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Consumers interest in developed

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Bargaining power very low/absent ... Consumers have high bargaining power. Consumers play active part in standard-setting, etc. ... – PowerPoint PPT presentation

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Title: Consumers interest in developed


1
Consumers interest in developed developing
markets implications for responsible business
  • Pradeep S Mehta
  • Secretary General, CUTS International
  • OECD CSR Roundtable
  • Paris, 15th June 2009

2
Outline of the presentation
  • Variations in consumers interest/awareness
    between developing and developed countries
  • Large no of contributory factors (externalities)
    in developing countries
  • Relationship between law enforcement, company
    behaviour and consumer welfare
  • Highlights challenges and traces the road ahead

3
Consumer Interests
Developed Countries
Developing Countries
  • Low-levels of consumer awareness
  • Consumers poorly organised, few Cons.
    Organisations
  • Views of consumers seldom incorporated into laws
  • No involvement of consumers in law enforcement
  • Redressal mechanism ill-developed, cumbersome
    and costly
  • Bargaining power very low/absent
  • Standards often reflect views of a particular
    class of consumers

4
Consumer Interests
Developed Countries
Developing Countries
  • High levels of consumer awareness
  • Consumers play active role in advocacy
  • Play active role in enforcement of laws
  • Redressal process transparent, simple and cost
    effective
  • Consumers have high bargaining power
  • Consumers play active part in standard-setting,
    etc.

5
Contributory Factors (Law Regulation related)
Developed Countries
Developing Countries
  • Laws absent or ineffective if present
  • Enforcement Institutions resource-strapped
  • Multiple institutions created but limited
    capacity on enforcement
  • Interference of interest groups hamper functions
  • Consumer standards not observed (goods and
    services)
  • Poor governance and weak functions of regulatory
    institutions

6
Contributory Factors(Law Regulation related)
Developed Countries
Developing Countries
  • Effective laws and better enforcement
  • Dynamic process of legislative/regulatory
    reforms
  • Effective governance mechanism and efficient
    functioning of regulatory institutions

7
Contributory Factors(External Factors)
Developed Countries
Developing Countries
  • Policy often inclined to benefit SoEs
  • Monopolies and abuse of dominance by companies
  • Unfair Trade Practices (UTPs) predominant
  • Poor service standards (e.g. after sales
    service)
  • Bad infrastructural facilities act as
    dis-incentive for Cos
  • Use of obsolete technology labour intensive
    processes

8
Contributory Factors(External Factors)
Developed Countries
Developing Countries
  • Predictable business environment and rules
  • Markets often competitive (level-playing field)
  • Excellent service standards high levels of
    consumer satisfaction
  • Well developed infrastructural facilities
  • Improved technology leading to improved products

9
Implication for Businesses
Developed Countries
Developing Countries
  • Often extractive, to source raw materials
  • Non-transparent operations, little or no
    communication with communities/consumers/sharehold
    ers
  • Weak enforcement help avoid actions
  • Low propensity to re-invest in host countries
  • Consumer ignorance used to their benefit
  • Viewed with suspicion by civil society (no
    dialogue)
  • Large no. of SMEs little or no incentives by
    the State
  • Old (often ineffective) marketing practices

10
Implications for Businesses
Developed Countries
Developing Countries
  • Stern action (precedents) facilitate responsible
    conduct
  • Transparent policy and operations
  • Close involvement with consumers/shareholders
  • High level of consumer awareness (watch dog)
  • Incentives from the State for responsible
    conduct
  • Dynamic marketing strategies

11
Challenges the Way Ahead
  • Making relevant information available to
    consumers in developing countries enhancing
    awareness
  • Promoting cooperation between regulatory
    institutions and consumers/groups in developing
    countries
  • International (donors) community to strengthen
    regulatory regimes/institutions in developing
    countries
  • MNCs to maintain consistent standards of
    performance across host (developed developing)
    countries

12
  • Thank You!
  • psm_at_cuts.org
  • 91-9829013131
  • www.cuts-international.org
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