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Re: The Great Opportunity for India



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IPI_Marker

Hi Ashish:
Let me site a couple of examples here:

1. Nirma, a startup then, almost threatened the very existence of 
Hindustan Lever in detergent business in the eighties. 
(Manufacturing industry)
2. Grameen Bank, Bangladesh, started as a humble initiative by a 
local to provide short-term micro-loans to the villagers today 
lends loans outside Bangladesh. (Service industry)

There is something strikingly common in above two examples. Yes, 
the target markets in both cases are the people at the bottom of 
the economic pyramid. So, what do we learn from this? There is 
huge and almost untapped market in this segment. Untapped because 
conventionally managers have seen this sector as low-profit area 
and hence neglected it. These are not my original deductions. I 
had read it in the paper "The Fortune at the Bottom of the 
Pyramid" by Prof. C.K.Prahalad and Stuart L. Hart. Although, at 
times, I thought that the authors appeared to be callous about the 
the purchasing power of the people in this zone, I think there is 
a great message in there, which has went unnoticed even in the 
paper, perhaps because the focus was different.

While people in this section offer vast markets, as the authors 
explain, they also offer scope for vast employment in areas of 
door-to-door sales, customer service, market research (data 
collection) and many other areas that involves human 
participation. And for reasons more obvious than not, such would 
be a profitable institution because they would be run privately. 
And this is where my comments merge with yours. Manufacturing 
industries are more investment intensive and due to lack of R&D 
and University relations, have suffered a setback especially with 
opening up of Indian markets to foreign investment. This is, 
however, not the case with service industries because any investor 
would be more happy to buy resources (most of which is labor) from 
within the country even if she / he is free to bring in resources 
 from her/ his home country (as a protection provided by WTO to 
the investor).

Not to mean that manufacturing industries could be ignored (after 
all service industries hugely depend onmanufacturing also), but a 
venturing into services industry appears to provide a good short 
term economic improvement as well as a reasonable platform for 
moving away from socialism.

These are my thoughts as of now. Comments are welcome.

Regards,
Yogesh



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