Prahalad: BoP markets (p570)

Note: Some of the points he then makes are highly controversial [Compare the handout article by Karnani on “fair & lovely”]. Prahalad claims that poverty alleviation will become a “business development” task. He claims that in some countries the “dominant logic” (ideology) has blinded government officers & some businesses to this.

(i) There is gold at the BoP, because so many people are poor. It is a latent market (p584: $13trillion of US-purchasing-power parity, i.e. volume of goods; 4bn people on < $2 per day)(ii) Currently, the poor pay more, due to their “high cost ecosystems” p576. The private sector can cure this. When people have no legal title to land (property rights) they have different spending priorities, preventing stewardship and development of the land. [are MNCs helping here??](iii) The new connectivity is giving businesses access to these markets e.g. Hindustan lever experience. The “empowered mothers”, Avon ladies.

….Some areas are still “media-dark” [?]

(iv) The private sector can pay attention to the poor and thereby provide them with dignity & choice. Stores that understand the (real) needs of the poor work well.(v) Need to develop an “installed base” of connectivity. Kiosks. Market related information is now available and travels, in LDCs. (vi) Brand-consciousness is high amongst the poor (“aspirational-products”).(vii) He says “The very poor (are) resilient entrepreneurs and value-conscious consumers”. (viii) The Market-development imperative Affordability “the single-serve revolution” & credit, Access, and Availability of product.(ix) New goods & services are therefore needed (e.g. icecream, pizza, sweets, ATMs-for -illiterates, affordable energy from green sources, quality furniture) (x) Trust is high in some LDCs (eg ‘Bimbo Bakery’ deliveries in Mexico)

Locke (p158)• Treatise on govt 1689: life liberty & property “are gifts of

God”.• There must be a means to “appropriate” property, so it

can then be of benefit (e.g. organising private farms in pioneering days).

• When you work (e.g. on developing the land) it becomes yours; you can exclude others.

• *Each person should have as much of the “land” as he is capable of fully developing. No more (since waste), no less (since loss of potential development).

• Nb. This argument applies only if there is plenty of land, otherwise there will be conflict.

• It also seems to imply that everyone should have free access to all existing knowledge.

• Money (and markets) give an extra incentive to “develop” (the land), since one can easily trade the surplus wealth.

Carnegie (p172)

• He was a poor immigrant, entrepreneur, philanthropist. • Society improved (“strengthened”) by struggle for

survival in the market. Great inequality is much better than universal squalor (false choice?)

• The friction between labourer and capital ensures survival of the fittest (can be a dangerous doctrine).

• Management talent is rare and should be rewarded (how much?)

• Civilisation depends of sacredness of property (but how defined?)

• Don’t uproot the system (political change).just try to bend the “tree” in direction most favourable to production of good fruit, under present circumstances.

• Suggests that at the death of a rich (person), the estate should go the state through tax.