Multinational companies entering the bottom of the pyramid market: What are the characteristics of a successful business model of a MNC entering the BoP market?

Abstract

Today it is estimated that 4 billion people live in a situation of extreme poverty. C.K Prahalad and Stuart L. Hart theorized the concept of «The fortune at the bottom of the pyramid» according to the idea that it would be possible to target the very poor population and still make profit out of it. Since that moment, this concept has attracted many players. The interest toward this market starts when realising that huge volume can compensate the low margins and the other investment they put into this market. Therefore we though from the very beginning that it was important to focus on large multinational companies and on the ways they have to enter this market. Our starting postulate was that multinational companies have a strong interest in BOP markets but that their structure and ways of working are not appropriate for this specific market and that they would face huge challenges. Our methodology was then to read the cases provided by the UNPD to get an overview and a better understanding of the current situation and issues of the MNC when taping the BOP market. Based on that study we decided to focus more on the partnerships between MNCs and other players.