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Serving the World’s Poor,
by C.K. Prahalad and Allen Hammond

Reprint r0209c

September 2002

HBR Case Study
Growing for Broke


Paul Hemp

HBR at Large
Crucibles of Leadership


Warren G. Bennis and Robert J. Thomas

Big Picture
Serving the World’s Poor, Profitably


C.K. Prahalad and Allen Hammond

The Curse of the Superstar CEO


Rakesh Khurana

Taking the Mystery Out
of Investor Behavior


Kevin P Coyne and Jonathan W. Witter

Three Questions You Need to Ask
About Your Brand


Kevin Lane Keller, Brian Sternthal,
and Alice Tybout

Pricing and the Psychology
of Consumption


John Gourville and Dilip Soman

Best Practice
What Makes Great Boards Great


Jeffrey A. Sonnenfeld

Tool Kit
A Better Way to Deliver Bad News
Jean-François Manzoni


Big Picture
Improving the lives of the billions of people at the bottom
of the economic pyramid is a noble endeavor.
It can also be a lucrative one.

Serving the World’s Poor,

by C.K. Prahalad and Allen Hammond


onsider this bleak vision
of the world 15 years from now:
The global economy recovers
from its current stagnation but growth
remains anemic. Deflation continues to
threaten, the gap between rich and poor
keeps widening, and incidents of economic chaos, governmental collapse, and civil war plague developing regions.
Terrorism remains a constant threat,
diverting significant public and private
resources to security concerns. Opposition to the global market system intensifies. Multinational companies find it difficult to expand, and many become
risk averse, slowing investment and pulling back from emerging markets. Now consider this much brighter scenario: Driven by private investment and widespread entrepreneurial activity, the
economies of developing regions grow


vigorously, creating jobs and wealth and
bringing hundreds of millions of new
consumers into the global marketplace
every year. China, India, Brazil, and,
gradually, South Africa become new engines of global economic growth, promoting prosperity around the world. The resulting decrease in poverty produces a range of social benefits, helping to stabilize many developing regions

and reduce civil and cross-border conflicts. The threat of terrorism and war recedes. Multinational companies expand rapidly in an era of intense innovation
and competition.
Both of these scenarios are possible.
Which one comes to pass will be determined primarily by one factor: the willingness of big, multinational companies to enter and invest in the world’s poorest markets. By stimulating commerce

and development at the bottom of the
economic pyramid, MNCs could radically improve the lives of billions of people and help bring into being a more stable, less dangerous world. Achieving
this goal does not require multinationals to spearhead global social development initiatives for charitable purposes. They need only act in their own selfinterest, for there are enormous business benefits to be gained by entering developing markets. In fact, many innovative companies – entrepreneurial outfits and large, established enterprises

alike – are already serving the world’s
poor in ways that generate strong revenues, lead to greater operating efficiencies, and uncover new sources of innovation. For these companies–and those that follow their lead – building businesses aimed at the bottom of the pyr-

Copyright © 2002 by Harvard Business School Publishing Corporation. All rights reserved.

S e r v i n g t h e W o r l d ’s Po o r, P ro f i ta b l y • B I G P I C T U R E

amid promises to provide important
competitive advantages as the twentyfirst century unfolds.
Big companies are not going to solve
the economic ills of developing countries by themselves, of course. It will also take targeted financial aid from the developed world and improvements in the...
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