What is the Base of the Pyramid? Why is it important?
The base of the pyramid is the majority of humanity which is approximately five billion people. The base of the pyramid is important because it hold the vast majority of people in the world, which shows that more than half of the consumers are part of the base. Thus, illustrating that if MNEs ignore the needs and wants of the vast majority of the population, their products/services will have a hard time succeeding in emerging economies.
What are the similarities and differences between GE’s traditional innovation and reverse innovation?
GE’s reserve innovation is the exact opposite of its traditional innovation. Reserve innovation as used by GE is creating products for low-income countries with an affordable price tag, and then offering those products to developed countries, at what it will be seen a low-cost price tag. While GEs traditional innovation strategy, was to develop products for developed economies at an expensive price, then doing certain modifications to the products and selling them in low-income countries at a not necessarily low price for those countries.
Why is GE so interested in reverse innovation?
GE is interested in reserve innovation because the company realized that in order to compete and stay ahead of its current and new competitors; it must continue to innovation in low-income countries and take its products global. As stated in the case, “reverse innovation isn’t optional; its oxygen” (Peng, pg 17). Thus, GE has positively experience that innovating in emerging economies that are rich with people and resources will assist in the company’s profitability and sustainability.
Why are leading US MNE such as GE, afraid of emerging multinationals from emerging economies?
US MNE such as GE are afraid of emerging multinational from emerging economies because of their capability to innovate in their home country with the advantage of fully researching the needs and wants of the consumers as well as setting a low price tag. In addition, having the people and resources to fully expand and be dangerous competitors to GE.