Abstract:
Emerging markets are a great point of interest to multinational companies seeking to exploit
new opportunities as they realise that catering to the rich domestic markets limits their
opportunities, their potential and competitive advantage. Serving the consumers that are at
the bottom of the economic pyramid (BoP) presents enormous opportunity but it also comes
with its unique set of challenges. These challenges require an alternative business strategy,
as companies entering these markets must develop new offerings designed to meet the
specific requirements of servicing the BoP consumer. This report seeks to explore why
companies operating in South Africa are entering the lower income markets, and will
describe the challenges encountered both internally and externally, when operating in these
markets. Ten interviews at six multinational companies based in South Africa were
conducted to test the research propositions derived from the literature. The results
concluded that companies enter the BoP markets in pursuit of growth. A variety of
secondary factors also emerged. The data revealed that these companies have created
innovative alternative execution strategies to overcome the challenges encountered in this
market. The report offered a descriptive model of why companies enter the BoP market, and
highlights how the challenges presented by the institutional voids and institutional distance
were overcome.
