Stuart L. Hart Samuel C. Johnson Chair in Sustainable Global Enterprise, SC Johnson Graduate School of Management, Cornell University, Ithaca, NY
	Por Ted London Senior Research Fellow, Director of Base of the Pyramid Initiative, The William Davidson Institute, University of Michigan

Use of Non-traditional Partners

Successful Strategy

One initiative used non.traditional partners to overcome a lack of potential sources of external funding. They identified a multilateral institution and an NGO as potential partners and developed a business plan that highlighted how a successful initiative could help both organizations achieve their objectives. As a manager noted, while it “takes time to build credibility and relationships in the public sector,” it was invaluable "getting to know the core influentials." By getting their support, the company could secure access to critical financing, legitimacy, and knowledge resources.

Failed Strategy

A firm relied primarily on the national government for funding base of the pyramid ventures in two different countries. A preexisting technology was introduced with the governments serving as key business partners. In both countries the governments were economically unstable, and the base of the pyramid initiatives had substantial trouble with their cash flow. They also struggled to create locally acceptable product offerings, since there was little awareness of the actual needs and desires of base of the pyramid customers.

Co-inventing Custom Solutions

Successful Strategy

One venture decided to forgo the traditional pricing model of cost plus margin. Rather, in discussions with local partners, they identified the appropriate selling price first. By "reverse engineering" and "maximizing local knowledge and entrepreneurship," they could then jointly design a product and business model that provided the functionality required and offered profit margins that were acceptable for a high volume business.

Failed Strategy

A locally-based MNC based its entry strategy on making an incremental adaptation to a current product. By removing some of the existing functionality, it was able to create a lower cost version of one of its mainstream products. But the MNC was not successful in reaching the vast majority of low-income customers. This market would have been much better served if the company had co-designed the product with local partners who understood what set of functionalities were most important to base of the pyramid customers.

Local Capacity Building

Successful Strategy

A locally-based MNC was able to effectively target a low-income market only after serving as a bridge between local distributors and base of the pyramid customers that they were having trouble reaching effectively. The MNC spanned the social gaps between organizations by providing a value-added advisory service that identified and eliminated inefficient practices by the intermediary and created surplus value for the local consumers. As a result, the MNC covered the cost of providing the service, improved its sale of raw materials, enhanced inter-organizational communication and trust, and generated additional reputational and branding opportunities.

Failed Strategy

A MNC venture interested in improving the local supply chain has been unsuccessful to date, primarily due to its inability to develop local capacity. The initiative was grounded in the firm’s reputation for corporate social responsibility, mainly based on creating value through donating resources. As a result, the firm has not been successful in building local capacity in the targeted low-income market, the supply chain remains weak, and the new initiative has yet to bridge the gaps in local capabilities necessary to create a successful business model.