The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits, Revised and Updated 5th Anniversary Edition Hardcover – January 1, 2009

This book open my mind in ways I never thought possible! Not only does it give you great ideas to make new businesses but it also open ups your mind by telling you that you have to include all the people around the world! Specially ¨poor people¨ because the main money maker is with their segment! Believe it or not!! And it is absolutely true!!! I completely recommend this book for all those readers!

I reviewed this book for my Theology of Technology course as a part of my Non-Profit Management degree at City Vision University.In Western Businesses, we usually do not consider the poor of the world (roughly 90 percent of the world’s population) as customers to products and services that we produce or develop. We have false assumption that “our” products are not needed, the poor can’t afford it, and that it’s not profitable. The Fortune at the Bottom of the Pyramid by C.K. Prahalad shows the opposite to be true.This, admittedly, was a new concept for me. It is simply something I never thought about. In America, we donate and expect that charity is doing good. Yet, Prahalad claims that in order to help the poor, charity is not enough – even failing. It is a quick fix for immediate needs, but it does not sustain needs forever. Prahalad advocates that private sector businesses can better provide. How is this so?The poor are denied access to a lot of services. Their choices are few, if any. For example, there may be only one store that sells rice that is accessible or only one place to get clean water. If these items are highly overpriced (often) than people have to pay what is called the poverty premium. They have to pay significantly more for basic needs that are cheap in the West. Yet, if there was a competitive private business there could be a second and fair alternative option. Just as we, in America, value having options and being able to “shop around,” those in extreme poverty are no different. They need access to more services and products that only a businesses can provide.So how would someone living on less than 2 dollars a day be able to afford anything? When serving the bottom of the pyramid (BoP), one has to keep eight main principles in mind: price, product innovation, scale, sustainable or eco, functional, process innovation, deskilled work, education of customers, design for hostile infrastructure, interfaces, access, and change of whole paradigm.Though the concept of serving the poor through business is a fairly new concept that still hasn’t caught on to all business schools and businesses, Prahalad provides many examples of how these eight BoP business principles have been used successfully. Basically, when providing a product, everything needs to start from scratch with no prior assumptions. The business model as well as everything about that product has to be innovative. Things like dusty air and unpredictable energy need to be considered. With that, price needs to be a factor from day one. This, along with creating in scale or bulk makes the end product considerable cheaper (80 percent). High innovation is needed not only to lower cost, but because the needs of varies areas, cultures, and income levels makes the product unique. Other principles are also discussed in depth.In all, I loved learning about all the amazing business ideas that have been uniquely developed in the developing world. For example, a clay fridge, a baby warmer, a mobile health clinic, mobile banking, and a more effective way for farmers to sell produce.At first you might have some ethical questions. It is easy for the poor to be exploited. It should be understood that though this is a business (in America we often associate businesses as being more or less corrupt), business is still essential to all people’s livelihood. Think if there was only one store for every town in America. Our livelihood would decrease, too. Businesses are forced to be creative in order to be competitive. New technology that suits the needs of the underserved can most effectively come from businesses.

Great Read

At first glance, Mr. Prahalda's ideas appear to be rife with wishful thinking, willful ignorance, state of denial or all three. Because it simply cannot be true that the bottom of the pyramid (BOP); the four billion people who live on less than $2 a day, can be economically tapped into by for profit companies. Such an effort requires wholesale changes in management thinking, superior product design at miniscule prices, the development of entire infrastructures to support the distribution of products, the means to reach this market without the use of T.V. and radio as they are often unavailable, and a target market that is scattered in low population centers such as villages (geographical isolation) and at times supported by local government systems mired in corruption. Existing products designed for the middle class, no matter how superior will fail in the BOP market. How can a world with an alarmingly high new product failure rate in established markets offer an acceptable risk level for entry into an undeveloped or underdeveloped world with a plethora of additional hurdles reducing the chances of success further? A world where profits have to be realized expeditiously or else stockholders will strike down upon management with great vengeance and furious anger?Traditional methods of alleviating world poverty and social injustice have so far failed. Mr. Prahalda has presented twelve case studies on for profit companies that have overcome most or all of these impediments to offer superior products and services at affordable prices to the BOP with economically viable models, and they all have the following in common: They operate based on free market principles and put social causes before profits.Mr. Prahalda's intent is to convince more private enterprises to combine efforts with civil society organizations, local governments and aid agencies to reach BOP consumers in countries such as India and Brazil, where most of the world's poor struggle to survive. The twelve case studies detailed offer aspiring companies a profile of this unique yet vast target market and how to maximize chances of success. Most of these twelve companies, however, appear to have sprung up domestically, or executed their innovative products and services in their home country before branching out. Therefore, the author's encouragement of multi-national corporation's (MNC) involvement in host countries is unconvincing. Casas Bahia, a domestic home appliance and financing company catering to the BOP in Brazil has succeeded where savvy giant retailers such as Sears and Wal-Mart have failed.The effort to reach and sustain fruitful interactions with the BOP remains by and large a domestic effort. It is a rare occurance for an MNC to genuinely care more about advancing the social status of a foreign country's poor than advancing its own agenda. It remains to be seen whether democratizing capitalism can take root and become a compelling force to raise 4 billion of the world's poor out of poverty. Regardless of the outcome, Mr. Prahalda's effort to publicize and advocate such an endeavor is commendable.

While I thoroughly appreciate this book, I was disappointed that the kindle edition of this book is not the 5th anniversary edition but the original version of this book. The kindle edition does not include the updated introduction and analysis of the past 5 years. Definitely a disappointment, as the kindle edition is linked to from the 5th anniversary page :(

Great book.

Coming from a developing or underdeveloped market and lamenting about lack of market ?Think again, CK Prahlad hints whereabouts of future customer, he who was ignored all the while and he, who is most eager to participate with the new economic opportunity provided. And most importantly the one, who values your business opportunities.I started reading this book in somewhat compulsion, but the author guided me through wast reefs of uncharted blue-ocean, teeming with great potential.One of the best books available about poverty and social entrepreneurship, esp. relevant for India and other emerging markets.

A great book with great ideas!

Nice book for those who wish to do business along with helping others

Quality of book is good