- Gebundene Ausgabe: 432 Seiten
- Verlag: Prentice Hall (5. August 2004)
- Sprache: Englisch
- ISBN-10: 0131467506
- ISBN-13: 978-0131467507
- Größe und/oder Gewicht: 15,9 x 3,5 x 24 cm
- Durchschnittliche Kundenbewertung: 3 Kundenrezensionen
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The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (Englisch) Gebundene Ausgabe – 5. August 2004
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"C. K. Prahalad argues that companies must revolutionize how they dobusiness in developing countries if both sides of that economic equation areto prosper. Drawing on a wealth of case studies, his compelling new bookoffers an intriguing blueprint for how to fight poverty with profitability." Bill Gates, Chairman and Chief Software Architect,Microsoft"The Bottom of the Pyramid belongs at the top of the reading list forbusiness people, academics, and experts pursuing the elusive goal ofsustainable growth in the developing world. C. K. Prahalad writes withuncommon insight about consumer needs in poor societies andopportunities for the private sector to serve important public purposes whileenhancing its own bottom line. If you are looking for fresh thinking aboutemerging markets, your search is ended. This is the book for you." Madeleine K. Albright, Former U.S. Secretary of State"Prahalad challenges readers to re-evaluate their pre-conceived notionsabout the commercial opportunities in serving the relatively poor nations ofthe world. The Bottom of the Pyramid highlights the way to commercialsuccess and societal improvement--but only if the developed worldreconceives the way it delivers products and services to the developingworld." Christopher Rodrigues, CEO, Visa International"An important and insightful work showing persuasively how the privatesector can be put at the center of development, not just as a rhetoricalflourish but as a real engine of jobs and services for the poor." Mark Malloch Brown, Administrator, United Nations Development Programme
The last couple of decades have seen great increases in sales, now multinational corporations are seeing markets with sluggish or no growth. One market that's been overlooked is also the fastest growing market in the world, and it's where you least expect it: at the bottom of the pyramid. Collectively, the world's 5 billion poor have vast untapped buying power. They represent enormous potential for companies who learn how to serve this market by providing the poor with what they need. This creates a win-win situation: not only do corporations tap into a vibrant market, but by treating the poor as consumers they are no longer treated with indignity; they become empowered customers. Corporations who service this market form an economic infrastructure, which creates real jobs for the poor, and finally an end to the vicious cycle of poverty. This book is a 3-part manifesto: passionate argument; detailed case studies from India, Peru, Mexico, Brazil, and Venezuela, and range from salt to soap, banking to cellphones, health to housing; and lastly, a CD with digital videos shot on location, designed to bring these innovations alive.CK Prahalad shows why we can't afford to ignore "Bottom of the Pyramid"(BOP) markets. Alle Produktbeschreibungen
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C.K. Prahalad and his graduate student collaborators strive to make a different case. Large companies can earn good profits by providing solutions to those problems the poor have that are most costly to them economically. Solving the problems then generates spendable income that will find its way to the large company. A good example comes in creating reasonable cost credit and access to futures markets to farmers so they earn more profits. The inefficient system that most go through now simply clips them like the feudal lords did on their domains.
The strength of the book comes in its detailed case histories which I found to be much more revealing than the primary text. In fact, the text seemed sometimes almost to be at odds with the main points of the case histories. If you find you are pressed for time, read the case histories and skip the text. There is also a brief CD to help illustrate the cases. Some of the cases are only on the CD so be sure to watch it.
I especially found the cases of Aravind Eye Care, CEMEX, Jaipur Foot, ITC e-Choupals and Voxiva to be interesting. These are essentially business model innovation stories, something that interests me very deeply. I learned from these cases how using local people can eliminate unnecessary overhead and that adapting the business model to the situation requires the local perspective of the poor . . . not that of the executives of a large company.
One reason that the main text reads a little strangely is that if everyone focused just at the bottom of the poorest consumers you would have too many companies working on the same problems (clean water, hygiene, overcoming simple forms of disease, etc.). It looked to me like the best business areas were ones that catered to those further up the ladder economically . . . but who were still poor. I was especially fascinated by how the Aravind solution is so powerful that people will be coming to India from the developed world to have their cataracts treated . . . and will save money even after paying for the travel costs! In this way, poor countries could become laboratories for better business models that could be transferred at least in part to wealthier people and countries.
I was also surprised not to see any material in here about Philip Morris, Coca Cola and Gillette who have been selling their products to the poorest people around the world for decades. When I first wanted to learn about the problem defined by this book, I went to visit those countries and learned many helpful answers that are only partially captured by this book.
Finally, I felt like the book makes a mistake in primarily looking at cases involving quite large companies. The bulk of innovation comes from much smaller firms. What role can these organizations plan in partnering with poor consumers around the world to create better business models and products? Genius isn't determined by whether you are born rich or poor. How can we tap into the potential of genius in more ways?
In this context, C.K. Prahalad outlines the dominant logic of multinational corporations (MNCs) as it relates to BOP:
Assumption 1- The poor are not our target customers; they cannot afford our products or services.
Implication 1- Our cost structure is a given; with our cost structure, we cannot serve the BOP market.
Assumption 2- The poor do not have use for products sold in developed countries.
Implication 2- We are committed to a form over functionality. The poor might need sanitation, but can't afford detergents in formats we offer. Therefore, there is no market in the BOP.
Assumption 3- Only developed countries appreciate and pay for technological innovations.
Implication 3- The BOP does not need advanced technology solutions; they will not pay for them. Therefore, the BOP cannot be a source of innovations.
Assumption 4- The BOP market is not critical for long-term growth and vitality of MNCs.
Implication 4- BOP markets are the best an attractive distraction.
Assumption 5- Intellectual excitement is in developed markets; it is very hard to recruit managers for BOP markets.
Implication 5- We cannot assign our best people to work on market development in BOP markets.
C.K. Prahalad says that "although the dominant logic and its implications are clear, it is our goal in this book to challenge and provide counterpoints (p.8)", and therefore, he identifies twelve principles of innovation of BOP markets:
1. Focus on price performance of products and services. Serving BOP markets is not just about lower prices. It is about creating a new price-performance envelope. Quantum jumps in price performance are required to cater to BOP markets.
2. Innovation requires hybrid solutions. BOP consumer problems cannot be solved with old technologies. Most scalable, price-performance-enhancing solutions need advanced and emerging technologies that are creatively blended with the existing and rapidly evolving infrastructures.
3. As BOP markets are large, solutions that are developed must be scalable and transportable across countries, cultures, and languages...Solutions must be designed for ease of adaptation in similar BOP markets. This is a key consideration for gaining scale.
4. The developed markets are accustomed to resource wastage...All innovations must focus on conserving resources: eliminate, reduce, and recycle. Reducing resource intensity must be a critical principle in product development, be it for detergents or ice cream.
5. Product development must start from a deep understanding of functionality, not just form. Marginal changes to products developed for rich customers in the United States, Europe, or Japan will not do...
6. Process innovations are just as critical in BOP markets as product innovations...
7. Deskilling work is critical...
8. Education of customers on product usage is key. Innovations in educating a semiliterate group on the use of new products can pose interesting challenges...
9. Products must work in hostile environments. It is not just noise, dust, unsanitary conditions, and abuse that products must endure...
10. Research on interfaces is critical given the nature of the consumer population...
11. Innovations must reach the consumer...
12. Paradoxically, the feature and function evolution in BOP markets can be very rapid. Product developers must focus on the broad architecture of the system-the platform-so that new features can be easily incorporated...
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Undoubtedly Mr. Pralhad's research demonstrates there are plenty of opportunities to do good business among the poor at the BOP (bottom of the pyramid), for them to benefit from the products and services not available now, and for some of them to go out of poverty by becoming entrepreneurs (market penetration is always limited). I agree on these conclusions, as commented extensively by the previous reviewers, and without a doubt this book will become a reference in many Business Schools. But to assert that this strategy will eradicate poverty and bring development is plain sophistry. As Carl Sagan said "Extraordinary claims require extraordinary evidence".
Why sophistry? Regarding the poverty eradication claimed by Mr. Prahalad I will try to highlight some of the main flaws in his rationale and lack of sufficient evidence:
1. Despite the consideration of several cases from around the Third-World, most of the discussion and arguments to build the framework are related to India, excessively. The conditions of the poor in Latin America are quite different, and often, they have better public services available to them. On the other hand, many African countries have worst conditions. So you can not reach valid conclusions based solely on a country with such unique cultural and ethnical conditions. For doing business the cases are fine, especially for India or China because they are such huge markets at the BOP.
2. Wealth creation is hugely overestimated. Poor entrepreneurs and their immediate family will undoubtedly benefit from these new economic activities, but the framework lacks an explanation about how these oases of welcomed capitalism will trickle-down to the rest of their neighbors and poor villages. The implicit assumption is that everybody at the BOP has to become an entrepreneur for this strategy to work, because by just having access to affordable consumer products it seems very unlikely that poverty will be eradicated. The proposed framework is just good for doing business and for the poor to have access to new services and products, but where is the sustainable "fishing industry" for the rest of the poor population? The cases are very unique, islands of excellence, and with limited potential for a population the huge size of the BOT to bail out of poverty in significant numbers.
3. The analysis lacks the historical, cultural, legal and socio-economical background for a given country or region, and this consideration is fundamental for a proper analysis on sustainable development. Even when Mr. Pralhalad correctly identifies lack of education, corruption and the size of the informal sector as barriers for development and doing business, he then oversimplifies a lot on how to overcome these key issues, and again, an isolated Indian case is used as the magic formula to solve the problem through information technology. In fact, at the end of Chapter 6, within the conclusions, he recognizes that the illustrations he provides "are but islands of excellence in a sea of deprivation and helplessness". As the development community knows well, these successful stories are very hard to replicate. In Latin America we have the outstanding cases of Chile, Uruguay and Costa Rica. In Brazil, we have the cases of the Southern states of Santa Catarina, Paraná, São Paulo and Rio Grande do Sul. All of them very developed as compared to their neighbors (in terms of income, education, health, etc.), but despite all efforts, no one has successfully reproduced these islands of excellence at a scale that makes a difference.
4. An example will help to understand how superficial the cases are from a point of view of development and poverty eradication. The Brazilian case of "Casas Bahia" lacks the consideration of the socio-economic environment of the country, especially the case omits to mention key characteristics of the financial and credit markets (for those interested in this particular case from the point of view of business, I recommend you read "Samuel Klein e Casas Bahia: Uma trajetoria de Sucesso", Novo Seculo, 2005, this is a real and really impressive business success story). Mr. Klein successfully, by trusting the poor, built an empire that today is still one of the few option many mid- and low-income families have to buy the first computer for their children going to college in Brazil. But, let's see why the market share for credit cards is only 4%, and why it is not a real threat for Casas Bahia own financial system as stated in the book, as well as why there is not much in here to help eradicat poverty in Brazil. Annual inflation today in Brazil is in the order of 3-4%, and the Brazilian currency, the "Real" have been steadily revaluating against the dollar for the last 3 years. However, interest rates in Brazil are sky-high, a legacy of the hyper-inflation times of twenty years ago. Interest rates for well-known international credit cards are 9-11% per month, which compounded translates to an annual rate close to 180%, regardless of whether you're poor or rich. Today retail chain stores of this type charge around 3% per month, embedded in the price of the consumer products, so the consumer doesn't know up-front the real price. This translates to a compounded rate of 43% per year. Often if you try to pay upfront, there is no discount. So where is the real benefit for the poor? Or are they just getting every day more indebted, and spending money on fat interests that they could have used to buy more or better food or better health services for their kids. I do not see where poverty eradication fits in this case. Obviously Brazil has a problem of lack of real competition in the capitalist sense; even the branches of American Banks doing business in Brazil charge these exorbitant rates. As a reference for the readers, you can buy a 30Gb iPod in Brazil for the "reasonable" amount of US$1,000, payable in 12 installments, and for the high price we also have to thank the federal government high taxes on almost everything. Coming back to the case, as an additional "benefit", you only can make the payments in person at stores of the retail chain, just to make sure the poor are tempted every month and come back for more when they are close to payback that debt. That's why there is a 77% of clients who make reapeat purchases as the book reports. Not surprisingly the case description mentions the criticism "that Casas Bahia simply exploits the poor and charges them exorbitant interest rates", but neglects to present a due explanation of why this is not truth, and simply disregards the cristicism.
5. Finally, Mr. Prahalad is extremely optimistic. At he end of Chapter 6 and in his own words: "I have no doubt that the elimination of poverty and deprivation is possible by 2020". This prophecy speaks by itself about the reliability of the analysis. And again, let's remember that extraordinary claims require extraordinary evidence. All the book presents is anecdotal evidence, which is not proof as any scientist knows, and the framework presented has no predictive power, much less to assert that poverty will end by 2020.
Unquestionably an excellent business book, and a very innovative one, but just for that, business. That's why to me it only deserves 3 stars. On the other hand, not much value-added in there for doing real sustainable development across the board, as the author insinuates and some of the readers think, and certainly not much for real poverty eradication. For that outrageous addition to the book's title I took the other 2 stars. The "Erradicating poverty through profits" part of the book's title should be erased, so the book really deserves the 5 stars most reviewers gave to it (and as the previous reviewer rightly complained, the cases were really awfully edited for the paperback edition, even with repeated sentences). Definitely this book is not recommended if you are serious about new ideas for sustainable development. For a real book on that subject, read the recently publicated The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It by Paul Collier, though its scope refers mainly to very poor African countries, it is an example of a serious and proper approach to the problem of eradicating poverty. To understand the complexities of promoting development, you may also read Making Globalization Work by Joseph Stiglitz. These two books will clearly ilustrate why "The Fortune at the BOP" is not a book on development, and absolutely, no Nobel Prize is deserved.
For more than 50 years a broad range of government and non-government organizations have been fighting poverty, but they have not succeeded in eradicating it. According to the author, we need a new approach which involves partnering with the poor to create large-scale profitable entrepreneurship in which the poor are actively engaged. There is a significant opportunity for value-creation latent in the bottom-of-the-pyramid market.
The book goes on to describe a number of companies which are successfully enriching the lives of the poor while operating profitably. Aravind Eye Care System, which provides cataract surgery, operates profitably and is the largest eye care facility in the world, yet 60% of the patients are treated for free. ITC placed computers in villages, allowing farmers to check prices, make better decisions, and improve their income. Many other large-scale success stories are told.
In my view the book proposes a very helpful approach to fighting poverty, devoid of the usual paternalistic assumptions. On the whole the poor are not looking for our charity; they are looking for opportunities to use their skills and labour to improve their circumstances. However the title of the book seems to overstate the "fortune" that is to be made. The examples given by the author were viable businesses, but they were focused on serving their customers, not on making a fortune. I highly recommend this book to anyone interested in serving the poor.