Different motives and goals have driven firms to contribute at the BOP level over the past 20 years. A mixture of profit and humanistic motives drove each case, while curiosity may have been another trigger, spiced with creativity and ambition. Successful cases emerged from around the world, mostly from MNCs that immersed themselves in the BOP market, but also from new companies that took risks in a market that few had dared to enter before. In the following, we present five examples that highlight what these cases can contribute to our knowledge on targeting the BOP.
CELTEL (communications): Founded in the ’90s by Mo Ibrahim, an ex-college professor and a software firm CEO, CELTEL was the first telecommunication company to risk incursion into Africa—one of the world’s most underserved telecommunication markets. Ibrahim was shocked at that time about the western world’s general ignorance about Africa and the immense opportunities the continent held. When he suggested the possibility of entering the African market to his software clients, their responses often bordered on alarmed; as one put it, “Mo, I thought you were smarter than that! You want me to go to my board and say I want to start a business in a country run by this crazy guy Idi Amin?” (p. 41). Africa has 50 countries, 1 billion people, and 11.7 million square miles of land. As an example of the continent’s potential, in 1998, the Democratic Republic of Congo had 55 million people and only 3,000 telephone lines. CELTEL launched operations in Africa in 1998 with only five employees. The continent had no fixed telephone lines and no mobile phone competitors at that time; investors had
considered Africa too unknown and too risky. CELTEL started with $16 million in capital the first year. By 2004, it had 5.2 million managed customers in 13 countries and revenues of $614 million, with a net profit of $147 million. In 2004, pressure brought on by capital needs and rejections from financial institutions led Ibrahim to sell CELTEL to ZAIN, a Kuwaiti-based mobile telecommunications company—for $3.4 billion dollars. CELTEL changed the concept of the mobile phone market. In the ’90s, most telecommunication firms focused on making the product more affordable for the middle- class, without thinking about the BOP market. CELTEL dabbled in prepaid cards and transformed many small village traders into business people. The benefit created for the BOP in Africa was enormous. CELTEL employees received training and over-the-market salaries that motivated them to stay in their home countries rather than migrate to Europe. CELTEL also helped the BOP by reducing the cost for communication and travel for farmers and small entrepreneurs; reuniting families pushed apart by local wars; and giving jobs and education to people who could not otherwise access them (Ibrahim, 2012; Klein, 2008).
Honey CARE Africa: Prior to the year 2000, honey producers in Kenya were poor rural farmers working at the mercy of middlemen or intermediaries. At that time, the honey industry was at subsistence levels; farmers were paid late at unfair prices, and the market was corrupt and inefficient. For farmers in the honey business, margins were nonexistent.
When the international NGO CARE entered the market in 2000, honey production had long been controlled by men. By 2006, a new company—Farouk Jiwa—helped change that context. Today, women do 30 percent of the honey business, which, with the
help of CARE partners and other NGOs, has now become profitable. Farouk Jiwa pays the farmers market prices in 48-hour terms. CARE made the connections between the BOP producer and the markets (national and international) and provided training and technology. Honey CARE is now the largest producer of high-quality honey in Eastern Africa (Dossani et al., 2007; Klein, 2008).
Project Shakti, Hindustan Lever: A subsidiary of Unilever, the Shakti Project began as a venture to stimulate demand for Unilever products among the BOP. The project started in partnership with rural self-help groups, offering micro-credit and training to illiterate women, transforming them into entrepreneurs. Shakti women receive training in sales and education in personal and oral hygiene; they then become spokeswomen for Unilever through door-to-door sales. By 2005, the Shakti project had extended to 50,000 villages and had 13,000 Shakti-Entrepreneurs reaching 15 million people in rural areas (Klein, 2008).
Farmacias Similares: Before Farmacias Similares launched in 1994, Mexico’s poor had to get their medicines from the government, which often ran out of stock. At the time, the government was satisfying only 18 percent of the BOP population’s need for medicine, and the only other option was extremely expensive medicines sold in private pharmacies. Farmacias Similares was a partial franchise concept that sold generic versions of medicines with expired patents. It opened stores in poor areas with prices that were at least 30 percent lower than those in other stores. In addition, each pharmacy had a medical doctor who offered primary healthcare consultation for only $ 50.00 Mexican pesos ($2.00 USD).
wake, other pharmacy businesses began selling generic medicines and lowered their shelf prices. In nine years, Farmacias Similares has become the largest drugstore chain in Mexico, with 3,400 stores and $600 million USD in sales. The company serves more than 10 million customers, and is now beginning to serve the middle class as well (Klein, 2008).
CEMEX: Francisco Garza, President of CEMEX, the leading cement Mexican company, created Patrimonio Hoy (PH) in 1998. Mr. Garza was concerned because 40 percent of CEMEX cement’s users were construction workers with very low income, and CEMEX knew nothing about them. Thus, the company primarily formed PH to understand these customers and determine how it could make them a larger part of its market.
Mexican low-income families are very different from those in the US. Because of the strong economic crises faced by Mexican people in different generations, the “patrimonio”—that is, the house, is one of a family’s more important assets for two reasons: it doesn’t lose its value as rapidly as the local currency, the Mexican peso, and its owners perceive it as solid and enduring. Low-income families build their homes step by step, sometimes on weekends and holidays, and typically as a family activity. These houses are mainly constructed on irregular lands, or ex-predios—that is, lands that use to be for farming, but became attached to the cities as they expanded. CEMEX realized it knew little about these construction workers, but that if it could help them grow their patriminios, they could become an important part of CEMEX’s market. When the research process was done and the firm understood the specifics about this group, it was time to strategize. CEMEX followed the “Tanda” concept of offering a “group savings
process,” in which three families contributed as a team, paying $11.50 USD per week per family for 10 weeks. Each week, one of the team’s three families was randomly chosen to receive the group’s money to build their planned room or house extension. CEMEX provided an experienced architect and an engineer to design the room plans for the family. PH also developed “Promotoras,” people who were well known and trusted by the community who earned a commission for each family or group they brought into the Tanda. From the start, 90 percent of the Promotoras have been women. CEMEX organizes presentations about the program and the Promotoras bring in candidates. If a family gets behind in its Tanda payment, the Promotoras analyze the situation and make decisions about how to proceed. CEMEX’s PH program has helped the firm understand and develop strategies to help a key user of its product, and in turn is helping grow the BOP market’s assets and creating higher profits for the company (Klein, 2008; Rangan, Quelch, Herrero, & Barton, 2007; Segel, Chu, & Herrero, 2006).
Table 4 summarizes the examples of documented BOP cases. These firms’ experiences show that “the BOP contains a large number of people with a substantial collective purchasing power” (Klein, 2008). These cases also show that, with the right strategy, firms were able to change their businesses to serve the BOP and achieve positive results. Many additional success cases are presented in diverse academic works, including Business Solutions for the Global Poor: Creating Social and Economic Value (Rangan et al., 2007).
The five example cases presented here offer some contribution in terms of strategizing the BOP. CELTEL and Unilever’s Project Shakti used education as triggers to develop their strategies. CELTEL trained micro entrepreneurs and made them
profitable, helping their employees develop the capabilities needed to stay in their homeland and avoid the seemingly inevitable migration to Europe. Project Shakti educated its saleswomen in health issues, and they in turn became educators in the villages they visited and for the families to whom they sold their products. CELTEL exploited technology to reduce the cost to its clients, a strategy also used by Honey CARE, which used information systems to advise farmers about prices and potential buyers. Two firms contributed to strategy in their use of experts on location: Farmacias Similares introduced medical doctors in pharmacy stores for walk-in consultations, while CEMEX supplied an architect and an engineer to help the BOP customers design and build their homes. CEMEX also contributed to strategy by exploiting social networks to create and promote its Promotoras, as well as by developing the group savings and Tanda programs, which reduce the risk of overdue accounts.
Table 4 Examples of firms investing in the BOP
Firm Article Keywords Source
CELTEL “Growing Inclusive Markets” Mobile telecommunications, Africa Catheu, 2007 Honey CARE
Africa N/A Farming, middlemen, food
Branzei & Valente, Richard Ivey School of Business, 2001
Project Shakti, Hindustan Lever LTD (Unilever)
N/A Rural areas, female entrepreneurs, micro-credit
Ionescu-Somers & Amann, IMD International, 2006 Farmacias
Similares N/A
Low-cost medicines, franchises, entrepreneurs
Chu & Garcia-Cuellar, Harvard Business School Press, 2007
CEMEX “Patrimonio
Hoy”
Cement market, micro- credit, entrepreneurs, housing
Segel, Chu, & Herrero, Harvard Business School Publishing, 2006