From the Transnational to the BoP Approach to Global Strategy: Opportunities and Challenges

Abstract

As global demographics change and emerging markets develop, multinational corporations are exploring economic opportunities in low-income markets across the globe. This global, low-income market is often referred to as the base of the pyramid (BoP) market. While MNCs have traditionally relied upon the transnational approach to global strategy regarding global strategic management, these multinational firms are discovering transnational strategies that have worked in developed markets often fail in BoP markets. Alternatively, BoP strategy has been introduced as an approach to global strategy that is more appropriate for targeting low-income markets. This article explores the differences between the transnational approach and BoP approach to global strategy, challenges facing MNCs regarding BoP strategy and opportunities associated with moving from the transnational approach to the BoP approach to global strategy.

Introduction

There has been growing interest in the bottom (or base) of the pyramid field of literature since its inception in 2002. The first two published articles that introduced the bottom of the pyramid were The Fortune at the Bottom of the Pyramid (Prahalad & Hart, 2002) and Serving the World’s Poor, Profitably (Prahalad & Hammond, 2002). Since the publishing of these original articles, authors began to use the terminology base of the pyramid to represent more of a bottom-up view (Prahalad, 2010).

The terms bottom and base of the pyramid are used interchangeably throughout the literature, and they are often abbreviated as simply BoP. Although bottom and base of the pyramid are used interchangeably, subsistence marketplaces is also commonly used to describe low-income markets in developing countries (Chikweche & Fletcher, 2010; Viswanathan & Rosa, 2007; Viswa-nathan, Sridharan & Ritchie, 2010). Furthermore, various definitions of BoP can be found in the literature. There is some ambiguity concerning how BoP is defined throughout the literature, and it is commonly interpreted in several ways.

For instance, BoP is referred to as a socioeconomic demographic of people (London & Hart, 2011; Prahalad, 2010; Simanis, 2010). It is can also be defined as a global consumer market such that the purchasing power of the people living in the BoP demographic can be aggregated, and the market can be segmented (Hammond, Kramer, Katz, Tran & Walker, 2007; Prahalad, 2010; Prahalad & Hammond, 2002; Prahalad & Hart, 2002). Finally, BoP is described as an approach to global strategy in which distinct business strategies are needed to support ventures or initiatives targeting the BoP market (London & Hart, 2004).

There are several aims of the article. First, the article describes the various BoP definitions such as the BoP demographic and the BoP market. Second, it explores the transnational and BoP approaches to global strategy and describes the differences between the two approaches. A final aim is to highlight challenges and opportunities associated with moving from the transnational approach to the BoP approach to global strategy.

Size and Parameters of the BoP Demographic and BoP Market

Prahalad and Hart (2002) were the first to use the term BoP to simultaneously represent a demographic of people and a global consumer market. They demarcated the BoP demographic by income as well as other social characteristics. In regard to income, Prahalad and Hart (2002) originally noted that there are approximately four billion people in the world that live on less than $1,500 (2002 purchase power parity – PPP) per capita. They proposed that multinational corporations (MNCs) should view the BoP demographic as an untapped, multi-trillion dollar consumer market. Prahalad (2004) later advocated that the global market potential of the BoP market is more than $13 trillion PPP. Figure 2.1 segments the world economic pyramid.

Figure 1: World Economic Pyramid (SOURCE: Prahalad & Hart, 2002)

Karnani (2006, 2007) challenged the initial income parameters of the BoP demographic and the global market potential of the aggregate BoP market. He argued that the number of people living in the BoP demographic and the estimated global market potential of the BoP market were overstated. He noted that there are only approximately 2.7 billion people living in the BoP demographic and that the global market potential of the BoP market is less than $0.3 billion (in 2002 PPP). However, these early criticisms were superseded by a joint study conducted by the World Resources Institute (WRI) and International Finance Corporation (IFC) regarding global income demographics (Hammond et al., 2007).

By using global household survey data from 110 countries, the WRI-IFC study found that there are approximately four billion people living in the BoP demographic that earn less than $3,000 PPP per capita in 2002 U.S. dollars ($3,260 PPP in 2005 U.S. dollars) (Hammond et al., 2007; London & Hart, 2011). Hammond et al. (2007) noted, however, that incomes (in 2005 U.S. dollars) vary regionally such as less than $3.35 per day in Brazil, $2.11 per day in China, $1.89 per day in Ghana and $1.56 a day in India. Consequently, using the empirical data provided by the WRI-IFC study, some authors estimated that the four billion people living in the BoP demographic earn less than $5.00 per day (Rangan, Chu & Petkoski, 2011; Simanis, 2010) while others suggested a more conservative estimate of less than $8.00 per day (Dreier et al., 2009; Jenkins, Ishikawa, Barthes & Giacomelli, 2008).

The joint WRI-IFC study further estimated the aggregate global market potential of the BoP market at five trillion dollars. In addition, the study segmented the BoP market into six income segments including the BOP500, BOP1000, BOP1500, BOP2000, BOP2500 and BOP3000 (Hammond et al., 2007). These income and market definitions are helpful. However, London and Hart (2011) caution that over-emphasizing PPP demarcation lines “… ultimately guides the conversation into an arena of diminishing returns,” and that attempting to precisely calculate market size is “…fraught with difficult-to-defend assumptions and questionable attempts at pseudoprecision”. Therefore, the PPP demarcation lines should be “…viewed as sources of empirical and illustrative convenience, rather than as a rigid definition because income provides a relatively narrow perspective concerning a more complex phenomenon” (p. 7).

Thus, instead of focusing on rigid income demographics, London and Hart (2011) propose that the BoP demographic represents the world population excluded from global capitalism and a demographic of people who conduct business in the extralegal or informal economy. Moreover, Simanis (2010) claimed that the debate over income and market potential provides limited value when crafting strategy to reach diverse BoP markets.

Changing Demographics and Market Growth Rates

As growth rates have slowed in developed markets in Europe and North America, multinational corporations (MNCs) have increasingly turned to emerging markets (EMs) in developing countries such as China, India, Brazil and Russia. In doing so, they have typically focused on the wealthy at the top of the economic pyramid and the rising middle class rather than the BoP market (London & Hart, 2004; Prahalad & Lieberthal, 1998). MNCs have relied primarily upon the transnational approach when developing global strategy to reach these top and middle of the pyramid markets (Tallman, 2001). This approach is based upon organizational capabilities such as global efficiency, national responsiveness and worldwide learning (Bartlett & Ghoshal, 1989).

In order to target the BoP demographic, London and Hart (2004) suggest that the transnational approach is inadequate and that a new capability and innovative strategies are needed to penetrate this global demographic of people. Focusing global strategy on targeting the BoP demographic is attractive to MNCs because there is an estimated four billion people living in the BoP demographic with an aggregate global market potential of five trillion dollars (Hammond et al., 2007; Prahalad & Hart, 2002). Thus, it is important to compare the two approaches to global strategy for MNCs to understand the differences and potential opportunities and challenges associated with the evolution from the transnational approach to the BoP approach.

The Transnational Approach to Global Strategy

According to Bartlett and Ghoshal (1989), three central capabilities comprise the transnational approach to global strategy, and firms following this approach must simultaneously develop these capabilities. First, transnational firms must seek global efficiency by centralizing control and decision-making and leveraging economies of scale and scope. By centralizing its resources and capabilities, the transnational firm can achieve efficiency through exploiting economies of scale in all its activities. Developing world-scale economies allows transnational firms to lower costs, and centralization of knowledge and skills leads to greater efficiency in managing innovations. As a result, the firm can ultimately develop new products and processes quickly and at a relatively low cost.

Although centralization is integral for efficiency, resources and capabilities are not necessarily centralized in the firm’s home market. For example, world-scale manufacturing plants may be located in a low-wage country such as Singapore, and more advanced technological processes may be centralized in Japan or Germany. Such flexible centralization augments the benefits of economies of scale by providing access to the best resources and capabilities, which may be located across country borders. In addition, the transnational firm’s resources and capabilities that drive global efficiency are integrated through strong interdependencies. The world-scale manufacturing plant in Singapore may depend on a world-scale component plant in Germany, and global sales subsidiaries may depend on Singapore for finished products. Therefore, the distribution of the transnational firm’s resources is best described as an integrated network (Bartlett & Ghoshal, 1989).

The transnational model also requires that firms develop national responsiveness. This capability allows transnational firms to be sensitive to local needs and opportunities across the various global markets in which they compete. However, the need for responsiveness is complex. For example, customers from different markets around the world demand differentiated products that are equal in quality and price to global products. Frequent changes in economic, social, technological and political environments further complicate organizational ability to successfully develop national responsiveness. It is insufficient for firms to be responsive at a single point in time. Rather, companies must develop the organizational capability in order to remain responsive as consumer tastes change, technologies evolve, regulations increase and exchange rates fluctuate. Flexibility across the value chain istherefore important, and it is central to overall strategy (Amis & Silk, 2010; Bartlett & Ghoshal, 1989).

There are many ways an organization may build flexibility. For instance, transnational firms plan for excess capacity in manufacturing plants, and adopt flexible automation to handle fluctuations in supply and demand. Further, they may design products with a modular format so that basic components and functions are standardized whereas other features and styles can be differentiated to appeal to specific markets. However, the transnational firm recognizes that differentiation is not essential in all markets and appropriately adjusts the roles of its various national operations. As a result, some national subsidiaries operate relatively autonomously and are encouraged by headquarters to differentiate while others implement centralized decisions and adopt standardized global products. Therefore, various subsidiaries assume different roles within the transnational firm. Some may be strategically located or resource rich and play a global role within the firm while others may be given a more autonomous role. Transnational firms appropriately determine the roles of their subsidiaries in order to effectively develop national responsiveness (Bartlett & Ghoshal, 1989).

Finally, the transnational firm leverages worldwide learning to develop creative solutions and diffuse innovations worldwide. These firms simultaneously transfer specialized knowledge throughout the organization and connect critical resources and capabilities across country borders. Worldwide learning benefits companies beyond merely identifying opportunities across different markets. Instead, the capability enables firms to obtain valuable market data and competitive intelligence and access scarce knowledge and expertise that may not be available in their home market. Thus, global subsidiaries provide the transnational firm with important information and innovative ideas that can be managed and shared globally (Bartlett & Ghoshal, 1989; Bou-dreau, Loch, Robey, & Straud, 1998).

Transnational firms further recognize that market demands and opportunities vary widely across countries and that different areas within the organization possess different capabilities.

Therefore, knowledge is jointly developed within the transnational firm so that innovative products and services can be shared on a worldwide basis. These transnational innovations are locally leveraged and globally linked, and the firm leverages the resources and capabilities of its subsidiaries to create and jointly implement innovations globally. Consequently, to capitalize on worldwide learning, the transnational firm combines the resources and capabilities of its central national headquarters with its globally dispersed subsidiaries in order to develop innovative solutions. The innovative products and processes are then diffused globally throughout the entire corporation. Thus, organizational learning is shared on a worldwide basis (Bartlett & Ghoshal, 1989; Hocking, Brown & Harzing, 2007).

The BoP Approach to Global Strategy

It is the simultaneous pursuit of global efficiency, national responsiveness and worldwide learning that characterizes the transnational approach to global strategy. The BoP approach, on the other hand, may require a capability beyond global efficiency developed through centralized control, the adaptive skills of national responsiveness or the sharing and diffusion of knowledge through worldwide learning. In fact, London and Hart (2004) found that the capabilities comprising the transnational approach were not only insufficient for MNCs targeting BoP markets, but may even constrain their efforts.

For example, whereas the transnational approach focuses on flexible centralization and national responsiveness, a decentralized, smaller-scale approach may be more appropriate for BoP markets. Leveraging global efficiency and sharing existing knowledge on a worldwide basis can prevent success in BoP markets because deep listening and local knowledge generation are needed to succeed in these markets. Therefore, the BoP approach tends to require more of a bottom-up solution rather than a standardized global solution or even a local adaptation of a centrally developed solution (Christensen, Craig, & Hart, 2001; London & Hart, 2004).

The BoP approach does not rely upon worldwide sharing of products and processes or knowledge transfer through diffusing or adapting existing business models across the entire organization. Firms targeting BoP markets cannot simply import the same business model from middle or top of the pyramid markets. Additionally, national responsiveness may also prevent success in BoP markets, particularly where existing solutions and business models are not adequate for the BoP market. Because transnational capabilities alone are insufficient for penetrating BoP markets, a new global capability is needed. This new capability is called social embeddedness, or native capability (Hart & London, 2005; London & Hart, 2004; Prahalad & Lieberthal, 1998).

Native capability is central to the BoP approach to global strategy. It enables an organization to build a web of trusted connections with a wide range of local market participants and become embedded within the local BoP market context. As a result, native capability allows the organization to gain deep understanding of the local environment, build on the local social infrastructure and generate bottom-up solutions. Local market participants view the organization as a natural part of the local landscape instead of a foreign or alien force that does not fit within the local market context. Because embeddedness within this local environment takes time to develop, it is difficult for competitors to imitate. Thus, the deep understanding and integration within the local market can be a source of competitive advantage for the firm that develops native capability (Hart & London, 2005; London & Hart, 2004).

Organizations that develop native capability are able to craft strategies based upon the knowledge and resources that exist in the external environment. This approach challenges and extends the conventional transnational model, which is a more top-down, internally focused approach that leverages and transfers knowledge and resources within firm boundaries. Whereas the transnational approach focuses on transferring proprietary resources within the firm, the BoP approach is dependent upon accessing knowledge and resources beyond firm boundaries. Therefore, competitive advantage is founded on developing trust and social capital instead of protecting existing patents or proprietary technology (Hart & London, 2005; London & Hart, 2004).

For firms to develop this new capability, they must implement strategies that leverage the inherent strengths of the local market context. These strategies include collaborating with non-traditional partners, co-inventing custom solutions, building local capacity, avoiding dependence upon central institutions, and creating social, not legal, contracts. Consequently, implementing the strategies enables firms to develop contextualized solutions to common problems that respect the culture and diversity of the local market context. These strategies are essential for developing native capability and allow firms to become indigenous to the locations in which they compete (Hart & London, 2005; London & Hart, 2004).

First, to develop native capability, firms must collaborate with non-traditional partners. It is common for firms to seek traditional corporate partners to fill expertise and resource gaps when encountering new challenging environments (Eisenhardt & Schoonhoven, 1996). Further, governments often require that multinational corporations engage a local corporate partner to ensure access in emerging economies (Blodgett, 1991). However, when targeting the BoP market, firms may need to expand their scope of alliance partners. London and Hart (2004) found companies that successfully serve the BoP market significantly rely upon non-traditional partners such as non-profit organizations, community groups and even local and village-level governments. Successful companies did not rely on traditional partners such as governments or large corporations because they did not have pertinent business knowledge of the BoP market in their own country. The non-traditional partners, on the other hand, were able to provide crucial information regarding the BoP market context such as the general business environment and target customers.

Hart and Sharma (2004) suggest that working with non-traditional partners enables firms to develop radical transactive-ness (RT). RT is the ability to engage non-traditional partners, or fringe stakeholders, in a two-way dialogue to continuously acquire and combine knowledge for the purpose of managing disruptive change and creating competitive imagination. In BoP markets, fringe stakeholders often hold knowledge and perspectives that are important for identifying both potential problems and innovative opportunities. By integrating the voices and concerns of non-traditional partners, RT enables firms to deepen relationships and develop goodwill with diverse stakeholders.

Although non-traditional partnerships are important for success in BoP markets, they can be difficult to manage. For example, while corporations and socially oriented organizations have begun to collaborate more frequently, tensions often arise in non-profit-corporate alliances due to underlying differences in goals and orientations. Therefore, collaboration with non-traditional partners requires careful design and ongoing attention to effectively share knowledge and maximize impact (Brugmann & Prahalad, 2007; London & Rondinelli, 2003).

Second, firms must co-invent, or co-create, custom solutions in order to develop native capability. Prahalad and Ramaswamy (2002) suggest there are four building blocks for co-creating value, including dialogue, access, risk reduction and transparency. These building blocks allow firms to understand unique social and culture contexts, broaden their view of business opportunities, reduce risk exposure and increase value to customers. Therefore, as firms pursue BoP markets, Prahalad (2010) claims that firms should co-create value in order to gain local knowledge, access context-related skills and resources, reduce capital requirements, develop trust and become a locally relevant market participant.

Co-creation extends far beyond the transnational concept of national responsiveness, which adapts pre-existing solutions to local conditions. Instead of imposing top-down, pre-existing solutions, the BoP approach stresses leveraging local partnerships to co-create every aspect of the product or service. Therefore, local partners contribute information and input into everything from product design to pricing to distribution. As a result, firms tend to allow the product and business model to coevolve. Successful ventures often allow everyone involved in the co-creation process to make money, and these initiatives ultimately become embedded in the local market through developing a product or service that is relevant to local customers (Hart & London, 2005; London & Hart, 2004).

Third, developing native capability requires that companies build local capacity. Whereas the transnational approach focuses on sharing resources internally, native capability requires local capacity building through sharing resources outside firm boundaries. Thus, the BoP approach considers economic as well as social performance. Firms can pursue this dual focus by integrating local capacity building directly into the business model rather than through traditional corporate philanthropy. For example, capacity building can include training programs for BoP entrepreneurs, providing opportunities for existing institutions such as local microfinance organizations and filling gaps in local infrastructure through providing basic services. A firm could also create strategic bridges between diverse stakeholders, which may be struggling to cooperate due to mistrust, tradition, logistical problems, power imbalance or lack of resources and expertise. The strategic bridge may allow the firm to further its own interests while simultaneous serving the interests of other stakeholders (London & Hart, 2004; Sharma, Vredenburg & Westley 1994; Westley & Vredenburg, 1991).

Fourth, firms must eschew dependence upon central institutions to develop native capability. These institutions include national governments, corrupt regimes and central infrastructure planning. By avoiding dependence upon these institutions, firms can fly under the radar by circumventing common problems such as instability, corruption and bureaucracy. Firms that design large-scale products that offer nationwide, centralized solutions to address problems such as energy or clean water often target large institutions in developing countries. However, dependence upon unstable and corrupt governments can be detrimental to the company, especially where politicians or officials may benefit politically or economically from delaying or even derailing a venture. In some cases, this dependency could put the viability of the company at risk. Launching a business on a smaller-scale, on the other hand, and allowing it to grow unhindered by institutional intervention allows firms to bypass unnecessary complexity and corruption associated with institutional dependency. Therefore, a small-scale venture with a product or service that is directly affordable by the end consumer is less likely to get enmeshed in bureaucracy and corruption (Hart & London, 2005).

Finally, firms should seek to develop social, not legal, contracts when conducting business in BoP markets. As previouslydiscussed, people living in the BoP demographic tend to transact business in the extralegal or shadow economy due to the absence of enforceable contract law and property titles. Extralegal or shadow economies comprise a significant percentage of the overall economy for many developing nations. As a result, social capital is central to how BoP markets operate. BoP markets lack various legal resources, but they are rich in other areas such as interpersonal relationships and local market intelligence (De Soto, 2000; Schneider & Enste, 2000; Schneider, Buehn & Montenegro, 2010; Viswanathan, 2007).

Western-style institutions are typically unavailable in BoP markets, and legally enforceable business contracts are not common. Therefore, firms must leverage the existing social infrastructure when launching ventures in BoP markets instead of attempting to implement Western-style business contracts. For example, the Grameen Bank in Bangladesh pioneered a peer lending model in banking. Since BoP entrepreneurs typically do not have collateral, legal contracts are impractical. Therefore, the peer lending model leverages social capital by lending to small groups of business owners and making the loan recipients mutually responsible for repayment of loans within the group. Borrowers are consequently subject to social, not legal, contracts, and the business model is built upon social capital and trust (Hart & London, 2005).

Conclusions

Many differences exist between the two approaches to global strategy and range from organizational structure and design to business model development. For instance, while the transnational approach relies on centralized control to maximize economies of scale and scope and top down implementation, the BoP approach requires smaller scale, decentralized control and bottom-up implementation. The two approaches also handle knowledge acquisition and transfer very differently. The transnational firm transfers knowledge within organizational boundaries while successful implementation of the BoP approach depends upon accessing knowledge outside organizational boundaries. The types and range of partners also differ between the two approaches. The transnational approach typically incorporates traditional corporate partners while the BoP approach requires non-traditional partners such as non-profits and community groups.

Business model development varies significantly between the two approaches to global strategy. Whereas the transnational approach adapts current business models through national responsiveness and worldwide learning mechanisms, the BoP approach involves innovating new business models through local co-creation and becoming socially embedded in the local context. There is a stark contrast between the types of contracts utilized by the different global approaches. Legal contracts are typical for the transnational approach. However, due to the lack of enforceable contract law and property titles in low-income markets, the BoP approach relies upon existing social capital to form a socially-oriented contract between trusted parties. Organizational objectives and competitive advantage are also more socially oriented in the BoP approach. The various differences between the transnational approach and BoP approach to global strategy are illustrated in the following table.

Table 1: Differences between the Transnational Approach and BoP Approach to Global Strategy

Given the extent to which the BoP approach has diverged from the transnational approach to global strategy, MNCs face many challenges when competing in BoP markets. In particular, the BoP approach breaches many of the assumptions associated with serving traditional top and middle of the pyramid markets. In order to successfully enter BoP markets, MNCs must shed established mindsets, systems and metrics. These entrenched corporate paradigms can be extremely difficult to change. Although there is a compelling economic rationale for MNCs to target the BoP market, many challenges remain for MNCs determined to successfully implement the BoP approach to global strategy that will enable these firms to capitalize on the global opportunities.

For instance, MNCs must increase local engagement and commitment in BoP markets in order to compete successfully. A recent study by Schuster and Holtbrügge (2012) supports this idea. From their case study research, they found that MNCs go beyond local manufacturing and increase their commitment to BoP markets by developing multiple partnerships from various sectors in order to acquire market-specific knowledge. The higher level of commitment includes activities such as sharing resources externally and aligning with partners’ social goals. This commitment can allow the MNC to tap into social networks and access local knowledge resources to overcome market barriers.

Business model innovation represents another significant challenge because the BoP approach requires a market entry strategy beyond importing and adapting business models. According to London (2010), firms must fundamentally rethink and innovate their business models when targeting BoP markets. This means MNCs cannot merely rely upon worldwide learning and sharing knowledge within company borders to incrementally adapt existing business models. Finally, MNCs face a challenging legal and technological environment in the absence of formal contracts and competitive advantage that depends more on trust and social capital rather than proprietary technology and trade secrets.

Although the BoP approach to global strategy presents many challenges for MNCs, significant opportunities exist in the BoP market. Hammond et al. (2007) demonstrate that there are approximately four billion people in the BoP demographic, and the size of the BoP demographic represents the majority of the popu-

lation in the developing countries of Africa, Asia, Eastern Europe and Latin America and the Caribbean. For instance, the BoP demographic in Asia represents 83% of the region’s population and a staggering 95% of the population in Africa. Thus, the BoP demographic provides MNCs with billions of new consumers.

The value of the BoP market represents a significant economic opportunity as the global market potential of the BoP market is estimated at five trillion dollars. This market comprises a substantial percentage of the purchasing power in many developing countries. For instance, the BoP market represents 42% of the aggregate purchasing power in Asia and 71% of the aggregate purchasing power in Africa. On a sector basis, the BoP food market alone is almost a three trillion dollar market, and the housing and energy markets are valued at $331.8 billion and $433.4 billion, respectively (Hammond et al., 2007).

Further economic opportunity lies below the surface in BoP markets. Due to lacking access to enforceable contract law, property titles and live capital, people living in the BoP demographic tend to transact business in the extralegal or shadow economy. Extralegal or shadow economies comprise a significant percentage of the overall economy for many developing countries, and business owners in industries ranging from agriculture to real estate transact business in this informal environment. Much of the resources owned by individuals living in developing countries is considered dead capital. For instance, dead capital in the Philippines is estimated at $132.9 billion and $241.2 billion in Egypt. MNCs may be able to generate additional economic opportunity through unlocking trillions of dollars in dead capital trapped in the extralegal market (De Soto, 2000; Schneider et al., 2010).

A final opportunity for MNCs serving BoP markets is reverse innovation, or trickle-up innovation. MNCs have traditionally created products for developed markets and then sold them in developing economies with some local adaptations. Reverse innovation is just the opposite. It is where products are engineered for emerging markets and then are later sold in developed markets. Thus, products created for BoP markets have the potential to trickle-up to developed markets as GE’s has experienced withsome of its healthcare innovations developed for emerging markets and are not sold in the US (Immelt, Govindarajan, & Trimble, 2009; Prahalad, 2010).

In conclusion, MNCs have increasingly turned to emerging markets in developing countries as growth rates have slowed in developed economies. These firms have traditionally relied upon the transnational approach to global strategy to target consumers at the top and middle of the economic pyramid. However, the transnational approach has proven inadequate as MNCs have begun to target the BoP demographic. There are many differences between the transnational and BoP approach to global strategy. As a result, MNCs face a range of challenges in BoP markets. Yet significant economic opportunities exist for innovative firms that have the ability to overcome the various challenges and target this enormous demographic.

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