through surveys (survey data, 57%) and research (hard data, 43%). This data was used to compute for the NRI. The structure of the NRI is based on three sub-indexes: (1) Environment, (2) Readiness and (3) Usage. These sub-indexes are further divided into three pillars for each sub-index. Computation for the NRI is under the assumption that each sub-index and pillar holds equal weight. Top performers and notable performances within each region and income group (high income, upper-middle income, lower-middle income, low income) are given particular mention. A total of 133 nations are assessed in this report, with Sweden awarded the highest rank. The Philippines claimed the 85th ranking and also ranked 13th in the lower-middle income group. This is the same rank obtained last year, unfortunately, it dropped one place lower to the 86th rank overall, and 14th in the lower-middle income group, in the following report, Global IT Report 2010-11. The effect of the urbanization trend on ICT has also been mentioned in this report. The networking of cities and the continuous growth of population in urban areas provide for a more ICT sustainable culture, and growth in ICT can likewise be beneficial to the city. Economic growth and environmental sustainability are a few of the benefits that can be derived by the cities. A particular article in this report discussed the growth of cloud computing and the potential benefits to be derived from this growth. Based on the authors research and estimates, cloud computing can provide an additional million jobs in Europe alone. Environmental sustainability has been mentioned as a benefit of ICT growth, and several articles focused on the relationship between ICT and the environment, discussing the topic of lowering carbon dioxide emissions in particular. Even the article stressing the importance of aligning business strategy with IT strategy also briefly touched the topic of environmental sustainability. Companies can aid the environment by using technology to improve business processes and waste management. Technological advances can help companies build infrastructure that is improved to produce green buildings, buildings with built-in architectural features that can help save energy consumption and facilitate better waste management. The case studies discussed in the second part of the report present the best practices that could be benchmarked by nations developing their ICT. The nations focused upon in each of the case studies are Spain, Ireland, Tunisia and

China. The conclusion of the report focused on presenting the data gathered and previously available data from prior year reports in relation to NRI computation.

5.2 CRITIQUE
This report was issued during the recovery phase from the recent global financial crisis. The topic of sustainability is very fitting for the timing of the reports release. Readers of this report can appreciate its contents, especially if they have financial-decision making responsibilities in their companies. This report should help boost the importance of making sound ICT-related decisions and investments and also strengthen the position of IT departments within companies. The ICT industry is constantly changing. The writers and publishers of this report recognized the need to be flexible in following the NRI framework; measures used are updated annually to conform to the updates in the ICT industry.

Additionally, the human element in ICT advancement is also recognized in this report. Advances in ICT will be ineffective if the end-users are unable to appreciate and use it. Throughout the report, the authors consistently sited best practices based from actual historical data. They used the selected best practices as benchmark and this provided consistent basis for evaluation. The Global IT Report can be a useful tool in analyzing and forecasting ICT trends in a nation. For an entrepreneur, this can help in his business strategy. The entrepreneur can invest in a nation with developed ICT, where he can find healthy competition or be a risk-taker in a developing nation. As the report is issued annually, and in basically the same format, comparisons to analyze trends would not be difficult to perform. The report also contained a table depicting the link to gross domestic product, job availability and ICT growth, particular to communication. This illustration is easily understandable and allows regular readers, persons with no direct ICT knowledge, to appreciate ICT advances. Several chapters in this report are focused on the relationship of ICT to other industries. It discussed the eventual long-term benefits in investing in ICT and other advanced technologies. However, investment in ICT requires a rather large sum of financial investment and although technology advances have positive impact on society in general, financial constraints will always hinder future ICT investments. For example, building a green building will be more beneficial to the environment and to the company in the long run, but this will require a larger sum of initial investment. A financial projection alongside the graphical representation of possible benefits to be derived from ICT investments would be helpful to the readers of this report. On a side note, the Philippines is already in the loop regarding green buildings through the Philippine Green Building Council (http://philgbc.org/index.php/home.html). Computation of the NRI is based on the assumption that all factors play an equally important role in a nations ICT readiness. This may not be true for all nations, for example, the government in a communist nation has greater controlling power than in a democratic nation. In the article ICT and the Sustainable Competitiveness of Cities, it was mentioned that Chinese and Indian cities were not included in the sample population. This may cause the results of their research to be inaccurate, as these two countries are estimated to be the most populated in the world. Representative cities from both countries should have been included in the study.

6 TEAM CONCLUSIONS AND RECOMMENDATIONS

The government, business sector, entrepreneurs, and the community must change for them to exploit existing, new, and emerging opportunities to improve communities and the economy. The transition may be done by looking into possible responsibilities per stakeholder group in order to improve communities and the economy: Business Sector. Medium Size and Enterprise Level Businesses should look into doing businesses outside their usual target market. They should look into opportunities to serve the needs of consumers beyond poverty line and those in emerging economies. The structure of these organizations may allow to them to speed up development and time to 3

market of new products based on the opportunities available to consumers at the base of the pyramid (BOP) and the said emerging economies. These businesses should also look into opportunities in entering or developing long term capabilities to IT and IT Enabled Services (ITES) to be able to acquire a significant share of this service oriented industry in the global scale. Entrepreneurs. The entrepreneurs are encouraged to venture into exploiting under-developed business opportunities and practicing social entrepreneurship. Most of under-developed business opportunities are found in small scale industries such as arts and crafts that are mostly unique to a region and may need specialized skills in production. Focusing on developing these industries may open opportunities to address the needs of an un-served market. Community. The academe, non-profit organizations, community based organizations, and regional groups would need to improve relationship management efforts with the business sector, entrepreneurs, and the government to speed up information transfer that may translate to development of new markets, products, and services. Government. Governments should ensure that they are able to create policies that make their state an ideal location for different industries to do business in. Aside from policies that support already developed industries, governments should also look into developing policies that will attract more entrepreneurs and business into entering into already existing industries that have not yet been developed like agriculture.

With better defined roles in contributing to developing the economy and communities, stakeholders from different sectors would be able to develop create and run better machinery for national innovation systems which can help exploit new, existing, and emerging opportunities through the use of technology.

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CIA The World Factbook: List of Countries by Population (2011 estimated) https://www.cia.gov/library/publications/the-worldfactbook/rankorder/2119rank.html Commission on Higher Education www.ched.gov.ph/information/statistics Department of Agriculture http://www.da.gov.ph/ Dumlao, Doris. 23 Million Filipinos Living Below Asia-Pacific Poverty Line. Inquirer Global Nation. 27 August 2008. http://globalnation.inquirer.net/news/breakingnews/view/20080827-157167/23million-Filipinos-living-below-Asia-Pacific-poverty-line

Environmental Sustainability Issues in Philippine Agriculture Nicomedes D. Brione Global Opportunity in IT Based Services http://siteresources.worldbank.org/EXTINFORMATIONANDCOMMUNICATIONA NDTECHNOLOGIES/Resources/2828221208273252769/The_Global_Opportunity_in_IT-Based_Services.pdf GMA NEWS. NCC SEEKS TOP RUNGS OF WORLD ECONOMIC FORUM RANKINGS FOR PHL. JULY 1, 2011. AS RETRIEVED ON JULY 24, 2011 HTTP://PH.NEWS.YAHOO.COM/NCC-SEEKSTOP-RUNGS-WORLD-ECONOMIC-FORUM-RANKINGS-170106120.HTML Global Competitiveness. World Economic Forum. As retrieved on July 24, 2011 http://www.weforum.org/issues/global-competitiveness Global IT Report 2010-2011 http://reports.weforum.org/global-information-technology-report/content/pdf/wefgitr-2010-2011.pdf World Atlas: List of Countries by Population (2010 estimated) http://www.worldatlas.com/aatlas/populations/ctypopls.htm NCC SEEKS TOP RUNGS OF WORLD ECONOMIC FORUM RANKINGS FOR PHL. GMA NEWS JULY 1, 2011. AS RETRIEVED ON JULY 24, 2011 HTTP://PH.NEWS.YAHOO.COM/NCC-SEEKSTOP-RUNGS-WORLD-ECONOMIC-FORUM-RANKINGS-170106120.HTML Philippine Agriculture Faces Challenges of Sustainability http://www.agriculture-ph.com The Global Economic and Financial Crisis: A Timeline by Mauro F. Guilln, Director of the Lauder Institute http://lauder.wharton.upenn.edu/pdf/Chronology%20Economic%20%20Financial %20Crisis.pdf World Economic Forum as retrieved on July 24, 2011 http://www.weforum.org/reports-results?fq=report^report_type%3A%22Annual %20Reports%22.