Strive for market shares, the willingness or necessity to increase revenues or diversify risk can be key drivers for innovative firms in going abroad (Peng, 2009). Usually,these companies favour markets somewhat similar to their already developed, saturated home markets with a large potential customer base and mass purchasing power (London & Hart, 2004; Peng, 2009). The article ‘Serving the World’s Poor, Profitably’ written by C.K. Prahalad and Allen Hammond, published in the Harvard Business Review in September 2002, stretches the tremendous sales potential for multi-national enterprises (MNEs) in doing business with the very poor. It builds on the socio-economic concept of the bottom-ofthe-pyramid (BoP), which refers to nearly four billion potential consumers with an annual income of less than US$ 2,000; that is two-third of the world’s population (Prahalad & Hart, 2002)[...]
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Prahalad's and Hammond's theses towards benefits for international businesses
- A critical discussion of the 'poverty premium'
- The role of the private sector in fighting poverty
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This essay critically examines the article 'Serving the World's Poor, Profitably' by C.K. Prahalad and Allen Hammond, published in the Harvard Business Review in 2002. The essay aims to explore the authors' proposition that companies can both profit from serving the poor and contribute to poverty reduction. It further analyzes the concept of the 'poverty premium' and its implications for businesses operating in BoP markets.
- The potential of the bottom-of-the-pyramid (BoP) market for multinational enterprises (MNEs)
- The concept of the 'poverty premium' and its validity
- The role of the private sector in fighting poverty
- The need for sustainable and profitable business models in BoP markets
- The importance of partnerships and collaboration in poverty reduction efforts
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: The essay begins by introducing the concept of the BoP market and highlighting the potential for MNEs to tap into this market. It discusses the potential of the aggregated purchasing power of the world's poor and the challenges associated with doing business in these markets.
- Prahalad's and Hammond's theses towards benefits for international businesses: This chapter presents the authors' argument that MNEs can benefit from doing business with the poor in terms of growth, cost reduction, and innovation. It discusses examples of successful businesses operating in BoP markets and the potential for creating new revenue streams, streamlining operations, and developing innovative products and services.
- A critical discussion of the 'poverty premium': This chapter examines the concept of the 'poverty premium', a premium that companies can charge for goods and services in BoP markets due to infrastructural limitations and the poor's willingness to pay more for essential items. It explores the validity of this concept and discusses arguments both for and against it.
- The role of the private sector in fighting poverty: This chapter examines the role of the private sector in poverty reduction. It emphasizes that while MNEs can play a significant role, achieving sustainable poverty reduction requires a multi-stakeholder approach involving governments, corporations, non-governmental organizations, and international institutions. It also highlights the need for profitable and sustainable business models in BoP markets.
Schlüsselwörter (Keywords)
The essay focuses on key concepts such as the bottom-of-the-pyramid (BoP) market, poverty premium, multinational enterprises (MNEs), sustainable business models, poverty reduction, partnerships, and inclusive capitalism. It explores the potential of the BoP market for MNEs and the ethical and strategic challenges associated with doing business in these markets.
- Quote paper
- Benjamin Renner (Author), 2013, Bottom of the pyramid: Doing business with the poor, Munich, GRIN Verlag, https://www.grin.com/document/268020
