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Head: BOTTOM OF THE PYRAMID: CORPORATE SOCIAL RESPONSIBILITY

Bottom of the Pyramid: Corporate Social Responsibility

Carly Sugar
0785738
University of Guelph
MGMT*3320: Corporate Social Responsibility
Davar Rezania
April 2nd, 2015

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It is important to determine whether businesses and technological advances have the
capability to eradicate poverty (Halme & Kandachar, 2008). Individuals in poverty lack the
ability to sustain the basic needs of life such as food, shelter and clothing (UNFPA, 2002).
Global poverty is a difficult rate to classify because there is no definite way to compare poverty
rates. Each country has different living standards, income levels, employment rates and
classifications of poverty. For instance, the United States Census Bureau determines poverty
rates as an individual or familys income rate compared to the national threshold (U.S. Census
Bureau, 2014). In comparison, the World Health Organization defines poverty as a dejection of
key human attributes (WHO, 2015). This paradox in defining poverty causes an inability to
correctly identify if poverty rates are currently rising or falling. As a result, corporations become
conflicted as to whether there is a need for helping the impoverished. The notion of poverty has
been an ongoing concern for many years. There is an obvious need for a successful strategy to be
developed in order to completely eliminate poverty. Currently, a substantial amount of
businesses neglect these underprivileged individuals. Corporations believe that there is no
conceivable way to cater towards the impoverished while still remaining profitable. This has
proven to be a misconception. An achievable and successful strategy must be implemented to
assist individuals who are living in extreme poverty is BoP. The Bottom of the Pyramid (BoP) is
a business strategy developed by multinational corporations to provide products and services
specifically towards the demographic of individuals living on less than $2.50 a day (Chandler &
Werther, 2014). This paper will further discuss reasons as to why Canadian organizations should
seek their fortune at the Bottom of the Pyramid as they will be supporting the less fortunate in
conjunction with benefiting their own prosperity.

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The BoP strategy is a model established by corporations in order to eliminate poverty,
while simultaneously producing profits for the company. Unilever is one of the many
corporations that have adopted BoP initiatives into their business plans (Karnani, 2007). Their
objectives of participating in BoP strategies allows the company to utilize their advanced
technology and global resources to improve market conditions. Similar to Unilever, companies
develop products and or services to particularly to aid poverty stricken countries. Canadian
organizations should participate in BoP practices, since these initiatives provide a reciprocal
effect for both the company and the impoverished.
The roundtable assignment explores the relationship between global population and
poverty. In 1950, the world population totaled 2.5 billion people- a number that has now risen to
7.3 billion- and is predicted to grow to 9 billion by 2050 (United Nations et. al, 2015). The world
population has been increasing exponentially as life expectancy has reached an all-time high
(WHO, 2014). Although poverty rates are decreasing, countries still cannot sustain the growing
population. According to the United Nations Population Fund (UNFPA), growing populations in
developing countries will create future challenges of sustainability. The speed at which the
earths resources are being depleted may cause irreversible problems for future generations.
Sustainability is the main driving force that is influencing organizations to participate in BoP
tactics. In the future, Canadian organizations can seek their funds on the increasing market of
impoverished consumers (Berger et. al, 2011). Specifically, they should focus on ensuring
globalization aids to further improve work and living conditions. For instance, in Ekhatpur, India
an organization known as Water 4 All, focused on discovering a solution of water scarcity in
their village. The more the population in India increases, the less access they will have to these

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resources (Water 4 All, 2015). It is important to note these growth rates in population, which
leverage unique opportunities for businesses to engage in BoP strategies.
According to Bill Gates, [it] offers an intriguing blueprint for how to fight poverty with
profitability (Prahalad, 2005, p.6). When initiating BoP tactics, there is a wide array of
opportunities created for businesses. More specifically, the bottom of the pyramid market creates
a new source of revenue for these corporations. Currently, this economic tier is an untapped
market which equates to two billion individuals, essentially a multi-trillion-dollar industry. As
this is an increasingly growing market, researchers have expected that this population could
triple within the next 40 years (Prahalad, 2005). Becoming involved in an untapped market
allows the corporation to offer cost-saving opportunities as well as access to new customers
(Chandler & Werther, 2014). In addition to a revenue gain, BoP strategies allow companies to
participate in corporate social responsibility initiatives. Corporations should embrace CSR as it
can help to enhance their brand reputation. A study conducted by Shwu-In Wu and Wen-Hsuan
Wang (2014), provides empirical evidence of the impact from CSR in relation to brand image,
attitude and buying willingness. The research concluded that brand image from CSR has a strong
and positive impact on consumers brand perception. The brand image is a powerful asset as it
can be used by consumers to identify products and services of the respective brands (Wang &
Wu, 2014). CSR helps create positive brand image in the mindset of each stakeholder involved.
Societal initiatives are activities designed to contribute to the greater good of all.
Consumers within the impoverished market tier obtain a variety of opportunities from
BoP initiatives. Canadian corporations should participate in this approach because of its benefits
to consumers. BoP strategies allow businesses to provide products and services that are of high
priority and demand to the poor (Chandler & Werther, 2014). Corporations try to provide these

BOTTOM OF THE PYRAMID: CORPORATE SOCIAL RESPONSIBILITY

individuals with more opportunities to improve their lives in the long-run. BoP focuses on both
effectively and efficiently changing the living conditions for those facing absolute or extreme
poverty. For instance, Lucky Iron Fish is a product developed to fight against iron deficiency in
Cambodia. The Iron Fish provides dietary supplements to anemic individuals living in poverty.
This organization focuses on tailoring their product to a local solution; a lack of nutrients.
Canadians should use their advanced technology, research, and disposable income to produce
simple products that aid in discovering a solution to local problems. Throughout the years, the
prices of adopting modern technology has significantly decreased, which results in easier and
cheaper ways to connect with this portion of the market. Improving access is critical to
consumers as these regions can be physically or economically isolated from the rest of the world.
Global corporations will have easier access for importing and exporting goods. Developing
countries are able to increase trade production, which in turn increase their living standards
(McDonald, 2012). Another opportunity to enhance BoP would be providing jobs to this
economic tier. Instead of employing from developed regions to create these products,
corporations can give low-income households economic opportunities. These jobs can be created
through production and distribution processes. Increasing employment rates help to improve the
countrys overall economy and living conditions (Prahalad, 2005).
Many individuals suppose that Bottom of the Pyramid tactics are solely beneficial towards
organizations and consumers. However, there are some challenges that businesses can encounter.
Implementing the BoP strategy requires innovations in technology, communications, products
and transportation systems. These regions either lack or have minimal availability to resources,
that developed regions are easily accessible to. Marketing to these individuals will be difficult, as
the media outlets that are used in developed countries are not accessible in these regions. Thus, it

BOTTOM OF THE PYRAMID: CORPORATE SOCIAL RESPONSIBILITY

may be difficult conveying the benefits that products present to consumers. Corporations will
need to establish new ways for promoting and differentiating themselves from competitors.
Businesses will be operated differently in developing regions, due to their lack of
industrialization. Majority of these individuals do not have access to the health care as these
services are often far away. Often, these advanced innovations can be added expenses, which
may not necessarily outweigh the earnings. Similar to any business, it may take years before
companies begin producing profits. Thus, the impact on eliminating poverty rates will become a
long-term goal. Furthermore, CSR Thresholds can complicate businesses operations as cultural
impacts must be determined and understood. Variations among cultures add complexity into the
way corporations conduct international business (Chandler & Werther, 2014). Determining
different business approaches can be a time consuming and expensive process. Companys must
research local communities, cultures and values in order to determine acceptable and innocuous
business practices. For instance, in Malaysia wearing the colour yellow can be offensive. It is
important to understand the importance of cultural awareness and sensitivity in order to not
alienate or offend potential consumers.
Poverty is an overall concern that must be addressed. By classifying poverty as increasing
or decreasing from historical rates should not be the main concern. There are still approximately
896 million individuals who are living on less than $1.90 per day (World Bank, 2015). Anyone
and everyone should step up to assist with completely eliminating poverty. For these reasons,
Canadian organization should participate in Bottom of the Pyramid initiatives. Corporations are
one of the only actors who can successfully help eliminate poverty as they have the necessary
resources, leverage and corporate power. Multinational corporations have the capability and
access to funds, which local entrepreneurs may not have. Local entrepreneurs lack the

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appropriate funding for conducting R&D for determining the specific needs and demands of this
market. It can be a very expensive and time consuming process to determine which products and
services these consumers desire. MNCs can use their money, research and experience to innovate
products accordingly. Corporations are able to develop distribution channels and
communications by using their revenue and support these expensive practices. In addition,
MNCs have the capability and access to complex infrastructure that local entrepreneurs may not
have. Local entrepreneurs may appear to have the resources and developments to succeed in
aiding the battle in poverty, but they are not sufficient enough (Prahalad, 2005). It must be large
corporations who develop and fund poverty projects and innovations. In addition, Canadian
organizations possess the leverage and global knowledge that local entrepreneurs may not have.
Business leverage stems from years of experience, corporate power and industry knowledge
(Prahad, 2005). Thus, corporations have the capability to make a substantial difference at
eliminating world hunger, increasing living conditions and improving economies within
developing regions. It is for these reasons that Canadian organizations should and are obliged to
help this economic segment.
It is clear that there are challenges presented by using the Bottom of the Pyramid
approach. However, there is a substantial market where corporations can target and prosper from.
After researching this untapped market, it is apparent that the impoverished represent latent
purchasing power (Prahalad, 2005). The benefits of participating in BoP provide endless
opportunities to the businesses involved and more importantly the consumers. The rising global
population and concern of poverty is creating a larger demand for BoP initiatives. A bottom of
the pyramid model will allow consumers increased accessibility and availability that will aid in
providing to individuals physiological needs. Corporations should be cooperating with local

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entrepreneurs, communities and governments to completely eliminate global poverty. As Canada
has the resources that may not be accessible to poverty stricken regions, Canada has the
responsibility to help.

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References
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BOTTOM OF THE PYRAMID: CORPORATE SOCIAL RESPONSIBILITY

http://knowledge.wharton.upenn.edu/article/marketers-must-seek-their-fortune-at-thebottom-of-the-pyramid/
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