Business leaders, entrepreneurs and strategists all over the globe have, since the past decade, paid close attention to impending challenges related to acute market competition and relatively slow growth in established markets. This has made a number of these entrepreneurs increase their focus on emerging markets, and subsequently reconsider the potential of emerging and least established markets.
As a CEO of a multinational company, there is need to formulate sound policies that will keep the firm competitive in all aspects. To stay ahead of competitors, there is need for multinational companies to broaden their markets by exploiting new markets in regions that are less competitive. These markets are often found not only in the least established economies, but also in emerging ones (Reddy, 2011).
This essay seeks to examine the issue of multinationals exploiting the ‘bottom of the pyramid’. In addition, the paper seeks to discuss the justification of multinational exploitation of the emerging markets. According to Hart (2005), ‘bottom of the pyramid’ is a market that comprises of individuals who live below a dollar a day. These are persons who are trapped in the vicious cycles of poverty.
A good number of this population resides in sub-Saharan Africa, Asia, Eastern Europe, and Latin America. The cardinal principle behind ‘bottom of the pyramid’ asserts that the rational way to address the needs of this vulnerable populace is through a market based approach that is profit driven (Sen, 2001).
In the contemporary society, firms tend to accrue more benefits by choosing to provide goods and services to markets that are both underserved and less competitive at the ‘bottom of the pyramid’. In the same breath, the poor also benefit from this move as poverty levels are reduced, productivity is increased and the general populace is empowered.
As a CEO of a multinational that aims to stay ahead of its competitors, exploiting all opportunities in ‘bottom of the pyramid’ market segment is important. This can be attained with much ease by devising solutions such as new market products or new models that will be able to provide products and services at affordable prices (Guo & Chen, 2012).
To be sustainable, the adopted approach needs to advocate for a win-win situation. In other words, both the company and the general population need to benefit. In the recent past, most companies failed to consider persons living below a dollar a day as potential clients mainly because of their meager incomes. However, as a CEO of a multinational, I have come to devise ways that are profitable to the firm through rethinking of our operational models.
By adopting feasible models, my firm has not only seized robust opportunities, but has also positioned itself well for the future (Lozi & Al-Ziod, 2011). From the above discussion, it is apparent that the market at the ‘bottom of the pyramid’ is a robust ground that firms can embrace and increase their profits considerably. This is relatively because a good number of people in the world are living below a dollar a day.
A company that aligns its products to the ‘bottom of the pyramid’ market is able to increase its revenue base since the market is big. There is a future for firms that will venture into the markets of the emerging economies, while the population in these economies stands to benefit from improved income levels and overall standard of living.
References
Guo, B., & Chen, X. (2012). Why are the industrial firms of emerging economies short-termistic in innovation? Industry-level evidence from Chinese manufacturing. International Journal of Technology, 59(3), 273-299.
Hart, S. (2005). Capitalism at the crossroads: the unlimited business opportunities in solving the world’s most difficult problems. Philadelphia, PA: Wharton School.
Lozi, B. M., & Al-Ziod, A. A. (2011). Challenges facing the emerging economy. Journal of Social Sciences, 7(2), 251-256.
Reddy, P. (2011). Global innovation in emerging economies. London: Taylor & Francis.
Sen, A. (2001). Development as freedom. New York, NY: Oxford University Press.