Assuming a Company Found a Profitable Niche in Serving the Fourth

question 39

Essay

Assuming a company found a profitable niche in serving the fourth tier (the 4 billion people at the bottom of the economic pyramid),how might such a breakthrough help the firm sell to the developed world at the top of the economic pyramid?

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Definitions:

Profit

The financial gain obtained when the revenue from business activities exceeds the costs and expenses associated with operating the business.

Economic Profit

The total revenue from operations minus both the explicit and implicit costs; it's a measure of profitability factoring opportunity costs.

Accounting Profit

The net income a company reports on its financial statements, calculated as total revenues minus explicit costs of doing business.

Marginal Cost

The additional cost incurred by producing one more unit of a good or service.