In this article, the Multinational Corporations or MNCs are challenged by economists: to reevaluate all previous business strategies, focusing on the lowest social class when finding prospective consumers for products. People in low classes are the true economists, increasingly becoming part of the present economy. The challenge for MNCs is to send products in areas where they will be appreciated-not where they already exist. The end result will be relieving poverty and bridging the gap between rich and poor.
Focusing on the economic pyramid, there are four tiers, the bottom consisting of the poor and moving to the minority rich. Compared to an iceberg, the tip is insignificant compared to the base, which represents the poor majority. Unless there is fair distribution, economic success cannot take place. The mistake MNCs make is to falsely assume only highly developed areas will appreciate their products and having humanitarian intentions will not attract corporations. The way to bridge the financial gap is to provide low cost and good quality simultaneously.
Furthermore, companies like Hindustan Level Ltd. and Nirma accomplished this goal by making detergent for India’s locals which was done by entirely changing business strategies. MNCs need to follow four key elements: create buying power, which involves providing access to credit and increasing earning potential, shaping aspirations or coming up with new technology and methods, improving access or going to the poor, and tailoring local solutions or combining advanced methods with familiar local ones.
MNCs need to be pioneers in this because they have resources, leverage, can communicate with international companies, and distribute goods from top to bottom. The authors propose that MNCs should build local support groups, conduct research, make new friends internationally, increase employment and reinvent cost structure as it is the MNCs’ responsibility to look out for the poor along with the rich.
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