C.K.Prahalad on $20 entrepreneurs from India

Prahalad is known for his out of the box corporate management and strategy lessons. BusinessWeek covers Prahalad’s radical views on how the East Asian economies will have a far reaching impact in the western corporate boardrooms. As he quotes while taking a cab drive through the streets of Mumbai,

With the world’s cheapest telecom rates, all you need here is a phone and a $20 card to start a business. He notices a busy closet-sized shop charging a few pennies per page to send faxes. “That guy probably started with a single phone and then added a fax and printer. Now he has a self-contained communications center offering extremely low prices.”

Prahlad stops his cab and visits a small shop and asks the owner to let him behind the counter to observe closely on his trade. He notices global brands such as Head & Shoulders, Colgate, Pears Lifebuoy and Lux.

Prahlad further adds,

Low wages alone can’t account for such price gaps with the West, Prahalad contends. The real secret is ingenious cost-cutting practices, such as extreme reliance on outsourcing, novel use of technology, and making the most of capital investment. “These are radical innovations,”

In the context of this statement, I feel Prahlad is so right about his predictions. The first thing that stuck to my mind is this company, website.in which sells Web related products and has resellers and customers worldwide. It probably started in a garage and is the cheapest domain reseller in the world today. Anybody who wants to venture into web hosting related business can start with a mere capital of $90 with no hidden fees and excellent customer service. In 2001 Godaddy.com came into limelight because it was the cheapest domain reseller directly poaching customers from Networksolutions. But today website.in is a bigger threat to Godaddy due to the formers low and efficient cost of working with high quality customer service. After low cost manufacturing, I feel that online businesses will feel the pinch sooner.


One Response to “C.K.Prahalad on $20 entrepreneurs from India”

  1. Convergence.In Blog » Blog Archive » Nokia to follow Bharti Business Model. Says:

    […] After 2 years, Hutchinson-Essar a joint venture between Hutchinson Whampoa and Essar group is following similar model by outsourcing their network operations to Ericsson. As C.K.Prahlad predicted that their is a lot for the Western CEOs to learn from the East, this proven business model is something which AT&T – Cingular and Sprint can’t afford to miss who are known for their poor customer service. […]

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