This is the twentieth in a series of posts discussing themes raised in The Fortune at the Bottom of the Pyramid by C K Prahalad. In chapter 3 the author discusses sources of opportunity for a large firm which invests in bottom-of-the-pyramid markets. These are:
- Large and attractive markets as stand-alone entities
- Local innovations can be leveraged in other bottom-of-the-pyramid markets
- Some innovations will have application in developed markets
- Lessons learnt can improve the global firm’s management practices.
India and China are the most obvious large emerging markets, but other potentially huge markets include Indonesia, Brazil, Mexico, Russia, South Africa and Nigeria. These markets can provide explosive growth for a company which finds the right mix of business model, products and services. A successful company in these markets needs to be able to cater for rapid growth more in the order of 100% per year rather than 5%.
Whereas management processes in most firms are geared for relatively slow growth, successful investment in bottom-of-the-pyramid markets requires the firm to be adaptable to significant change in a very short period of time. Most firms would experience severe difficulties in hiring and training large numbers of new employees to cope with rocketing demand.