BOTTOM OF THE PYRAMID

GOING BEYOND

Presented by:

GROUP 5
Chakor Bhagawat
Malathi C H
Muhammed Abdul Jamiah M
Pankaj Rai
Dheeraj
 What is
happening at What is
Bottom of actually
pyramid???? there.. fortune
or Fallacy???
 Poverty Eradication
Increasing role for the private sector

Development through Enterprise

World Economic Forum

World Bank: Private Sector Development

United Nations: Inclusive Markets

Bottom of the Pyramid (BOP) strategies

World Resources Institute

World Business Council for Sustainable Development

Business as an Agent of World benefit

 Poverty Eradication
Private Sector

Poor as Consumers

Why Cant you consider Poor as Producers

Public Sector

Civil Society
 Bottom of Pyramid Proposition

Low-income markets present a prodigious

opportunity for the worlds wealthiest companies
to seek their fortunes and bring prosperity to the
aspiring poor.
C.K. Prahalad and Stuart L. Hart,
The Fortune at the Bottom of the
Pyramid,
Strategy + Business, January 2002
 Exploiting the Poor

The poor often make choices that are not in their own self interest.

The poor are vulnerable: lack of education (often illiterate), ill

informed, victims of social and cultural deprivations

Amartya Sen: A persons utility preferences are malleable and

shaped by his background and experience, especially so if he has
been disadvantaged. We need to look beyond the expressed
preferences and focus on peoples capabilities to choose the lives
they have reason to value.
 Fair & Lovely
A poor woman using Fair & Lovely has a
choice and feels empowered because of an
affordable consumer product formulated
for her needs.
Hammond and Prahalad (2004)
 Fair & Lovely Advertisement

A young, dark-skinned girls father laments he has no son to

provide for him, as his daughters salary was not high enough
the suggestion being that she could not get a better job or
get married because of her dark skin.

The girl then uses the cream, becomes fairer, and gets a
better-paid job as an air hostess and makes her father
happy.
 Empowerment or
Entrenching Disempowerment?
A poor woman using Fair & Lovely has a choice and feels
empowered because of an affordable consumer product
formulated for her needs.
Prahalad (2004)

Fair & Lovely cannot be supported because the advertising

is demeaning to women and womens movement

Ravi Shankar Prasad, Former Minister of Information and Broadcasting

 Role of Private Sector
Poor as Consumers
Color Coding
Facilitate purchase BOP emphasis
Reality
Lower price without lowering quality!!!!!!!!!!

It is a good idea, but too rare in practice

Lower price and lower quality

Appropriate price-quality trade-of

Transpareny
 Romanticizing the Poor Harms the Poor

We should recognize the poor as resilient

and creative entrepreneurs and value-
conscious consumers.
Aneel karnani
Associate Professor of Strategy and Chair of Strategy
University of Michigan
 Please dont romanticize but Create Employment

Create jobs
Labor intensive, low-skill sectors
SMEs are the primary engine of job creation
Pro-business (especially pro-SMEs) policies and
environment
 Increase employability
Education

Vocational training

Reduce friction in labor markets

Motivation

Labor mobility

Information; enabling transition

 Job Creation and Productivity

Employment/Popu Employment/Popu
lation lation
Late 1980s Late 1990s
China 51.0% 58.7%
India 29.5% 35.8%
Africa 33.4% 30.1%

Working Working
Poor/Employment Poor/Employment
Late 1980s Late 1990s
China 79.6% 35.2%
India 75.0% 62.0%
Africa 63.4% 65.4%
 Role of Public Sector

The BOP approach relies on the invisible

hand of free markets to eradicate
poverty. We should instead require the
Government to extend a very visible
hand to the poor to help them climb out
of poverty.
FIRST MAKE A
Public Sector BASEMENT,THEN TRY TO
BUILD ON IT

Public Services and Infrastructure

Regulation

Equity
 Role of the Public Sector

The poor have suffered because of a massive failure of the state to

fulfill its traditional functions of providing
Literacy and basic education
Basic health care and public health
Safe drinking water
Sanitation
Basic infrastructure (transportation, electricity)
Public safety and security

THIS IS THE
REALITY!!!
 BOP: Dangerous Delusion
Failure of the Government can not be remedied by
increasing the role of the private sector. We need
to enhance the agency and the voice of the poor.

Discussing the residents of the slums of Dharavi (in

Mumbai), Prahalad and say that getting access to
running water is not a realistic option. The poor
accept that reality and they spend their money
on things they can get now, such as televisions.

Even if the poor accept this reality, we should not.

 Poverty Eradication:
What Private sector can do???
Help generate employment by creating (or facilitating)
low skill jobs.

Focus on the poor as producers, and help increase their

productivity and income potential.

Sell products/services appropriately targeted at the

poor at prices they can afford, even (and usually) at the
expense of quality.

Respect the vulnerabilities of the poor, even in the

absence of other protective mechanisms
 Conclusion
The BOP proposition is characterized by much
hyperbole. The fortune and glory at the bottom
of the pyramid is a mirage. The fallacies of the
BOP proposition are exacerbated by its hubris.
Certainly the best way for private rms to help
eradicate poverty is to invest in upgrading
the skills and productivity of the poor and
to help create more employment
opportunities for them. This is the win-win
solution; this is the real fortune at the bottom
of the pyramid.
THANK YOU.