- 18 Apr 2018
Operations Strategy at the Base of the Pyramid: Consumer Education and Reverse Logistics in a Durable Goods Supply Chain
18 Apr 2018 - 5:00 pm - 6:30 pm
We model and analyze the value of different operations strategies for a social enterprise that distributes durable life-improving technologies to low-income consumers in the Base of the Pyramid (BOP). This distributor considers two strategies: (i) improved consumer education and (ii) improved reverse logistics. We prove that (ii) is always beneficial for the distributor, while (i) may be detrimental. Moreover, we show that this effect is weakened (strengthened) if the consumers’ financial distress is high (low) and the distributor highly values product adoptions relative to profits. We use this framework to contrast the value of strategies (i) and (ii) in the BOP for non-profit organizations that primarily value adoption of life-improving products, social enterprises that value both profit and adoption, and for-profit businesses that primarily value profit. We compare these strategies with those in high-income markets where consumers do not suffer extreme financial distress.
Technical University of Munich
TUM School of Management