What are the barriers preventing Dimension Data South...

What are the barriers preventing

Dimension Data South Africa from

pursuing the BOP market?

A Research Report

presented to

The Graduate School of Business

University of Cape Town

In partial fulfilment

of the requirements for the

Masters of Business Administration Degree

by

Samir Desai

December 2015

Supervised by: Dr. Nceku Nyathi

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DissertationProposal

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Student Number: DSXSAM001 Page 2 of 98

PlagiarismDeclaration

1. I know that plagiarism is wrong. Plagiarism is to use another’s work and pretend that it

is one’s own.

2. I have used a recognised convention for citation and referencing. Each significant

contribution and quotation from the works of other people has been attributed, cited

and referenced.

3. I certify that this submission is all my own work.

4. I have not allowed and will not allow anyone to copy this essay/assignment with the

intention of passing it off as his or her own work.

Samir Desai Date: 9/12/2015

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Acknowledgements

In the name of Allah, the most Beneficent, the most Merciful.

I express my appreciation and gratitude to the following people:

My supervisor Dr. Nceku Nyathi for his invaluable expertise, guidance and understanding

during this challenging period of my MBA journey.

To all the Participants of this case study for sharing their insights and opinions.

Dimension Data for allowing me to pursue this research.

And most of all, to my dear wife Zakiya for her love, encouragement and motivation.

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TableofContents

PlagiarismDeclaration...................................................................................................2

Acknowledgements.......................................................................................................3

TableofContents..........................................................................................................4

Abstract.........................................................................................................................6

Introduction..................................................................................................................7

Backgroundandcontext............................................................................................................................................7Researchareaandproblem......................................................................................................................................8Researchpurpose,significance,questionsandscope...................................................................................9Researchassumptions.............................................................................................................................................10Researchethics...........................................................................................................................................................10

LiteratureReview........................................................................................................12

IntroductiontotheBOPProposition.................................................................................................................12TheBOPMarketandSize........................................................................................................................................13CritiqueoftheBOPproposition...........................................................................................................................18DoestheBOPpropositionalleviatepoverty?................................................................................................20ApproachforBOPMarkets....................................................................................................................................22BOPMarketBarriers.................................................................................................................................................32Conclusion.....................................................................................................................................................................43

TheoreticalConceptualFramework.............................................................................46

ResearchMethodology................................................................................................47

ResearchApproachandStrategy........................................................................................................................47ResearchAssumptions.............................................................................................................................................47ResearchDesign,DataCollectionMethodsandResearchInstruments.............................................48Sampling.........................................................................................................................................................................52DataAnalysisMethod...............................................................................................................................................52ResearchCriteria........................................................................................................................................................54

ResearchFindings,AnalysisandDiscussion..................................................................56

ResearchFindings......................................................................................................................................................56

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ResearchAnalysisandDiscussion......................................................................................................................70ResearchLimitations................................................................................................................................................81

ResearchConclusions..................................................................................................83

FutureResearchDirections..........................................................................................85

Bibliography................................................................................................................86

APPENDIXA:Interviewguideandquestionnaire.........................................................96

APPENDIXB:ConsentForm.........................................................................................97

APPENDIXC:FiveCoreElementsfortheShiftinMentalModels..................................98

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Abstract

Purpose: to explore and identify the barriers preventing Dimension Data South Africa

from pursuing the bottom of the pyramid (BOP) market. The purpose of which is to

encourage a better understanding of the BOP market and provide Dimension Data an

opportunity to review its position, and reconsider its approach and product offering with

regard to the BOP market in South Africa, and perhaps the world.

Research Design: single case study on Dimension Data based on qualitative data collected

from semi-structured interviews with employees from Dimension Data.

Major findings and conclusions: the findings and analysis revealed that the following

barriers are preventing Dimension Data from pursuing the BOP market: Profitability,

Business model & Target market, Opportunistic, Capability, Product, Infrastructure, and

Strategic Alignment. While the lack infrastructure was found to be an external barrier as

well as internal cognitive barrier, the remaining barriers are internal and are either

cognitive, structural or processual. Even though these seven barriers were identified, it is

noted that the overall barrier is cognitive i.e. the mindset barrier should first be overcome

in order for any of the seven barriers to be overcome. These findings are consistent with

the literature, in particular with Olsen and Boxenbaum's (2009) findings that internal

barriers prevent organisations from entering the BOP and that these barriers may be

cognitive, structural or processual.

Keywords: Bottom of the pyramid, market entry, barriers, cognitive, structural, processual

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Introduction

Backgroundandcontext

Information Communications and Technology (ICT) “…seems to lend itself to business at

the Base of the Pyramid. It unlocks opportunities in hard to reach markets, reduces

transaction costs and allows reach on a scale that used to be unthinkable.” ICT is a strong

driver of growth, potentially unlocks new opportunities with huge scale, while in some

markets ICT is essential (Ashley, Sivakumaran, & UNDP, 2014, p.54).

Dimension Data is a global leader in the provision and management of ICT solutions and

services boasting 30 years of success. Operating in over 58 countries it employs over

23,000 employees and serves more than 6,000 clients across all industries. Dimension Data

plc is a wholly owned subsidiary of Nippon Telegraph and Telephone Corporation (NTT),

one of the largest global telecommunications service providers. Year on year Dimension

Data receives numerous international and local awards, which is a testament to its technical

skills and commercial success. It made history in 2015 when it delivered real-time

analytics on the riders of the 102nd Tour de France cycling competition. Dimension Data is

headquartered in South Africa (“Dimension Data Website,” n.d.).

Simanis & Hart (2008, p.1) define the Base of the Pyramid (BOP) as “the more than four

billion people globally with per capita incomes below $1,500 (purchasing power parity).”

Prahalad and Hart (2002) claim that the BOP represents the biggest potential market

opportunity in the history of commerce. However, in their seminal article, The Fortune at

the Bottom of the Pyramid, Prahalad and Hart (2002) argue that business not only has a

primary role of seeking profit from the world’s poor, but also that business has a role to

play in alleviating poverty (through the pursuit of profit) from the world’s poor. Their BOP

proposition, and probably the most widely held one is:

• Significant profits exist at the BOP i.e. untapped purchasing power exists because of

the large population; and

• Selling to the poor (BOP) can alleviate poverty.

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“The central thesis is that poverty eradication is reconcilable with a profit maximising

objective within an enterprise-based market system” (Ansari, Munir, & Gregg, 2012, p.

814).

According to the International Finance Corporation (IFC):

• “The African BOP includes 486 million people in 22 surveyed countries—95% of the

population in those countries.

• South Africa has the region’s strongest and most modern economy, yet 75% of the

population remains in the BOP.

• The South African BOP market has an aggregate income of $44 billion.

• In Africa the measured BOP market is $2.0 billion (258 million people), and the

estimated total BOP market $4.4 billion (486 million people).

[T]he African ICT market is the most rapidly growing one—and it has already generated

very profitable companies and significant wealth” (Hammond, World Resources Institute,

& International Finance Corporation, 2007, p.45).

Researchareaandproblem

There is a growing interest in emerging markets as companies seek sources of growth in

new markets (Lagace, 2010), and most emerging markets are characterised by BOP

populations. Wanasika (2013) claims that “BOP markets will play an increasingly bigger

global role in years to come” (Wanasika, 2013, p.52) and that there is enormous potential

in BOP markets, significant enough to assert that BOP markets cannot be ignored. Since a

majority of South Africa’s population remains at the BOP (Hammond et al., 2007), ICT

companies are best placed to innovate and advance populations out of poverty, thereby

fulfilling the BOP proposition (Ashley et al., 2014). Furthermore the role of ICT in the

BOP market is critical since lack of communication infrastructure is an institutional void

posing a great challenge for doing business in this market – ICT companies should be

treating this institutional void as a business opportunity with the potential to unlock other

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market opportunities at the BOP on a large scale whilst advancing the poor (Munoobhai,

2015) (Dhanaraj & Khanna, 2011) (Ashley et al., 2014).

Pursuing profits while alleviating poverty is irresistible for most companies involved in

corporate social responsibility (CSR). Increasingly, multi-national corporations (MNCs)

are viewed as the drivers in facilitating economic inclusion and social empowerment of the

poor and disadvantaged for various reasons such as moral obligation to do good,

competitive advantage, global reach and resource capabilities in order to build capacity and

drive economic growth through affordable innovations (Ansari et al., 2012).

Dimension Data fits the profile described by Ansari et al. (2012) – it is a global leader in

ICT, which is evidenced by its continuous receipt of global industry awards. Dimension

Data also has a history of being innovative. Its most recent innovation had a significant

impact on the Tour de France, whereby technology applications used in cycling have been

revolutionalised. Dimension Data continues to display its enthusiasm to innovate even with

its CSR initiatives, yet it has not pursued the BOP market as a role player as envisaged by

the BOP proposition. Furthermore, its home ground in South Africa, has a BOP market

representing a relatively substantial percentage of its population (Hammond et al., 2007).

Therefore, a significant question that arises is – what are the barriers preventing Dimension

Data South Africa from pursuing the BOP market?

Researchpurpose,significance,questionsandscope

This research in the form of a case study aims to explore and identify the barriers

preventing Dimension Data South Africa from pursuing the BOP market. The purpose of

which is to encourage a better understanding of the BOP market and provide Dimension

Data an opportunity to review its position, and reconsider its approach and product offering

with regard to the BOP market in South Africa, and perhaps the world.

Dimension Data is an MNC founded in South Africa. The reason for selecting Dimension

Data as the case study object is because Dimension Data matches the business profile

suited for the BOP proposition (Ansari et al., 2012) (Prahalad & Hart, 2002). In addition, it

may be argued that Dimension Data is losing out on potential profits, the opportunity to

innovate within the BOP market, and to become a leading development actor (Ismail,

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Kleyn, & Ansell, 2012) in the BOP space while setting a precedent for other ICT

businesses to embrace the BOP proposition.

The scope of this research is limited to Dimension Data South Africa and the potential

barriers to BOP market entry, within the applicable timeframe requirements. Although this

research is a single case study it may be of importance to practitioners and academia as it

increases BOP literature in general and in relation to South Africa, as some authors claim a

lack of information around BOP and emerging markets (Cheung & Belden, 2013).

Furthermore it specifically adds to BOP case study literature regarding potential

organisational barriers to BOP market entry (Olsen & Boxenbaum, 2009) (Perrot 2013)

(Reficco 2012). Lastly, it may be relevant to other businesses by bringing about awareness

and questioning their organisational position in respect of the BOP proposition.

Researchassumptions

This research was based on the assumption that Dimension Data had not pursued the BOP

market as a profit-making entity on any significant level and its current role in the BOP

space is limited to CSR initiatives. This assumption was justified based on the researcher’s

own knowledge as an employee of Dimension Data, and information on the Dimension

Data website (Simon, 2011). The assumption was confirmed during the research, however

it is noted that a subsidiary of Dimension Data is involved in the provision of public

wireless access throughout South Africa and Africa. The subsidiary provides wholesale

wireless access allowing data service providers to operate on one wireless platform, but the

BOP segment is not a target market for the subsidiary (Mzekandaba, 2015).

Researchethics

The researcher obtained ethical clearance by following the process set out by the

University of Cape Town’s Graduate School of Business Research Ethics Committee.

Throughout this research, all information obtained was kept confidential and was only used

for the purpose of the said research. If an individual participant chose to remain

anonymous, then no reference is made to the participant’s actual name or identifiable

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information. A copy of the consent form signed by participants is attached to this

document as Appendix B.

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LiteratureReview

IntroductiontotheBOPProposition

Breaking Through: Inclusive Business and the Business Call to Action Today, a report by

the United Nations Development Programme (UNDP), defines poverty as:

“What is poverty? Absolute poverty is a condition characterized by severe

deprivation of basic human needs, including food, safe drinking water,

sanitation facilities, health, shelter, education and information. It depends

not only on income but also on access to social services. Absolute poverty is

a condition in which a significant proportion of the world’s people live (at

least 2.4 billion, as of 2010 lived on less than US$2 a day). It is also a

condition that places unique structural constraints on the markets in which

they live and work” (Ashley et al., 2014, p.8).

The UNDP report (2014) also claims that business can provide access to jobs and life-

saving healthcare, build skills and capacities of people, innovate products that make

positive contributions to ultimately strengthen economies (Ashley et al., 2014). The role of

the business sector in alleviating poverty has received much attention recently. Aligned to

Friedman’s (1970) simple view of business which asserts, “the only social responsibility of

business is to increase its profits,” Prahalad and Hart (2002) claim that the BOP represents

the biggest potential market opportunity in the history of commerce. However, in their

seminal article, The Fortune at the Bottom of the Pyramid, Prahalad and Hart (2002) argue

that business not only has a primary role of seeking profit from the world’s poor, but also

that business has a role to play in alleviating poverty (through the pursuit of profit) from

the world’s poor. As per Ansari, Munir, & Gregg (2010, p.254), “Prahalad champions the

‘marketization’ of social welfare in what is purportedly a harmonious hybridization of

strategic management and CSR, where one mutually reinforces the other in a

complementary relationship.” Karnani (2007) summarises the BOP proposition, as follows:

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• “There is much untapped purchasing power at the bottom of the pyramid. Private

companies can make significant profits by selling to the poor.

• By selling to the poor, private companies can bring prosperity to the poor, and thus can

help eradicate poverty.

• Large multinational companies (MNCs) should play the leading role in this process of

selling to the poor” (Karnani, 2007, p.90).

Munoobhai (2015, p.13) identifies four key drivers for entry into the BOP market:

1. The opportunity for new growth markets.

2. The threat of existing markets maturing.

3. Doing good and uplifting the lifestyle of rural communities.

4. Creating feeder markets and growing with the consumer.

Taken together, the four key drivers are a typical characterisation of the BOP proposition.

The question of whether business ‘should’ be concerned about poverty alleviation may be

debated endlessly (Ismail et al., 2012). Two differing views on the subject are identified as

follows:

1. The only social responsibility of business is to increase its profits (Friedman, 1970).

2. Business should seek to combine social impact with commercial sustainability (Ashley et al., 2014).

The researcher emphasises and prefers the latter view due to its inclusive approach.

TheBOPMarketandSize

Prahalad’s (2002) article defines the BOP as the ‘aspiring poor’, and it segments the world

population into a four-tiered pyramid. Tier one represents the top of the pyramid (TOP),

tiers two and three represents the middle of the pyramid (MOP), and the lowest tier four,

represents the bottom of the pyramid (BOP). The article also associated the following

characteristics or conditions with the BOP:

• Accounts for 40% - 60% of economic activity in developing countries;

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• Most live in rural villages, urban slums or shantytowns;

• Usually do not hold legal or title deed to their assets;

• Little or no formal education;

• Hard to reach via conventional credit, communications or distribution.

Trompenaars and Coebergh (2014) provide an updated diagram depicting 5 tiers below.

Prahalad (2012) later cited the IFC (2007) report regarding the population size and the

daily living amount in describing the BOP. However, his description provided the

following additional characteristics: multiple cultures, ethnicity, literacy, capabilities,

needs, and can be segmented in many ways.

Prahalad (2002) used the World Bank for his estimation of the number of poor people.

Karnani (2007) criticises the assumption of the size and value of the BOP opportunity and

claims that the BOP market is only US$0.3 trillion, after taking into account purchasing

power parity (PPP) and adjusting the number of poor people. In adjusting the number of

poor people Karnani (2007) cites other researchers who disagree with the World Bank

estimation of the number of poor people.

In 2005 monetary terms, The World Resources Institute (WRI) and the International

Finance Corporation (IFC) defined the BOP population segment as those that earn less

than US$3000 per capita per year and live in relative poverty. At that time, the IFC deemed

Figure 1: The Bottom of the Pyramid (Trompenaars and Coebergh, 2014) Copyright UCT


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the BOP to be a US$5 trillion consumer market and suggested that these markets represent

a significant share of the world population, are generally underserved, dominated by the

informal economy and are generally inefficient. The IFC published “The Next 4 Billion”

with a view to promote the BOP proposition i.e. for business to address the opportunities

and markets made up by the four billion people while simultaneously increasing incomes,

productivity, alleviating poverty and empowering the BOP toward formal economy

(Hammond et al., 2007).

Using US$ daily earnings, Rangan, Chu, and Petkoski (2011) identify three segments of

the BOP i.e. low income, subsistence and extreme poverty. The low income segment

typically earn between US$3 to US$5 dollars per day, while the subsistence segment

typically earn between US$1 to US$3 per day and the extreme poverty segment typically

earn less than US$1 per day (Rangan et al., 2011).

Rangan et al. (2011, p.114) thereafter identify segments which they call “value creation

roles.” The three value creation role segments are: consumers, co-producers, and clients.

Each value creation role is linked to the previously identified living standard segment. By

linking the value creation role to the living standard segment, Rangan et al. (2011)

recommend direct and indirect methods of providing value to these BOP segments

(Rangan et al., 2011). The UNDP (2014, p.29) report also highlights segmentation, and

states that segmentation should be “strongly considered” because the “needs of those

earning US$1 to US$2 per day are different than the needs of those earning US$3 to US$5

a day.” The abovementioned segments, linkages and recommendations by Rangan et al.

(2011) are tabulated below.

Living Standard (segmented by)

Population Value Per Day Characteristics

Low Income 1.4 billion $3 - $5 Little secondary education. Basic skills for jobs.

Subsistence 1.6 billion $1 - $3 Poor education. Low level of skills.

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Extreme Poverty 1 billion < $1 Lack basic necessities such as food, clean water, shelter, health, and nutrition.

Table 1: Segmentation by Living Standard (Rangan et al., 2011)

Value Creation Role

(segmented by) How to provide value Indirect Method Segment

Consumers

Directly addressing their needs for services: clean water, better sanitation, education, and credit.

Introduce innovations that enable people to devote fewer resources to basic activities and more to other pursuits

Low income

Co-Producers

Earn additional income. Provide work and income. Provide skills to upgrade quality of their output. Reward with greater monetary returns.

Training, transportation, distribution i.e. bridging the last mile to the customer.

Subsistence + Low Income

Clients Need ‘agents’ to garner resources on their behalf. Extreme

Poverty

Table 2: Segmentation by Value Creation Role (Rangan et al., 2011)

Instead of reaching consensus regarding the definition of BOP by population size or

income levels, London and Hart (n.d.) as quoted by Ismail et al. (2012, p.22), “propose a

set of defining characteristics for what they called the ‘BOP Segment’, which are the

following:

• It is heterogeneous across multiple dimensions – varied and variable in many ways.

• It includes the portion of the world’s population with least amount of income.

• It contains local enterprises that are generally not well integrated into the formal

capitalist economy.

• It lives primarily in the informal economy.

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• It constitutes the majority of humanity” (Ismail et al., 2012).

The South African Audience Research Foundation (SAARF) makes use of the South

African Living Standards Measures (LSM) in conjunction with further methods and

analysis to identify the South African BOP as LSM 1 – 4 (SAARF, 2014). The four-tiered

pyramid is reproduced below. The pyramid below represents the South African BOP

(fourth tier) as 23% of the population.

Similar to Rangan et al. (2011), Ismail et al. (2012) note that for many South African

businesses, the absolute base of the pyramid LSM 1 does not hold out the best immediate

potential for doing business. People in this group may need assistance through corporate

social initiatives or governmental initiatives to help them in reaching a level where they

can function effectively in business or community partnerships.

According to research by Chipp, Corder, & Kapelianis, (2013) the South African BOP

represents 35% of the South African population i.e. just over one third of the population.

Chipp et al. (2013) also suggest that black South Africans are more likely to be classified

as BOP, as a vast majority of the South African BOP are black, which is as a result of the

apartheid legacy. Furthermore, they adopt a more collectivist approach to determine BOP

Figure 2: SA Pyramid (SAARF, 2014)

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classification in South Africa, and argue that collectivism is a defining feature of life at the

BOP in South Africa. Therefore business should not target the South African BOP on an

individual level, but rather business should target the South African BOP using a

collectivist approach. “Thus the role of the community and household must be elevated in

importance for this market segment” (Chipp et al., 2013, p.11). This is in line with the

view of Prahalad and Hammond (2002) who state in the context of ICT and the provision

of IT access to BOP markets, that shared access is becoming the standard model thereby

making the community the ‘customer’ and not the individual.

CritiqueoftheBOPproposition

A major problem faced by businesses wanting to pursue opportunities at the BOP is lack of

information (Cheung & Belden, 2013). Cheung & Belden (2013) find that a significant

challenge in BOP markets is the cost and difficulty in obtaining market research in respect

of BOP consumers. Many articles on emerging markets also mention the high costs and

difficulty in obtaining consumer research information (Lagace, 2010) (Atsmon, Kertesz, &

Vittal, 2011), and most BOP markets are found within emerging markets. However, a

counter argument is that companies must adopt a learning by doing approach because if

they postpone their entry into the BOP due to lack of market information they would be

overtaken by competition (Munoobhai, 2015) (Dhanaraj & Khanna, 2011).

Karnani (2007) suggests that companies should be cautious when approaching the BOP

and claims that there is no fortune for companies at the BOP, in opposition to Prahalad’s

(2002) argument. Karnani (2007) investigates the various characteristics of the BOP

markets and finds that these characteristics increase the cost of doing business and

therefore make the BOP markets less desirable for companies seeking opportunistic profits.

Some of the characteristics which potentially lead to higher costs are: geographically

dispersed, culturally heterogeneous, increases distribution and marketing costs, difficult to

exploit economies of scale, weak infrastructure, small size of each transaction.

Furthermore companies often fail because they overestimate the purchasing power of poor

people and set prices too high (Karnani, 2007).

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In developing countries and in inefficient markets normally associated with the BOP, little

or no consumer protection is offered (Ansari et al., 2012) (Karnani, 2007). Therefore,

companies seeking profits may inadvertently be guilty of unethical marketing practices

(Ansari et al., 2012) where poor consumers are persuaded to purchase non-essential

products.

In targeting BOP consumers or markets, companies need to be considerate of

environmental factors. Hahn (2008), as cited by Cheung and Belden (2013), state that BOP

researchers have raised environmental concerns. Hahn (2008) argues that ecologically

sustainable packaging and products are not enough for the BOP, as the waste infrastructure

in each region also needs to be investigated. Karnani (2007) uses the example of shampoo

sold in sachets and points out these types of packaging add to the waste problem in most

villages, slums, or informal settlements with inefficient waste infrastructure.

Gunther (2014) references Milstein (n.d.) (an expert on BOP at Cornell University) who

states that while the BOP proposition is irresistible, profits at the BOP remain elusive,

largely because of the complexity of doing business with the BOP. More importantly, he

also mentions that the notion of the BOP proposition was oversold. Karamchandani,

Kubzansky and Lalwani (2011, p.2) state that “Companies sense that profits in this [BOP]

market are elusive, and the evidence backs them up.” Furthermore, Simanis and Hart

(2008, p.1) claim, “most ‘first generation’ corporate BOP strategies have, in our view,

failed to hit the mark.”

Gunther (2014) also quotes Simanis (2013) where the latter states, "We (include myself

here) got too caught up with our own beautiful theories and abstract concepts (like mutual

value creation, inclusive business) and lost sight of the pressure on managers to meet next

quarter's sales and earnings forecast. We theorised ourselves out of being relevant." Olsen

& Boxenbaum (2009) find that businesses may discover significant organisational

challenges while trying to incorporate sustainability or BOP into its daily operations.

Similar to Simanis (2013) above, Olsen & Boxenbaum (2009) found organisational

barriers that were cognitive, processual and structural. In terms of cognitive barriers,

peoples’ mindset was fixated on being profitable and successful to such an extent that it

was difficult to adapt routine and work with something which was more risky than normal

business – processual barrier. The mindset and inflexibility was reinforced by two widely

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used criteria for selecting projects: net present value (NPV) and business risk, which were

the structural barriers.

Wanasika (2013) tabulates arguments for and against investing in BOP markets in the

figure below.

DoestheBOPpropositionalleviatepoverty?

London and Hart (2004) were among the first to criticise the BOP proposition for not

‘really serving’ the BOP. Companies were essentially moving down into a new segment

i.e. with existing products at lower prices and/or smaller quantities. They argued that this

Figure 3: Arguments in favour of and against investing in BOP markets (Wanasika, 2013)

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approach may not be beneficial in alleviating poverty, yet alleviating poverty is a crucial

element of the BOP proposition (Kandachar & Halme, 2008).

For example, although the organisation Hershey’s recently committed to sourcing 100% of

its cocoa from sustainable sources, it is speculated that this initiative may not be enough to

raise living standards and incomes of African farmers (Gunther, 2015).

Karamchandani et al. (2011) investigate reasons for companies being unsuccessful in BOP

markets. One of the reasons companies are unsuccessful is because companies are unable

to gauge demand. Interestingly, they opine that companies gauge demand based on BOP

needs while actual demand is based on BOP wants (Karamchandani et al., 2011). This

theory implies that the BOP pursues products and services based on wants rather than

needs, thereby increasing the probability that the BOP remains in poverty with no

improvement to living standard. However, an alternative perspective based on BOP’s

needs is put forward by Munoobhai (2015) who suggests by citing Agnihotri (2013), that

companies could alleviate poverty in the BOP by providing cost-effective utilitarian goods

and services instead of luxurious goods with aesthetic appeal or emotional value. As stated

earlier, ICT is a much needed service in the BOP market and ICT companies could

therefore take up the challenge to provide cost-effective connectivity goods and services to

the BOP.

Ansari et al. (2010) criticise the BOP proposition for the little emphasis it places on

inclusion and empowerment. It is also difficult to determine whether BOP capabilities are

being strengthened or exploited. Ansari et al. (2010) cite literature (Burkey, 1993;

Narayan, Chambers, Shah, & Petesch, 2000; Banerjee & Duflot, 2007) which makes the

point that little has been done to develop a people centred perspective to understand the

BOP and listen to “voices of the poor” (Ansari et al., 2010, p.262), yet it is argued as a key

focus of BOP strategies. Ansari et al. (2012) argue the point of social capital and

capabilities further, asserting that BOP propositions must enable communities by building

social capital and capabilities i.e. for the BOP proposition to alleviate poverty (Acquaah,

Amoako-Gyampah, & Nyathi, 2014). In discussing the benefits and value of external

social capital Acquaah et al. (2014, p.9) state:

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“Social capital has been shown to be an important contributor to community

development and sustainable management of natural resources. When firms are

willing and able to contribute to relationships within and beyond the firm, they

contribute to the broader stock of social capital in the communities in which

they operate and virtuous cycles of human capital and economic development.”

Acquaah et al. (2014,) also provide a framework which may assist firms in understanding,

measuring and benefitting from social capital.

Figure 4: Social Capital, Benefits and Measurement (Acquaah, Amoako-Gyampah & Nyathi, 2014)

ApproachforBOPMarkets

In discussing why business models matter, Magretta (2002) asserts that the term ‘business

model’ is one of the most distorted and misused word in business. She suggests that good

business models are in essence stories, and good business models at least answer the

following questions:

• Who is the customer?

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• What does the customer value?

• How do we make money in this business?

• How can we deliver value to customers at an appropriate cost? (Magretta, 2002).

In the context of the BOP market, Magretta’s (2002) questions would require

understanding the BOP market and learning about BOP customers. Magretta (2002) also

compares the term ‘business model’ to ‘strategy’. She states that the business model

describes the system and how the pieces fit together while strategy explains how an

organisation will do better than its competitors and how an organisation will be different.

Organisations must realise that a business model is not a strategy, and that both are

required for organisations to be successful – one does not replace the other. Magretta

(2002) concludes by remarking that although ‘business model’ and ‘strategy’ are the most

carelessly or inaccurately used terms in business, both terms and their concepts have

enormous value (Magretta, 2002).

Magretta (2002) states that there are two tests to examine why business models fail i.e. the

numbers test and the narrative test. In terms of the numbers test, a business model fails

because the business math is flawed and the numbers do not add up, whereas in terms of

the narrative test one looks for faulty assumptions e.g. faulty assumptions of consumer

behaviour.

According to Simanis (2012), in its simplistic form the BOP concept is to sell high

volumes with low prices and low margins. Simanis (2012) argues that the model is flawed

because often an impractical penetration rate of 30% or more is required for success. The

simple model only works when existing infrastructure is available and can be leveraged,

and if consumers know how to buy and use the products –however both these conditions

are often not achievable (Simanis, 2012). A three-pronged approach to the BOP market is

proposed by Simanis (2012):

• Localise and bundle base products;

• Offer an enabling service;

• Cultivate customer peer groups.

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Karamchandani et al. (2011) claim that profits in the BOP market are elusive. As BOP

business models have requirements that are different from a company’s core business

model, Karamchandani et al. (2011) assert that barriers to the BOP market can be

overcome by a company by adapting its own business models. Furthermore,

Karamchandani et al. (2011) state that most firms may not find it worthwhile to rethink

business models to enter the BOP market, while firms that are innovative are able to

overcome obstacles and enjoy great rewards at the BOP. Karamchandani et al. (2011, p.4)

suggest that the following questions be considered before a firm enters BOP markets:

• “Can we manage large numbers of low-margin, low-value transactions?

• Can we work with informal markets?

• Can we keep out legacy and overhead costs?

• Do our leaders have a long-range mindset?

• Will our organisational culture stifle bottom of the pyramid innovation?”

Karamchandani et al. (2011) also highlight the following risks when competing in BOP

markets: image, brand, cannibalisation and underestimating the competition.

In comparing anticipated outcomes to empirical evidence of BOP strategies Ansari et al.

(2010, p.270) recommend a typology for BOP ventures. In doing so, they also recommend

government engagement (public-private engagement) to ensure social and economic

benefit to society from BOP initiatives i.e. “government policies could be used to not only

mitigate risks for MNCs, but also provide some protection to the BOP from succumbing to

MNC interests.”

Cheung & Belden (2013) cite authors who claim that CSR needs to surpass traditional

public relations, where CSR is incorporated into the business model. Olsen and

Boxenbaum (2009) performed a case study where a company attempted to incorporate

sustainability practices including a BOP project into its organisational practice. The case

study revealed that internal organisational barriers prevented the incorporation of

sustainability driven business initiatives (including BOP) into its organisational practice.

The organisation was left with no choice but to create a centralised function to investigate

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and initiate the BOP project – the centralised function was created within the CSR

department (Olsen & Boxenbaum, 2009). Similarly Ismail et al. (2012) state that

champions will find it difficult to implement guidelines relating to the relationship between

a company and a new low-income market community if the company’s internal attitudes,

structures and processes are inflexible. Therefore Ismail et al. (2012, p.96) further state

that “alongside the process of developing new business offerings runs a process of looking

inwards at how the company can strengthen such business initiatives, and what factors

might hold back progress.”

Prahalad (2012) cites earlier writings where it is claimed that the typical 4Ps of marketing

(McCarthy, 1982): product, price, place and promotion do not apply to the BOP. He claims

that using the 4Ps may result in an undifferentiated approach to BOP markets, which may

be unsuccessful when applied to BOP markets. Prahalad (2012) further asserts that BOP

markets are distinctly different in each region and therefore application of a business

model needs to consider the following:

• Awareness: BOP should know what is available and how to use it.

• Access: to remote locations.

• Affordable: quality (not luxury) at a fraction of the price in developed markets.

• Availability: consistent supply (Prahalad, 2012).

After performing action research within an MNC, Perrot (2013) found that local market

conditions dictate the choice of BOP market strategy. Therefore the strategy should be

decided upon after local market analysis and not in advance. Local market conditions may

call for a market creation strategy involving a series of efforts, or a market capture strategy

by developing an offer through existing capabilities. However, in the context of the BOP

segment an ambidextrous approach is likely to be beneficial.

Ansari et al. (2010) cite multiple authors who suggest that the BOP market is ideal for

introducing and refining disruptive innovations. Hart and Christensen (2002) motivate

companies to attempt disruptive innovation at the BOP, while implying that there are many

opportunities for technological advances and that technology is needed to address the

social and environmental challenges associated with the BOP. One reason is that business

models that are crafted in developing countries are applied to more countries than business

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models from traditional first-world economies (Hart & Christensen, 2002). Prahalad (2012)

demonstrates a ‘sandbox’ approach to innovation and also claims that innovations at the

BOP have implications in developed markets. Markides (2012) compared successful and

unsuccessful innovative disruptions to identify differences, and found that the success of

low-cost innovations depends on whether the disruption is based on an innovative business

model that supports the low cost advantage, as well as how aggressively do the incumbents

respond to the threat posed by the low-cost innovation. Markides (2013) later suggested

that the success of disruptive innovations coming from the BOP depends more on how

aggressively incumbent or first-world firms respond to the disruption. Therefore the

response of incumbent firms is broadly based on three categories: awareness, motivation,

and ability (Markides, 2013).

Prahalad (2012) claims that BOP innovations will be successful if they are cognisant of the

constraints of the target market, and he calls this approach the “Innovation Sandbox.”

Within this approach, an in-depth understanding of the consumer and his or her

requirements is emphasised as crucial, and leads to product or service development criteria

and development boundaries. As an example, the process and resulting sandbox for the

Energy India project is depicted below (Prahalad, 2012).

Figure 5: Will BOP Innovations Disrupt Markets (Markides, 2013)

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A prescriptive framework is the BOP Protocol by Simanis and Hart (2008) – BOP 1.0 (first

edition) approaches were criticised by many authors for ‘selling’ to the poor and viewing

the BOP as consumers. BOP 2.0 (second edition) now focuses more on community co-

creation and mutual value, long-term growth and capabilities. Differences between BOP

1.0 and 2.0 are tabulated as follows (Simanis & Hart, 2008):

The BOP Protocol provides detailed lists of activities that one may follow in order to

develop a new product, based on the unique characteristics and abilities of the targeted

Figure 6: Business Specification for Innovation Sandbox (Prahalad, 2012)

Figure 7: Innovation Sandbox for Energy in India (Prahalad, 2012)

Figure 8: BOP 1.0 VS BOP 2.0 (Simanis & Hart, 2008)

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BOP population. There are three phases to the BOP Protocol which are: opening up,

building the ecosystem, enterprise creation, and what may be called a fourth step, scaling

out. The BOP Protocol is depicted below for reference (Simanis & Hart, 2008).

Building on the co-creation concepts of the BOP Protocol, Ismail et al. (2012, p.69) define

co-creation as, “working with market and local partners to transform a product or,

especially, a service in ways that make it more relevant and effective.” In underserved

markets co-creation is valuable because insights lacking by a company wanting entry into a

specific market may be obvious to partners already operating in the market as well as

customers living there; it shows that the company wants to listen and builds loyalty and

goodwill and very importantly it affords low income customers the dignity of not being

treated as objects in the company’s business process, but rather as offering community

building impacts.

A South African example of an organisation which successfully used the value co-creation

concepts of the BOP 2.0 Protocol is Nedbank. Its image was previously associated with

serving more affluent white customers and for ethical, political and commercial reasons

Nedbank wanted to become a more inclusive bank and do business with low income

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customers. By holding community consultations called ‘imbizos’ where the community

gathered to refine new products and services, Nedbank developed innovative banking

products for low-income customers with more traditional offerings and converted

Nedbank’s business vision into a practical and grounded consumer offering. During the

imbizo process, Nedbank spoke broadly “…about banking and insurance and allowed the

questions and complaints that emerged from the imbizo to select (and innovate within) a

suitable final product range” (Ismail et al., 2012, p.91). Apart from value co-creation

Nedbank met BOP market requirements by doing the following: developed a sophisticated

back-end to support a simple front-end customer interface; implemented a different

planning framework; used a phased market creation strategy with different metrics and a

longer perspective; hired people who represented the communities it was working in and

this in turn assisted in changing mindsets within the bank; created new metrics to measure

piloting progress; and launched customer education programmes to increase financial

literacy (Ismail et al., 2012).

Wanasika (2013) finds that there are unique competitive conditions in BOP markets and

develops a strategic process by identifying strategic themes that are relevant to BOP

markets. “BOP markets have unique competitive environments, competitive dynamics,

geographic and sociocultural contexts, rendering mainstream strategic frameworks

insufficient in facilitating effective strategy” (Wanasika, 2013, p.47). BOP markets are

very different to developed markets, which are characterised by “structure, homogeneous

customers, informed customers, regulation, property rights, effective infrastructure and

technology. These conditions are often absent in BOP markets” (Wanasika, 2013, p.47).

One of the key challenges within BOP markets is undeveloped infrastructure. Although

technology, infrastructure and capital resources are scarce, BOP markets generally have

plenty of natural and human resources (Wanasika, 2013).

Most literature on BOP implies that business has a responsibility to alleviate poverty when

engaging with the BOP. Contrary to this opinion, Wanasika (2013) puts forward a non-

benevolent business case – in line with Friedman's view (1970) that the only responsibility

of business is to make profit. While there is social and moral relevance to BOP markets,

Wanasika (2013) claims that social and moral rationale are inadequate for meaningful

investments. Furthermore, Wanasika (2013) cites Lumpkin and Dess (1996) and Shane and

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Vankataraman (2000) who claim that an entrepreneurial mindset is crucial for BOP

markets as the firms must find new ways of competing given the unique environmental

conditions in order to identify and exploit opportunities in BOP markets. Unlike

strategising in developed markets, collaboration is a key component for strategising in

BOP markets (Wanasika, 2013).

Based on a review of extant literature on BOP markets, Wanasika (2013) identifies six

strategic themes for the BOP market which are then applied in a strategic process for an

effective BOP strategy for a big pharmaceutical: entrepreneurial mindset, innovation,

developmental pathways, marketing, collaboration. The six processes are depicted below

and briefly described thereafter.

• Entrepreneurial mindset: helps to identify opportunity in BOP markets as well as to

exploit these opportunities. A mindset shift is also required to change perception of

BOP populations – the BOP must be perceived as customers and perceptions of

benevolence should be transformed (Wanasika, 2013).

Figure 10: Strategic Process of Big Pharma in BOP Markets (Wanasika, 2013)

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• Innovation: supports entrepreneurial mindset. Value chain activities such as

understanding customer needs, modes of delivery, research & development,

manufacturing and sales must be leveraged for innovation (Wanasika, 2013).

• Developmental pathways: distribution networks, building internal capabilities and

adaptive low-cost models are required to ensure a long-term strategic presence

(Wanasika, 2013).

• Marketing: as the BOP is generally limited in education and poverty stricken.

Combining the BOP characteristics with inherent limited infrastructure, marketing

strategies must therefore be creative to be successful. Co-creation and a proactive

market orientation are important strategic elements of marketing to the BOP

(Wanasika, 2013).

• Collaboration: BOP markets are characterised by institutional barriers, underfunded

sectors and undeveloped systems. These potential market failure scenarios require

collaboration and alliances with stakeholders in order for BOP initiatives to be

successful (Wanasika, 2013).

• Logistics: Organisations need to consider scalability and non-traditional methods due

to lack of infrastructure and unique issues found in BOP markets (Wanasika, 2013).

In discussing the implications of his research on BOP theory, Wanasika (2013) suggests

that strategic theories or processes being developed in the BOP should consider a more

inclusive approach. Executive strategic orientation, field of vision and perceptions on BOP

markets should be examined to determine their views and beliefs on the potential of BOP

markets. Organisations core capabilities must be adjusted in order to exploit opportunities

in BOP markets, especially by cutting costs in the value chain. Most importantly,

Wanasika (2013) asserts that organisations should include BOP markets as part of their

competitive offerings when developing strategies and furthermore, organisations should

engage and maintain presence in BOP markets to avoid future competition from smaller

companies, which may grow as a result of exploiting opportunities at the BOP.

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BOPMarketBarriers

Reficco (2012, p.3) introduces the BOP proposition and suggests that the “greatest hopes

and expectations” were placed on the potential of large corporations to alleviate poverty.

Reficco (2012) claimed that the original BOP movement or proposition was based on the

premise that large corporations were best suited to serving the BOP markets. Furthermore,

he cites Lodge (2002) who claimed that the early BOP movement was initiated as a call for

large corporations to alleviate poverty. While this assumption is still alive according to

Reficco (2012), he provides examples to question whether this assumption is valid, and

then investigates barriers that hinder large corporations from getting involved with the

BOP, partly to explain why have large corporations been unenthusiastic in engaging the

BOP. Wanasika (2013) also cites Reficco (2012), when he comments on the lack of

interest in engaging with the potential market opportunities at the BOP.

Reficco (2012) provides an example from Mexico where a program, which included

government funding and other assistance, was setup to assist large corporations to launch

engage and launch projects with the BOP. Although large corporations showed initial

interest in engaging the BOP market, interest waned and over a 6 month period not a single

project was launched – the program was closed as a result. When the program was re-

launched to include Small to Medium Enterprises (SMEs) and Non-governmental

Organisations (NGOs), large corporations yet again disappointed with only 33% of

proposals being submitted by large organisations. Of the 33%, only half of these proposals

were actually implemented.

Reficco (2012) suggests that this lack of interest from large corporations has received little

attention and draws on the research of Olsen and Boxenbaum (2009) to summarise and

discuss the barriers that large corporations face when considering BOP initiatives.

Reficco's (2012) diagram depicting the result of Olsen and Boxenbaum's (2009) research is

reproduced below.

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Figure 11: Barriers to implementation (Reficco, 2012)

Reficco (2012) suggests that BOP-oriented initiatives are characterised by substantial

change, which Reficco (2012) claims is a tall order for large organisations due to the

substantial sunk-costs embedded in large organisations resulting in a built-in aversion to

change. The internal barriers, as found by Olsen and Boxenbaum (2009) are: process

related barriers, structure and incentive, cognitive barriers.

Process-Related barriers:

Change must unfold both horizontally and vertically to be effective. There is generally a

disconnect within the entire organisation unless the new initiative fits in with existing

values, processes and routines. In terms of management, often there is a disconnect

between executive or senior management that push the initiative and middle management

who are required to implement the initiative and deliver results according to expectation

(Reficco, 2012).

Irregular creation of knowledge of BOP related market concepts and market intelligence

within large corporations is also a process-related barrier. Large organisations generally

make use of ad-hoc teams to engage in BOP initiatives leaving the large corporation with

pockets of average experience, whereas the large organisation may have benefited from

using unchanged resources in order to grow the large corporations learning, experience and

ability in the BOP.

A feature of large organisations is its employee value proposition and most large

corporations promote and rotate staff frequently. Reficco's (2012) research found that

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leadership change on BOP projects were fatal to the projects. Although the employee value

proposition offered by large corporations is beneficial to the large organisations and its

employees it may affect a BOP project negatively (Reficco, 2012).

Structure and Incentive barriers:

When selecting business opportunities, large corporations generally face a number of

choices, and the opportunity cost of capital makes it difficult to select BOP opportunities

(Reficco, 2012).

Opportunity costs are similar to financial metrics. Resources are asked to take on high

margin low risk deals in most large corporations. Resources are also expected to spend

more time on high margin low risk projects. Therefore financial incentive structures drive

resource allocation and focus away from BOP projects (Reficco, 2012).

Reficco (2012) compares the responses of a sales manager and an operations manager to

provide an example which exhibits conflict of performance indicators or targets within a

large organisation. The operations manager embraced the BOP project since delivering

successfully on the BOP project was increasing his or her performance ratings. Conversely,

the sales manager disregarded the project as his or her sales targets were negatively

affected by the BOP project.

Cognitive barriers:

On the concept of inclusive business, the perception of a zero sum relation between

financial value created for companies and social value built for communities leads large

corporations away from exploring BOP initiatives for profitability, and almost defaulting

the initiatives to social responsibility (Reficco, 2012). Similar to Wanasika's (2013) non-

benevolent business case view, Reficco (2012, p.8) suggests “…companies should view it

[BOP] shamelessly as an opportunity to make money with the poor.”

Risk aversion is also a cognitive barrier as large corporations are resistant to change and

risk-taking (Reficco, 2012). Munoobhai (2015) states that when managers deal with low

income markets, a major transformation to their mental models is required because the

market is different to the markets they are accustomed to. Top managers develop

subjective views of their operating environment which in turn steer their strategic decisions

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and actions, and affect a company’s priorities. In other words, it is not the objective

environment that drives a company’s decision making but rather top managements’

subjective cognitive representations that do so. Managers experience difficulties when

having to change their mindset or criticise or re-evaluate their own methods. However

Dhanaraj and Khanna (2011, p.690) state that “If the dynamics of institutions and markets

are not factored in the mental models, executive thinking can remain frozen in the past and

can be a major stumbling block to recognising current reality.” Dhanaraj and Khanna

(2011) suggest five tools for shifting mental models: anchor learning content on

compelling theory; exposure to variations across emerging markets; emphasise diverse

goals of business to provoke thinking that is beyond profit-making; utilise a multi-method

approach; and learn by doing. The tools would enable the following: existing mental

models to be challenged; assumptions to be exposed in a systematic way; and the provision

of an alternative compelling and coherent model (Dhanaraj & Khanna, 2011).

Apart from internal barriers inherently found in large corporations because of their general

makeup, Reficco (2012) also discusses external barriers, which are: misalignment of

opportunities and core competencies, and attractiveness of BOP market segment.

Misalignment of opportunities and core competencies:

Reficco (2012) draws from his research and emphasises the importance of the alignment

with the main value chain of an organisation to the BOP value chain of an organisation. He

further claims that “…the greater the alignment, the higher the chances for success”

(Reficco, 2012, p.9). Conversely, “the greater the leap from the established main line of

business to the BOP initiative, the higher the risks. Indeed, stronger successes seem to have

hinged on incremental innovation, supported by existing models and assets” (Reficco,

2012, p.9). Citing Porter (1996), Reficco (2012) asserts that strategy is a choice and

serving the BOP market in a commercial way is a choice which will only make sense if the

market proves attractive and organisational core competencies are aligned with the

market’s opportunities. This is in contrast with the more popular held view that radical

innovation is required to succeed at the BOP (Reficco, 2012).

Attractiveness of BOP market segment:

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Reficco (2012) claims that the size of the market opportunity is generally big enough to

induce large corporations to make investments and to take on change in order to take

advantage of market opportunity. He also claims that unfortunately, the perception of

opportunity at the BOP does not seem attractive enough for large corporations as yet

(Reficco, 2012). BOP markets have an inconsistent supply of basic services, they have

limited or no access to financial support which makes it difficult for companies to transact

with them and there is a lack of infrastructure such as communication and transportation.

These characteristics are the cause of its unattractiveness for many companies (Munoobhai

2015).

Reficco (2012) relates market attractiveness to the allocation of resources, and finds that

companies often claim that there is not enough market intelligence nor is there adequate

know-how available within the large corporation to take advantage of BOP opportunities –

yet, the large corporation is prepared to invest in resourcing to obtain market intelligence

and know-how to take advantage of the attractive opportunities in other markets. Reficco

(2012) then suggests that BOP initiatives must be seen as actual opportunities rather than

inclusive business opportunities, in order to ensure that appropriate investment and

monitoring is applied by the large organisation.

In addition to the abovementioned internal and external barriers Reficco (2012) mentions

that many organisations do not track or monitor BOP initiatives as diligently as the core

business is tracked or monitored. Furthermore, the main driver for pursuing the BOP is for

public relations. Therefore, Reficco (2012) states that as long as large corporations

“are mostly attracted to the BOP to enhance their reputation or boost their public relations,

they will be more inclined to ‘show’ that they care about it than to actually take some risks.

Inclusive business ventures may end up being perceived as a defensive tool, a means to

safeguard a vulnerable reputational spot, rather than a true opportunity to seize” (Reficco,

2012, p. 10).

The above again points to a cognitive barrier since it stems from management’s perception

and would require a change in mindset (Reficco, 2012) (Olsen & Boxenbaum, 2009)

(Munoobhai, 2015).

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Perrot (2013) states that organisational change can take different forms. Change can take

place at a conceptual level such as mindset, culture or strategy; or change can occur at a

more concrete level such as organisational charts or job activities. When a company is

faced with a situation in which its capabilities (meaning its capacity to deploy resources to

perform an activity efficiently) do not allow that company to perform in a market, the

company can choose to acquire new capabilities either internally through research and

development, or externally through joint ventures and company acquisitions. When

entering BOP markets a company can manage capabilities by leveraging existing

capabilities in a way where the mainstream business model is modified to deliver products

or services – this approach would be “related to a market capture strategy of existing BOP

markets” (Perrot, 2013, p.4). The second alternative is to develop new capabilities to fit

market conditions by acquiring knowledge and resources which will enable it to overcome

BOP challenges – this approach would be termed a market creation strategy. Market

creation strategies are associated with the facilitation of learning and change. Similar to the

BOP Protocol by Simanis and Hart (2008), which emphasise co-creation within a BOP

market, market creation strategies are also the preferred strategy for targeting the BOP

market (Perrot, 2013). However, Reficco (2012) suggests that the first approach of altering

the business model is the preferred approach.

In line with the above strategies, two themes have emerged on organisational change

namely, the need for a company to either exploit existing capabilities by adapting them

slightly – the focus being on core capabilities and existing resources; or the need for a

company to explore new capabilities by adapting its business model and entering a new

market – the focus being on innovative ideas, flexibility and discovery of new

competencies (Bedford, 2015). Focusing too heavily on either alternative can be

detrimental to the company since exploitation causes rigidness that hinders a company’s

ability to adapt, whilst exploration shifts a company away from its core capabilities which

can be destructive in the case of repeated failure. Perrot (2013) asserts that companies must

combine exploration and exploitation activities for successful change. Thus, companies

need to be ambidextrous in their approach (Perrot, 2013).

Perrot (2013) cites Olsen and Boxenbaum (2009) who identify conflicting mindsets and

changes to routines as organisational barriers in the implementation of BOP strategy.

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Perrot (2013) analysed the changes that took place within a global cement company

Lafarge, over a period of three years with regard to its approach to the BOP market. At

first top executives doubted that the BOP market was a realistic business opportunity but at

the end of the three year period their mindset had changed and Lafarge set up a dedicated

organisation to address the BOP market in 12 countries.

Perrot (2013) used Simons' (1995, 2000) four levers of control for implementing strategy

to analyse Lafarge’s change in approach to the BOP and its triggering factors. Simons

(2000) suggests that the four levers create a tension between predictable goal achievement

and innovation and should be used in a way that they complement each other to bring

about profitable growth.

Perrot (2013) describes Simons' (1995, 2000) four levers as:

• Diagnostic control systems:

! exist to ensure that work gets done by measuring the actions which contribute

to the organisational outcome. Examples are KPIs and incentive schemes;

! are used to exploit existing capabilities.

• Interactive control systems:

! processes and decisions that afford management enough flexibility to consider a

new positioning of the company which could result in a new strategy. Examples

are budgets and reward schemes for unusual thinking;

! are used to ensure exploration of new capabilities.

• Boundary systems:

! set down the core area and focus of the company;

! describe a company’s positioning in the industry and its core business;

! are part of the cognitive framework meaning it affects mindset and culture in

the company.

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• Belief systems:

! sets out core values such as integrity or innovation;

! are part of the cognitive framework meaning it affects mindset and culture in

the company (Perrot, 2013).

Using the above four levers, Perrot (2013) analysed the change in Lafarge’s approach

towards the BOP, in particular what changes in the boundary and belief systems were

needed to engage at the BOP and whether a diagnostic control system impeded the

development of BOP programs (Perrot, 2013).

Prior to 2007, Lafarge had some experience in developing programs targeted at low

income consumers but these projects did not become major opportunities. As part of its

CSR initiatives Lafarge provided housing to families living close to its production sites and

partnered with NGOs to build houses for the underprivileged in certain countries.

Lafarge’s business model focused on the production of materials which it sold to local

distributors from the door step of production sites. It did not enter the distribution chain

and for Lafarge a ‘customer’ meant a contractor or distributor who purchased in bulk.

Therefore a BOP end-user buying small quantities was not a ‘customer’ for Lafarge and

such person remained outside the scope of its marketing studies. Furthermore, Lafarge

found it challenging to contribute to a major as well as stable reduction in construction

cost, since its cement is sold through distributors who incur transportation and storage

costs prior to selling to end-users and cement represents only a 15% of the total cost of

construction (Perrot, 2013).

In 2006, Lafarge strongly emphasised its core activities of cement and concrete production.

As a result, attempts to address the BOP market as a business model that went beyond the

boundary system of the company did not receive support. In 2007, the failure of a Lafarge

housing solution in rural India reinforced the idea that the BOP segment should remain a

CSR imperative and the business should not go downstream and set up as a constructor

promoting low-income housing. Therefore, Lafarge’s belief system with regard to the BOP

segment was that the BOP segment was a constraint that was external to the company’s

business model (Perrot, 2013).

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Action research was prompted by the above and was undertaken by Perrot (2013). More

importantly, the fact that Lafarge’s main competitor Cemex had launched a successful

BOP program which provided access to micro credit which low-income consumers used to

purchase materials and build their houses was also a major contributor to launching the

action research within Lafarge. At the end of the three year action research undertaken at

head-office and subsidairy level in the targeted countries, the perception of the BOP

segment had changed thereby demonstrating a change in the company’s belief system. The

BOP segment became a business issue rather than a philanthropic one and it became the

new strategic priority within the context of new business development (Perrot, 2013).

Perrot (2013) identified three phases in the change which occurred at Lafarge in relation to

perception of the opportunity at the BOP:

• Phase 1 Raising awareness –

! benchmarks of BOP initiatives carried out by competitors and peer companies

were produced to get the attention of management;

! creating management awareness of the BOP segment in order to assist

managers to understand and overcome confusion about whether the BOP

segment was a public relations matter or business opportunity, by preparation of

an article based on the analysis of external case studies; interviews with

managers at Lafarge who were responsible for its previous BOP projects; and

interrogation of BOP program managers in other companies;

! a memo setting out how a BOP pilot project that was being developed in Aceh

(Indonesia), which involved the extension of micro-credit for housing could be

implemented on a wide scale through a special financing vehicle – the memo

resulted in the launch of the BOP pilot project without any objection to the

progress of the project;

! interviews were conducted with top executives, several regional managers and

functional directors. The results indicated that the BOP segment was associated

with philanthropic activities that Lafarge had previously implemented, and

Larfarge’s failed projects in China and India. It also appeared that the

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interviewees were not aware of successful approaches to the BOP market

undertaken by competitors. However, building on the experience of competition

and peer companies as a possible approach to the BOP market was welcomed

by most interviewees. Interestingly, when the interviewees were questioned

about the reasons why Lafarge should consider the reinforcement of its social

approach, answers given included the need to strengthen the loyalty and pride

of Lafarge employees, to learn from new business models and the market

opportunity at the BOP;

! a note was prepared to address how Lafarge could reinforce its societal

engagement. The note which recevied positive feedback from the CEO,

articulated how other companies managed to develop programs that embedded

a social and economic mission and how Lafarge could do the same by

addressing the housing needs of the BOP;

! in order to sensitise parties to the topic of housing, visits to slums in Paris were

undertaken and meetings with NGOs and social entrepreneurs were organised

(Perrot, 2013).

• Phase 2 Experimenting on a small scale –

! two BOP pilot projects in Aceh and Medan (Indonesia) contributed to

sensitising the top managers at Lafarge. The pilot project in Aceh was achieved

firstly through the action research since it provided time to convince Lafarge’s

managers about launching the project on a small scale and secondly through the

partnership with NGO Care France. The first results of the two BOP pilot

projects changed the perception of the BOP within Lafarge since it illustrated

the impact on the lives of the poor and profitability of the business models

albeit on a small scale. The fact that Lafarge’s cement was sold without

discount demonstrated that the BOP approach for Lafarge was not linked to

product downgrade or a reduction in price but rather a change to the business

model and the right partnerships (Perrot, 2013).

• Phase 3 Building a business case for wider engagement –

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! a special team was launched to assess the size of the BOP market opportunity

and initiate projects in various countries with the goal being to identify potential

financial value and make recommendations on how to address the BOP market.

This resulted in the preparation of a more precise report in respect of market

size, business opportunity, expected volumes and internal rates of return;

! the pilot projects proved that there was opportunity for additional sales through

the development of supplementary services. A further memo was prepared

which set out the possibility to scale up the BOP pilot project in Aceh and this

memo received positive feedback from the CEO which led to further

investigation in the context of a strategic plan and subsequent consensus that

the BOP segment was then considered a significant market opportunity;

! prior to this, Lafarge was focused purely on its traditional core business. The

new mindset and realisation of market opportunity resulted in the launching of a

corporate program to develop revenues through unusual approaches. This was

also considered as testing of Lafarge’s boundary systems (Perrot, 2013).

According to Perrot (2013) the above three phases show a shift in the belief system which

constitutes a first step in organisational change towards perceiving the BOP market as a

business opportunity – these three phases display elements of the five tools for shifting

mental models as suggested by Dhanaraj and Khanna (2011).

However a company’s boundary system, diagnostic control sytems and interactive control

sytems strongly influence the type of BOP strategy that can be successfully implemented

by a company (Perrot, 2013):

• Diagnostic and interactive control systems – market capture projects can be integrated

into diagnostic management control. For example the BOP pilot project in Medan

involved the sale of cement and therefore there was limited change to Lafarge’s

business model, and it was also aligned to performance objectives such as short term

financial results. As a result, local managers found it feasible to integrate the project

since it was compliant with their performance measurement system – diagnostic

control sytem. In contrast, the BOP pilot project in Aceh was based on a market

creation strategy and involved entry into the credit market by the provision of

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microfinance with a long-term pay off. This strategy was difficult to integrate since

there were no short term results that were aligned with the diagnostic control system.

Since market creation projects may be perceived as downgrading performance

indicators in the short term, they are unlikely to be developed by a business where a

predominantly diagnostic management control system exists. They are more likely to

be feasible in a flexible environment where a more interactive control system exists.

On the other hand, market capture projects are more likely to occur in a diagnostic

control system environment for example, strictly defined KPIs, managers driven by

short-term objectives, bonus schemes and business performance indicators geared

towards financial objectives (Perrot, 2013).

• Boundary system – BOP market creation projects are likely to be feasible when

boundary systems are not rigid. BOP market capture projects are more likely to occur

when boundary systems are strictly defined. Perrot (2013) explains that at the

beginning of the research period at Lafarge, the strategic focus was cement production

and cost reduction and this focus delineated the ‘boundary’ of core business. Initiated

at head-office level, the boundary system was tested during the research period. At the

end of the research period there was a change in the boundary system since there was a

strong focus on innovation in operations and the creation of new business

opportunities. Local managers were allowed to innovate with end-users and low

income consumers and not only traditional customers such as distributors and

developers (Perrot, 2013).

This is aligned to Bedford's (2015) view that diagnostic and boundary systems support

projects that are more exploitative in nature whereas interactive control systems support

projects that are more exploratory, and a balanced and combined use of diagnostic and

interactive control systems is more suited for projects requiring an ambidextrous approach.

Conclusion

The BOP proposition is irresistible for most companies with a sincere CSR focus (Gunther,

2015). While the question of whether business should be concerned about poverty

alleviation may be debated endlessly (Ismail et al., 2012) the researcher emphasises and

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prefers inclusive approaches to business i.e. the combining social impact with commercial

sustainability and profit maximisation (Ashley et al., 2014). Many authors argue that the

BOP proposition is oversold (Karnani, 2007), (Karamchandani et al., 2011) and cite a

range of issues from market information (Cheung & Belden, 2013); no real fortune at the

BOP (Karnani, 2007); environmental issues (Cheung & Belden, 2013); not actually

assisting to alleviate poverty but rather just selling to the poor (Kandachar & Halme,

2008); and unethical marketing by businesses (Ansari et al., 2012). While the BOP

proposition may be questioned, there are success stories and cases, which lend hope to the

BOP cause. Many authors provide approaches for doing business at the BOP (Prahalad,

2012), (Simanis & Hart, 2008), (Simanis, 2012), (Ismail et al., 2012).

There are differing views on precise metrics to be used when calculating BOP income,

population, and market opportunities (SAARF, 2014), (Rangan et al., 2011), (Karnani,

2007), (Chipp et al., 2013). Various authors claim that an understanding of the general

characteristics and unique elements of a targeted BOP population is needed for an

organisation to develop a unique approach to the BOP (Simanis & Hart, 2008), (Prahalad,

2012), (Rangan et al., 2011), (Chipp et al., 2013). Therefore, it is argued that segmentation

is key for pursuing opportunities at the BOP (Ashley et al., 2014). However, most authors

claim that ICT presents significant opportunity for innovation and enablement of unique

business models. ICT companies are best placed to innovate and advance populations out

of poverty, thereby fulfilling the BOP proposition (Ashley et al., 2014) (Prahalad &

Hammond, 2002).

Barriers that prevent organisations from entering BOP markets could be internal and/or

external. In terms of external barriers, the main barriers are framed within market

characteristics (Karamchandani et al., 2011), lack of market information (Cheung &

Belden, 2013), institutional barriers (Wanasika, 2013) and lack of infrastructure (Prahalad

& Hammond, 2002). In terms of internal barriers to entry of BOP markets, Olsen and

Boxenbaum (2009) find cognitive, processual or structural barriers. Building on the

barriers identified by Olsen and Boxenbaum (2009), Reficco (2012) provides further

examples of these barriers through his research as well as examples of external barriers.

Similarly, Perrot (2013) builds on the original findings of Olsen and Boxenbaum (2009),

however Perrot (2013) introduces a management control systems framework i.e. the four

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levers of control by Simons (2000). Many barriers are cited by many other authors such as:

Karamchandani et al. (2011), Prahalad and Hammond (2002), Wanasika (2013), Ismail et

al. (2012), Munoobhai (2015), Dhanaraj and Khanna (2011), Simanis (2012) and Ansari et

al. (2010). While these authors cite barriers, almost all internal barriers may be contained

within the cognitive, processual, structural barriers (Olsen & Boxenbaum, 2009) or within

the four levers of management control systems (Perrot, 2013) (Simons, 2000).

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TheoreticalConceptualFramework

Based on the researcher’s literature review as contained in the preceding section the

researcher created a theoretical conceptual framework in relation to the research problem

which was used to guide the development of the analysis of this case study (Kohlbacher,

2006) (Tellis, 1997) (Darke, Shanks, & Broadbent, 1998):

Figure 12: Theoretical conceptual framework based on literature review.

MarketIntelligenceCognitive Structural Processual MarketCharacteristics

InteractiveSystems InfrastructureDiagnosticSystems Institutional

BoundarySystemsBeliefSystems

InternalBarriers

External

Barriers

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ResearchMethodology

ResearchApproachandStrategy

This research study aims to explore barriers preventing Dimension Data South Africa from

pursuing the BOP market. The enquiry is exploratory in nature since the research seeks to

discover the barriers within the context of Dimension Data South Africa for the first time.

A qualitative research strategy was employed since qualitative methods are more suited to

real-world research projects (Hayes, 2000). In putting forth the main points of what

qualitative research is, Kohlbacher (2006) cites a list of defining characteristics for

qualitative research given by Cassell and Symon (1994, p.7):

“a focus on interpretation rather than quantification; an emphasis on

subjectivity rather than objectivity; flexibility in the process of conducting

research; an orientation towards process rather than outcome; a concern with

context – regarding behaviour and situation as inextricably linked in

forming experience; and finally, an explicit recognition of the impact of the

research process on the research situation.”

A qualitative research strategy is generally associated with an inductive approach, which is

characterised by moving from particular facts towards generalisations and theories i.e.

bottom-up approach (Trochim, 2006). Pratt (2009) argues that a qualitative approach

brings about an opportunity for creative responses and ideas, thereby giving the researcher

a rich in-depth view of the intricacies pertaining to the research question asked.

ResearchAssumptions

A general assumption of qualitative research is that multiple realities exist in any study,

therefore qualitative research is open to interpretation based on one’s view of reality.

Accordingly, the researcher guarded against “preconceived notions” during the theory

building process (Egan, 2002, p.278). The researcher also paid attention to the researcher’s

own theoretical sensitivity, as per Glacer and Strauss (1967) cited by Egan (2002).

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Another assumption of qualitative research is that accuracy of the information that is

obtained may need verification. The researcher assumed that participants answered

accurately and honestly giving rise to sound findings. This assumption is justified based on

assurance of confidentiality and anonymity given to the participants by the researcher. The

researcher also informed the participants that their participation was voluntary and that

they were able to withdraw at any time (Simon, 2011). However, in order to mitigate the

risk of inaccuracy, the researcher triangulated the data by comparing the data across

participants’ responses (Munoobhai, 2015). Triangulation is where one piece of

information is verified using different sources in order to confirm the validity thereof

(“Qualitative research,” n.d.).

The researcher was cognisant of the above assumptions during the research design phase,

data collection, instrument preparation and research analysis phase.

ResearchDesign,DataCollectionMethodsandResearchInstruments

Research design specifies methods and procedures for fulfilling research objectives and

answering research questions i.e. collecting, analysing and validating information needed

for research. The key issues of research design are: generalisability, reliability and validity

(Adams, 2007).

This exploratory, qualitative research made use of single case study design (Darke et al.,

1998). Yin (1984, p.23) as cited by Soy (1997), defines the case study research as:

“an empirical inquiry that investigates a contemporary phenomenon within its

real-life context; when the boundaries between phenomenon and context are

not clearly evident; and in which multiple sources of evidence are used.”

“For the novice research a case study is an excellent opportunity to gain

tremendous insight into a case. It enables the researcher to gather data from a

variety of sources and to converge the data to illuminate the case” (Baxter &

Jack, 2008, p.556).

Furthermore, Darke et al. (1998) state that single case studies allow researchers to

investigate phenomena in an in-depth way in its natural context to bring about rich

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description and understanding and is appropriate where it represents a critical case, unique

or revelatory case. Case studies are widely used in organisational studies, are well suited to

creating managerially relevant knowledge and have provided ground-breaking insights to

the strategic management field (Kohlbacher, 2006) (Gibbert, Ruigrok, & Wicki, 2008).

Accordingly, the case study method is particularly useful in business research and analysis

of organisations and was appropriately suited to explore and provide a better understanding

of what barriers prevent Dimension Data from pursuing the BOP market (Adams,2007).

Kohlbacher (2006) states that according to Yin (2003, p. 21-28) there are 5 components of

research design which are essential for a case study:

1. A study’s questions;

2. Its propositions, if any;

3. Its unit of analysis;

4. The logic linking the data to propositions;

5. Criteria for interpreting the findings.

Darke et al. (1998) state that the design and scoping of a case study research must be

preceded by a comprehensive literature analysis in order to understand the existing

literature within the research area and position the research question – the researcher

therefore embarked on a literature review of the research area prior to formulating the

research question for the study.

Darke et al. (1998) further advise that in order to gain the support of the participant

organisation the research question must be interesting and important to the organisation.

The organisation should attain some benefit out of the research, such as an overview of the

organisation’s position in relation to the research question or a rich description and

understanding of the nature of the phenomena within the organisation – the researcher

believes that the research question and this case study in general provides benefit to

Dimension Data, since it provides the entity with opportunity to review its position, and

reconsider its approach and product offering with regard to the BOP market in South

Africa, and perhaps the world .

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Citing Yin (1994), the unit of analysis is explained by Darke et al. (1998) to be a unit that

identifies what constitutes a ‘case’. A complete collection of data for one study of the unit

of analysis would constitute a single case. Accordingly, the unit of analysis may be an

individual, a group, an organisation or an event or phenomena (Darke et al., 1998, p.280)

and in this case study the unit of analysis is Dimension Data South Africa.

Not all studies require a proposition, for example an exploratory study could have a stated

purpose instead of a proposition (Tellis, 1997) – this study being an exploratory case study

is not premised on any theoretical propositions, however based on the researcher’s

literature review the researcher developed a theoretical conceptual framework in relation to

the research problem which was used to guide the development of the analysis of this case

study (Tellis, 1997) (Darke et al., 1998) (Kohlbacher, 2006).

Founded on literature of well-known case study researchers Stake, Simons and Yin, Soy

(1997) proposes a 6 step technique that may be used to practically organise case study

research:

1. Research questions must be determined and defined;

2. Selection of a case and determination of data gathering and analysis to be used by the

researcher;

3. Preparation for data collection;

4. Collection of data in the field;

5. Data evaluation and analysis;

6. Report preparation (Soy, 1997).

The researcher was guided by the above technique in conducting the case study.

Interviews allow the researcher best access to participants’ views and interpretations of

actions and events. For case study research, interviews are considered essential and one of

the most important sources of data (Darke et al., 1998) (Tellis, 1997). Useful data sources

such as internal magazines and organisational bulletins which are circulated within the

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organisation can be used to supplement data from other sources since they can provide a

reflection of the organisation’s culture and current issues (Darke et al., 1998). The

researcher used semi-structured interviews as the primary source of data to gather new

first-hand information for the case study, based on the assumption that Dimension Data

does not possess adequate secondary sources to investigate and answer the research

problem (Adams, 2007). The Dimension Data website was used as a secondary source of

data to gain information in relation to its market position, accolades, CSR initiatives etc.

Leacock, Warrican, & Rose (2009) advise that an interview schedule should be prepared if

data is collected using semi-structured interviews. The interview schedule contains

questions which are focused on the research question and research problem in general and

should be reliable and valid. Open-ended questions are used when the researcher wishes to

avoid suggesting a response from the interviewee and wants the interviewee to respond in

his own words, thus allowing the interviewee freedom of expression which further allows

for the collection of rich and in depth data (Leacock et al., 2009). Accordingly, as a

research instrument, an interview schedule was prepared containing open-ended questions

which were used to guide the researcher during the interview process (refer to Appendix

A). The researcher relied on the literature review to assist in targeting and formulating the

questions so that insightful questions focused on the research problem were posed.

It is important that the researcher understands the purpose of the study, is able to grasp

issues and is open to contrary findings during the data collection phase Soy (1997). The

researcher acknowledged the above and guarded against not feeling threatened by

unexpected change Soy (1997).

As soon as the data is collected it must be documented and organised. A case study data

base is used to store the case study data and must be organised in way that allows ready

access to the data during and after the research period (Darke et al., 1998). The researcher

took notes during the interviews and also voice recorded the interviews with the

participants’ permission for the sake of accuracy and completeness (Munoobhai, 2015).

Leacock et al. (2009) state that where the researcher electronically recorded the interviews

then the data should be compiled by transcribing the responses verbatim or in a way that

records the participants’ responses in a concise way which still captures the essence of the

answer Leacock et al. (2009). Therefore even though notes were taken during the

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interview, the voice recorded data was transcribed. All data for this case study is stored on

an electronic database.

Sampling

The researcher employed purposive and snowball (network or chain) sampling techniques.

Leacock et al. (2009, p.213) define purposive sampling as “a non-probability sampling

technique that involves selecting participants for a study because they possess

characteristics that make them rich sources of information”. Leacock et al. (2009, p.214)

further define snowball sampling as “a non-probability sampling technique in which the

researcher locates participants through by making contact through other participants.

Snowball sampling allows reduced sample size and most importantly, targets members

who are involved in a similar network or characteristic or interest (Adams, 2007). The

sampling criteria were based on the sample’s responsibility for or ability to influence:

overall business strategy, organisational change; new business models, products, services

or CSR initiatives; and/or entry into new markets such as the BOP, for Dimension Data

South Africa. The participants were from amongst key executives, business development

managers, business unit managers, product managers, financial managers and solution

consultants operating at Dimension Data group, regional and subsidiary level.

Although the researcher would have preferred to interview every person in Dimension

Data who matched the sampling criteria, it was not possible due to time constraints. The

researcher was able to interview 13 samples and the researcher deemed this number as

adequate to draw conclusions (Munoobhai, 2015).

DataAnalysisMethod

There are a number of approaches to analyse data from interviews, observations and

written documentation. Qualitative data analysis aims to detect patterns; deviants and

oddities; detect conformance (compare to theory); classify; construct models; and to test or

validate (Adams, 2007).

According to Leacock et al. (2009), when analysing narrative data such as responses to

semi-structured interview questions the researcher may analyse the responses question by

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question, looking for patterns, trends, commonalities or differences and record the findings

using codes or comments. Alternatively, instead of focusing on responses to specific

questions, the researcher may analyse the narrative data by broad themes or issues –

Leacock et al. (2009, p.138) state that this particular approach “is suitable when the data

were collected by interview, where the questions may not have been asked in exactly the

same way, but the same issues were explored.” Using this approach the researcher reads

the interview data several times looking for places where the respondent touched on or

addressed themes or issues. These themes or issues can be identified beforehand, or the

themes or issues can emerge from the narrative data itself (Leacock et al., 2009).

The purpose of coding is to methodically move to a higher conceptual level. The initial

codes can be referred to as open coding or level 1 where the codes are more literal and

closely represent the original data. To move to a higher conceptual level the researcher

then recognises categories that the level 1 concepts may fall into and accordingly the

coding proceeds to level 2 or category codes. The next level of coding involves taking the

coding to an even higher level where themes or theoretical concepts emerge – the

researcher does so by keeping the original study topic in mind and noting patterns in the

categories (Yin, 2011).

The researcher followed the approach suggested by Leacock et al. (2009) where the

researcher analyses the narrative data by broad themes or issues by looking for places

where the respondent touched on or addressed those themes or issues. This approach was

used since the open-ended interview questions were not asked in exactly the same way but

the same issue were explored – the researcher was probing for potential barriers preventing

BOP market entry. In adopting the above approach, each participant’s interview data was

read by the researcher several times to familiarise himself with the data. Thereafter, using

Yin's (2011) process in the preceding paragraph, the researcher embarked on the analysis

of the data by coding the data and developing categories of barriers using notes, keywords,

colour coding and Microsoft Excel software. The researcher was guided by the theoretical

conceptual framework (Figure 12) in the development of the analysis. The categories were

evaluated based on the number of occurrences per category (Leacock et al., 2009) (Soy,

1997) (Adams, 2007) (Darke et al., 1998) (Munoobhai, 2015) (Yin, 2011) (Kohlbacher,

2006) (Tellis, 1997).

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The findings which in this case were the barriers discovered from the data analysis process

were discussed in light of the theoretical conceptual framework in relation to the research

problem and compared to the literature which emerged from the researcher’s literature

review, in order to establish the level of consistency between the findings and the literature

(Kohlbacher, 2006). Generalisation of the findings is thus made to theory – analytical

generalisation, and not populations – statistical generalisation (Tellis, 1997).

ResearchCriteria

Reliability is essentially the consistency of measures and is checked in two ways, first by

repeatability (test-retest method), and second by examining internal consistency (split-half

method) (Adams, 2007). Similarly Soy (1997) refers to reliability as the stability, accuracy

and precision of measurement. The researcher ensured that research collection and analysis

procedures were documented and the interview schedule, interview response notes, voice

recordings and transcriptions have been electronically stored on a database to ensure

transparency and the reliability of results if repeated (Gibbert et al., 2008) (Munoobhai,

2015) (Soy, 1997).

According to Adams (2007) validity is the accuracy of measurement and is concerned with

the strength of the researchers conclusions, inferences and propositions. Three types of

validity are: construct validity, internal validity, and external validity.

Internal validity refers to the causal relationship between variables and results and is more

important in causal studies rather than exploratory studies. It requires logical validity of the

conclusions. For this research internal validity was enhanced by triangulation of data

across participants’ responses and then against existing literature (Gibbert et al., 2008)

(Soy 1997) (Tellis, 1997) (Munoobhai, 2015).

Whereas internal validity refers to the data analysis phase, construct validity is considered

during the data collection phase. “Construct validity refers to the extent to which a study

investigates what it claims to investigate, i.e. to the extent to which a procedure leads to an

accurate observation of reality” (Gibbert et al., 2008, p.3). In order to enhance construct

validity the researcher has established a clear chain of evidence which allows the reader to

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reconstruct the journey from research questions to research conclusions (Gibbert et al.,

2008).

External validity refers to the generalisability of the research results to other settings and

situations (Adams, 2007) (Gibbert et al.,2008). According to Eisenhardt (1989) literature

that discusses similar findings is important and tying emergent theory to existing literature

enhances validity and generalizability. It is argued that although case studies do not allow

for statistical generalisation they are not devoid of generalisation altogether, since case

studies may allow for analytical generalisation. Eisenhardt (1989) as cited by Gibbert et al.

(2008), argues that cross case analysis involving four to ten case studies may provide a

good basis for the analytical generalisation. With regard to generalisability of interpretive

case study research, Darke et al. (1998) drawing on the work of Walsham (1995) say that

explanations of phenomena that are derived from the research may be valuable in other

settings or organisation as interpretations of phenomena, even though not completely

predictive for future situations. Since this research work was based on a single case study

cross case analysis was not possible however the researcher has provided full details on the

case study context as suggested by Gibbert et al. (2008) so that other organisations may

learn from the findings and perhaps use it to reconsider their own position in relation

thereto.

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ResearchFindings,AnalysisandDiscussion

ResearchFindings

The research question for this case study is: what are the barriers preventing Dimension

Data from pursuing the BOP market?

The researcher conducted thirteen semi-structured interviews with employees from

Dimension Data based on purposive and snowball sampling to gain insight and answer the

research question.

The sampling criteria were based on the sample’s responsibility for or ability to influence:

overall business strategy, organisational change; new business models, products, services

or CSR initiatives; and/or entry into new markets such as the BOP, for Dimension Data

South Africa. The participants were from amongst key executives, business development

managers, business unit managers, product managers, financial managers and solution

consultants operating at Dimension Data group, regional and subsidiary level. An

interview schedule was used as guidance by the researcher during the interview process

(refer to Appendix A).

Based on the researcher’s literature review the researcher created a theoretical conceptual

framework in relation to the research problem which was used to guide the development of

the analysis of this case study (Darke et al., 1998) (Kohlbacher, 2006) (Tellis, 1997). The

collected data was analysed by researcher using the analysis method as set out in the

Research Methodology section of this document.

The findings from the research data are set out below together with participants’ data

related to the finding:

Profitability

All 13 participants mentioned that profitability was a key aspect for any business case or

opportunity in Dimension Data - whether part of market entry criteria or measuring success

in markets. Some participants mentioned that entering the BOP would be purely for profit

purposes. Several participants mentioned the importance of high gross domestic product

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(GDP) when participating in a large economic market. Many different forms of financial

terms linked to profitability were mentioned, such as: turnover, margins, operating profit,

net profit and cash flow. An element that was raised in relation to profitability was

timeframe – some participants stated that return on investment (ROI) or profitability must

be ‘quickly’ recouped.

Participant 1 – You had to get there quickly and it had to be quick.

Participant 2 – Our financial metrics do not allow this.

Especially now given the tough financial situation, how much are we prepared to shave off

margin.

Participant 3 – Operating profit and growth in operating profit.

Today, having quick turnaround of working capital cycle is what we will consider more

successful than just operating profit on its own.

Participant 4 – Relatively quickly, we tend to have a short-term mind-set with aggressive

payback ROI or NPV requirements i.e. quick results.

Participant 5 – Money. Sales driven organisation, if it is not profitable we are not going to

go there.

At the end of the day you look at the bottom line and see how profitable you are at the

moment, and then long term for profits on the horizon. Realistically, if the profits are too

far away....

Looking at the market it is long term, rewards are slow, uptake is slow....we are not good

at slow.

Participant 6 – Only financial metrics but unfortunately the truth.

ROI, Return on Capital. Another financial metric is also cash flow, we want to have a

positive cash flow...

Access to capital and ROI – we don’t have shareholders with massive appetite for this.

Participant 7 – Profit. Profit seems to be the overriding factor at the moment.

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Participant 8 – The obvious one would be to atleast be financially viable, in other words

we can make a margin on whatever we are selling.

Participant 9 – Create returns for shareholders.

Participant 10 – So we want to see a sustainable business case where there is value we

can add and there is financial value thereafter.

Participant 11 – Market share, Market positioning, Total Revenue.

In Dimension Data, we are geared to a high value, high margin value proposition in

everything that we do.

Participant 12 – In D[imension] D[ata] financial lense is 90% of determining criteria.

…Invariably ability to generate turnover at a respectable margin-taking cognisance of

overheads to deliver operating profit.

… Cash flow to determine how are we funding the business.

…Balance Sheet.

Therefore there are three financial lenses that we apply.

Participant 13 – In a healthy business, are you making enough money, enough profit, and

is it strategic to be there.

In my mind there are specific levers i.e. always strategic, generate revenue or profit or

operating margin.

This is in the back of my mind on every deal and every opportunity.

BusinessModel

9 out of 13 participants spoke about or referred to business model in their responses. There

is a perception that Dimension Data’s business model is currently not suited to exploit

opportunities at the BOP - reasons cited by the participants varied: payment or collection

mechanisms, infrastructure to deal with mass number of clients, marketing, contact centres,

sales and resources.

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Participant 1 – You could do it. Possibly. How do you collect the money, that is the hard

thing.

We don’t think of end consumers, not in our model and we are not innovative enough.

Participant 2 – Our limitation is that we don’t have the channel and infrastructure to deal

with mass number of clients.

To get down to a consumer level, we would have to have a different business model, more

marketing, more contact centre, less feet on the street.

Participant 3 – Definitely a role to play, I don’t think we are geared to offer consumer

services at scale, but we could offer to other companies.

We are one step away from the BOP; we service companies that may not be focused on the

BOP.

Participant 8 – The actual marketing and selling it will be a challenge because we are not

used to doing that.

We are used to having a reactive selling model, we react very much in terms of tenders,

RFPs.

Participant 9 – Unfortunately with our current business model, even if we want to serve

clients who serve these markets… the difficulty is that these markets don’t have telecoms

structures, education levels to run those are not available.

DD is not the kind of company that has the resources to do this – Dimension Data is not

designed for this.

Other companies can because they have the right business models and they are able to

invest into projects.

Participant 10 – Making money and finding different models that could work for the BOP.

Very interesting concept, I suppose one has to decide on whether they have the appetite for

that, and whether they would want to pursue this business model as opposed to business

models that exist today.

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We will not break the key principles of our business model. But we can relax some of the

expectations in given markets based on risk-reward assessments.

Participant 11 – We have enabling technology, but no consumer abilities whatsoever.

We customise for many projects and solutions, we are slowly changing this to a vanilla

offering.

80% of our business is bespoke solutions, so we cannot sell at scale and at low margin.

Participant 12 – In the BOP you always compete on price, you don’t compete on value.

Dimension Data tries not to compete on price. In the BOP, price is everything.

I think that when one looks at this holistically got to have a view of what type of business is

suited to every market. Not every business is suited to every market.

So you calibrate business to your target we sell sophisticated ICT to educated wealthy

entities.

Participant 13 – [Dimension Data’s current] Engagement model, fairly intensive from

both an overhead and people perspective. Entire engagement model will need to change.

TargetMarket

8 participants out of 13 participants mentioned that end consumers were not Dimension

Data’s target market. Rather, large enterprises and multinational organisations were

Dimension Data’s target market since Dimension Data focuses on business-to-business

transactions.

Participant 1 – We don’t think of end consumers, not in our model and we are not

innovative enough.

Our challenge would be interaction with consumers, we don’t know how to interact with consumers. So we need a distribution or partnership to interact with consumer.

Are we in a consumer market - no.

For consumers, I struggle to find examples of what we could do successfully.

Participant 2 – We are not in the consumer space, if you are an MTN, your proposition is

a no brainer.

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If you look at Unilever, their core business is consumed by individuals, consumers.

Our challenge is that we are not big, and we don’t service the consumer market.

Participant 3 – BP or Unilever have to be focused from a product perspective to satisfy

the consumers need or how they could access that environment.

To get down to a consumer level, we would have to have a different business model, more

marketing, more contact centre, less feet on the street.

Our culture is certainly around supporting enterprise clients. The culture of supporting

consumers, I don’t know if we have that ability.

So if we can do both, and there is something to take to market, I'm pretty sure the

shareholders will be prepared to listen. But then, I suppose everyone would say that we are

not in the consumer business.

Our business is built around enterprise clients, in private or public sector. We need those

economies of scale.

We have too much cost in our business to support smaller clients.

Participant 4 – To put some context to the start of this, both Dimension Data and Internet

Solutions are not consumer companies, and all group companies, so the challenge there, I

guess, is finding how we could support the consumer companies that concentrate on this

space.

We not a consumer company.

Participant 6 – Experience running consumer segments.

We have a strategy for marginal for consumers but it is very, very minor. Certainly not

customisation of strategy for this BOP space. This is a part of the consumer market.

Participant 8 – The actual marketing and selling it will be a challenge because we are not

used to doing that.

Participant 9 – The concept mostly easily applies to consumer goods companies that have

saturated other markets. In Dimension Data’s case, we don’t believe that our market focus

is saturated at the moment.

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We target exclusively business to business, large domestic or bigger clients. So that is our

target market.

Participant 13 – Engagement model, fairly intensive from both an overhead and people

perspective. Traditional Dimension Data service/account managed view of the world is not

appropriate when dealing with revenues per user.

Dimension Data engagement would have to logically be quite different.

Opportunistic

7 out of 13 participants discussed the opportunistic nature of Dimension Data. While

Dimension Data innovates and exploits opportunities, participants view these opportunities

as readily available. Considering that most innovation was accomplished through existing

or easily found opportunities, one participant even questioned whether Dimension Data is

innovative enough.

Participant 1 – Because we were opportunistic we did stuff.

For one project, there was a brand new thing that I developed, but it did not go any

further. However, then another client called me to help with a similar project - further

reason to prove how opportunistic we are.

....because we are opportunistic, we tend to be a ‘me too’....

Inadvertently, not consciously. We are very risk averse, looking at the contracts we sign,

we take on very little risk. But we will go into Nigeria, it is a risky market, but we had/saw

an opportunity.

Participant 4 – Typically almost opportunistic, into services to support clients

expanding....where there is enough market opportunity then we grow from this base.

Participant 5 – We always went into a company on the back of a deal. Someone will come

to us and tell us we have a deal, perhaps we can handle it. We take a look, a few deals,

then assume there is a business case, and then open a mini office, and then after business

starts to pickup we start an office. We don’t really go looking, we get pulled in.

Some markets have been quite successful, we win the deal and it just grows, we need

people and can’t keep flying them.

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Dimension Data has always been a big bets company, always go after the low hanging

fruits first.

We look for opportunities where it is not difficult to get into and where rewards come fast.

Participant 6 – We are very sales driven, making targeted growth and targeted return on

investment.

Only one criteria, and that is large GDP. We want the biggest economic market.

Another reason is dependant on the landscape of our clients....

Participant 8 – Therefore, if we evaluate an opportunity to sell, if it is not an existing

market, we almost discard it.

We are used to having a reactive selling model, we react very much …

This has to be actively designed a project like this, it will not come walking into your door,

this is a challenge, to get management commitment to it [BOP Initiative] is a challenge.

Participant 9 – As a business opportunity, if the business case we would go for it but one

would have to think very deeply about that business case.

One possibility is we don’t fund it ourselves, someone funds it and wants a company to

help roll it out.

Biggest single obstacle is that we think there are better opportunities elsewhere.

Participant 11 – Therefore we were able to penetrate or open new markets where we

created opportunities and new offerings to the market, giving us first mover advantage.

80% combination of existing things and 20% of what we needed to fill the gaps.

We would only do it for profit, at that scale anyway.

Capability

6 out of 13 participants explored Dimension Data’s know-how or ability to take advantage

of opportunities in BOP markets. Participants mentioned that Dimension Data did not

possess any know-how or sound experience to work in BOP markets. Two participants

suggested that due to lack of experience and capacity, Dimension Data would need to

purchase or acquire the capability from a third party if it entered the BOP market.

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Participant 1 – Our challenge would be interaction with consumers, we don’t know how

to interact with consumers. MS do it through shops, whereas Apple know how to do it, MS

built company mostly on enterprise agreements.

Participant 3 – Culture is certainly around supporting enterprise clients. The culture of

supporting consumers, I don’t know if we have that ability.

There is a different type of service, people, and its own ability and agility.

Example is the sport business; we never thought we would focus on this.

It is not our core focus to alleviate poverty, but it is our core focus to bring return to

shareholders.


shareholders will be prepared to listen.

But then, I suppose everyone would say that we are not in the consumer business.

Look at our sport business for example.

With the Tour de France, we learnt that we have technical capabilities that improve sport.

But even this business is based on big clients who deal with consumers.

It is not our core focus to alleviate poverty, but it is our core focus to bring return to

shareholders.


shareholders will be prepared to listen.

But then, I suppose everyone would say that we are not in the consumer business.

Participant 5 – Manpower. If we closed a deal, it has to be structured so that the

community takes it forward, or a 3rd party company. Dimension Data doesn’t have the feet

to run a low income project.

Participant 6 – We don’t have any strengths in BOP connectivity, no experience in

delivering real solutions to people in that segment.

We could theoretically do it, but I would never say we should do it directly.

We don’t have any experience … providing services to the BOP; experience running

consumer segments.

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A different kind of company provides services to them, eg mobile companies, things that

really enable people in the BOP.

Culture, we don’t have a history of being disruptive innovation. There is a big cultural

component to this.

We don’t have a history of doing that.

Instead of building capacity, we buy the capacity - They should be at scale and relatively

mature.

Participant 9 – DD is not the kind of company that has the resources to do this - DD is not

designed for this.

Participant 11 – I don’t think we have the internal structures or process to service

consumer markets.

We have enabling technology, but no consumer abilities whatsoever.

80% of our business is bespoke solutions, so we cannot sell at scale and at low margin.

Product

6 out of 13 participants’ discussion related to the issue of products. All 6 discussions

implied that Dimension Data has no existing products that would be applicable to the BOP

market. As Dimension Data targets large enterprises and focuses on the business to

business market, their products are more high-end and reliant on infrastructure that is likely

to be lacking in BOP markets. Unique products would have to be developed for the BOP

market.

Participant 1 – We would have to team up with somebody to produce something, I am

thinking more learning.

We typically take a product that is sold to enterprises and resell.

Our offerings are reliant on mobile and data infrastructure which is assumed challenging

in these markets.

Participant 4 – The type of innovation we focus on is much more on corporate products.

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Participant 5 – There could be products that could do something … I think we would look

at it.

Participant 8 – If it is the right product you can alleviate living conditions and alleviate

poverty because the BOP can actually make an income out of it as well if you do it right.

We have to think when we think about new products, projects solutions, we have to think

about this as well.

Participant 9 – ....our ability to sell our own products and services, increasingly have

those offerings be platform or cloud based.

If we add a new product offering, is it one that can we take in a largely standardised way,

does it fit in with our models, sales etc.

Participant 11 – 80% combination of existing things and 20% of what we needed to fill the

gaps.

... I would like to see that we carve out offerings we do have and give more access to small

business etc. I would like to bundle this with financial institutions etc.

StrategicAlignment

5 out of 13 participants discussed Dimension Data’s strategic alignment to the Dimension

Data Group strategy. 3 of these participants represent executive and strategic management.

All 3 emphasised the current drive to standardise business models and products throughout

Dimension Data globally. Furthermore, introduction of new products or services would

only be considered if the products or services were applicable to the global business model.

2 out of the 5 participants also discussed the role of CSR within the strategy. One of these

participants mentioned that CSR initiatives sit outside of the core business and operations,

however these initiatives were meant to aid the long-term strategy. Going forward though,

the participant is hoping that some proposed changes would bring CSR closer to the core

business and operations in order to be more meaningful. The other participant believes that

the CSR initiatives are as a result of Dimension Data abilities and success, and that these

initiatives are providing benefit to the community. This participant believes that CSR

should not be linked to strategy and that CSR should not be for profit purposes.

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Participant 2 – I think at the end of the day, like all companies, we have a responsibility

that there is access to information and knowledge for every South African.

The problem with a lot of the way we do business is that our CSR initiatives sit outside our

business whereas if it is part our business, it cannot be uncoupled hence Unilever etc.,

where their market is impacted by low hygiene levels and levels of health. If you look at 10

- 20 years time, then they contribute to killing their own market so maybe Dimension Data

should look at its market or its ability to reach its strategic objective will be impacted if

these objectives are not reached e.g. Saturday schools.

We have not linked our [CSR] investments towards skills development and acquisition of

skills. Now, we have developed a framework to link all 3 programmes as well as other

programmes to feed into our business.

Participant 9 – The main criteria is that is aligned with our overall strategy

We can create a differentiated offering within our target market.

We want to globally standardise our offerings. This may not be the best approach for any

given market, however, our strategy is to have a narrower scope, but to do it consistently

globally. As a consequence, we don’t pursue niche markets, that would require niche or

bespoke systems. The next phase is to have a consistent offering in all markets, making

sure we have standard back-end capabilities in all markets.

If we add a new product offering, is it one that can we take in a largely standardised way,

does it fit in with our models, sales etc.?

We are not looking for significantly new market segments.

We believe there is significant headroom in the markets we currently serve.

Our challenge is to execute better going after markets we have already chosen.

Biggest single obstacle is that we think there are better opportunities elsewhere. This is

probably the biggest obstacle because the question you will probably get is … Why try

something new if you haven’t executed properly in your main strategy? Why would you

want to do something new if there is still growth in you current strategy?

Challenge from a global perspective, we want a consistent quote, single global view on

people and global teams, and we think this is our competitive advantage, if we allow SA to

pursue other things then it might be very good for SA but it will detract from our global

business [model].

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Participant 10 – We do have a CSR strategy, which encompasses the BOP, but it is not a

business model. Our view is we can leverage our core capabilities with technology to

create value, we picked education, and we believe that the things we do there make a

difference. We believe the things we do with education can make a big difference. There is

evidence where a lot of young people are now able to go on and find employment, which

has a ripple effect on families and communities. We are not doing it for profit purposes.

Because we are globalising and standardising, we are not going to have a business model

in SA, that we have no intention of taking globally. For example, we are not going to start

selling things that we don’t have globally just because for this point in time it makes sense.

I would agree with him, in SA, that we are big, I am not totally convinced that we are

saturated, being big means that we will be at the receiving end of other players, so we are

up against competition. This may force us to look at the business model and deliberately

make some changes that make sense for us to be more competitive. But the limits of this

change is something that is debateable, there is some lee way to make necessary changes if

need be.

Participant 12 – But bear in mind that Dimension Data’s future is going towards

standardisation and global scale. The group is grappling with customisation vs

standardisation, frankly, it is not part of the group strategy to micro customise the business

model.

Participant 13 – We have, for example, the way we engage with public sector, there are

certain deals we gone after where we haven’t made operating margin, there was revenue

there, but the strategic lever is more important. Additional pull through business or

positioning. Strategic in that this is a piece of the customer portfolio that must be met, and

rather it be met by us than a competitor.

Infrastructure

4 out of 13 participants mentioned infrastructure challenges. One participant explained that

Dimension Data’s CSR initiatives are frequently hampered by infrastructure issues, and

argued that major investment was required to implement the required infrastructure. In

trying to understand what products would suit the BOP market, one participant questioned

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whether there is adequate infrastructure available for these products. A participant who

was very familiar with challenges faced by Dimension Data in Africa cited lack of

infrastructure as a major stumbling block to Dimension Data’s ability to sell products or

services.

Participant 2 – Fundamentally our challenge is infrastructure requirement which is too

expensive.

If we provide a service, it must be a proper service. So remote connectivity, the number of

people would need to be big enough. Then how do we make sure we provide equal access

to the entire community?

Our eLearning will have more impact if there was connectivity. But who funds this rollout,

eg fibre connectivity or wireless. Is there existing infrastructure that can be leveraged? If

we can find a way to make connectivity accessible, definitely then we need to do it.

eLearning has its limitations not because of its content made available online, the reason

is because there is no connectivity.

Participant 3 – Our limitation is that we don’t have the channel and infrastructure to deal

with mass number of clients.

By definition, emerging markets are risky. Because some factors are macro economic,

exchange rates. Other factors based on geopolitical, government institutions, terrorism,

health, and infrastructure.

Participant 8 – What infrastructure do you have available for what you are selling?

The other issue is Internet availability, do you go for full cloud or localise in a specific

school?

Participant 9 – What we found out the hard way in business in Africa. There is no base

infrastructure, which our business relies on to be successful. For example we need strong

telecommunications to be in place, because we deliver services remotely, i.e. call centres,

voice managed services.

We are not going to be the company that brings telecoms into Africa - we will have to wait

until the infrastructure reaches a level that we are able to rollout our business model into

those countries.

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Internet Solutions may be another area to explore, like WiFi segments, quite a strong

argument to be made if you have the infrastructure.

ResearchAnalysisandDiscussion

The findings from the previous section are discussed in light of the theoretical conceptual

framework in relation to the research problem and compared to the literature which

emerged from the researcher’s literature review, in order to establish the level of

consistency between the findings and the literature (Kohlbacher, 2006). Generalisation of

the findings is thus made to theory – analytical generalisation, and not populations –

statistical generalisation (Tellis, 1997). The theoretical conceptual framework (Figure 12)

is reproduced hereunder for ease of reference.

Profitability

According to the reviewed literature BOP markets are associated with risk, high costs,

uncertainty, undeveloped infrastructure and require unique or innovative business models

to be successful (Karamchandani et al., 2011) (Prahalad & Hammond, 2002) (Wanasika,

2013) (Karnani, 2007). A similar view is held in respect of emerging markets and most

BOP markets are found within emerging markets (Cheung & Belden, 2013) (Lagace, 2010)

(Atsmon et al., 2011). BOP markets have an inconsistent supply of basic services, they

have limited or no access to financial support which makes it difficult for companies to

transact and there is a lack of infrastructure such as communication and transportation.

These characteristics are the cause of its unattractiveness for many companies (Munoobhai

2015).

The perception of opportunity at the BOP does not seem attractive enough for large

corporations as yet (Reficco, 2012). However, there are authors who assert that BOP

markets are profitable such as Wanasika (2013) and Prahalad (2012). Wanasika (2013)

MarketIntelligenceCognitive Structural Processual MarketCharacteristics

InteractiveSystems InfrastructureDiagnosticSystems Institutional

BoundarySystemsBeliefSystems

InternalBarriersExternal

Barriers

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states that there is enormous potential in BOP markets, which is significant enough to

assert that BOP markets cannot be ignored. Furthermore, there is a growing case for

profitable BOP initiatives. As per Prahalad (2012, p.12):

“For global firms, active participation in BOP markets is not an option. Just as

Nokia, Unilever, Nestle, and others have discovered, these markets are critical

for their sustained and profitable growth. More important is the fact that

breakthrough innovations that allow them to participate in BOP markets can

often be leveraged in developed markets.”

More recently Perrot's (2013) study of Lafarge pointed out that Lafarge’s executives and

management were largely unaware of the potential opportunity and market attractiveness

of the BOP. Citing Porter (1996), Reficco (2012) asserts that strategy is a choice and

serving the BOP market in a commercial way is therefore a choice which will only make

sense if the market proves attractive.

It is evident from the participants’ responses that Dimension Data places emphasis on

profitability and financial metrics, with the important metrics to Dimension Data being

profit, cash flow and timing of returns. Based on the literature and in particular the lessons

from the Lafarge action research by Perrot (2013) – it is deduced that profitability is in fact

an internal cognitive barrier and relates to the negative perception of

profitability/opportunity at the BOP. Accordingly, this research finds that in relation to

profitability, an internal cognitive barrier exists within Dimension Data which prevents it

from pursuing the BOP market (Olsen & Boxenbaum, 2009). In terms of the four levers

(Simons, 2000), the cognitive barrier would be linked to belief systems such as core values

and the commitment to achieve company objectives (Bedford, 2015) such as making

profits. Once the cognitive barrier is overcome changes are likely to be made to the

structures and processes at Dimension Data that relate to the requirement of profitability in

order to align it to the new perception and BOP market requirement (Perrot 2013).

Even though profitability is currently a key measure for business at Dimension Data, some

participants noted that Dimension Data is prepared to sacrifice profitability for key clients

or strategic initiatives. This implies that there have been instances where structural and

processual (Olsen & Boxenbaum, 2009) barriers were overcome by amending the

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management control systems to align with the strategic initiative. In terms of the four

levers (Simons, 2000), the belief systems changes result in appropriate boundary systems

and diagnostic and/or interactive systems depending on which levers need to be

emphasised.

In summary, whilst profitability is a key measure, Dimension Data has relaxed its

profitability measures for strategic initiatives or key clients where it deems these initiatives

or clients more important than its profitability requirements. This emphasises the cognitive

or belief system barrier for BOP markets. If management’s perception is altered to believe

that there is a significant opportunity at the BOP then Dimension Data may be willing to

update its belief systems, which would trigger appropriate amendments to other

management control systems i.e. if Dimension Data believes that there is a significant

opportunity at the BOP it will create a strategic initiative which would result in appropriate

updating of targets, key performance indicators, processes, targets and policies.

BusinessModelandTargetMarket

Magretta (2002) claims that business models answer the following questions: who is the

customer; what does the customer value; how do we make money; and at an appropriate

cost how can we deliver value to customers? Furthermore, in comparing the terms

‘business model’ to ‘strategy’, she asserts that business model represents a companies

value chain which describes its system and how all the pieces fit together, whereas strategy

explains how an organisation competes in a market and how it will differentiate itself from

competitors (Magretta, 2002).

Simanis (2012) claims that BOP business models require high volumes, low prices, low

margins and a penetration rate of 30% or more is often required for success.

Karamchandani et al. (2011) claim that BOP business models have requirements that are

different from a company’s core business model and that barriers to the BOP market can

be overcome by a company by adapting its own business models. Furthermore,

Karamchandani et al. (2011) state that most firms may not find it worthwhile to rethink

business models to enter the BOP market, while firms that are innovative are able to

overcome barriers and enjoy great rewards at the BOP. Karamchandani et al. (2011, p.4)

suggest the following questions be considered before a firm enters BOP markets:

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• “Can we manage large numbers of low-margin, low-value transactions?

• Can we work with informal markets?

• Can we keep out legacy and overhead costs?

• Do our leaders have a long-range mindset?

• Will our organisational culture stifle bottom of the pyramid innovation?”

Prahalad (2012) takes the concept of unique business models even further by citing earlier

writings where it is claimed that the typical 4Ps of marketing (McCarthy, 1982): product,

price, place and promotion do not apply to the BOP. Instead, Prahalad (2012) suggests that

the 4As should be applied to BOP markets, as BOP markets are distinctly different in each

region and therefore application of a business model needs to consider his suggested 4As:

awareness, access, affordable and availability. Ansari et al. (2010) suggest that

organisations could participate in global value chains, in which organisations collaborate in

larger value chains and participate in BOP initiatives, thereby allowing organisations

minimal deviation from their core business models.

Whilst much of the literature focused on the need to create non-traditional business models

in order to be successful in the BOP, there is limited reference to companies that do not

deal with end consumers. However, Perrot's (2013) case study provides one such example,

as Lafarge did not deal with end consumers and only sold to contractors and bulk

distributors. Therefore, in this instance Perrot's (2013) study of Lafarge will be used as a

comparison to Dimension Data. In line with the statement by Karamchandani et al. (2011),

Lafarge enjoyed great rewards after becoming innovative and rethinking its business model

to enter the BOP (Perrot, 2013).

Perrot (2013) stated that Lafarge was fixated on its strategy of focusing on core business of

cement production and cost reduction, while its business model did not deal with end

consumers. However, once the cognitive barrier regarding the perception of the BOP

market was removed, Lafarge’s management realised that the BOP market presents

significant opportunity. Entering the BOP market also provided strategic benefit against its

global competition. After this newfound appreciation for the BOP market Lafarge

implemented changes to its strategy and business models. In some areas new capabilities

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were created in order to deal with end consumers, whilst in other areas existing capabilities

were modified in order to deal with lower levels of the value chain i.e. closer to the end

consumer. Where the target market allowed, Lafarge created the new capabilities to deal

with the end consumer. Lafarge found its BOP initiatives both strategic and competitive,

and the case study ends at a point where Lafarge planned global expansion of its BOP

initiatives (Perrot, 2013).

The participants made it clear to the researcher that Dimension Data does not target end

consumers. Furthermore, according to the participants, in order for Dimension Data to

engage directly with end consumers a significant change to Dimension Data’s business

model would be required. The literature as cited in the above paragraphs suggests that

significant changes to the business model would be required for organisations to compete

in the BOP. The 4Ps of marketing (McCarthy, 1982) are arguably one of the most

prevalent and well-known concepts, yet it is claimed that even this concept does not apply

to the BOP, let alone traditional business models (Prahalad, 2012). It should be noted that

while the above suggests that a change to the business model is required for companies to

be successful in the BOP, this research also draws attention to research findings by Reficco

(2012) who emphasised the importance of aligning the organisation’s main value chain to

its BOP value chain i.e. greater alignment equals a greater chance of success and greater

divergence equals greater risk.

Therefore, Dimension Data’s current business model and target market are internal barriers

preventing it from pursuing the BOP market. In terms of strategy Dimension Data has

chosen to remain fixed on its core target market and accordingly its boundary system is

currently rigid (Perrot 2013). While the business model is not strategy (Magretta, 2002), it

spans across all elements of the internal barriers being structural, processual and cognitive

(Olsen & Boxenbaum, 2009).

Opportunistic

BOP markets are characterised the following factors: geographically dispersed, culturally

heterogeneous, increased distribution and marketing costs, difficult to exploit economies of

scale, weak infrastructure, and small size of each transaction. These BOP market

characteristics create increased costs while doing business and result in BOP markets being

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less desirable for companies that seek opportunistic profits (Karnani, 2007). Furthermore,

the opportunity cost of capital makes it difficult to select BOP opportunities, where

opportunity costs are similar to financial metrics because resources are expected to spend

more time on high margin low risk projects. Therefore financial incentive structures drive

resource allocation and focus away from BOP projects (Reficco, 2012).

Findings from the data suggest that while Dimension Data is innovative, it has achieved

success through the exploitation of readily available opportunities. An example in the data

relates to an opportunity where although the market was risky in Nigeria, Dimension Data

seized the business opportunity. Although there appeared to be risk outside of the

transaction, Dimension Data was prepared to assume the risk as long as the transaction was

large enough and almost certain i.e. opportunistic.

Based on the findings that Dimension Data is opportunistic in nature, it is likely that

Dimension Data engages in market capture strategies, and not market creation strategies

which are required for BOP markets – the literature calls for disruptive innovation (Hart &

Christensen, 2002) which is associated with market creation strategies (Perrot, 2013). A

dominant interactive control system is required for explorative innovation (Bedford, 2015).

The internal barrier related to an opportunistic characteristic would therefore be processual

(Olsen & Boxenbaum, 2009) or a management control system emphasised by diagnostic

controls (Perrot, 2013).

Capability

Wanasika (2013) cites Lumpkin and Dess (1996), and, Shane and Vankataraman (2000)

who claim that an entrepreneurial mindset is crucial for BOP markets as the firms must

find new ways of competing in order to identify and exploit opportunities in BOP markets.

Unlike strategising in developed markets, collaboration is a key component for strategising

in BOP markets (Wanasika, 2013).

When an organisation attempts to perform in a market in which its capabilities do not meet

the market requirement, the organisation may create the capabilities organically by

investing in research and development or externally by acquisition and joint ventures

(Perrot, 2013).

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Organisations that are serious about BOP markets must adopt a learning by doing approach

because if they postpone their entry into the BOP due to lack of market information they

would be overtaken by competition (Munoobhai, 2015) (Dhanaraj & Khanna, 2011). One

example in the reviewed literature is Nedbank, where it followed a co-creation approach to

learn, understand and develop products for a BOP market (Ismail et al., 2012).

In the case of Lafarge, employees were unaware of successful approaches to BOP markets.

The internal learning initiative provided Lafarge with information and experiences of

possible BOP approaches based on competition and peer companies in order to learn from

new business models and about market opportunities at the BOP. The learning articulated

how other companies managed to develop programs that embedded a social and economic

mission (Perrot, 2013). After the initial learning phase, the subsequent phase launched an

initiative where a special team was created to obtain market intelligence and assess the size

of potential BOP markets and opportunities. The market intelligence and projects resulted

in the preparation of more precise reporting on market size, business opportunities,

expected volumes and internal rates of return. These and other initiatives eventually led to

consensus within Lafarge that the BOP segment was a significant market opportunity.

Prior to this, Lafarge focused purely on its traditional core business. The new mindset and

realisation of market opportunity resulted in the launching of a corporate program to

develop revenues through unusual approaches. This was also considered as testing of

Lafarge’s boundary systems (Perrot, 2013).

It is a commonly held view in the literature that companies do not possess adequate market

intelligence, experience, capabilities or know-how to be successful in BOP markets. From

as early as 2002, Prahalad and Hammond (2002) raised awareness that traditional

developed world organisations contain workforces that are assembled to run high cost

operations. Furthermore, Prahalad and Hammond (2002) called for organisations to

develop workforces in order to understand the BOP. Reficco (2012) relates market

attractiveness to the allocation of resources, and finds that companies often claim that there

is not enough market intelligence nor is there adequate know-how available within the

large corporation to take advantage of BOP opportunities – however, when compared to

other attractive markets, the large corporation is prepared to invest in resourcing to obtain

market intelligence and know-how to take advantage of the attractive opportunity.

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Therefore, Reficco (2012) suggests that BOP initiatives must be seen as actual business

opportunities rather than CSR opportunities, in order for an organisation to address the

opportunity with the same scrupulousness as it would address a pure business opportunity.

The findings indicate that majority of participants believe that Dimension Data does not

have experience, capabilities or know-how to exploit BOP opportunities. However,

Dimension Data has a history of acquisition and entering new markets (“Dimension Data

Website,” n.d.). As Participant 9 suggests, Dimension Data could theoretically do it, but he

would never say that Dimension Data should enter the BOP directly – thus implying that

Dimension Data should either partner or acquire the competencies it requires – “instead of

building capacity, we buy the capacity - they should be at scale and relatively mature.”

Based on Dimension Data’s know-how in acquiring competencies and the research data

confirming that Dimension Data can acquire capabilities, it is deduced that Dimension

Data does have the ability to enter into markets if it chooses.

For example, Participant 3 provided an example of Dimension Data’s recent success in

revolutionalising the sport of cycling by introducing new methods and uses of technology

during the world renowned Tour De France and Cape Epic cycling competitions. Some

comments of Participant 3 in this regard are:

Example is the sport business; we never thought we would focus on this.

Look at our sport business for example. With the Tour de France, we learnt

that we have technical capabilities that improve sport. But even this business is

based on big clients who deal with consumers.

It is not our core focus to alleviate poverty, but it is our core focus to bring

return to shareholders. So if we can do both, and there is something to take to

market, I'm pretty sure the shareholders will be prepared to listen. But then, I

suppose everyone would say that we are not in the consumer business.

The interview with Participant 3 suggests that Dimension Data entered into a new market

i.e. the sport market relatively easily. The data from the interview with Participant 6

suggests that Dimension Data is comfortable with acquiring competencies and know-how.

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The example provided by Perrot (2013) where Lafarge obtained the necessary competency

only after the cognitive barrier was removed by the realisation of the potential opportunity

at the BOP lends weight to suggestions by Reficco (2012) and Wanasika (2013)

respectively – when organisations see BOP opportunities as actual business opportunities

then it would be addressed as a business opportunity with the appropriate rigor and non-

benevolent approach in order to ensure that necessary entrepreneurial initiative is applied

to BOP opportunities. Therefore with regard to the capability findings, the barrier to

Dimension Data pursuing the BOP is cognitive (Olsen & Boxenbaum, 2009) or belief

system related (Perrot, 2013).

Product

Although initial literature on BOP products asserted that organisations should create

innovative products to succeed and meet the requirement of BOP markets, contemporary

literature suggests that the least risky approach is for organisations to make small

amendments to the core offerings to succeed and meet requirements of BOP markets

(Reficco, 2012).

London and Hart (2004) criticised companies that moved into the BOP segment with

existing products at lower prices and/or smaller quantities, arguing that this approach may

not be beneficial in alleviating poverty, yet alleviating poverty is a crucial element of the

BOP proposition (Kandachar & Halme, 2008). As mentioned in previous barriers, Prahalad

(2012) cites earlier writings where it is claimed that the typical 4Ps of marketing

(McCarthy, 1982): product, price, place and promotion do not apply to the BOP. Instead,

Prahalad (2012) recommends usage of the 4As being: awareness, access, affordable and

availability. Ansari et al. (2010) cite multiple authors who suggest that the BOP market is

ideal for introducing and refining disruptive innovations. Hart and Christensen (2002)

motivate companies to attempt disruptive innovation at the BOP, while implying that there

are many opportunities for technological advances and that technology is needed to address

the social and environmental challenges associated with the BOP.

Both Nedbank (Ismail et al., 2012) and Lafarge (Perrot, 2013) created new products for

their BOP markets. However both organisations used their existing core business products

as base layers of the new product offerings. These examples imply that whilst a certain

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amount of development is required, organisations are able to modify existing products in

order to market to the BOP.

In the case of Dimension Data, Participant 11 noted that previous attempts to enter or

disrupt Dimension Data target markets involved a combination of 80% of existing

offerings in order to create products that resulted in competitive advantage for Dimension

Data. In addition it could be argued that Dimension Data did not have products that were

directly suited for the sport market, yet it modified its existing products to meet this

market.

Although the above suggests that Dimension Data has the potential to create

products/offerings for the BOP market either directly or indirectly through its customers, it

presently does not have any products that are immediately applicable to the BOP markets.

Therefore, Dimension Data’s product offering is a barrier preventing Dimension Data from

pursuing the BOP market.

Infrastructure

Lack of infrastructure is frequently cited as an external organisational barrier for entering

both emerging and BOP markets (Karnani, 2007) (Simanis, 2012) (Prahalad & Hammond,

2002) (Wanasika, 2013) (Reficco, 2012). According to Simanis (2012) simple BOP

business models are only successful if existing infrastructure is available. Being an ICT

organisation, Dimension Data offerings rely on infrastructure in order to supply products

or services to its target markets. Therefore, having limited infrastructure does impede

Dimension Data’s ability to service is target market – accordingly lack of infrastructure is

an external barrier to Dimension Data pursuing the BOP market.

However, Prahalad and Hammond (2002) suggest that ICT organisations are best placed to

provide innovative solutions to overcome some of the infrastructure related barriers.

Ashley et al. (2014) suggest that ICT is essential as it is a strong driver of growth and

unlocks opportunities in hard to reach markets. The role of ICT in the BOP market is

critical since lack of communication infrastructure is an institutional void posing a great

challenge for doing business in this market – ICT companies should be treating this

institutional void as a business opportunity with the potential to unlock other market

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opportunities at the BOP on a large scale whilst advancing the poor (Munoobhai, 2015)

(Dhanaraj & Khanna, 2011) (Ashley et al., 2014). Based on these views there is a need for

Dimension Data to overcome the cognitive barrier of viewing the lack of infrastructure as

an external barrier to viewing it as a business opportunity (Dhanaraj & Khanna, 2011).

StrategicAlignment

Perrot (2013) cites Olsen and Boxenbaum (2009) who identify conflicting mindsets as

organisational barriers in the implementation of BOP strategy. For example, a ‘head-

office’ mindset may conflict with the local business unit where the local business unit may

want to accept a BOP project. Similarly, according to Participant 9, Dimension Data is

bound by the strategic belief and boundary systems set out by the Dimension Data Group.

During Perrot's (2013) study of Lafarge, employees were not aware of successful

approaches to the BOP market undertaken by competitors. As stated previously and

emphasised by Perrot (2013), overcoming the mindset or cognitive barrier is the first step

in changing strategy towards including the BOP. Once the mindset shift took place at

Lafarge, the BOP was regarded as a significant opportunity (Perrot, 2013) – subsequently

the target market included the BOP and business models were amended based on the

change to strategy.

Magretta (2002) suggests that strategy is related to decisions revolving around how an

organisation will compete and how it will differentiate from competitors. Magretta's (2002)

view suggests that strategy and business models are linked yet still remain different

concepts, therefore it is strategy that influences and impacts the business model because

the business model is a reflection of a firms realised strategy (Zott, Amit, & Massa, 2011).

Therefore strategic decisions and actions will impact the internal cognitive, structural and

processual barriers (Olsen & Boxenbaum, 2009), as well as belief, boundary, diagnostic

and interactive control systems (Perrot, 2013).

The current strategy of Dimension Data emphasises focus on global standardisation of

business models and products as the Group aims to create consistency across all regions

and territories. In terms of its target market, there is a belief that there is significant

headroom, hence some of the related comments from Participant 9 are:

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We are not looking for significantly new market segments.

We believe there is significant headroom in the markets we currently serve.

Our challenge is to execute better going after markets we have already chosen.

Biggest single obstacle is that we think there are better opportunities

elsewhere. This is probably the biggest obstacle because the question you will

probably get is … Why try something new if you haven’t executed properly in

your main strategy? Why would you want to do something new if there is still

growth in you current strategy?

Since Dimension Data’s Group strategy is aimed at standardising products and services

globally, Dimension Data South Africa is faced with an internal barrier in the form of its

strategy, which is preventing it from pursing the BOP market.

ResearchLimitations

A disadvantage associated with the use of case study research and which may limit the

validity of case study research is that data collection and analysis methods are subject to

the researcher’s characteristics and background and rely on the researcher’s interpretation

of events, documents and interview material (Darke et al., 1998).

The researcher is an employee of Dimension Data and therefore the risk of bias existed.

The researcher was aware of this limitation and guarded against preconceived notions and

bias during the research process (Egan, 2002) by trying to see things through the lenses of

an outsider with limited knowledge of the research context (Leacock et al., 2009).

A limitation of the case study is that there was a single researcher – a technique using

multiple researchers benefits a case study research by providing multiple perspectives

thereby increasing confidence in the findings. Furthermore, conflicting findings allow

multiple researchers to validate information. The researcher believes that the analysis

techniques that were employed provided the opportunity to corroborate the findings

thereby strengthening the conclusions – in this way, the researcher mitigated the limitation

of being a single investigator (Soy, 1997).

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To address the time constraint limitation, the researcher overlapped a portion of the data

collection phase with the analysis phase. Eisenhardt (1989, p.538) states, “A striking

feature of research to build theory from case studies is the frequent overlap of data analysis

with data collection.”

Lastly, this research is based on a single case study and therefore generalisibility of the

findings to other settings is more limited than a case study involving multiple cases,

however other organisations may still learn from the finding and perhaps use it to consider

their own position in relation thereto (Gibbert et al.,2008) (Darke et al., 1998) (Eisenhardt,

1989).

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ResearchConclusions

In selecting Dimension Data, a global ICT leader with South Africa as its home ground,

this case study research explored and identified barriers preventing Dimension Data South

Africa from pursuing the BOP market.

Based on the literature review the researcher found that barriers preventing organisations

from entering BOP markets could be internal and/or external. In terms of internal barriers

to entry of BOP markets, Olsen and Boxenbaum (2009) find cognitive, processual or

structural barriers. Building on the barriers identified by Olsen and Boxenbaum (2009),

Reficco (2012) provides further examples of these barriers through his research as well as

examples of external barriers. Similarly, Perrot (2013) builds on the original findings of

Olsen and Boxenbaum (2009), however Perrot (2013) introduces a management control

systems framework i.e. the four levers of control by Simons (2000) to analyse the impact

of management control systems on the barriers.

The researcher conducted thirteen semi-structured interviews with employees from

Dimension Data from amongst key executives, business development managers, business

unit managers, product managers, financial managers and solution consultants operating at

Dimension Data group, regional and subsidiary level.

The findings and analysis revealed that the following barriers are preventing Dimension

Data from pursuing the BOP market: Profitability, Business model & Target market,

Opportunistic, Capability, Product, Infrastructure, and Strategic alignment. While the lack

infrastructure was found to be an external barrier as well as internal cognitive barrier, the

remaining barriers are internal and are either cognitive, structural or processual. Even

though these seven barriers were identified, it is noted that the overall barrier is cognitive

i.e. the mindset barrier should first be overcome in order for any of the seven barriers to be

overcome. These findings are consistent with the literature, in particular with Olsen and

Boxenbaum's (2009) findings that internal barriers prevent organisations from entering the

BOP and that these barriers may be cognitive, structural or processual. The cognitive

barriers found in this research may be overcome by utilising Dhanaraj and Khanna's (2011)

five tools for shifting mental models: anchor learning content on compelling theory;

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exposure to variations across emerging markets; emphasise diverse goals of business to

provoke thinking that is beyond profit-making; utilise a multi-method approach; and learn

by doing (Refer to Appendix C).

Overall, there is a growing interest in the BOP proposition and based on the findings of

this case study research, Dimension Data is likely to better understand what barriers are

preventing it from pursuing the BOP market, thereby allowing Dimension Data to review

its position and reconsider its approach and product offering.

“If the dynamics of institutions and markets are not factored in the mental

models, executive thinking can remain frozen in the past and can be a major

stumbling block to recognising current reality.” (Dhanaraj & Khanna, 2011,

p.690)

Dimension Data’s own ambition, as a global ICT leader is to challenge paradigms through

world leading innovative solutions. Dimension Data has a sincere CSR focus, however

CSR coupled with market prospects present Dimension Data with an opportunity to

innovate within a new sphere and further showcase its unique capability (“Dimension Data

Website,” n.d.). Should Dimension Data eventually deliver innovative solutions based on

the BOP proposition, this research would have contributed to the alleviation of poverty.

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FutureResearchDirections

This research is based on a single case study and the research problem may benefit from a

multiple case study which would allow for cross-case analysis in relation to barriers

preventing companies from entering or pursuing the BOP market (Eisenhardt, 1989)

(Gibbert et al., 2008).

Furthermore, the researcher suggests that the multiple case study should involve companies

that do not deal directly with end consumers – in order to add to literature relating to

internal barriers faced by these types of companies when considering entry or pursuing

BOP markets (Olsen & Boxenbaum, 2009).

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APPENDIXA:Interviewguideandquestionnaire

Pleasementionthefollowingtotheintervieweeatthestartofthemeeting1 MyNameisSamirDesai2 IamconductingresearchaspartofstudiesatGraduateSchoolofBusinessofUniversityofCapeTown3 Explainthepurposeofthisstudy4 Confidentiality5 Anonymity6 Participationisvoluntaryandtheintervieweemaywithdrawatanytime.Istheinterviweecomfortable?7 AmIabletorecord?

Name:

Surname

Race(Allowpersonnottodisclose)

EmployedorcontractedbyDimensionData

Position

Department

Questions

WhataretheDimensionDatacriteriaforenteringintonewmarkets

Whatarethemeasuresofsuccessforemergingmarketsormarketopportunities

Haveyoumadeadjustmentstothecorebusinessmodel,tocaterforuniqueneedsofanymarketWHY

Whatinformationdoyourequirebeforeenteringintonewmarkets

Inyourrole,orwithinyourbusinessunit,doyouinfluencewhetherDimensionDataentersorrecedesfrommarkets

DoesDimensionDataenterintoriskymarkets,projectsetc?

Doyouknowaboutwhatthebottomofthepyramidisandifsopleaseelaborate

DoyoubelievethattheBOPpropositionisprofitable,andwillalleviatepoverty

AreyouawareoftheBOPproposition

DoesDimensionDatahaveaBOPstrategy

WouldDimensionDataconsiderentryintoBOPmarkets

Ifyes,whyhasitnotyethappened/Ifno,whatarethereasonsfornotentering?

WillenteringtheBOPbedoneforCSRorforprofitobjectives

WhatdoyouperceivewillbechallengesforenteringtheBOP

WhatarethelimitationsorobstaclespreventingDimensionDataSouthAfricafromenteringtheBOPmarket,andhowcanthesebeovercome?

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APPENDIXB:ConsentForm

Informed Consent

Form Principal Researcher/s: Samir Desai Project Title: What are the obstacles preventing Dimension Data South Africa from pursuing the Bottom of the Pyramid (BOP) market? Brief overview of the project and its purpose, and what is expected from the respondent: As part of the researcher’s MBA dissertation, the researcher is

conducting research in the form of a single case study on Dimension Data. The

research will investigate Dimension Data’s pursuit of the BOP market, as a

provider of products and services. In doing so, your participation is required in the

form of a one on one interview. Date of Interview: Day Month 2015

There are no known risks or dangers to you associated with this study. Unless you provide an explicit approval, the researchers will not attempt to identify you with the responses to the questionnaire, or to name you as a participant in the study, nor will they facilitate anyone else's doing so.

I acknowledge that I am participating in this study of my own free will. I

understand that I may refuse to participate or stop participating at any time

without penalty. If I wish, I will be given a copy of this consent form.

Subject’s signature:_____________________ Date:_________________

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APPENDIXC:FiveCoreElementsfortheShiftinMentalModels

Figure13: Five Core Elements Needed for the Shift in Mental Models (Dhanaraj & Khanna, 2011)Copyright UCT

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