1. The document discusses opportunities and challenges for multinational companies (MNCs) in entering emerging and low-income markets known as the "Bottom of the Pyramid" (BOP), which consists of the 4 billion poorest people in the world living on less than $2 per day.
2. Some key opportunities include the vast size of the BOP market totaling $5 trillion in purchasing power, the rapid growth expected in developing markets, potential cost savings from local production, and opportunities for innovation to meet unfulfilled needs. However, challenges include the poverty of consumers which limits purchasing power, differences in geography, culture and economies between developed and emerging markets, and limited brand awareness in new markets.
Study to understand the management strategies of new multinationals from the ...Charm Rammandala
The purpose of this study is to understand how the emerging multinational companies from emerging economies such as BRIC countries, Middle East and developing countries like Thailand and Malaysia challenging the traditional multinational companies who have strong roots to developed countries. Using various strategies and business models such as alliances, joint ventures and in some cases wholly owned subsidiaries, newly emerging multinationals have made their presence felt in the world market. This study will take an in-depth look in to the management strategies in place to overcome the barriers and accelerate the growth.
Re-Innovating Innovation: The Case for Emerging MarketsInfosys
Market players that have learnt to compete on volume despite low margins in a tough environment have also developed a lethal capability to explode premium market barriers in mature markets. Western incumbents will only be able to win this race as long as they can compete and excel not only at home, but more importantly, in the rough-and-tumble of emerging markets.
Know more: http://www.infosys.com/building-tomorrows-enterprise/emerging-economies/Pages/index.aspx
MNCs are corporations that control production facilities in more than one country through Foreign Direct Investments. MNCs increase competition thereby breaking domestic monopoly. The demerit of having MNCs is that their functioning can be inimical to national interests.
For more such innovative content on management studies, join WeSchool PGDM-DLP Program: http://bit.ly/ZEcPAc
1. BENEFITS THAT MNCS BRING TO HOST NATIONS
a. Improvement in the standard of living
b. Employment and economic growth in overseas countries
2. POTENTIAL NEGATIVE IMPACT
a. Influence on foreign governments to gain concession
b. Exploitation of labour in developing countries
i. Implementation of working practices which would be unacceptable in their home country
ii. Sale of unsafe products to consumers
c. Use of unsustainable resources and the degradation of the local environment
d. Cultural Imperialism
e. Footloose Capitalism
3. CONTROLLING MNCs
a. Pressure groups and public opinion
b. Internet
c. Self-Regulation
d. Political Constraints
e. Legal or constraints
f. Competition policy
In the Business Perspectives for Emerging Markets 2012-2017 Report from GIA, 431 large and mid-sized companies reveal their true goals and intentions. This presentation shows selected slides from a GIA white paper. To download the entire white paper that you are interested in, please visit http://bit.ly/GIAinsightWP
1. 70% say they want to gain a foothold for long term success
2. 51% say they were keen to gain global market share
3. 4 out of 10 have followed their customers to Emerging Markets
4. A third are looking for growth outside established markets with lackluster growth and profits
5. 1 out of 4 are keen to diversify their risks, as well as tap into short to medium term profits and growth
6. Only 17% said it was to lower supply costs
Many still favor BRIC countries as their top focus between 2012 and 2017, with similar emphasis on individual markets across 10 industries.
However, 91% admit to wanting to have done things differently in their Emerging Market strategies. The main regrets are not adapting more to local conditions, not entering sooner and not acquiring better market intelligence.
Over half say that information on Emerging Markets is not readily available in their organizations, with three out of four doubting the accuracy and completeness of the information that they do have.
Download the Business Perspectives for Emerging Markets 2012-2017 Report (Global Results) from GIA, to find out how companies say they will tackle Emerging Markets and what they see as the success factors and threats for their individual industries. The wide ranging Emerging Markets survey covered questions such as:
- How do you define Emerging Markets in your company?
- Which are the top Emerging Markets for your industry over the next five years?
- What key factors will determine whether foreign companies succeed in Emerging Markets?
- What are the biggest threats to succeeding in Emerging Markets?
- What are your company’s main reasons for investing in Emerging Markets?
- What share of your company’s global revenue do you expect to come from Emerging Markets?
- Which one aspect of your Emerging Markets strategy would you go back and change if you could?
Industries covered include: Manufacturing & Industrial; Telecommunication, Technology & Media; Professional & Business Services; Financial Services; Consumer & Retail; Pharmaceuticals & Healthcare; Energy, Resources & Environment; Automotive; Chemicals; Logistics & Transportation.
Study to understand the management strategies of new multinationals from the ...Charm Rammandala
The purpose of this study is to understand how the emerging multinational companies from emerging economies such as BRIC countries, Middle East and developing countries like Thailand and Malaysia challenging the traditional multinational companies who have strong roots to developed countries. Using various strategies and business models such as alliances, joint ventures and in some cases wholly owned subsidiaries, newly emerging multinationals have made their presence felt in the world market. This study will take an in-depth look in to the management strategies in place to overcome the barriers and accelerate the growth.
Re-Innovating Innovation: The Case for Emerging MarketsInfosys
Market players that have learnt to compete on volume despite low margins in a tough environment have also developed a lethal capability to explode premium market barriers in mature markets. Western incumbents will only be able to win this race as long as they can compete and excel not only at home, but more importantly, in the rough-and-tumble of emerging markets.
Know more: http://www.infosys.com/building-tomorrows-enterprise/emerging-economies/Pages/index.aspx
MNCs are corporations that control production facilities in more than one country through Foreign Direct Investments. MNCs increase competition thereby breaking domestic monopoly. The demerit of having MNCs is that their functioning can be inimical to national interests.
For more such innovative content on management studies, join WeSchool PGDM-DLP Program: http://bit.ly/ZEcPAc
1. BENEFITS THAT MNCS BRING TO HOST NATIONS
a. Improvement in the standard of living
b. Employment and economic growth in overseas countries
2. POTENTIAL NEGATIVE IMPACT
a. Influence on foreign governments to gain concession
b. Exploitation of labour in developing countries
i. Implementation of working practices which would be unacceptable in their home country
ii. Sale of unsafe products to consumers
c. Use of unsustainable resources and the degradation of the local environment
d. Cultural Imperialism
e. Footloose Capitalism
3. CONTROLLING MNCs
a. Pressure groups and public opinion
b. Internet
c. Self-Regulation
d. Political Constraints
e. Legal or constraints
f. Competition policy
In the Business Perspectives for Emerging Markets 2012-2017 Report from GIA, 431 large and mid-sized companies reveal their true goals and intentions. This presentation shows selected slides from a GIA white paper. To download the entire white paper that you are interested in, please visit http://bit.ly/GIAinsightWP
1. 70% say they want to gain a foothold for long term success
2. 51% say they were keen to gain global market share
3. 4 out of 10 have followed their customers to Emerging Markets
4. A third are looking for growth outside established markets with lackluster growth and profits
5. 1 out of 4 are keen to diversify their risks, as well as tap into short to medium term profits and growth
6. Only 17% said it was to lower supply costs
Many still favor BRIC countries as their top focus between 2012 and 2017, with similar emphasis on individual markets across 10 industries.
However, 91% admit to wanting to have done things differently in their Emerging Market strategies. The main regrets are not adapting more to local conditions, not entering sooner and not acquiring better market intelligence.
Over half say that information on Emerging Markets is not readily available in their organizations, with three out of four doubting the accuracy and completeness of the information that they do have.
Download the Business Perspectives for Emerging Markets 2012-2017 Report (Global Results) from GIA, to find out how companies say they will tackle Emerging Markets and what they see as the success factors and threats for their individual industries. The wide ranging Emerging Markets survey covered questions such as:
- How do you define Emerging Markets in your company?
- Which are the top Emerging Markets for your industry over the next five years?
- What key factors will determine whether foreign companies succeed in Emerging Markets?
- What are the biggest threats to succeeding in Emerging Markets?
- What are your company’s main reasons for investing in Emerging Markets?
- What share of your company’s global revenue do you expect to come from Emerging Markets?
- Which one aspect of your Emerging Markets strategy would you go back and change if you could?
Industries covered include: Manufacturing & Industrial; Telecommunication, Technology & Media; Professional & Business Services; Financial Services; Consumer & Retail; Pharmaceuticals & Healthcare; Energy, Resources & Environment; Automotive; Chemicals; Logistics & Transportation.
Globalization Past,Present and The FutureAnkur Sharma
This presentation charts the history and the present status of Globalization and then, introduces a disruptive concept called "Reverse Innovation" which the author believes would change the way Globalization happens currently. Please contact info@ankursharma.co.in more information and my speaking schedules
In this presentation, we will discuss role of MNCs in global economy, their merits and demerits, how to globalize a business by transforming the organizational structures according to international standards.
To know more about Welingkar School’s Distance Learning Program and courses offered, visit: http://www.welingkaronline.org/distance-learning/online-mba.html
What will be the likely impact of the growing economic power of China and India on individuals, national and multinational firms in the 21st century?
Implications of their population size, economic growth and export rates, increased purchasing power and foreign investment, predicted economic power compared with US and EU, barriers to market entry, trade opportunities for UK firms, differences between China and India, for example state ownership of firms.
строительство и эксплуатация комплексов придорожного сервиса (кафеdoroganet
The construction and operation of pre-fabricated (from sandwich panels) of objects of public catering (cafes,hotels, service stations, Parking lots, campsites, roadside shops, etc) on the Federal highway M53, "Yenisei", "Baikal". The Russian Federation
Globalization Past,Present and The FutureAnkur Sharma
This presentation charts the history and the present status of Globalization and then, introduces a disruptive concept called "Reverse Innovation" which the author believes would change the way Globalization happens currently. Please contact info@ankursharma.co.in more information and my speaking schedules
In this presentation, we will discuss role of MNCs in global economy, their merits and demerits, how to globalize a business by transforming the organizational structures according to international standards.
To know more about Welingkar School’s Distance Learning Program and courses offered, visit: http://www.welingkaronline.org/distance-learning/online-mba.html
What will be the likely impact of the growing economic power of China and India on individuals, national and multinational firms in the 21st century?
Implications of their population size, economic growth and export rates, increased purchasing power and foreign investment, predicted economic power compared with US and EU, barriers to market entry, trade opportunities for UK firms, differences between China and India, for example state ownership of firms.
строительство и эксплуатация комплексов придорожного сервиса (кафеdoroganet
The construction and operation of pre-fabricated (from sandwich panels) of objects of public catering (cafes,hotels, service stations, Parking lots, campsites, roadside shops, etc) on the Federal highway M53, "Yenisei", "Baikal". The Russian Federation
Powerpoint presentation from this years Augmented Reality Event. An overview of AR Location Based Gaming, Paranormal Activity iPhone Game, and thoughts on where the technology is driving us...
Phytorid Wastewater Treatment Technology- Decentralised & Ecosystem Based ...Nitin Kumar
Phytorid Wastewater Treatment Technology involves a constructed wetland exclusively designed for the treatment of municipal, urban, agricultural and industrial wastewater.
Presentation prepared for the course 'Sanitary Engineering' in Civil Engineering
Cross industry innovatie 7 tips om te startenMarc Heleven
Cross-industry innovatie is een slimme manier om, buiten de grenzen van de eigen industrie of sector, ideeën op te doen en deze toe te passen in jouw eigen bedrijf of organisatie.
Als je nieuwe producten of diensten wil uitvinden of op de markt brengen is het vaak handig om te kijken hoe andere bedrijven of industrieën dit probleem vroeger al succesvol oplosten.
In dit kleurrijke boek met vele illustraties geven de auteurs in 7 hoofdstukken tips om inspiratie elders op te doen en toe te passen als je zelf wil innoveren. Het bevat inspirerende verhalen, uitdagende praktijkvoorbeelden en veel praktische gereedschappen om fantastische ideeën in andere sectoren te ontdekken.
This presentation elaborates the enormous business opportunities to be made by companies that would pay attention to the 65% of the world population known as the Bottom of the pyramid. The presentation explains the work of C.K Prahalad and Allen Hammond.
The notion that the Bottom of the Pyramid (BOP) consumers is a segment that is not important for the long-term viability of most of the businesses is no more classified as ‘accepted wisdom’. There is a shift in thinking of MNCs which now are considering BOP consumers as a potential source of revenues as well as drivers of innovation. Targeting the subsistence marketplaces poses various challenges for MNCs, but has favourable outcomes for BOP participants, economy and business organizations. This paper identifies the challenges of launching products targeting BOP markets in India and discusses the implications for consumers, national economy, and companies targeting BOP consumers.
Chapter 5 How Managers Use Balance of Payments Data – p.213Do.docxrobertad6
Chapter 5: How Managers Use Balance of Payments Data – p.213
Do some research on the items in the table below and see if you see a pattern with the various country’s economies:
1. What is the G7?
2. What is the E7?
G7 Countries
Continent where the country lies
GDP
Ease of Doing Business
1.
2.
3.
4.
5.
6.
7.
NOTE: When you find the GDP (Gross National Product) note the year – you may not have 2018 statistics. That is okay –find the latest data available. You may need to search for the Ranking of Ease of Doing Business – and then find the countries that make up the G7 or the E7.
NEXT PAGE!
E7 Countries
Continent where the country lies
GDP
Ease of Doing Business
1.
2.
3.
4.
5.
6.
7.
A. Compare the 2 groups of countries – explain your findings.
Globalization Effects on Country Institutions, People and Business
Chapter 3
Key Points for the Chapter
Economic development comprises positive economic growth and entails changes in a country’s political, economic, and cultural institutions, as well as in individual values, attitudes, and behaviors.
Economic development requires resources from public and private sectors, both internal and external.
Technology transfers by international corporations comprise manufacturing technologies, management organizations, and marketing know-how.
Intro: The Economic Development Process
Economic development is the progress countries make in living standards as they experience positive economic growth and the changes occurring in societal and cultural institutions and values as nations move toward more advanced stages of industrialization.
Economic progress demonstrates human progress, and more pragmatically, it keeps politicians in power, companies busy, and consumers (and voters) optimistic about the future.
Technology Transfers
International trade, investments, and global media have opened world markets up to a variety of modernizing influences.
In general terms, technology transfers occur as corporations enter new markets with products, technologies, lifestyles, and business methods developed in their home and other international markets.
Technology transfers first affect urban segments of developing countries where there are developed infrastructures and pocket of economically significant customers.
As media become commercialization and distribution channels are built into rural areas, greater proportions of developing-country populations come into contact with modernization influences.
4
Positive Effects
Positive effects occur as societies are exposed to broad varieties of products that make lives easier.
Convenience products such as packaged foods, and consumer durables such as refrigerators, radios, televisions, and stoves have positive effects on consumer lifestyles.
New technologies in manufacturing and distribution make products cheaper and more widely available. They provide employment opportunities for lo.
Cooperation issues in developing the BOP marketAnand Sheombar
The basic argument of this paper is that successful contribution of ICT to development goals is partly dependent on the nature of the cooperation between partners. Thus if there is a need to assess the contribution of ICT, then one needs to look further than just the basic quantitative measures and include cooperation issues as criteria for success.
Are there enough resources for financing an Arab Development Transformation?UNDP Policy Centre
The fundamental development challenge in the Arab region is one of economic transformation or, more pertinent, a lack thereof. Heavy sectoral weights of extractive industries lead to dependence on global oil prices, even in oil-producing countries. The structure of production limits employment generation for skilled and semi-skilled labour. Low-skill services and informal activities then absorb the labour force, with corresponding harm to aggregate productivity and living standards. The slow emergence of manufacturing capacities distinguishes the economies of the Arab region from other developing countries. Compared to suitable aggregates or, more poignant, the successful Asian emerging economies, manufacturing exports from the Arab region do not contribute sufficiently to growth. Concurrently, growth is volatile and saving and investment rates are significantly below what is required to undertake this economic transition. This paper by the International Policy Centre for Inclusive Growth (IPC-IG) approaches fiscal space by asking: What barriers to the creation and use of such fiscal space must be removed in order to undertake such a transformation? In posing this question, the paper seeks to clearly demarcate its treatment of the fiscal space issue from that of the fiscal fundamentalist: its concern is to ensure that fiscal space is created
not in the abstract for an unspecified purpose.
Discovery of key factors that may influence the success of multinational ICT ...Anand Sheombar
This overview paper presents results of an investigation into the nature of key factors that
may influence the success of multinational information and communication technology
(ICT) companies in their efforts to engage with the Base of the Pyramid (BOP).
The research was conducted in 10 BOP projects involving multinational ICT companies in
Africa. ICT is relevant here because of frequently high expectations that it contributes
positively to development goals. A study of the BOP literature reveals that several elements
need consideration when trying to create value in developing areas. In addition it
emerges that these elements are somehow interdependent. Qualitative data was collected
using the case study method and the data was analyzed for emerging patterns.
The analysis revealed three high level factors that may need to be aligned in order to ensure
optimized value creation of BOP ventures. These three factors are BOP strategy, partnerships,
and products & services development.
Discovery of key factors that may influence the success of multinational ICT ...
Jelena Dukic_IBS1report
1. Doing Business at the Bottom of the Pyramid
International Business Strategy 1 – Jelena Đukić
2. 2
Jelena Đukić
Introduction ____
Over the past few years, business leaders and strategists around the world have increased the
focus on the challenges of intense competition and slowing growth in high income markets. In
order to remain competitive, multinational companies (MNCs) must adjust. Winston
Churchill once said: “To improve is to change; to be perfect is to change often.” This process
has led many of MNCs to reconsider the potential of emerging and low income markets.
The concept of the Bottom of the Pyramid (BOP) consists of the market made up by 4 billion
poorest people in the world that live on less than $2 a day. A lot of MNCs have already tried
to enter emerging markets in BRICS countries that account for almost a quarter of the world’s
GDP (Castellanos, Uglow & Kodama, 2013). However, the idea behind BOP suggests that the
best way to meet the needs of the poor is through a profit driven market-based approach (Hart,
Prahalad, 2002). Most companies have usually not considered people at the base of the
economic pyramid due to the low individual income, but rather served customers from the
“global tier”. However, the true opportunity for both the poor and MNCs actually lies at the
bottom of the pyramid, also named the Tier 4 (Prahalad, Hart, 2002).
Before getting into more details, it is crucial to
understand which market is targeted in such a
case. On the image on the right it can be seen
that the top arrow represents the wealthiest
countries and the bottom one the countries that
are on the “Bottom of the Pyramid”.
It is observant that in general, when going abroad, companies take with them their well
worked out business strategies. However, even though this may work out when going to some
high-income markets, when entering into an emerging market, their business models need to
be modified. The BOP presents a whole new managerial challenge and in the further text, the
advantages and disadvantages of doing so will be debated.
3. 3
Jelena Đukić
Advantages ______________
There are more than 4 billion people living in Tier 4 originating from every continent, with
the most affected regions being Africa, Latin America, Asia, Eastern Europe and the
Caribbean (Prahalad, Hart, 2002). All together they make up 72% of world’s population and
with the population growth rate increasing in developing countries, the number of people in
the BOP could reach 6 billion in the next decades (Ashish Karamchandani, Mike Kubzansky,
Nishant Lalwani, HBR, 2011). In previous years, MNCs mostly focused on serving the
“global tier” customers first. Zilber and da Silva state that the MNCs were only paying
attention to the easily spotted “iceberg”, yet the massive Tier 4 was largely kept under water.
However, the real and numerous opportunities actually lay at the Bottom of the Pyramid.
Some examples of these opportunities are: vast size, rapid growth, cost-savings, less
competitive environment and opportunities for innovation.
1. Vast size
As previously mentioned, the BOP constitutes the lower segment of the economic
pyramid and it represents the purchasing power of all the consumers living on less
than $2 a day or the equivalent of $3,000 per year. Moreover, even within the global
BOP there are levels making it a pyramid itself.
On the pyramid on the left the size of each layer
represents the number of people in the different income
segments. The aggregated income of the total BOP
population makes up a $5,000 billion market.
All these layers include around 4 billion consumers with a purchasing power of $5
trillion. Even so, companies should not expect high profit margins; however the unit
sales could be extremely high due to a large number of potential customers. Therefore,
it can be concluded that profits are not driven by high margins, but rather by the
volume, which is in this case – the consumers.
2. Rapid growth
As the developing markets included in the BOP are in their young stage of economic
development, it is highly likely they may be hiding a huge growth potential which
presumably could evolve very rapidly. Several African countries are experiencing
growth rates of 5% and countries in Asia, Latin America and Eastern Europe are
growing at an even faster pace. Another factor is the high birth rates that will increase
the number of people in the BOP. In addition, the more people, the more customers,
4. 4
Jelena Đukić
the higher profits (discussed below into more detail). Western cultures’ birth rates are
declining, which also makes developing countries more desirable for MNCs.
(Prahalad, Hammond, 2002)
3. Costs-savings
In general, companies take their well worked out business strategies with them when
going abroad. However, even though that may have worked with higher income
countries, when entering the BOP, MNCs are facing obstacles when combing
sustainability, good quality, low costs with being profitable all at the same time
(Prahalad, Hart, 2002). Therefore, before emerging into the new markets MNCs must
generate a completely new strategy - a great challenge, yet a great advantage for the
future, since the brand new strategy will make the companies operate in a much more
efficient way. When entering the BOP, Tier 4 customers’ needs must be taken into
consideration; something that worked quite well in the past, may not work today, and
thus change is inevitable. (Prahald, Hammond, 2002). According to Prahald and
Hammond, change in the cost structure is imminent, as well, therefore stating to have
high profits will not be an option anymore, but rather saying how efficient the capital
is (Return on Capital Employed ROCE). Another factor beneficial to being cost
efficient is that experience showed that cost structures tend to be lower in developing
countries and producing locally can also lower the production costs considerably.
4. Less competitive environment
Over past few decades, many MNCs tried to enter the BOP, however some of them
failed to be successful due to the incapability to adapt their business strategies.
Nonetheless, some companies succeeded to enter the developing countries and
established themselves in the emerging markets. On the other hand, the intense
competition has saturated the top of the pyramid, which was previously the main target
of MNCs, thus they no longer represent the true competition due to decreasing growth
and profits. Even though there are many opportunities and advantages for MNCs they
have to bear in mind that they have to remain versatile and follow the steps of the
previous companies and overlook the local companies’ strategies - “When in Rome,
do as the Romans do.” (Khanna, Palepu, 2006)
5. Opportunities for innovation
With underdeveloped infrastructure and technology, emerging markets are craving for
innovation. Being unable to provide all the products that consumers from the BOP
require in order to satisfy their basic human needs, this sector is great for innovation.
All the innovative products and solutions MNCs had, yet could not present to
developed countries due to high knowledge and unwillingness to participate can now
be introduced to the BOP. With new and innovative products, many problems
emerging markets had may disappear. After testing the products and conducting
consumer reactions, MNCs can actually present these innovative products to
developed countries that will result in satisfaction and be beneficial for both sides.
(Khanna, Palepu, 2007)
5. 5
Jelena Đukić
Disadvantages _________
In the text above, all advantages and opportunities of entering the BOP were mentioned.
However, there are few challenges MNCs should prepare for in order to be successful in the
emerging markets, and in this case, when entering the Tier 4.
1. Poverty
The reason why the consumers at the bottom of the pyramid are so interesting to
MNCs cannot be neglected. Even though being extremely numerous attracts the
companies, the fact they are lacking the financial resources is most probably the
greatest challenge when entering these types of markets. When looking at the figures,
it is apparent that people from the BOP have a lot of money to spend, however that
specific “a lot” is mostly spent on food and basic products. With the remaining money
consumers purchase “luxury” goods provided by MNCs. MNCs need to understand
that they are serving the market that lives slightly above the $1 a day which is
somewhat above the poverty line (Karnani, 2007) and not to set their prices too high
(Karamchandani, Kubzansky & Lalwani, 2011). Failing to do so appeared to be a fatal
move for many companies that wanted to conquer these markets.
2. Geographic, economic and cultural difference
Geographic, economic and cultural differences make a huge impact when creating a
new strategy and setting up a business in the emerging country, even though it perhaps
does not sound as important as it would be to create a well established costing
strategy. Let’s take an example of a Dutch company wanting to enter Peru. First of all,
there is an immense geographical distance that can disturb the business in several
ways, such as climate, distribution channels, etc. Forces that influence economy in
Western Europe may be completely different in Eastern Europe or Africa or in this
Case, Latin America, thus it is important to be familiar with the know-hows in the
business. Cultures differ from region to region, hence the pre-knowledge about the
culture that the company will be facing in the future is an asset that is convenient to
possess. All of these are most definitely just fractals of the business strategy when
entering the BOP, yet the crucial factors to be taken into consideration.
3. Limited brand/product awareness
In BOP markets some brands/products are widely available and recognizable whereas
others are completely unknown, or it may be that consumers are unaware that they
even need a certain product. That is where MNCs jump in and educate their potential
consumers.
6. 6
Jelena Đukić
Conclusion ____
When entering the BOP there are many challenges to be conquered, yet many advantages and
opportunities that work in favor for the MNCs. As previously mentioned, a one size strategy
is not applicable due to different needs of various populations, in addition to geographical,
economical and cultural factors. Gaining previous and local knowledge is crucial and
beneficial for MNCs and eases the process of adaptation.
BOP markets are the markets of the tomorrow and MNCs must overcome all vicissitude
situations, in order to capture the markets that will be of extreme value in the prospective
future. Even if that means adapting the business strategy completely, ultimately every
hardship must be overcome.
In order for MNCs to be successful, consumers must be actively involved in the market, since
they are another big aspect of the process. That way, consumers rise up from poverty and
switch to a better and more prosperous life.
Entering the BOP is most definitely not for every company, thus every MNC has to reason
well and wage out whether entering the BOP is the right choice for them. Moreover, when
carefully deciding, the willingness to modify the cost structure as well as the management of
the company has to be taken into account. If most or all factors are favorable, MNCs should
go for it. The risks are high, but the rewards are even higher.
7. 7
Jelena Đukić
References _________
International Finance Corporation (IFC), World Bank Group (2014), “The Next 4 Billion:
Market Size and Business Strategy at the Base of the Pyramid”
Ashish Karamchandani, Mike Kubzansky, Nishant Lalwani (March 2011), “Is the Bottom of
the Pyramid Really for You?”
Paul Polak, Mal Warwick (April 2014), “Why Entrepreneurs Will Beat Multinationals to the
Bottom of the Pyramid”
Prahalad, C., & Hammond, A. (September, 2002) “Serving the World's Poor, Profitability”
Confederation of Danish Industries (June 2007), “Working with the Bottom of the Pyramid”
Khanna, T., & Palepu, K. (October, 2006). “Emerging Giants”