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International business assignment 8


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International business assignment 8

  1. 1. Principles for BoPMarket InnovationKelly Poppe-GaleSeptember, 2012 Page 2
  2. 2. Overview • Mobile Money Transfer Industry • BOP Classification and Demographics • BOP Opportunity • Market for Mobile Money Services • Models for MMS partnerships • Kenya • Afghanistan • Phillippines • 12 Principles for BOP Innovation Page 3
  3. 3. Mobile Money Transfer Industry• Reaching the Unbanked• Technology Dependent Banking
  4. 4. BoP Consumers • Population of 4 billion • They are brand conscious • They are value conscious • A higher percentage of money is spent on luxury goods • They do not own their homes or real estate and therefore do not invest money there • 85% of residents of one city in India own television sets, blenders, and gas stoves Page 5
  5. 5. Why BoP Markets for MMT? • Consumers are: – connecting and networking – Readily accepting of advanced technology • Only 4% penetration of existing companies Page 6
  6. 6. Safaricom and M-PESA• Only MNO in Kenya at launch• Vodaphone owned 40%• Targeted the Unbanked• Population was technologically prepared• Kenyan Government does not require bank accounts
  7. 7. M-PESA Success Factors• Simplicity• Immediate functionality• Differentiated fee structure
  8. 8. Vodaphone, Roshan andM-Paisa • Roshan was leading MNO in Afghanistan • Targeted Microfinance Loans Market • Low Literacy • High Consumer education needs Page 9
  9. 9. USAID/MicroenterpriseAccess to Banking Services (MABS) - Philippines• Smart Communications• Globe Telecom• Targeted large population of rural banks
  10. 10. Recurring Considerations • Importance of trust in agents • Volatile market conditions • Need for education of consumers Page 11
  11. 11. Regulatory Considerations• Customer Due Diligence (CDD)• Know Your Customer (KYC)• Anti-Money Laundering (AML)
  12. 12. 12 Principles of Innovation 1. Create a new price- performance envelope • Free accesses to the platform • Subscription • Flat fee • Tiered transaction basis. Page 13
  13. 13. 2. Offer Hybrid solutions • Match existing structures for similar services • Offer options when possible3. Design scalable solutions for ease of adaptation in similar BOP markets
  14. 14. 4. Reduce Resource Intensity5. Design Products for Functionality6. Develop a logistics Infrastructure7. Deskill work
  15. 15. Principles of Innovation 8. Inform Customers about product usage – Transactions – Fees 9. Design products for durability and reliability 10.Research heterogeneity of the population
  16. 16. Principles of Innovation11.Develop low cost distribution methods12.Use a systems approach; design platform for ease of new feature introduction
  17. 17. Market Factors• Literacy• % consumers with Bank Accounts• Competition• Agent Network Development• Availability of Technology• Current Business Practices
  18. 18. Potential New PlayersGrameen BankObopayNokia
  19. 19. Recommendations • Complete a cultural analysis of market • Determine Government Requirements • Study consumer behavior • Adopt best model Page 20
  20. 20. Conclusions• Choose partners carefully• Best model currently is that of Safaricom in Kenya• Modify for market conditions and adopt best practices from other models
  21. 21. ReferencesMas, I., & Ngweno, A. (2010). Three keys to M-PESAs success: Branding, channel managementand pricing. Journal of Payments Strategy & Systems, 4(4), 352-370.Mas, I., & Radcliffe, D. (2011). Scaling mobile money. Journal of Payments Strategy & Systems, 5(3), 298-315.Merritt, C. (2011). Mobile money transfer services: The next phase in the evolution of person-to-person payments. Journal OfPayments Strategy & Systems, 5(2), 143-160.De Sousa, S. (2010). The role of payment systems in reaching the unbanked. Journal Of Payments Strategy & Systems, 4(2),145-155.Jack, W., Suri, T., & Townsend, R. (2010). Monetary Theory and Electronic Money: Reflections on the Kenyan Experience.Economic Quarterly (10697225), 96(1), 83-122.Abdalla, S. (2011). Stock market development and economic growth in Sudan (1995-2009): Evidence from Granger CausalityTest. Journal of Business Studies Quarterly, 3(2), 93-105.Boşcor, D. D., & Brătucu, G. G. (2010). Base-of-the-pyramid global strategy. Bulletin Of The Transilvania University OfBrasov. Series V: Economic Sciences, 311-16.Majumder, M. (2012). A Critical Approach in Understanding Bottom of the Pyramid Propositions. Journal of Management &Public Policy, 3(2), 18-25.Prahalad, C. K. (2005). The Fortune at the Bottom of the Pyramid. Wharton School Publishing, Upper Saddle River, NJ.
  22. 22. ReferencesGriffin, R. W., & Pustay, M. W. (2010). International Business. 6th Ed. Upper Saddle River, NJ.International Finance Corporation, (n.d.) M-money channel distribution case – Afghanistan. World Bank Group. RetrievedSeptember 27, 2012, from:$FILE/Tool+6.9.+Case+Study+-+M-Paisa+Afghanistan.pdf