Making profit to solve development problems: the case of Telenor AS and the Village Phone Programme in Bangladesh

Abstract

Multi-national corporations (MNCs) and large domestic companies have traditionally ignored a large part of the world's population with lower income levels, also known as the bottom of the pyramid (BOP). New empirical measures of the behaviour of those at the BOP and their aggregate purchasing power, however, suggest significant opportunities for the MNCs - as the BOP constitutes a $5 trillion global consumer market. In this paper, we explore the key elements of the BOP thesis and offer a critique from a number of developmental and marketing perspectives. We argue that instead of focusing on untapped low-income markets for profit-generation only, a business model that integrates local people and takes into account the local socio-economic context of the target markets, is a more sustainable way to successfully penetrate the BOP markets. To illustrate this point, we explore a case study from Bangladesh, namely Village Phone Programme (VPP), an initiative undertaken by Telenor AS, a Norwegian telecommunications company, in alliance with an internationally-known development organisation in the country – the Grameen Bank.