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The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (The Wharton Press Paperback Series) :: 0131877291
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| The world's most exciting, fastest-growing new market? It's where you least expect it: at the bottom of the pyramid. Collectively, the world's billions of poor people have immense entrepreneurial capabilities and buying power. You can learn how to serve them and help millions of the world's poorest people escape poverty. It is being done-profitably. Whether you're a business leader or an anti-poverty activist, business guru Prahalad shows why you can't afford to ignore "Bottom of the Pyramid" (BOP) markets. In the book and accompanying CD videos, Prahalad presents... Why what you know about BOP markets is wrong A world of surprises-from spending patterns to distribution and marketing Unlocking the "poverty penalty" The most enduring contributions your company can make Delivering dignity, empowerment, and choice-not just products Corporations and BOP entrepreneurs Profiting together from an inclusive new capitalism "C. K. Prahalad argues that companies must revolutionize how they dobusiness in developing countries if both sides of that economic equation areto prosper. Drawing on a wealth of case studies, his compelling new bookoffers an intriguing blueprint for how to fight poverty with profitability." Bill Gates, Chairman and Chief Software Architect,Microsoft "The Bottom of the Pyramid belongs at the top of the reading list forbusiness people, academics, and experts pursuing the elusive goal ofsustainable growth in the developing world. C. K. Prahalad writes withuncommon insight about consumer needs in poor societies andopportunities for the private sector to serve important public purposes whileenhancing its own bottom line. If you are looking for fresh thinking aboutemerging markets, your search is ended. This is the book for you." Madeleine K. Albright, Former U.S. Secretary of State "Prahalad challenges readers to re-evaluate their pre-conceived notionsabout the commercial opportunities in serving the relatively poor nations ofthe world. The Bottom of the Pyramid highlights the way to commercialsuccess and societal improvement--but only if the developed worldreconceives the way it delivers products and services to the developingworld." Christopher Rodrigues, CEO, Visa International "An important and insightful work showing persuasively how the privatesector can be put at the center of development, not just as a rhetoricalflourish but as a real engine of jobs and services for the poor." Mark Malloch Brown, Administrator, United Nations Development Programme Editorial Descriptions are usually submitted by the manufacturers, publishers and authors. Contact us if you are one of them, and wish to change the above description. |
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Author: Guest
FBP is an intriguing concept and the model can be scaled up or down in size in all parts of the world. The book serves as a wake up call to businessmen across the world.
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Author: Guest
A new approach which in fact is so easy but psychologically so difficult to accept. We have tried it out and and observed companies doing it since 16 years: to design and market low end products for the "Bottom of the Pyramid" (BOP) with high profit margins at low cost. We have developed a tool which we call MMP or Multiple Market Positioning which shows step by step how to implement this BOP idea successfully. Regards, Dr. Peter Oertli, OEC Oertli Consulting, CH-8142 Uitikon-Zurich, Switzerland.
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Author: Guest
In this economics/business book, the author offers some solutions toward what is considered by many to be the greatest economic problem in the world: Global poverty. A large percentage of the world's population lives on a sustenance wage and millions can barely afford to get the basic goods needed for survival. It is this group that Prahalad refers to as the "Bottom of the Pyramid", or BOP for short. He wrote this book as a guide to show that meaningful solutions do exist and while they won't eradicate all poverty overnight, they at least offer a glimmer of hope for the people who live in these impoverished nations along with solutions that are backed up with evidence, proving their effectiveness.
Part I of this book includes the first six chapters and it is here that the author breaks down the problem of world poverty and discusses how best to serve this large, underdeveloped segment of the population. The greatest obstacle that must be overcome before any progress can be made is the perception problem with the BOP. This is something I hadn't thought much about but like the author states, it is a perception problem that must be addressed before any progress can be made. What he is referring to is the universal assumptions that the world's poorest people do not have any economic resources and thus are useless to market products and services to because the cost will far outweigh the benefits, making the business proposition unprofitable. Some people even take this core assumption a step further and assume that the members of the BOP are not only economically limited, but also lack the mental capacity to make informed decisions. The author spends time in Part I debunking these myths and he goes on to say that the BOP is so huge in number that multi- national corporations cannot afford to ignore it much longer.
So how do companies fulfill the needs of the world's poorest people and still show a profit? Well, many would say this is a hopeless cause but Prahalad shows that it is not hopeless at all. It can be accomplished if approached in the right way. It starts with companies changing their strategies to accommodate the needs of people at the BOP. Since these people have very little money and almost no way to borrow cash, they need goods and services that satisfy their needs yet fit into their budgets. This might sound impossible at first, but Prahalad gives several examples of companies that have accomplished this feat while still generating a small profit. One example given is Jaipur Foot- a company that specializes in artificial limbs. As most people already know, limb replacement can be an extremely costly procedure costing tens of thousands of dollars in some instances. What Jaipur Foot had to do was find a way to manufacture artificial limbs that worked yet were inexpensive enough that the poor customers were able to afford them. Jaipur Foot and its management team set out to find ways to make inexpensive limbs and they succeeded, bringing a much needed service to thousands of poor Indian natives at a fraction of the cost for a similar service in the United States.
One thing you will notice immediately when you read this book is that the author spends most of his time talking about the nation of India. There are nations poorer than India but I think he chose India because of its large population and status as the largest Democratic nation in the world. There is a great deal of government control in India and it makes reform difficult. But as Jaipur Foot and others have shown, there is still enough free market opportunity to bypass the government restrictions and bring products and services to people who have never had them before.
After the groundwork for the book has been placed in Part I, Prahalad then proceeds to the second part of the book where he offers case studies from twelve different companies that have succeeded in raising some of the world's poor people out of their cycle of destitution and into a higher social class. This part of the book is good because it offers concrete examples that show how private companies have successfully lifted people out of poverty. Most of the examples given in this section involve companies that are affiliated with the health industries. Jaipur Foot was already mentioned, but others include Annapurna Salt (a company that helped to increase iodine intake and thus reduce the instance of disease); Hindustan Lever Limited (a manufacturer of soap products that helped eliminate unsanitary practices); and Aravind Eye Care Systems (a company that has worked to eliminate needless blindness). There are also some successful companies that are not in the health business, like ICICI Bank- a business that helps provide the means necessary for poor people to borrow money that can be later used for economic development. The reason companies like these were selected is because they represent the most basic of all human needs. And in a poor nation like India, the basics are the most critical. There is no time to worry about luxury when basic needs like health and finances are not fulfilled.
Prahalad backs up his claims with proof of success and this is easily the book's strongest point. Many authors write books that include different theories on poverty eradication but Prahalad shows that the methods described really can work by offering case studies on actual companies that have helped to lift thousands of people out of poverty through their own innovations. He also includes tables, graphs, and statistics to back up his claims and let the reader see the exact numbers behind all the talk. The improvements are not astronomical but Prahalad doesn't claim that gigantic achievements will be made overnight. He shows instead how steady progress toward a common goal can make a difference in reducing poverty around the globe.
One thing about this book that will bother some people is that it tends to get a little boring from time to time. The first part of the book (the six chapters) offers some good reading and the second part (with the case studies) is also good. I also liked the inclusion of a CD so that readers can visually see the work of these companies live, in action. But the problem I have is with the second section, where the case studies are located. The reading material here is a little boring and a little redundant. It is written in a management style and some readers will have a hard time staying awake as they read. The best way to handle this section is to turn directly to a company of interest and read that specific case study. The stories are generally good and they offer optimism and hope, but it is difficult to get past the mundane managerial writing offered in these case studies. Unless you have and active interest in these specific companies, you will have a difficult time keeping your interest as you read.
Overall, this is still a good management/economics book that will likely result in mixed opinions with different readers. Most will agree that this is a good book with proven results that add greatly to its validity. But the case studies and other parts of the book do get a little redundant at times, making this book the type that would be enjoyable only to those who have an active interest in the subject.
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Author: Guest
Tons of information backed by practical means. There is a ton of contemporary and useful information, statistics, charts, and analysis in this book. Equally important are the lists
of specific steps and methods to implement these practical ideas.
In "Bottom of the Pyramid," C.K. Prahalid details the critical
realities that are witnessed and experienced in our radically
changing world today. Especially for those that are living in LDC nations, or those on the lower end of the Per Capita Income scale, and/or those that are not experiencing sufficient economic growth. "BOP" is also quite relevant to high economic growth nations such as China and others, as these countries evolve (or is that devolve)?
Several concepts are examined and advocated in "Bottom of the Pyramid by Prahalad. MFIs, and Purchasing Power Parity (PPP) at the Bottom of the Pyramid (BOP) are relevant examples of purchasing parity. The author's concept of these populations being "value conscious by necessity" is real.
As practical as the means to implement these concepts are in this
book, often aided with specific models, examples, and instruction - it also takes - local people to accept it and do it. Many of the means and methods proposed for these areas at the BOP at times seem visionary and over-idealistic and also, too consumer-oriented. Prahalid does note the impediments, and is realistic about them.
Supplying market needs is helpful to people by providing them access and affordability to the products they need. Beyond this, what can be achieved once these market niches are filled? Again, Prahalid uses a lot of charts, graphs, and stats to outline current challenges, and also the specific ways to address them. Prahalid lists logistics, payment methods, transportation, etc.
One concept advocated is "creating the capacity to consume" in these poor countries, facilitated by the "single serving revolution." This single serving marketing approach is for sales of smaller packages of products instead of larger ones because lower income people in BOPs can't afford to buy larger packages and quantities and put them on the shelf at home for later use. Good value for a good product, with a good portion-to-cost ratio. Some small packaged single servings specifically listed by Prahalad are: "ketchup, tea, shampoo, coffee,
and aspirin." Trivial products, many of us in the world use. Going farther and beyond these items would help, however: and, Prahalid does. In addition, his concept of the "Three As" is realistic in this approach to marketing: Affordability, Access, Availability.
Some of the bureaucratic policies and private industries noted:
citizen-centric governance, e-governance, the salt industry in India, landmines and prosthetics, eye care, rural kiosks, training, deliveries, and supply-chains, etc.
Prahahlid noted the challenges to implementation. Ideas and words are quite different from implementation. (The doing.) This book's ideas can be helpful in certain circumstances and in many areas of the world. There is opportunity to implement these concepts, There are however, many hurdles to implementing them and achieving success. Will people at the BOP make the behavioral changes needed? Changing mentalities is where it starts. Are these recommendations, a form of cultural imperialism to some degree? One obstacle is corruption;
it's rampant in many of these BOP countries. A high percentage of aid and investments are stolen throughout the world. Multi-national companies (MNCs) are often squeezed. Theft, corruption, and judiciary systems are built to work against foreigners and obstruct them, while these BOP nations depend upon them. NGOs acquire and spend a lot of money. What do they actually do? Not much, as a whole. NGO corruption and embezzlement is endemic. Aid is used by governments of the "developed world" to push forward its own agenda
in these nations. Aid, is a carrot and a stick at the same time.
In these nations there is no concern for individuals. Governments of BOP nations care about large corporations that dump millions of dollars of FDI into these countries. These MNCs often flush millions down the drain to get into these nations to get market share, reduced labour-costs, and to often export what they produce in BOPs nations to consumers in highly developed countries. Outsourcing is the latest motivator for the globalized competitive world where MNCs wield enormous power. Where do the 4 billion people Prahalad mentions as living on $2 USD per day fit into this? at the BOC (Bottom of the
Company). Author Prahalid states: "The process must start with
respect for Bottom of Pyramid consumers as individuals." Consumers? Target marketing aspirin, coffee, and shampoo.
If foreigners can be the saviour, how long will they have to stay? This sounds like a business oriented financial quid-pro-quo with the time-consuming and often ineffective Peace Corps approach: "We can do things better than you can. So let us come. Let us in. We're doing you a favor, while we're furthering our interests at the same time. Mutual benefits to some degree, but what is the ratio? Different parties want access to the pie. If the entire pie grows and greater
pieces and access of it are available to those who have less, those who have nothing or little, will in theory get a larger piece of the bigger pie. An element of Game Theory, perhaps.
There are 6.3+ billion people on this planet, and the population is contueing to rise rapidly. Water and food will take prevalence over economic growth if something is not done about it. Lack of these basic necessities needed for basic survival will obstruct the prospect for economic growth and better quality of life. And, developed nations plunder world's the environment and harm the lives of those with less political and economic power. We live in one world, not three. What we do, more than ever, affects the entire population. This is a very positive book, with realistic means to achieve its aims.
Ideas, facts, and realistic methods are superbly tied together in
"Bottom of the Pyramid." The biographies at the back of the book add depth to the people involved. A Highly recommend book for everyone, and in particular those in Internationally Development, Intl. business, MNCs, and government. Great book.
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Author: Guest
On the one hand this book is endorsed by Microsoft's Bill Gates and Former Secretary of State Madeleine Albright. That ought give the prospective reader some idea of its value. On the other hand, it might be asked, what kind of book is this that purports to tell businessmen how to make money by selling goods and services to the poorest people on earth? After all, the poorest people that have any disposable income at all make something like two dollars a day.
First question then is, how big is the market at the bottom of the pyramid (BOP)? Prahalad writes that China's per capita gross domestic product of $1000 really represents a dollar purchasing power parity (PPP) several times that, resulting in a $5-trillion dollar economy. He sees the Indian economy as being worth about $3-trillion in PPP terms. (p. 10) It's easy to see that even the apocryphal "two dollars a day" multiplied by two, three or four billion or so results in a whole lot of money.
The second thing that might be asked is, is it really moral for the business world to turn its considerable powers of inducement and persuasion on people who have so little to begin with? What kind of person would aim to exploit those least able to afford the exploitation? The answer given persuasively by Prahalad is that by making products and services available to the poor, two good things will happen. First is the fact that goods and services hitherto unavailable to the poor will actually become available. Second, these products and services will increase their standard of living and allow them to "acquire the dignity of attention and choices from the private sector that were previously reserved for the middle-class and rich." (p. 20)
How might this work? Presently people in the poorest neighborhoods in the world ironically often pay a premium for what little goods and services they get. Prahalad points out that this is because they are paying a "poverty penalty" which is the "result of inefficiencies in access to distribution and [because of] the role [played by]...local intermediaries." By "local intermediaries" he means the line of middlemen--some traditional, some corrupt, some both--that presently stand between the poor and their products and services. These middlemen add no value but have their hands out and therefore artificially increase prices for the people at the BOP. Products using modern distribution methods will undersell the old ways.
Prahalad emphasizes targeting products precisely to the needs of the poor. BOP people are "value-conscious by necessity," he argues, and contrary to what might be assumed are "very brand-conscious." They are interested in "aspiration products"--brand names--since these products symbolize a higher standard of living and a better way of life. We can see this in our own poor neighborhoods where brand icons like Nike and Sony are almost worshiped. Prahalad notes that the "poor have unpredictable income streams. Many subsist on daily wages and...tend to make purchases only when they have cash and buy only what they need for that day." Consequently a good marketing strategy is to offer "single-service packaging--be it shampoo, ketchup, tea and coffee, or aspirin..."
This may work I believe if, and only if, the products that big business makes available to the people at the BOP really do improve the quality of their lives. If they are persuaded to buy, say, cigarettes which they would not otherwise buy, clearly this will not improve the quality of their lives. If they are persuaded to buy soft drinks and other artificial "foods" consisting of empty calories, it's doubtful that they will benefit.
But is all of this more "globalization trickle down"?--that is, the rich get richer and the poor get--well, somewhat less poor? Prahalad believes that turning the people at the BOP into consumers will raise their standard of living and in the long run eradicate poverty. He uses the phrase "creating the capacity to consume" as a means to this end.
The unstated assumption behind Prahalad's idea (and the consumptive economy in general) is that there is great wealth in the world that only needs to be created by human ingenuity, and then efficiently distributed by the capabilities of the modern corporation. If we can find an energy source as cheap as oil and make a smooth transition to an oil-less economy, I think there is a good chance that Prahalad's vision will be realized. However, if we don't solve the coming energy problem, Prahalad's idea will gather dust and decay like so many abandoned SUVs alongside roads that we can't afford to repair.
In a sense then, this could be a visionary book well ahead of its time.
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