strategy+business

The Fortune at the Bottom of the Pyramid by C.K. Prahalad and Stuart L. Hart

from strategy+business issue 26, first quarter 2002

© 2002 Booz Allen Hamilton Inc. All rights reserved.

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The Fortune at the of the

Bottom Pyramid by C.K. Prahalad and Stuart L. Hart

SECURITY AND S T R AT E GY

content strategy & competition

Low-income markets present a prodigious opportunity for the world’s wealthiest companies — to seek their fortunes and bring prosperity to the aspiring poor.

1

With the end of the Cold War, the former Soviet

Union and its allies, as well as China, India, and Latin America, opened their closed markets to foreign investment in a cascading fashion. Although this significant economic and social transformation has offered vast new growth opportunities for multinational corporations (MNCs), its promise has yet to be realized. First, the prospect of millions of “middle-class” consumers in developing countries, clamoring for products from MNCs, was wildly oversold. To make matters worse, the Asian and Latin American financial crises have greatly diminished the attractiveness of emerging markets. As a consequence, many MNCs worldwide slowed investments and began to rethink risk–reward structures for these markets. This retreat could become even more pronounced in the wake of the terrorist

attacks in the United States last September. The lackluster nature of most MNCs’ emergingmarket strategies over the past decade does not change the magnitude of the opportunity, which is in reality much larger than previously thought. The real source of market promise is not the wealthy few in the developing world, or even the emerging middle-income consumers: It is the billions of aspiring poor who are joining the market economy for the first time. This is a time for MNCs to look at globalization strategies through