DLN Turning Poverty Into Opportunity - White Paper Final

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Turning Poverty into Opportunity DLN White Paper November 2005

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TABLE OF CONTENTS

1 FOREW ORD.........................................................................................................4 1.1 FOREWORD BY JEAN-PIERRE LEHMANN .......................................................................4

2 EXECUTI VE SUMMARY ........................................................................................6 2.1 PURPOSE .........................................................................................................62.2 SUMMARY FINDINGS AND RECOMMENDATIONS ..............................................................6

3 OVERVIEW ..........................................................................................................7 3.1 INTRODUCTION ..................................................................................................73.2 BACKGROUND....................................................................................................73.3 STRUCTURE OF DLNPROJECT .................................................................................7

3.3.1 Launch and Road mapping..........................................................................73.3.2 Active Investigating ...................................................................................73.3.3 Reflecting.................................................................................................73.3.4 Synthesizing .............................................................................................83.4 THE BOTTOM OF THE PYRAMID ................................................................................8

3.5 TYPES OF PROJECTS WHICH BENEFIT THE POOR ............................................................94 BENEFI TS AT THE BOTTOM OF THE P YRAMID ...................................................10

4.1 INTRODUCTION ................................................................................................104.2 BUSINESS BENEFITS ..........................................................................................10

4.2.1 Profit .....................................................................................................104.2.2 Developing New Markets ..........................................................................114.2.3 First-mover Advantage.............................................................................114.2.4 Brand Building ........................................................................................114.2.5 Knowledge Transfer and New Skills ............................................................12

4.3 MARKET BENEFITS.............................................................................................134.3.1 Social ....................................................................................................134.3.2 Economic ...............................................................................................134.3.3 Infrastructure .........................................................................................14

5 CHALLENGES FOR BOP PROJECTS.....................................................................155.1 INTRODUCTION ................................................................................................155.2 CORPORATE CHALLENGES ....................................................................................15

5.2.1 Market Size Estimation Methodology ..........................................................155.2.2 Margin Threshold.....................................................................................155.2.3 Risk-averse Decision Making .....................................................................155.2.4 Anxiety about Local Partners.....................................................................165.2.5 Short-sightedness ...................................................................................16

5.3 GOVERNMENT AND INFRASTRUCTURE CHALLENGES .......................................................175.3.1 Regulation and Business Climate ...............................................................175.3.2 Providing Essential Infrastructure ..............................................................17

6 CREATING A NEW BUSI NESS MODEL ................................................................196.1 INTRODUCTION ................................................................................................196.2 DEFININGBOTTOM OF THE PYRAMIDBUSINESS MODELS ..............................................196.3 BUSINESS MODELS,BUILDING BLOCKS AND PARTICULARITIES .........................................196.4 EXAMPLES OF BUSINESS MODEL INNOVATION .............................................................206.5 ROUTES TO BUSINESS MODEL INNOVATION ...............................................................216.6 SHARING KNOWLEDGE ON BOPBUSINESS MODELS......................................................22

7

CONCLUSIONS ..................................................................................................24

7.1 INTRODUCTION ................................................................................................247.2 POTENTIAL AT THE BOTTOM OF THE PYRAMID..............................................................247.3 APPROACHING BOPPROJECTS ..............................................................................24


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8 NEXT STEPS ......................................................................................................25 8.1 PEER GROUP FOR ON-GOING DISCUSSIONS ...............................................................258.2 EXTERNAL REFERENCES ......................................................................................25

9 APPENDICES .....................................................................................................26 9.1 REFERENCES ...................................................................................................269.2 BOPOPPORTUNITY SELF-ASSESSMENT FRAMEWORK.....................................................279.3 LIST OF ACRONYMS ...........................................................................................289.4 LIST OF KEY PROJECTS REVIEWED ..........................................................................299.5 LIST OF PARTICIPANTS .......................................................................................29


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1 FOREWORD

1.1 Foreword by Jean-Pierre Lehmann

Technologies, policies, the overall environment and challenges may change, includingboth threats and opportunities, but mentalities are much more difficult to change. Forall the rhetoric about out-of-the-box and lateral thinking, it is quite striking howconventional and imprisoned by their preconceived paradigms people tend to be. Thishas often been the key cause for the decline of civilisations, societies and enterprises.The great and powerful empire of China in the mid-19th century is one of the mostegregious cases. But there are countless others.

To say that in the early twenty-first century the world is at a turning point would beone of the great understatements. The world has changed a great deal. Who wastalking of China or India a decade ago? And it is poised to change a great deal more.

The biggest driver of change is demographics. In a nutshell, the rich will get far fewerand much older, while people in the developing world, especially in Africa, the MiddleEast, South Asia and Latin America, will get far more numerous. The median age inJapan, Germany and Italy in 2025 will be 50; the median age in India in the same yearwill be 30. In Africa it will be 20! The current population of the world at just over 6billion counts about 3 billion below the poverty line of $2 per day and about 750 millionin the upper income bracket, with the rest in between.

All of this has immense implications for the future of business and global prosperity.Although currently profits are mainly derived from the large OECD markets, growth liesoutside the OECD markets. The challenge of reducing poverty, hence enhancingprosperity, in developing countries is not simply a humane endeavour, but is absolutely

vital for the future of business. To put it in perhaps crude terms, business in the 21stcentury needs to expand its customer base.

Traditionally there has been an implicit division of labour between business that focuseson consumers from which it derives its profits, and governments, internationalgovernment organisations and non-government organisations that focus on the poorand provide aid and succour. The efforts of development, i.e. lifting people out ofpoverty, has been mainly in the public domain and conducted on a top-down basis.This policy, in existence for close to half-a-century, has, by and large, failed. There hasbeen, among development specialists, a growing recognition that the role of the privatesector in poverty alleviation might be much greater than was previously realised.

The two forces are therefore converging, or so one would think. There remain,however, significant barriers on all sides. There is a suspicion in many government andnon-government organisations circles that business is by definition rapacious and hencegiven a chance it will exploit the poor. Yes, there are cases of exploitation, but in thelong-term it is in businesss self-enlightened interest that the poor should cease to bepoor so that they might have the purchasing power to consume the products andservices that business has to offer.

There is also a strong barrier in business. Still today, all of the data and evidence to thecontrary notwithstanding, there is a view in business circles that the poor in developingcountries are very peripheral to core business strategy. This has much to do with lackof familiarity and lack of education. A Belgian business executive intuitivelyunderstands a Nigerian business executive, but cannot readily understand the life of aNigerian villager or urban slum dweller.


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The main thrust of the argument provided by this DLN is that efforts must be directedat reducing poverty through market mechanisms and ones that allow firms to makeprofits. This DLN is not about philanthropy. It is about seeking to identify win-winsolutions that will empower the poor and, at the same time, generate profits andcontribute to the maximisation of shareholder value. But this is an area where not justangels get queasy. What, make profits from the poor? How despicable!

This is part of the mental frameworks that the authors of the DLN whitepaper urgeshould change. The poor are human beings and, like for all human beings, dignity isimportant. Dignity is not bolstered by being at the receiving end of alms and pity. Forthe poor to become genuine citizens and consumers, this allows a big transition toentering society.

The excellent work done by the DLN team and the participants who contributed theirthoughts and experiences is a pioneering effort at changing the business paradigm ofthe 21st century by facing the biggest challenge of all: how to transform poverty intoopportunity. It is a right step forward in what will no doubt be a long and exciting

journey. Those firms that do not engage in the journey will in most likelihood find that

they will be the ones that will be marginalised over time. The concluding point to stressis that this is a very exciting journey and good make the world a much moreprosperous and profitable place.

Professor Jean-Pierre LehmannNovember 2005


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2 EXECUTIVE SUMMARY

2.1 Purpose

The purpose of this White Paper is to draw together the key findings from our DynamicLearning Network (DLN) project carried out from August to November 2005.

The topic of the project was Turning Poverty into Opportunity as a means forProsperity and this paper highlights the key insights and recommendations from thework carried out.

The project involved 135 registered participants from a range of backgrounds. In linewith the general aims of DLN projects at IMD, the project successfully enabledparticipants to become familiar with the latest knowledge on this key issue and workwith colleagues around the globe to develop new insights and create new knowledgevia virtual teams and networks.

2.2 Summary Findings and Recommendations

The key focus of our DLN project has been on the opportunities at the Bottom of thePyramid (BOP). The project involved a wide range of participants from variousgeographies and industries and included case study investigations into numeroussuccessful BOP initiatives as well as interaction with leading pioneers of BOP businessmodels. The key findings and recommendations can be summarised as follows:

There is considerable potential for businesses to target consumers at the socalled Bottom of the Pyramid. Such businesses not only provide significantnew potential revenue streams for companies, they can also bring a range ofbenefits to the poorest consumers and their communities, including sustainableeconomic, social and infrastructure enhancements. BOP initiatives clearly havethe chance to create genuine win-win outcomes.

A range of highly innovative and successful BOP projects have been investigatedduring this project but in reality the number of BOP projects undertaken is tinyin proportion to the scope of opportunities available. Companies need afundamental change of mindset in order to acknowledge the potentialopportunities and be willing to make the capital investments required to gainaccess to exciting new markets.

Companies must give careful consideration to the overall business model used

for their BOP initiatives, focussing in particular on obtaining the necessary localpartnerships and ensuring access to the required local skills. For any BOPinitiative it is vital that companies have access to sufficient local knowledge inorder to make the project a success. Companies must also recognize thatsignificant innovation in the business model and potentially in the product itselfmust be undertaken in order to successfully capture the BOP market.

The impacts of BOP initiatives are significantly enhanced when the business isfully-integrated into the local environment, thus bringing benefits across theregional supply chain.

By turning their attention to BOP initiatives, multinational corporations not only

have access to new market opportunities, they also have the potential toaddress and resolve some of the conflicts between proponents of globalcapitalism and advocates of environmental and social sustainability.


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3 OVERVIEW

3.1 Introduction

This section provides an overview of the DLN project as a whole, its high-level aims,scope and structure. It then introduces the core concept of the Bottom of the Pyramid(BOP) and explains the different types of BOP initiatives which take place and why.

3.2 Background

Globalisation has witnessed an unprecedented growth in the number of global citizensengaged in the global market. The transformation of India, China, the former SovietUnion, Brazil, and other developing countries has provided corporations with newstrategic horizons. However, globalisation has also witnessed the marginalisation ofhundreds of millions of people and rising inequality. The business world has focused on

those already integrated into the global market economy, leaving international agenciesand NGOs to cope with the excluded. This DLN proposed that corporations aremissing huge opportunities by not paying sufficient attention to this substantial marketpotential. Our objective was to focus on profit-making business activities that createdtangible benefits for poor consumers while contributing to the corporate bottom line.We wanted to learn about what works (and what doesnt), why and how.

3.3 Structure of DLN P roject

This DLN was a web forum that allowed interested participants to share theirknowledge, opinions and experience on how poverty could be turned into opportunities.We had around 135 registered participants that included employees of large multi-

national corporations, NGO workers, entrepreneurs and academics besides the MBAteam. The discussion approximately spanned across 3 months and was structured intofour key phases.

3.3 .1 Launch and Road mapp ing Da tes: Aug 15 Aug 28 In this phase we created a picture of the learning needs and a planned route to addressthem. We also explored our current awareness level about the topic by reading articlesand discussing with each other, and created a plan for filling in the gaps.

3.3 .2 Act i ve I nves t i ga t i ng Da tes: Aug 29 Oc t 2 In this phase participants provided input to the knowledge creation process by activelygathering information in their own work environments and then contributing thisfeedback to the DLN seminar. The idea here was to use the distributed, virtual networkto investigate the topic. One of the key highlights of this phase was our interview withMr. Iqbal Quadir, the founder of Grameen Phone in Bangladesh.

3.3 .3 Ref lect ing Dates: Oct 3 Oct 30

The Reflecting phase involved following up on the activity and information collected inthe previous stage. By this stage each person in the seminar had access to theexperiences of others and they jointly discussed the patterns, exceptions, and insights.We also outlined the structure of the white paper and sub-divided it to teams who


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would work on specific sections. The overall aim of this white paper was to synthesizethe learning from the discussions and information sharing on this DLN forum.

3.3 .4 Synthes iz ing Dates: Oct 31 Nov 10 The final stage of the learning cycle was about consolidating the new knowledge inform of a white paper. The participants read the initial draft of the white paper andcontributed insights to revisions and communication. An updated version was thenposted on the DLN forum after incorporating the team feedback. This white papertherefore synthesizes the discussion on the DLN forum.

3.4 The Bottom of the Pyramid

Our discussion primarily focussed on exploring various profit-making business activitiesthat created tangible benefits for poor consumers as well as contributed to thecorporate bottom line. We defined our poor consumers to be part of the Bottom of the

Pyramid (BOP), an influential phrase coined by C.K. Prahalad1.

The Bottom of the pyramid refers to the potential market of four billion people in thedeveloping countries living on less than $1,500 per year (in US$ purchasing powerparity figures). The opportunities for companies getting involved in business at the BOPare immense. The World Bank estimates that this population could reach 6 billionpeople in the next 40 years. In contrast, the rest of the worlds population is currentlyabout 2 billion people. The BOP portion of the population is therefore the mostsignificant, and likely to increase faster than the rest due to higher birth rates.

In their seminal paper, Prahalad and Hart described the opportunity as follows:

The real source of market promise is not the wealthy few in the developing world, oreven the emerging middle-income consumers: It is the billions of aspiring poor whoare joining the market economy for the first time.

Investing in BOP market opportunities has the potential to lift billions of people out ofpoverty and desperation, whilst also preventing social decay, political chaos, terrorism,and environmental meltdown that is expected to continue as the gap between rich andpoor countries continues to widen.

Figure 1 shows the World Economic Pyramid as presented by Prahalad and Hart, withthe BOP consumers indicated in Tier 4.

Figure 1 The World Economic Pyramid

1Prahalad, C.K. and Hart, Stuart L., The Fortune at the Bottom of the Pyramid, Booz Allen Hamilton IncStrategy+Business, Issue 26, Q1 2002.


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In this paper, we have explored the potential offered by BOP markets, pre-conditionsfor successful business ventures targeting BOP consumers, features of the newbusiness models needed for successful BOP initiatives and the impact of such initiativesboth on the corporations and the BOP consumers and their communities.

3.5 Types of Projects Which Benefit the Poor

There are various different types of initiatives which provide benefits to the worldspoorest consumers and these can be characterised generally as being non-marketbased or market-based, as illustrated in Figure 2.

Figure 2 Non-market and Market-based mechanisms for targeting BOP Consumers

The focus of this project has been on market-based initiatives to target BOPconsumers in a profitable and sustainable way. Programmes and initiatives to provideaid from governments, charities or NGOs are outside the scope of this paper.

In general the types of BOP projects can be broadly characterised by the two distinctcategories of businesses which undertake them, as follows:

Entrepreneurs and Local SMEs2 here initiatives are launched initially in aspecific and normally localised market by entrepreneurs or small businesseswith a strong local market knowledge and understanding of what it takes to dobusiness in that environment. Here the motivation is normally to form a

sustainable business clearly this implies profitability but it will also bringclear benefits to local BOP consumers and is often motivated by the strong beliefin the importance of bringing these benefits.

Multinational Corporations (MNCs) here initiatives are launched based onmaximising market potential, often with a view to gain first-mover advantage ina new market. However, the motivations, whilst always fundamentally profitbased, are also increasingly driven by the Corporate Social Responsibility (CSR)agenda, with MNCs wanting to enhance brand perception, customer loyalty andstaff retention in developed markets, in addition to exploiting new businessopportunities.

One recent development in this area has been the growing emphasis given to Public-Private Partnerships (PPP) in BOP markets, with the World Bank and the IFC inparticular having recently taken steps to promote these. However, it should be notedthat such partnerships have not been investigated in detail as part of this study.

2SME: Small/Medium Enterprise

Non-marketmechanisms

Government

Market-basedmechanisms

Entrepreneurs

Charities SMEs

NGOs MNCs

Bottom of the Pyramid Consumers

AID TRADE

Focus of

this DLN

Non-marketmechanisms

Government

Market-basedmechanisms

Entrepreneurs

Charities SMEs

NGOs MNCs

Bottom of the Pyramid Consumers

AID TRADE

Focus of

this DLN


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4 BENEFITS AT THE BOTTOM OF THE PYRAMID

4.1 Introduction

In this section, we explore the range of benefits which accrue to businesses deliveringproducts and services to BOP consumers, the potential benefits to the consumers andtheir communities, and the relationship between the two.

Cases of successful BOP initiatives, whether undertaken by entrepreneurs or by MNCs,show that the more an initiative is embedded in the local economy, the greater thebenefits to the local community. More jobs are created, investment attracted,infrastructure put in place, and so on. To embed the project in the local economymeans different things for different types of business, but is likely to includeestablishing a locally based supply chain and/or retail network, particularly one thatsupports the growth of local SMEs. Creating more wealth in a BOP community creates,in turn, more potential consumers for the product or service on offer, builds loyalty to

the brand, and ultimately enables the business to deliver additional profit. This is avirtuous circle in which greater benefits for the community lead to greater benefitsfor the company.

4.2 Business benefits

Traditionally, MNCs have downplayed the potential value that could be extracted fromBOP consumers, thinking that consumers who earn barely enough to survive do nothave money to spend. This is short-sighted thinking. Sure, there is no patented modelof how to do business with this new market, but MNCs that concentrate part of theirefforts on the needs of the BOP market will be able to find a multitude of possibilities todo profitable business.

Successful BOP-focused projects, whether undertaken by entrepreneurs or by MNCs,can deliver major benefits to the business. Some of the most significant benefits arehighlighted in the following sub-sections.

4.2 .1 Pro f i t The following are examples in which companies managed to address the needs of aBOP market and in turn earn healthy profits:

Ultra cheap cell phones by Nokia with basic features tailored to the needs of the

populations in Africa or China

Ruf n Tuf Jeans kits provided for a few dollars by local tailors

Unilever shampoo in single use packages catering for a population that could notafford larger package sizes

In each case the business model applied differed radically from standard models usedby MNCs in developed countries (see Chapter 5 below). Customers in this segment aremore price-aware, and more discriminating in their search for quality products that canadd real value to their lives. These issues have to be addressed in a different mannerthan in conventional developed markets. Margins are often smaller than for productstargeted at middle class consumers, but this is offset by the potential to operate atvery high volumes.


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An extraordinary example of brand building identified during this DLN is Indias AMUL.India was a country with milk shortfall. With seed capital from the Swiss government,Dr Kurien started AMUL, and today his company the lives of numerous farmers in Indiaby creating a huge milk industry from nothing. AMUL products are now found on theshelves of Walmart in the USA and many other retail giants in the world. It also createda mega food brand which in India is now synonymous with butter, milk and milkproducts. AMUL provides an income for millions of farmers, collects millions of litres ofmilk every day and touches the lives of millions of consumers worldwide.

Ruf n Tuf jeans is another example made by Arvind Mills, the fifth largest exporter ofdenim in the world. The jeans are specifically made of high quality since, in addition toprice, durability is an important purchase criterion for BOP customers. Ruf n Tufproducts come both as ready-made jeans and ready-to-stitch kits, and both are highlysuccessful. Arvind Mills managed to create a new brand through their marketingstrategy. In India, the concept of ready-made clothes is not very prevalent especially inmen's clothing, with the majority of the population still preferring to get have clothesmade according to their own preferences. Using the strategy of ready-to-stitch kits,Arvind Mills not only managed to lower the price but also allowed consumers to get

jeans of their choice made in their own way. Whether or not these consumers areaware of Lee or Levis, Ruf n Tuf is now firmly positioned as their brand of choice.

In addition to building brands in BOP markets, MNCs can also gain a significant positivebrand impact in their existing developed markets by virtue of their involvement insocially responsible projects in developing countries. Society is becoming increasinglyglobal and the actions of the MNCs around the world are watched closely by theircustomers and shareholders at home. Any action perceived to be irresponsible, forexample Nikes involvement with child labour, is likely to lead to sanctions in their coremarkets. However, by demonstrating benefits for poor communities via sustainableengagement in developing markets, MNCs will create a positive brand impact.Companies that are perceived as good world citizens attract employees, partners,

investors and consumers alike.

4.2 .5 Know ledge Trans fe r and New Sk i l l s Engagement in BOP markets requires skills that are often lacking in the MNCs. BOPmarkets demand a non-traditional approach to the business model and tocommunication channels, particularly with respect to receiving and interpreting marketinformation from the field at the decision-maker level. In many of the examples sitedin this DLN, opportunities have been realised by local companies (sometimes with thefinancial help of MNCs), or directly by MNCs that have developed specific, detailed localmarket knowledge.

Companies engaged in these BOP markets must go through a learning curve in order toestablish a profitable business. However, the knowledge acquired now will also offeradditional competitive advantage in the future, just as the investment in a newtechnology would.

New skills that are acquired sometimes also impact the overall competitive strength ofthe company. New methods of production, promotion and distribution have to be foundin order to deliver good quality products at lower prices. The know-how acquired in thisprocess in turn leads to more effective ways to produce goods for developed markets.

Surprisingly the experience and skills acquired in successfully addressing these marketsis in many cases not transferred to other BOP countries, even if they would in principle

present similar opportunities. This might be due to the fact that the original initiativewas local and that the firm has little interest in becoming international. MNCs could bea formidable vehicle to transfer these skills to other places and to implement them.While this could be a remarkable competitive advantage, it is rarely realized.


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For MNCs, BOP markets present a good opportunity to diversify their business in newventures and new locations with significant potential for increasing revenue streams.However a change of mindset is needed to address these markets successfully.

4.3 Market benefits

BOP projects create benefits on many levels for the individuals and communities indeveloping countries who make up the BOP market. Direct impacts includeimprovement in social and economic conditions and opportunities. In addition to thesedirect benefits, a major initiative, such as Grameen Bank or GrameenPhone, has knock-on effects such as infrastructure improvements and an uplift in general marketconditions, paving the way for additional projects and new investments.

4.3 .1 SocialThe most obvious social benefit is the increased availability and affordability of desiredproducts that in turn, improve the hygiene, health and quality of life of people living

on very low incomes.

Hindustan Lever Limited (HLL) has been proactively engaged in rural development inIndia for nearly 30 years and set up Project Shakti in 2001. The objective was to createincome-generating capabilities for underprivileged rural women, by providing asustainable micro enterprise opportunity, and to improve living standards throughhealth and hygiene awareness. This project is a good example of how such businessescan help people (especially women) to get a foot on the social ladder and improve theirstatus. Moreover, it gives them a purpose other than just being mother/wife andincreases their independence. It also gives new skills to these women, and increasestheir general level of education.

4.3 .2 EconomicAdditional benefits, in the case of a service such as GrameenPhone, are time andefficiency savings, leading to greater productivity. Consider the farmer who is tryingto sell his crops. He needs information about competitors prices for crops, the marketprice, and whether there is a shortage or overcapacity of his particular product. He willgladly spend money on a mobile phone that would get him this information quickly.With this information he can make more informed decisions about his production andshipments. He can price his products more competitively, raising prices when there is ascarcity of product, lowering prices when there is overcapacity.

BOP projects create jobs locally, in the company itself and across the entire supply

chain. A project delivering products or services to BOP consumers often deliverssignificant economic benefits by supporting local businesses in the supply chain orvia retail and service channels. A project originating from an MNC or an entrepreneurcan have a huge impact on the local economy by creating demands to be filled bylocally-based SMEs. Iqbal Quadir, founder of GrameenPhone, noted that as a result ofhis initiative, all sorts of businesses have started theres a huge industry inBangladesh now, selling handsets, repairing them, selling pre-paid cards.3

Stimulating the growth of BOP market can, in time, attract additional investment bycreating a space for competition.

3Interview with Iqbal Quadir, founder of GrameenPhone, on Turning Poverty into Opportunity as a means forProsperity website, www.imd.ch/dln, 4 October, 2005.


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4.3 .3 I n f r a s t r u c t u r e Business needs infrastructure, and a major project targeting BOP markets will oftenprovide or spur infrastructural development, including investments in ICT, transport,financial and educational infrastructure. The presence of better infrastructure, in turn,opens up new business opportunities.

This snowball effect has already been demonstrated with GrameenPhone, the creationof which was only made possible by the presence of an existing banking infrastructure(Grameen Bank). This in turn provided the communications infrastructure necessary toincrease productivity in rural communities in Bangladesh. Access to information canalso be improved with the Simputer, a very cheap computer ($200) that can connect tothe internet. MIT is trying to build an even cheaper notebook computer for under $100.

Another good example of a BOP project which provides essential infrastructure is SoluzInc. in Honduras and the Dominican Republic, which sells decentralized solar powerunits for households, stores, and street vendors in rural areas.


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5 CHALLENGES FOR BOP PROJECTS

5.1 Introduction

It has become clear through discussion on the DLN forums that there are majorchallenges for an entrepreneur or a multinational corporation interested in serving themarket at the Bottom of the Pyramid. In this section, we highlight some of the keychallenges, both internal and external to the firm.

Internal or corporate level issues are most relevant to multinational corporations, forwhom a change in m indse t is required before BOP projects will be approved,supported and delivered. Our strong recommendation to companies considering BOPprojects is to develop partnerships with local companies, governments and NGOs.Knowledgeable partners will help communicate the opportunity and mitigate risk.

External challenges, regulatory restrictions and infrastructure issues are faced equally

by entrepreneurs and MNCs. Private sector actors working in partnership withdeveloping country governments can push for (and help to create) better regulation,improvements in infrastructure, training programmes, etc. As argued in the previoussection, we believe that the more a BOP project is embedded in the local environment,and the deeper the web of partnerships with local organizations, the greater theopportunity to create benefits both for the market and for the company.

5.2 Corporate Challenges

In order to develop serious, sustainable projects addressing the demands of BOPmarkets, multinational corporations need to address a range of internal issues, some ofwhich can act as show stoppers, whilst others are more likely to undermine theproject slowly over the longer term. We highlight the most prevalent of these issuesbelow.

5.2 .1 Marke t S ize Est im at ion Meth odo logyMost successful BOP projects are opening up new markets by introducing productswhich were previously unavailable. If decision-makers rely on current estimates formarket size to evaluate potential revenues, they may reject opportunities at firstglance. However, if estimates are based on assumptions about creating demandthrough introduction of innovative products, the scale of the opportunity will be readilybecome apparent. The difficulty lies in making credible assumptions regarding market

penetration, and determining the time-frame over which demand can be created.

5.2 .2 Marg in Thresho ld Companies like Unilever, Nestl and Procter & Gamble have struggled with and solved acommon problem. Products targeted at BOP markets must be priced low and thereforegenerate a lower margin than the companys mainstream products. However, if thedistribution network is fully developed to meet demand, these low margin products cangenerate higher absolute returns due to achieving unusually high sales volumes.

5.2 .3 Risk-av erse Decision Mak ing Real and perceived risks include dealing with developing country governments andregulatory bodies (see the following section), currency exposure and generaluncertainty around the status of a new venture in a developing or transition economy.


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This group of risks is associated with any business activity outside of familiar markets,and must be managed through applying financial controls, hiring experiencedgovernment liaison personnel, etc.

Risk is also associated with the potential for negative press in the MNCs core markets.The perception of this danger is fuelled by well-known events such as Nestls milkpowder debacle in Africa. The multinational is painfully aware that its greatest asset isits brand, and quite rightly worries that the brand will be tarnished by any association(however inadvertent) with exploitation of the poor in developing countries.

Some of the best risk mitigation strategies, particularly with respect to public relationsrisk, involve partnership with NGOs. For example, a knowledgeable NGO partner canbe asked to perform a due diligence exercise on the project, including supply chain, inorder to highlight any areas of ambiguity which need to be resolved.

5.2 .4 Anx ie ty abou t Local Par t ne rs Many MNCs lack awareness and experience with localized suppliers, distributors,marketing and retail channels in BOP markets. This is particularly of concern in projectswhich are focused on serving BOP consumers in rural areas, where the most effectivebusiness model is often based around local suppliers and distribution networks (as willbe discussed in the next section of this paper).

Perhaps more important than the concern about logistics is a deeper anxiety on thepart of managers, likely to be personally unfamiliar with the market and the geographyunder discussion, about the idea of negotiating with SMEs and micro-businesses indeveloping countries.

Partnership with a well-established local firm or an entrepreneur with a strong trackrecord can provide a multinational with necessary local knowledge and networks.Another useful method for dealing with this issue is to start with a small pilot projectwhich can be rolled out in later phases over a wider geographical area. This approachgives the corporation a chance to experiment with a new business model at relativelylow cost. A well-managed pilot project can also serve an important purpose as part ofan internal communication strategy, helping to build awareness, interest andcommitment across the corporation.

5.2 .5 Shor t - s igh tedness Some MNCs fail to consider longer-term benefits associated with developing brandloyalty in BOP markets, as discussed in Chapter 4. Corporations may pay lip service to

a long-term global strategy with an emphasis on establishing a brand presence in China(for example), but actually fail to establish decision-making criteria on the basis of thisstrategy. The possibility of developing brand-loyal customers, whose disposable incomewill increase significantly year-on-year, should ultimately yield benefits far greater thanthe immediate returns from a BOP-focused project. However, many corporations areunable to take into account these potential long-term benefits in their financial analysisof project feasibility.


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5.3 Government and Infrastructure Challenges

5.3 .1 Regu la t ion and Bus iness Cl im ate Many developing country governments have some way to go in establishing a businessenvironment that will not only attract MNCs but will also encourage domesticentrepreneurs to invest and serve the BOP markets. What can governments do tosupport the creation and expansion of companies that are financially, economically,socially, and environmentally sustainable? Besides improving health care, education,and macroeconomic conditions, and encouraging competition, governments canundertake institutional reforms that, over time, lower the costs of doing business andthus create a more favourable business environment. Such reforms encourageactivities not only by foreign investors but also, and more importantly, by thethousands of local entrepreneurs who want to start or expand small businesses inagriculture, services, and manufacturing.

Developing country governments need to tackle obstacles that reduce the volume ofprivate sector activity at any level of economy. These obstacles can be identified asexcessive taxes, limited or too strict regulations, financing difficulties, high inflation,and political instability or uncertainty. In addition, the private sector is faced withissues such as corruption and exchange rate problems. Reforms could includedeveloping Regulatory Bodies that not only establish the rules of the industry, whichcreates transparency and diminishes the perceived risk for the private sector investor,but also protects the interests of the poor against being exploited.

The small companiesand start-up firms, in particularthat are crucial to long-termeconomic and social development are especially vulnerable to bad governmentpractices. Poor policies and weak institutions hurt these companies more than they doothers. Larger firms can better afford to protect themselves, even though protectioncomes at a cost. There is no doubt that there are strong links between positivegovernment reforms aimed at creating a better investment climate and the level ofinvestment and economic growth.

5.3 .2 Prov id ing Essen t ia l I n f r as t ruc t u re Developing country governments could adopt output based aid initiatives and utilizedonor funds by compensating companies on the cost of selling a product or service andthe ability of customers to pay. Such initiatives would reduce risk for the private sectorbut would only be practical in the provision of public goods like electricity, water andtelecommunication services. However, is the provision of such aid sustainable? The

case of the pilot project in rural Bangladesh for the provision of electricity to the BOPillustrated that while local communities wanted electricity, they were unable to pay forthe service even though the rates were a fraction of what was paid in the more urbanareas. The provision of output based aid provided a short term solution but was notfeasible in the long run.

In order to enable companies to reach consumers, particularly at the BOP level, furthergovernment action may be needed to develop infrastructure, such as railways,telecommunications and electricity. By ensuring that there is adequate provision ofinfrastructure services, such as reliable transport or electricity, the governmentminimizes the perceived risk that a number of private sector companies sense wheninvesting in unfamiliar markets and areas. Furthermore, the provision of infrastructureservices generates economic activity by enabling factories to produce and distributegoods, create employment and generate income for the government.


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Increasingly, new infrastructure facilities are not only being built in partnership with theprivate sector but services are also being operated by the private sector. These areareas of opportunity for MNCs interested in reaching the BOP markets and entrenchingthemselves in developing countries. Private sector involvement in infrastructureprovision both reduces risk for the public sector and frees up scarce public funds forinvestments in sectors were private investment is impossible or inappropriate (e.g.educational or social services).


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6 CREATING A NEW BUSINESS MODEL

6.1 Introduction

Some companies have succeeded in doing business at the bottom of the pyramid andhave improved the lives of many people while making a profit at the same time. Amongthem are large multinationals, SMEs, local companies and micro-enterprises. Thissection aims to understand how these companies have turned environments whichmany perceive as uninteresting, unprofitable or too risky into opportunities andsometimes even little goldmines. We propose to use the concept of business models asa unit of analysis to better grasp how businesses have succeeded at the bottom of thepyramid. This will allow us to better describe, communicate and analyze BOP successstories.

6.2 Defining Bottom of the Pyramid Business Models

A model is a simplified description and representation of a complex real world object. Amodel describes the original in a way that we understand its essence without having todeal with all its characteristics and complexities. In the same line of thought we candefine a business model as a simplified description of how a company does businesswithout having to go into the complex details of all its strategy, processes, units, rules,hierarchies, workflows, and systems. Regarding our subject of study, this will allow usto describe the essence of how companies succeeded at the bottom of the pyramid.However, now that we know that the business model is a simplified representation ofhow to do business, we still have to decide which elements to describe. A synthesis ofliterature shows that we could use the following building blocks to help us describe aBOP business model:

1. The value proposition of what is offered to bottom of the pyramid markets;

2. The target customer segments and their needs addressed by the valueproposition;

3. The communication and distribution channels to reach bottom of the pyramidcustomers and offer them the value proposition;

4. The activities and skills needed to make the BOP business model possible;

5. The partnerships and their motivations of coming together to make a BOPbusiness model happen;

6. The revenue streams generated by the BOP business model;

7. The cost structure having to be supported to implement the BOP the businessmodel.

6.3 Business Models, Building Blocks and Particularities

During the investigation phase of our DLN on we described a number of BOP businesscases by applying the above business model framework. By using the same structure toput the examples onto paper we were able to compare them and better understandtheir particularities. What came out of the analysis was that businesses thatsuccessfully addressed the bottom of the pyramid were innovative in one or several ofthe business model building blocks. Moreover, often it was not only a product or servicetailored to the needs of the BOP that led to success (i.e. the value proposition), but it


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was the fit between different building blocks and their innovative combination thathelped success.

For example, to sell their products some companies designed innovative distributionchannels to reach the poor: they affiliated with poor local entrepreneurs who would sellin their neighbourhood. Who would better know how to market to the bottom of thepyramid than members of the BOP themselves? Other successful companies combinedmicro-finance or revenue-generating projects to create a better market for their valueproposition. In general we can say that many companies who flourished at the bottomof the pyramid not only found products to satisfy consumer needs, but foundinnovative business model designs adapted to the realities of BOP environments.

6.4 Examples of Business Model Innovation

Businesses that succeed at the Bottom of the Pyramid are champions of businessmodel innovation.

There are examples of business model innovations in each building block. The mostobvious is innovating in the value proposition. When mobile phones appeared in themarket they offered a completely different value proposition than fixed line phones.Particularly in developing countries where fixed telecom infrastructure is weak andwaiting lists for phone lines unbelievably long, mobile services were destined to thrive.In Nigeria MTN, a South African Telco set up a successful venture to tap into the 130million person market.

Regarding target customer segments and distribution channels, Arvind Mills Ruf nTuf Jeans (www.arvindmills.com) is a particularly interesting case. The entrepreneurArvind Mills saw a niche market in stylish jeans at an affordable price that was notbeing filled by any company. Target customers are Indians who cannot affordconventional jeans but still wish to purchase them. So Ruf n Tuf offers a jeans kit at$6/pair to local tailors who function as a distribution channel to reach the final localcustomers. Due to the large scale Arvind Mills manages to make a profit on the lowmargins per jeans. (Check out Yahoo! Finance for more information.)

Anand Milk Union Limited (www.amul.com) is an interesting case of how a businessinnovation can change the fortunes of the poor in a developing country like India byintegrating local skills and local activities into its business model. India was a countrywith milk shortfall and imported milk every year in form of milk powder. Then AMULbuilt up a huge milk industry from scratch together with local farmers. Today India isthe world's largest milk producer and it even exports milk. AMUL products are found onthe shelves of Walmart in the USA and many other retail giants in the world.

A nice example of how partnerships can lead to BOP success is the case ofGrameenPhone (www.grameenphone.com) in Bangladesh. Its founder, Iqbal Quadir,realized that if a woman could be given a micro-credit to buy a cow and sell milk thenthe same could be done for phone services. GrameenPhone was born. Supported bythe multinational company Telenor he bought a mobile network license and set up amobile phone network. Then he partnered with Grameen Bank, an established micro-credit institution in Bangladesh who brought in the knowledge on credits and adatabase of potential customers. The bank started offering women in villages a creditto buy mobile phones, which they used to sell phone calls to the villagers, repay theirdebts and make a daily living. Grameen Bank expanded its lending and GrameenPhoneharvested a network of women reselling phone calls through their network.

Hindustan Lever Limited (www.hll.com) has been able to create new revenue streamsby being proactively engaged in rural development in India for nearly 30 years. It setup Project Shakti (www.hllshakti.com) in 2001 with the objective of creating income-generating capabilities for underprivileged rural women, by providing a sustainable


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micro enterprise opportunity, and improving rural living standards through health andhygiene awareness. With working capital provided by HLL, Shakti women entrepreneurssell HLL products to their local village. This gives HLL access to large markets thatwould not otherwise be easily accessible. 70% of the Indian population lives in villages,of which there are around 627,000.

Regarding the cost structures of BOP business models there is often a huge pressureto produce extremely efficiently, because products usually have to be cheap enough forTier 4 customers. In general BOP cost structures are kept low by selling very largevolumes and thus profiting from economies of scale. In addition many of the BOPbusiness models described above make use of affiliation and entrepreneurship to shiftparts of the costs to other partners in the business model. GrameenPhone, Arvind Millsand Project Shakti are just three examples of how tapping into local entrepreneurshipby promoting micro business ownership can give access to powerful free distributionnetworks of incredible reach. This could have never been achieved by the companiesthemselves.

6.5 Routes to Business Model Innovation

As outlined, businesses that succeeded in addressing Tier 4 markets are characterizedby innovating in the way they design their business model for the realities of BOPbusiness environments. They have shown that there is a whole range of creative waysto design business for such unknown territories as BOP markets. They have shown thatthis can be done profitably.

Companies that try to understand the realities of the BOP, that thoroughly understandtheir business model and know how the building blocks relate to each other, will beable to constantly rethink and redesign these blocks and their relationship so that theycan succeed in addressing Tier 4 markets.

We mentioned above that business model innovation in BOP markets can happen in allthe nine described business model building blocks or in the way they are configured.We can distinguish between supply driven BOP business model innovation anddemand driven BOP business model innovation.

1. Supply-driven innovation is for example achieved by doing things in a new wayor by applying new technologies to an existing business model in order to addressBOP markets.

Example: E-Choupal (www.echoupal.com) is an Internet based system that givesclose to a million Indian farmers access to real-time market information, andagricultural information. It was launched by the Indian conglomerate ITC at

substantial investments but gives them access to a large number of potentialcustomers for their agribusiness.

2. Demand-driven innovation is characterized by a customer drive based on newor changing needs of Tier 4 markets.

Example: The emigration of many Africans to Europe created a large need formoney transfers back to their families which Western Union was very quickmaterialize on.

Furthermore, we can distinguish between innovative BOP business models wherecompanies do similar things as in traditional markets in a slightly new w ay and

change industries as a consequence, extended business models where companiesbuild on the existing conventional business models and companies that create entirelynew BOP business models for the BOP market.


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1. Doing similar things differently mostly means offering similar valuepropositions in an entirely new fashion.

Example: Big companies selling beauty products were surprisingly slow tomaterialize on the opportunities of BOP markets. They maybe realize that the poorwere longing for nice perfumes, sophisticated soaps, shampoos and othercosmetics, but they didnt realize that these Tier 4 markets were willing to spend abig proportion of their small incomes for this but simply couldnt afford thetraditional package size. So the first beauty companies that offered tiny packagesof shampoo to the BOP market in India were really successful. While the marginswere very low per package this was easily compensated by the large scale.

2. Extending an existing business model means building on the current buildingblocks of the conventional business by adding new ones.

Example: Vestergaard Frandsen (www.vestergaard-frandsen.com), a 50-year-old family enterprise that started out in labour clothing managed to transformitself into a designer of high-tech bed-nets and emergency sheeting. The company

successfully extended its value proposition of selling conventional textiles toselling special bed nets protecting from malaria and emergency sheeting fordisaster recovery. Innovating in the business model required extensive R&D andparticipating in a public-private partnership initiated by the Roll Back MalariaPartnership (RBM) of the World Health Organization (WHO). Vestergaard broughtin the in-depth knowledge of textiles, the money, the logistical background, and aproduction set-up in Vietnam, while WHO gave an official stamp of approval,which was crucial to winning large contracts.

3. Sometimes entirely new BOP business models pop up and create newmarkets.

Example: A number of companies and research institutes are aiming at offeringdeveloping countries low cost computing devices, for example to access theInternet. A well known project is the Simputer (www.simputer.org) which waslaunched by the Indian Institute of Science (IIS) and Encore Software (formerlyNcore technologies). However, the project yet failed to succeed for the lack of asustainable business model. Similarly, Nicholas Negroponte, founder of MIT'sMedia Lab, wants to design a 100 US dollar laptop computer for BOP markets. Likethe Simputer, Negroponte is betting on an innovative product rather than a BOPcompatible business model. Whether either will succeed remains to be seen.

6.6 Sharing Knowledge on BOP Business Models

Some companies have managed to thrive at the bottom of the pyramid. It is from themthat we must learn how to successfully transform our business model to generaterevenues at the bottom of the pyramid. Many of these companies are actually willing toshare how they succeeded. What is lacking is an effective way of how to nurture thissharing so we can learn from their example.

One such way of nurturing sharing is outlined in this section. It is based on a particularapproach of knowledge management practiced at BP. This approach shall help usassure transferability of BOP business model knowledge within and betweenorganizations.

It follows three steps that lead to increased sharing and crystallization of common

knowledge in how to build BOP business models.


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1. Self-assessment: In a first step a company or a unit conducts a self-assessment toidentify its strengths and weaknesses in materializing on bottom of the pyramidbusiness opportunities. Each group ranks itself on a scale of 1-5 on a number ofdifferent issues regarding bottom of the pyramid opportunities.

2. Sharing and Learning: Based on the self-assessment a company or a unit knows itsstrengths and weaknesses on each issue evaluated. Hence, if we have a group ofcompanies or units they can share their strengths on a particular issue while they canlearn from others on issues where they are weak.

3. Know ledge Assets: Based on the learning and sharing the different groups canidentify the communalities of success in addressing bottom of the pyramidopportunities and build so-called knowledge assets.

We have designed a draft self-assessment framework with 9 issues of bottom of thepyramid opportunities (see Appendix, Section 9.2. For each issue there are 5 levels ofcompetence. A company or business unit can thus evaluate how it performs on each of

the following 9 issues:

1. Recognizing bottom of the pyramid opportunities

2. Integrating bottom of the pyramid aspects into our business model

3. Understanding the bottom of the pyramid and Tier 4 customer needs

4. Reaching Tier 4 customers through distribution channels

5. Activities and Skills to make bottom of the pyramid business models possible

6. Partnerships to address bottom of the pyramid opportunities

7. Revenue streams from the bottom of the pyramid

8. Adapting the cost structure to bottom of the pyramid offers

9. Learning and transfer

For example a company that is very weak in recognizing BOP opportunities may learnfrom a company that reflects on and discusses about BOP opportunities as a part oftheir daily life. Or a company that doesnt know how to reach Tier 4 customers despitehaving a promising product may get knowledge from a company that has strong BOPdistribution channels.

Self-Assessment Connecting

Companies orbusiness units areisolated in theirdesire to addressBOP opportunities

Companies orbusiness units gothrough a self-assessmentregarding 9 issuesto decide how itscores from a levelof 1-5 (strong)

Companies andunits becomeaware of theirstrengths andweaknesses inaddressing BOPopportunities

According to theirassessment theactors seek toconnect wherethey havestrengths toshare or wherethey want tolearn

Companies andunits connect,share and learnin a peer-to-peermanner.Strengths areshare and gaps


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7 CONCLUSIONS

7.1 Introduction

This final section of the White Paper draws together some of the key learning pointswhich have been identified during the course of the Turning Poverty Into OpportunityDLN project.

7.2 Potential at the Bottom of the Pyramid

It is clear that there is a great potential at the Bottom of the Pyramid. First andforemost BOP initiatives allow access to new markets, revenue streams and profits forcompanies willing to make the required investments, take the associated risks and actwith a long-term view. However, they also have the potential to bring a wide range ofshort-term and long-term benefits not only to the consumers targeted, but also to the

communities in which the BOP businesses are active.

In this paper we have seen clear examples of benefits from BOP initiatives. Theseinclude economic benefits such as job creation and demand for new services, socialbenefits such as empowerment and improved quality of life and infrastructure benefitssuch as enhanced transport and communications. In addition, within the context of aprofitable enterprise these benefits can also be sustainable. When coupled with thebottom-line benefits, plus the additional potential factors for companies such asenhanced brand perception and staff retention it is clear that BOP initiatives have thechance to create genuine win-win outcomes.

However, a clear observation from this DLN project has been that, despite the range ofhighly innovative and successful BOP projects weve discovered, it appears that inreality the number of BOP projects undertaken is tiny in proportion to the scope ofopportunities available. Many MNCs need a fundamental change of mindset in order toacknowledge the potential presented by BOP markets and to understand the flexibilityrequired in order to make them a success. We hope that this study and other similarinitiatives will bring the potential benefits of BOP projects to the attention of executivesand managers currently unaware of the opportunities available.

7.3 Approaching BOP Projects

When undertaking projects to target Bottom of the Pyramid markets, companies needto give careful consideration to the overall business model, focussing in particular on

the local partnerships required and availability of the required skills, in addition to thevalue proposition, revenues streams and so on. The focus should be on both demand-driven and supply-driven innovation to identify new ways of addressing consumerneeds.

For any BOP initiative to succeed, it is vital that companies have access to sufficientlocal knowledge in order to make the project a success, understanding the local supplychain, Government regulations and operating models. There are various ways this localknowledge can be accessed for example via local entrepreneurs, joint businessventures, or partnerships with NGOs. However, without sufficient integration with andunderstanding of the local environment we believe BOP initiatives will fail to besuccessful in the long-term.

Finally, and most importantly, the benefits that can be brought by BOP initiatives aresignificantly enhanced when the business is fully-integrated into the localenvironment bringing benefits across the regional supply chain.


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8 NEXT STEPS

8.1 Peer Group for On-going Discussions

This DLN has brought together a group of people who are very motivated byunderstanding the business opportunities at the BOP. We have begun a very fruitfuland useful discussion through our three months together. This paper is one result ofthat discussion. But the challenges of understanding how best to target and serve theBOP cannot be solved in 12 weeks. This will take years of experimenting and refiningbefore solid best practices can truly emerge.

In order to continue our discussions and learning Alex Osterwalder has created aGoogle Group for on-going dialogue on the subject. This can be access as follows:http://groups.google.com/group/Bottom-of-the-Pyramid

In addition, related issues are discussed by several forums in existence currently, such

as The Evian Group (www.eviangroup.org) and its associated Open World Initiative(www.eviangroup.org/events/young.php). Both of these offer continued readings andupdates on progress being made in BOP opportunities, among other topics.

This DLN will continue until the 11th of November as a forum for discussing thegeneration of a more permanent place for dialogue.

8.2 External References

There are a number of external web resources which provide excellent informationregarding the latest news on BOP initiatives worldwide. We recommend that thoseinterested in pursuing this topic further refer in particular to these sources.

World Bank Bloghttp://psdblog.worldbank.org

Next Billion - Development through Enterprisehttp://www.nextbillion.net

Africa: Open for Businesshttp://www.africaopenforbusiness.com

Digital Solidarity Fundhttp://www.dsf-fsn.org


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9 APPENDICES

9.1 References

[1] Buckman, Cellphone Game Rings In New Niche: Ultracheap --- Chip, GadgetFirms Stand To Gain From an Initiative Set for Developing Nations, The WallStreet Journal, 18 August 2005, p. B4.

[2] Gomes, Engineers Modify High-Tech Devices for World's Poorest, The Wall StreetJournal, 1 August 2005. pp. B1

[3] Lehmann, A shift away from opacity, Financial Times, 2 June 2005.

[4] Lehmann, A New Form of Colonialism, The Globalist, 1 January 2000.

[5] Roy, Why the millennium goals wont work, International Herald Tribune, 14

September 2005.

[6] Business and Development Special, Financial Times, 14 September 2005.

[7] Scheeres, Sunny Isles Seizing the Power, Wired.com, 5 July 2001.

[8] Sharma, Is a $20 cell phone on the horizon?, CNET News.com, 8 August 2005.

[9] Hart, S. Beyond Greening Strategies for a Sustainable World, Harvard BusinessReview, January-February 1997.

[10]Bottom up Economics, A Conversation with Iqbal Qadir, Harvard Business

Review, August 2003

[11]Doing Business with the Poor a Field Guide, World Business Council forSustainable Development, 2005.

[12]Rigid Rules and Double Standards, Oxfam, 2002.

[13]Burgmans, A, 2005, Doing business with the poor, World Economic ForumMagazine, vol 4, pp. 4.

[14]Lehmann, J.P. 2003. Corporate Governance and Sustainable Global Capitalism,Journal of Japanese Trade & Industry, pp.1-4.

[15]Prahalad C.K. and Hart S.L., The Fortune at the Bottom of the Pyramid,Strategy+Business issue 26, first quarter 2002

[16]Hammond A.L and Prahalad C.K., Selling to the Poor, Foreign Policy JournalMay/June 2004

[17]Prahalad C.K. and Lieberthal K, The End of Corporate Imperialism, A ChangedWorld, August 2003

[18]Dawar, N and Chattopadhyay, A., Rethinking Marketing Programs for EmergingMarkets, Long Range Planning Journal, No. 35, 2002

[19]Prahalad C.K and Hammond A, Serving the Worlds Poor, Profitably, HarvardBusiness Review, September 2002.


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9.3 List of Acronyms

Acronym Meaning

BOP Bottom Of Pyramid

CSR Corporate Social Responsibility

DLN Dynamic Learning Network

FDI Foreign Direct Investment

FMCG Fast-Moving Consumer Goods

GP Grameen Phone

GPRS General Packet Radio Service (phone standard)

ICT Information & Communications Technologies

IMD International Institute for Management Development

MBA Masters of Business Administration

MNC Multi-national Corporation

MOP Middle of Pyramid

NGO Non Governmental OrganisationOECD Organisation for Economic Co-operation and Development

PPP Public-Private Partnership

PSD Private Sector Development

RFID Radio Frequency Identification

SA South Africa

SME Small/Medium Enterprise

TOP Top of Pyramid

T4 Tier 4 consumers

UNDP United Nations Development Programme

UNICEF United Nations Children's Fund

UNIDO United Nations Industrial Development OrganizationVSO Voluntary Service Overseas

WAP Wireless Access Protocol (phone standard)

WRI World Resources Institute

WWF World Wildlife Fund


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9.4 List of Key Projects Reviewed

The following case studies were discussed and developed in the forums.

Project/Company Sector Location

Amul Food and drink IndiaArvind Mills Ruf n Tuf Jeans Retail India

Cavincare Consumer goods India

DSM Food Fortification Food and drink China

E-Choupal IT India

Grameen Bank Banking Bangladesh

Grameen PhoneTelecommunications Bangladesh

HLL Project Shakti Micro-credit India

MTN LimitedTelecommunications Nigeria

Nokia cheap cell phonesTelecommunications China

Rural Houses Industry Construction Venezuela

Simputer IT India

Soluz Inc Energy Honduras, Dominican Republic

Unilever detergent Consumer goods Brazil

Vestergaard Frandsen Consumer goods Vietnam

Wizzy Digital Courier IT South Africa

9.5 List of Participants

Last Name First Name Email

Agrawal Manish [email protected]

Aksakal Ozgur [email protected]

Alfaro Cesar [email protected]

Almenberg Erik [email protected]

Ampuero Jaime [email protected]

Anyakora Chimezie [email protected]

Arante Anderson [email protected]

Baroncelli Arturo [email protected]

Barraza Harry [email protected] Torsten [email protected]

Bhatnagar Pratik [email protected]

Bonino Ivan [email protected]

Bonsall Amy [email protected]

Borrell Leo [email protected]

Boucher-Dakroub Kelly [email protected]

Briseno Mariana [email protected]

Brown Anna [email protected]

Bui Minh [email protected]

Capel Manuel [email protected]

Chauca Jorge [email protected] Eddie [email protected]

Chong Su Lee [email protected]

Choudhary Smita [email protected]


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D'Haenens An [email protected]

Das Abhik [email protected]

Demir Elma [email protected]

Desai Darshan [email protected]

Disu Tunde [email protected]

Dudchenko Igor [email protected]

Dunphy Sean [email protected]

Esselinckx Bernard [email protected]

Faraz Hasan [email protected]

Fircks Inga [email protected]

Fjalldal Jhann Bragi [email protected]

Frey Jana [email protected]

Frigerio Fabrice [email protected]

Galvez Ivan [email protected]

Ge Harry [email protected]

Gomes Alessandro [email protected]

Gounder Mary [email protected]

Gruber Gerald [email protected]

Gupta Manish [email protected]

Hengerer Roland [email protected]

Hug Paul [email protected]

Jaberg Thomas [email protected]

Jaubert Ariane [email protected]

Joedicke Harald [email protected]

Joedicke Jamorski Christine [email protected]

Kalsi Priya [email protected]

Karkera Ashvini [email protected]

Katsaounis Alexia [email protected]

Kilasara Joseph [email protected]

Kode vinay [email protected]

Kohn Philipp [email protected]

Kourkoulakos Dimitris [email protected]

Kram Raymond [email protected]

Lam Jade [email protected]

Lenzmann Frank [email protected]

Leonhardt Ana [email protected]

Leroux Karine [email protected] Richard [email protected]

Lienhard Christophe [email protected]

Luick Albrecht [email protected]

MacEachern Erik [email protected]

Magowan James [email protected]

Maguna Aitor [email protected]

Magunacelaya [email protected]

Mani Anbarasan [email protected]

Marangos Ioannis [email protected]

Marostica Sandro [email protected]

Mascaray Victoria [email protected]

Mbamba Juste Cabrel [email protected]

McKeown Philip [email protected]


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Menchaca Eduardo [email protected]

Mercado Dennis [email protected]

Michel Pascal [email protected]

Mohamed Ahmed [email protected]

Morris-Cotterill Nigel [email protected]

Mungatana Edward [email protected]

Noal Jonathan [email protected]

Nouti Idar [email protected]

Novosel Christian [email protected]

Nwobodo Patricia [email protected]

O'Halloran David [email protected]

Ogunsanya Muraino [email protected]

Osterwalder Alexander [email protected]

Pahladsingh Perry [email protected]

Pande Deepti [email protected]

Pasic Edin [email protected]

Perry Verna [email protected]

Planche-Popke Gerard [email protected]

Plykine Sergey [email protected]

Portal Sebastien [email protected]

Prevljak Dzenan [email protected]

Quaranta Anna [email protected]

Rasetti Helena [email protected]

Reeves Simone [email protected]

Regli Bernhard [email protected]

Riedener Micha [email protected]

Salawu Adesina [email protected]

Salzmann Alexander [email protected]

Sankar Parvathy [email protected]

Santos Dimas [email protected]

Srivastava Madhur [email protected]

Stadelmann Daniel [email protected]

Suri Munish [email protected]

Taori Harish [email protected]

Townsend David [email protected]

Tsai George [email protected]

Ursprung Jolanta [email protected] Nitesh [email protected]

Uttamchandani Satish [email protected]

Vaidyanathan Vijay [email protected]

van der Kaaij Jan [email protected]

Venter De La Rey [email protected]

Wadkar Anant [email protected]

Wang Ying [email protected]

Williamson Mark [email protected]

Wong Sam [email protected]

Yorke Peter [email protected]

Zaied Yassine [email protected] Luisana [email protected]

Zarranz Nora [email protected]

Zetterqvist Henrik [email protected]


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Zhi Yanping [email protected]

Zuleta Carlos [email protected]

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