Multinational corporations in Kenya and application of the bottom of the pyramid proposition
The Bottom of the Pyramid (BoP), a concept pioneered by Hart and Prahalad (2002), is a phrase used to describe both the largest but poorest people living on less than $2 a day, as well as the business models used by firms to serve this group. The underlying idea behind the BoP proposition is that the potential growth for many multinational (MNC) and medium sized companies is not in the small high income market. Instead, its source is the mass low-income people. The BoP concept has however received a lot of criticism as it seems more of an ideological pipe dream and most of the critics insist that firms claiming to have successfully implemented the BoP concept stretch the truth. MNCs have a lot of influence on the host countries, and that is why they are the main actors in the BoP proposition. The objective of this study was to determine whether the BoP proposition is applied by the 226 foreign MNCs in Kenya. A cross-sectional type of survey was conducted, which was appropriate for the large number of the foreign MNCs in the country. A sample of 35 MNCs was drawn from the 226 MNCs through simple random sampling. Primary data was collected using structured questionnaires. It was determined that half of the respondents (50%) indicated that their organizations had never applied the concept and only17.9% indicated that their organizations had always applied it. This implied that applying the BoP proposition may be a challenge for MNCs probably due to high cost, no profits at the market and lack of market viability. The study recommends that the various MNCs in the country look for innovative ways to adopt the BoP concept as it was established that it has its advantages which might surpass the accompanying hindrances / challenges that the firms encounter during the BoP implementation process.