Karnani and Prahalad
IN YOUR OPINION, which arguments you prefer: Karnani’s or Prahalad’s? Why? The Fortune at the Bottom of the Pyramide (F. BOP – Prahalad’s article) defend the idea that if MNC’s can succeed in the BOP market their potential rewards, such as growth, profits and contributions to human kind will be prodigious. This challenging opportunity is created due to the characteristics of an unsaturated market (e.
g. ize) which required affordability, availability, awareness and access. The Mirage at the Bottom of the Pyramid (M. BOP – Karnani’s article) defend a different perspective from Prahalad’s arguing mainly that the BOP market is composed by 2. 7 billion of poors instead of 4 billion; that the fortune at BOP is a misleading notion due to high cost for MNC’s, poors’ purchasing power, fallacy of “affordability” and the uncorrect exemplifications in Prahalad’s article (e. g. Casas Bahia).
Moreover, the article defend that it is not only crucial to raise poor’s income creating employment or lowering prices decreasing quality but also to create productivity, efficient markets, increase poor’s capabilities and freedom, make social and cultural changes and transform the role of government. Firstly, it is not possible to precise the size of the BOP market and therefore authors can use the more convenient source of data. In my opinion, the dimension the BOP market (4 billion or 2. billion) is in both cases relevant for MNC’s, comparing with saturated markets where they operate, which have the pressure to growth trough new markets or trough new products in order to survive. Also, the BOP opportunity has not only to do with profits but with gaining efficiency and innovation. Secondly, in my opinion, the poor consumer is not “fooled” to think that small size products are cheaper but they do not have another option. Therefore, give them the possibility of choosing others items (e. g smaller products) is a way to provide them, at least, the capacity for a daily consumption.
Thirdly, all individuals have different consumption needs and therefore they can be prioritized differently. In my opinion, no interdiction or change can be made to avoid poor’s relatively bad consumption since it is more a matter of culture, habits and preferences than a lack of information. In the long term run, with the development of the country, the poor consumer will naturally change its consumption. The lack of information, mentioned before, is used by Karnani to explain the vulnerability of the poor consumer.
Nevertheless, when Karnani defend that the BOP market prefers cheaper but lower quality products (e. g. Nirma) even if it can cause blisters, he seems to disregard the fact that consumers are not well-informed and may not know about potential effects. How can the poor consumer not have enough knowledge to understand the trade-off between buying two different products or the trade-off between small-size and price but have enough education to understand about the price-quality/safety trade-off?
In my opinion, in this explanation, Karnani demonstrate some inconsistency in his arguments. Furthermore, I agree with the notion of “The poors as producers” but in order to be achieving it is necessary to have financial and governmental support, a minimum of infrastructures available, etc. Both articles make a reference about the importance of the employment creation, the productivity and the role of government which is without doubt crucial for the development of the BOP market.
Finally, I can conclude that I prefer Prahalad’s perspective because he takes into account both consumption and production in order to achieve poverty alleviation in which multiple players are involved (e. g. NGOs, governamental authorities and other companies) and not only MNC’s. Also, in my opinion, creating the ability to consume is a way to create potential disposable income and original and lucrative markets. In that sense, F.
BOP article, perceive and describe the development of the BOP market more as a complex and detailed process in which companies are still beginners and therefore still learning, improving and innovating. In addition, Prahalad’s article makes reference to more deterministic arguments and solutions. Nevertheless, even if I prefer Prahalad arguments I am conscient that there is still much to be resolved and improved. (e. g. environmental concerns)