Business at the Base of the Pyramid

Course Number 1908

Professor V. Kasturi Rangan
Senior Lecturer Michael Chu
Fall, 29 Sessions
Exam

Target Audience

This is a General Management course aimed at managers, entrepreneurs and investment professionals who may be operating in emerging markets now or in the future, and/or are interested in the possibility of serving low-income populations anywhere. The course seeks to provide an understanding of how business approaches can address low income markets that at times represent the largest components of developing economies, both in numbers of people as well as total income. The course materials explore the commercial viability of such markets, and attempts to examine the impact of such business approaches on the social and economic development of the populations involved.

Overview

In the markets at the top of the socioeconomic pyramid, traditionally served by leading corporations, a global and "flatter" world has relentlessly increased the intensity of competition, and decreased profits. On the other hand, examples of enterprises focusing at the base of the pyramid capable of achieving both scale and commercial rates of return are beginning to be noticed by the business community. Meanwhile, the compatibility of financial viability and positive social change is a question being raised in economic and social development circles that is increasingly part of the political debate in developing nations.

Business at the Base of the Pyramid (B-Bop) addresses these issues by examining enterprises that focus on serving low-income sectors from various perspectives. Roughly half the cases in the course have commercial actors as the chief protagonists, and the other half has social entrepreneurs as the key protagonists (including NGOs and government agencies as collaborators). The course is composed of an introduction and four main modules:

• Basic Services: 8 sessions covering housing, utilities, healthcare and education for low income populations
• Microfinance: 3 sessions on financial services for low income populations
• Production of Goods and Services: 5 sessions on addressing low income populations as co-producers in value creation.
• Consumption of Goods and Services: 5 sessions on meeting the needs of low income populations as consumers

Through an analysis of the cases, selected readings, and the course paper, the course will attempt to identify the principal challenges in serving low income markets and the key factors that lead to success or failure. In addition, B-Bop examines the conditions under which economic returns are compatible with the generation of social value, and under what circumstances such compatibility can be preserved through time. In the process, the course will seek to understand to what degree viable businesses serving the base of the socioeconomic pyramid can play a role as an effective response to global poverty.

Course Evaluation and Grading

50% of the grade will be based on class participation.
50% of the grade will be based on the final paper or exam.