Foreign subsidiaries’ ability to develop business for the base of the pyramid: Caught between a rock and a hard place
Abstract:
The concept of doing business for the base of the economic pyramid proposes several reasons for which foreign subsidiaries operating in emerging economies, need to craft their own product strategies. Not only because they face adverse business conditions that are atypical and can hardly be endured by knowledge generated in developed countries but also, because of a promising base of emerging consumers that raises the profit expectation once ignored. However, a focus towards the base of the economic pyramid is a substantial change in a subsidiary’s strategic role and produces major implications to the way headquarters conceives mandates.
The purpose of this paper is to uncover the ability of foreign subsidiaries to embed themselves in the corporation in order to raise a voice about the need of this shift, as well as to embed themselves in the local arena to solidify the shift. The paper analyses cases of foreign subsidiaries operating in Latin America, gives examples of their strategies, and exposes barriers to accomplish the shift.
Keywords: Subsidiary Embeddedness, Base of the Pyramid, Emerging Consumers.