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Case Critique
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Introduction
In viewing the case study “Innovation and Social Entrepreneurship at the Bottom
The Bottom of the Pyramid (BOP). The BOP is said to be a socio-economic conceptual
theory that states a vast segment of people around the world constitutes the poorest of the
world’s population (Prahalad, 2005, p. 4). This segment is termed to be an invisible and
unserved market that is faced with numerous challenges and likewise barriers that prevents
them from attaining their human potential. In fact, this potential can be beneficial—if
managed correctly—to their families and communities at large. The BOP is the people
whose spending power lies below $1,500 annually and who can barely meet their financial
commitment. The population of persons that fall at the Bottom of the economic Pyramid
around the world are within the forgoing regions, these are the Caribbean, South Asia,
Africa, Eastern Europe, and Latin American. These constitute two thirds of the world’s
population.
Summary:
The BOP refers to the over four billion persons who possess very little purchasing
power, as little as under two dollars per day. Most of these earnings were applied to the
necessities of life, with little or none remaining for investments. Another concern was
their location, they lived in rural areas and it was expensive to reach the outside world.
They also lacked the availability of space, if they produced anything, they had nowhere to
store the produce. They are considered the poorest people in the world and lives in poverty.
With such a restraint on their ability to meet financial needs, some of the multinational
companies and entrepreneurs spotted opportunities to invest while creating an avenue for
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the BOP to increase productivity and services, thereby increasing their spending power and
overall their ability to rise from the bottom of the pyramid. Some investors targeted the
consumers in the BOP, they were used as producers rather than mere consumers. Once
they were able to meet production standards, they not only had enough for personal use but
also to offer for sale to the middle class of the BOP. The poor people view themselves as
being in the lower class of the world, as being persons who do not possess innovation, they
felt they could not afford to pay for technology or business models.
In addition, to changing consumers to producers, that is using the people in the BOP,
for example as farmers, so that they could be producers and able to gain profits through
their sales. Some multinational companies created hundreds of jobs to the BOP which
increased their cash flow. The many attempts of investments in the BOP markets gave rise
to varying results. If a social benefit and an economic need was met then the investment
was considered an “economic success”, if not then it was a failure. An important criterion
used to distinguish between success and failure is how the entrepreneur engaged the BOP
by not only selling to the poor but also by involving them in the process. Most time failures
were only realized when the multinational companies got greedy and did not engage the
stakeholders, availability and innovation. Companies were able to realize the benefits and
profits from tapping into the BOP markets. These markets were untouched and available
for investors to become profitable because the BOP was considered the largest but poorest
Conclusion
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BOP are being faced with issues such as variance in their annual income which span as low
as under $2 dollars a day. Prahalad felt that the BOP was a lucrative market for
multinational companies, he also believes that multinational companies have the power to
convert the BOP market into huge profits. This he believed can be done by building on the
idea that to sustain this market, companies would be required to introduce products and
services that are affordable and accessible. One of the biggest problems that was faced in
the BOP is the operations of business in an informal economy where there was no access
to capital start up. Products could not have been sold legally. Their income was
excessively low, and they could not afford to purchase the necessary tools and equipment
the BOP markets. They both play an important role in the BOP, they provide the basis for
companies to enter and provide employment or for individuals themselves to become self-
sufficient. They open the doors to many opportunities for those persons in the BOP to
come up with ideas and ways to earn an income and gain spending power. They also can
create goods and services that will help sustain their communities for they have a clear
understanding of their culture and needs. They will not only be consumers, but they will
play the role of producers as well. For example, Nestle of Pakistan, is the fifth-largest
producer of milk in the world, they were able to come up with innovative ways to assist
the poor farmers to reduce wastage and contamination of the milk, but it also assists ensured
that the farmers were able to reap the full reward of their labour. This venture of Nestle has
benefited both the company and the locals. While Karnani disagrees with Prahalad’s theory,
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that the BOP market is a lucrative one, he is of the belief that poverty “is a global challenge
that needs to be addressed.” (2007, p. 55). Karnani further states “…there are success
The BOP market is one that has limitless potential, but it is faced with many
challenges. These challenges can put a hold on international companies wishing to enter
the BOP market because they don’t see it as a lucrative venture due to the low incomes of
the individuals found at the BOP. The vast majority of these international companies does
not see the returns of having to change its current business model. This model is profitable
serving the upper and middle class and they conclude that it is not profitable to change to
fit the BOP. Political uncertainty or stability is also a major contributing factor when
addressing the requirements of the BOP. Nonetheless, ….... example, the Amish
community although their spending power is not heavily dependent on the global world,
Reference(s)
Prahalad, C.K., Hart, S.L. (January 2002). The Fortune at the bottom of the pyramid.
business.com/article/11518?gko=9a4ba
Financial Times. Lexicon. (2018, September 23rd,). Definition of bottom of the pyramid (BOP).
pyramid-(bop)
Prahalad, C.K. and Hammond, A. (2002, September) ‘Serving the World’s Poor, Profitably’,
Harvard Business Review. pp. 44-11 Retrieved September 23rd, 2018, from
https://hbr.org/2002/09/serving-the-worlds-poor-profitably