Since the mists of time many people have reflected and worked on the issue of poverty, Mandela (2005), in an interview, argues that ‘like slavery and apartheid, poverty is not natural. It is man made and it can be overcome and eradicated by the actions of human beings.' Even earlier it has been argued that poverty was the worst form of violence (Ghandi, 1940). But the sentence ‘Bottom of the Pyramid' (BoP) was first introduced by Roosevelt, on the 7th of April 1932 in his radio address: The forgotten Man. Later, in the late 1990s Prahalad and Hart have suggested that multinational corporation companies (MNCs) can help to reduce the poverty.
They defend the idea that if MNCs create suitable and affordable product for the low-income people, they can both help reduce poverty and generate new benefits. Then, they have offered the concept of ‘Bottom of the Pyramid', which refers to the 4 billion of people who live on an income of 3 US $ or less per day in purchasing power parity (PPP) (Prahalad, 2004). However, although this concept has generated a strong interest in the corporate world and in lot of academia, the reality of this idea remains controversial (Karnani, 2007).
Nowadays, the context in which the MNCs operate experiences important changes and the idea of the BoP as virgin market, easy to conquer by the company, has disappeared. The issues related to environmental sustainability and corporate social responsibility (CSR) are more and more ubiquitous (Diamond, 2005). Whether through consumer pressure or through government regulation, companies can no longer ignore these trends. In this context of questioning of the conventional business models, ideas of Prahalad and Hart around the wealth at the base of the pyramid have interested many multinational companies, and we have seen a proliferation of initiatives of these ones to attempt to penetrate this forgotten market. These initiatives have as the main objective to obtain knowledge of the market and to generate long-term benefits. They are also part of the issue of corporate social responsibility (CSR) aforementioned, because they incorporate social aspects to developing countries. Thus, in most cases the BoP initiatives use a social partner. However, we can separate the social businesses and the projects managed as usual projects of the company.
[...] (2009) were the first to distinguish different categories within the concept of innovation. Thus, according to Hamel and Breen (2007) innovation may relate to processes and target the operational excellence, or concern a product or services, in other words, concern new offerings that will be introduced on the market. Innovation may also be strategic and reshape an economic model. Finally, managerial innovation represents the combination of skills and resources which are unique to the company (see Figure 2.1 Figure 2.1 : The innovation Pyramid Sources: Hamel, G., (2006), The why, what and How of Management Innovation, Harvard Business Review, pp. [...]
[...] They must be creative and change their business model, and it is difficult for large companies which have well-established procedures in developed markets. Companies like Schneider Electric, Danone, Essilor which have undertook initiatives in the BOP are confronted to these new features and need to redefine their key success factors in adapting to this new market. Prahalad (2011) identifies the Bottom of the Pyramid market as a new source of radical innovation. Prahalad suggests that external constraints should be utilized to build innovative business models. [...]
[...] Result The link between innovation in emerging markets and innovation in developed countries i. The phenomenon of reverse innovation Govindarajan (2009) identifies the concept of reverse innovation as a new phase of globalization. The concept of reverse innovation, which has emerged since recent years, is the fact to develop innovations in emerging markets and transpose it into developed countries. The first step of this movement is to develop products in a market: specifically for this market, instead of importing concepts for other markets and adapt it. [...]
[...] EISENHARDT, K.M Building theories from case study research. Academy of management review, pp.532-550. ENEA-CARE CONSULTING Les Grandes entreprises et le BoP [online]. CARE-ENEA. Available at: http://www.carefrance.org/images/2011%20-%20CARE- ENEA%20Consulting 20Les%20grandes%20entreprises%20et%20le%20BoP.pdf [Accessed 25 October 2012]. ESSILOR Essilor Forges Eight New Partnerships Worldwide [online]. Paris: ESSILOR INTERNATIONAL. Available at: http://www.essilor.com/en/Press/MediaLibrary/2010/10 acquisitions_A.pdf [Accessed 12 March 2013]. ESSILOR Varilux India : Natural Vision for Indian wearers [online]. Paris: ESSILOR INTERNATIONAL. Available at: http://www.essilor.com/en/BrandsAndProducts/Lenses/ Lenses/Pages/VariluxIndia.aspx [Accessed 10 March 2013]. [...]
[...] WILLE, E., & BARHAM, K A role for business at the bottom of the pyramid, The Ashridge Journal, pp. 1-87 Appendices Twelve Principles of Innovation for BOP Markets (PRAHALAD, 2006). Focus on price performance of products and services. Serving BOP markets is not just about lower prices. It is about creating a new price–performance envelope. Quantum jumps in price performance are required to cater to BOP markets. Innovation requires hybrid solutions. BOP consumer problems cannot be solved with old technologies. [...]
APA Style reference
For your bibliographyOnline reading
with our online readerContent validated
by our reading committee
