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Book part
Publication date: 10 August 2016

Paul N. Gooderham, Svein Ulset and Frank Elter

The purpose of this chapter is twofold. First, to investigate how multi-domestic, multinational corporations (MNCs) can develop business models that are appropriate to…

Abstract

The purpose of this chapter is twofold. First, to investigate how multi-domestic, multinational corporations (MNCs) can develop business models that are appropriate to “Bottom-of-the-Pyramid” (BOP) settings. Second, to address how they can apply elements of BOP business models across their operations. We use the case of the entry of the Norwegian mobile telecom MNC Telenor into India as the empirical context. Prior to India, Telenor had operated successfully in Asian emerging economies by adapting its business model to local conditions. However, it had only operated in the upper income tiers of these countries. In India, its late entry meant that for the first time in its history it had to move beyond these upper income tiers and develop a business model suited to BOP. We apply an economic model terminology as a means to gauging the degree of business model innovation Telenor undertook. Telenor succeeded in its development of a BOP business model by working in close partnership with local firms. Although Telenor in India was operating at BOP, a number of the resultant innovations were deemed by Telenor to be transferable to top-of-the-pyramid operations across Telenor. In order to succeed in developing BOP business models MNCs must go beyond local responsiveness and engage closely with local partners. However, transference of elements of BOP business models to other parts of the MNC is contingent on there being a centralized integrating capability.

Details

Perspectives on Headquarters-subsidiary Relationships in the Contemporary MNC
Type: Book
ISBN: 978-1-78635-370-2

Keywords

Book part
Publication date: 4 January 2014

Jenny Hillemann and Alain Verbeke

The purpose of this chapter is to demonstrate that sound, mainstream international business (IB) thinking should be applied when assessing the economic opportunities…

Abstract

Purpose

The purpose of this chapter is to demonstrate that sound, mainstream international business (IB) thinking should be applied when assessing the economic opportunities available to multinational enterprises (MNEs) in Bottom of the Pyramid (BOP) markets.

Design/methodology/approach

We describe and evaluate critically the key points made in the BOP literature about the alleged attractiveness of BOP markets, and the alleged strengths of MNEs to penetrate these markets successfully. We revisit the managerial implications from the BOP literature using an internalization theory lens.

Findings

We demonstrate the weak conceptual grounding of conventional BOP thinking, which suggests that MNEs from developed economies should be very entrepreneurial and should systematically serve BOP markets with new products and business models. We also show the fallacy of the idea that a “success template” in one BOP market would be easily replicable in other BOP markets and would allow the MNE to earn economies of scale and scope.

Research implications

IB researchers should start conducting serious studies on the attractiveness of BOP markets for MNEs. They should also analyze seriously the micro-foundations of successful knowledge recombination in BOP markets and the limits to the transferability of success templates. Mainstream IB theory, namely internalization theory, is particularly well equipped to analyze the costs and benefits of entering BOP markets, building upon a comparative institutional logic.

Practical implications

Senior MNE managers should not allow themselves to be blinded by BOP gurus, advocating the alleged great benefits of penetrating BOP markets. BOP markets may be especially challenging international expansion targets for MNEs because of large institutional voids, high uncertainty, high “distance” vis-à-vis the home country market and the difficulties of transferring relevant knowledge from one BOP market to another.

Originality/value

This chapter is the first to show that mainstream IB research can be usefully applied to analyze the “real” attractiveness of BOP markets for MNEs. Comparative institutional analysis is proven to provide substantially more insight to make BOP market penetration work than past guru-talk on BOP markets.

Article
Publication date: 11 July 2016

Misagh Tasavori, Pervez N. Ghauri and Reza Zaefarian

The purpose of this paper is to shed light on the international market expansion of multinational corporations (MNCs) to the base of the pyramid (BoP). The authors employ…

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Abstract

Purpose

The purpose of this paper is to shed light on the international market expansion of multinational corporations (MNCs) to the base of the pyramid (BoP). The authors employ the corporate social entrepreneurship (CSE) perspective to reveal how MNCs can enter this market, the key enabling factors and the benefits they can gain. CSE is related to entrepreneurial and marketing strategies that are inspired by social responsibility.

Design/methodology/approach

An exploratory, qualitative multiple-case study has been employed. In-depth interviews were conducted with managers from three MNCs that have entered the BoP market in India.

Findings

The findings of this research confirm that successful entry into the BoP requires the pursuit of social responsibility and the adaptation of marketing strategies. In addition, MNCs should identify the key environmental factors (demand conditions and socio-political actors’ expectations) and develop organisational characteristics (management support, network orientation towards non-governmental organisations and availability of financial resources) to match. The findings of this research show that engagement in CSE in countries with considerable BoP populations can bring firms legitimacy and sustainable profitability.

Research limitations/implications

This research is based on interviews with a limited number of MNCs in India. Future studies could generalise the findings of this research to a larger number of corporations in other countries.

Originality/value

This research brings new insights to the field of international marketing by integrating the corporate social responsibility, marketing and entrepreneurship disciplines. The findings of this research offer empirical support for CSE and its role in international marketing strategies.

Details

International Marketing Review, vol. 33 no. 4
Type: Research Article
ISSN: 0265-1335

Keywords

Article
Publication date: 10 November 2014

Pervez Ghauri, Misagh Tasavori and Reza Zaefarian

The purpose of this paper is to explore how employing corporate social entrepreneurship and developing a network of relationships with non-governmental organisations…

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Abstract

Purpose

The purpose of this paper is to explore how employing corporate social entrepreneurship and developing a network of relationships with non-governmental organisations (NGOs) can support and contribute towards the internationalisation of service firms into the base of the pyramid (BOP) markets in emerging markets.

Design/methodology/approach

This research adopts an exploratory approach employing qualitative multiple case studies. Three service firms that have targeted the BOP markets in India were studied. In total, 25 in-depth interviews were conducted with multinational corporations (MNCs) and their NGO partners. Data analysis was facilitated through pattern matching and systematic case comparison.

Findings

The findings reveal that, by engaging in social entrepreneurship, these MNCs have focused on the neglected needs of the BOP population, developed sustainable solutions and empowerment, and started with social value creation and postponed value capturing. The pursuit of corporate social entrepreneurship has paved the way for them to establish relationships with NGOs. While the MNCs have mainly had the technical knowledge and financial resources required, collaboration with NGOs have allowed them to learn about the BOP’s specific needs and benefit from the NGOs’ knowledge, human resources and good relationships in this market.

Originality/value

This research unravels how service firms can seize opportunities at the BOP. The authors build on social entrepreneurship theory and bring new insights to the field of international business. In addition, the authors broaden the network view and show how networking with social actors such as NGOs enables the mobilisation of resources, actors and activities in emerging markets.

Details

International Marketing Review, vol. 31 no. 6
Type: Research Article
ISSN: 0265-1335

Keywords

Article
Publication date: 26 October 2012

Jakki J. Mohr, Sanjit Sengupta and Stanley F. Slater

This article aims to propose a continuum of strategic engagement approaches to baseof‐the‐pyramid (BOP) markets ranging from non‐profit and government aid to corporate

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Abstract

Purpose

This article aims to propose a continuum of strategic engagement approaches to baseof‐the‐pyramid (BOP) markets ranging from non‐profit and government aid to corporate social responsibility (CSR) programs and social entrepreneurship. A framework is presented to identify which approach to serving the BOP market makes the most sense under certain conditions, depending on availability of consumer resources to participate in the initiative, the infrastructure available for the initiative to leverage, and whether the focus of the initiative is to be self‐sustaining over time.

Design/methodology/approach

This is a conceptual article based on literature review and synthesis.

Findings

Eight different approaches to engage with BOP markets are recommended under different combinations of three underlying conditions: consumer resources, infrastructure availability and self‐sustainability goals.

Originality/value

The paper presents a continuum of strategic engagement approaches to BOP markets.

Article
Publication date: 10 May 2011

Robert L. Williams, Maktoba Omar and John Ensor

Much has been written concerning the value and validity of the bottom of the pyramid (BOP) model, as a strategy for multi‐national corporation (MNC) growth. The model…

2013

Abstract

Purpose

Much has been written concerning the value and validity of the bottom of the pyramid (BOP) model, as a strategy for multi‐national corporation (MNC) growth. The model presented in this paper adds to the discussion of strategic possibilities to tap the potential of emerging markets. This paper seeks to address these issues.

Design/methodology/approach

The paper first discusses trends in economic growth in emerging markets, global strategies, and the BOP market, then analyzes the blue ocean strategy (BOS) of value innovation.

Findings

The paper develops the Value Flame at the Base of the Pyramid (VFBOP) model by combining BOP and BOS strategies to potentially offer opportunities for MNC market entry as well as market supply, to drive revenues and expand global market share.

Research limitations/implications

As a concept, the model must be validated by empirical and case research to ascertain the shape and dynamics of the model. Future research can establish the parameters of the flame.

Originality/value

It is believed that the VFBOP model is the first to address some of the limitations of BOP strategy while profiting from the BOS model, in order to fully benefit from sourcing and selling to emerging markets.

Details

Marketing Intelligence & Planning, vol. 29 no. 3
Type: Research Article
ISSN: 0263-4503

Keywords

Article
Publication date: 13 April 2015

Stephen Mezias and Mohamad Fakhreddin

Over the last 15 years, articles about the base of the pyramid (BOP) have begun to appear in scholarly business journals. Although attention was driven initially by claims…

Abstract

Purpose

Over the last 15 years, articles about the base of the pyramid (BOP) have begun to appear in scholarly business journals. Although attention was driven initially by claims that corporations could earn a fortune selling to these consumers, it became clear that this is difficult. The paper aims to discuss these issues.

Design/methodology/approach

To move beyond this difficulty, the authors emphasize the iterative boundary capabilities built by local, for profit enterprises as the key to creating markets at the BOP.

Findings

The authors argue that the evolution of the business models to permit firms to earn profits and have positive social impact requires building iterative boundary capabilities and support this claim by reviewing two cases of community based non-profits.

Research limitations/implications

Future research should demonstrate that the process the authors observed in these two cases applies in other contexts. Scaling social impact will require sharing knowledge about iterative boundary capabilities and developing best practices that can help effective allocation of patient capital to share best practice and guide public policy.

Practical implications

Social entrepreneurs can conceptualize their own enterprises in terms of iterative boundary capabilities. Social investors can use the framework to assess and advise enterprises in which they may or have invested. Policy makers can enact laws and other legal actions to facilitate the formation of iterative boundary capabilities.

Social implications

The authors see the framework as part of a broader move toward business models that pursue both positive social impact and profits.

Originality/value

The authors link a structuring approach with an institutional perspective to enhance business models that pursue profit and create positive social impact in BOP communities.

Details

Journal of Entrepreneurship and Public Policy, vol. 4 no. 1
Type: Research Article
ISSN: 2045-2101

Keywords

Book part
Publication date: 3 December 2018

Ogechi Adeola and Yetunde Anibaba

The predominance of certain adverse factors has historically de-motivated firms seeking to enter into the bottom-of-the-pyramid (BoP) markets due to the perception that BoP

Abstract

The predominance of certain adverse factors has historically de-motivated firms seeking to enter into the bottom-of-the-pyramid (BoP) markets due to the perception that BoP markets are impoverished and therefore unable to afford their products. However, Prahalad’s seminal study on BoP markets as potential sources of wealth may have influenced the mindset of marketers around the world to view the demographic at the BoP as prodigious product markets waiting to be mined. This chapter, therefore, explores how some multinational corporations (MNCs) may have successfully implemented BoP marketing in Nigeria against the backdrop of diffusion of innovation (DoI) theory. The DoI theory tries to explain how and why new ideas, product, structures, or phenomena (innovations), spread across users and social systems. It posits among other things that there are at least five conditions that define the rate of adoption of an innovation, including relative advantage, compatibility, complexity, trialability, and observability. The authors find in the context of case companies, MTN Communications, Promasidor (Cowbell), and Dufil Prima Foods (Indomie) Nigeria that these elements contribute to building a viable explanation for the wide adoption of their products in the Nigerian BoP markets. Regarding the economic viability of BoP markets, the authors find that MNCs may have to embrace a commitment to long-term profitability, focus on economies of scale as a basis for competitiveness, and realize that in BoP markets, defining a marketing model is a continuous process.

Details

Bottom of the Pyramid Marketing: Making, Shaping and Developing BoP Markets
Type: Book
ISBN: 978-1-78714-556-6

Keywords

Article
Publication date: 13 May 2019

James Lappeman, Kristin Ransome and Zach Louw

This paper aims to show that a generic bottom-of-the-pyramid (BoP) segmentation strategy does not represent a multi-country BoP consumer profile. A series of multinational…

Abstract

Purpose

This paper aims to show that a generic bottom-of-the-pyramid (BoP) segmentation strategy does not represent a multi-country BoP consumer profile. A series of multinational entry failures has clearly shown that a one-size-fits-all strategy is inappropriate for emerging markets, especially in Africa.

Design/methodology/approach

The study analysed literature defining and profiling BoP consumers at both a global and local level using South Africa as a case study. Being Africa’s largest economy, South Africa was an ideal subject. The findings were then independently triangulated with seven experts for validation.

Findings

The results show that the South African BoP has eight characteristics that align with definitions in global BoP consumer literature. An additional five characteristics were identified that were not general BoP characteristics, and that applied specifically to South Africa.

Practical implications

The findings add to the growing evidence that BoP markets are complex and heterogeneous, and they make a case to consider each BoP market individually. As there is yet to be a model to define BoP market differences systematically, this study provides a foundation for new developments in BoP segmentation in Africa and in other emerging markets.

Originality/value

While there is evidence that BoP markets are complex and heterogeneous, there is yet to be a model to begin the process of defining these differences systematically to improve strategic direction for multinational companies and regional decision makers. This study, therefore, provides a foundation for new developments in this field of segmentation in Africa and in other emerging markets globally.

Details

European Business Review, vol. 31 no. 3
Type: Research Article
ISSN: 0955-534X

Keywords

Book part
Publication date: 21 August 2012

Robert L. Williams, Maktoba Omar and Ujvala Rajadhyaksha

Addressing potential markets in emerging countries is an important development in international marketing, and over the last decade research has been energized by the…

Abstract

Addressing potential markets in emerging countries is an important development in international marketing, and over the last decade research has been energized by the model of the Bottom of the Pyramid (BOP). More recently the focus has shifted away from defining the BOP potential in terms of identifying the market at the BOP, and toward creating a market at the BOP, concurrent with the rephrasing of the potential as the Base of the Pyramid. The Value Flame at the Base of the Pyramid (VFBOP) model discussed here stresses not only that a leap in mindset and analysis is necessary to operate in the BOP, but that principles of mutual value and co-venturing are necessary, that is, not only enter into the BOP but collaborate within the BOP. Twenty-one VFBOP characteristics are summarized into four categories: (1) change the mindset; (2) don’t compete; (3) align all organization activities in pursuit of differentiation; and (4) create and capture new market demand. These characteristics can be a template of considerations for a company when designing and marketing a product or service to profitably meet the demands of the BOP market. To illustrate the VFBOP model and characteristics a case study is presented. Through the VFBOP model it can be seen that enormous opportunities may be available in these emerging economies.

Details

Interdisciplinary Approaches to Product Design, Innovation, & Branding in International Marketing
Type: Book
ISBN: 978-1-78190-016-1

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