Fortune at the Bottom of the Pyramid
The monetary crisis that affected Asia and Latin American markets significantly shrunk the appeal associated with budding markets. Consequently, a number of Multi-National Corporations (MNCs) globally slackened investments and started to devise risk–reward configurations for these markets. MNCs have learnt to align their strategies in a way that they are in tandem with the new trends of globalization. The bottom of the pyramid market dynamics has the prospects of economic augmentation, revenues, and inestimable help to humanity. These are privileges that are within reach for corporations that have the economic muscle and persistence to compete at the bottom of the pyramid.
The bottom of the period is characterized by the world’s poorest people. It therefore follows that corporations should undertake deep-seated novelty in the field of technology and commerce models. Consequently, MNCs will have to employ innovative levels of resources effectiveness. Moreover, they have to devise innovative methods of ascertaining economic success. Corporations will be compelled to change their perceptive of scale. That is, shifting from a “bigger is better” concept to a concept that advocates for the transaction of vastly dispersed small‐scale processes aligned to world‐scale capacities. The operations of the corporations are therefore hinged on a deliberate attempt of selling to the underprivileged and assisting them advancing their livelihood. This is done by manufacturing and dispensing goods in culturally susceptible environments through cost-effectively gainful ways.
It is imperative to note that the disenfranchised who constitute majority of the fourth tier of the pyramid which forms a fundamental part of the world economy. They cannot be disregarded or written off. The tier represents a potential multitrillion‐dollar marketplace. This is a market which portends enormous market prospects. It has however remained, for the most part, imperceptible to the corporate segment. The following assumptions depict how corporations view this bottom tier.
The poor do not constitute their target market since most of the MNCs have complex financial configurations. Therefore they cannot profitably participate in that marketplace given those dynamics. More importantly Tier four is not a segment that permits the conventional quest for elevated margins rather revenue is created through volume and resource effectiveness. Margins (as dictated by existing standards) may be low; however unit sales will be tremendously high. The companies can work around this challenge by designing minimal‐cost production processes. This will mean that the firms will work within their financial structures while exploiting new markets concurrently.
A question is posed whether the poor have the ability to afford goods and services sold in developed marketplace. The disenfranchised can prove to be an extremely lucrative market. That is particularly so when MNCs modify their business structures. This will be achieved through the production of goods and services that resonate with the needs of the populace at tier four.
It is assumed that only urbanized markets will value and purchase new-fangled technology whiles the poor will use the preceding era technology. Tailor made technology applications that conform to the dictates of tier four markets should be developed. MNCs ought to coalesce their exceedingly developed technology with local insights to come up with workable technology for the new markets.
The bottom of the pyramid is deemed less significant with reference to the long‐term feasibility of the MNCs business strategies. The Tier is therefore the preserve of governments and not-for-profit organizations. Recent trends like achievement of not-for-profit organizations that have specialized on small‐scale disseminated energy remedies have drawn the interest of Western companies to these markets.
That MNC managers are not thrilled by business prospects portend a charitable facet. However, it is imperative to note that managers with an eye for gross margins stand to lose the prospects at the bottom of the pyramid. More importantly, managers who are innovative with keenness on economic revenue will reap the benefits.
There is an absence of Intellectual enthusiasm at the bottom of the pyramid. Chances of finding brilliant managers with a drive to work at this tier are slim. This question is tackled through the willingness of managers to experiment, work together, and generate novel means of attaining competitive gain and affluence.
In retrospect, the bottom of the pyramid portends enormous economies of scale for MNCs that dare to exploit this market. MNCs have learnt to align their strategies in a way that they are in tandem with the new trends of globalization. Imperatively, the disenfranchised constitute majority of the fourth tier of the pyramid. This forms a fundamental part of the world economy hence they cannot be disregarded or written off. Questions posed as to whether the bottom of the tier is viable have been asked and subsequently deliberated on this article. Various procedures should also be taken in a bid to exploit the market at the bottom.