Growth At The Base Of The Pyramid

  • Should multinational search for new growth opportunities in slums and rural villages?
  • Could the poorest of the poor who live in the so-called Base of the Pyramid (BOP) hold the key?

“We’re talking about four billion people living on less than US$100 a year,” says INSEAD Professor of Entrepreneurship and Family Enterprise Stephen Mezias . “It seems clear to me if these people don’t get a stake in the global economy then this is going to be a huge problem for everyone.”

When cutting costs and consolidating operations is the general trend sweeping through the business, experimental moves into markets that are deemed “difficult” is waning.

Anyway, “moving into BOP markets has never been business as usual”.

In his research paper Business Paradigms for the Base of the Pyramid: Effective Structuring of Institutional Interfaces, Mezias looks at how social and political differences can impede effective market exchange and how companies can better transfer knowledge and information across boundaries to enhance their chance of success.

Some of the important findings of this research paper are:

  • Successful ventures are built on dialogue and joint action and not data and delivery time
  • To be successful, companies will have to innovative their business models, review their product offerings and look at effective ways of communicating with their new, unfamiliar customers
  • There is a definite gap between the Western perception of what people at the base of the pyramid need and what they actually desire
  • American companies attempt to penetrate the BOP market as a business venture and find themselves missing unrealistic milestones and unable to meet profit expectations
  • European companies’ model of making CSR investments into BOP markets with an eye towards creating new markets or new products for existing markets – or both has a greater chance of success

Adapted From: Finding Growth at the Base of the Pyramid

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