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Exploring the Links Between International Business and Poverty Reduction: A Case Study of Unilever in Indonesia

Principal Author: Jason Clay Principal Author: Jason Cla

An Oxfam GB, Novib, Unilever, and Unilever Indonesia joint research project

First published by Oxfam GB, Novib Oxfam Netherlands, and Unilever in 2005 © Oxfam GB, Novib Oxfam Netherlands, and Unilever 2005 ISBN 0 85598 566 6 All rights reserved. This publication is copyright, but may be reproduced by any method without fee for advocacy or teaching purposes, but not for resale. The copyright holders request that all such use be registered with them for impact assessment purposes. For copying in any other circumstances, or for re-use in other publications, or for translation or adaptation, prior written permission must be obtained from the publishers, and a fee may be payable. Printed by Information Press, Eynsham, UK Original language: English A catalogue record for this publication is available from the British Library. Copies of this report and more information are available from: Oxfam GB, Oxfam House, John Smith Drive, Cowley, Oxford, OX4 2JY, UK Email: oxfam@oxfam.org.uk Oxfam GB is registered as a charity (no. 202918) and is a member of Oxfam International. Novib, Mauritskade 9, Postbus 30919, 2500 GX Den Haag, The Netherlands, +31()703421991 Unilever PLC, PO Box 68, Unilever House, Blackfriars, London EC4P 4BQ, UK Tel +44 (0)20 7822 5252 Fax +44 (0)20 7822 5951

Acknowledgements
This report is based on research commissioned by Oxfam GB and Unilever Indonesia and carried out in Indonesia by T. Hani Handoko, A. Prasetyantoko, B.M. Purwanto, and Maria Ratnaningsih, co-ordinated by Amar Inamdar at Synergy. In-country project facilitation and information gathering were provided by Oxfam staff in Indonesia and by Unilever Indonesia. The principal author of the report was Jason Clay. The project was supported throughout by David Logan and Michelle Dow of the Corporate Citizenship Company, who also assisted in the drafting of the final report.

Front-cover photographs (left to right): Soybean farmer tending his plants. (Kate Rawo rth/Oxfam GB) Unilever factory employee packing product. (Unilever Indonesia) Unilever sales representative distributing product to retailers by bicycle. (Unilever Indonesia) Customer buying goods from a warung retailer. (Unilever Indonesia)

Exploring the Links Between International Business and Poverty Reduction: A Case Study of Unilever in Indonesia

Principal Author: Jason Clay

An Oxfam GB, Novib, Unilever, and Unilever Indonesia joint research project

Exploring the Links between International Business and Poverty Reduction

Contents
Acronyms and abbreviations 7 Foreword: Oxfam 8 Foreword: Unilever 10 Executive summary 12 1 Introduction 23 Why Oxfam and Unilever began this project 23 What is this research about? 25 Methodology 26 The context of the research project 30 Assessing the impact of Unilever Indonesia 33 The structure of the report 35

5 Low-income consumers in the marketplace 87 The fast-moving consumer-goods (FMCG) market in Indonesia 88 What exactly does UI sell? 88 Who buys UI products? 89 Access to UI products 89 Why do people buy UI products? 92 The role of promotion and advertising 94 Meeting or creating needs? 96 Key insights 99 6 UI’s wider impact in the community 101 Corporate community involvement 101 UI’s influence on the business sector and government 103 Key insights 104 7 Conclusions 106 Content: lessons learned from the research project 107 Process and partnership: lessons learned from working together 111 Feedback from the external reference group 114 The way forward 115 Notes 116 References and sources 119 Appendix 1: The project team 121 Appendix 2: UI product list, 2003 123

2 The impacts of Unilever Indonesia at the macro-economic level 37 Setting the context: the 1997–98 financial crisis 37 Unilever’s organisation and recent performance in Indonesia 38 UI’s response to...
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