Multinational enterprises at the bottom of the economic pyramid: a framework for strategy analysis.

Authors Publication date
2011
Publication type
Thesis
Summary The concept of "Bottom of the Pyramid" suggests that multinational companies can contribute to poverty reduction in emerging countries by developing a dedicated offer for low-income consumers. In order to better understand the validity of this proposition, the thesis focuses on firms' strategies towards this segment and relies on an action research program conducted with the Lafarge Group, at its headquarters and in a subsidiary in Indonesia. It proposes a framework for analyzing corporate strategies that contrasts two forms of approach: an approach that seeks to maintain the firm's legitimacy ("license-to-operate") on the one hand, and a search for commercial opportunities on the other. The thesis shows how Lafarge evolved from the first to the second approach between 2007 and 2010. It analyzes the factors that led to this change and in particular the role played by two pilot housing programs launched in Indonesia as part of the action research, which contributed to the construction of over 800 houses. The thesis then distinguishes between two broad forms of business strategies, contrasting market capture and market creation approaches, and highlights the importance of local market specificities in choosing one or the other. Finally, the thesis analyzes, within the framework of market creation strategies, the conditions under which partnerships between companies and nonprofit organizations are sources of innovation and learning for the firm. It highlights three key elements: the sharing of a common vision between partners, the joint creation of programs and the implementation of intentional learning processes.
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