Karnani and Prahalad?

Topics: Poverty, Consumer theory, Economics terminology Pages: 3 (733 words) Published: December 4, 2010
EXERCISE 3 – Due: Aug 23rd
B) Written Assignment
1) 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. size) 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 2.7 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...
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