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Free «Summary: Fortune at the Bottom of the Pyramid» Essay Sample

Prahalad and Hart claim that MNCs, or Multinational Corporations, have an obligation to close the widening gap between the rich and poor of society.  According to them, MNCs can achieve this goal if they change their business practices completely and start thinking outside the box.  At the end of the Cold War, international markets were open for MNCs to steer in any direction possible and they were steered unwisely because they neglected the poor, who make up the majority of the world consumers.  MNCs need to refocus on them and sell their products to them instead of only focusing on the rich.

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The huge gap between social classes can be visualized on an economic triangle which depicts four consumer tiers showing poor at the very bottom.  It is blatant that there needs to be a redistribution of wealth.  MNCs gravely make wrong assumptions about that social class since they believe that poor people will not be interested in their products.  They also wrongly assume that huge businesses do not want to waste time investing in them.  However, many businesses are looking for ways to provide low cost together with good quality.

Moreover, the authors present strategies to cope with this problem: create buying power, shape aspirations, improve access, and tailor to local solutions.  This basically means that producers should give access to credit, increase earnings, come up with new methods, take the products to the poor, and incorporate familiar local ideas with new ones.  This can ultimately be achieved if the MNCs start building support groups, researching the poor, increase employment, and reinvent cost structures.  The main idea is to let the poor know about the products on display so they can buy them.  If they have never been introduced to them, products will never become a necessity and therefore, MNCs lose the largest consumer group on the economic pyramid. 

   

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