Microfinancing Works for Local Citizens and Foreign Business
by Denise Roseland

Read Denise's profile Printable version of the lesson


Grade: 8-12

Suggested Curriculum Areas: Business, Marketing, Social Studies, Economics

After completing this Lesson, you’ll be able to:

•Define social responsibility.

•Describe examples of social responsibilities businesses have to society.


Describe how social, cultural, and economic factors impact the international business environment

Analyze special challenges in operations, production and human resource management in international business

Identify entrepreneurial opportunities available in international business

Background information for teachers:

There is an assumption that students will have prior knowledge of leading economic indicators like gross national product and understand social responsibility as it relates to business decisions. This lesson would be best after initial instruction on business ethics and social responsibility has occurred.

Gross national product (GNP) per capita is the dollar value of a country’s final output of goods and services in a year, divided by its population. It reflects the average income of a country’s citizens. Countries with low GNP per capita tend to be located in Sub-Saharan Africa and parts of Asia. Countries with high GNP per capita tend to be located in Europe, North America and parts of Asia.

GNP per capita shows what part of a country’s GNP each person would have if this GNP were divided equally. Knowing a country’s GNP per capita is a good first step toward understanding the country’s economic strengths and needs, as well as the general standard of living enjoyed by the average citizen. A country’s GNP per capita tends to be closely linked with other indicators that measure the social, economic, and environmental well-being of the country and its people. For example, generally people living in countries with higher GNP per capita tend to have longer life expectancies, higher literacy rates, better access to safe water, and lower infant mortality rates.

Social responsibility in business is the practice of placing the good of society before the return of profit. Socially responsible actions can fall into one or more of the following categories:
- Providing a safe product
- Creating jobs
- Protecting the environment
- Creating a better standard of living for all

Lesson Outline

Background for students:

You have already learned about social responsibility and business. Remember that there are many examples of times when businesses fail to make decisions that are socially responsible and then government creates laws that require a business to address an issue by complying. Socially responsible activities that a business engages in will usually fall into one of the following categories:

· Provide safe products
· Create jobs
· Protect the environment
· Create a better standard of living for all


Read the following case study and answer or discuss the questions that follow the study.

Time Required: 30-50 minutes

Materials list: Copies of case study for all

Assessment ideas, if applicable

Additional resources for teachers: Photos of CCD entrepreneurs

Connections to Standards:

A.4.10 Follow oral directions (see LA C.4.2)
A.4.11 Demonstrate the ability to listen for meaning (see LA C.4.2)
A.8.6 Present brief impromptu remarks pertaining to topics of current or general interest (see LA C.8.1)
A.8.8 Ask appropriate questions when more information is needed (see LA C.8.3)
A.8.10 Demonstrate respect for differences in regional and multicultural communication (see LA C.8.1, D.8.2)
A.12.4 Analyze and respond in writing to business situations (both individually and collaboratively) (see LA B.12.1, F.12.1)
A.12.5 Participate in group discussions for problem resolution (see LA C.12.13)
A.12.6 Organize and lead discussions; participate in meetings; answer questions in formal and informal situations (see LA C.12.13)
A.12.10 Demonstrate interactive listening techniques (see LA C.12.3)
A.BS.2 Analyze and respond to complex business case studies
Present point of view on a current business issue
J.4.6 Respect the rights and feelings of others
J.4.8 Discuss the importance of being able to work together with people who are different from oneself
J.8.6 Describe different cultural behaviors and expectations (see SS E.8.10)
J.12.2 Identify stereotypes and discriminatory behaviors that could impact personal and organizational success
J.12.5 Organize and participate in a discussion (see LA C.8.3, C.12.3)
J.12.6 Demonstrate courteous attention to speakers
J.12.11 Define ethics
J.12.14 Explain the importance of consumer trust for the successful conduct of business
J.BS.3 Demonstrate an acceptance of different cultural beliefs and practices
J.BS.4 Demonstrate successful listening techniques
K.12.11 Discuss social and ethical standards of the workplace
D.4.1 Understand that productive resources are limited and that people cannot have all the goods and services they want; as a result they must choose some things and give up others. Identify the opportunity cost of a decision when one alternative is chosen (see SS D.4.1, D.4.2, D.4.7)
D.BS.5 Explain the concepts of inflation, unemployment, Gross Domestic Product and Gross National Product and describe how they are measured
I.8.1 Explain why laws are made

Interpret and apply legal principles to business and personal situations
E.8.2 Recognize opportunities that would lead to a successful business
E.8.3 Give examples of how businesses meet societal needs
E.BS.9 Describe practices associated with cultural diversity that would impact a business moving from the national to the international marketplace
G.12.2 Explain the difference between a domestic and international company
G.BS.5 Explain the role of international business at local, regional, and national levels
G.BS.12 Explain appropriate business protocol in international business situations
G.BS.17 Identify potential problems or “hurdles” of doing business in foreign countries
H.8.1 Identify why business decisions need to be made
H.BS.1 Analyze the pros and cons of different management decisions
H.BS.3 Describe how the organization provides for accountability through authority and responsibility

Questions for discussion or completion:

1. Before receiving her loan, how did Suja and her husband support their family?
[They worked on their land. They were tied to the growing seasons.]

2. What did Suja use her Your Share loan for?
[She bought a cow and a goat.]

3. Aside from giving some additional income, how did Suja’s investment add to the financial stability of the family? [It helped to ensure that the family had income throughout the year, not just at planting and harvest times.]
4. Why didn’t Suja use the money she borrowed from Your Share to pay for the roof and her children’s shoes?

[By investing in the cow and goat, she could ensure that she would have profits for years to come, which she could use to pay back the loan as well as buy things her family needed. If she had used the money to buy shoes and a roof at the beginning, she would have had no means of paying the money back, nor would she have been able to buy other things for her family later on.]

5. Who are the clients served by the Your Share loan program? [The clients of the Your Share program are poor women in developing countries who would otherwise have no access to credit to develop their businesses.]

6. How does microfinance work?
[People who cannot get regular loans because they are poor credit risks are able to come together and borrow money as a group. They take joint responsibility for the repayment of their loan. The recipients of the loans invest the money in their businesses--for example by buying new equipment, farm animals, or seed, or by hiring additional employees--in order to make their businesses grow at a faster rate and make greater profits. Studies show that the money made from the investment usually goes toward food, shelter, clothing, or education for the family, thus increasing the chance that the generations that follow will be healthier and more financially secure than their parents.]

7. How can microfinance, which works on a small, individual level, affect the larger economy?
[By lending money to poor people to start their own businesses, microfinancing helps to improve individual standards of living. Beyond that, recipients of microfinance loans contribute to the national economy by producing more goods and services and often hiring others to work for them. And with the additional money they earn, they can buy more goods and services, again adding to the national economy. In addition, microfinancing can help more people move from the informal economy to the formal.]

8. Why do local managers for Your Corp. in Tamil Nadu think it’s a good idea for the company to invest in Your Share?
[Answers will vary but should include ideas like a healthier economy controlled and driven by local residents will increase the overall quality of life for everyone, the rights and responsibilities to local resources should remain in the control of local residents and that often requires financial investment which struggling residents can’t provide, etc.]

9. This case study shows how microfinancing works in developing economies. Would industrial economies be able to benefit from a similar system? Explain your answer.
[Answers will vary.]

10. How do people get small business loans where you live? How well does the system work? Explain your answer.
[Answers will vary.]
Back to lesson plans