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Fortune At The Bottom Of Pyramid

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Dear all,
This is the review of the book " The Fortune At The Bottom Of Pyramid" written by Dr. C.K. Prahlad.....
Thanks

Fortune At The Bottom Of Pyramid

  1. 1. <ul><li>THE </li></ul><ul><li>FORTUNE </li></ul><ul><li>AT THE BOTTOM </li></ul><ul><li>OF THE PYRAMID </li></ul><ul><li>ERADICATING POVERTY THROUGH PROFITS </li></ul><ul><li>C K PRAHALAD </li></ul>
  2. 2. <ul><li>Ashutosh Yadav (04) </li></ul><ul><li>Vineet Dubey (28) </li></ul><ul><li>Pritam Gayakwad (34) </li></ul><ul><li>Ashish Kumar Jha (41) </li></ul><ul><li> Anant Kawale (48) </li></ul><ul><li>(MMS-2007-09) </li></ul>
  3. 3. <ul><li>At the bottom of the </li></ul><ul><li>pyramid </li></ul>
  4. 4. <ul><li>Consists of 4 billion people </li></ul><ul><li>Living on less than $ 2 per day </li></ul><ul><li>400 million people in India constitutes the bottom of the pyramid </li></ul>
  5. 5. <ul><li>Purchasing Power </li></ul><ul><li>Parity in US dollars </li></ul><ul><li>> $20,000 </li></ul>$1,500 - $20,000 $1,500 <$1,500 75 - 100 1,500 – 1,750 4,000 Population in Millions Tier1 Tiers 2-3 Tier 4 Tier 5
  6. 6. <ul><li>Exploitation of poor people by Private sector. </li></ul><ul><li>Rural population was primarily poor & urban population was relatively rich. </li></ul><ul><li>Private sector businesses , especially MNCs logic about BOP. </li></ul>
  7. 7. BOP latent 4-5 billion consumer opportunity Politicians, public policy establishments Aid Agencies NGOs, civil society organizations Private sector, including MNCs
  8. 9. <ul><li>There is money at BOP. </li></ul><ul><li>Access to BOP markets. </li></ul><ul><li>The BOP markets are Brand – Conscious. </li></ul><ul><li>The BOP market is connected </li></ul><ul><li>BOP consumers accept advanced technology readily </li></ul>
  9. 10. <ul><li>Create the capacity to consume </li></ul><ul><li>The need for new goods and services </li></ul><ul><li>Dignity and choice </li></ul><ul><li>Trust is a Prerequisite </li></ul>
  10. 11. <ul><li>Huge market potential </li></ul><ul><li>4 to 5 billion underserved people </li></ul><ul><li>Economy of more than $ 13 trillion PPP </li></ul><ul><li>The needs of the poor are many </li></ul><ul><li>Thus, the case for growth opportunity in the BOP markets is easy to make. </li></ul>
  11. 12. <ul><li>A philosophy for developing products & services for the BOP </li></ul><ul><li>- small unit packages </li></ul><ul><li>- low margin per unit </li></ul><ul><li>- high volume </li></ul><ul><li>- high return on capital employed </li></ul>
  12. 13. <ul><li>Price Performance </li></ul><ul><li>Innovation : Hybrids </li></ul><ul><li>Scale of Operations </li></ul><ul><li>Sustainable Development : Eco-Friendly </li></ul><ul><li>Identifying Functionality : Is the BOP different from Developed Markets? </li></ul><ul><li>Process Innovation </li></ul><ul><li>Deskilling Of Work </li></ul><ul><li>Education Of Customers </li></ul><ul><li>Designing for Hostile Infrastructure </li></ul><ul><li>Interfaces </li></ul><ul><li>Distribution : Accessing the Customer </li></ul><ul><li>BOP markets essentially allow us to challenge the Conventional Wisdom in Delivery of Products and Services </li></ul>
  13. 14. <ul><li>Some BOP markets are very large and attractive </li></ul><ul><li>Local innovations can be leveraged across other BOP markets </li></ul><ul><li>Some innovations from the BOP markets will find applications in developed markets </li></ul><ul><li>Lessons from the BOP markets can influence the management practices of global firms </li></ul>
  14. 15. Developing a unique approach to BOP markets and learning from the experience Fine-tuning the traditional approach
  15. 17. <ul><li>Micro encapsulation of iodine in salt – in India has found market in other BOP markets in Africa especially in Ivory coast, Kenya & Tanzania. </li></ul><ul><li>Launch of Wheel detergent by HLL. </li></ul><ul><li>Micro-financing by Grameen Bank in Bangladesh. </li></ul><ul><li>Jaipur foot </li></ul><ul><li>Aravinda Eye Care </li></ul>
  16. 18. <ul><li>The Voxiva Story of Peru. </li></ul>
  17. 19. <ul><li>Capital Intensity </li></ul><ul><li>Sustainable Development </li></ul><ul><li>Innovations </li></ul>
  18. 20. <ul><li>“ I think we have to recognize that a whole lot of </li></ul><ul><li>potential is going to come out of the bottom </li></ul><ul><li>of the pyramid” </li></ul><ul><li> Chanda Kochhar, Executive Director </li></ul><ul><li>Retail Banking, ICICI Bank </li></ul>
  19. 21. <ul><li>“ to identify and support initiatives designed to improve the capacities of the poorest of the poor to participate in the larger economy” </li></ul>
  20. 22. <ul><li>“ poor do pay for the services rendered to them and they ought to be viewed as consumers rather than passive beneficiaries” </li></ul>
  21. 23. <ul><li>The Direct Access, Bank-led Model - Catalyzed by the merger with Bank of </li></ul><ul><li>Madura. </li></ul><ul><li>- Utilizes its power to promote and grow </li></ul><ul><li>SHGs . </li></ul><ul><li>Indirect Channels Partnership Model </li></ul><ul><li>-Looks to leverage current infrastructure and </li></ul><ul><li>relationships of MFIs and NGOs. </li></ul>
  22. 25. <ul><li>Self Help Groups </li></ul><ul><li>- 15 to 20 members </li></ul><ul><li>- from same village </li></ul><ul><li>- married </li></ul><ul><li>- between the ages of 20 and 50 </li></ul><ul><li>- existing below poverty line </li></ul>
  23. 26. <ul><li>Each member contributes Rs 50 to a joint savings account </li></ul><ul><li>Leader responsible for collection and opening up of savings account in the bank. </li></ul><ul><li>The savings are converted into fund. </li></ul><ul><li>Used for emergency lending to an individual within the group. </li></ul><ul><li>Eligible for loan after one year of formation. </li></ul>
  24. 27. <ul><li>Number of SHGs increased from 1500 in 2001 to 8000 in 2003. </li></ul><ul><li>ICICI has utilized its financial expertise to fashion a model that is economically viable. </li></ul><ul><li>ICICI has positioned itself as socially conscious corporate citizen. </li></ul><ul><li>Helps ICICI’s bargaining power with the RBI and other government institutions. </li></ul>
  25. 28. <ul><li>Information centers linked to the internet. </li></ul><ul><li>Connects subsistence farmers with large farms,current agricultural research and global markets. </li></ul><ul><li>Operated by local farmer called sanchalak. </li></ul><ul><li>Information provided by samyojaks. </li></ul><ul><li>. </li></ul>
  26. 29. <ul><li>Virtual integration of supply chain. </li></ul><ul><li>Results in better yield through better practices. </li></ul><ul><li>Farmers benefit by realizing better prices </li></ul>
  27. 32. <ul><li>Better information content. </li></ul><ul><li>Better information timing </li></ul><ul><li>Transportation cost </li></ul><ul><li>Transaction duration </li></ul><ul><li>Weighing accuracy </li></ul><ul><li>Professionalism and dignity </li></ul>
  28. 33. <ul><li>Disintermediation savings </li></ul><ul><li>Freight costs </li></ul><ul><li>Quality control </li></ul><ul><li>Risk management </li></ul>
  29. 34. <ul><li>Largest retail chain in Brazil. </li></ul><ul><li>- 330 stores </li></ul><ul><li>- 10 million customers </li></ul><ul><li>- 20,000 employees </li></ul><ul><li>Sells electronics, appliances and furniture. </li></ul>
  30. 35. <ul><li>Individuals stratified into five basic economic classes: A,B,C,D and E. </li></ul><ul><li>C,E and D considered to be the BOP – 84% of the total population of Brazil. </li></ul><ul><li>Represents significant purchasing power in Brazil’s economy – at 41% total spending capacity. </li></ul><ul><li>70% of Casas Bahia’s customers have no consistent income. </li></ul>
  31. 36. <ul><li>Carne or passbook system – allows customers to make small installment payments for merchandise. </li></ul><ul><li>Payment schedules ranges from 1 to 15 months. </li></ul><ul><li>Financed sales are responsible for 90% of all sales volume. </li></ul><ul><li>Credit score system for customers. </li></ul>
  32. 37. <ul><li>Largest cement manufacturer in Mexico, second largest in USA, and the third largest in the world. </li></ul><ul><li>Manufactures and sells raw cement, ready-mix concrete, aggregates and clinker. </li></ul><ul><li>High level of commitment to customer service and satisfaction. </li></ul>
  33. 38. <ul><li>Means “savings/property today” </li></ul><ul><li>Launched in 1998 </li></ul><ul><li>Enables very poor to pay for services and building materials to make and upgrade their homes. </li></ul>
  34. 39. <ul><li>Provide poor families looking for better quality of life through households by offering good quality cement and raw materials at reasonable prices. </li></ul><ul><li>Offer access to credit. </li></ul><ul><li>Position Cemex as a responsible corporate citizen. </li></ul>
  35. 40. <ul><li>Is it as easy as he makes it sound? </li></ul>

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