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THE
FORTUNE
AT THE BOTTOM
OF THE PYRAMID
ERADICATING POVERTY THROUGH PROFITS
C K PRAHALAD
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Ashutosh Yadav (04)Vineet Dubey (28)
Pritam Gayakwad (34)Ashish Kumar Jha (41)Anant Kawale (48)
(MMS-2007-09)
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At the bottom of thepyramid
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Consists of 4 billion people Living on less than $ 2 per day
400 million people in India constitutes thebottom of the pyramid
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Purchasing PowerParity in US dollars
> $20,000 Tier1
Tiers 2-3
Tier 4
Tier 5
$1,500 - $20,000
$1,500
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Exploitation of poor people by Private sector. Rural population was primarily poor & urban
population was relatively rich. Private sector businesses , especially MNCs
logic about BOP.
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BOP latent 4-5 billionconsumer opportunity
Politicians, publicpolicy
establishments
Aid Agencies
NGOs, civil societyorganizations
Private sector, including MNCs
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Economicdevelopment
and socialtransformation
PRIVATEENTERPRISE
Developmentand aid
agencies
BOPconsumers
BOPentrepreneurs
Civil societyorganizations
and localgovernment
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There is money at BOP. Access to BOP markets.
The BOP markets are Brand Conscious. The BOP market is connected BOP consumers accept advanced technology
readily
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Create the capacity to consume
The need for new goods and services Dignity and choice Trust is a Prerequisite
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Huge market potential 4 to 5 billion underserved people
Economy of more than $ 13 trillion PPP The needs of the poor are many
Thus, the case for growth opportunity in theBOP markets is easy to make.
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A philosophy for developing products &services for the BOP
- small unit packages- low margin per unit- high volume- high return on capital employed
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Price Performance Innovation : Hybrids Scale of Operations Sustainable Development : Eco-Friendly
Identifying Functionality : Is the BOP different fromDeveloped Markets? Process Innovation Deskilling Of Work Education Of Customers Designing for Hostile Infrastructure Interfaces Distribution : Accessing the Customer BOP markets essentially allow us to challenge the
Conventional Wisdom in Delivery of Products and Services
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Some BOP markets are very large andattractive
Local innovations can be leveraged acrossother BOP markets Some innovations from the BOP markets will
find applications in developed markets Lessons from the BOP markets can influence
the management practices of global firms
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Developing a
unique
approach to
BOP markets
and learning
from the
experience
Fine-tuning the
traditional
approach
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Micro encapsulation of iodine in salt in Indiahas found market in other BOP markets in
Africa especially in Ivory coast, Kenya &Tanzania. Launch of Wheel detergent by HLL. Micro-financing by Grameen Bank in
Bangladesh. Jaipur foot Aravinda Eye Care
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The Voxiva Story of Peru.
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Capital Intensity Sustainable Development
Innovations
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I think we have to recognize that a whole lot of
potential is going to come out of the bottomof the pyramid
Chanda Kochhar, Executive Director
Retail Banking, ICICI Bank
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to identify and support initiatives designedto improve the capacities of the poorest ofthe poor to participate in the largereconomy
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poor do pay for the services rendered to themand they ought to be viewed as consumersrather than passive beneficiaries
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The Direct Access, Bank-led Model- Catalyzed by the merger with Bank of
Madura.
- Utilizes its power to promote and grow
SHGs. Indirect Channels Partnership Model
-Looks to leverage current infrastructure andrelationships of MFIs and NGOs.
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6 Promoters
Formation of new SHGs
6 Coordinators
Formation of new SHGs Monitors the action of promoters
Project Manager
Approve loan applicationsHelps with the development of
SHGs
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Self Help Groups- 15 to 20 members
- from same village- married- between the ages of 20 and 50- existing below poverty line
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Number of SHGs increased from 1500 in 2001to 8000 in 2003.
ICICI has utilized its financial expertise tofashion a model that is economically viable. ICICI has positioned itself as socially
conscious corporate citizen. Helps ICICIs bargaining power with the RBI
and other government institutions.
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Information centers linked to the internet. Connects subsistence farmers with large
farms,current agricultural research and global
markets. Operated by local farmer called sanchalak. Information provided by samyojaks.
.
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Virtual integration of supply chain. Results in better yield through better
practices. Farmers benefit by realizing better prices
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Inbound
Logistics
Display andInspection
AuctionBagging and
weighingPayment
OutboundLogistics
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PricingInboundLogistics
Inspectionand
Grading
Weighingand
Payment
HubLogistics
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Better information content. Better information timing
Transportation cost Transaction duration Weighing accuracy Professionalism and dignity
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Disintermediation savings Freight costs
Quality control Risk management
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Largest retail chain in Brazil.- 330 stores
- 10 million customers- 20,000 employees Sells electronics, appliances and furniture.
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Individuals stratified into five basic economicclasses: A,B,C,D and E.
C,E and D considered to be the BOP 84% ofthe total population of Brazil. Represents significant purchasing power in
Brazils economy at 41% total spendingcapacity.
70% of Casas Bahias customers have noconsistent income.
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Carne or passbook system allows customersto make small installment payments for
merchandise. Payment schedules ranges from 1 to 15
months. Financed sales are responsible for 90% of all
sales volume. Credit score system for customers.
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Largest cement manufacturer in Mexico,second largest in USA, and the third largest in
the world. Manufactures and sells raw cement, ready-
mix concrete, aggregates and clinker. High level of commitment to customer
service and satisfaction.
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Means savings/property today Launched in 1998
Enables very poor to pay for services andbuilding materials to make and upgrade theirhomes.
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Provide poor families looking for betterquality of life through households by offering
good quality cement and raw materials atreasonable prices. Offer access to credit. Position Cemex as a responsible corporate
citizen.
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Is it as easy as he makes it sound?
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