Bottom of the pyramid Essay

Submitted By Zahraanjum
Words: 2635
Pages: 11
Open Document
Contemporary Issues in Business & Management
Zahra Hussain 11454024

Assignment One
Deadline: 22nd Nov 2013 (11pm)
Word count: 2187

In economics, wealth and income belonging to each country is commonly portrayed in the form of a pyramid. Countries placed at the top of the pyramid are amongst the most affluent and wealthiest with innumerable opportunities, whilst at the bottom of the pyramid (BoP) lies the largest socio-economic group consisting of 4 billion people who make ends meet on $2 per day. The BOP strategy, first discussed by Professor Prahalad (1998), maintained the belief that this market entails a fortune to be made by those firms who decide to operate within this sector.
Prahalad upheld that this market has the immense profitable potential for firms as well as opportunities for the poor population of this market, hence creating a win-win situation for both parties. Such was his certainty that he remarked this as a market opportunity which mustn’t be ignored and that if done so it is “at their own peril.” Prahalad’s strategy has been adopted by many businesses however contrarily; his strategy has been criticised by the likes of Karnani which will also be discussed throughout this assignment.
The BoP strategy holds that consumers with low levels of income could become profitable customers which could be attained using social goals to recognise business targets. Prahalad states that “low-income markets present a prodigious opportunity for the world’s wealthiest companies– to seek their fortunes and bring prosperity to the aspiring poor” (Prahalad and Hart 2002); implying that Prahalad’s statement reiterates that poverty is an issue at hand which may be lessened through this strategy rather than become an unavoidable issue (Hart 2005, Prahalad 2004.)
Prahalad’s thesis is contrary to the assumptions that, according to Prahalad, many multinational companies make; that there is no potential in BoP markets as this low income market cannot afford the services and products that their high cost structures consist of. Thus, innovation is deemed valuable only in developed markets, suggesting that this segment should be left to the governments. Prahalad instead argues that the poorest socio-economic group can also be deemed valuable customers as they require value from their purchases. Hence a Prahalad debates that given a company fulfils the criteria, investing ample resources to satisfy the requirements of the BoP, they can overcome any BoP market barriers. This will boost the economy and help the poor, providing employment opportunities for them, which plays an important part in Prahalad’s strategy (Karnani. 2013.)
Prahalad distinguishes that to operate in BoP markets; a viable approach is required to cater to the needs of people. He suggests that to flourish in BoP markets, four elements are essential; creating buyer power, product innovation and consumer education, improving access through better distribution and communication systems and modifying local solutions. He recognises that each BoP market will be subject to differentiated approaches according to their country of operation, which can achieved via innovation, which he believes to be working within limitations like those that may be experienced in a BoP. According to Prahalad, innovation is not just about products as it encompasses “developing an appropriate ecosystem that enables a new business system to function” (Prahalad 2012).
However according to Prahalad, a business must envision many concepts before making any intention to move into BoP markets, determining how beneficial BoP markets will be. He states that access to BoP markets is easy as they are untapped and commonly overlooked markets which hold promising potential. Prahalad argues that the poor are brand conscious and aspire to own leading brands, hence making the poor brand aware will be of benefit to them and the business. Additionally, Prahalad states that BoP markets are
Show More

Related Documents: Bottom of the pyramid Essay

The Fortune At The Bottom Of The Pyramid

In C.K. Prahalad’s book, “The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits” he discusses the plethora of opportunities out there by catering to the BOP market. Additionally, he talks about how this would work and the benefits to all stakeholders involved. This was quite an interesting read as it allowed to me to see this issue from a different perspective and altered my views on this subject. The Bottom of the Pyramid, or BOP market represents the 4 billion of the world’s…

Words 1996 - Pages 8

The Fortune at the bottom on the pyramid Essay

The Fortune at the Bottom on the Pyramid (Prahalad and Hart) Question: Can focusing your growth strategy at the bottom of the world’s economic pyramid provide financial growth, drive innovation and an opportunity for the poor to better themselves? MNC’s (Multinational Corporations) have primarily focused growth, innovation, marketing and resources at the top of Economic Pyramid. The top of the pyramid represents 100M consumers comprised of upper and middle income that have >$20K in annual income…

Words 1369 - Pages 6

The Quest For The Fortune At The Bottom Of The Pyramid: Potential And Challenges

The quest for the fortune at the bottom of the pyramid: potential and challenges Dennis A. Pitta The University of Baltimore, Baltimore, Maryland, USA, and Rodrigo Guesalaga and Pablo Marshall ´ Pontificia Universidad Catolica de Chile, Santiago, Chile Abstract Purpose – The purpose of this article is to examine the bottom of the pyramid (BOP) proposition, where private companies can both be profitable and help alleviate poverty by attending low-income consumers. Design/methodology/approach…

Words 9069 - Pages 37

Psychological Needs Essay

are met. This system is based on a pyramid, “the lower levels of the pyramid before they can successfully be motivated to tackle the next levels. The lowest four levels represent deficiency needs, and the upper three levels represent growth needs” (Martin & Joomis, 2007, Pg. 72-75). Maslow's hierarchy of needs can be seen most in the shape of a pyramid. Whereas the pyramid has become the average way to represent the hierarchy, Maslow himself never used a pyramid to describe these levels in any of…

Words 830 - Pages 4

Essay on How Did Sohan Lal Effectively Manage Village Affairs

reparation of the JCB machine to renovate the pond and to finally give a chance to all villagers to have access to clean water. 4. Carry out a base-of-the-pyramid competency analysis to suggest the competencies that were reflected through Sohan Lal’s way of approaching issues and making decisions in the Indian context. The base-of-the-pyramid model introduced by Prahalad proposes the idea that: “The poor present a vast untapped business opportunity, and if companies serve the poor, they can help…

Words 1281 - Pages 6

Maslow's hierarchy of Needs Essay

represented by a pyramid. In order for a person to move up the pyramid, he or she has to fulfill the lower needs first. This pyramid would show the basic primary needs, such as food, water, sleep, and sex at the very bottom. Directly above the primary needs would be the need for safety and security. Above the safety needs would be the need to have love and affection and to belong. The next level is self-esteem, or "the need to develop a sense of self worth." At the very top of the pyramid is self actualization…

Words 338 - Pages 2

Pyramid of Giza Essay

Pyramid’s Construction: The construction of the Great Pyramid of Giza has long been debated. Most theories of the Great Pyramid’s construction include using ramps and pulley mechanisms in order to move such massive stones, but exactly how has remained a mystery. There is a theory on how the Egyptians attained the large workforce needed for the construction of the Great Pyramid. Egyptologists Mark Lehner and Zahi Hawass believe that the Great Pyramid was built by a willing labor force as opposed to…

Words 661 - Pages 3

Paradox of Affluence Essay

that we can’t trust people to rate their own happiness- that people do in fact get happier as they get richer. Maslow’s hierarchy of needs is most often displayed as a pyramid. The lowest levels of the pyramid are made up of the most basic needs, while the more complex needs are located at the top of the pyramid. The bottom of the pyramid are the basic physical requirements including the need for food, water, sleep and warmth. Once the lower level needs have been met, people can move on to the next level…

Words 398 - Pages 2

Csr: Corporate Social Responsibility Essay

the facility is located. The Pyramid model Archie B. Carroll theorized represents the levels of responsibility that a corporation needs to meet to be successful (Kreitner & Kinicki, p. 20). There are four separate layers to Carroll’s corporate social responsibility pyramid. His theory is that each level needs to be met successfully in order for the next level to be achieved. Whole Foods values seem to address and excel at each level of the pyramid. The first or bottom layer is Economic Responsibility…

Words 342 - Pages 2

Egypt Notes Essay

enemies in the bottom register. LUXURY ITEM Old Kingdom- Old Kingdom was the first to have Megalithic architecture. Imhotep (architect)- Funerary complex of King Zoser (Djoser), Saqqara ca 2500 BCE (Step Pyramid) Imhotep- worshiped like a god. 13 false doors and 1 actual door. 5 Mastabas on top of each other Old Kingdom-Pyramids at Giza dates vary; the three main people buried Kahfre, Kufu, Menakaure. Great Pyramid of Kahfre, Giza, ca. 2551-28 BCE (Largest/Oldest tomb) Pyramid of Kufu, Limestone…

Words 577 - Pages 3