Group A: Bottom Of The Pyramid Ots Review Quiz

1. For whom does microcredit represent an opportunity?

For banks and lenders only.

For poor people only.

For people with skills, vision, creativity and persistence.

Microfinancing can benefit both parties. Borrowers are able to avail of small amounts of money interest-free whilst lenders can get tax-breaks on their donations. Banks and financial managing institutions are able to earn interest from the pool of money they manage from donors.

You can get involved in micro-financing entrepreneurs at the BoP level. If this interests you, check out: http://www.kiva.org

Explanation

Microfinancing can benefit both parties. Borrowers are able to avail of small amounts of money interest-free whilst lenders can get tax-breaks on their donations. Banks and financial managing institutions are able to earn interest from the pool of money they manage from donors.

You can get involved in micro-financing entrepreneurs at the BoP level. If this interests you, check out: http://www.kiva.org

2. Approximately how much does someone living in the fourth tier of the economic pyramid live off a day?

Less than $2.50 USD

More than $2.50 USD

Exactly $12.50 AUD

They don't need money to live.

Earning $2.50 a day really puts a cramp in your style, doesn't it? Most BoP members already struggle to afford basic needs such as food, water, and clothing. They have even much less to spend on vitamins, education and other goods to improve their current situation. Usually, it becomes a matter of prioritization if they are to acquire everything they need. Money doesn't solve everything, but there's a lot that big companies can do to help innovation at the BoP.

Explanation

Earning $2.50 a day really puts a cramp in your style, doesn't it? Most BoP members already struggle to afford basic needs such as food, water, and clothing. They have even much less to spend on vitamins, education and other goods to improve their current situation. Usually, it becomes a matter of prioritization if they are to acquire everything they need. Money doesn't solve everything, but there's a lot that big companies can do to help innovation at the BoP.

3. What forms of innovation will suit the people at the Bottom of the Pyramid and thus be successful in that respective market?

Product Innovation

Services Innovation

Processes Innovation

All of the above.

All of the above: Because each form of innovation has its own benefits and will help the people in that market in some or the other way. For example: A product innovation in the form of a small sachet of shampoo instead of a big bottle of the same (which suits the demands of people in that market) Similarly services innovations such as healthcare are important and benefactory to everyone

Explanation

All of the above: Because each form of innovation has its own benefits and will help the people in that market in some or the other way. For example: A product innovation in the form of a small sachet of shampoo instead of a big bottle of the same (which suits the demands of people in that market) Similarly services innovations such as healthcare are important and benefactory to everyone

4. The expression "Bottom of the Pyramid" refers to:

Those buildings in Egypt

The lowest income earners of the global society

The foundations of innovation

The lowest tier of management in an organisation

Bottom of the Pyramid refers to the 4th tier of the population as divided by financial demographics. BoP members earn as little as $2.50 a day or less! They are mostly found in rural areas in developing nations and work mostly in the agricultural industry.

Explanation

Bottom of the Pyramid refers to the 4th tier of the population as divided by financial demographics. BoP members earn as little as $2.50 a day or less! They are mostly found in rural areas in developing nations and work mostly in the agricultural industry.

5. Why should we encourage innovation at the BoP?

It will lower our carbon footprint.

The best inventors are those who have gone without food, water, shelter and clothing for days.

There are heaps of reasons to support innovation at the Bottom of the Pyramid. The biggest reason is SOCIAL RESPONSIBILITY! Also, as Prahalad outlined, the market at the BoP is huge, simply because they do have a lot of needs given the situation. Whether or not a company makes money out of the venture, ingenious ideas and innovative products that provide for a better life will always serve as a step forward for all mankind. Read our wiki for Pros and Cons!

Explanation

There are heaps of reasons to support innovation at the Bottom of the Pyramid. The biggest reason is SOCIAL RESPONSIBILITY! Also, as Prahalad outlined, the market at the BoP is huge, simply because they do have a lot of needs given the situation. Whether or not a company makes money out of the venture, ingenious ideas and innovative products that provide for a better life will always serve as a step forward for all mankind. Read our wiki for Pros and Cons!

6. What is meant by the term diffusion with respect to innovation (and thus innovation at the bottom of the pyramid)?

The rate at which innovations are adopted and used by customers

The rate at which innovations are diffused (fizzed out) in the market

The mixture of two different innovations into a single and more combative and successful innovation

None of the above

Diffusion is the rate at which innovations are adopted and used by customers at the bottom of the pyamid (in this context). Diffusion describes the way in which innovations catch on and become popular and thus the rate at which they are adopted and used by customer varies

Explanation

Diffusion is the rate at which innovations are adopted and used by customers at the bottom of the pyamid (in this context). Diffusion describes the way in which innovations catch on and become popular and thus the rate at which they are adopted and used by customer varies

7. What inhibits innovation at the bottom of the Pryamid?

The assumptions of Multi-National Companies

The buying habits of poor people

The scale of investment required for success in the BoP market

All of the above

Sadly, this is a money-making world and a lot of things exist that inhabits innovation at the Bottom of the Pyramid. Research into BoP is still on going and there exists a lot of assumptions and prejudices created by both sides. Also, the scale of investment needed is huge, investments such as: creation of new, cheap products or simply investing into new processes to make products available to BoP.

Explanation

Sadly, this is a money-making world and a lot of things exist that inhabits innovation at the Bottom of the Pyramid. Research into BoP is still on going and there exists a lot of assumptions and prejudices created by both sides. Also, the scale of investment needed is huge, investments such as: creation of new, cheap products or simply investing into new processes to make products available to BoP.

8. Water purification powder of Procter&Gamble became a big profitable success.

Yes, it was a financial success.

No, it was a failure in all terms.

Yes, it succeeded, but only as a philanthropic activity.

No, they accidentally made poison instead.

Proctor and Gamble had tried to enter the BoP market but decided to treat it's members as consumers of a product. This product that they created was the water purifying filter powder. They invested $10m to its research, production and cost minimization in hopes that the BoP market would purchase it a lot. However, only 5% of the market was interested. After all, regardless of its low cost price, there were other FREE ways to filter water (like, not filtering it at all..) Free is always going to be cheaper. In the end, P&G relegated this project as a philanthropic activity and gave the powder away to non-profit organizations.

If this interests you, check out: http://business.financialpost.com/2011/01/07/pg-hunts-opportunities-at-the-bottom-of-the-pyramid/

Explanation

Proctor and Gamble had tried to enter the BoP market but decided to treat it's members as consumers of a product. This product that they created was the water purifying filter powder. They invested $10m to its research, production and cost minimization in hopes that the BoP market would purchase it a lot. However, only 5% of the market was interested. After all, regardless of its low cost price, there were other FREE ways to filter water (like, not filtering it at all..) Free is always going to be cheaper. In the end, P&G relegated this project as a philanthropic activity and gave the powder away to non-profit organizations.

If this interests you, check out: http://business.financialpost.com/2011/01/07/pg-hunts-opportunities-at-the-bottom-of-the-pyramid/

9. How can innovation at the Bottom of the Pyramid be positive?

Multinational companies can hire human labor for cheap and not worry about rights or benefits.

A lot of needs of the less-fortunate demographic can be met by companies striving to be socially responsible.

Companies have a chance to profit from selling to consumers in the BoP market.

A and B

B and C

Supporting innovation at the Bottom of the Pyramid can be a win-win solution for all parties involved, if the factors are right for the opportunity and situation. Read our Pros and Cons page for more information!

Explanation

Supporting innovation at the Bottom of the Pyramid can be a win-win solution for all parties involved, if the factors are right for the opportunity and situation. Read our Pros and Cons page for more information!

10. Which of the following is NOT an example of a feasible innovative product, service of process at the BoP market?

Microfinance and microloans to BoP entrepreneurs.

Small goods stores and products for BoP retailers .

Crafts and produce export and sales, in cooperatives or through partnerships.

Affordable products such as water filters, educational materials, fertilizer, and lights.

Research into nanotechnology by BoP members.

Innovation at the Bottom of the Pyramid usually involves lower levels of technology, and buying, selling and lending on small scales. On the S-Curve, they would be on the lagging stage of adopters of technology, simply because of the cost. As technology becomes more common, the cost comes down, and the BoP benefit from this. Small-scale trade is easier to manage by BoP entrepreneurs because it costs less and requires less effort to oversee.

Explanation

Innovation at the Bottom of the Pyramid usually involves lower levels of technology, and buying, selling and lending on small scales. On the S-Curve, they would be on the lagging stage of adopters of technology, simply because of the cost. As technology becomes more common, the cost comes down, and the BoP benefit from this. Small-scale trade is easier to manage by BoP entrepreneurs because it costs less and requires less effort to oversee.

11. Amongst the theories of innovation, which of the following options refect the best way to monitor the progress of the innovation and predict the impact that the innovation will have?

S curve (Technology)

S curve (Adoption)

Punctuated Equlilibrium

Dominant Design

Depends on the innovation and its type in question

Different theories of innovation assist in identifying patterns of innovation which will be linked to the types of innovation, thus it depends on the innovation and its type in question

Explanation

Different theories of innovation assist in identifying patterns of innovation which will be linked to the types of innovation, thus it depends on the innovation and its type in question