Academic journal article Review of Business

Doing Good and Making Profits: A Case Study of Affordable Business Solutions

Academic journal article Review of Business

Doing Good and Making Profits: A Case Study of Affordable Business Solutions

Article excerpt

Abstract

Research on the popular but controversial concept of the 'bottom of the pyramid' has focused on businesses that meet the needs of individuals at the bottom of the economic pyramid. Applying the same analysis to business organizations in the service markets, an information technology (IT) service provider identifies its market space, which consists of small businesses at the bottom of the pyramid. Limited in financial and knowledge resources, these small businesses are unable to take advantage of enterprise resource planning systems that facilitate integration of business processes. This paper presents and explains the innovative business model used by the IT service provider to successfully meet the needs of the small business market segment, while gaining the 'fortune at the bottom of the pyramid' for itself.

Introduction

The "bottom of the pyramid" (BOP) model has been successfully applied in product markets (Prahalad, 2005). In this paper, our goal is to examine how the BOP model fits the service markets. We introduce the innovative business model of Affordable Business Solutions (ABS), a young, mid-size business in the information technology (IT) sector, which maintains competitive advantage by servicing small businesses at the bottom of the pyramid (BOP) (1).

In our analysis of ABS, we draw upon network theories, showing ABS to be a social connector, linking a network of suppliers with buyers. In addition, we illustrate how ABS assists businesses at the bottom of the pyramid to increase employment and productivity (Karnani, 2007). ABS also develops and shares those implementation strategies that maximize the operational efficiencies required to target the bottom of the pyramid businesses (Seelos and Mair, 2006). We also elucidate best practices of how companies, particularly entrepreneurs, can leverage their resources and capabilities to exploit opportunities and trends in the external environment, to earn increased economic returns for themselves and for their clients at the bottom of the pyramid. This case study extends the current research on businesses at the bottom of the pyramid, which to date has been limited (Seelos and Mair, 2006; Vachani and Smith, 2008).

Product Markets and Service Markets: The Difference

The BOP model has received much support from management scholars and practitioners; however, successful implementations of the model appear to be limited in number. Olsen and Boxenbaum (2009) identify reasons that prevent organizations from adopting the BOP model, while Vachani and Smith (2008) suggest that much needs to be done to empower the consumers at the bottom of the pyramid to access goods and services.

Many of the successful examples of implementation of the BOP model are drawn from product markets. For example, Hindustan Lever Limited (HLL), a leading multinational firm in India, learned its lesson from a local firm, Nirma, which challenged HLL in its detergent business by creating a new business system--a new product formulation, new manufacturing process, distribution, packaging, and pricing. HLL, in turn, altered its traditional business model, changing both the product and the cost structure, introducing the product at a lower price point (Prahalad, 2005).

Yet, different paradigms guide operations in the product and service markets. While the product markets employ a 'create-produce-sell' model, the service markets emphasizes the 'hire-train-deploy' model (Rosen, 2000). In this paper, we discuss and analyze both the challenges and the rewards of ABS, a firm in the IT service industry that focuses on the markets at the BOP.

CASE STUDY

Addressing Value-Denial (2)

Recognizing the importance of information technology for their operations, business organizations continue to invest in IT infrastructure and management. Not only does IT help in automating and making business processes more efficient, it also supports the integration of business processes. …

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