Bottomof the Pyramid Strategy: Business Schools and Companies Explore to Exploit



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Code : SEP0015

Year :
2008

Industry : Education

Region : Global

Teaching Note: Available

Structured Assignment : Available

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Bottom of the Pyramid
The term ‘Bottom of the Pyramid’ or ‘Base of the Pyramid’ (BOP) was first coined by professors Prahalad and Hart. This is a market of 4 billion people, primarily based in developing countries, who earn less than $2 a day. Such huge customer base of aspiring poor can not be ignored by companies looking for growth. Those companies that have the required resources and the ability to compete at BOP would be rewarded with growth and profits, along with their immeasurable contribution to the society. Hence, the BOP proponents suggest the big companies not to ignore these traditionally overlooked people’s considerable combined purchasing power. By doing this, they would help lift billions of poor out of poverty. Further these countries, deprived of the modern infrastructure and basic human needs, are an ideal testing ground for developing environmentally sustainable technologies for the entire world...

Companies Operating in BOP Markets
Prahalad advocates tremendous benefits for companies that choose this segment. He states that today’s poor are tomorrow’s middle class. Companies should stop viewing poor as victims and should instead start considering them as resilient, creative entrepreneurs and value-conscious consumers. Instead of confining to saturated developed markets, companies are targeting low-income customers of developing countries with low prices and sometimes even better products than in the west...

Business Schools
Growing interest in BOP from students is making business schools gear up for it. Many companies have already developed business models based on this idea, but business schools have just begun. Electives, specialised research institutes, student clubs and internships that focused on this subject are on the rise in a number of B-Schools since 2005. In the Aspen Institute’s Beyond Grey Pinstripes biennial report, it was showed that in 2001 only 13 schools offered this course, while in 2005 it was 60...

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